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To put it another way: Tech startups before 2008 generally made money by suddenly providing new and cool stuff. Think Google, Facebook, Twitter, Apple. Tech s
by fergie 8y ago
To put it another way:
Tech startups before 2008 generally made money by suddenly providing new and cool stuff. Think Google, Facebook, Twitter, Apple.
Tech startups now seem to be focussed to a greater degree on rent-seeking business models- think Uber, AirBnb, UpWork, Stripe, various ginormous tech mega-consultancies.
Do you see the difference? The former have won market share by making products that are clearly better than the competition. The latter are essentially attempts to capture "middle man" monopolies on existing transaction chains.
This is of course a bit of a generalisation, but rent-seeking _is_ a bad thing in a number of non-obvious ways, and should be called out to a much greater degree.
- vonmoltke 8y agoHow are Uber, AirBnB, UpWork, and Stripe rent-seeking business models?
- chii 8y agoRent seeking is the wrong term for those businesses. A more appropriate term might be a market maker. Rent seeking specifically means to extract extra money from an existing asset, but not produce any extra value (but purely by virtue of owning the asset).
- fergie 8y agoWhat you say is true in the purest sense. Building on this, some economists regard monopolies of exchange as "assets". Baumol (the economist referenced in the article) did a lot of research into "Contestble Markets Theory", essentially concluding that markets which are not contestable generate free money for incumbants/owners/monopolists You could say that anything to do with the "Sharing" or "Gig" economy is a play on rent extraction. Companies seek to own a marketplace in order to levy a rent on transactions.
- grigjd3 8y agoThey seek to change or undermine regulations in order to provide for their middleman positions.
- curun1r 8y agoUmm...3 out of the 4 pre-2008 companies (Apple excepted) you listed are just as much middle-men as the post-2008 companies...they're middle men between consumers (a.k.a the product) and advertisers (a.k.a the customer). The "cool stuff" you refer to is just a side effect of their rent seeking. Note that they've also displaced the previous generation of rent seekers to varying degrees (print media significantly, TV/radio a bit less significantly). Those three companies have also come with the externalities of significant privacy invasion and helping to undermine our democratic process, so there's that too. I'm not convinced that the more recent rent-seeking companies are much different than the previous generation. Both were seeking to displace the incumbent rent seekers (Uber == taxis, AirBnB == hotels, Stripe == traditional credit card processors) by finding a more efficient or more modern way of accomplishing the existing use case. The only real difference between them and Google/FB/Twitter is that their products are aimed at consumers instead of advertisers.