Businesses should try to be the best, not the biggest • Hacker News Board

Re: Businesses should try to be the best, not the biggest

#211

Post by titzer » Fri, Jan 29, 2021, 3:03 PM UTC

belval wrote: post #134

hh3k0 wrote: post #118

Earlier quoted context omitted.

"We have a finite environment—the planet. Anyone who thinks that you can have infinite growth in a finite environment is either a madman or an economist." David Attenborough

That quote always bugged me because it disregards that our economic growth is not really tethered to natural resources. Sure a company like Coca-Cola can only grow so much before it effectively covers the entire planet, but they can still reduce costs to improve their profit margins and displace existing drinks from other companies with a new product. The cloud as a business is mostly about building products that add…

> There are no environmental restrictions here you could grow for as long as user needs grow.

Computers need matter, energy, and space.

Re: Businesses should try to be the best, not the biggest

#212

Post by villasv » Fri, Jan 29, 2021, 3:03 PM UTC

I enjoyed the article and mostly agree with the authors opinions, but I think it glances over some important shifts in modern economies.

1) It is becoming increasingly hard to stay small if you have a competitor taking advantage of economies of scale and network effects. 2) It is becoming increasingly common for new sectors to discover economies of scale and network effects as digital transforms products and services.

So from a game theoretical point of view, it is kind of inevitable that "being the best" will start to be shadowed by "being big" if size becomes relevant for survival.

If you don't want to be part of something big, the alternative is to build something incredibly differentiated (like sake with 800 years of history).

Basecamp is cited in the article and their approach is exactly this. They build something incredibly differentiated like Hey (a 100 USD/year email service). But "email services" is not a market with significant economies of scale nor network effects, Google and Microsoft would not offer such service for free if it was.

But if you're interested in, say building a job board, where there are strong network effects. You'll never be able to be at peace regarding size. As soon as a direct competitor becomes bigger, you're in danger. There is room for a few medium size contenders, not infinitely many artisans with their slow-going shops.

The thing is: if you open a sake brewery today, can you survive long enough to make it highly differentiated and earn your place in the market? Not an easy task. So I don't blame founders if most companies today are born with growth in mind. Some if it might be tunnel vision and articles like these are good to remind everyone that "big" is not the only option, but it's not like the other options are always feasible either.

Re: Businesses should try to be the best, not the biggest

#213

Post by joehx2 » Fri, Jan 29, 2021, 3:03 PM UTC

hh3k0 wrote: post #118

dm319 wrote: post #108

Earlier quoted context omitted.

There is a growing body of thought that capitalism and, more specifically, continued growth, is unsustainable. A lot of the literature focuses around the environment [1], but we should also think about businesses that perform a useful community service or product to their community - must they always grow? If not, must their competitor? [1] https://www.tandfonline.com/doi/pdf/10.1558/jocr.v5i2.197

"We have a finite environment—the planet. Anyone who thinks that you can have infinite growth in a finite environment is either a madman or an economist." David Attenborough

You can have unending growth even with finite resources.

It's Zeno's Paradox - if you have use half of the resources, and then half of the remaining, and then half of that remaining, you could continue forever.

Re: Businesses should try to be the best, not the biggest

#214

Post by [deleted] » Fri, Jan 29, 2021, 3:04 PM UTC

MarkusWandel wrote: post #202

"Go big or go home". This seems to be a uniquely north-American attitude. Germany, or maybe Europe, is full of so-called "Mittelstand" companies that are good in what they do, have 500-ish employees, have been in the same family ownership for generations and provide a good solid living for everyone involved. What is wrong with that? It goes without saying that staying mid-sized doesn't mean staying complacent, but yo…

[deleted]

Re: Businesses should try to be the best, not the biggest

#215

Post by danaris » Fri, Jan 29, 2021, 3:04 PM UTC

ROARosen wrote: post #156

soVeryTired wrote: post #102

I think one interesting way of looking at a company is as a power struggle between - the owners - the employees - the managers - the clients - (and sometimes) the government / general public Companies can benefit all of these parties, but a good system should have forces in place to prevent any of them from getting the upper hand. Some of those forces include competition, unionisation, labour mobility, fiduciary duty…

Sure there's the ongoing struggle. But the basic fact will always stay that the point of founding and putting in the effort to establish a commercial company in the first place is to "provide value to the shareholders" (i.e. the owner/founder). If not for that, why anyone go through that hassle? All that Silicon-Valley-esque "We founded the company because we wanted to make the world a better place" is only when the…

There's a big difference between "provide a decent living for the founders of the company" and "provide ever-increasing profits to the already-wealthy shareholders", and I believe that difference is at the heart of the article's point.

Re: Businesses should try to be the best, not the biggest

#216

Post by antoniuschan99 » Fri, Jan 29, 2021, 3:06 PM UTC

I agree with this article personally, but don’t economies (which comprise of businesses) have to grow to either compete or reduce inequality?

Seeing how China is continuously growing at a higher rate, eventually that growth will outpace other economies proving the country a higher standard of living, technological advancement, and power.

Vietnam just reported 3% growth which is good in 2020 when countries had negative growth, however, but it was growing at 7% the last few years. If it can’t sustain growth, the labour market won’t be healthy. In turn, inequality will rise, and social mobility will be depressed.

In the article it mentions Japan a lot. I love Japan, but the stagnating economy (and aging population) is a very visible reason why 0 growth is a big issue.

Re: Businesses should try to be the best, not the biggest

#217

Post by titzer » Fri, Jan 29, 2021, 3:06 PM UTC

Matticus_Rex wrote: post #127

hh3k0 wrote: post #118

Earlier quoted context omitted.

"We have a finite environment—the planet. Anyone who thinks that you can have infinite growth in a finite environment is either a madman or an economist." David Attenborough

One thing this argument misses is that much of economic growth comes not from increasing consumption, but from making that consumption more efficient.

Do you have any data to back this claim? Because Jevon's Paradox is a real, observed phenomenon. In reality, the only thing our economies optimize for is profit. Sometimes profit comes from reducing costs or increasing efficiency. Other times it comes from manipulating consumer psychology. Or did you think that Red Bull cans are tall and skinny because that's somehow an efficient use of aluminum?

[1] https://en.wikipedia.org/wiki/Jevons_paradox

Re: Businesses should try to be the best, not the biggest

#218

Post by [deleted] » Fri, Jan 29, 2021, 3:06 PM UTC

MarkusWandel wrote: post #202

"Go big or go home". This seems to be a uniquely north-American attitude. Germany, or maybe Europe, is full of so-called "Mittelstand" companies that are good in what they do, have 500-ish employees, have been in the same family ownership for generations and provide a good solid living for everyone involved. What is wrong with that? It goes without saying that staying mid-sized doesn't mean staying complacent, but yo…

[deleted]

Re: Businesses should try to be the best, not the biggest

#219

Post by ghoward » Fri, Jan 29, 2021, 3:07 PM UTC

jspash wrote: post #36

I often question the motives of my company. It has only 100 or so employees. Has been in business for 25+ years. But we are on a continual drive to increase sales, hire new people, add size to the facilities. But it wasn't always this way. It only happened once it went public. Now we are working for the investors. They need to see an increasing return on their investment. Management choices are no longer about the cu…

I wrote about this phenomenon at https://gavinhoward.com/2020/01/corporations-create-perverse... . I think it's a real thing.

Re: Businesses should try to be the best, not the biggest

#220

Post by danaris » Fri, Jan 29, 2021, 3:08 PM UTC

notacoward wrote: post #207

Growth doesn't necessarily mean being the biggest . Unbounded growth is strongly analogous to cancer, but bounded growth up to a certain point is a valid way of getting to an ideal team size/composition, economy of scale, or customer-base diversification to limit risk. Back in 1989, I interviewed at a place called Daedalus something-or-other in Ann Arbor, MI. They had about a dozen employees crowded into an old Victo…

I think it's about the difference between having your goal be "growth" and having your goal be "(grow to) have X customers and Y employees" or "(grow to) have $X profit per year".

In the latter case, growth is a means to an end—a specific goal that is (at least potentially) achievable, and can yield a sustainable, profitable steady-state for the foreseeable future. In the former case, growth is seen as an end in itself—or, to the extent that it's a means, the end is simply "more profit, forever".