Bits vs. Atoms

Bits vs. Atoms

Not too long ago, billionaire investor and Venture Capitalist Peter Thiel commented at a TechCrunch Disrupt conference that there is too much investment in “bit” companies and not enough investment in “atom” companies these days. (Tech author Nicholas Negroponte is credited with first comparing the “bit” versus “atom” economies back in 1995 in his book: Being Digital.)

As a co-founder of PayPal and Palantir Technologies (and an early investor in Facebook) – all “bit” companies – this comment struck many as ironic but his larger point was to call attention to the “irrational exuberance” within investment markets (both public and private) regarding such companies. In a nutshell, many people believe that “atom” companies are “passé”…but Mr. Thiel is not one of them.

In the world of Information Technology (IT) – my world for a number of years now – it seems to me that the most successful companies (at least from an innovation perspective) are coming up with products and services that really do combine the best of both worlds, i.e., bits and atoms. Companies such as Axcient, Pure Storage and Rubrik have advanced the world of data storage/backup by marrying physical hardware with virtualization and cloud-based administration.

In fact, if one peruses Forbes’ “Richest People in Tech” list (2015), then she would notice that the top 10 richest people (all billionaires) on this list lead or founded tech companies that combine elements of bit and atom innovations with the notable exceptions of Mark Zuckerberg and Michael Dell who are on opposite ends of the bit/atom spectrum (though, you could argue that Facebook’s investment in Oculus VR actually means that it is steering its way towards the converged bits/atoms economy).

If you’re an IT Provider, then you would be wise to continue looking for these converged solutions and figuring out how the best and brightest of them can make your customer’s lives easier.

If you’re a Small Business Owner, then keep in mind that these new, converged technologies mean greater flexibility in how and where you can deploy your resources (e.g., people working almost anywhere in the world, technical infrastructure that is distributed and geographically redundant, etc.). Yes, these technologies can make your company look and act like companies much larger than you!

If you’re neither an IT Provider nor a Small Business Owner but just an ordinary consumer of “stuff” (as we all are), then you’re probably already noticing and/or using the fruits of these converged technologies now such as, self-driving cars (I live in Mountain View, CA and I see about as many self-driving cars as I see people walking their dogs), smart electrical grids (yes, they are coming into existence slowly) and so on.

Bottom line: Products that combine the near limitless potential of “bits” with the tangible world of “atoms” offer a path to abundance not just in business but in all other aspects of life as well.


When Danny is NOT busy “consuming stuff”, he’s also leading a technology consulting company. Hit him on Twitter or Facebook.

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