Summary of the Blinkist summary :
(my thoughts are in italic)
The focus of our economy is shifting from physical assets to intangible assets.
For centuries, the process of assessing value has involved measuring, counting and evaluating physical, tangible things. But economists are now catching up with an emerging reality. Intangible assets are growing in economic importance. (example, application of barcodes in supermarkets.) We’re experiencing an increasing disconnect as capitalism operates with less and less reliance on physical capital.
The characteristics of intangible investments
Intangibles assets are scalable, meaning they can be used time and time again, simultaneously in different places. The scalable nature of intangibles is particularly apparent in the tech industry. It also means that new entrants trying to break into markets dominated by the owners of scalable assets face a major challenge. In a market with high scalability, there’re few rewards for the runner-up. It could lead to a monopoly or industry concentration. For example, if Google’s algos mean that its search function is simply the best out there, and its infinitely scalable, then why should anyone use Yahoo or Bing?
Taleb talks about scalable and non-scalable information in The Black Swan.
Intangible investments are sunk costs. If a traditional manufacturing business goes bust, it can sell off some of its assets to pay off outstanding debts. Property evaluators can place an accurate market value on things like the factor buildings. And there’re established secondary markets for almost all used equipment. By contrast, there’re no established markets for brands or corporate processes. If Starbuck went bust, it could sell its coffee machines but it’d find it hard to evaluate and sell its brand. Unlike physical assets, intangible assets can’t simply be put up for sales as a stand-alone item.
Intangibles generate spillovers. Competitors can easily steal your intangible assets. Sometimes spillovers amount to the simple adoption or imitation of ideas. Competitors simply imitated Apple’s ideas – for example, its creation of a software supply chain, in the form of an app store. Spillovers matter because they required a strong regulatory framework to ensure they’re not abused. A key challenge for policymakers in an intangible economy is to find robust ways to protect intellectual property and to ensure that the fear of spillovers doesn’t discourage biz from investing in intangibles. The nature of spillovers also has implications for biz practices. To avoid being left behind, biz in an intangible economy need to quickly identify and exploit their competitor’s spillovers.
The regulatory framework reminds me of ShanZhai in Blockchain Chicken Farm.
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