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So in what world are startups going to have the funding or the infrastructure to have warehouses worldwide to compete with Amazon or servers to compete with AWS

So in what world are startups going to have the funding or the infrastructure to have warehouses worldwide to compete with Amazon or servers to compete with AWS? Or in Google’s case the infrastructure to design custom processors with the demand to actually buy enough slots from TSMC to make it affordable? You can’t make laws to undue scale efficiencies. A startup isn’t going to make a phone in their garage to compete with Apple no matter what magically thinking they have about the government passing laws. Most startups can’t even pay the wages of a mid level employee at BigTech company that has been out of school for three years. Just like any other industry, if a startup can’t afford the free market price of labor, that’s a them problem.

AnthonyMouse 1y ago
> So in what world are startups going to have the funding or the infrastructure to have warehouses worldwide to compete with Amazon or servers to compete with AWS? In a competitive market you don't have that. Instead of a massive conglomerate having a warehouse in every region, Alice, Bob and Carol each have a warehouse near New York, Dan, Erin and Frank have one near Houston, etc., and then a dozen independent aggregators each negotiate with a warehouse in each region to store goods for anyone who wants to offer fast delivery everywhere. Meanwhile doing that, whether you're Amazon or not, is inefficient for anything that doesn't need to be delivered on short notice. If you have a recurring subscription to get a box of toiletries every month, it doesn't matter if it arrives on the 17th because they mailed it from a local warehouse on the 16th or a centralized warehouse on the 10th, and delivery companies offer discounts if you palletize shipments based on region even if they come from a central location, which removes the cost of having local warehouses for those regions. > Or in Google’s case the infrastructure to design custom processors with the demand to actually buy enough slots from TSMC to make it affordable? If there is aggregate demand for those processors then you sell them to the other people who want them regardless of whether they're within the same corporation, and then they don't have to be. > You can’t make laws to undue scale efficiencies. A startup isn’t going to make a phone in their garage to compete with Apple no matter what magically thinking they have about the government passing laws. The defect is in expecting one entity to make the entire phone. One company makes a screen, one makes a battery, one designs a processor, another fabs it, another makes memory, another makes the OS (or it's open source), another lays out the system board to integrate the various components, another does final assembly, etc. When you don't require the whole thing to be done under the same umbrella it doesn't take a trillion dollar company to do any given piece. > Most startups can’t even pay the wages of a mid level employee at BigTech company that has been out of school for three years. Suppose phone components were easily available as a fungible commodity, and had standardized interfaces so that integrating them was only a modest amount of work, i.e. a year of effort for a full-time engineer. Then you get a phone which sells as an also-ran -- a million units a year for three years, less than 0.5% of Apple's sales volume. The phone sells for $250, less than the cheapest new iPhone, and 0.5% of the retail price goes to pay the engineer. Then they'd be making $3.75M for that year of work. Those numbers could be off by 10 fold and still be a competitive salary. Except that the market is too concentrated and the standards don't exist, which means it's not that easy as things are now. > Just like any other industry, if a startup can’t afford the free market price of labor, that’s a them problem. The issue is, is it a free market, or a captured one?
- JustExAWS 1y ago
  Everything you suggested gives customers a worse user experience - see Android vs iOS and Windows vs Macs - and higher prices because each component in the chain needs to make a profit and slower product cycles than when one company can offer an integrated experience. If I want a regionally redundant infrastructure do I now have to negotiate with multiple companies in a region (multi AZ) and multiple regions? Do I have to negotiate with thousands of Points of preference for my CDN? Do all of these companies who want their own TPUs have to negotiate with TSMC?
  - AnthonyMouse 1y ago
    > Everything you suggested gives customers a worse user experience - see Android vs iOS and Windows vs Macs - and higher prices because each component in the chain needs to make a profit and slower product cycles than when one company can offer an integrated experience. None of that is true and the impression only comes about because concentrated markets create a small sample size and Microsoft and Google in particular care less about user experience than Apple. Putting aside things like third party support (which come from incumbency and scale rather than design choices), which desktop operating system has the best user experience: Windows, macOS, or Linux? It's Linux by a hair, then macOS, with Windows a mile behind either of them. Which doesn't make any sense if vertical integration is a huge advantage, but makes perfect sense if specifically Microsoft sucks and being insulated from real competition allows them to. "Each company has to make a margin" doesn't increase costs whatsoever because each company only gets the margin on the part they're doing. If the RAM has a net production cost of $20 and the flash is $25 and they're both made by the same company with a 10% margin then the total cost is $45 + 10%. If they're made by two different companies then one costs $20 + 10%, the other costs $25 + 10% and the total is still $45 + 10%. And the same is true for steps that happen in series rather than in parallel, because margins aren't a fixed percentage, they're the amount you can get away with before the customer goes to a competitor, which in a competitive market is related to the cost of production + cost of capital. Having a combined retailer and wholesaler means the combined entity then has combined costs -- the "retailer" has to negotiate with manufacturers and the "wholesaler" has to operate retail stores, and therefore needs both margins to operate. Meanwhile market consolidation is the thing that actually increases prices, because the lack of competition is what allows the supplier to increase their margins without losing business to competitors. > If I want a regionally redundant infrastructure do I now have to negotiate with multiple companies in a region (multi AZ) and multiple regions? Do I have to negotiate with thousands of Points of preference for my CDN? If you want a cart full of groceries, do you have to negotiate with hundreds of orange groves and chicken farms? No, supermarkets do that and then you go to any of the numerous supermarkets to get your groceries. That doesn't require the supermarkets to own the orange groves or chicken farms. > Do all of these companies who want their own TPUs have to negotiate with TSMC? Do all of the companies that want their own GPUs have to negotiate with TSMC? No, AMD/nVidia/Broadcom/NeoMagic/Qualcomm/etc. negotiates with TSMC/Samsung/GlobalFoundries/Intel/etc. and then you buy a GPU from a GPU company instead of the GPU/TPU customer needing to design their own GPU/TPU.

AnthonyMouse 1y ago

> So in what world are startups going to have the funding or the infrastructure to have warehouses worldwide to compete with Amazon or servers to compete with AWS? In a competitive market you don't have that. Instead of a massive conglomerate having a warehouse in every region, Alice, Bob and Carol each have a warehouse near New York, Dan, Erin and Frank have one near Houston, etc., and then a dozen independent aggregators each negotiate with a warehouse in each region to store goods for anyone who wants to offer fast delivery everywhere. Meanwhile doing that, whether you're Amazon or not, is inefficient for anything that doesn't need to be delivered on short notice. If you have a recurring subscription to get a box of toiletries every month, it doesn't matter if it arrives on the 17th because they mailed it from a local warehouse on the 16th or a centralized warehouse on the 10th, and delivery companies offer discounts if you palletize shipments based on region even if they come from a central location, which removes the cost of having local warehouses for those regions. > Or in Google’s case the infrastructure to design custom processors with the demand to actually buy enough slots from TSMC to make it affordable? If there is aggregate demand for those processors then you sell them to the other people who want them regardless of whether they're within the same corporation, and then they don't have to be. > You can’t make laws to undue scale efficiencies. A startup isn’t going to make a phone in their garage to compete with Apple no matter what magically thinking they have about the government passing laws. The defect is in expecting one entity to make the entire phone. One company makes a screen, one makes a battery, one designs a processor, another fabs it, another makes memory, another makes the OS (or it's open source), another lays out the system board to integrate the various components, another does final assembly, etc. When you don't require the whole thing to be done under the same umbrella it doesn't take a trillion dollar company to do any given piece. > Most startups can’t even pay the wages of a mid level employee at BigTech company that has been out of school for three years. Suppose phone components were easily available as a fungible commodity, and had standardized interfaces so that integrating them was only a modest amount of work, i.e. a year of effort for a full-time engineer. Then you get a phone which sells as an also-ran -- a million units a year for three years, less than 0.5% of Apple's sales volume. The phone sells for $250, less than the cheapest new iPhone, and 0.5% of the retail price goes to pay the engineer. Then they'd be making $3.75M for that year of work. Those numbers could be off by 10 fold and still be a competitive salary. Except that the market is too concentrated and the standards don't exist, which means it's not that easy as things are now. > Just like any other industry, if a startup can’t afford the free market price of labor, that’s a them problem. The issue is, is it a free market, or a captured one?

JustExAWS 1y ago
Everything you suggested gives customers a worse user experience - see Android vs iOS and Windows vs Macs - and higher prices because each component in the chain needs to make a profit and slower product cycles than when one company can offer an integrated experience. If I want a regionally redundant infrastructure do I now have to negotiate with multiple companies in a region (multi AZ) and multiple regions? Do I have to negotiate with thousands of Points of preference for my CDN? Do all of these companies who want their own TPUs have to negotiate with TSMC?
- AnthonyMouse 1y ago
  > Everything you suggested gives customers a worse user experience - see Android vs iOS and Windows vs Macs - and higher prices because each component in the chain needs to make a profit and slower product cycles than when one company can offer an integrated experience. None of that is true and the impression only comes about because concentrated markets create a small sample size and Microsoft and Google in particular care less about user experience than Apple. Putting aside things like third party support (which come from incumbency and scale rather than design choices), which desktop operating system has the best user experience: Windows, macOS, or Linux? It's Linux by a hair, then macOS, with Windows a mile behind either of them. Which doesn't make any sense if vertical integration is a huge advantage, but makes perfect sense if specifically Microsoft sucks and being insulated from real competition allows them to. "Each company has to make a margin" doesn't increase costs whatsoever because each company only gets the margin on the part they're doing. If the RAM has a net production cost of $20 and the flash is $25 and they're both made by the same company with a 10% margin then the total cost is $45 + 10%. If they're made by two different companies then one costs $20 + 10%, the other costs $25 + 10% and the total is still $45 + 10%. And the same is true for steps that happen in series rather than in parallel, because margins aren't a fixed percentage, they're the amount you can get away with before the customer goes to a competitor, which in a competitive market is related to the cost of production + cost of capital. Having a combined retailer and wholesaler means the combined entity then has combined costs -- the "retailer" has to negotiate with manufacturers and the "wholesaler" has to operate retail stores, and therefore needs both margins to operate. Meanwhile market consolidation is the thing that actually increases prices, because the lack of competition is what allows the supplier to increase their margins without losing business to competitors. > If I want a regionally redundant infrastructure do I now have to negotiate with multiple companies in a region (multi AZ) and multiple regions? Do I have to negotiate with thousands of Points of preference for my CDN? If you want a cart full of groceries, do you have to negotiate with hundreds of orange groves and chicken farms? No, supermarkets do that and then you go to any of the numerous supermarkets to get your groceries. That doesn't require the supermarkets to own the orange groves or chicken farms. > Do all of these companies who want their own TPUs have to negotiate with TSMC? Do all of the companies that want their own GPUs have to negotiate with TSMC? No, AMD/nVidia/Broadcom/NeoMagic/Qualcomm/etc. negotiates with TSMC/Samsung/GlobalFoundries/Intel/etc. and then you buy a GPU from a GPU company instead of the GPU/TPU customer needing to design their own GPU/TPU.