4 ms·

How do big companies stay alive for so long? I guess it's still possible to coast on a single success for so long that the company has time to completely rot fr

by l0b0 3y ago

How do big companies stay alive for so long? I guess it's still possible to coast on a single success for so long that the company has time to completely rot from the inside before any of it reaches their customers. Or maybe the early money gets invested in a bajillion projects, on the very slim chance that the company isn't a one-trick pony.

throwaway5959 3y ago
Regulatory capture.
- yesbut 3y ago
  and Zombie Companies https://www.cnbc.com/2023/10/31/zombie-firm-bankruptcies-amid-fed-interest-rate-hikes.html https://www.cnbc.com/2023/10/31/zombie-firm-bankruptcies-ami...
- gruez 3y ago
  What sort of regulations are preventing a google competitor from starting up? "GDPR/CCPA" isn't very convincing because it was only a recent thing, but google has been around for decades.
  - throwaway5959 3y ago
    Regulatory capture covers more than just regulations. It also covers the lack of regulation; including anti-trust. Do you want to do a search or mobile OS startup with Google’s market position? Do you think they’ll release a YouTube or Google Maps application for your phone OS?
    - pjc50 3y ago
      I think that's stretching the definition of "regulatory capture" beyond useful meaning. Just say "monopoly" or the softer "market power".
  - imhoguy 3y ago
    - Patents, grow a bit more and the sharks will come. - Unfair taxation advantages, and fines are laughable.
TulliusCicero 3y ago
Because they're not actually much more dysfunctional than smaller companies, you just hear more stories because they're bigger. Bigger means more employees for things to go wrong around, bigger means that people are more likely to be interested in hearing stories and thus other people are more likely to tell, remember, and repeat said stories. A story about some idiot doing an idiotic thing at Google is vastly more likely to be passed around forever than a story at a random mom and pop company*. People love hearing about morons at big tech giants, and the storytellers oblige. That, plus sufficient economies of scale or complementary tech products. * unless that story is REALLY incredible, like that guy who went to an interview and accidentally killed the CEO's dog
- habitue 3y ago
  The bigness itself causes dysfunction, apart from just having more employees and more chances to have a disaster. It's the whole Dunbar's number thing, we really haven't figured out a great way to work effectively in huge groups yet. But... some things can only be done with huge groups, so even working ineffectively can be worth it. And in a competitive setting, your competition also has these problems, so you can win in the market despite them.
  - blablabla123 3y ago
    The problem with tiny startups is often that people are really inexperienced with people problems. Large corps somewhat fix that by having HR departments and all. But ultimately I'm starting to think today's business often relies on some sort of hype train.
    - fallingknife 3y ago
      I tend to think of HR departments as a people problem, not the solution to one.
      - atq2119 3y ago
        HR is often awful, sure. But it helps get the basics right. My brother works at a small (<100 people) startup in the material sciences, and the amount of times that his and his co-workers pay statements got messed up in creative ways is incredible. Meanwhile I'm working at a decades old big company and never had any problems like that.
nullc 3y ago
There are many companies that are so wealthy that they could just stop all revenue completely and coast no for decades while management continues to skim out their fat paychecks. Some theorize that this has already occurred. Besides, -- if you think how some companies work is fugly, go take a look at biology or politics. Companies are evolved systems. Once they're old enough they're almost always messy even when they aren't especially dysfunctional. The human body is full of almost vestigial parts and dead end metabolic pathways... huge chunks of our DNA are just self replicating repeating sequences. In reality the cruft in companies is often not even non-functional, but sometimes it serves some more complex purpose. Lots of large companies, for example, have some useless figurehead security position that exists for the actual purpose of having someone to fire when there the inevitable serious security issue occurs, without putting anyone actually productive at risk. Companies are built out of and owned by people. Like anything else they have to respect the the limitations of the building material and the needs of their owners. The resulting requirements are no less real even though they might not exist in a world populated by homoeconomicus instead of man kind. If man kind wants a blood sacrifice for security incidents then it's reasonable and good for a company to have one.
- RandomLensman 3y ago
  For investors winding down and returning money fast might be preferable to a company without profits.
  - nullc 3y ago
    Sure, and for a period corporate raiders took advantage of companies like that-- but standard defenses against raiding have become well known and widely deployed. Like life learning how to make cellulose suddenly the landscapes were littered with the husks of things that nothing knew how to digest. But the value to society at large isn't just a profit (much less an ever growing profit). It's good that we have businesses which simply satisfy the involved parties (their customers, their employees, and their owners)-- even if they don't perform well on any external metric of efficiency.
    - 3y ago
csomar 3y ago
One overlooked reason is the government intervening to save these companies. Either by bailout, lowering rate, special loans, etc… This prevents these companies from going into bankruptcy and restructuring and keeps the status quo as is. It’s kind of a disguised communism and the longer the government keeps proping the economy (and making it difficult to start new companies), the worse this will get.
- pjc50 3y ago
  > is the government intervening to save these companies Name some. Many very dysfunctional companies are also very profitable and have no need of outside bailouts. How long has IBM been at it?
  - Dracophoenix 3y ago
    General Electric.
- ace32229 3y ago
  Corporate socialism it's often called.
- carlosjobim 3y ago
  Where's the disguise?
_tk_ 3y ago
A lot of big companies don’t. Additionally, a single success often implies multiple times smaller successes that are just not visible outside a corporation.
lmm 3y ago
Sometimes being big is a structural advantage. Also there's a variant of the Peter Principle at work: any effective company grows until it is ineffective, therefore productive work is done only by companies that haven't finished growing yet.
ian0 3y ago
At its core a company is a machine that makes money. Once the machine is up and running, you just have to avoid not breaking it. An org at this stage can be completely dysfunctional as long as the machine keeps running. Also figuring out the "wins" while scaling are much more obvious than while trying to start.
- freefaler 3y ago
  That's true if the environment where the machine work doesn't change. However with business environment changing the machine need to change as well. Big corporations have "moats" (as per Buffet's definition) and a big bank vendor locked into your solution will drag a badly working machine for years.
ludicity 3y ago
Author here. My organization continues to exist in its current massive form due to regulatory capture - I can't provide details and remain anonymous, unfortunately. We would probably survive at 1/10th the size or something akin to that without that protection, and we would be considerably more efficient. EDIT: Oh, and the part that earns money through regulatory capture earns so much money that we can have all these departments doing nothing in the meantime. We might do something one day with amazing leadership, but the incentives and odds are stacked against us.
swiftcoder 3y ago
Big companies tend to have a handful of divisions that generate almost all of the revenue, and then everyone else is a cost centre. As long as the revenue generators outweigh the cost centres, no one really cares broadly about efficiency. For Facebook the revenue generator is Ads. For Amazon it was initially physical shipping, and later cloud hosting. Outside of those divisions you could burn billions on long shot projects that went nowhere, and nobody really cared...

by l0b0 3y ago

throwaway5959 3y ago

Regulatory capture.

yesbut 3y ago
and Zombie Companies https://www.cnbc.com/2023/10/31/zombie-firm-bankruptcies-amid-fed-interest-rate-hikes.html https://www.cnbc.com/2023/10/31/zombie-firm-bankruptcies-ami...
gruez 3y ago
What sort of regulations are preventing a google competitor from starting up? "GDPR/CCPA" isn't very convincing because it was only a recent thing, but google has been around for decades.
- throwaway5959 3y ago
  Regulatory capture covers more than just regulations. It also covers the lack of regulation; including anti-trust. Do you want to do a search or mobile OS startup with Google’s market position? Do you think they’ll release a YouTube or Google Maps application for your phone OS?
  - pjc50 3y ago
    I think that's stretching the definition of "regulatory capture" beyond useful meaning. Just say "monopoly" or the softer "market power".
- imhoguy 3y ago
  - Patents, grow a bit more and the sharks will come. - Unfair taxation advantages, and fines are laughable.

TulliusCicero 3y ago

Because they're not actually much more dysfunctional than smaller companies, you just hear more stories because they're bigger. Bigger means more employees for things to go wrong around, bigger means that people are more likely to be interested in hearing stories and thus other people are more likely to tell, remember, and repeat said stories. A story about some idiot doing an idiotic thing at Google is vastly more likely to be passed around forever than a story at a random mom and pop company*. People love hearing about morons at big tech giants, and the storytellers oblige. That, plus sufficient economies of scale or complementary tech products. * unless that story is REALLY incredible, like that guy who went to an interview and accidentally killed the CEO's dog

habitue 3y ago
The bigness itself causes dysfunction, apart from just having more employees and more chances to have a disaster. It's the whole Dunbar's number thing, we really haven't figured out a great way to work effectively in huge groups yet. But... some things can only be done with huge groups, so even working ineffectively can be worth it. And in a competitive setting, your competition also has these problems, so you can win in the market despite them.
- blablabla123 3y ago
  The problem with tiny startups is often that people are really inexperienced with people problems. Large corps somewhat fix that by having HR departments and all. But ultimately I'm starting to think today's business often relies on some sort of hype train.
  - fallingknife 3y ago
    I tend to think of HR departments as a people problem, not the solution to one.
    - atq2119 3y ago
      HR is often awful, sure. But it helps get the basics right. My brother works at a small (<100 people) startup in the material sciences, and the amount of times that his and his co-workers pay statements got messed up in creative ways is incredible. Meanwhile I'm working at a decades old big company and never had any problems like that.

nullc 3y ago

There are many companies that are so wealthy that they could just stop all revenue completely and coast no for decades while management continues to skim out their fat paychecks. Some theorize that this has already occurred. Besides, -- if you think how some companies work is fugly, go take a look at biology or politics. Companies are evolved systems. Once they're old enough they're almost always messy even when they aren't especially dysfunctional. The human body is full of almost vestigial parts and dead end metabolic pathways... huge chunks of our DNA are just self replicating repeating sequences. In reality the cruft in companies is often not even non-functional, but sometimes it serves some more complex purpose. Lots of large companies, for example, have some useless figurehead security position that exists for the actual purpose of having someone to fire when there the inevitable serious security issue occurs, without putting anyone actually productive at risk. Companies are built out of and owned by people. Like anything else they have to respect the the limitations of the building material and the needs of their owners. The resulting requirements are no less real even though they might not exist in a world populated by homoeconomicus instead of man kind. If man kind wants a blood sacrifice for security incidents then it's reasonable and good for a company to have one.

RandomLensman 3y ago
For investors winding down and returning money fast might be preferable to a company without profits.
- nullc 3y ago
  Sure, and for a period corporate raiders took advantage of companies like that-- but standard defenses against raiding have become well known and widely deployed. Like life learning how to make cellulose suddenly the landscapes were littered with the husks of things that nothing knew how to digest. But the value to society at large isn't just a profit (much less an ever growing profit). It's good that we have businesses which simply satisfy the involved parties (their customers, their employees, and their owners)-- even if they don't perform well on any external metric of efficiency.
  - 3y ago

csomar 3y ago

One overlooked reason is the government intervening to save these companies. Either by bailout, lowering rate, special loans, etc… This prevents these companies from going into bankruptcy and restructuring and keeps the status quo as is. It’s kind of a disguised communism and the longer the government keeps proping the economy (and making it difficult to start new companies), the worse this will get.

pjc50 3y ago
> is the government intervening to save these companies Name some. Many very dysfunctional companies are also very profitable and have no need of outside bailouts. How long has IBM been at it?
- Dracophoenix 3y ago
  General Electric.
ace32229 3y ago
Corporate socialism it's often called.
carlosjobim 3y ago
Where's the disguise?

_tk_ 3y ago

A lot of big companies don’t. Additionally, a single success often implies multiple times smaller successes that are just not visible outside a corporation.

lmm 3y ago

Sometimes being big is a structural advantage. Also there's a variant of the Peter Principle at work: any effective company grows until it is ineffective, therefore productive work is done only by companies that haven't finished growing yet.

ian0 3y ago

At its core a company is a machine that makes money. Once the machine is up and running, you just have to avoid not breaking it. An org at this stage can be completely dysfunctional as long as the machine keeps running. Also figuring out the "wins" while scaling are much more obvious than while trying to start.

freefaler 3y ago
That's true if the environment where the machine work doesn't change. However with business environment changing the machine need to change as well. Big corporations have "moats" (as per Buffet's definition) and a big bank vendor locked into your solution will drag a badly working machine for years.

ludicity 3y ago

Author here. My organization continues to exist in its current massive form due to regulatory capture - I can't provide details and remain anonymous, unfortunately. We would probably survive at 1/10th the size or something akin to that without that protection, and we would be considerably more efficient. EDIT: Oh, and the part that earns money through regulatory capture earns so much money that we can have all these departments doing nothing in the meantime. We might do something one day with amazing leadership, but the incentives and odds are stacked against us.

swiftcoder 3y ago

Big companies tend to have a handful of divisions that generate almost all of the revenue, and then everyone else is a cost centre. As long as the revenue generators outweigh the cost centres, no one really cares broadly about efficiency. For Facebook the revenue generator is Ads. For Amazon it was initially physical shipping, and later cloud hosting. Outside of those divisions you could burn billions on long shot projects that went nowhere, and nobody really cared...