5 ms·

I disagree. Corporations, in practice, aren't that. They are not disposable in practice. Large companies dominate their markets, expect to live forever, etc.

by netcan 6y ago

I disagree. Corporations, in practice, aren't that. They are not disposable in practice. Large companies dominate their markets, expect to live forever, etc. Innovations that don't happen within Google, microsoft, etc... those innovations don't happen. This isn't an absolute statement. Innovations can happen outside and new companies can be founded. We went through a period in internet-based innovations where a lot of innovation happened outside of existing large corporations and became their own giant corporations. That's not a long term norm though. That reality was largely driven by really low capital costs. These days, new internet companies raise a lot more money... mostly to pay for advertising that goes to google and facebook, who control access to users. More likely than innovation outside of existing companies gets bought into bigger ones. Consider Tesla. Obviously Musk's abilities played a big part. So did his bank account, his ability to raise capital, etc. It takes that much force to innovate in that market from outside. Very difficult. I think it's reasonable to ask why existing car companies couldn't pull off anything like it. There are incentive/incumbent reasons, but I don't think these are the whole story. I agree that innovation should and could come from outside big corporations. But, the reality is that resources, market power and such are highly concentrated within large corporations. There isn't much space to operate outside of it. We can't expect a sub-1% section of an industry to do all the innovation... outside of rare examples like the internet circa 1995-2015. Also, consider that tech giants are a lot more innovative than incumbents in other industries, largely because of the pressure from small companies and their relative youth. Trains, Planes, Cars, Roads, Banking, smelting, etc... these industries are not like that. Nothing at all happens outside of large corporations, innovative or otherwise.

roenxi 6y ago
> I think it's reasonable to ask why existing car companies couldn't pull off anything like it... Usually I leave comments alone unless I agree or disagree, but this is a really easy one to answer - the entire Tesla experiment has been grossly unprofitable so far and there isn't any concrete evidence that any business should follow in Tesla's footsteps. They just posted their first measly profit after a decade with not much to show for it. It may yet come good and it has been a good ride for shareholders, but if you want to know why nobody is rushing to innovate like Tesla it is because they have been leaking money like a drunken sailor.
- rickdangerous1 6y ago
  There is a really important difference between companies which don't have enough margin to post a profit and companies that invest every bit of resource into capturing a new market. They're not leaking money, that is the wrong metaphor. They're conducting an expensive land grab on 3 huge industries: Cars, Energy storage, and solar.
  - lazylizard 6y ago
    Yes. There's a chance that toyota, honda, daimler, Volkswagen, are wrong.
    - rickdangerous1 6y ago
      In so far as they have missed the transition from ICE to EV, they are all wrong. Tesla has such a huge lead on them, they probably will never catch up.
      - oblio 6y ago
        https://en.wikipedia.org/wiki/Volkswagen_Group_MEB_platform https://en.wikipedia.org/wiki/Volkswagen_Group_MEB_platform The MEB platform is part of a Volkswagen strategy to start production of new battery electric vehicles between 2019 and 2025.[3] In 2017, the VW Group announced a gradual transition from combustion engine to battery electric vehicles with all 300 models across 12 brands having an electric version by 2030.[4] As of May 2018, the VW Group had committed US$48 billion in electric-vehicle batteries supplies[5] and announced plans to outfit 16 factories to build electric cars by the end of 2022.[6]
  - foolmeonce 6y ago
    Assuming that is true, it doesn't really answer the question of why an existing player should be that innovative. Experiments by existing players are harshly critiqued, the division that does them is demoralized by other divisions that contribute to quarterly profits and any innovation that is useful is pretty easily copied by competition. Since every existing player has a patent portfolio of BS for the Texan kangaroo court, there wont be a good return in royalties. Running garbage through an oversized legal department while copying someone else is a better investment in R&D.
scarface74 6y ago
More likely than innovation outside of existing companies gets bought into bigger ones. What’s wrong with that? An “innovation” is not always a product. Sometimes it’s just a feature of a larger product. Apple for instance acquires a company every couple of weeks according to Cook. Those companies’ innovations get integrated into an already successful product. “The Innovator’s Solution” is for larger companies to start a small independent team not beholden to the corporate structure. That’s basically what an M&A strategy is.
- netcan 6y ago
  Nothing, at the particular level. Maybe nothing generally, unless you have issues with industrial consolidation. Either way, you now have a more concentrated industry, with a larger share of resources in non innovative hands. Also, don't rely too much on internet companies for your example. This is (was?) a sector with high, fast returns on innovation, low barriers to entry and low capital requirements. That's not the norm.
  - scarface74 6y ago
    Apple isn’t an “Internet company”. It’s been around for over 40 years. It makes almost all of its money selling hardware and has the same challenges and long development cycles as any other manufacturer. Also many of its most strategic acquisitions have been used to design and manufacture hardware from processors, biometric sensors, etc. Yes I realize Apple doesn’t “manufacturer” anything. But its just a legal construct. More of a difference in degree than kind. It pours billions in its manufacturing partners. Apple sells 300 million+ physical goods every year.

by netcan 6y ago

roenxi 6y ago

> I think it's reasonable to ask why existing car companies couldn't pull off anything like it... Usually I leave comments alone unless I agree or disagree, but this is a really easy one to answer - the entire Tesla experiment has been grossly unprofitable so far and there isn't any concrete evidence that any business should follow in Tesla's footsteps. They just posted their first measly profit after a decade with not much to show for it. It may yet come good and it has been a good ride for shareholders, but if you want to know why nobody is rushing to innovate like Tesla it is because they have been leaking money like a drunken sailor.

rickdangerous1 6y ago
There is a really important difference between companies which don't have enough margin to post a profit and companies that invest every bit of resource into capturing a new market. They're not leaking money, that is the wrong metaphor. They're conducting an expensive land grab on 3 huge industries: Cars, Energy storage, and solar.
- lazylizard 6y ago
  Yes. There's a chance that toyota, honda, daimler, Volkswagen, are wrong.
  - rickdangerous1 6y ago
    In so far as they have missed the transition from ICE to EV, they are all wrong. Tesla has such a huge lead on them, they probably will never catch up.
    - oblio 6y ago
      https://en.wikipedia.org/wiki/Volkswagen_Group_MEB_platform https://en.wikipedia.org/wiki/Volkswagen_Group_MEB_platform The MEB platform is part of a Volkswagen strategy to start production of new battery electric vehicles between 2019 and 2025.[3] In 2017, the VW Group announced a gradual transition from combustion engine to battery electric vehicles with all 300 models across 12 brands having an electric version by 2030.[4] As of May 2018, the VW Group had committed US$48 billion in electric-vehicle batteries supplies[5] and announced plans to outfit 16 factories to build electric cars by the end of 2022.[6]
- foolmeonce 6y ago
  Assuming that is true, it doesn't really answer the question of why an existing player should be that innovative. Experiments by existing players are harshly critiqued, the division that does them is demoralized by other divisions that contribute to quarterly profits and any innovation that is useful is pretty easily copied by competition. Since every existing player has a patent portfolio of BS for the Texan kangaroo court, there wont be a good return in royalties. Running garbage through an oversized legal department while copying someone else is a better investment in R&D.

scarface74 6y ago

More likely than innovation outside of existing companies gets bought into bigger ones. What’s wrong with that? An “innovation” is not always a product. Sometimes it’s just a feature of a larger product. Apple for instance acquires a company every couple of weeks according to Cook. Those companies’ innovations get integrated into an already successful product. “The Innovator’s Solution” is for larger companies to start a small independent team not beholden to the corporate structure. That’s basically what an M&A strategy is.

netcan 6y ago
Nothing, at the particular level. Maybe nothing generally, unless you have issues with industrial consolidation. Either way, you now have a more concentrated industry, with a larger share of resources in non innovative hands. Also, don't rely too much on internet companies for your example. This is (was?) a sector with high, fast returns on innovation, low barriers to entry and low capital requirements. That's not the norm.
- scarface74 6y ago
  Apple isn’t an “Internet company”. It’s been around for over 40 years. It makes almost all of its money selling hardware and has the same challenges and long development cycles as any other manufacturer. Also many of its most strategic acquisitions have been used to design and manufacture hardware from processors, biometric sensors, etc. Yes I realize Apple doesn’t “manufacturer” anything. But its just a legal construct. More of a difference in degree than kind. It pours billions in its manufacturing partners. Apple sells 300 million+ physical goods every year.