Inside-Out vs. Outside-In: The Adoption of New Technologies

There are broadly two adoption paths for new computing technologies: inside-out and outside-in. Inside-out technologies are pioneered by established institutions and later proliferate outward to the mainstream. Apple (followed by Google and others) pioneered the modern touchscreen smartphone, university and corporate research labs pioneered machine learning, and big tech companies like Amazon pioneered cloud computing.

Outside-in technologies, by contrast, start out on the fringes and only later move inward to established institutions. Open-source software started out as a niche anti-copyright movement. The web was invented at a physics lab and then built out by hobbyists and entrepreneurs. Social media began as a movement of idealistic blogging enthusiasts.

Inside-out technologies tend to require significant capital and formally trained technical expertise. They also tend to be technologies that most people would recognize as valuable even before they exist. It wasn’t very hard to imagine that affordable, easy-to-use, internet-connected pocket supercomputers would be popular, or that machines that could learn to behave intelligently could do all sorts of useful tasks.

Outside-in technologies tend to require less capital and less formally trained technical skills, creating a much more level playing field between insiders and outsiders. In many cases the value of outside-in technologies is not only unclear before they’re invented, but remains unclear for many years after they’re invented.

Take the example of social media. Early on, blogs and services like Twitter were mostly used to discuss niche tech topics and share mundane personal events. This led many sophisticated observers to dismiss them as toys or passing fads. At its core, however, social media was about the creation of curated information networks. Today, this is easy to see — billions of people rely on services like Twitter and Facebook for their news — but back then you had to cut through the noise generated by the eccentricities of early adopters. Social media is a technology for creating global media networks that arrived disguised as a way to share what you had for lunch.

Both inside-out and outside-in technologies are important, and in fact they’re often mutually reinforcing. Mobile, social, and cloud powered the growth of computing over the last decade: mobile (inside-out) brought computers to billions of people, social (outside-in) drove usage and monetization, and cloud (inside-out) allowed back-end services to scale. Most likely the next major wave in computing will also be driven by a mutually reinforcing combination of technologies, some developed at established institutions and some developed by enthusiastic and possibly misunderstood outsiders.

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In the video below, Chris Dixon speaks with Buzzfeed founder and CEO Jonah Peretti about modes of innovation and how they will drive the future of the Internet.

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