4 ms·

The New New Economy: More Startups, Fewer Giants, Infinite Opportunity

26 points by peter123 17y ago

aurora72 17y ago
Great, but this time the states are getting bigger, aren't they? And also, we see the news of "vertical integration" in the IT business, e.g. Oracle buying Sun. What does the author have to say about them?
- cwan 17y ago
  I think he might say that big companies aren't going to go away altogether but there will be fewer of them relative to the past. I suspect it's overreach for the purposes of selling the magazine but I think his thesis is sound. Dollar for dollar, I don't think it's ever been easier to start a new business and compete against much larger ones. Outsourcing work is a lot simpler through things Guru, Mechanical Turk, etc. It's getting less costly to launch new websites and with the overall trend towards more transactions being done over the net, this is positive (though I seem to recall that Amazon is accounting for a large amount of those). But it's always the small companies that dominate the periphery - those niche markets - but with the web, this means that what used to be a niche limited by geography is now massive. Living in China this seems obvious to see. As a billion people get wealthier, the need for even the oddest of niches gets at least 5x bigger.
- enki 17y ago
  a counterexample doesn't mean there's no trend. it's a prediction, so i doubt he'll have hard data to back it up, but i think the argument is pretty compelling: if transaction costs hinder smaller companies in competing, but on the upside they have a competitive edge in being able to adapt faster, then lower transaction costs will increase the number of viable small companies, and decrease the relative viability of big companies. how far this trend will go is hard to say. what advantages of being big are really sustainable?
  - aurora72 17y ago
    Oh no, I didn't mean to object the author's point of view, on the contrary I agree. Thanks to the current technological level, it's definitely much easier and less risky than ever for small companies to undertake businesses which normally bigger companies are supposed to take. TV Broadcasting is an immediate example here. What I wanted to point was that there's a real and enormous effort by the governments to keep those "big companies" going no matter how much it costs. Apparently those big, unproductive and unsuccessful companies are being rewarded. I just wish the author had a thing or two to say about this irritating fact as it concerns thousands of billions of dollars being spent to help those biggies stay big a little more.
    - Kadin 17y ago
      Steady, predictable employment is the opiate of the masses in a way that religion will never be. That's why there's so much political will to keep those big companies going: they keep, or kept, a lot of people steadily employed, and those employees vote. I think it's entirely possible that an economy consisting of fewer giants and more startups would have less overall unemployment and produce more real wealth, but it would also require workers to give up any remaining idea of lifetime employment and instead embrace careers as people in the IT field are frequently used to them: a string of engagements with different companies, hopefully helping you to develop personally and professionally. It's not necessarily an easy sell; to a lot of people, it looks a lot more risky and less certain than the jobs their fathers had at the steel mill or the auto plant. To the extent that such jobs exist anymore, there's going to be a lot of political pressure to keep them around at any cost.
mbrubeck 17y ago
Ironic headline, given that Wired was the major cheerleader of the last "New Economy" during the 1990s dotcom bubble. They trumpeted technologies like hydrogen power as the Next Big Thing in their original New Economy articles. (Predictions are hard, especially about the future.)
joecode 17y ago
As venture capitalist Paul Graham put it, "It turns out the rule 'large and disciplined organizations win' needs to have a qualification appended: 'at games that change slowly.' No one knew till change reached a sufficient speed. An interesting article, and no doubt a prediction that many of us in the startup world would like to see come true, but the above quote was one of the few pieces of actual support for its thesis. And it seems like most of the economy does not change quickly, and so for the most part, the claims appear baseless. Side musing: I wonder how Paul feels being referred to as a "venture capitalist".
- pchristensen 17y ago
  It took me a triple-take to tell they were talking about pg. The "venture capitalist" tag obscured the name completely.
ahoyhere 17y ago
Giant empires are great! Oops, it rotted from within. Small countries are great! Giant empires are great! Oops, it tore itself apart by war. Small countries are great! Giant empires are great! Oops, we decided it was too much work and gave the other countries back. Small countries are agile! Ad nauseum...
jamesk2 17y ago
It does not matter if you're huge or tiny. The ability to quickly anticipate and react to unstoppable change is the key to success. Microsoft is a giant but when threatened by tiny Netscape they moved mountains to get their internet tech out there.

26 points by peter123 17y ago

Great, but this time the states are getting bigger, aren't they? And also, we see the news of "vertical integration" in the IT business, e.g. Oracle buying Sun. What does the author have to say about them?

cwan 17y ago
I think he might say that big companies aren't going to go away altogether but there will be fewer of them relative to the past. I suspect it's overreach for the purposes of selling the magazine but I think his thesis is sound. Dollar for dollar, I don't think it's ever been easier to start a new business and compete against much larger ones. Outsourcing work is a lot simpler through things Guru, Mechanical Turk, etc. It's getting less costly to launch new websites and with the overall trend towards more transactions being done over the net, this is positive (though I seem to recall that Amazon is accounting for a large amount of those). But it's always the small companies that dominate the periphery - those niche markets - but with the web, this means that what used to be a niche limited by geography is now massive. Living in China this seems obvious to see. As a billion people get wealthier, the need for even the oddest of niches gets at least 5x bigger.
enki 17y ago
a counterexample doesn't mean there's no trend. it's a prediction, so i doubt he'll have hard data to back it up, but i think the argument is pretty compelling: if transaction costs hinder smaller companies in competing, but on the upside they have a competitive edge in being able to adapt faster, then lower transaction costs will increase the number of viable small companies, and decrease the relative viability of big companies. how far this trend will go is hard to say. what advantages of being big are really sustainable?
- aurora72 17y ago
  Oh no, I didn't mean to object the author's point of view, on the contrary I agree. Thanks to the current technological level, it's definitely much easier and less risky than ever for small companies to undertake businesses which normally bigger companies are supposed to take. TV Broadcasting is an immediate example here. What I wanted to point was that there's a real and enormous effort by the governments to keep those "big companies" going no matter how much it costs. Apparently those big, unproductive and unsuccessful companies are being rewarded. I just wish the author had a thing or two to say about this irritating fact as it concerns thousands of billions of dollars being spent to help those biggies stay big a little more.
  - Kadin 17y ago
    Steady, predictable employment is the opiate of the masses in a way that religion will never be. That's why there's so much political will to keep those big companies going: they keep, or kept, a lot of people steadily employed, and those employees vote. I think it's entirely possible that an economy consisting of fewer giants and more startups would have less overall unemployment and produce more real wealth, but it would also require workers to give up any remaining idea of lifetime employment and instead embrace careers as people in the IT field are frequently used to them: a string of engagements with different companies, hopefully helping you to develop personally and professionally. It's not necessarily an easy sell; to a lot of people, it looks a lot more risky and less certain than the jobs their fathers had at the steel mill or the auto plant. To the extent that such jobs exist anymore, there's going to be a lot of political pressure to keep them around at any cost.

mbrubeck 17y ago

Ironic headline, given that Wired was the major cheerleader of the last "New Economy" during the 1990s dotcom bubble. They trumpeted technologies like hydrogen power as the Next Big Thing in their original New Economy articles. (Predictions are hard, especially about the future.)

joecode 17y ago

As venture capitalist Paul Graham put it, "It turns out the rule 'large and disciplined organizations win' needs to have a qualification appended: 'at games that change slowly.' No one knew till change reached a sufficient speed. An interesting article, and no doubt a prediction that many of us in the startup world would like to see come true, but the above quote was one of the few pieces of actual support for its thesis. And it seems like most of the economy does not change quickly, and so for the most part, the claims appear baseless. Side musing: I wonder how Paul feels being referred to as a "venture capitalist".

pchristensen 17y ago
It took me a triple-take to tell they were talking about pg. The "venture capitalist" tag obscured the name completely.

ahoyhere 17y ago

Giant empires are great! Oops, it rotted from within. Small countries are great! Giant empires are great! Oops, it tore itself apart by war. Small countries are great! Giant empires are great! Oops, we decided it was too much work and gave the other countries back. Small countries are agile! Ad nauseum...

jamesk2 17y ago

It does not matter if you're huge or tiny. The ability to quickly anticipate and react to unstoppable change is the key to success. Microsoft is a giant but when threatened by tiny Netscape they moved mountains to get their internet tech out there.