Seeing the Shift: Strategy in an Age of Platforms.

1994: A Server in a Friend’s Trunk

We needed a computer we could not afford. This was Carnegie Mellon in 1994. The web existed, but most people had never seen it. Pages were mostly text on a gray background, and images loaded line by line. We wanted to take financial information, the kind that lived on expensive terminals in brokerage offices and in the newspaper a day late, and put it inside a web browser.

To put a service on the web back then, you needed a Unix machine: a Sun workstation or an IBM RS/6000. Both were very expensive. Ed Samuel, a dear friend from Carnegie Mellon, was working in sales at IBM. I told him our problem. “Well,” Ed said, “I have an RS/6000 in the trunk of my car that I use. You guys can borrow it for a while, until you can afford one.”

That is how NETworth got on the web. As far as I have been able to verify, it was the first commercial stock quote server on the internet. It ran on a borrowed IBM machine that had been riding around in a friend’s trunk. It was the work of Galt Technologies, which Joel Maske and I had co-founded while we were students.

The name came from a book. I named the company after John Galt, the hero of Ayn Rand’s Atlas Shrugged. I was very much an objectivist at the time. Every time we signed a client, especially in finance, I mailed them a big box. Inside was a copy of Atlas Shrugged, a very thick book, with an inscription thanking them for coming on board. That was how we said welcome.

It was not the last time. A few years later, WiseWire needed a DEC Alpha that cost about a million dollars. A colleague and I traveled to Digital Equipment Corporation’s campus on Route 128. Our host walked us to the wrong floor first, a sea of green cubicles, before we found her office one floor up. I remember thinking: thank God I’m in the startup. Then I made my pitch. A DEC Alpha running machine learning on the web would show the world what their machine could do. We got the machine.

Passion pulls. Scrappiness is how you meet it halfway. When the thing you need looks too big to ask for, ask anyway.

The Core Idea

Every platform shift follows the same arc. First comes infrastructure. Then consolidation. Then regulation. Then scale. The technology changes each time. The arc does not.

Creators who know where they are on the arc make better strategic decisions than creators who are only good at building. They know when to build, when to sell, when to partner and when to wait. Strategy, in this sense, is not a plan. It is a form of orientation.

Scarce Information Was the Opening

In 1994, financial information was a privilege. It flowed through gatekeepers. If you were an ordinary investor, you got it late, you got it partial, and you often paid someone to give it to you. NETworth was my first real attempt to act on my domain of impact: a world where an individual investor could see what a professional could see.

The Internet Was an Academic Network

There were no stock quotes anywhere on the internet. Getting online at all was a project. I went to New York to visit S&P, which had a quote service called ComStock that delivered prices to a little box with an antenna. I wanted one of those boxes, and the right to put its data on the internet.

“What’s the internet?” they asked. “Oh, it’s an academic network,” I said. “Don’t really worry about it.” They approved a distribution contract. A week later a box arrived with a serial port on the back.

I had exactly one engineer, Tom Neuendorffer, a research scientist at Carnegie Mellon. He wrote a small program that pulled the quotes out of that box and published them to the web. At launch it read the wrong table, so a search for Apple might return a price that belonged to IBM. We found the bug. A month later S&P called to tell us the quotes had to be delayed. We had not known. We wrote more code. We could not even line up the columns, because HTML had no way to make a table yet.

When the tools are that crude, the field is empty. The people willing to wrestle with serial ports and broken tables get there first.

Then distribution found us. The Mosaic team at NCSA, the group behind one of the first web browsers, called to put NETworth in the browser's drop-down menu. When Microsoft licensed the Mosaic code for Internet Explorer, the menu came with it. That was distribution we could never have bought. By the time Intuit called, about a hundred financial institutions used NETworth, including Schwab, Vanguard and 20th Century, now American Century.

When a smart person goes quiet in front of something new, it usually means they are reorienting.

Every Shift Follows One Arc

I have lived through three major platform shifts as a builder: the commercial internet, artificial intelligence and digital assets. The same four stages appear every time.

1. InfrastructureProtocols, networks, standards and tools. Most people outside the field do not notice. Outsiders call it a toy. NETworth was built in this phase.
2. ConsolidationThe established players arrive with customers and capital. Distribution becomes more important than invention. The Intuit acquisition was a consolidation event.
3. RegulationRules arrive, often clumsy at first. It is a signal that the technology has become important enough to govern, and that institutions are getting ready to adopt it.
4. ScaleThe technology reaches everyone and turns boring, in the best sense. This is where most of the value shows up.

The stages overlap. One part of a market can be in consolidation while another is still building infrastructure. The point is not a perfect label. It is knowing which forces are acting on your company right now.

Read Your Position From the Evidence

Nobody announces the transitions. You read them from the evidence, the way a crew reads its position from instruments rather than from the view out the canopy. One tool helps. I call it the strategic game board. Lay out every player in your market on one page, on more than one axis, and look at where you sit. A board full of look-alike competitors clustered together usually means consolidation has started.

Infrastructure outlasts applications

Ask what will still be needed if every current application fails. The answer is usually infrastructure.

Each shift lays ground for the next

The internet made data abundant. AI makes it useful. New settlement systems make it possible to act on it with trust.

Regulation is a feature

The future arrives when institutions can adopt it safely. Design for scrutiny from the beginning.

Read the Age Wave Too

The arc tracks technology. I use one more lens, and it has nothing to do with code. It is population. A technology's position on the arc has to be read from the evidence. A generation's position is already on the calendar. The people who will be seventy in twenty years are fifty today. That makes demographics one of the most useful lenses I know for asking where a market is headed.

A Secret Is Not Enough

In Zero to One, Peter Thiel asks what important truth very few people agree with you on. Great companies are built on secrets. NETworth was built on one: ordinary people wanted the same financial information as professionals, and the web would let them have it. Most people in finance in 1994 did not believe that.

After thirty years, I would add three things for founders in this decade.

1. The arc matters as much as the secretA true secret at the wrong stage of the arc will still fail.
2. Definite optimism needs a plan for the inner gameThe founders who burned out in every shift I have seen were rarely short on strategy. They were short on the inner discipline to sustain it.
3. Know why you are the one to build itA secret tells you what to build. Your domain of impact and your Connected Purpose tell you why you should spend a decade on it.

A secret without a calling is a trade. A secret joined to a calling is a life's work.

Strategy Is Knowing Where You Stand

We did not know the arc in 1994. We were curious, stubborn and lucky to be standing at the beginning of something large. It took me years to see that what felt like luck was also position. We were standing in the right place at the right moment, and the most important thing we did was recognize when the moment changed.

Strategy is a decision about where to stand. Execution is what happens when the shooting starts.

This page is an overview of the chapter. The full chapter is in The Creator's Journey.

The Practice

Strategy is orientation turned outward. Write your answers in your journal, and revisit them every six months. The arc moves, and so should your thinking.

1. Place your industry on the arcFour boxes: infrastructure, consolidation, regulation, scale. Place your market, list three pieces of evidence and write what the next stage will demand. Then read the age wave for the people you serve.
2. Write down one secretWhat important truth do very few people in your field agree with you on? One sentence, the evidence, and why most people do not see it yet.
3. Ask what would make you infrastructureWhat would you need to standardize, whom else would you serve, what would you give away? Being an application can be right. Choose it deliberately.
4. Run a pre-mortemGary Klein's technique. Imagine it is two years from now and your strategy has failed. Write how it failed. Then address what you can now.
5. Test the sale questionDoes my product belong inside a larger platform? Write who might want it and why. You are not deciding to sell. You are making sure you will see the moment clearly.