4 ms·

This chart makes it clear how big the difference is: http://bit.ly/Qcrv3R http://bit.ly/Qcrv3R

by pg 14y ago

kmfrk 14y ago
As a European, that's a seriously depressing chart. I guess I can try comforting myself by stating that it says "In Europe", not "by Europeans". :)
Ra1d3n 14y ago
Well maybe europeans make good midsize companies?
- fforw 14y ago
  Here in Germany that would be http://en.wikipedia.org/wiki/Mittelstand http://en.wikipedia.org/wiki/Mittelstand, SMEs that are the major backbone of German economy.
  - Silhouette 14y ago
    I'd argue that SMEs are the backbone of every successful economy. If you look at big business, say the Fortune 500 for example, these organisations are typically much more high profile than their smaller brethren, but there are still... well, only 500 of them. And while the list includes giant individual employers like Walmart, those businesses collectively still only employ something like 20M-30M people depending on how you count. Similarly, while your revenues are probably $5B+ if you made the 500 this year, plenty of the businesses towards the lower end of the list only made perhaps $20M-30M in profit, and one or two didn't even land a profit at all. Depending on whose definition you take for the maximum number of employees, companies of up to 100-300 people might be considered SMEs. At that point, you could certainly be earning profits that compete with the lower end of the Fortune 500, and there are a lot more SMEs out there than industry giants. And that's just the most basic, raw economic data about business performance and employment, without even considering cultural differences and efficiencies and innovation and numerous other factors that make smaller businesses important to the wider economy.
    - tptacek 14y ago
      ?! There are only 500 F500's because the F500 is the top 500 companies. It feels weird to have to point out that there is in fact a 501th company. You probably haven't heard of #500, but #499 --- second from the bottom of the list --- is KeyCorp, one of the country's largest regional bank chains.
      - Silhouette 14y ago
        Sorry, I'm not sure what point you're trying to make here. I was just trying to demonstrate that although "big" businesses tend to get a lot of attention, they don't actually employ a large proportion of the working population, nor do they necessarily make much more profit than a large SME. In other words, really big business isn't the driver behind a successful economy, something else is. I contend that the "something else" is SMEs.
        tptacek 14y ago
        Hard to support that without torturing definitions: http://www.census.gov/econ/smallbus.html http://www.census.gov/econ/smallbus.html
        thaumaturgy 14y ago
        Those charts are abysmally bad [1]; they also don't seem to agree with what other branches of the government are saying. From the SBA [2]: "Small firms represent 99.7 percent of all employer firms; employ half of all private sector employees; pay 44 percent of total U.S. private payroll; create more than half of the non-farm private GDP; hire 43 percent of high tech workers..." I think Silhouette has got the details pretty wrong, but if he had said that SMEs were as important to the U.S. economy as BigCos, and especially the Fortune 500, then it looks like the SBA agrees with him. [1]: The data between businesses with no employees and businesses with less than 500 employees is mutually exclusive; you can't use those carts to make any points about the contributions to the economy of businesses with less than 500 employees, including those without employees, because that data is missing. "Annual Payroll" is a pretty bad data point to use for judgements about contributions to the economy; "sales or receipts" would be better, but that's only available for all employer firms, with no further breakdown, for some reason. All in all, pretty useless here. [2]: http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24 http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24 -- seems to be down right now, try the Google cache: http://webcache.googleusercontent.com/search?q=cache:Wv_OfwDi_lIJ:web.sba.gov/faqs/faqIndexAll.cfm%3Fareaid%3D24 http://webcache.googleusercontent.com/search?q=cache:Wv_OfwD...
- digitalWestie 14y ago
  exactly, what's wrong with midsize companies?
cperciva 14y ago
That chart is dramatic, but I'm not convinced that I know what it implies. There are few large young European companies right now; but this doesn't necessarily mean that European companies are less successful, or fewer of them are founded. It just means that they grow more slowly. I'm sure the US has more people who decide to "roll the dice" and rapildly end up either spectacularly successful or spectacularly flaming out; I've seen far less evidence that there's anything wrong with a culture where slower but more consistent growth is rewarded. The graph we really need is not "number of big companies founded at given dates" but rather "number of companies which will ultimately become big founded at given dates".
- pmjordan 14y ago
  One immediate issue I see with slow-growth companies is that if all companies grow slowly, that puts a cap on the maximum growth of the overall economy. The other thing we in the software world mustn't forget is that we have marginal costs of approximately zero (or should I say picodollars?), which makes smaller companies disproportionally more competitive. The only advantage of being big in software is bigger leverage (which is usually in direct competition with agility) whereas elsewhere economies of scale are pronounced. And regarding "number of companies which will ultimately become big founded at given dates": I'd love to see some numbers on companies that are big but got there slowly. I suspect it doesn't happen, leaving aside artificially competition-stifled markets such as state-blessed monopolies. Given the nature of exponential growth, I'd be surprised if any of those Global Fortune 500 had no period of fast growth. Slow growth is also likely to be correlated to inability to react to disruption. So companies in <high-growth country> would necessarily out-compete companies in <steady-growth country> in a free, globalised market economy.
  - cperciva 14y ago
    if all companies grow slowly, that puts a cap on the maximum growth of the overall economy. Yes, but not a meaningful one. For the purposes of this discussion, "slow growth" is anything under 100% per year. I'd love to see some numbers on companies that are big but got there slowly. I suspect it doesn't happen Interesting. I don't have any data, and I'm failing at finding any right now, but I think of Coca-Cola as being a company which reached its current size primarily through steady growth. I'm sure there are large pharmaceutical and chemical companies which have had slow growth curves -- while any one product may have a sharp growth curve, the company as a whole won't. Insurance companies and banks also tend to grow slowly, and of course Berkshire Hathaway is an example, with a highest ever Y/Y growth rate of 59.3%. I suspect there's a certain amount of observation bias: Companies which grow slowly are boring, so we don't think about them.
confluence 14y ago
Looks counter cyclical - as US rises, Euro falls and vice versa. The Euro zone is in the same situation the US was during the 1900s. I wouldn't write off the europeans just yet.

This chart makes it clear how big the difference is: http://bit.ly/Qcrv3R http://bit.ly/Qcrv3R

by pg 14y ago

This chart makes it clear how big the difference is: http://bit.ly/Qcrv3R http://bit.ly/Qcrv3R

kmfrk 14y ago

As a European, that's a seriously depressing chart. I guess I can try comforting myself by stating that it says "In Europe", not "by Europeans". :)

Ra1d3n 14y ago

Well maybe europeans make good midsize companies?

fforw 14y ago
Here in Germany that would be http://en.wikipedia.org/wiki/Mittelstand http://en.wikipedia.org/wiki/Mittelstand, SMEs that are the major backbone of German economy.
- Silhouette 14y ago
  I'd argue that SMEs are the backbone of every successful economy. If you look at big business, say the Fortune 500 for example, these organisations are typically much more high profile than their smaller brethren, but there are still... well, only 500 of them. And while the list includes giant individual employers like Walmart, those businesses collectively still only employ something like 20M-30M people depending on how you count. Similarly, while your revenues are probably $5B+ if you made the 500 this year, plenty of the businesses towards the lower end of the list only made perhaps $20M-30M in profit, and one or two didn't even land a profit at all. Depending on whose definition you take for the maximum number of employees, companies of up to 100-300 people might be considered SMEs. At that point, you could certainly be earning profits that compete with the lower end of the Fortune 500, and there are a lot more SMEs out there than industry giants. And that's just the most basic, raw economic data about business performance and employment, without even considering cultural differences and efficiencies and innovation and numerous other factors that make smaller businesses important to the wider economy.
  - tptacek 14y ago
    ?! There are only 500 F500's because the F500 is the top 500 companies. It feels weird to have to point out that there is in fact a 501th company. You probably haven't heard of #500, but #499 --- second from the bottom of the list --- is KeyCorp, one of the country's largest regional bank chains.
    - Silhouette 14y ago
      Sorry, I'm not sure what point you're trying to make here. I was just trying to demonstrate that although "big" businesses tend to get a lot of attention, they don't actually employ a large proportion of the working population, nor do they necessarily make much more profit than a large SME. In other words, really big business isn't the driver behind a successful economy, something else is. I contend that the "something else" is SMEs.
      - tptacek 14y ago
        Hard to support that without torturing definitions: http://www.census.gov/econ/smallbus.html http://www.census.gov/econ/smallbus.html
        thaumaturgy 14y ago
        Those charts are abysmally bad [1]; they also don't seem to agree with what other branches of the government are saying. From the SBA [2]: "Small firms represent 99.7 percent of all employer firms; employ half of all private sector employees; pay 44 percent of total U.S. private payroll; create more than half of the non-farm private GDP; hire 43 percent of high tech workers..." I think Silhouette has got the details pretty wrong, but if he had said that SMEs were as important to the U.S. economy as BigCos, and especially the Fortune 500, then it looks like the SBA agrees with him. [1]: The data between businesses with no employees and businesses with less than 500 employees is mutually exclusive; you can't use those carts to make any points about the contributions to the economy of businesses with less than 500 employees, including those without employees, because that data is missing. "Annual Payroll" is a pretty bad data point to use for judgements about contributions to the economy; "sales or receipts" would be better, but that's only available for all employer firms, with no further breakdown, for some reason. All in all, pretty useless here. [2]: http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24 http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24 -- seems to be down right now, try the Google cache: http://webcache.googleusercontent.com/search?q=cache:Wv_OfwDi_lIJ:web.sba.gov/faqs/faqIndexAll.cfm%3Fareaid%3D24 http://webcache.googleusercontent.com/search?q=cache:Wv_OfwD...
digitalWestie 14y ago
exactly, what's wrong with midsize companies?

cperciva 14y ago

That chart is dramatic, but I'm not convinced that I know what it implies. There are few large young European companies right now; but this doesn't necessarily mean that European companies are less successful, or fewer of them are founded. It just means that they grow more slowly. I'm sure the US has more people who decide to "roll the dice" and rapildly end up either spectacularly successful or spectacularly flaming out; I've seen far less evidence that there's anything wrong with a culture where slower but more consistent growth is rewarded. The graph we really need is not "number of big companies founded at given dates" but rather "number of companies which will ultimately become big founded at given dates".

pmjordan 14y ago
One immediate issue I see with slow-growth companies is that if all companies grow slowly, that puts a cap on the maximum growth of the overall economy. The other thing we in the software world mustn't forget is that we have marginal costs of approximately zero (or should I say picodollars?), which makes smaller companies disproportionally more competitive. The only advantage of being big in software is bigger leverage (which is usually in direct competition with agility) whereas elsewhere economies of scale are pronounced. And regarding "number of companies which will ultimately become big founded at given dates": I'd love to see some numbers on companies that are big but got there slowly. I suspect it doesn't happen, leaving aside artificially competition-stifled markets such as state-blessed monopolies. Given the nature of exponential growth, I'd be surprised if any of those Global Fortune 500 had no period of fast growth. Slow growth is also likely to be correlated to inability to react to disruption. So companies in <high-growth country> would necessarily out-compete companies in <steady-growth country> in a free, globalised market economy.
- cperciva 14y ago
  if all companies grow slowly, that puts a cap on the maximum growth of the overall economy. Yes, but not a meaningful one. For the purposes of this discussion, "slow growth" is anything under 100% per year. I'd love to see some numbers on companies that are big but got there slowly. I suspect it doesn't happen Interesting. I don't have any data, and I'm failing at finding any right now, but I think of Coca-Cola as being a company which reached its current size primarily through steady growth. I'm sure there are large pharmaceutical and chemical companies which have had slow growth curves -- while any one product may have a sharp growth curve, the company as a whole won't. Insurance companies and banks also tend to grow slowly, and of course Berkshire Hathaway is an example, with a highest ever Y/Y growth rate of 59.3%. I suspect there's a certain amount of observation bias: Companies which grow slowly are boring, so we don't think about them.

confluence 14y ago

Looks counter cyclical - as US rises, Euro falls and vice versa. The Euro zone is in the same situation the US was during the 1900s. I wouldn't write off the europeans just yet.