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I knew that but I'm specifically asking about "starting a competitor often requires far more capital than the incumbents needed to reach their position", not wh

I knew that but I'm specifically asking about "starting a competitor often requires far more capital than the incumbents needed to reach their position", not where the money is coming from

coldtea 7y ago
>I'm specifically asking about "starting a competitor often requires far more capital than the incumbents needed to reach their position" Well, isn't that self-evident? You can't beat Google or Amazon or Apple starting from the money Apple had at its times, or Amazon had when they started (adjust for inflation). They have tons of billions of cash at hand to stomp on you, tons of special deals, economies of scale, can buy the best talent undercutting you, have friends in government and media, have huge network systems of third parties, and so on.
- ttoinou 7y ago
  Because you need to provide something different. "Pure" competition doesn't exists, all companies and products are different
  - fragmede 7y ago
    Yes that's exactly the point. The fiction under which corporations are granted their strange and powerful place in society, is that the invisible hand of the free market results in the best, floating to the top. Unfortunately, that invisible free hand is more imaginary than real, giving incumbents far more power than intended - assuming that you view pure competition as the ideal state, rather than a malignant state.
    - Mirioron 7y ago
      But they have to be different - that's how things improve. If they were exactly the same then what difference does it make for the consumer which product they buy? They're identical.
      - fragmede 7y ago
        better, yes. the issue is that it has to be monumentally better in order to complete. Say I came up with a new algorithm for search, and an angel funded me at the same level that Google started off at. In order for MyNewSearchCo to be able to competitive, my algorithm needs to be 1,000% better; 10 or 50 or 100 percent isn't enough. Considering that I'd also have to build my own ad-network and crawl all of the Internet, I'm not sure it's even possible to compete at this point. Especially once Google sees me as a threat, the sheer amount of resources (and not just technical) they could bring to bear against a small dozen person start-up is ludicrous. That is where the harm comes in - as a consumer, I'd love a 50% better search (insofar as thats readily quantifiable), but the current architecture of the market ends up preventing this from happening!
    - solidsnack9000 7y ago
      Most corporations aren't big and don't have a lot of power -- laundromats, machine tool manufacturers, and so many other businesses are formed as corporations (and not as sole proprietorships). How fictive is the invisible hand on that scale? Lots of money confers lots of power, sure, though this is not anything peculiar to corporations. Corporations are a strange kind of ownership -- since shareholders "own" the corporation but have almost no control of it or any direct access to its assets -- but what is the "strange and powerful" place that corporations are granted?
  - dredmorbius 7y ago
    Competing against price-cutting, product-dumping, employee-luring, FUD campaigns, bundling and tying, exclusive dealings arrangements, legislative lobbying, patent lawsuits, bribery, forced acquisitions (e.g., Luxottica & Oakley) and any of the numerous other tactics that are not "pure competition" but are and have been used against challengers, is exceedingly difficult. Sneaking up under the radar, making a lateral move, or finding a patron or sweetheart deal as an entry into a market is frequently required. Microsoft's break was its exclusive, per-CPU licensing deal with IBM, later extended to other OEMs, and followed by bundling (Office) and tying/dumping (Internet Explorer). Government contracts (national, state, or local) can be a path. Emerging during a period of general economic panic works for others -- both Google and Facebook effectively emerged during financial squeezes (and legal impairments) on incumbents or potential spoilers (2001, 2007-8). Bernhard J. Stern's "Resistances to the Adoption of Technological Innovations" (1935) details numerous instances and methods of such dirty tricks, and is rapidly becoming among my favourite references to these: https://archive.org/details/technologicaltre1937unitrich/page/39 https://archive.org/details/technologicaltre1937unitrich/pag... Markdown: https://pastebin.com/raw/Bapu75is https://pastebin.com/raw/Bapu75is
- WalterBright 7y ago
  > You can't beat Google or Amazon or Apple starting from the money Apple had at its times, or Amazon had when they started (adjust for inflation). And yet Apple beat IBM, DEC, HP, etc. which nobody anticipated. The same things you're saying today were said about IBM, etc., in the 70's and 80's.
  - coldtea 7y ago
    >And yet Apple beat IBM, DEC, HP, etc. which nobody anticipated. In a totally different market. IBM wasn't making Apple I and II equivalents before, or Mac OS equivalents afterwards, and Apple wasn't making mainframes and workstations, and targeting enterprise (in fact, in the 90-96 period that it did try that, it almost tanked). And the IBM PCs ended dominating the world (market share wise), IBM just didn't have exclusivity on building compatible devices. But even all of those are beside the point: we're talking about now, not the 80s. At the time the home PC market didn't exist, companies started from scratch. And even enterprise computing (except for the big systems catered by IBM, DEC and co) was the Wild West. It's like entering the search engine space in 1998 (when there were around 10 competing engines) vs today.
    - WalterBright 7y ago
      Apple now is the biggest company in the world. IBM has faded away. Nobody predicted that - it was all about the unshakable dominance of IBM.
      - coldtea 7y ago
        That's more about the poor performance of predictions. And a reminder that companies can and do fade. Not really relevant as to whether a small company can beat an incumbent in their own game today. If Google fades eventually it wouldn't be because a new search company beat them at search, but because the industry changed and search is not longer as relevant, ad revenues are marginal, etc, for example.
        WalterBright 7y ago

I knew that but I'm specifically asking about "starting a competitor often requires far more capital than the incumbents needed to reach their position", not where the money is coming from

coldtea 7y ago

>I'm specifically asking about "starting a competitor often requires far more capital than the incumbents needed to reach their position" Well, isn't that self-evident? You can't beat Google or Amazon or Apple starting from the money Apple had at its times, or Amazon had when they started (adjust for inflation). They have tons of billions of cash at hand to stomp on you, tons of special deals, economies of scale, can buy the best talent undercutting you, have friends in government and media, have huge network systems of third parties, and so on.

ttoinou 7y ago
Because you need to provide something different. "Pure" competition doesn't exists, all companies and products are different
- fragmede 7y ago
  Yes that's exactly the point. The fiction under which corporations are granted their strange and powerful place in society, is that the invisible hand of the free market results in the best, floating to the top. Unfortunately, that invisible free hand is more imaginary than real, giving incumbents far more power than intended - assuming that you view pure competition as the ideal state, rather than a malignant state.
  - Mirioron 7y ago
    But they have to be different - that's how things improve. If they were exactly the same then what difference does it make for the consumer which product they buy? They're identical.
    - fragmede 7y ago
      better, yes. the issue is that it has to be monumentally better in order to complete. Say I came up with a new algorithm for search, and an angel funded me at the same level that Google started off at. In order for MyNewSearchCo to be able to competitive, my algorithm needs to be 1,000% better; 10 or 50 or 100 percent isn't enough. Considering that I'd also have to build my own ad-network and crawl all of the Internet, I'm not sure it's even possible to compete at this point. Especially once Google sees me as a threat, the sheer amount of resources (and not just technical) they could bring to bear against a small dozen person start-up is ludicrous. That is where the harm comes in - as a consumer, I'd love a 50% better search (insofar as thats readily quantifiable), but the current architecture of the market ends up preventing this from happening!
  - solidsnack9000 7y ago
    Most corporations aren't big and don't have a lot of power -- laundromats, machine tool manufacturers, and so many other businesses are formed as corporations (and not as sole proprietorships). How fictive is the invisible hand on that scale? Lots of money confers lots of power, sure, though this is not anything peculiar to corporations. Corporations are a strange kind of ownership -- since shareholders "own" the corporation but have almost no control of it or any direct access to its assets -- but what is the "strange and powerful" place that corporations are granted?
- dredmorbius 7y ago
  Competing against price-cutting, product-dumping, employee-luring, FUD campaigns, bundling and tying, exclusive dealings arrangements, legislative lobbying, patent lawsuits, bribery, forced acquisitions (e.g., Luxottica & Oakley) and any of the numerous other tactics that are not "pure competition" but are and have been used against challengers, is exceedingly difficult. Sneaking up under the radar, making a lateral move, or finding a patron or sweetheart deal as an entry into a market is frequently required. Microsoft's break was its exclusive, per-CPU licensing deal with IBM, later extended to other OEMs, and followed by bundling (Office) and tying/dumping (Internet Explorer). Government contracts (national, state, or local) can be a path. Emerging during a period of general economic panic works for others -- both Google and Facebook effectively emerged during financial squeezes (and legal impairments) on incumbents or potential spoilers (2001, 2007-8). Bernhard J. Stern's "Resistances to the Adoption of Technological Innovations" (1935) details numerous instances and methods of such dirty tricks, and is rapidly becoming among my favourite references to these: https://archive.org/details/technologicaltre1937unitrich/page/39 https://archive.org/details/technologicaltre1937unitrich/pag... Markdown: https://pastebin.com/raw/Bapu75is https://pastebin.com/raw/Bapu75is
WalterBright 7y ago
> You can't beat Google or Amazon or Apple starting from the money Apple had at its times, or Amazon had when they started (adjust for inflation). And yet Apple beat IBM, DEC, HP, etc. which nobody anticipated. The same things you're saying today were said about IBM, etc., in the 70's and 80's.
- coldtea 7y ago
  >And yet Apple beat IBM, DEC, HP, etc. which nobody anticipated. In a totally different market. IBM wasn't making Apple I and II equivalents before, or Mac OS equivalents afterwards, and Apple wasn't making mainframes and workstations, and targeting enterprise (in fact, in the 90-96 period that it did try that, it almost tanked). And the IBM PCs ended dominating the world (market share wise), IBM just didn't have exclusivity on building compatible devices. But even all of those are beside the point: we're talking about now, not the 80s. At the time the home PC market didn't exist, companies started from scratch. And even enterprise computing (except for the big systems catered by IBM, DEC and co) was the Wild West. It's like entering the search engine space in 1998 (when there were around 10 competing engines) vs today.
  - WalterBright 7y ago
    Apple now is the biggest company in the world. IBM has faded away. Nobody predicted that - it was all about the unshakable dominance of IBM.
    - coldtea 7y ago
      That's more about the poor performance of predictions. And a reminder that companies can and do fade. Not really relevant as to whether a small company can beat an incumbent in their own game today. If Google fades eventually it wouldn't be because a new search company beat them at search, but because the industry changed and search is not longer as relevant, ad revenues are marginal, etc, for example.
      - WalterBright 7y ago