Zero-Sum Tech? Addition vs Replacement

Below is the ‘Tip of the Week’ from Ep74: Virtual Reality Investing, Part 2 (Adam Draper)

In today’s interview, we discussed how, in many applications, VR won’t replace existing methods or use-models, rather it will be a new and different level of interaction, that’s additive. Many have a fear of change and technological innovation, because it can be perceived as destroying old ways of doing things. And in a lot of cases old technologies, that have no experience value, will be replaced. But new technology often does not mean the end of existing tech.

Did the automobile replace the bicycle?
Did the smartphone replace the pc?
Did the treadmill replace running outdoors?

In the episode, Adam weighed in on ‘Addition vs Replacement’ w/ regards to games… he talked about how video games didn’t replace board games and mobile games didn’t replace video games. They were additive and likely increased the total market size for gaming in its original forms; possibly b/c they introduced new users to gaming. His position was similar on VR; it will not replace existing forms of gaming, but rather will add to it. Another example we discussed was related to travel. Adam believes that virtual travel experiences will actually increase interest in traditional travel, rather than displace it. As I think about the way travel, and many other products are sold, it is often done through storytelling. Combinations of visual and verbal stories can make a strange, foreign place seem very desirable to visit. And I can’t imagine a better story telling technology than virtual reality.

Change is tough. Technology is often seen as a threat instead of an opportunity. As was discussedย in the episode on Blockchain w/ William Mougayar, large businesses are focused on consolidating and increasing power. So naturally many view new technology as a disruptive threat that destroys value. But technology is not a zero-sum game. For every unit of value created with new tech a unit of value is not extracted from the world. Quite the contrary, the more efficient we get and the more access we have to information, tools and each other, the more value will be created. There is a reason why the stock market, long-term, moves up and to the right. And it’s not just because there are more human consumers in the world. True innovation yields true, accretive value creation.