#16 - Benedict Evans

Balaji Srinivasan (0:00)

I'm here with Benedict Evans. We worked together at A6 and Z more than 10 years ago. Benedict is a well-known newsletter author, probably needs no introduction for people watching this. We're here in Singapore, we just came here for an AI conference. You do about one-fourth newsletter, three-fourths conference nowadays, we're speaking. That's what brought you out here, right?

Benedict Evans (0:18)

Pretty much, yeah.

Balaji Srinivasan (0:20)

And newsletters now, like 175, something like that you said?

Benedict Evans (0:23)

Yeah, something like that, it wobbles a bit from day to day.

Balaji Srinivasan (0:26)

And it started out, you started as a mobile analyst, and you became like a broader tech analyst. Is that the evolution?

Benedict Evans (0:32)

Yeah, that's one way to put it. I mean, I think...

Balaji Srinivasan (0:35)

You're an orange, is that right?

Benedict Evans (0:36)

A long time ago, yes. A long time ago, yes. Just when it was all becoming horribly French.

There's like, as we were chatting before this, and I said like, the thing in tech is at the point that you understand something is often the point that you should be moving on to pay attention to something else. So I started my career in the.com bubble as an equity analyst, and I was covering mobile stocks. And at that time, mobile was kind of dynamic and exciting and sexy and disruptive, and they turned into water companies.

Balaji Srinivasan (1:02)

Into water companies?

Benedict Evans (1:03)

Utilities.

Balaji Srinivasan (1:04)

Oh, utilities, yeah, OK.

Benedict Evans (1:05)

They were going to connect everybody in the world, and then they did. And now what? They were like, Marc Andreessen's phrase, they were like the dog that caught the truck. And I went and worked in strategy in a bunch of media and telecom things, and yeah, I was analyzing looking at smartphones, because that was suddenly become the center of the industry, and no one understood it. Now, like it happened, time to look for different questions.

Balaji Srinivasan (1:27)

Well, it's funny because I think when we were overlapping, it was right in the middle of the smartphone dividend, the smartphone explosion, and just to, you know, we actually, there's a few things. One is the smartphone dividend. That's a useful concept, right? Like that the rise of a billion smartphones meant that everything that went into them became cheaper, and that enabled VR headsets, that enabled drones, right? All this stuff.

Benedict Evans (1:49)

Yeah, all the components that came out of it. Yeah, so smartphone sales are now, from memory, like one and a quarter, one and a half billion units a year, and all the supply chain from that, all of those components is then available off the shelf if you want to buy 5,000 of them or 10,000 of them, all the Wi-Fi chips and the batteries and the cameras and all the other bits. And before, if you wanted to put computer into something, you basically need to use PC components, so ATMs and so on are all basically PCs. Elevators are basically PCs. And that has size and power and cost constraints. And then smartphones become the thing, and then all those components are available. And so that's what gets you drones and connected light bulbs and all the other bits and pieces around the edge of that.

Balaji Srinivasan (2:38)

One of the things I think people don't appreciate is they think, for example, like the consumer. They think like the military has like special gear, and it's got its own kind of supply chain. And often, the military supply chain is often just a subset of the consumer supply chain, because you sell a billion units of this, and maybe you have 100,000 or a million units of a military thing.

Benedict Evans (2:57)

It's almost kind of the reverse now, in that it used to be, so the way I think about this is like in the past, like before we were born, the intelligence agencies would get the cool new stuff first, and then the military would get it, and then big corporations would get it, and eventually consumers would get it like 30 years afterwards. So this is like the canonical thing. It's like microwaves were invented for NASA, and eventually consumers get them.

Balaji Srinivasan (3:20)

Yeah, or like GPS was invented to guide missiles, and now it's used for tagging cat photos.

Benedict Evans (3:24)

And the shift is like a combination of the stuff getting cheap enough that it can be for consumers, instead of you needing a billion dollars to have one, and then the scale of consumers once it gets cheap enough. And so now the way it works is the consumers get the new stuff and the military gets it 10 years later, because that's how long it takes to...