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Software Is the New Oil

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Re: Software Is the New Oil

#61

Post by pjc50 »

kfk wrote: post #21
pjc50 wrote: post #11

Earlier quoted context omitted.

self driving cars, pharma (aging, cancer, etc.), robotics, ... , power generation, interstellar expeditions All of those involve very large software elements, and benefit from software innovation. It's quite plausible that the existing winners are at the top of their ramp, so buying in today at high p/e might not be a good bet. But all the unicorn investing is betting on new software companies coming along and reachi…

Excluding maybe self driving cars (maybe), I doubt that the core capability needed to drive the innovation in the above is software. I mean, that's like saying metal is everywhere in those industries. Of course it is, but it's also a commodity because it's easy enough to be produced by many competitors. I don't see software as so complex that few companies can keep the monopoly.

I didn't downvote you, but I disagree strongly. Software is both the most complex and skilled-labour-intensive thing that humanity has produced, and something that needs to be individually commissioned for any kind of real business edge. And it's supply constrained; that's why we're paid better than most of the non-finance economy.

You can't just go down and pump another few thousand barrels of raw software into your Strategic Software Reserve.

Re: Software Is the New Oil

#62

Post by pjc50 »

pcurve wrote: post #57
jasode wrote: post #19

I'm not convinced by this blog post that "software" is the new oil. To me, it's the top talent of "software PROGRAMMERS" that's the "oil". Let's pretend that Google Inc opensourced their entire software stack. Now, anyone can just spend money on hardware and datacenters and "replicate" what Google does in a certain sense. But did you really duplicate their abilities? Would intelligent and visionary investors fund suc…

I like this assessment much better. Software programmers are finite in number. Maybe ordinary software programmers are like crude oil because there is finite number of them, but still abundant. And fairly fungible. Talented ones are like highly enriched uranium in that they're much more rare than crude oil by volume. But they're still fungible because they can jump ship and decide to burn themselves at a different co…

And stack ranking is "refining" the programmers by heating them under pressure then skimming the top?

decide to burn themselves [out] at a different company

Truth in humour, dude.

Re: Software Is the New Oil

#63

Post by adventured »

blobbers wrote: post #47

Amazon made 17 cents per share and that was enough to convince you? "strong profits"? Drink the koolaid much? I'll sell you some shares in my software company at the same multiple. We've even got better margins. It'll be great. I promise.

They generated a billion in operating profit between AWS and retail.

Specifically what's so amazing, is that AWS is set to produce perhaps $2.25 to $2.5 billion in operating profit in the next four quarters. With the growth curve it's on, it'll very rapidly become one of the most valuable companies in the world, buried within Amazon. They'll hit $20 billion in sales in just three years, assuming slower growth.

By comparison, AWS is already generating 2.5 times the operating profit of VMWare. It has greater sales than either Salesforce or Netflix, and is generating a drastically greater operating profit than either of those two.

Re: Software Is the New Oil

#64

Post by saryant »

rm_-rf_slash wrote: post #46
saryant wrote: post #40

Earlier quoted context omitted.

> The difference between data and oil is that you aren't going to drive to the oilfields one morning and find that it's all been hacked and stolen. Ask Western oil workers in Libya or Nigeria or Venezuela or Mexico (depending on the decade) how accurate they feel that sentence is. Oil concessions have been regularly expropriated.

Fine then, stolen at the click of a button. Oil is a finite resource, software isn't. We create our own scarcity. Oil = software is a lazy metaphor.

As opposed to the stroke of a pen?

Re: Software Is the New Oil

#65

Post by silverbax88 »

jasode wrote: post #19

I'm not convinced by this blog post that "software" is the new oil. To me, it's the top talent of "software PROGRAMMERS" that's the "oil". Let's pretend that Google Inc opensourced their entire software stack. Now, anyone can just spend money on hardware and datacenters and "replicate" what Google does in a certain sense. But did you really duplicate their abilities? Would intelligent and visionary investors fund suc…

This is more accurate. Taking the Amazon example, there is literally zero financial reason that Wal-Mart could not compete with Amazon. None. Yet,so far, they have not even come close. The reality is execution, not deep pockets.

And that execution comes from the talent powering the company, at least in the right positions.

Re: Software Is the New Oil

#66

Post by it_learnses »

doyoulikeworms wrote: post #56
toptalentscout wrote: post #45

Earlier quoted context omitted.

>> To me, it's the top talent of "software PROGRAMMERS" that's the "oil". So does that make all the rest of us plain programmers the grease?

I think all programmers are the "oil". Some are higher quality that others, just as is the case with oil. Maybe tech companies are like refineries? This analogy is getting strange, but I like it.

Yes and right now the industry is trying to create more and more programmers by pushing schools, promising riches, etc. just like the oil industry has been experimenting with various ways of extracting as much oil as possible. Wondering what the side effects equivalent to environmental pollution are in this case...

Re: Software Is the New Oil

#67

Post by prostoalex »

jofer wrote: post #3

If software is the new oil, be prepared for a wild ride. The oil industry is notorious for decade-scale cycles of over-hiring and then layoffs and under-hiring, rinse-lather-repeat. Regardless, it's a good analogy, but be careful how far you take it. There's a _very_ important difference between the energy and other major industries. It's a difference that the software industry shares, but in the opposite extreme: Th…

Oil is high cap-ex, low op-ex, as labor costs are relatively cheap. Software is low cap-ex, but once you've created a prototype and need to hire people to build a business on top of it, op-ex becomes expensive.

Re: Software Is the New Oil

#68

Post by prostoalex »

hathym wrote: post #29
kfk wrote: post #8

And yet when you look at it, the biggest opportunities to create immense value added are on the hardware side of things: self driving cars, pharma (aging, cancer, etc.), robotics, batteries, power generation, interstellar expeditions, bringing billions of people out of poverty, etc. I don't want to be dismissive, but the software industry might very well go through and M&A and commodification phase once it matures. I…

None of the above can run without software

Sure, but the debate is about software as critical value generator versus software as a cost center.

It's like starting with observation that no business nowadays can run without email, and therefore building an email client and a server for business is the way to make it big in the software industry.

Re: Software Is the New Oil

#70

Post by vonklaus »

prostoalex wrote: post #67
jofer wrote: post #3

If software is the new oil, be prepared for a wild ride. The oil industry is notorious for decade-scale cycles of over-hiring and then layoffs and under-hiring, rinse-lather-repeat. Regardless, it's a good analogy, but be careful how far you take it. There's a _very_ important difference between the energy and other major industries. It's a difference that the software industry shares, but in the opposite extreme: Th…

Oil is high cap-ex, low op-ex, as labor costs are relatively cheap. Software is low cap-ex, but once you've created a prototype and need to hire people to build a business on top of it, op-ex becomes expensive.

I think you are correct relative to each specific industry, i.e software projects require more developers and server space at scale so they cost more to run BUT, that opex is low relative to the energy industry.

Tools and automation get better while all computer resources become less. oil operating costs likely dwarf a comprable SASS conpany in operational expenses.

edit

to clarify, opex in software becomes more expensive in aggregate. i can't think of a good business that has dropping opex as it scales except maybe Enron or a chainmail referral company. Energy companies do have high barriers to entry with a much lower opex after infrastructure has been developed, but software isn't neccesarily the opposite. If we compare a built out production application, outside of beta, with a decent userbase and its core purpose/features implemented, with a nuclear plant or oil refinery, the costs to rub the app is almost certainly lower than the energy comps and could possibly have opex held fairly linear relative to growth.

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