Markets are Going Through a Shift
American physicist and philosopher Thomas Kuhn presented the notion of a paradigm shift in his 1962 book “The Structure of Scientific Revolutions.”, in which he describes how new phenomena render existing science incompatible, requiring the development of a new theory or paradigm.
In the information and technology age, we have seen dramatic shifts in the 90s starting with the internet. Lessons from the web, mobile and cloud show us that leadership in the respective industries has played out over decades.
In 1994, Netscape launched the web browser and the seeds of the internet boom were sown. Google, the dominant search engine today was only founded four years after the browser, after many search companies had become mainstream like Yahoo. Early web leaders such as Altavista, AskJeeves, eToys, Geocities, Go!, Infoseek, Lycos, Pets.com and Friendster don’t exist anymore and have been surpassed by later entrants.
Since then, technology start-ups like Expedia, Facebook, Netflix, PayPal, LinkedIn, and Spotify have out-competed incumbents and changed how we connect, shop, travel and much more.
The Coming AI Revolution
It has been almost two years since OpenAI released ChatGPT. If history is any guide, as we sit in the early days of the democratization of AI technology, creative destruction will ensue and once dominant companies will likely be surpassed by up-and-coming yet unknown start-ups.
The implication for investors today is that taking a large bet on any particular company in hopes that it will continue to dominate the marketplace has low odds of success. We have shown that throughout history, many companies that delivered paradigm-shifting technological breakthroughs have failed to deliver long-term returns for investors.
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