2012 Is The Year When Software Eats (The Rest Of) The World

By Nathaniel Whittemore , written on January 24, 2012

From The News Desk

In the pantheon of "Apple" days, it is entirely possible that when we look back a decade from now, last week's education-focused announcements will stand next to the first iPod, the iPhone, and the iPad as a day that the entire future of an industry was reoriented.

At the press conference - their first major event since the passing of Steve Jobs - Apple announced a suite of products that directly declared their intent to compete and win in the next generation education space. With their new textbooks initiatives, they're hoping to do to the multi-billion dollar print textbook market what they did to music - push all the content creators into the digital realm and own the central distribution channel for their materials. With their iBooks Author Tool, they're building an authoring infrastructure for the next generation of "texts" that could replace the textbooks of today.

Whether they're successful or not, Apple has given the education technology space a megadose of energy and attention. At first glance, education has had a strange relationship with technology. More than 8% of the US GDP is tied up in education - including K12, higher education, and continuing and professional ed - yet historically, less than a single percent of venture capital financing has gone towards education startups.

There are a variety of historical reasons for this disparity - a mollases-esque sales cycle to public school districts, high barriers to entry and entrenched actors in the college software purchasing space, confused revenue channels and more. But over the last few years, the forces that shaped the consumer internet are beginning to find their way into the education space - new distribution channels that hop over traditional sales model and allow companies to get directly to end users, ubiquitous access to internet enabled mobile devices, adaptive, game-style learning approaches that resonate with young learners used to bite-sized consumptive and creative experience, and network effects which are enabling massive benefits within the context of social learning platforms.

VCs are responding. Greylock, Benchmark, and the Founders Fund have all made major investments in education platforms in the last few months. The activity in the seed space has been ferocious, with a significant uptick in the number of education companies participating in programs like Y Combinator and 500 Startups. Vinod Khosla has been writing about the changes in education, and even internet soothsayer-of-the-moment Marc Andreessen has been talking about it.

What's happening in education is not unique however, but reflective of a larger trend.

Last year, Andreessen published a seminal essay "Why Software Is Eating The World" in the Wall Street Journal. The thesis of the piece was that any industry the internet hadn't fundamentally remade yet, it would. And, TechCrunch added, jobs would follow.  In 2012, we'll see a major shift in investor and entrepreneurial activity towards industries where that promise has not yet been fully realized.

Education is a space in which the forces have aligned for software to begin truly eating and disrupting the industry, but it's not just education that is feeling the inevitability of technology-wrought creative disruption.

Last week, Pando Daily Editor-In-Chief Sarah Lacy wrote an update about the state of the enterprise software market. For as long as there has been an internet, it seems, enterprise software has been the consumer internet's less cool (if often better paid) older sibling, but in the last few years, story after story has heralded the coming "consumerization" of the enterprise. Startups like and Yammer have promised to out Salesforce Salesforce and liberate employees and departments from the tyrannical rule of IT departments and legacy software once and for all.

Unfortunately, change happens slowly and the nut of Lacy's piece was that the media hype has created an expectation about the coming changes that if not wrong in the magnitude of the opportunity, are off in the timing. One interesting question for 2012, however, is that as IT departments adopt the iPad en masse, does a totally different form factor and software delivery channel tip the scales towards a more rapid consumerization of enterprise?

With a headed presidential election season, 2012 also promises some interesting developments in the political and civic participation. The last few years have seen the emergence of social action platforms that, for the first time, are actually demonstrating regularized efficacy harnessing digital participation for social good. (a company I was a freelance writer for between 2008 and 2010) has become a force, regularly winning campaigns ranging from turning over localized breed specific legislation that outlaw pit bulls to garnering more than 200,000 signatures from around the world to force the South African Ministry of Justice to address "corrective rape" for the first time. And when it comes to political campaigns, for all the hype about Obama's 2008 social media strategy, political software has only begun to scratch the surface of what big data analysis could do for campaigning.

In music, 2012 promises to be the first time that platforms like Spotify and Soundcloud achieve the sort of scale that enables startup ecosystems to grow around them. Likewise, the massive health industry - the formal sector of which is still a technological dinosaur and the informal sector of which still hasn't seen a single dominant platform for personal health management - has an ever growing ecosystem of startups and vertical funds and incubator programs.

There is even some interesting movement in the Pet space, with startups like DogVacay - an Airbnb for dogs emerging to take on a space that has been historically underserved by web startups.

The second half of the Aughts will be remembered as the era which birthed the architecture of the social internet. The early Teens are shaping up to be the time in which entrepreneurs took advantage of that architecture to remake every industry - big and small - that touches our daily lives.