11 ms·

Incumbents are fighting back against disrupters

166 points by ijidak 3y ago

puffyengineer 3y ago
[dead]
Animats 3y ago
Oh? U.S. Steel is for sale for $7 billion. One-sixth of Twitter's sale price. U.S. Steel was once the largest company in the world.
- xvilka 3y ago
  By the time Twitter will live long enough as U.S. Steel right now it will highly likely be even cheaper. If even exist at all.
- quickthrower2 3y ago
  You may have a point but you should argue against the data in the article rather than one anecdote.
  - Finnucane 3y ago
    Also, not sure Twitter's price is a great example of a reliable value.
    - derbOac 3y ago
      You were being downvoted but I had the same thought — not as a statement about Twitter but because the circumstances of the sale were so controversial.
  - s1artibartfast 3y ago
    The best Counterpoint is that the average time of a company being part of the Fortune 500 is declining over time. This means that there's greater turnover and disruption. a Fortune 500 company today is less likely to still be a Fortune 500 company tomorrow then most of the history of the Fortune 500. This tells a different story than the article which focuses on the average age of companies including time not part of the Fortune 500. It would be interesting to run the same analysis for the Fortune 100 and the fortune 500 to 400 companies https://www.aei.org/carpe-diem/only-52-us-companies-have-been-on-the-fortune-500-since-1955-thanks-to-the-creative-destruction-that-fuels-economic-prosperity-2/ https://www.aei.org/carpe-diem/only-52-us-companies-have-bee...
- paulryanrogers 3y ago
  Just have to suffer for a few decades under their boot, until a seismic shift in industry can undermine their dominance?
- lapcat 3y ago
  > U.S. Steel was once the largest company in the world. You're talking about practically ancient history. "In 1902, its first full year of operation, U.S. Steel made 67 percent of all the steel produced in the United States. About 100 years later, as of 2001, it produced only 8 percent more than it did in 1902, and its shipments accounted for only about 8 percent of domestic consumption." https://en.wikipedia.org/wiki/U.S._Steel https://en.wikipedia.org/wiki/U.S._Steel The federal government did try to break up U.S. Steel... in 1911.
  - s1artibartfast 3y ago
    I think that's kind of the point. Us steel had a 120 year run without being toppled. This isn't exactly a new phenomenon. It's hard to guess where Apple or Google will be in 100 years
    - lapcat 3y ago
      > Us steel had a 120 year run without being toppled. Um, no? It didn't magically go from 67% to 8% in the year 2001. It had already declined. In fact, it started to decline quickly: "Because of heavy debts taken on at the company's formation—Carnegie insisted on being paid in gold bonds for his stake—and fears of antitrust litigation, U.S. Steel moved cautiously. Competitors often innovated faster, especially Bethlehem Steel, run by Charles Schwab, U.S. Steel's former president. U.S. Steel's share of the expanding market slipped to 50 percent by 1911."
      - s1artibartfast 3y ago
        I was talking more about company lifespan given that US steel is up for sale. If you want to talk specifically about average company time in the Fortune 500, that has been going down
        psunavy03 3y ago
        "Company lifespan" is a stupid metric. Any given company can hold on as best it can or be driven into the ground in a few years, depending on what management and the board does with it. There's no rule in business that says "oh, too old, time for you to go out of business now."
- Vt71fcAqt7 3y ago
  This time it's different, though. In the age of computing, nobody will be able to step up to IBM — they control the entire industry. This is only going to be more true now that they have consolidated their control over the consumer computer market with the Personal Computer.
- aorloff 3y ago
  I have the feeling in the very near future a controlling amount of Twitters debt could be purchased for 7B
  - slt2021 3y ago
    debt does not offer control over company. if it were, it would have been called differently
    - acover 3y ago
      They are implying Twitter will default on their debt and the debt owners will take what's left of the companies assets - the company.
      - slt2021 3y ago
        Elon’s titter shares are backed with his assets (mainly Tesla stock), so I dont see how titter will default unless tesla stock gets heavy heavy beating (which it surprisingly endured pretty well so far) Twitter has not defaulted so far because elon can just pour money in and cut expenses - which he has been doing since taking over
        aorloff 3y ago
        It's hard to build a revenue stream by cutting expenses.
        HWR_14 3y ago
        No, Twitters 12.5 billion in debt is backed by Twitter. Money that Elon personally borrowed to buy Twitter, but Twitter is not on the hook for, is backed by Tesla. Elon defaulting won't affect his ownership of Twitter (because he pledged Tesla shares) and Twitter going to zero won't affect Elons other investments (unless he voluntarily adds more money to Twitter).
  - nebula8804 3y ago
    No way it happens before the 24 election. Musk with his Space company, his commanding lead on EV infrastructure and what is still a sizable pop culture megaphone has the US leadership by the balls in some respects.
exhibitapp 3y ago
https://archive.is/fqqxf https://archive.is/fqqxf
quickthrower2 3y ago
https://archive.is/fqqxf https://archive.is/fqqxf
typon 3y ago
Incumbents reinforce their moats through labyrinthine regulation (and bribery?) and are smarter than their predecessors in adapting to newer technologies.
- RajT88 3y ago
  Not to mention anti-competitive behavior (which used to get you hauled in front of Congress).
  - makeitdouble 3y ago
    > which used to get you hauled in front of Congress They still get hauled in front of Congress, but it doesn't seem to matter much nor affect their business.
    - zer8k 3y ago
      It doesn't matter if you're hauled in front of congress if 2/3 of them are on your payroll. This is certainly the case for Google, Amazon, and probably TikTok at this point. It's been true for big pharma for half a century. I can't even remember a monopoly that was smashed outside of Big Bell.
      - psunavy03 3y ago
        > It doesn't matter if you're hauled in front of congress if 2/3 of them are on your payroll. Everyone likes to say this, and sure, lobbying is a thing. But I doubt 99 percent of the people saying this can produce evidence of wide-scale bribes and corruption at the Federal level which could justify them saying it as often as they do.
        xbar 3y ago
        No one can explain why regulators refuse to regulate corporate behemoths without this model. And being on the payroll is played very differently now: consider the Pelosi family investment strategy as it relates to big tech. Bribes are not required to get paid.
broken_clock 3y ago
This is very similar to Ben Thompson's The End of the Beginning article: https://stratechery.com/2020/the-end-of-the-beginning/ https://stratechery.com/2020/the-end-of-the-beginning/ What I took from this article is that you can never beat incumbents by trying to offer a better version of their product. They already have immense institutionalized knowledge and economies of scale. You can only beat them by offering a different product that meets their needs better. Think Walmart vs Amazon. Online shopping is actually a completely different product. An example today is the iPhone. There are a ton of competitors trying to offer a better version of the same thing, but iPhone share is only growing in the US. Is it possible to offer a product that better suits its niche of mobile general purpose computing? Maybe! But technology today is so capital and knowledge intensive that the kind of organization that can try is probably already about Apple-sized (Vision Pro?).
- causality0 3y ago
  Personally I'm really hoping someone tries another gaming phone with buttons built in. There's really no always-with-you gaming solution that doesn't come with massive compromises.
  - bombcar 3y ago
    I’ve always thought the key will be some buttons on the back.
    - causality0 3y ago
      Prepare to be sad after you look up the failed Flitchio, which was a phone case with shoulder buttons and slide pads on the back.
      - bombcar 3y ago
        Oh I know it would be hard to sell - maybe it would work if Nintendo sold it as a gaming device that could make calls or something.
  - 3y ago
k0gi 3y ago
Chaebols
- wnc3141 3y ago
  Chaebols are sort of the product of a centrally planned economy. I.e the government backs a "winner" - so Korea can more quickly compete globally at scale. (competitive markets, but does not quickly industrialize an economy). The article instead looks at massive capital consolidation as the product of a free market. The scale begets massive synergies (for lack of a better word) across vertical integration and horizontal expansion. This particularly holds true software firms. With those efficiencies, it becomes impossible for new entrants to enter a market even adjacent to a large incumbent.
  - sph 3y ago
    This is not the product of the free market. Let's stop blaming the free market because it doesn't exist and it is a convenient scapegoat. We have no free market. If the corner shop can go bankrupt but the trillion dollar company receives government help to pay its debts, it is not a free market. If any tariffs system exists, which inherently favours a niche over the other, it is not a free market. If once you reach a certain size you unlock ways to avoid paying your workers, skirt around taxes, because there are laws written to allow this, it is not a free market. If the amount of money you control pays your way into the king's court, and helps sway the ones in power to write laws that favours you, it is not a free market. > Chaebols are sort of the product of a centrally planned economy. I.e the government backs a "winner" - so Korea can more quickly compete globally at scale. How are our Western democracies not centrally planned economies? Don't we have a central bank and a single place where all state powers flow from? Of course we don't operate like the CCCP did, but we are no less centrally-planned than they or Korea are. We never had one a free market, we never had a decentralised economy, and we should be talking about that instead of living in that Eric Andre skit. Our system is set up to destroy any semblance of competition and meritocracy and then we wonder "who killed the small business?"
    - bee_rider 3y ago
emmett 3y ago
I can’t quite reconcile this article with what I’ve seen before like this below…the methodology in the OP seems pretty questionable, so I trust this other article more. https://www.aei.org/carpe-diem/fortune-500-firms-1955-v-2016-only-12-remain-thanks-to-the-creative-destruction-that-fuels-economic-prosperity/ https://www.aei.org/carpe-diem/fortune-500-firms-1955-v-2016...
- IG_Semmelweiss 3y ago
  your article consists of hard data. Seems to refute the article pretty well
- mxkopy 3y ago
  Any definitive statements made about the past half century are pretty questionable, ideological biases notwithstanding (see “ The constant turnover in the Fortune 500 is a positive sign of the dynamism and innovation that characterizes a vibrant consumer-oriented market economy, and that dynamic turnover is speeding up in today’s hyper-competitive global economy.” and “Another economic lesson to be learned from the creative destruction that results in the constant churning of Fortune 500 (and S&P 500) companies over time is that the process of market disruption is being driven by the endless pursuit of sales and profits that can only come from serving customers with low prices, high quality products and services, and great customer service.”). I think it’s not an unreasonable argument that the process of market disruption (over the past century at least) isn’t being driven by “the endless pursuit of profits that can only come from serving customers with low prices, high quality products and services, and great customer service” (LOL) but by some insane demographic changes occurring in the background of equally insane technological progress. It actually seems quite delusional that, knowing about Moore’s Law/baby boomers/more than 5 tv channels, this person decided that customer service would be more important in deciding how the economy moves. Bonkers levels of autofellation, I say.
- everforward 3y ago
  A potential reconciliation is that most of the companies left those lists via mergers with other companies on the list. It both consolidates power and gives churn to that list. I don't know whether that's true or not, but it's notable that your article counts companies as "leaving" the list if they merge with someone else.
throwaway1777 3y ago
The eurofication of the US continues
RachelF 3y ago
Another factor is increased regulation: Big companies have an advantage that they can afford the lawyers to navigate the laws, often written by them via lobbyists.
- brnaftr361 3y ago
  They can also hire the regulators. Companies with first movers advantage build huge moats before industries get regulated, once they do those moats give them de facto primacy in their field. I would actually point at regulation for most of the modern maladies we suffer, typically property rights, particularly IP, if only because we're oriented towards services now.
s1artibartfast 3y ago
I think the more interesting story is about the death of the IPO and how the number of public companies today is half of what it was at the peak in the late 90s. I don't know if this is due to more private funding, more acquisitions, regulatory capture, or what. Despite living in the internet Information Age, it seems like it's less viable than ever to find public investors and Investments via IPO https://www.google.com/amp/s/finance.yahoo.com/amphtml/news/jp-startup-public-companies-fewer-000000709.html https://www.google.com/amp/s/finance.yahoo.com/amphtml/news/...
- RachelF 3y ago
  The Sarbanes-Oxley act in ~2002 after the Enron mess made it harder to IPO with much more paperwork required.
  - SkyPuncher 3y ago
    That paperwork is trivial compared to the amount of effort that goes into building an IPO ready company.
- dehrmann 3y ago
  > the number of public companies today is half of what it was at the peak in the late 90s. Comparing the number of public companies around an IPO-fueled bubble isn't a fair comparison.
  - s1artibartfast 3y ago
    sure, the 90s was the peak, but it built up to that over 20+ years, and I think it was indicative of a robust and competitive market.
  - nickff 3y ago
    IPOs have massively declined since Sarbanes-Oxley, even if you look past the dot-com era; take a look at the chart on this page: https://corpgov.law.harvard.edu/2012/04/02/considering-causes-and-remedies-for-declining-ipo-volume/ https://corpgov.law.harvard.edu/2012/04/02/considering-cause...
virtuous_sloth 3y ago
Break them all up 10 ways to Sunday. I'm with Cory Doctorow on this one.
- travisgriggs 3y ago
  I just want mandated open interop standards. Maybe I’m naive and that’s not enough, but it seems that it gets us a step in the right direction.
- sph 3y ago
  Who's gonna break them up? You and I? How? Themselves? Of course not. The government? They're the reason they're so big and powerful in the first place. Politicians are easily swayed if you have billions of dollars to convince them to do your bidding. Everything is set up to favour cancerous growth once you reach a certain size, and there are no real failsafe mechanisms against that. Antitrust is useless if it is never invoked, for example. I wish we'd start to notice how our legislative, judicial and executive branches of government have been failing us for decades on this matter, instead of just wondering "how the hell did it come to that?" and blaming "capitalism", whatever that means. Adam Smith alone doesn't explain how a company can skirt around the rules of free market competition and grow to a trillion dollars. You need a lot of external help from people in power to get there.
  - infamouscow 3y ago
    To add, the establishment LOVES when team red and blue fight over social issues. Not that social issues aren't important, but the outcome of social issues never negatively affect the crony capitalists in power. Social issues are the opium of activists and pundits to distract the very same activists and pundits from decades of policy that only benefit the elite. Raytheon LOVES when people fight about abortion rights. Citibank LOVES when people fight about police reform. None of these social issues actually matter if the entire middle class is ground to dust and scattered into the wind.
- Mistletoe 3y ago
  I’m afraid that indexing and the top heavy nature of the SP500 has made it very against the personal interests of anyone in power to do this. :( They know their own net worth will tumble if they break up the seven or so companies propping up the SP500 right now. https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/just-7-companies-are-carrying-the-s-p-500-in-2023-75823741 https://www.spglobal.com/marketintelligence/en/news-insights... Hopefully some politicians will eventually realize they are put in power to serve the needs of everyone not just the rich that own stocks. >In 2023, the percentages owning stock range from highs of 84% of adults in households earning $100,000 or more and about eight in 10 college graduates and postgraduates to a low of 29% of those in households earning less than $40,000.
sharts 3y ago
There's always the option to exercise discipline to support small and local businesses or entirely forgo products you don't absolutely need.
MagaMuffin 3y ago
[dead]
nologic01 3y ago
> the digital revolution has not been all that revolutionary in some parts of the economy Extreme concentration in tech has sucked the air out the "digital revolution". When all the tech infrastructure is controlled by less than a handful of conglomerates there is no meaningful transformation of any other sector that will not involve them. This creates resistance by other corporate interests and a stalemate. Financial services is particularly interesting as a study case as it is almost 100% information processing, hence fully "disruptable". Why is it not happening? The article paints a picture of inertia as the reason for stagnation in financial services, apparently oblivious to the skirmishes and tiptoing going on: The facebook/libra fiasco, user as client vs user as product business models, the apple/goldman tieup, privacy and commercial secrecy concerns around cloud use etc. In fact the gazillion valuations of big tech is the market telling us that it expects they will swallow any digitally transformed sector. For society to see a dividend from the digital revolution (seen eg in a number of major new enterprises that are fully transformed by tech), tech must get democratised. For as long as there is a racket that gets a 30% cut of all action there will be an eerily ominous quiet in the marketplace.
- staplers 3y ago
  Financial services is particularly interesting as a study case as it is almost 100% information processing, hence fully "disruptable". Why is it not happening? Never underestimate mass opinion shaping by incumbants. There is a well known answer to your question that many scoff at because they've read a lot of negative articles about it.
  - mejutoco 3y ago
    Assuming your refer to cryptocurrency, in a way it already disrupted financial services. I disagree with negative articles being the reason why people "scoff" at them. I think specific cryptocurrencies have a lot to genuinely criticize.
  - matheusmoreira 3y ago
    Cryptocurrencies didn't disrupt anything though. It was supposed to liberate us from banks and their fees. They reinvented banks and the entire financial system on top of crypto, exchanges are literally unregulated banks. It was supposed to free us from government currencies. It turned into stocks instead. A good currency like Monero that actually works for transacting quickly, cheaply and anonymously? Nobody cares about it or uses it. It's pretty depressing really.
lemper 3y ago
one of the more effective ways to topple them is using laws that serve the people. but, as long as they still keep doing "lobbying", which is a corrupt practice in many other places, then we're not going see anything different.
padheyam 3y ago
Coincidentally, the audible book I was just listening to, mentioned how the VC firms in the mid-70s passed on investment opportunities with the mindset that start-ups cannot take on IBM.

166 points by ijidak 3y ago

[dead]

Oh? U.S. Steel is for sale for $7 billion. One-sixth of Twitter's sale price. U.S. Steel was once the largest company in the world.

xvilka 3y ago
By the time Twitter will live long enough as U.S. Steel right now it will highly likely be even cheaper. If even exist at all.
quickthrower2 3y ago
You may have a point but you should argue against the data in the article rather than one anecdote.
- Finnucane 3y ago
  Also, not sure Twitter's price is a great example of a reliable value.
  - derbOac 3y ago
    You were being downvoted but I had the same thought — not as a statement about Twitter but because the circumstances of the sale were so controversial.
- s1artibartfast 3y ago
  The best Counterpoint is that the average time of a company being part of the Fortune 500 is declining over time. This means that there's greater turnover and disruption. a Fortune 500 company today is less likely to still be a Fortune 500 company tomorrow then most of the history of the Fortune 500. This tells a different story than the article which focuses on the average age of companies including time not part of the Fortune 500. It would be interesting to run the same analysis for the Fortune 100 and the fortune 500 to 400 companies https://www.aei.org/carpe-diem/only-52-us-companies-have-been-on-the-fortune-500-since-1955-thanks-to-the-creative-destruction-that-fuels-economic-prosperity-2/ https://www.aei.org/carpe-diem/only-52-us-companies-have-bee...
paulryanrogers 3y ago
Just have to suffer for a few decades under their boot, until a seismic shift in industry can undermine their dominance?
lapcat 3y ago
> U.S. Steel was once the largest company in the world. You're talking about practically ancient history. "In 1902, its first full year of operation, U.S. Steel made 67 percent of all the steel produced in the United States. About 100 years later, as of 2001, it produced only 8 percent more than it did in 1902, and its shipments accounted for only about 8 percent of domestic consumption." https://en.wikipedia.org/wiki/U.S._Steel https://en.wikipedia.org/wiki/U.S._Steel The federal government did try to break up U.S. Steel... in 1911.
- s1artibartfast 3y ago
  I think that's kind of the point. Us steel had a 120 year run without being toppled. This isn't exactly a new phenomenon. It's hard to guess where Apple or Google will be in 100 years
  - lapcat 3y ago
    > Us steel had a 120 year run without being toppled. Um, no? It didn't magically go from 67% to 8% in the year 2001. It had already declined. In fact, it started to decline quickly: "Because of heavy debts taken on at the company's formation—Carnegie insisted on being paid in gold bonds for his stake—and fears of antitrust litigation, U.S. Steel moved cautiously. Competitors often innovated faster, especially Bethlehem Steel, run by Charles Schwab, U.S. Steel's former president. U.S. Steel's share of the expanding market slipped to 50 percent by 1911."
    - s1artibartfast 3y ago
      I was talking more about company lifespan given that US steel is up for sale. If you want to talk specifically about average company time in the Fortune 500, that has been going down
      - psunavy03 3y ago
        "Company lifespan" is a stupid metric. Any given company can hold on as best it can or be driven into the ground in a few years, depending on what management and the board does with it. There's no rule in business that says "oh, too old, time for you to go out of business now."
Vt71fcAqt7 3y ago
This time it's different, though. In the age of computing, nobody will be able to step up to IBM — they control the entire industry. This is only going to be more true now that they have consolidated their control over the consumer computer market with the Personal Computer.
aorloff 3y ago
I have the feeling in the very near future a controlling amount of Twitters debt could be purchased for 7B
- slt2021 3y ago
  debt does not offer control over company. if it were, it would have been called differently
  - acover 3y ago
    They are implying Twitter will default on their debt and the debt owners will take what's left of the companies assets - the company.
    - slt2021 3y ago
      Elon’s titter shares are backed with his assets (mainly Tesla stock), so I dont see how titter will default unless tesla stock gets heavy heavy beating (which it surprisingly endured pretty well so far) Twitter has not defaulted so far because elon can just pour money in and cut expenses - which he has been doing since taking over
      - aorloff 3y ago
        It's hard to build a revenue stream by cutting expenses.
      - HWR_14 3y ago
        No, Twitters 12.5 billion in debt is backed by Twitter. Money that Elon personally borrowed to buy Twitter, but Twitter is not on the hook for, is backed by Tesla. Elon defaulting won't affect his ownership of Twitter (because he pledged Tesla shares) and Twitter going to zero won't affect Elons other investments (unless he voluntarily adds more money to Twitter).
- nebula8804 3y ago
  No way it happens before the 24 election. Musk with his Space company, his commanding lead on EV infrastructure and what is still a sizable pop culture megaphone has the US leadership by the balls in some respects.

exhibitapp 3y ago

https://archive.is/fqqxf https://archive.is/fqqxf

quickthrower2 3y ago

https://archive.is/fqqxf https://archive.is/fqqxf

typon 3y ago

Incumbents reinforce their moats through labyrinthine regulation (and bribery?) and are smarter than their predecessors in adapting to newer technologies.

RajT88 3y ago
Not to mention anti-competitive behavior (which used to get you hauled in front of Congress).
- makeitdouble 3y ago
  > which used to get you hauled in front of Congress They still get hauled in front of Congress, but it doesn't seem to matter much nor affect their business.
  - zer8k 3y ago
    It doesn't matter if you're hauled in front of congress if 2/3 of them are on your payroll. This is certainly the case for Google, Amazon, and probably TikTok at this point. It's been true for big pharma for half a century. I can't even remember a monopoly that was smashed outside of Big Bell.
    - psunavy03 3y ago
      > It doesn't matter if you're hauled in front of congress if 2/3 of them are on your payroll. Everyone likes to say this, and sure, lobbying is a thing. But I doubt 99 percent of the people saying this can produce evidence of wide-scale bribes and corruption at the Federal level which could justify them saying it as often as they do.
      - xbar 3y ago
        No one can explain why regulators refuse to regulate corporate behemoths without this model. And being on the payroll is played very differently now: consider the Pelosi family investment strategy as it relates to big tech. Bribes are not required to get paid.

broken_clock 3y ago

This is very similar to Ben Thompson's The End of the Beginning article: https://stratechery.com/2020/the-end-of-the-beginning/ https://stratechery.com/2020/the-end-of-the-beginning/ What I took from this article is that you can never beat incumbents by trying to offer a better version of their product. They already have immense institutionalized knowledge and economies of scale. You can only beat them by offering a different product that meets their needs better. Think Walmart vs Amazon. Online shopping is actually a completely different product. An example today is the iPhone. There are a ton of competitors trying to offer a better version of the same thing, but iPhone share is only growing in the US. Is it possible to offer a product that better suits its niche of mobile general purpose computing? Maybe! But technology today is so capital and knowledge intensive that the kind of organization that can try is probably already about Apple-sized (Vision Pro?).

causality0 3y ago
Personally I'm really hoping someone tries another gaming phone with buttons built in. There's really no always-with-you gaming solution that doesn't come with massive compromises.
- bombcar 3y ago
  I’ve always thought the key will be some buttons on the back.
  - causality0 3y ago
    Prepare to be sad after you look up the failed Flitchio, which was a phone case with shoulder buttons and slide pads on the back.
    - bombcar 3y ago
      Oh I know it would be hard to sell - maybe it would work if Nintendo sold it as a gaming device that could make calls or something.
- 3y ago

k0gi 3y ago

Chaebols

wnc3141 3y ago
Chaebols are sort of the product of a centrally planned economy. I.e the government backs a "winner" - so Korea can more quickly compete globally at scale. (competitive markets, but does not quickly industrialize an economy). The article instead looks at massive capital consolidation as the product of a free market. The scale begets massive synergies (for lack of a better word) across vertical integration and horizontal expansion. This particularly holds true software firms. With those efficiencies, it becomes impossible for new entrants to enter a market even adjacent to a large incumbent.
- sph 3y ago
  This is not the product of the free market. Let's stop blaming the free market because it doesn't exist and it is a convenient scapegoat. We have no free market. If the corner shop can go bankrupt but the trillion dollar company receives government help to pay its debts, it is not a free market. If any tariffs system exists, which inherently favours a niche over the other, it is not a free market. If once you reach a certain size you unlock ways to avoid paying your workers, skirt around taxes, because there are laws written to allow this, it is not a free market. If the amount of money you control pays your way into the king's court, and helps sway the ones in power to write laws that favours you, it is not a free market. > Chaebols are sort of the product of a centrally planned economy. I.e the government backs a "winner" - so Korea can more quickly compete globally at scale. How are our Western democracies not centrally planned economies? Don't we have a central bank and a single place where all state powers flow from? Of course we don't operate like the CCCP did, but we are no less centrally-planned than they or Korea are. We never had one a free market, we never had a decentralised economy, and we should be talking about that instead of living in that Eric Andre skit. Our system is set up to destroy any semblance of competition and meritocracy and then we wonder "who killed the small business?"
  - bee_rider 3y ago

emmett 3y ago

I can’t quite reconcile this article with what I’ve seen before like this below…the methodology in the OP seems pretty questionable, so I trust this other article more. https://www.aei.org/carpe-diem/fortune-500-firms-1955-v-2016-only-12-remain-thanks-to-the-creative-destruction-that-fuels-economic-prosperity/ https://www.aei.org/carpe-diem/fortune-500-firms-1955-v-2016...

IG_Semmelweiss 3y ago
your article consists of hard data. Seems to refute the article pretty well
mxkopy 3y ago
Any definitive statements made about the past half century are pretty questionable, ideological biases notwithstanding (see “ The constant turnover in the Fortune 500 is a positive sign of the dynamism and innovation that characterizes a vibrant consumer-oriented market economy, and that dynamic turnover is speeding up in today’s hyper-competitive global economy.” and “Another economic lesson to be learned from the creative destruction that results in the constant churning of Fortune 500 (and S&P 500) companies over time is that the process of market disruption is being driven by the endless pursuit of sales and profits that can only come from serving customers with low prices, high quality products and services, and great customer service.”). I think it’s not an unreasonable argument that the process of market disruption (over the past century at least) isn’t being driven by “the endless pursuit of profits that can only come from serving customers with low prices, high quality products and services, and great customer service” (LOL) but by some insane demographic changes occurring in the background of equally insane technological progress. It actually seems quite delusional that, knowing about Moore’s Law/baby boomers/more than 5 tv channels, this person decided that customer service would be more important in deciding how the economy moves. Bonkers levels of autofellation, I say.
everforward 3y ago
A potential reconciliation is that most of the companies left those lists via mergers with other companies on the list. It both consolidates power and gives churn to that list. I don't know whether that's true or not, but it's notable that your article counts companies as "leaving" the list if they merge with someone else.

throwaway1777 3y ago

The eurofication of the US continues

RachelF 3y ago

Another factor is increased regulation: Big companies have an advantage that they can afford the lawyers to navigate the laws, often written by them via lobbyists.

brnaftr361 3y ago
They can also hire the regulators. Companies with first movers advantage build huge moats before industries get regulated, once they do those moats give them de facto primacy in their field. I would actually point at regulation for most of the modern maladies we suffer, typically property rights, particularly IP, if only because we're oriented towards services now.

s1artibartfast 3y ago

I think the more interesting story is about the death of the IPO and how the number of public companies today is half of what it was at the peak in the late 90s. I don't know if this is due to more private funding, more acquisitions, regulatory capture, or what. Despite living in the internet Information Age, it seems like it's less viable than ever to find public investors and Investments via IPO https://www.google.com/amp/s/finance.yahoo.com/amphtml/news/jp-startup-public-companies-fewer-000000709.html https://www.google.com/amp/s/finance.yahoo.com/amphtml/news/...

RachelF 3y ago
The Sarbanes-Oxley act in ~2002 after the Enron mess made it harder to IPO with much more paperwork required.
- SkyPuncher 3y ago
  That paperwork is trivial compared to the amount of effort that goes into building an IPO ready company.
dehrmann 3y ago
> the number of public companies today is half of what it was at the peak in the late 90s. Comparing the number of public companies around an IPO-fueled bubble isn't a fair comparison.
- s1artibartfast 3y ago
  sure, the 90s was the peak, but it built up to that over 20+ years, and I think it was indicative of a robust and competitive market.
- nickff 3y ago
  IPOs have massively declined since Sarbanes-Oxley, even if you look past the dot-com era; take a look at the chart on this page: https://corpgov.law.harvard.edu/2012/04/02/considering-causes-and-remedies-for-declining-ipo-volume/ https://corpgov.law.harvard.edu/2012/04/02/considering-cause...

virtuous_sloth 3y ago

Break them all up 10 ways to Sunday. I'm with Cory Doctorow on this one.

travisgriggs 3y ago
I just want mandated open interop standards. Maybe I’m naive and that’s not enough, but it seems that it gets us a step in the right direction.
sph 3y ago
Who's gonna break them up? You and I? How? Themselves? Of course not. The government? They're the reason they're so big and powerful in the first place. Politicians are easily swayed if you have billions of dollars to convince them to do your bidding. Everything is set up to favour cancerous growth once you reach a certain size, and there are no real failsafe mechanisms against that. Antitrust is useless if it is never invoked, for example. I wish we'd start to notice how our legislative, judicial and executive branches of government have been failing us for decades on this matter, instead of just wondering "how the hell did it come to that?" and blaming "capitalism", whatever that means. Adam Smith alone doesn't explain how a company can skirt around the rules of free market competition and grow to a trillion dollars. You need a lot of external help from people in power to get there.
- infamouscow 3y ago
  To add, the establishment LOVES when team red and blue fight over social issues. Not that social issues aren't important, but the outcome of social issues never negatively affect the crony capitalists in power. Social issues are the opium of activists and pundits to distract the very same activists and pundits from decades of policy that only benefit the elite. Raytheon LOVES when people fight about abortion rights. Citibank LOVES when people fight about police reform. None of these social issues actually matter if the entire middle class is ground to dust and scattered into the wind.
Mistletoe 3y ago
I’m afraid that indexing and the top heavy nature of the SP500 has made it very against the personal interests of anyone in power to do this. :( They know their own net worth will tumble if they break up the seven or so companies propping up the SP500 right now. https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/just-7-companies-are-carrying-the-s-p-500-in-2023-75823741 https://www.spglobal.com/marketintelligence/en/news-insights... Hopefully some politicians will eventually realize they are put in power to serve the needs of everyone not just the rich that own stocks. >In 2023, the percentages owning stock range from highs of 84% of adults in households earning $100,000 or more and about eight in 10 college graduates and postgraduates to a low of 29% of those in households earning less than $40,000.

sharts 3y ago

There's always the option to exercise discipline to support small and local businesses or entirely forgo products you don't absolutely need.

MagaMuffin 3y ago

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nologic01 3y ago

> the digital revolution has not been all that revolutionary in some parts of the economy Extreme concentration in tech has sucked the air out the "digital revolution". When all the tech infrastructure is controlled by less than a handful of conglomerates there is no meaningful transformation of any other sector that will not involve them. This creates resistance by other corporate interests and a stalemate. Financial services is particularly interesting as a study case as it is almost 100% information processing, hence fully "disruptable". Why is it not happening? The article paints a picture of inertia as the reason for stagnation in financial services, apparently oblivious to the skirmishes and tiptoing going on: The facebook/libra fiasco, user as client vs user as product business models, the apple/goldman tieup, privacy and commercial secrecy concerns around cloud use etc. In fact the gazillion valuations of big tech is the market telling us that it expects they will swallow any digitally transformed sector. For society to see a dividend from the digital revolution (seen eg in a number of major new enterprises that are fully transformed by tech), tech must get democratised. For as long as there is a racket that gets a 30% cut of all action there will be an eerily ominous quiet in the marketplace.

staplers 3y ago
Financial services is particularly interesting as a study case as it is almost 100% information processing, hence fully "disruptable". Why is it not happening? Never underestimate mass opinion shaping by incumbants. There is a well known answer to your question that many scoff at because they've read a lot of negative articles about it.
- mejutoco 3y ago
  Assuming your refer to cryptocurrency, in a way it already disrupted financial services. I disagree with negative articles being the reason why people "scoff" at them. I think specific cryptocurrencies have a lot to genuinely criticize.
- matheusmoreira 3y ago
  Cryptocurrencies didn't disrupt anything though. It was supposed to liberate us from banks and their fees. They reinvented banks and the entire financial system on top of crypto, exchanges are literally unregulated banks. It was supposed to free us from government currencies. It turned into stocks instead. A good currency like Monero that actually works for transacting quickly, cheaply and anonymously? Nobody cares about it or uses it. It's pretty depressing really.

lemper 3y ago

one of the more effective ways to topple them is using laws that serve the people. but, as long as they still keep doing "lobbying", which is a corrupt practice in many other places, then we're not going see anything different.

padheyam 3y ago

Coincidentally, the audible book I was just listening to, mentioned how the VC firms in the mid-70s passed on investment opportunities with the mindset that start-ups cannot take on IBM.