Author: a16z New Media

Translation: Shen Chao TechFlow

Shen Chao Guide: The latest issue of a16z's chart weekly report has dismantled a core argument with a wealth of data: the dominance of the tech industry over the global economy is still accelerating. The combined market value of the top ten global companies has surpassed the GDP of the G7 (excluding the United States), and AI may reshape organizational forms once again, just as railroads gave birth to the modern corporate system. Additionally, stablecoins are shifting from mere transfer tools to real payment scenarios, and trust in traditional media among young Americans has fallen to historic lows.

Software Has Eaten the World

We certainly have a biased stance, but the importance of technology to the global economy really cannot be overstated.

You could even say that software has truly eaten the world:

Caption: Top ten companies by market value globally vs GDP of G7 (excluding the United States)

The combined market value of the top ten publicly listed companies is larger than the total GDP of all G7 countries (excluding the United States). Even if Saudi Aramco, which no one would classify as a "tech company," is excluded, the conclusion remains the same. (Although Saudi Aramco was indeed founded in San Francisco!)

To be fair, the top ten are more like "tech + semiconductor (plus the hard-to-classify Tesla and Apple)," rather than purely software companies. But the conclusion is unchanged: tech is not just a big business, it is the biggest business.

Furthermore, the takeover of the globe by technology is happening quickly:

Caption: Market value of top ten tech companies vs GDP of G7 (excluding the United States), time series

The market value of the top ten tech companies was once just a fraction of the GDP of G7 (excluding the United States) until cloud computing truly gained momentum in 2016-2017. Since then, in less than a decade, the combined market value of these companies has surpassed the GDP of the entire world excluding China.

The rise of tech is not just about a new set of winners emerging.

The largest companies today are much bigger than they were ten years ago:

Caption: Changes in market value and market share of the top ten companies in the S&P 500

The combined market value of the ten largest companies in the S&P 500 is approximately six times that of 2015, and their share of the total market value of the index has doubled.

There has indeed been a "blood change." The composition of the top ten has changed dramatically compared to the previous decades. By 2025, only three companies will continue from the previous decade, and only one (Microsoft, a tech company) has survived from the decade before that.

If you were an investor in 2015 and tried to model tech stocks based on the largest companies in the index at that time, you would have underestimated the upside potential by about six times. Technology has fundamentally "broken the model," redefining how big a company can become.

And this ceiling seems to be rising further.

In fact, technology's core position in the global growth narrative has recently been strengthened. Last week we showed that the earnings growth expectations for the tech sector are about twice that of the rest of the market. Looking back further, you’ll find that technology has contributed a historically large proportion to the overall market's earnings growth:

Caption: Contribution of each industry to overall market earnings growth

Since 2023, technology has contributed to over 60% of the entire market's earnings growth.

Aside from the brief glory of the energy sector at the beginning of the 21st century, no other industry has played such a core role in earnings growth, and for such a long time.

Today, it can be said that technology is not just a cycle; it is the cycle itself.

Railroad GPT

We just said technology is an unprecedented big deal, but that's not entirely accurate.

In the industrial age, no industry was more dominant than the railroads:

Caption: The share of the railroad industry in the total market value of the U.S. (historical peak approximately 63%)

At its peak, railroads accounted for about 63% of the total market value in the United States, which Bank of America called "the most dominant innovative industry in history."

Bears love to use this railroad image to tell a story: Look, the railroads once accounted for 63% of the market, then the bubble burst, and now it's almost negligible.

But it's not that simple. Railroads are still important; what really happened is that railroads gave birth to an entirely new, previously unimaginable economic system, and this economic system is much larger than the railroads themselves.

Caption: Changes in industry market value distribution in the U.S. stock market (19th century to present)

Railroads yielded their dominance to industry, which then yielded to technology (with finance and real estate briefly rising to prominence before the global financial crisis).

Although technology is significant today, in relative terms, it is not nearly as large as the transportation industry (or real estate and finance) was at its peak in the 19th century.

The economy has become larger and more complex. Today approximately 70% of the industries in the market were either very small or nonexistent in 1900.

Caption: Composition of industries in the U.S. stock market in 1900 vs today

The U.S. economy in 1900 was essentially textiles, steel, coal, tobacco, plus the railroads that transported them and the banks that financed them. Today, those industries together account for only a small proportion.

So the more interesting question is not whether a certain platform is transitioning or is a bubble, but what new economy this technological leap will unlock.

Railroads were an incredible universal technology. One dramatic (but unexpected) change they brought about was the birth of the modern corporate system. Before railroads, a company was usually small enough to fit in one person's mind. But railroads involved too many trains, too many stations, and too many simultaneous decisions.

In 1855, the directors of the New York and Erie Railroad Company drew what is considered the first modern organizational chart: a hierarchical reporting tree designed to solve the increasingly complicated scheduling problems of the railroads. In many ways, middle management, multi-business structures, professional managers, and MBA degrees, all originated from the organizational challenges created by railroads.

Railroads changed not just what America produced, but the very nature of "enterprise." The emergence of middle management in railroads is what Alfred Chandler referred to as the "visible hand."

The interesting thing about AI is that, compared to railroads, AI might once again rewrite the mainstream organizational templates established over a century ago by railroads.

Last month, Jack Dorsey and the management team of Block published an article, which echoed this sentiment: the value of AI in enterprises is not providing everyone with a copilot, but replacing the functions of middle management. Absorbing and routing information, maintaining alignment, and pre-calculating decisions—tasks typically managed by management—can be handled by technology in an AI company, allowing people to go back to the edges and focus judgment on customer touchpoints and interpersonal interactions.

According to him, a management model that has existed for 170 years will be entrusted to technology, creating entirely new organizational forms. This sounds significant.

Whether Dorsey is right (and what kind of new companies will emerge) is, of course, an open question. But these implications are far more important than "whether tech stocks will correct from their highs this quarter."

Stablecoin Transaction Volume Shifts from Transfers to Payments

After stripping away the mechanical operations related to transactions, funds management, and exchanges—which accounted for a large part of stablecoin transactions—real payment transactions between different parties last year were estimated to be between $350 billion and $550 billion.

Caption: Breakdown of stablecoin payments by type (B2B, B2C, C2B)

B2B transactions make up the majority of stablecoin payments (which is not surprising considering the scale), but B2C and C2B are also growing.

In short, stablecoins are increasingly involved in day-to-day business activities. This is part of a larger trend that a16z crypto discusses in this article.

The Next Decade in Journalism

Trust among Americans in mainstream media has recently hit a new low, marking one of the most spectacular slow-motion collapses in modern polling history.

Caption: Changes in Americans' trust in mainstream media (1975-2025)

By 2025, only 28% of Americans report having "a lot" or "quite a bit" of trust in mainstream media (newspapers, television, radio). This number was 72% in 1975.

But overall trust does not tell the whole story.

The real story lies in the generational divide, and the rift is enormous:

Caption: Comparison of trust levels in traditional media vs social media across different age groups

The younger you are, the less you trust traditional media, and the more you trust social media. The reverse is also true—older people trust traditional media more and social media less.

Besides the trust gap, there's also a consumption gap:

Caption: Proportion of different age groups getting news from social media

Among adults under 30, 76% get news from social media at least occasionally. Only 28% of those aged 65 and older do so (even slightly lower than it was five years ago).

Trust in mainstream media has indeed fallen from its peak, but a significant part of this story is the shift in media habits among the younger generation. Compared to their elders, young people have much lower trust in mainstream media and are heavy users of social media alternatives.

Returning to the initial observation: the peak of 72% trust in media in 1975 is often reminisced as the golden age of journalism. But the same fact is that in the early 1970s, only a few television networks and newspapers monopolized information supply, with almost no competition.

It begs the question: how much of that "peak" trust came from excellent journalism, and how much from the lack of choice? The two are certainly not mutually exclusive—there may have been good news in the late 60s and early 70s, as well as a captive audience. But it’s hard not to notice that the generation with the lowest trust in mainstream media grew up in an environment with the most choices.

This is precisely the argument made by Martin Gurri in "The Revolt of the Public": the collapse of information monopolies in various fields (media, government, professional authorities) has exposed authority that was never genuinely earned. The public has seen behind the curtain, and trust has declined accordingly.

Gurri also says that while the public is good at tearing down the old, they are not good at building the new. He might have a point. But at least the barriers to entry for building new media alternatives have never been lower than they are now. Whether they can rebuild trust in journalism will be the core story of the next decade.

Goodbye, Productivity Boost

Zyn (nicotine pouch) sales have entered unknown territory: year-over-year growth has turned negative for the first time.

Caption: Year-over-year growth rate of Zyn sales (4-week rolling), has turned negative for the first time

Based on a 4-week rolling basis, Zyn's year-over-year growth rate has become negative for the first time in history, although the decline is slight.

In reality, Zyn is still growing in terms of sales volume. However, due to recent extensive promotional activities, total sales revenue has slightly declined.

The productivity boost remains intact (laughs).

Another interesting detail: Zyn's market share in the nicotine pouch market is no longer over half:

Caption: Changes in Zyn's market share in the nicotine pouch market

Zyn's market share fell below 50% by the end of last year.

[^1]: Yes, we know that stock market values and GDP are comparisons of stocks and flows. But the chart still looks good.