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Here's something we see in practice: "- In 1965, the average tenure of companies on the S&P 500 was 33 years. By 1990, it was 20 years. It's forecast to shrink

Here's something we see in practice: "- In 1965, the average tenure of companies on the S&P 500 was 33 years. By 1990, it was 20 years. It's forecast to shrink to 14 years by 2026. - About 50 percent of the S&P 500 will be replaced over the next 10 years, if Innosight's forecasted churn rate holds. " https://www.inc.com/ilan-mochari/innosight-sp-500-new-companies.html https://www.inc.com/ilan-mochari/innosight-sp-500-new-compan... What are you seeing in practice that makes you think the truth is the opposite of what this data suggests?

AndrewKemendo 8y ago
Pretty simple, Consolidation. Companies that have information advantage will continue to push into new markets and absorb or kill incumbents. These are complimentary phenomenon actually.
- mattnewport 8y ago
  So what is your claim here? That most companies haven't learned these lessons but those that have will assimilate or destroy the ones that don't? What would that look like in the statistics? Are there particular companies that you think are doing this successfully? The post you originally replied to mentioned Google and Facebook neither of which look like companies that have learned this lesson well enough to beat the trend. They both look to me like they have passed their peaks in many areas: - Innovation - Developer, public and political good will - Creating (rather than buying at great expense) successful new products - Self awareness
  - AndrewKemendo 8y ago
    That most companies haven't learned these lessons but those that have will assimilate or destroy the ones that don't? Precisely What would that look like in the statistics? Something like this: https://www.investopedia.com/news/5-companies-amazon-killing/ https://www.investopedia.com/news/5-companies-amazon-killing... Are there particular companies that you think are doing this successfully? FAANG are the examples here. Look at the top 10 most used apps[1]. 5/10 are Google owned 3/10 are Facebook owned 1 is owned by Apple Amazon in clearly leading here as it has 49% of the ecommerce market share. Microsoft has the vast majority of the IT ecosystem. Facebook the company is doing well in this area. Google is also doing well here. Creating (rather than buying at great expense) successful new products I'm not sure why "buying at great expense" is relevant here. At the end of the day it comes down to longevity. The longest lasting companies are ones which have bought themselves into relevancy. That's the whole point. They have the market capacity to buy out or crush their competition. Facebook used Instagram to crush Snapchat in pretty much every dimension because Snap wouldn't sell to them. All your other metrics are kind of random and I'm not sure if there is anything that says those things lead to longevity. The few companies who were good at this in the past (Standard Oil, Bell, Railroads) eventually got broken up by the government. [1] https://www.businessinsider.com/most-used-smartphone-apps-2017-8 https://www.businessinsider.com/most-used-smartphone-apps-20...
    - mattnewport 8y ago
      > At the end of the day it comes down to longevity. The longest lasting companies are ones which have bought themselves into relevancy. I think it's a little early to say whether Facebook or Google will have the kind of longevity of a GE, ExxonMobil or DuPont. Longevity on its own doesn't actually seem particularly interesting, what makes those three stand out is staying large and relevant for so long, not merely surviving. > All your other metrics are kind of random and I'm not sure if there is anything that says those things lead to longevity. The few companies who were good at this in the past (Standard Oil, Bell, Railroads) eventually got broken up by the government. My metrics were directed partly at that point. Microsoft was a more recent target of government. It looks much more likely today that Facebook, Google or Amazon would be targets of government action (with plenty of public support) than it did just a few years ago.
      - hitekker 8y ago
        Agreed. “Are the FAANGs the first perfect economic actors in human history?” No. I remember people making the same arguments for mortgage back securities. So much worship of so much snake oil.
        AndrewKemendo 8y ago
        “Are the FAANGs as the first perfect economic actors in human history?” That's a great way to put it, and my answer would be: Of course not, but they are probably the closest we've ever seen and are on a vector that keeps them getting closer.
        mattnewport 8y ago
        It doesn't look that way to me, in fact they all look quite vulnerable in various ways, some common and some unique. Netflix and Facebook will be the first to stumble I suspect. I can't predict the future and I'm not an active investor but for my part my retirement savings are not going to be heavily weighted in FAANG stock. I guess we'll see how the landscape looks in a decade.

AndrewKemendo 8y ago

Pretty simple, Consolidation. Companies that have information advantage will continue to push into new markets and absorb or kill incumbents. These are complimentary phenomenon actually.

mattnewport 8y ago
So what is your claim here? That most companies haven't learned these lessons but those that have will assimilate or destroy the ones that don't? What would that look like in the statistics? Are there particular companies that you think are doing this successfully? The post you originally replied to mentioned Google and Facebook neither of which look like companies that have learned this lesson well enough to beat the trend. They both look to me like they have passed their peaks in many areas: - Innovation - Developer, public and political good will - Creating (rather than buying at great expense) successful new products - Self awareness
- AndrewKemendo 8y ago
  That most companies haven't learned these lessons but those that have will assimilate or destroy the ones that don't? Precisely What would that look like in the statistics? Something like this: https://www.investopedia.com/news/5-companies-amazon-killing/ https://www.investopedia.com/news/5-companies-amazon-killing... Are there particular companies that you think are doing this successfully? FAANG are the examples here. Look at the top 10 most used apps[1]. 5/10 are Google owned 3/10 are Facebook owned 1 is owned by Apple Amazon in clearly leading here as it has 49% of the ecommerce market share. Microsoft has the vast majority of the IT ecosystem. Facebook the company is doing well in this area. Google is also doing well here. Creating (rather than buying at great expense) successful new products I'm not sure why "buying at great expense" is relevant here. At the end of the day it comes down to longevity. The longest lasting companies are ones which have bought themselves into relevancy. That's the whole point. They have the market capacity to buy out or crush their competition. Facebook used Instagram to crush Snapchat in pretty much every dimension because Snap wouldn't sell to them. All your other metrics are kind of random and I'm not sure if there is anything that says those things lead to longevity. The few companies who were good at this in the past (Standard Oil, Bell, Railroads) eventually got broken up by the government. [1] https://www.businessinsider.com/most-used-smartphone-apps-2017-8 https://www.businessinsider.com/most-used-smartphone-apps-20...
  - mattnewport 8y ago
    > At the end of the day it comes down to longevity. The longest lasting companies are ones which have bought themselves into relevancy. I think it's a little early to say whether Facebook or Google will have the kind of longevity of a GE, ExxonMobil or DuPont. Longevity on its own doesn't actually seem particularly interesting, what makes those three stand out is staying large and relevant for so long, not merely surviving. > All your other metrics are kind of random and I'm not sure if there is anything that says those things lead to longevity. The few companies who were good at this in the past (Standard Oil, Bell, Railroads) eventually got broken up by the government. My metrics were directed partly at that point. Microsoft was a more recent target of government. It looks much more likely today that Facebook, Google or Amazon would be targets of government action (with plenty of public support) than it did just a few years ago.
    - hitekker 8y ago
      Agreed. “Are the FAANGs the first perfect economic actors in human history?” No. I remember people making the same arguments for mortgage back securities. So much worship of so much snake oil.
      - AndrewKemendo 8y ago
        “Are the FAANGs as the first perfect economic actors in human history?” That's a great way to put it, and my answer would be: Of course not, but they are probably the closest we've ever seen and are on a vector that keeps them getting closer.
        mattnewport 8y ago
        It doesn't look that way to me, in fact they all look quite vulnerable in various ways, some common and some unique. Netflix and Facebook will be the first to stumble I suspect. I can't predict the future and I'm not an active investor but for my part my retirement savings are not going to be heavily weighted in FAANG stock. I guess we'll see how the landscape looks in a decade.