3 ms·
It takes much less capital to scale a company that delivers service over the internet than pretty much any other type of company because it isn't: 1. labor int
by fallingknife 3y ago
It takes much less capital to scale a company that delivers service over the internet than pretty much any other type of company because it isn't:
1. labor intensive
2. capital intensive
Since these challenges don't exist for a company like Google or FB, these companies can scale faster. This also means they don't need to raise as much capital as other types of company to reach massive scale. This leaves the founders (and early investors. There's a reason VCs focus on internet companies) with a much larger slice of the company than would be the case for an industrial company. It's really just simple economics and not in any way profound.
Note that "tech" companies like Amazon and Apple, which do face those challenges to a degree took much longer to scale than Google of FB. And Apple really didn't reach massive trillion dollar scale until it was able to effectively outsource all of the capital intensive manufacturing and focus on the high value add "tech" components.