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Machine learning is a zero-sum game

ML Is Unlike Industrialization, Electricity and IT

Only the companies that invest into machine learning today will exist 10 years from now. The ones that look to the sidelines will be eaten by their competition. 

The machine learning (ML) revolution is unlike any of previous revolutions; the industrial revolution, electricity or the IT revolution.

The epoch we call the industrialization, evolved around moving away from manual production methods to mechanical automation. The second industrial revolution took place some hundred years later when we started to get more reliable energy sources through electricity from dams. The third large revolution was through automation in the form of the IT boom from the 1990s all the way to today.

During these three previous revolutions, companies that didn’t adapt to industrialization, electricity or IT eventually died out. But the ones that did, didn't get an infinite competitive advantage. The revolutionary steps were huge, but they didn’t result in permanent competitive advantages. Everyone benefited and everyone could start from scratch and fairly quickly catch up. You could e.g. today start a shoe manufacturer and the old players wouldn't have a competitive advantage because of having used electricity for a hundred years.

Early movers in ML get an unfair advantage

Machine learning is different from previous revolutions, because it relies so heavily on historic data you've collected.

The ones with the most data will be able to create an unfair competitive advantage! Imagine for instance a manufacturing company that can source their raw material 5% better, reduce loss by 2%, increase energy efficiency by 10%, cut down human errors by 7% and so on. The slimmer the margins of the business, the larger the possibilities of ML in that business. And the more they can optimize due to historic data, the harder it is for an underdog to catch up. 

And the companies that start collecting data earlier and using it to drive further improvement in their ML models will get a permanent unfair advantage. It’s impossible to compete with less data and it’s impossible to catch up or start from scratch. Data isn’t the new gold, data is your  kryptonite – it will make it impossible for your competitors to get near to you.

This is especially true in B2B where customer data depends on agreements with other businesses. And already a small competitive advantage will help you win customers that helps you grow your data and further improve your ML models.

Enterprises have an edge, but only if they wake up

The enterprise giants of the world have an early mover’s advantage, in the way that they already have the most data about their customers. When the first giant in a business vertical wakes up to the possibilities of ML, the rest of the giants will be eaten quickly and much faster than e.g. in the past 20 years through IT. And the enterprises left sleeping won’t get a second chance.

It’s time to wake up. Most of your and my work will eventually be displaced and there is a possibility that governments will regulate data for this reason, but governments are slow and the ones that move now will at least have a 20+ year advantage over the rest. It is a zero sum game: Do you want to be a zero or a one?

This article was inspired by a discussion on the Andreessen Horowitz podcast. For the original source and the entire discussion listen to it at Apple Podcasts.

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Fredrik Rönnlund
Fredrik Rönnlund
Software Engineer turned marketing lizard turned product dadbod turned ML nerd. In charge of growth at Valohai, i.e. the co-operation between products, marketing and sales.

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