Technology businesses are heavily influenced by waves of technology change, like the rise of the internet or AI. Knowing how to adjust strategy for these changes is one of the most important skills to develop.
As technology has advanced, technology waves have become larger, more frequent, and more sudden. In just the last 30 years (less than a full career, literally less than the time between graduation and your first 401k payout) we’ve seen:
- The rise of the consumer internet, creating massive companies like Google, Amazon, Meta and Netflix, and essentially killing dozens of industries from print media to Blockbuster videos.
- The rise of cloud (enterprise internet), which was an extinction event for on-prem B2B software that companies like Adobe, Bloomberg, and Microsoft managed to survive.
- The rise of mobile, creating massive companies like Uber and Instagram, turbo-charging companies like Apple and Meta, temporarily shoving Microsoft into a corner, and reshaping where we spend our attention.
- Aborted technology waves for 3D printing and Virtual / Augmented reality.
- The “rise” of crypto / Web3, creating a large public company (Coinbase) and a large illicit marketplace (The Silk Road) and some stablecoin infrastructure, but few other major businesses or use-cases. More on this later.
- The rise of AI, creating lightning fast growth for OpenAI, Anthropic, and Cursor, turbocharging Nvidia and AMD, and shaking essentially all industries to their core.
This has happened for thousands of years. I’m sure there was some Bronze Age metalsmith in 3000 BC who had to explain to his pissed-off wife that he lost his job because some asshole figured out you could make a better sword out of iron. Disruption from technology waves has been happening for thousands of years and will continue for the indefinite future.
What To Do
I’ve been around long enough to watch multiple technology waves swell and break on the shore. There are a few super simple questions below that I ask as early as possible in a technology wave that I’ve found invaluable for orientation. The key is to ask them, in order, every time:
- Does this technology actually matter? Does anyone that I know actually use it? Is anyone changing their habits because of it? If it’s a new speculative technology (e.g. internet, AI, blockchain) does it like, actually do something anyone cares about?
- If it matters, you need to ask how the new technology actually functions. Could I explain it to my mom at a very high level if I had to? Talking points from social media or (worse) traditional media don’t count.
- Once you know how new technology works, you need to ask what new functions it will enable. Since we’ve established that it matters and understand how it works, what behaviors will it change? You’re looking for ground truths about the future, even if they’re obvious: AI lets people create images faster, AI lets you synthesize huge amounts of text, AI generates working code. Establish the facts in a boring way; inoculate yourself from hype and grifters. For mobile, instead of “all of the internet, directly in your pocket,” go with “it will be possible to perform business tasks in places with broadband, as long as they work on a small touchscreen.”
- Finally, you have to ask whether your product or business is impacted. Do buyers care about any of the things that the new technology does? Does it impact your cost structure? Does it impact your customers’ businesses? If you gave yourself a cold enough shower at the previous step, you’ll be left with the distilled reality of whether this wave matters for your business.
These questions are not hard to answer. They do not require a deep math background or Machiavellian cleverness. If this is a road trip, you’re not trying to find a shortcut through backroads, you’re just trying to figure out if the bridge you’re about to drive over has collapsed. But it is essential that you actually take the time to ask them, which is surprisingly hard because…
People Are Lazy
Whenever a new technology wave comes along (like the internet, mobile, or AI), a huge number of businesses simply ignore it because change is annoying. Maybe if we ignore these dumb phones they’ll go away. This GPT thing can’t count how many Rs are in the word “strawberry,” it’s useless.
(Worth noting that the tendency to ignore new technology waves seems to have gone down over time. There were many, many more internet skeptics than AI skeptics)
Ignoring new technology waves feels good because most technology waves do sputter out. The few big businesses built on crypto have (so far) been mainly related to speculating or buying drugs. VR games never got mainstream adoption. Only weirdos and tinkerers have 3D printers in their homes. Being lazy pays off pretty often. It also lets you talk down to others, which many people unfortunately enjoy.
Additionally, just assuming that nothing is happening is a somewhat self-correcting problem. You can ignore iPhones for a long time, but eventually literally everyone you’ve ever met has one, and you can just shamefully pretend that you never said they were pointless. As a result, being lazy is often less dangerous than the other trap…
People Fear Embarrassment
A lot of senior leaders, even “leaders” at tech companies, are fundamentally insecure about technology. They’re either not technical by training or so out of practice that they don’t know how their products work. This is especially true in fields where projecting confidence is a key part of the job: Sales, Marketing, Human Resources, and arguably even Security are all examples.
So in order to instill confidence in their teams, or to win whatever political battle is being fought this week, whenever a tech wave appears on the horizon many execs feel compelled to project wisdom and understanding.
Critically, these execs don’t actually understand what’s going on – they haven’t followed the steps outlined above, and they often also fall into the trap of being lazy. So instead they follow the hype: This is popular on X (or worse, LinkedIn), all our competitors are leaning in, or “Gartner said this is the next big thing.” It’s classic herd behavior. Once the hype is loud enough, these leaders’ next step is to declare that the new technology is the birth of a new machine god, and that they will be its prophet.
Going all-in on something you don’t understand can work out fine if you capture something like the iPhone moment and build a mobile empire. But it’s deeply damaging if it causes you to mortgage your business’ future on some Web3 technology with 0 actual users. Or if you cancel your entire roadmap to put a hat that says “I ♥️ AI” on top of your product, when your customers actually wanted you to add better approval flows.
Blind over-rotation is the default strategic mistake in times of major change. To avoid it, you need to make sure that you and your team aren’t falling into the trap of avoiding embarrassment by leaning in on whatever is hot.
Takeaways
New technology waves can make or break your business, but only some of the bumps in the water actually matter.
Follow the steps of thoughtfully asking whether the technology is impactful, researching how it functions, establishing the facts on what it makes possible, and considering whether it impacts your business. Beyond that, don’t assume it’s just nothing, and don’t let embarrassment drive you to go all-in just because everyone else is.
Most importantly: The greatest sin of technology waves is missing an obvious wave and pretending it wasn’t real because of your ego. If you miss a wave, the single most important step is to swallow your pride and immediately take strides to catch up:
- Acknowledge that you have a problem, potentially publicly to your team if you missed badly enough. Take personal responsibility.
- Pivot appropriate resources towards catching up. Be prepared to cancel projects, and be prepared to put your best people on the task even if that means hurt feelings. When you’re playing catch-up during a wave of industry change you need to actively put your best people on the frontlines, and doing so will actually rebuild your team’s confidence.
- Follow through on that personal responsibility by staying close to the project and making sure that you actually fix the error.
The silver lining of technology waves is that when they matter they’re big, and when they’re big they’re eventually obvious. Missing them, more than anything else, is truly business-killing, but luckily you don’t need to be that clever to detect a wave that matters.