The Common Thread Among Breakout Companies

A recent analysis of successful companies revealed a shared characteristic: they bridge the gap between the online and physical worlds. The author observed this pattern in their own list of current "breakout companies" and confirmed it by examining top-ranked companies from the past three Y Combinator batches.

• The author's list of breakout companies all displayed this connection.
• Y Combinator's top-ranked companies over the past three batches also exhibited this trait.

Two Models for Bridging the Online and Physical Worlds

The article presents two primary models for connecting the online and physical realms, both of which facilitate real-world actions through digital platforms:

• Uber Model: This model involves using a website or app to trigger actions in the physical world, like requesting a ride or ordering food.
• Airbnb Model: This model utilizes an online service to facilitate real-world activities that are possible but inefficient without digital assistance, such as finding a place to stay or sharing a car.

The Power of Connecting the Online and Physical Worlds

The article emphasizes the advantage of companies that bridge the online and physical worlds by enabling users to perform real-life tasks more efficiently. This approach often leads to greater success than companies that solely exist in the online or physical realm.

• Examples like Uber and Airbnb demonstrate the effectiveness of this model.
• Even Facebook, while primarily an online platform, connects with the real world by allowing users to share real-world experiences and identities online.
• Companies that operate solely online or in the physical world tend to lag behind those that connect both realms.

The Rise of Online-to-Physical Businesses

The author posits that the increased adoption of smartphones and growing comfort with sharing real-world information online have accelerated the growth of companies that bridge these two worlds.

• Smartphones have provided ubiquitous access to online services, facilitating the connection between the online and physical world.
• A growing comfort level with sharing real-life experiences and information online has fostered the development of companies that operate in both realms.

Implications for Startups and Businesses

This trend suggests that startups and businesses should consider how they can connect the online and physical world. Companies that effectively bridge these two realms may have a significant advantage in today's tech landscape.

• The author acknowledges exceptions like enterprise software and developer tools, where this model may not be as applicable.
• However, the author asserts that for most businesses, particularly those with a consumer-facing element, considering the "online-to-physical" approach is beneficial.

Software "Eating the World" Through Physical Connection

The article concludes by referencing Marc Andreessen's statement that "software is eating the world." This trend highlights the need for software to operate in the real world to truly impact society. Companies that connect online platforms with physical activities are positioned to be at the forefront of this revolution.

• The connection between online and physical worlds is essential for software to truly make an impact.
• Companies that effectively bridge these two realms are well-positioned to capitalize on this trend.

Key Takeaways

The article argues that successful companies are increasingly bridging the online and physical worlds, creating new opportunities for businesses and users alike. The "online-to-physical" approach offers a powerful strategy for startups and established companies looking to thrive in today's technology-driven landscape.

• Companies that connect online platforms with physical activities are poised for success.
• The trend of "software eating the world" underscores the importance of bridging the online and physical realms.
• Startups and established companies should consider how they can leverage this approach to drive innovation and growth.