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I remember reading a PaulG essay[1] that explains why the above scenario happens. Willingness to take big chances might not hurt a small company as it does to a
by anirudh24seven 11y ago
I remember reading a PaulG essay[1] that explains why the above scenario happens. Willingness to take big chances might not hurt a small company as it does to a big company. Big companies try to maintain their position in their market rather than take big chances again & lose their position[2].
That essay goes on to say that this creates a chance for startups to make their presence felt, because big companies don't want to take risks anymore.
[1] - I can't find the link right now. Will update this post, when I do
[2] - This is slightly related to Gambler's fallacy https://en.wikipedia.org/wiki/Gambler%27s_fallacy https://en.wikipedia.org/wiki/Gambler%27s_fallacy
- 314 11y agoIt doesn't matter if a risk does harm a small company - in the worst case it folds and everybody involved jumps into something else. The amount of disruption and economic damage is limited to the participants. If a large company goes broke the disruption and damage spread far beyond the pool of employees. Small companies need to try to win (and risk dying in the process). Large companies need to try not to lose (and risk stagnating instead). It's an interesting consequence of the effects of scale. Edit: I would relate it more to an Anthropic Principle than the gambler's fallacy. There is a lot of survivor bias in the stories that we hear about.