Yesterday I suggested capitalism and the need for growth would eventually lead tech to healthcare.
Tech companies already command a greater share of wallet / economy than probably any single industry has ever commanded in history.
In order to keep growing, the only options are:
1/ Keep finding new customers (which at this point is mostly international or very young or very old consumers),
2/ Get existing customers to buy existing products and services more frequently,
3/ Expand into new products and services,
4/ Raise prices.Source: Tech, Healthcare, and Alignment of Interests
It should be obvious why #4 is probably the least interesting lever to pull unless all other options are exhausted. Nobody likes higher prices, especially if the buyer does not feel like they are getting more in the process. If you are a dominant company and trying to raise prices, that might be an invitation for political scrutiny in addition to burning consumer goodwill.
It is really option #3 that probably drives tech’s ever expanding scope into more and more parts of our economy. It is also option #3 that might connect tech to healthcare.
However, rather than view tech’s interest in healthcare as only a quest for new verticals and growth, I suggested tech’s interest in healthcare is possibly better explained by tech’s alignment of interests with consumers: If you have very valuable consumers that you likely know will be customers for life, then a very rational thing to do if you want to increase the value of your business is to make sure your customers live as long as possible.
While this is certainly true for almost any business, I think it’s a more realistic consideration for tech because very, very few companies / industries in history can simultaneously generate a lot of profits and have high confidence that consumers / buyers will remain customers for life.
Economics 101 would suggest that the higher your profits, the less likely you are going to be able to retain that customer (or profits) for a long time because competition will arise. And unless you can reasonably expect a very profitable customer to stick around for a long time, their health and well-being is probably not really an economic consideration to you.
But tech is different. Tech right now can simultaneously generate a lot of profits and believe that users will stick around almost forever. The only other industry I suggested that has similar dynamics is tobacco (or any kind of addictive substance for that matter), but for tobacco companies, extending customer life is not really a realistic consideration.
I think it makes sense, especially if you look at which companies are interested in healthcare. Amazon, Google, and Apple. I think you’ll agree with me if I say these three businesses probably have some of the stickiest customers of any business on Earth. In contrast, Facebook is not interested in healthcare. No social media business is, actually. Nor is any enterprise software, industrial, or commodity business. These examples do not necessarily indicate causation, but it seems like there could be some explanatory value.
And, ultimately, this does not need to depend on any assumptions about generosity or altruism on behalf of the tech company…you get to the same place even through cold, hard rationalism because the incentives of the tech companies and consumers are generally aligned.
Anyway, that’s not the point of this post. The point of this post is that…there is a 5th option for making money and creating value in addition to the four I listed above! One that I conveniently left out just so I could write a separate post about it.
That 5th option is also the hardest option: Make your consumers richer!
So if you’re a tech company and you’re powerful and reaching almost to the stratosphere, the options you have to continue to grow are almost always framed as only figuring out how to take more money out of your consumers’ wallets. Whether that means getting them to buy more of the same stuff, buy more new stuff, or raise prices.
But you can also get more if you make your consumers richer as well.
That makes sense! If you can help your consumers make money, then you can eventually get more out of them, too, because there is simply more money to go around.
Henry Ford famously understood this a century ago. He wanted to sell a lot of cars. He wanted everyone to have a car. And in order for that to happen, he needed a lot of people to be able to afford a car! And he started with his own employees by offering an industry-beating wage, which raised wage standards across the board. He not only figured out how to get more money out of people, he figured out how to get more money to people first.
Doesn’t that make a lot of sense?
I assume it makes sense to you, too, otherwise I am keenly aware I potentially sound crazy here…but for how much sense this makes, it’s surprising how few tech companies have focused on making their consumers richer and expanding their income.
The paradox in all of this is that part of what people hate about tech is that it has destroyed a lot of people’s incomes and jobs.
For all the benefits of tech (including lower costs passed on to the consumers), it cannot be a net positive if you destroy the consumer’s job in the process (e.g. in offline retail or jobs that have been automated away).
The people that like tech now are those whose incomes are not affected and can benefit from the growing efficiencies of tech.
But the obviously best outcome would be when tech can create wealth in a broader way.
And part of closing that loop likely depends on the expansion of low / no-code offerings.
Many people in tech still think of low / no-code as “fake tech”. In a way, it is. But that’s only true if you are a developer that is fluent in code.
Requiring code fluency in order to partake in and generate income in the digital economy, is probably a bottleneck that society cannot bear.
Tech is already absorbing so much of consumer wallets that it’s high time to consider how to help consumers make money, too, before the unsustainable path runs its course.
It’s too much to expect everyone to be able to code in order to make money in this digital future. But the magic of tech is that it can evolve and adapt.
And low / no-code is where we need to go.
We are already seeing great examples of this such as Shopify. Shopify is the quintessential no-code platform that is enabling anyone to become a digital commerce business.
Similarly, the rapidly expanding tools available for creatives in the creator / influencer economy can allow anyone to build their own media empire.
And within the enterprise, low / no-code platforms like ServiceNow and Alteryx are allowing many more people to develop apps, digital services, and analytics without needing a degree in computer science.
And we need more.
The promise of tech is infinite. But it’s time for tech to deliver. Not just for people that can code. But for everyone. Because our future depends on it.
And for investors like us, low / no-code should be an extremely rewarding area in the years to come.
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