Digital GDP.
In my 14 years of building digital companies it’s interesting to see how the value of digital resources out paces those of any other industry, dinosaur goo included (oil).
It’s a concept I coined called ‘digital GDP’. Digital resources are unique in that they are not constrained by geologic assets. Most countries consider geologic GDP as their true asset.
The interesting thing is that very few countries understand or embrace Digital GDP. In some ways Japan was an early convert given that as an island it had little or no natural assets to exploit.
India in the 1990s began to embrace the idea of software production andsoftware outsourcing, both parts of a Digital GDP strategy. Today, India’s economy is rapidly growing as a result.
China is trying to get into the Digital GDP business also with software outsourcing. It has a more difficult route based on language but nonetheless, China is making inroads into becoming a more Digital GDP exporter.
The US has long exported ‘cultural GDP’ (movies, music) and Silicon Valley has been a leader in truly digital export: eBay, Google and Yahoo among them.
To me, the Digital GDP began in earnest 30 years ago when Microsoft’s Bill Gates was one of the first to understand the value of software. One lone voice charging for software back in the 1970s when most software was hobbyist made and pirated (click to read Bill’s letter here).
Microsoft’s $25 billion in cash is more than most nation’s have in their treasury. Why? Digital GDP is the world’s only renewable asset.
For many countries natural resource GDP keeps them in the debt cycle. This is what has hampered Latin America and African nations in particular. Debt servicing with only geologic assets to back it up. And they are dependent on four seasons and something as basic as rain (water).
Digital assets, however, multiply in a digital environment based on a different set of ’seasons’. These seasons I would call: concept, launch, adoption, proliferation. In general, this cycle depends on biological assets (us) interfacing with the digital platform and not geologic ones (oil, water, earth).
The cycle for a company is contingent on adoption, not time, parallel growth, not linear. Like growing one apple tree 12 ways instead of one.
Countries that want to create long-term value for the next 10 or 100 years will need to focus on digital GDP and not geologic. Companies that can create valuable digital assets will far outpace those that introduce assets based on geologically-limited ones.
It’s why after 30 years Bill Gates retires the world’s wealthiest person, give or take a few hamburgers.
How many politicians and governments understand the Digital GDP notion? Their country’s future is at stake if they don’t, they will forever be constrained by the whims of commodities markets.
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