Entropy

I had a great conversation with a venture capitalist friend today about whether there’s a theme to my seed-stage investing.

At first I resisted the idea — I think if myself as a founder-centric investor who’s willing to follow the lead of talented teams with much deeper insights into the business problems they want to solve than I’ll ever have.

But as we talked about it, I realized that there is a theme — of sorts — that ties together much of what I’ve done as investor over the past few years.

As I’ve written many times before, I believe that technology is fundamentally changing the nature of work, both within and beyond the enterprise.

The net effect of that change — and the theme that reappears again and again in our portfolio — is Disaggregation (or Entropy, if you want to get fancy about it).

Within the enterprise, this manifests as the decentralization of technology choices: for business functions, the shift from from monolithic ERP + CRM systems to best-of-breed departmental SaaS; and in technical functions, from standardized tech stacks and on-prem datacenters to polyglot platforms, development environments and hybrid cloud infrastructures.

But the same forces of deconstruction are at work on the enterprise itself: less and less of the human work of the corporation is done by full-time employees; more and more is performed by dynamically assembled teams of employees, vendors and contractors who work virtually across geographies, disciplines and organizational boundaries.

As an investor, I like ideas that tap into the disruptions and cultural changes that this tendency toward disaggregation causes. Sometimes it’s helping enterprise managers deal with the new complexities caused by their increasingly distributed work and systems. Sometimes it’s helping the workers themselves as they navigate the shifting nature of employment and career as independent economic agents. (And sometimes — but not as often as I’d like to think — I’ll still follow the instincts of gifted makers in directions that have nothing to do with either of these).

Ironically, while the economy at large is trending toward disaggregation, the technology business itself is increasingly concentrated, with a small handful of global giants (Apple, Amazon, Google, etc.) calling the tune for many of the most significant vectors of tech-driven innovation and monetization. These firms are at the root of the deconstructive forces at play in the traditional economy, but are themselves highly centralized command-and-control organizations.

I’m still processing this dichotomy between technology-driven disaggregation in the global economy and increasing aggregation of economic power within global tech leaders, but I’m grateful for the opportunity to surf on the gap between them, and to do so in the company of people much smarter than I am — like the friend who kicked off this whole line of thinking in a casual conversation this morning.

Happy 2013 to all of you out there — it’s still day one in the technology business and I couldn’t be more excited to see what this year will bring.