The Everything Apps?

Over the last few years, you have probably heard that Silicon Valley’s venture capitalists are looking for “The Everything App”. The idea, in theory, is that a single app will contain, well, everything. Actually, it’s not everything - but it’s an extremely wide variety of services and products in a single app. 

Sequoia Capital had been on the lookout for The Everything App when they invested in FTX, and the less said about that, the better. Elon Musk wants to turn X into The Everything App, and the less said about the better as well.

Now I do have some qualms about venture capitalists pursuit of The Everything App, which I’ll come to. But as a broad idea, I’m very supportive. For enterprising business owners, scaling, growing, entering new markets and expanding through vertical and horizontal integration is economically rational. There are examples of super apps (which I’ll treat as a synonym for everything apps) worldwide. The two most well known examples hail from China: Alipay is a payment, financial and ecommerce app, but it has a number of mini apps within the core app and actively courts third parties to build within its ecosystem. Don’t let the word “mini” fool you. Mini apps within Alipay include Didi, the ride hailing app, which is a company with over USD $20 billion in revenue and Meituan, a shopping and commerce app, which has over USD $25 billion in revenue. Alipay is, in effect, a digital shopping mall, where it both owns stores, and rent stores out.

The other Chinese super app is WeChat, which is a social media, video sharing, payments and instant messaging app.

Other super apps include Grab, headquartered in Singapore, which provides ride hailing, payments and food delivery; and Indonesia’s gojek which covers payments, ride hailing, food delivery and commerce. 

With ecosystem lock in, the opportunity for cross-selling and upselling to users, and providing a greater number of services, super apps are appealing to business owners and shareholders. They’re also terrifically convenient for consumers too. It’s not a novel concept however.

Google has a variety of apps and services, which include consumer services email (Gmail), video (YouTube), storage (Drive), translation (Translate), search; enterprise services like cloud and AI (GCP), productivity tooling (Docs Editors); advertising (AdMob, AdSense, DoubleClick); consumer hardware such as the Google Pixel phone and Nest products, and in addition, Google Pay is a key player in the payments industry. Meta has a suite of messaging apps which are pretty dominant in the Western world. So the concept behind The Everything App is not new. Except, consumer preferences in the West point to having a suite of apps, rather than a single app.

But it is a feat of significant software engineering to deliver The Everything App, and companies like Alipay, Tencent (WeChat), Grab and GoTo (gojek) have managed to achieve this feat.

Amazon is 30 years old now. It was only 19 years old when Brad Stone released his book The Everything Store: Jeff Bezos and the Age of Amazon. By all accounts, Jeff Bezos always had the vision that Amazon would sell everything. And whilst it doesn’t sell everything, it sells a lot. It covers nearly every part of retail through amazon.com, it covers food and beverage through Amazon Fresh, it covers cloud (where they have the largest market share) and AI through the insanely profitable AWS, it covers media and entertainment through Prime Video and it’s got a significant online advertising component too. Then there are the subsidiaries: Kuiper Systems (a satellite provider), IMDd, Goodreads, Ring, Audible, Twitch, Whole Goods Market and Zoox, for self driving cars. Then there are services it uses to run operations, such as Amazon Air, Amazon Flex and Amazon Logistics. Amazon is huge. It’s a modern-day technology conglomerate. In fact, you could compare it to Samsung and Hyundai which we generally think of when we’re talking about conglomerates. We have to mention another big US conglomerate, which has been built through acquisitions, and that’s Warren Buffett’s Berkshire Hathaway. Berkshire owns or partially owns businesses in as diverse industries as financial services (insurance, payments, banking), utilities and energy, manufacturing, clothing, flight services, retail, media, real estate, consumer technology and fast-moving consumer goods.

Of course, building and growing these different conglomerates were done very differently, and the management of them is done very differently. Conglomerates are often undervalued by the market, but if you are a buy and hold, long term investor, that shouldn’t worry you. On the contrary, that’s a good thing. As much as I’m a fan of conglomerates, I’m not blind to the fact that they can display the worst of big company behaviour: inefficiency, bloated, slow moving, poor incentives, bad organisational design and lacking in focus.

You’ll notice that as we moved away from The Everything Apps, towards industrial conglomerates the composition of services and products provided changes. 

This brings me onto the biggest two qualms I have with the Silicon Valley Everything App. Firstly, no conglomerate started as a conglomerate, they started in a niche, and then expanded. Amazon started selling books. Berkshire started as a textile mill. Samsung started by selling noodles, fish and groceries. You can’t start with a super app, you’ve got to grow to it. Interestingly, this has always been the Silicon Valley startup advice - find a niche market and exploit it (Facebook found college students as a niche, PayPal found eBay users as a niche). Any product, at conception that aims to be The Everything App will almost certainly fail.

But secondly, Silicon Valley Everything Apps lack ambition. Let’s take Sequoia Capital’s write up of FTX.

That’s not an Everything App - it’s simply a payments app. The Everything App, is more often than not, marketing hype. And marketing hype is an avoid at all costs scenario for the clever investor. The Everything Apps touted by Silicon Valley don’t get close to being everything, none of them have an industrial component. Silicon Valley Everything Apps lack ambition, and conglomerates already have bigger ambitions.