Peak Horse and the Importance of New Use Cases

I have a seen a few references to the transition between horse and car recently (Bill Gurley quoted Aaron Levie’s widely retweeted comments in his well argued piece on Uber recently, for example), comparing the idea of analyzing the car industry based on the number of horses in the US in the early 1900’s to McKinsey’s work on cellphones in 1980.

I’d argue that the important thing was not the switch in mode of transport, but in what new use cases it enabled.

First on the numbers- peak horse in the US was about 1915, with around 25M horses and mules. It took 15-20 years to get to that many cars in the US, and adjusting for population and income (roughly 3x and 4x respectively) it is actually a remarkably good indicator of how many vehicles there are in the US today. Spend will have shifted, but that would have been a good base for 20-50 year planning.

What was much more important is what new use cases were created, including, notably, commuting to work; people could live in nicer locations, further from work. US-style suburbs could never have existed without the car. So what moving from horse to car created was an incredible housing and related development boom, with extraordinary economic effects for at least two generations. That’s not necessarily all good (neither was the emergence of an effective oligopoly on car manufacture), but the effect was enormous.

What I look for in technology shifts is not what gets replaced or displaced on a one for one basis, but what new use case is developed. I think “personal transportation as a service” can be such a shift, but until we see clear new use cases, at massive scale, I am not sure we are (yet) seeing a revolution.