We can’t comprehend how big the world is
I was reading an article about scientific illiteracy. Which author was recounting a story that he was teaching his class a physics problem which you need to estimate the population of the USA. But worked a significant amount of students underestimated the US population. Some overestimated it by a billion. He said that the students were “innumerate”. As they did not grasp what a million or billion was.
I found a similar concept in an article called The Economy is Mind-Bogglingly Huge. In the article, he explains that tons of industries you have never heard about that keeps the world spinning.
In the article he gave this example:
I was talking to the owner of a scale (to weigh things) business in the Midwest. People ask him "Is that a full-time job? Is that industry big enough to support you?"
His response: "Look around this room. Everything you own, everything you see, and everything you eat has been weighed. Multiple times."
When a product (let’s say flour) is farmed and processed, it is weighed. When it is packed into shipping containers, those are weighed. When they are unloaded from the ship, they are weighed again. When the truck is loaded with pallets it is weighed again. A customer buying flour may weigh it again while they’re making their recipe, and then weigh themselves after eating their cookies.
Then added:
Have you ever thought about how many times your flour is weighed? How many scales are built, sold, repaired, and serviced in the supply chain of just your flour?
Granted this does not take into account the decreasing globalisation and localising of supply chains. But it gets the point across. Supply chains as we can see in the example above can still involve numerous parties in just one area. Never mind a whole country or the entire world.
Software Economy is Bigger Than You Think
In the software world, a similar observation was made called the Patio11 Law. Patio11’s Law states the software economy is bigger than you think, even when you take into account Patio11’s Law.
Patio11 (Patrick Mckenzie) gave an example in a podcast. About people making decent cash making software for kitchen countertop installers. Kitchen remodelling can cost a lot of money if you a going for a high end remodel. There is a large field of local companies doing these. And they have serious questions they want answers to. Like how much marble do I buy from the store? Because if you don’t buy enough you will work out halfway through that you have an incomplete kitchen. Also if you buy too much then work out that you spend too much money on the material. Having software can give you the answers to the question. This allows the software maker to create a boatload of money. With a field, you never heard about.
He also mentions there is software for cemetery management. Software that can help lay out cemeteries and other functions. While this is morbid. It does help illustrate the point software and people creating companies is everywhere you see.
In this blog post. The person gave more examples.
Austen Allred shared how, when matching Lambda graduates to jobs, he’ll discover software companies he’s never heard of in Oklahoma pocketing $10m/year in profit. Doing things like “making actuarial software for funeral homes.”
My favorite example is ConvertKit. None of my friends have heard of ConvertKit. They ended 2019 with $20 million in ARR. Revenue is growing 30% year-over-year. They have 48 employees.
To be fair Nathan Barry is pretty well known in the bootstrapper scene. But compared to the YC companies it is a drop in the bucket.
In the article he also mentioned that:
Of the 3,000+ software companies acquired over the last three years, only 7% got TechCrunch, Recode, HN, or other mainstream tech coverage.
So they are thousands of software companies hanging in the background, making a load of cash. Also, I think that these companies are not invisible. There are invisible to us. That funeral home software I’m sure has some presence in the industry. By word of mouth or marketing via B2B means.
Think of AWS if you’re a developer or if you’re somewhat aware of tech. You probably know that AWS is one of the most important companies around. But if you ask your grandfather about it. He will give you an odd look.
It’s the reason why we call many of these areas niches. Only a select few people care about the subject. But that is more than enough to make a lot of money.
The internet has allowed us to connect to billions of people are around the world with no geographic limit. So this allows us to fulfil niches that we could not have before due to geography. There are millions of niches one could get involved in. Some niches are more valuable than others. The media only writes articles about a select few of those niches.
See: Ben Thompson never-ending-niches
So it would make sense that you could create millions of dollars and nobody has heard about you. Because there is so much to do with billions of people on the planet. Billions of people in the world mean billions of people to serve.
This does not mean they are not roadblocks for opportunity. Racism, sexism, corruption etc. But the pie is getting bigger and we can be part of it.
Massive Supply Chains Around the World
Right now, semiconductors are in the news because we have a shortage of them. And many companies can’t create new products. Car companies can’t make new cars. Tech companies can’t make new laptops and phones. Sony can’t make new PlayStations.
The semiconductor industry has hundreds of players. Some very big, some very small. You have some companies that only make the blueprints. You have some companies that only make the chips. You have companies that only make the software for the chip. Then you have companies that add the chip they add to their device. And there is way more I’m missing.
When making a chip, they are companies that make equipment for those chip manufacturers. The most famous and important example is the Dutch company ASM. That makes million-dollar machines to cut chips using lasers. (I'm not kidding). This Dutch company is the only company in the world that can do lithography to such a high level.
Check out this video by TechAltar explaining the semiconductor industry.
Some of the famous covid vaccines take at least 200 components to manufacture. You can bet that there are companies where their only job is to make some of those materials.
Bits of the internet that was forever free are now becoming monetised. Patron and Onlyfans are the latest examples. But twitter announced upcoming monetization features for creators. Spotify and Apple are looking to have exclusive podcast episodes. So many people can serve their niches while getting paid. Most of these creators will not know about it. But enough people will be enough to sustain them. Think of Kevin Kelly 1,000 true fans.
Blockchain and decentralised finance promise to do even more. But has yet to hit mainstream adoption outside of speculation.
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