Expertise in scaling up is the visible secret of Silicon Valley

The visible secret of Silicon Valley

Silicon Valley and the surrounding Bay Area has become a global leader in innovation, technology and new industry creation. This small region, with only 7m residents, boasts more than 150 technology companies valued at more than $1bn.

Most observers instinctively conclude that Silicon Valley is great because it has a unique ability to create start-ups. Most observers are wrong. Many parts of the world now have the necessary ingredients to create start-ups. There are brilliant technical graduates everywhere. Venture capital has gone global.

This even applies to more subtle elements once unique to Silicon Valley, such as broad first-hand knowledge of the start-up process and a cultural acceptance of failure as a necessary byproduct of risk-taking. Through the internet, this essential start-up knowledge is available anywhere. Meanwhile, belief in entrepreneurship is spreading, creating receptive cultures in many regions (from “Silicon Alley” to “Silicon Glen”).

Why does Silicon Valley continue to produce a disproportionate share of industry-transforming companies like Google, Facebook and LinkedIn? Or the next generation of companies like Airbnb, Dropbox, and Uber? The answer, which has been hiding in plain sight, is Silicon Valley’s ability to support scale-ups.

When you examine the history of the best Silicon Valley companies, they quickly increase the number of their customers, revenue and raise organisational scale to fit a global market. Most of the impact and value creation in Silicon Valley actually occurs after the start-up phase ends and the scale-up phase begins.

Building great, world-changing companies requires more than just building a cool app and raising money. Entrepreneurs need to build massive organisations, user bases and businesses, at a dizzyingly rapid pace. That’s how Mark Zuckerberg built Facebook from dorm-room to the world’s most popular internet service in just six years.

So what makes Silicon Valley so good at scale-ups? The obvious answers are talent and capital. Both offer a scale-up positive feedback loops. The competitor that gets to scale first nearly always wins. First-scaler advantage beats first-mover advantage. Once a scale-up occupies the high ground in its ecosystem, the networks around it recognise its leadership, and talent and capital flood in.

Top professionals understand that they can have the greatest impact working for the market leader. Meanwhile, joining a scale-up that is clearly a “rocket ship” offers many of the financial rewards of working for a start-up, with more certainty and less risk. By attracting the best, scale-ups increase their ability to build and bring to market great products, which in turn increases their ability to scale.

A parallel calculus applies to investors. Achieving scale makes it easier for venture capitalists to decide to invest. And because networks disseminate this information quickly and broadly, a rapidly expanding scale-up can raise massive capital. This can fuel explosive, self-reinforcing growth.

Yet talent and capital are necessary but not sufficient. The key success factor is actually a comprehensive and adaptable approach to scale. A scale-up grows so fast that conventional management approaches are doomed to fail. For example, the conventional wisdom is to hire senior management with relevant experience. But if you’re Uber or Airbnb, you can’t simply put up a listing that states: “This job requires at least five years of management experience running a sharing economy service.” The only candidates that can meet that requirement already work there.

With each order of magnitude of scale, you must rethink and rebuild your organisation and processes. Sometimes through existing team members; sometimes by recruiting outside talent, such as when Mr Zuckerberg hired Sheryl Sandberg. Sometimes this means building new products internally, like Google with Gmail, and other times it means acquiring breakthrough technology like Android.

Change, not stability, is the default state at every stage and in every facet of the company. Continually reinventing yourself, your product and your organisation won’t be easy, but it will allow you to use rapid scaling as a strategic weapon to attain and retain market leadership. This is the visible secret of Silicon Valley.

This post originally appeared on Financial Times.

Acquiring proven entrepreneurs is a smart way to innovate

Proven Entrepreneurs

Nearly every company understands the urgent need for innovation. Technology and globalisation have so accelerated change that scale and power — once the greatest strengths — have become weaknesses because they impair an organisation’s ability to adapt. The problem is, the term “innovation” is used so broadly that it has become virtually meaningless.

Consider the typical initiatives that companies pursue: some create labs to innovate, yet most labs fail to help companies adapt to the future. Others try methodologies such as the “lean start-up”, but find it difficult to act on potential breakthrough ideas. What these failures have in common is that they do not focus on the right talent.

To innovate successfully requires entrepreneurial talent, which is not simply being creative, smart and flexible. What sets entrepreneurs apart is that they envision a future that defies conventional wisdom, then assemble (and reassemble) the plans and resources needed to make it a reality.

You cannot teach this by sending your people to a two-day workshop; these skills come from months and years of hard-won experience. It is also incredibly difficult to hire this kind of talent; no entrepreneur worth his or her salt is looking for a traditional job.

In Silicon Valley, we have overcome these issues by using acquisitions to bring in innovative, entrepreneurial talent. I am not necessarily talking about “acquihires”, in which technology companies acquire start-ups as a recruiting strategy. Rather, you are trying to acquire leaders who have proven their ability to build a new business. Unlike most other skills, there is no academic degree or job title that can accurately predict this.

Even when you have identified one or more great entrepreneurs you want to acquire, you need to adopt a different approach to M&A. It is not simply a matter of buying the “right” company at a good price. The real challenge is finding talented entrepreneurs who are aligned with your mission and can function within a larger organisation. You have to make sure that the body does not reject the transplant.

At LinkedIn, we used acquisitions to fuel innovation when we acquired Pulse and Newsle. Both had built killer products. But we also wanted to transplant their entrepreneurs (and the future innovations they would create) into LinkedIn — Ankit Gupta and Akshay Kothari at Pulse, and Axel Hansen and Jonah Varon at Newsle.

Similarly, our business lines — talent, marketing and sales solutions — are run by acquired product leadership (Eduardo Vivas from, Russell Glass from Bizo and Sachin Rekhi from Connected).

To retain acquired entrepreneurs, you must build strong alliances with them based on closely aligned values and missions. In my book, The Alliance, my co-authors and I wrote about the importance of building open, honest and mutually beneficial relationships with employees. Each key employee should be on a “tour of duty”, which includes a clear objective (with agreed success criteria) that would help transform the company and the employees’ career. The same principles apply to any entrepreneurs you acquire, though their “signing bonuses” may include a few extra zeros.

When LinkedIn acquires a company, we work with the entrepreneur(s) to define a tour of duty that advances their career. Given the financial rewards they have already received, these tours focus less on compensation and more on learning opportunities.

For example, Ankit, Akshay, Axel and Jonah all came to LinkedIn with relatively little work experience; Ankit and Akshay had just finished their graduate degrees at Stanford, while Axel and Jonah were Harvard dropouts. Eduardo had jumped right into the start-up world after high school, and sold another company before building, but had never worked at a business of our scale. Working at LinkedIn gives these entrepreneurs the opportunity to manage a far larger team, with a far greater user base — experiences that will help them advance to executive roles or to start new businesses, whether inside or outside LinkedIn (preferably inside).

Executed properly, bringing in entrepreneurial talent via acquisition can be a major win-win. Your business gets a much needed infusion of innovation, while the entrepreneurs you ally with benefit both economically and by gaining valuable experiences that advance their careers.

This post originally appeared on Financial Times.

The Information Age to the Networked Age: Are You Network Literate?

It’s said that when architects walk through an office, they see ceiling ornamentation, light sources, building acoustics. When psychologists walk through an office, they see unresolved father issues and avoidant personality disorders. When I walk through an office, I see networks. I know that makes me sound like the kid from The Sixth Sense. But I don’t see dead people. I see networks.

When you truly see networks, it changes the way you plan and strategize. You move differently.

Take job hunting. The Networked Age has radically changed this activity, and yet when you ask people how they look for a job, a surprising number continue to say they “search the job listings.” That’s the Information Age approach! In the Networked Age, you should look for people with connections to companies you’re interested in, trace the best path from those connections to people who can share useful intelligence, and then ask for introductions to those people.

Or consider investing. In my work at Greylock Partners, I don’t form an investment theory and then go search for a startup that fits this theory. Nor do I purchase ad space in the Yellow Pages and hope that talented entrepreneurs let their fingers do the walking until they find me. Again, those are Information Age approaches.

The Networked Age approach? I focus on being a great ally to my network, and developing strong relationships where the information flow is highly reciprocal. I put myself at as many key intersections in my networks as I can. As a result, my network inevitably ends up connecting me with great entrepreneurs and great investments.

A decade ago, John Battelle stressed the importance of “search literacy.” What he meant was that people who were skilled at using Google to find information had an edge over those who had yet to acquire this aptitude. In the Information Age, if you couldn’t make sense of an increasingly information-rich world through effective search capabilities, you’d be culturally marginalized, just like a person who couldn’t read street signs.

Now, those who can conceptualize and understand networks – both online and off – have an edge in today’s fast-paced and hyper-competitive landscape, where the speed with which we can make informed decisions is critical. To wit, the subtitle of my forthcoming book is “Managing Talent in the Networked Age” — I think the networked age changes everything.

I like to use the word “literacy” in this context because it suggests a fundamental skill, a capability you must possess in order to effectively navigate the world. An illiterate person, a person who can’t read street signs or complete job applications, has limited opportunities compared to others who possess these skills. A literate person moves freely and capably through the world.

So how do you know when you’re network-literate? I think in terms of three levels that signify ascending competency:

Apprentice: Using network technology

Journeyman: Establishing a network identity

Master: Utilizing network intelligence 

Apprentice: Using network technology

At this most basic level of network literacy, you’re part of some networks. You have a Facebook profile, a LinkedIn profile, etc. You’re using these networks to keep in touch with people you know, and on occasion, you may even use them to facilitate new connections.

While you may not be completely fluent yet, you understand that Facebook is more than just a place to announce what you had for lunch – it’s a place to strengthen personal relationships. Similarly, you know that LinkedIn is more than just a repository for your digital resume. You use phrases and keywords with deliberate intention, to maximize your discoverability by the kinds of people you want to be found by.

In the case of my own LinkedIn profile, for example, my headline isn’t “Executive Chairman of LinkedIn.” It’s “Entrepreneur. Product Strategist. Investor.” That’s because my LinkedIn profile is targeted primarily to entrepreneurs who might want financing from me.

(You’d be surprised at how many people simply use their current job title as the headline of their LinkedIn profile. This isn’t wrong per se. But ultimately the headline on your LinkedIn headline is the first thing many people will see about you in a professional context – so it’s an excellent place to choicefully craft your network identity. And your network identity is larger – or at least it should be larger — than your current position and company affiliation.)

Another way to make yourself more findable by the kinds of people you want to be found by are to join the same LinkedIn groups that they’re participating in, or to follow relevant companies and individuals within the domain of your industry. Once you start thinking in terms of how the people you want to be found by might in fact find you – and tailoring your profile to maximize such potential discoveries – you have begun to think in a network-literate way.

Journeyman: Establishing a network identity

Once upon a time, we exercised unchecked authority over our identities, verbally air-brushing our resumes into highly idealized portraits of ourselves, carefully vetting the references we chose to vouch for us. In the Networked Age, however, we’re all visibly and enduringly enmeshed in networks – even the so-called “self-made man” is a highly annotated specimen, with readily apparent links to the colleagues, mentors, institutions, and other entities that have helped shape the contours of his identity.

Indeed, we’re all the sum of an ongoing conversation that we initiate and propel, but which colleagues, customers, and even competitors contribute to as well. And while we once relied upon the broad strokes of resumes to define us, now we’re often judged by far more granular, network-derived metrics of influence and authority: Who retweets our tweets? Who comments on our Medium posts? Who shows up on LinkedIn as a 1 degree connection?

In the Networked Age, your professional identity expands well beyond your job title and the company you work for. You’re not just “you” anymore. You’re also who you know,how they know you, what they know about you, who they know, and so on. At the Journeyman level, this way of thinking is becoming second nature to you. You understand that your identity is multivariate, distributed, and partially out of your control – your network helps shape your identity too.

Increasing your network literacy also means understanding other people’s network identities. Tell me the name of a person, and I’ll think of the network around them. I always see a person as part of a larger web of relationships. When I met Jeff Weiner, LinkedIn’s current CEO, I’d already had conversations with many of my own trusted colleagues about him. I had relationships with people that he had relationships with, and these strong points of network connectivity gave me a clear signal about Jeff and the kinds of people he trusted and valued most. I had a network portrait of him. And based on that portrait, I knew I wanted to build a strong relationship with him.

Master: Utilizing network intelligence

Spend five minutes watching your LinkedIn feed or Twitter timeline, and it’s clear that information proliferates even faster in the Networked Age than it did in the Information Age. Consequently, the ability to extract the right information at the right time is more crucial than ever. Search literacy is an important starting point, but in today’s high-velocity world, network literacy is increasingly crucial too.

In the Information Age, the New York Times, the Wall Street Journal, CNN, and eventually Google were typically people’s “first reads,” i.e., their default sources of new information and intelligence. Now, if you’re fully network-literate, your networks are your first reads – because you’ve consciously built up pipelines of people who reliably deliver information that is highly significant and relevant to you.

There is a whole “dark net” of critical-edge information that hasn’t made it into newspapers and blogs, information that exists only in people’s heads. In the past, such information was difficult to access for all but the best-connected and most persistent individuals. Now, it’s often just a few keystrokes away.

And if you’re fully network literate, you’ve taken the time to understand the information flows within any given network. You know who the news breakers are. You know the thought leaders, the critics, and skeptics within a particular domain. You’re familiar with their preferred sources and biases.

While platforms like LinkedIn, Facebook, and Twitter certainly qualify as information Costcos, one-stop shopping for data en masse, the quality of your connections – and the strength of the relationships you have with them — generally matters more than the quantity. Ten extremely informed individuals who are happy to share what they know with you when you engage them can tell you a lot more than a thousand people you only know in the most superficial way.

But remember, using networks well is always a two-way street. People who exhibit the highest levels of network literacy know that the more relevant, high-quality information you share with others, the more such information you’re likely to receive. To be truly network literate is to always be thinking of how you can add value to the networks you’re a part of, and to make it a priority to turn connections into relationships, and relationships into alliances.

What Do You See When You Enter a Room?

These days, it’s not just Internet entrepreneurs who should see networks everywhere they look. When architects walk into a room, they should see networks. When psychologists walk into a room, they should see networks. In the Networked Age, we’re all like the little kid from The Sixth Sense. If you’re not seeing networks when you enter a room, you might want to check your pulse.

Learn how to support the development of network literacy inside your own company in my forthcoming book (with Ben Casnocha and Chris Yeh) titled The Alliance: Managing Talent in the Networked Age.

Photo: Rawpixel & HunThomas / shutterstock

Remix: LinkedIn

The World’s Bank: How Crowdfunding is Disrupting Old Banking

4 Crowdfunding - Rocio Lara

By Julie Hanna and Reid Hoffman

In San Francisco, Teresa Goines is breaking down deeply entrenched cycles of poverty and crime, one bowl of peanut butter stew at a time. Old Skool Café, the 1940’s supper club she started, gives jobs to at-risk and former gang youth. When banks turned her down, 41 people she’d never met crowdfunded a $5000 loan, putting their faith and money in Teresa, a former corrections officer with no restaurant experience in a city where most new restaurants fail. Their bet paid off. She repaid her loan in full. Each year, 25 troubled young people, most who have tangled with the law, get their lives back on track. Today, Teresa has an even bigger dream of opening Old Skool Cafes across the nation and revitalizing communities everywhere.

As high-tech investors, both of us obviously value high-impact, fast-growth companies that attract massive global user bases. Such companies can scale quickly, create thousands of jobs, and help the U.S. improve its export economy at a time when its share of global economic output is falling. But we also recognize that most businesses are small businesses. Indeed, out of the roughly 27 million businesses in the U.S., 21 million of them have no employees – they’re sole proprietorships. And approximately 4.6 million of the 5.9 million businesses that do have employees have nine or fewer.

Thus, small businesses are a crucial component of the American economy. Yet when people like Teresa Goines try to create new businesses and jobs, banks shy away. According to Biz2Credit, an online devoted to small business funding, big banks currently reject more than 8 out of 10 loan applicants, and small banks reject 5 out of 10. Some estimates suggest that investment in small businesses has dropped as much as 44 percent since the Great Recession in 2008. That’s tens of billions of dollars that fueled the economy and helped our communities thrive – gone, completely eviscerated. Meanwhile, twenty-one million people are underemployed or unemployed. Globally, it’s far worse, with half the planet’s population living on less than $2 a day.

While talent is universal, opportunity is not – even in the land of opportunity. The greatest threat to our long-term prosperity goes far beyond the financial crisis and the health of a few banks on Wall Street that have been deemed “too big to fail.” The real threat we face is a global opportunity crisis. In both the developing and the developed world, billions of people don’t have access to jobs and capital.

That’s why we’re on the board at Kiva, the pioneering crowdfunding platform where citizen lenders invest small sums in micro-entrepreneurs all over the world. Nearly 1.3 million borrowers like Teresa Goines, living in 76 countries, including the U.S., have received more than half a billion dollars in loans. 99% of these loans have been repaid in full, flying in the face of traditional banking assumptions about credit and trust.

Kiva is no longer unique. Today, an exploding crowdfunding sector is making billions of dollars of capital accessible to upstarts and entrepreneurs. Over 700 crowdfunding marketplaces, led by the likes of IndieGogo, Kickstarter, and Lending Club, are democratizing access to capital, fueling entrepreneurship and innovation, and profoundly changing the face of philanthropy at unprecedented scale and impact.

Citizens Lenders Democratizing Access to Capital

One of the best ways to fuel widespread prosperity is by helping Main Street invest in itself. Crowdfunding relies on the wisdom of crowds to identify fund and unleash entrepreneurial innovation far more efficiently than the credit rules of banks can.

Call it the emergence of a “world’s bank” – a system built by and for the people, delivering credit in America and across the globe in a radically decentralized, highly scalable, and crucially equitable way.

The World Bank funds institutions. The world’s bank funds people. For decades, the World Bank has existed as a top-down mechanism to spur economic growth in developing nations. In contrast, the world’s bank picks up with a nimble, bottoms-up model that is far more attuned to on-the-ground needs of micro-entrepreneurs and their communities worldwide.

The motivations for citizen-lenders run the gamut from altruistic to creative to financial. Kickstarter and IndieGogo funders typically get some type of reward in return for their capital. Kiva lenders are paid back by micro-entrepreneurs, albeit with no interest. Services like Lending Club offer lenders a way to earn interest on personal loans.

In the same way that citizen journalists have shaken up Old Media, citizen lenders may upend Old Banking. Already, Lending Club has made $4 billion in personal loans in the U.S. alone. Kickstarter lenders have applied over $1 billion to more than 60,000 projects in just five years. More than 60 projects obtained at least $1 million in funding, and one attracted over $10 million. There are over 1 million Kiva lenders residing in 198 countries. Finally, a new change in federal regulations has opened the market for equity crowdfunding, further empowering innovative entrepreneurs via marketplaces like AngelList and CrowdFunder.

Still, it’s easy to underestimate the impact of crowdfunding, dismissing these purpose-driven marketplaces as a simplistic way for do-gooders to easily support pet causes, yet incapable of driving massive structural change that can improve prosperity for all, not just a select few. The opposite is true.

The Surprising Sophistication of Crowdfunding Platforms

Crowdfunding can easily go where traditional banks cannot. Take Erastus Kimani, a 73 year old schoolteacher turned entrepreneur, who lives in a remote part of Kenya without indoor plumbing, much less indoor banking. Erastus attracted lenders from all over the world. They crowdfunded $1700 which allowed him to triple the production of his ceramic stove liner business. Using just his mobile phone, Erastus applied for, received, and paid back his loans in full. He did it all without bank officers, ATMs, or even a computer.

More broadly, crowdfunding is a sophisticated and pragmatic expression of democratic values and ideals. It recognizes that person-to-person connections are the essential fuel that powers the Internet. Just as Old Media behemoths struggle to keep up with the growth of people-powered content, traditional financial institutions can’t scale like crowdfunding platforms can. Imagine what it would cost a traditional bank to hire enough loan officers to match the network intelligence that millions of citizen lenders provide.

As technology continues to virtualize money, brick ‘n mortar banks have become as superfluous as traditional bookstores. Ornate buildings designed to convey trust and dependability just make loans look more costly. Meanwhile, the world’s bank lending infrastructure is increasingly made up of people like Erastus Kimani and his mobile phone. His status as a dependable borrower qualified him to join a growing network of trustees and vouch for other micro-entrepreneur borrowers in his village of Maragua, Kenya.

2 Erastus

Networks of Trust

Remember George Bailey from It’s a Wonderful Life, the small-town banker who helped local entrepreneurs achieve self-sufficiency and resilience? Or the stories of Bank of America founder A.P. Giannini, who in the wake of San Francisco’s devastating 1906 earthquake and fire famously made loans to distraught home and business owners on the basis of a handshake?

Crowdfunding multiplies George Bailey and A.P. Giannini. It uses early 21st century technology to return us to early 20th century ideals of loyalty, reciprocity, and community. The result is highly efficient trust networks based on reputation. It replaces credit score-based lending by faceless institutions with a person to person character-based lending model. It creates connections and stories that intermediary institutions are hard-pressed to facilitate. 34 individuals put their faith in Erastus Kimani. Not surprisingly, he paid back both of his loans in full.

Wall Street is evermore focused on creating increasingly exotic, abstract, and toxic instruments of speculation with little to no societal benefit. Our financial institutions are becoming less and less tied to producing tangible goods and services. In contrast, crowdfunding re-humanizes our economy. It makes the act of lending more fulfilling for both lenders and borrowers, brings meaning to commerce, and creates tangible social and economic value at a mass scale.

Philanthropy Exponentialized

While many traditional attempts to address poverty often set up recipients for a vicious cycle of dependency, crowdfunding platforms tie opportunity to innovation, accountability, and self-reliance. They create an ecosystem where debt, applied to entrepreneurial ends rather than mere consumption, can create value for people rather than simply becoming a millstone around their necks.

In the case of Kiva, lenders invest again when their loans are repaid. Over time, $25 has the impact of $250. $100,000 has the impact of $1 million. $1 million has the impact of $10 million. It’s philanthropy exponentialized.

Google and a growing number of companies and results-driven philanthropists have begun creating multi-million-dollar evergreen loan funds that are tapping the power of this leverage. Imagine if the Small Business Association, the Fortune 500, the World Bank, and even Wall Street followed suit and began directly supporting those three billion overlooked micro-entrepreneurs like Erastus Kimani and Teresa Goines through the world’s bank movement. It would profoundly accelerate our quest to end the global opportunity crisis.

Every technology revolution has its early adopters and its laggards. The early adopters fueling the world’s bank and democratizing access to capital understand that the true path to prosperity lies in recognizing the critical role that micro-entrepreneurs and small businesses play in establishing healthy and resilient economies. They understand that crowdfunding starts with individuals but quickly scales. First, it changes a borrower’s life. Then, a family’s. Then, a community’s. Finally, it changes the fate of nations.


Julie Hanna is an entrepreneur, investor, and chairperson of Reid is a board member at

This post originally appeared on LinkedIn.

(Photo credits: Crowdfunding logo via Rocio Lara. Erastus photo via Kiva

The Entrepreneurial Opportunities in the Coming “Resource Revolution”

Over the next decade and a half, 2.5 billion people in China, India, and other developing countries will join the global middle class. They are going to need skyscrapers to live in and super-stores to shop in. They are going to want smartphones, cars, flank steaks, air conditioning, pet clothing, Disneyland vacations, and probably some throw pillows.

How is a planet already straining under the pressure of today’s 2 billion middle-class consumers going to accommodate 2.5 billion additional ones?

For many observers, this unprecedented economic growth foretells a Malthusian meltdown. In this scenario, skyrocketing demand for scarce natural resources will lead to unchecked carbon emissions, water wars, massive deforestation, $100 Big Macs for the rich and cricket-meat Bug Macs for everyone else.

McKinsey director Matt Rogers and Stanford professor Stefan Heck have a more optimistic take on the future. In their compelling new book, Resource Revolution, they show how a third Industrial Revolution, focused on radically optimizing land usage and natural resources, is starting to materialize.

In their vision, the combination of finite resources and exploding demand for raw materials and finished goods isn’t a recipe for disaster. Instead, they see it as “the biggest business opportunity in a century.” Dealing with resource scarcity will compel companies to adopt new technologies, new manufacturing processes, and new management practices — all of which will drive innovation faster and faster.

As the global middle class expands, there will massive opportunities for entrepreneurs to create more efficient industries and more productive business ecosystems. Technologies and industries will collide in new and unexpected ways, and these entrepreneurial mash-ups, inspired in part by scarcity, will potentially produce greater utility and prosperity for society at large.

Take, for example, the car industry. Its production processes have been refined over a century of increasing consumer adoption and global competition. Its elaborate ecosystem of dealerships, service stations, roads, highways, parking lots, and fast-food joints with drive-thru windows is so robust and pervasive that driving in America feels as natural as breathing.

And yet for all its culture-shaping success, the entrenched car industry is wildly inefficient – and not just in terms of the 14 miles per gallon a Chevy Camaro gets. Even the most fuel-efficient cars aren’t driving machines as much as they’re parking machines. The average car is on the road only 4 percent of the time. And in that hour or so each day it’s in motion, it does a horrible job of leveraging the energy it requires to operate.

According to physicist and environmentalist Amory Lovins, almost all the energy in a car’s gas tank is either lost to heat dissipation, tire wear, idling, and powering accessory systems like air conditioning, or used to move the massive weight of the car itself – less that 1 percent of that energy is actually used to move the vehicle’s operator. On a similar note, roads reach peak throughput only about 5 percent of the time.

In recent years, however, resource scarcity and the new approaches it inspires has brought innovation to the car industry from entities with expertise in electric batteries, consumer electronics, and information technologies rather than combustion engines.

Tesla and Toyota are building cars that use high-torque, low-waste electric motors. Zipcar, Uber, and similar services make car- and ride-sharing as convenient and reliable as car-owning – thus turning more and more cars into driving machines rather than parking machines. Driverless technologies, pioneered by Google and now pursued by virtually every major car manufacturer and various other institutions (such as universities), will be ready for public adoption as early as 2017. The driving efficiencies that such technologies enable will eventually give every 4-lane highway the throughput of a 32-lane highway.

Tomorrow’s cars won’t just use natural resources more efficiently than today’s do. They’ll also make automobility cheaper, accessible to a wider range of users, more convenient, and faster. Thanks to driverless technologies and the car-sharing services they’ll enable, blind people and old people will be able to transport themselves without assistance. Circling for parking will go the way of dial-up modems. And millions of suburban garages, no longer needed to store two or three lightly used late-model sedans, will be leasable through Airbnb and other sharing platforms as office space for millions of new start-ups!

Ultimately, using raw materials, water, and energy more efficiently – and thus boosting resource productivity – means using them more intelligently. And that’s where networks and platforms come into play. Over the last decade, through platforms like LinkedIn, Facebook, and Twitter, we’ve gotten very good at sharing information about people and organizations, and creating real-time and increasingly granular maps – or graphs – of relationships, networks, information flows, etc.

Where we need even more innovation is in the realm of the so-called Internet of Things – i.e., objects and products that are connected to the web and potentially to each other. Because it is through greater and greater degrees of network intelligence that we can achieve the efficiencies that can boost resource productivity. For example, Tesla knows more about how its customers use its products than most car manufacturers, because Tesla cars send information back to the company about when, where, and how they’re being used (if owners consent to this functionality). In turn, such knowledge can help the company determine what improvements it can make to optimize future usage.

At Greylock, my colleague Josh Elman led an investment in a company called SmartThings that is developing a “physical graph” of the world through a platform that makes it easy to connect various household products to the web. Increasingly, we’ll be able to leverage the collective intelligence that a million connected refrigerators or thermostats can generate to seriously reduce energy loads (in addition to making everything more convenient and fun to use). In this environment, the opportunities for entrepreneurs and entrepreneurial thinking are endless.

Which is not to say that boosting resource productivity to meet the demands of the world’s rapidly expanding middle class will be easy. As Matt and Stefan suggest in their book, it will take long-range thinking and the right inputs from governments as well. Nor will every company out there embrace this challenge. But companies that proactively look for ways to deploy resources more intelligently can certainly help mitigate the strains that will come as the world’s middle class more than doubles in size over the next fifteen years.

Indeed, if we really want to stave off peak oil, peak water, and other instances of potential resource depletion, then we need to keep pushing closer and closer toward peak network.