One of the tragedies of centralization is that as more of your data is in one place, the owner of that place gets less and less of an incentive to do anything about it.
- One of the tragedies of centralization is that as more of your data is in one place, the owner of that place gets less and less of an incentive to do anything about it.
- The value of data is combinatorial; the combination of the right bits of data creates new value.
- For example, combining your workout history and your DoorDash history[ahs] produce insights neither source would have alone.
- So as you get more of your data under one roof, it's now possible for more of the combinatorial value of your data to be activated in a way that creates value for you.
- But you are likely not the only one who is storing more and more data there.
- You are likely storing more data with them because they are an aggregator.
- Aggregators are like gravity wells; it becomes harder and harder to resist as more people use them for more things.
- "They already have my email, my calendar, and all my docs… it's not that big of a deal to also give them my workout history."
- "All of my friends who I collaborate with use it, it's more of a hassle to avoid using it than to just use the same service everyone else does."
- But the ability of an aggregator to add value-creating features goes down with additional scale[aht] of usage.
- This is because of the tyranny of the marginal user: to grow scale, these providers need to make their products more and more lowest common denominator, dumbing them down.
- Imagine a feature that would revolutionize the lives of a certain niche of people, e.g. TTRPG players.
- Let's imagine the feature would combine insights from email, calendar, documents, etc, to create some kind of life-changingly-great new bit of functionality.
- But at a big aggregator, that couldn't be done by one team, or one PM.
- You'd need to coordinate dozens of PMs, for a feature that would have a smaller audience.
- The more different PMs that have to coordinate, the higher the amount of scale it would require to justify it–and this scales combinatorially.
- So the more data sources that have to be combined, the larger the scale of possible users necessary to justify it… which would require it to be watered down to get that scale, which prevents doing it in the first place.
- This effect only happens when the entity deciding what kind of software to build is not the user who will benefit.[ahu]
- The user puts their data in the aggregator, but the aggregator is only motivated to build software if it aligns with their business model: creates more engagement with their services.
- This is a fundamental divorce of value and incentive.
- This stagnation is one of the primary problems of centralization[ahv].
- The main problem of centralization is that as companies get larger they can't do small niche value unlocks as well.
- Because they have fewer effective competitors (and the switch cost is so large) they have no incentive to do better, they just start stagnating.