Weekly Update

Here’s why Facebook and Google are leading the new moonshot era in tech

If you look back to the olden days of tech – meaning 5 or so years ago – you’d see that most tech companies were fairly predictable when it came to acquisitions or new lines of business.

Be it Google, Microsoft or Apple, a big move in the past probably meant a shift into an adjacent market or staking claim to a new part of an industry value chain previously left to a supplier.

Rarely however, would acquisitions or major new initiatives make everyone stop and say “wait, what?”

But today, moves of the jaw-drop variety  happen seemingly once a month.  The most recent example is Facebook’s acquisition of Oculus VR, a virtual reality headset company the social network announced it would acquire on Tuesday.

Out-of-left-field moves are even more common for Google, who has institutionalized moonshots with its own crazy idea lab in Google X.  And while Google X has been a factory production line for mind-blowing initiatives like  Google Glass and self-driving cars over the past few years, Google also will look to go shopping periodically to make a splash.  

The big question is why are we seeing this spike in moves, by these two companies in particular, into what are seemingly unrelated businesses?

A few thoughts:

These companies are creating the conglomerates of the future

Unlike the last generation of tech industry leaders, this generation don’t believe they should limit themselves to their core markets. Under Gates and for most of Ballmer’s reign, Microsoft viewed themselves as just a computer software company. Cisco, Dell and others have largely stuck to their knitting.

But these companies? They’re just as willing to go in on robots and virtual worlds as network-enabled contact lenses or driverless cars. Why? Because…

…Hypergrowth matters more than adjacency

Some might complain these businesses aren’t related, but Zuckerberg and Larry Page would suggest that doesn’t matter. That’s because all of these markets have potential for hyper-growth ten or fifteen years down the road, and these leaders know their massive market-caps give them a war chest to put themselves in the driver’s seat by the time these technologies are ready for mass commercialization.

And while not all of these new areas will be sure-fire hits – drones, for example, could be a fairly limited market as a result of oversight by governing bodies like the FAA – some no doubt will and Google, Facebook and even Amazon are trying to maneuver themselves to be at the center of these new industries in the future.

Large unrelated (but really quite related) shifts are happening all at once

There is no doubt that the last thirty years of progress in computing, software and Internet have set the stage for the next decade, where a number of technology trends –  cloud, Internet of things, robotics, democratized creation, 3D printing, wearable computing – will soon create tectonic shifts under nearly every industry imaginable.

And while it may seem coincidental that the above technology trends that were seemingly locked in a state of ‘not ready for prime time’ are suddenly all seemingly ready for market,  it’s not coincidental as it all seems. Be it the mobile peace dividend, Moore’s law, open source hardware and software, the power of crowds or a combination of all of the above, these factors have given lift to all these markets, creating a unique time in history for technology and society in general.

And these two companies and their leaders, perhaps more than most, have a unique combination of vision and means to take advantage in this new era of tech.