“It’s a sunk cost. If your investment doesn’t pan out, you don’t have physical assets like machinery that you can sell off to recoup some of your money”

That also means it’s cheaper to develop. Software is so popular since it’s only requires a developer and a PC. The return/investment is a lot higher and faster than traditional hardware development. Cheap and fast is what everyone wants.

Of course investors are now realizing, in the case of self driving cars (or cars themselves with Tesla), that hardware still plays a role, and it’s not cheap and fast with instant riches.

20 years ago, biotech was supposed to be the hot thing after the internet. Instead it has been software services, focusing on service labor. Biotech is not cheap and fast enough.