Ignorance

"However vast any person’s basic reading may be, there still remain an enormous number of fundamental works that he has not read." - Italo Calvino

It hasn't been possible to have read 'everything' for a couple of hundred years (since Erasmus, perhaps). It hasn't been possible to understand all of engineering or technology for perhaps a hundred or a hundred and fifty years. And today, it isn't really possible to understand all even of the internet or mobile - not all at once. There are simply too many things going on for any one person even to know the key basics in every relevant field, never mind become an expert or have some insight. I'm pretty sure it's not possible to have a really deep understanding of all of, say:

• The mobile semiconductor industry and the competitive positioning of Mediatek, Rockchip and Qualcomm
• The mobile handset market and the interaction of Apple, Samsung and the Chinese OEMs
• The online music business
• The latest developments in ad-tech
• Games
• SEO, social sharing and user acquisition across desktop web, mobile web and apps
• Power and processing budgets for very cheap/low-power hardware (Android, drones, thermostats, wearables, HDMI dongles...)

No-one can be an expert on all of those, yet all of them are relevant to someone trying to understand mobile ecosystems. And as mobile and software eat the world, more and more previously separate things overlap and become relevant to each other. For 20 years we've been talking about the 'convergence' of the three industries of 'TMT', Tech, Media and Telecoms, but now it's finally happening and they're not so much converging as colliding, like galaxies. (And a few new galaxies are smashing into the mix as well, like retail). That means there are even more things to keep track of and understand, because the opportunity set for new and disruptive businesses is expanding massively. 

Hence, consider a few more things someone like me might now need to understand: 

• The US pay TV industry and the evolution of affiliate fees
• Regional film rights windowing
• The outlook for operator handset subsidies
• The evolution of mobile data costs for low-income users in emerging markets
• The structure and economics of the global payments industry. Oh, and monetary economic theory

Part of the fun is that people in each of TM&T tend to think that they do understand the other two (and that the other two are run by idiots). But they see each other in terms of their own preoccupations, rather than looking at the real drivers in a quite different industry: 

• Media companies look at tech and telecoms and say "well, they're just a channel for our stuff"
• Telcos look at tech and media and say "they're using our networks so we should control everything"
• Tech companies look at media and telecoms and say "a little disruptive technology would change everything"

So, rather like the blind men examining an elephant, who each feel one part and conclude the elephant is a snake or a tree, when TMT companies look at another industry they tend to see the bit that matters to them and assume that that's the important part. Tech people have this problem particularly badly: a repeated failing of tech companies is to look at media and telecoms, see some tech, and think it's the key point of leverage in those markets. Mobile networks and TV do look like tech should be a crucial lever, but that isn't necessarily so. 

Two useful examples of this sort of cross-industry misunderstanding are Joost and mobile WiMax. These proposed radical technology that would disrupt the TV and mobile industries respectively, but in both cases that technology was actually applied to a part of the value chain that offered very limited leverage to disrupt anything, and both were total failures:

• Joost had a P2P platform that gave 'free distribution for TV'. But distribution is actually a tiny part of the cost of running a major TV channel - all the money goes to content. It took Netflix to work out how internet distribution could change things - as an enabler for a different operating model, with a new UX combined with data as a tool to rework content acquisition (and meanwhile YouTube solved the true long tail story)
• Mobile WiMax was supposedly 10-20-30% cheaper than then-current cellular network technology for equivalent capacity. But the equipment itself is typically only a quarter of the cost of an urban base station, and the number of urban base stations you need is a function of in-building coverage as well as capacity, and WiMax was actually only available for deployment on high-frequency spectrum which is bad for in-building coverage. And you were deploying a weird non-standard tech with only one vendor and no handsets. So when you ran the maths, the tech that was "30% cheaper!" could actually be much more expensive to deploy. (Yes, this is a huge simplification)

Naturally, one thing Joost and WiMax had in common was that TV and mobile people fell off their chairs laughing when they heard the pitch. And of course that showed that they didn't 'get it' - but actually, they did. They got the tech, but they also knew the broader industry context that meant the tech didn't matter. 

Both of these are of course inversions of the way that tech often does disrupt industries - by affecting parts of the industry that no-one paid attention to but which were actually key leverage points. Not many magazine people thought of themselves as being in the trucking and light-manufacturing business, for example, but they were, and that was why the internet had such an impact on them. But the opposite can also be true - there are industries where tech doesn't look important but is actually crucial, but there are also industries where tech looks crucial but doesn't actually matter very much at all, outside narrow constraints. 

The problem is, this sort of ignorance and misunderstanding is often how we get true disruption - people are so ignorant that they don't know something can't be done and won't work, so they go and do it, and it works. Dropbox and Paypal are particularly good examples of this, while Bessemer's 'anti-portfolio' is a fun look at the sensible reasons why some amazing companies would never work. The challenge of venture investing is that the model depends on investing in things that are laughable, because those are the only things that can make billions of dollars from zero in a few years. So you kind of want people to laugh at you and think you don’t understand the sector. You just have to be sure that you understand why they’re laughing.