4 ms·

Here is one: Large organizations will start to do worse now, though, because for the first time in history they're no longer getting the best people. I believ

Here is one: Large organizations will start to do worse now, though, because for the first time in history they're no longer getting the best people. I believe this statement to be false. Sampling from my college class and my smart hometown friends, the most common careers are, in order: 1) Law School/Med School 2) Wall St. 3) Consulting 4) Government 5) Academia 6) non-profit 7) other large corporation 8) small business. Perhaps 1% are working for a startup. This dominance by large organizations is historically weird. For most of American history, the goal of an ambitious person was to own his own business or farm. The really ambitious would aim to turn that small business into an empire. Statistically, the average firm size was far, far smaller in 1900, so most ambitious people would be working for small businesses. Anecdotally, my great-grand parents mostly ran a business or were self-employed. But my father and uncles were mostly "organization men", as are most of my peers. I think relative to 1960, people today are more likely to work for small organizations. But the "organization man" economy of the 60's was a creation of the New Deal and World War II. We're still trying to unwind the consolidation of that era.

kingkongrevenge 18y ago
> the goal of an ambitious person was to own his own business or farm Establishment elite have used government to pervert the risk-return relationship. You can get relatively low risk high returns as a doctor, for example, because the profession is cartelized. http://www.2blowhards.com/archives/2007/02/risk_reward_and.html http://www.2blowhards.com/archives/2007/02/risk_reward_and.h...
pg 18y ago
Ok, so you agree that since 1960 it's been true that large organizations no longer get all the best people. The question is whether before that ambitious people were drawn to larger organizations or not. You have (accidentally I realize) selected a very anomalous time and place as your counterexample. In the first half of its history America was practically unique among richer countries in having huge amounts of unsettled agricultural land. So yes, in America between 1650 and 1850, a lot of ambitious people moved west to establish new farms. But broaden the scope to include the rest of the world, and the time to more than that 200 year window, and ask the question: did an ambitious person stay in his local village and farm, or did he leave to seek his fortune? You can also approach this question from the other direction. Examine a large organization for its time (e.g. the British East India Company, the Medici bank, Cluny, the papal curia) and ask: were the people running it more or less ambitious than peers who'd stayed on the farm? Either way you get the same answer.
- ivankirigin 18y ago
  Ambition has too low dimensionality to describe the differences between farm founders moving west and the leaders of the industrial revolution. I agree with your essay though.
- bokonist 18y ago
  It wasn't just the American west that attracted the ambitious. Sample from a time and place with healthy entrepreneurial capitalism and I think you'll find that ambitious people had a much greater inclination towards starting a business than they do today. Examples: every American city pre-1930, most of Western Europe between 1815 and 1914, the Netherlands post 1600, and Venice in the 15th century. Nothing like our modern "organization man" economy existed in these places. Ambitious, upwardly mobile people did not find safe jobs as managers. They did not rise to the top by climbing the ladder. They started workshops, built factories, and captained merchant ships. The British East India Company and the Medici bank were among the world's very first startups, and they were both highly successful. I'd also note that the Medici bank had fewer employees than a well funded silicon valley startup. And each of its nine branches was a semi-independent startup - kind of like your "pooled-risk management company". Of course, in places without entrepreneurial capitalism, most ambitious people aimed to work for large existing organizations - usually the government, church, or military. Examples: France before 1815, the papal states, China for its entire history, the late Roman empire, modern Japan, and modern Europe. It seems part of your thesis is: "For most of history, ambitious people sought to join large organizations such as the church, state, or army. But with the rise of entrepreneurial capitalism, ambitious people instead chose to start or join small, growth oriented businesses" I agree with this part of your thesis completely. My point of contention is that I don't think entrepreneurial capitalism began in the late twentieth century. Entrepreneurial capitalism began in earnest around the 17th century, and peaked across the Western world in 1914. Then the world wars and the progressive movement almost completely wiped out entrepreneurial capitalism and replaced it with the civil service state/managed capitalism. The rise of Silicon Valley is a step towards restoration, not a brand new innovation. Nor are venture capital firms anything new. It used to be that banks and angels were the primary sources of venture capital, see the Boston Associates for one example of many: http://en.wikipedia.org/wiki/The_Boston_Associates http://en.wikipedia.org/wiki/The_Boston_Associates. But post-New Deal, banks were highly regulated, non-risk taking entities. The 95% marginal tax rates severely limited the supply of wealthy investors. The founders of Silicon Valley had to basically reinvent the wheel and call it a different name.

kingkongrevenge 18y ago

> the goal of an ambitious person was to own his own business or farm Establishment elite have used government to pervert the risk-return relationship. You can get relatively low risk high returns as a doctor, for example, because the profession is cartelized. http://www.2blowhards.com/archives/2007/02/risk_reward_and.html http://www.2blowhards.com/archives/2007/02/risk_reward_and.h...

pg 18y ago

Ok, so you agree that since 1960 it's been true that large organizations no longer get all the best people. The question is whether before that ambitious people were drawn to larger organizations or not. You have (accidentally I realize) selected a very anomalous time and place as your counterexample. In the first half of its history America was practically unique among richer countries in having huge amounts of unsettled agricultural land. So yes, in America between 1650 and 1850, a lot of ambitious people moved west to establish new farms. But broaden the scope to include the rest of the world, and the time to more than that 200 year window, and ask the question: did an ambitious person stay in his local village and farm, or did he leave to seek his fortune? You can also approach this question from the other direction. Examine a large organization for its time (e.g. the British East India Company, the Medici bank, Cluny, the papal curia) and ask: were the people running it more or less ambitious than peers who'd stayed on the farm? Either way you get the same answer.

ivankirigin 18y ago
Ambition has too low dimensionality to describe the differences between farm founders moving west and the leaders of the industrial revolution. I agree with your essay though.
bokonist 18y ago
It wasn't just the American west that attracted the ambitious. Sample from a time and place with healthy entrepreneurial capitalism and I think you'll find that ambitious people had a much greater inclination towards starting a business than they do today. Examples: every American city pre-1930, most of Western Europe between 1815 and 1914, the Netherlands post 1600, and Venice in the 15th century. Nothing like our modern "organization man" economy existed in these places. Ambitious, upwardly mobile people did not find safe jobs as managers. They did not rise to the top by climbing the ladder. They started workshops, built factories, and captained merchant ships. The British East India Company and the Medici bank were among the world's very first startups, and they were both highly successful. I'd also note that the Medici bank had fewer employees than a well funded silicon valley startup. And each of its nine branches was a semi-independent startup - kind of like your "pooled-risk management company". Of course, in places without entrepreneurial capitalism, most ambitious people aimed to work for large existing organizations - usually the government, church, or military. Examples: France before 1815, the papal states, China for its entire history, the late Roman empire, modern Japan, and modern Europe. It seems part of your thesis is: "For most of history, ambitious people sought to join large organizations such as the church, state, or army. But with the rise of entrepreneurial capitalism, ambitious people instead chose to start or join small, growth oriented businesses" I agree with this part of your thesis completely. My point of contention is that I don't think entrepreneurial capitalism began in the late twentieth century. Entrepreneurial capitalism began in earnest around the 17th century, and peaked across the Western world in 1914. Then the world wars and the progressive movement almost completely wiped out entrepreneurial capitalism and replaced it with the civil service state/managed capitalism. The rise of Silicon Valley is a step towards restoration, not a brand new innovation. Nor are venture capital firms anything new. It used to be that banks and angels were the primary sources of venture capital, see the Boston Associates for one example of many: http://en.wikipedia.org/wiki/The_Boston_Associates http://en.wikipedia.org/wiki/The_Boston_Associates. But post-New Deal, banks were highly regulated, non-risk taking entities. The 95% marginal tax rates severely limited the supply of wealthy investors. The founders of Silicon Valley had to basically reinvent the wheel and call it a different name.