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Let's ignore the ridiculous 99% figure on which you rhetorically position your argument. - I don't know that innovation is the right term for the rapid value e

Let's ignore the ridiculous 99% figure on which you rhetorically position your argument. - I don't know that innovation is the right term for the rapid value extraction you're talking about. It's more like a powerful and well-configured economic environment for manufacturing-related value extraction. Many aspects of that environment are temporal and historically contingent. Things like labor costs, labor conditions, rule of law/regulations and international tolerance for norm-breaking are not constants. And some of those may have passed inflection points recently (ie- labor costs and tolerance). So, good competitive circumstances. "Innovation"... I don't know. -How profitable and sustainable are these value extraction operations, on average? I really don't know, but how reliable of a business plan is it? I'm not doubting people get rich off it, but it feels like slash and burn territory rather than a blueprint for building big, sustainable businesses. -Sure, there's a case to be made against IP. But this article and this thread are examining the outright fraud of trying to pass off counterfeits as a different company's product. That's categorically different and clearly problematic even in an IP-free world.

baybal2 9y ago
>I don't know that innovation is the right term for the rapid value extraction you're talking about. It's more like a powerful and well-configured economic environment for manufacturing-related value extraction. Yes, you are totally right in what you are saying. You do get the subtleties of the matter even better than me here. That environment/business-ecosystem is what China has managed to sustain for 30 years and what America never managed to create to begin with, unless you count times of Bennie Franklin. See this: if you give a hungry Chinese business owner a hen laying golden eggs, he will probably slaughter it upon first opportunity, but he will spend the proceeds from sale of than hen and its eggs to breed more of them and do it again. If you give such hen to a hungry American or Western European, he will probably run away, hide that hen, and will be brooding over it until he dies from hunger or the hen dies from old age. What seems to me to be the raison-detre for a lot of American business people is to find some easily securable cash cow captive market niche, and then deep a huge patent/legal/copyright moat around it to monopolize it. That is an example of very passive-rentieristic mindset. Chinese entrepreneur can slaughter his cash cow business and go on to next big thing, while American has no willpower to do so. >Many aspects of that environment are temporal and historically contingent. Things like labor costs, labor conditions, rule of law/regulations and international tolerance for norm-breaking are not constants. This is true too. Western companies that were setting up shops in China in nineties are long long gone. They were there not for simply cheap labour, but ridiculously cheap labour. Chinese industrialists have long closed businesses like rubber sandals factories and are continuously moving their industrial groups from one "next big thing" to another faster than anybody else on the planet. Nobody in SV are like those guys. Doing things this way takes special talent. >How profitable and sustainable are these value extraction operations, on average? I really don't know, but how reliable of a business plan is it? I'm not doubting people get rich off it, but it feels like slash and burn territory rather than a blueprint for building big, sustainable businesses. Yes, the slash and burn approach it is. You can build a substantial business group using it, but you will have to keep moving all the time. I see it as a valid business strategy with major strength of being strong against Western type competitors. You enter early, scale faster than others, by the time any foreign competitor simply realise the existence of your market niche, you already ran margins into zero and is doing an orderly downscaling and profitable exit. You leave rotten capitalists nothing, but crumbs behind you. They can't grow and challenge you that way. In China this tactic is called "Locust business" - any trendy product makes healthy double digit profits for three month before the locust swarm of late comers, and you need to switch to the next big thing. A guy describes that phenomenon very vividly in this video - https://www.youtube.com/1IYu4wzy9Lw https://www.youtube.com/1IYu4wzy9Lw This is how it was with countless novelties that make our daily lives today that came out of China - consumer 3d printers, hdmi stick computers, drones, bluetooth car monitors, dashcams, portable bluetooth boomboxes, wifi lightbulbs, LED lighting, air washers, hoverboards, vapes, spinners and so on. I met 3 Chinese millionaires from mainland during my life in Vancouver, all of them did something in electronics, and all of them went through many many of those slash and burn cycles. One started from making socks, then phone holsters, then small gadgetry where he went through 3 very different product. Another did sandals and mp3 players. The third one started with radios, but ended making semi fab tooling where he nuked Western competitors that had 10 digit valuations.

baybal2 9y ago

>I don't know that innovation is the right term for the rapid value extraction you're talking about. It's more like a powerful and well-configured economic environment for manufacturing-related value extraction. Yes, you are totally right in what you are saying. You do get the subtleties of the matter even better than me here. That environment/business-ecosystem is what China has managed to sustain for 30 years and what America never managed to create to begin with, unless you count times of Bennie Franklin. See this: if you give a hungry Chinese business owner a hen laying golden eggs, he will probably slaughter it upon first opportunity, but he will spend the proceeds from sale of than hen and its eggs to breed more of them and do it again. If you give such hen to a hungry American or Western European, he will probably run away, hide that hen, and will be brooding over it until he dies from hunger or the hen dies from old age. What seems to me to be the raison-detre for a lot of American business people is to find some easily securable cash cow captive market niche, and then deep a huge patent/legal/copyright moat around it to monopolize it. That is an example of very passive-rentieristic mindset. Chinese entrepreneur can slaughter his cash cow business and go on to next big thing, while American has no willpower to do so. >Many aspects of that environment are temporal and historically contingent. Things like labor costs, labor conditions, rule of law/regulations and international tolerance for norm-breaking are not constants. This is true too. Western companies that were setting up shops in China in nineties are long long gone. They were there not for simply cheap labour, but ridiculously cheap labour. Chinese industrialists have long closed businesses like rubber sandals factories and are continuously moving their industrial groups from one "next big thing" to another faster than anybody else on the planet. Nobody in SV are like those guys. Doing things this way takes special talent. >How profitable and sustainable are these value extraction operations, on average? I really don't know, but how reliable of a business plan is it? I'm not doubting people get rich off it, but it feels like slash and burn territory rather than a blueprint for building big, sustainable businesses. Yes, the slash and burn approach it is. You can build a substantial business group using it, but you will have to keep moving all the time. I see it as a valid business strategy with major strength of being strong against Western type competitors. You enter early, scale faster than others, by the time any foreign competitor simply realise the existence of your market niche, you already ran margins into zero and is doing an orderly downscaling and profitable exit. You leave rotten capitalists nothing, but crumbs behind you. They can't grow and challenge you that way. In China this tactic is called "Locust business" - any trendy product makes healthy double digit profits for three month before the locust swarm of late comers, and you need to switch to the next big thing. A guy describes that phenomenon very vividly in this video - https://www.youtube.com/1IYu4wzy9Lw https://www.youtube.com/1IYu4wzy9Lw This is how it was with countless novelties that make our daily lives today that came out of China - consumer 3d printers, hdmi stick computers, drones, bluetooth car monitors, dashcams, portable bluetooth boomboxes, wifi lightbulbs, LED lighting, air washers, hoverboards, vapes, spinners and so on. I met 3 Chinese millionaires from mainland during my life in Vancouver, all of them did something in electronics, and all of them went through many many of those slash and burn cycles. One started from making socks, then phone holsters, then small gadgetry where he went through 3 very different product. Another did sandals and mp3 players. The third one started with radios, but ended making semi fab tooling where he nuked Western competitors that had 10 digit valuations.