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I think this parallels the situation in the startup economy. Founder-CEOs are the norm today, as opposed to the older baronial CEO types who walked, talked and

I think this parallels the situation in the startup economy. Founder-CEOs are the norm today, as opposed to the older baronial CEO types who walked, talked and looked like old school VC firm partners. It used to be that you needed a lot of capital to enter markets - you had to build a data center, hire people, build and sustain in the hope of a market. For that you needed money, and for old school VCs to feel comfortable, they wanted someone in their mold, and who they could trust. So founders became CTOs and VPs of Engineering, and picked someone the VCs could get behind to raise money. But with the cost of starting a company plummeting, founders no longer have to show this deference. And as some of these companies succeed, their founder CROs are now the new rock stars. And a new breed of VCs asks looks for performance metrics and worries less about fitting a theoretical mold. If there is a mold, it's the founder-CEO in their minds, not the old school baronial CEO. I think a similar dynamic operates in larger companies as well. The necessity of capital acted as an automatic restriction on competitors emerging. Companies could charge high prices, make higher profits and build private five-star hotels. With the cost of building a business dropping however, markets are more competitive than ever, and it's much harder to charge the prices required to sustain profit growth expectations. And investors of course will have no patience for the lavish perks. The times they are a changin'.

owebmaster 9y ago
> It used to be that you needed a lot of capital to enter markets - you had to build a data center, hire people, build and sustain in the hope of a market. I'd say that this is still the norm with some lucky exceptions in the Valley, but the Valley itself is a huge capital investment (public and private). If you look world-wide, nobody can compete with Facebook, Google or Apple, even with high investment in data centers, people, etc. Our economical system gives a lot of benefits to monopolies.
- rtpg 9y ago
  Perhaps more importantly nowadays with this gen of unicorns: Companies are willing to spend a looooot more on acquisition of users, beyond the actual value of the users. Mainly to try a monopolistic play. Uber is the typical example of "turn money into market share", though you can see a lot of SV companies nowadays spending a huge amount in this space.
Agathos 9y ago
That's the dream. But there isn't much evidence that new firms are being founded at a higher rate than the historic average, and there is some evidence that incumbent firms now enjoy increased structural advantages. https://www.washingtonpost.com/news/on-small-business/wp/2015/02/12/the-decline-of-american-entrepreneurship-in-five-charts/?utm_term=.567514952d7e https://www.washingtonpost.com/news/on-small-business/wp/201... https://fivethirtyeight.com/features/the-slow-death-of-american-entrepreneurship/ https://fivethirtyeight.com/features/the-slow-death-of-ameri... https://hbr.org/2017/06/is-america-encouraging-the-wrong-kind-of-entrepreneurship https://hbr.org/2017/06/is-america-encouraging-the-wrong-kin...
deleted 9y ago
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owebmaster 9y ago

> It used to be that you needed a lot of capital to enter markets - you had to build a data center, hire people, build and sustain in the hope of a market. I'd say that this is still the norm with some lucky exceptions in the Valley, but the Valley itself is a huge capital investment (public and private). If you look world-wide, nobody can compete with Facebook, Google or Apple, even with high investment in data centers, people, etc. Our economical system gives a lot of benefits to monopolies.

rtpg 9y ago
Perhaps more importantly nowadays with this gen of unicorns: Companies are willing to spend a looooot more on acquisition of users, beyond the actual value of the users. Mainly to try a monopolistic play. Uber is the typical example of "turn money into market share", though you can see a lot of SV companies nowadays spending a huge amount in this space.

Agathos 9y ago

That's the dream. But there isn't much evidence that new firms are being founded at a higher rate than the historic average, and there is some evidence that incumbent firms now enjoy increased structural advantages. https://www.washingtonpost.com/news/on-small-business/wp/2015/02/12/the-decline-of-american-entrepreneurship-in-five-charts/?utm_term=.567514952d7e https://www.washingtonpost.com/news/on-small-business/wp/201... https://fivethirtyeight.com/features/the-slow-death-of-american-entrepreneurship/ https://fivethirtyeight.com/features/the-slow-death-of-ameri... https://hbr.org/2017/06/is-america-encouraging-the-wrong-kind-of-entrepreneurship https://hbr.org/2017/06/is-america-encouraging-the-wrong-kin...

deleted 9y ago

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