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[I wrote the 1980s VC post] When I think about building entirely new markets, I don't think the risk is the quantifiable risk that you're thinking of. It's wha
by ganeumann 12y ago
[I wrote the 1980s VC post]
When I think about building entirely new markets, I don't think the risk is the quantifiable risk that you're thinking of. It's what Frank Knight called "uncertainty" (Knight, "Risk, Uncertainty and Profit", http://www.econlib.org/library/Knight/knRUP.html http://www.econlib.org/library/Knight/knRUP.html). I prefer to call it "unknowability", but the concept is the same.
The unknowability of new markets is what makes them so valuable. If it were just risk, then it could be managed (ie. insurance) and established businesses would create all new markets. This, it seems, is not what is happening.
That said, I don't think Chris has misanalyzed the situation. It's just that he and I start with fundamentally different beliefs: I think Perez is wrong, and he thinks she is right. My post was written partly out of my rejection of Perez, but I don't think it comes anywhere close to actually refuting her.
- npalli 12y agoWhere do you think Perez is wrong? Have you fleshed out your refutation on your blog? Awesome blog, BTW. Great find for me this year.
- ganeumann 12y agoThanks! And no. That blog post was a start at trying to sort out my disagreement with Perez (thinking out loud, basically.) My initial concern was her too-neat cycles and that the chemo-therapeutic revolution (anti-virals, antibiotics, etc.) doesn't fit into her theory at all, even though it's certainly the technological revolution that has had the most impact. I like a lot of her work, especially the idea of technological systems and technological revolutions. It's the long-wave stuff I dislike. I think that systems thinking leads you to the conclusion that there will not be any deterministic cycles, so it troubles me that she takes that leap of faith.