Think of it like wine country.
In the United States today, software seems to grow from the soil, a new technological idea or innovation sprouting with each sweep of the sun. It has become the nation’s proudest industry, as lines of code and quiet disk drives are rapidly replacing yesterday’s assembly lines of steel beams and soldered metal,.
In French Burgundy country, the minerals of the earth and the ripening climate make the area’s wines among the most coveted in the world. But in the world of software development, where work is done at desks and geography is irrelevant, why is it that the taste of America’s product is so undeniably superior?
Technology entrepreneur Alan Dabbiere stopped by the Hudson Institute recently to run through this landscape, offering an insider’s look at what makes America such a technological giant.
Having already created two billion-dollar-plus companies in the software industry, Dabbiere was able to explain what aspects an environment can play in terms of a company’s future success.
“In my opinion, it really boils down to your ability to scale and the fact that we don’t have a lot of friction in getting things done in this country,” Dabbiere said.
While this may seem simple enough — a nice mantra about how business can thrive in America — Dabbiere said it actually reflects the very factor that makes software such a singular industry.
“Unlike all other industries,” Dabbiere said, “the software industry wants to be a monopoly.”
A company that makes cars, for example, may ship out 1 million vehicles, but it may barely turn a profit. But a software company has practically zero cost for goods sold, meaning all profits are immediately available to be re-invested: better sales teams, better marketing teams, more engineers to innovate on future software.
It becomes, as Dabbiere put it, a “virtuous cycle.”
“People don’t realize that software is a fashion product,” he continued. “Nobody goes out to buy software and asks to see the lines of code to check how good it is. It all comes down to how you present it, how well you present the need, how quickly you can convey its value, and how well you adapt to future needs.”
That means that having the money to grow sales and marketing teams, coupled with a better staff of engineers to create future software, allows a briefly successful company to quickly out-scale and crush its competitors. It’s the same formula that allowed Dabbiere to expand his company Manhattan Associates from a staff of 30 people to nearly 1,000 people in just a few short years.
“And because the United States is such a meritocracy,” Dabbiere said, “we have an environment where smart, creative people can succeed in ways very few countries have. Just the lack of friction, with none of the political or cultural restrictions you see in so many other countries, gives us the ability to move quickly between states and explore our options in a competitive way — that’s what makes things work so well here.”
Based on this assessment alone, however, one could assume that the United States would be a breeding ground for destructive monopolistic technology companies. After all, having the ability to scale so rapidly would surely swallow up all competition and stunt the market as a whole, wouldn’t it?
“Sure, that may be the case for a short while,” Dabbiere said. “Until there’s an innovative disruption. The big monopolistic company that everyone knows and trusts becomes too settled, it decides it has to protect its markets, and all of a sudden something comes up from the bottom and shocks them all.”
As Dabbiere sees it, this factor is what makes the software industry unlike any other industry in the world. It does not require land, large amounts of resources, political support, environmental factors —nothing. All it requires is imagination and skill and hard work. And even once you are at the top, the smarter, more determined little guy can always topple you. It is, Dabbiere said, the perfect industry for America, in that it most closely reflects America’s meritocratic conviction.
“People might not realize how true this is until they travel to other countries,” Dabbiere said, “but compared to everyone else, we have such a harder drive of being a meritocracy and doing what’s right, as opposed to doing what’s friendly, or doing what’s politically accommodating for older ways of thinking. We have one goal: creating the best software product that will make my company succeed. And that’s why America succeeds.”
To hear more of Dabbiere’s thoughts on the world of technology, head over to the Hudson Institute to watch the full interview.
Evan Smith is a Staff Writer for Opportunity Lives. You can follow him on Twitter @Evansmithreport.