Corporate America Hasn’t Been Disrupted
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Corporate America Hasn’t Been Disrupted
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Re: Corporate America Hasn’t Been Disrupted
#2Another simple explanation for the decline might be economies of scale or economies of scope (or both) . Thirty years ago they might have had a smaller effect on small businesses (like coffee shops and retailers), whereas nowadays complex logistics (economies of scale, ie. walmart) or versatile production facilities (economies of scope, ie. starbucks) have a bigger influence on profits.
Re: Corporate America Hasn’t Been Disrupted
#3I think there is a bit of cognitive dissonance in the tech community about "disruption" versus "big companies." Technology, in general, makes it easier to scale companies to large sizes, and "disruption" often involves using technology to enter an existing industry that is dominated by small, inefficient companies.
A great example is Uber. Uber is making the taxi market a lot more efficient, but it's also well on the path to replacing a bunch of little local taxi companies with a big national one. That's the power of technology: it pushes out the point on the curve where diseconomies of scale cancel out economies of scale. Technology enables consolidation. Other good examples are the dry cleaning and food delivery startups.
It's also not surprising that once an industry has been "disrupted" it takes a lot to push out the incumbent. Small businesses are generally inefficient and prone to failure. Large corporations are efficient and diversified in comparison. A new mom & pop coffee shop might easily out-compete the old mom & pop coffee shop across the street, but they can't offer the scale and uniformity of a Starbucks. When big corporations die, it's either because of their own mistakes, or some seismic market or technological shift (e.g. Kodak).
Re: Corporate America Hasn’t Been Disrupted
#4Another issue is that as IT has become more prevalent in corporations, there are just more jobs out there in existing companies for STEM grads - so they feel less pressure to start new companies. But, I would honestly not take this data too seriously. The latest startup tech boom is too young to judge. this data is probably skewed by the tech collapse of 2000-2001.
Re: Corporate America Hasn’t Been Disrupted
#5Could other possible reasons be:
1) The companies innovating become large themselves and are now indistinguishable from the incumbents?
2) Silicon Valley is in a venture capital frenzy. VCs make money by exits. Innovative companies keep getting bought by the incumbents.
Re: Corporate America Hasn’t Been Disrupted
#6Could other possible reasons be: 1) The companies innovating become large themselves and are now indistinguishable from the incumbents? 2) Silicon Valley is in a venture capital frenzy. VCs make money by exits. Innovative companies keep getting bought by the incumbents.
Not to mention that counting the number of companies says little about their cumulative impact.
Re: Corporate America Hasn’t Been Disrupted
#7Though I find his point intriguing about corporate America entrenching itself, the graphs he has chosen to represent it are a bit misrepresented - most notably, the graph about startup failure rate. I disagree that the rate of failure in startups has risen significantly in the last 20 years - he cherry picked his data point from 1991 to 2011. The first fifteen years of that interval remain almost entirely flat. The spike in the last three are easily explainable as part of the housing bubble bursting that sent a bunch of businesses in the US to the deadpool. Conversely, the declines in new businesses in the early 80s and late 00s can be easily attributed to spikes in the price of oil and the housing bubble bursting. The rate seems pretty solid at about 10 percent before that.
I find the evidence he presents inconclusive at best. If anything, I find it encouraging - no huge sea changes in the ability to start a business in the US over the last 30 years, except for macroeconomic factors.
Re: Corporate America Hasn’t Been Disrupted
#8Though I find his point intriguing about corporate America entrenching itself, the graphs he has chosen to represent it are a bit misrepresented - most notably, the graph about startup failure rate. I disagree that the rate of failure in startups has risen significantly in the last 20 years - he cherry picked his data point from 1991 to 2011. The first fifteen years of that interval remain almost entirely flat. The s…
Agreed, on that particular chart at the 2010 point there was actually an increase going forward after the 2007-2008 drop.
Re: Corporate America Hasn’t Been Disrupted
#9In many markets, there are great opportunities to nibble around the edges of the larger companies. The crumbs of many of these companies offer entrepreneurs the opportunity to build six and seven figure annual businesses.
The way to win in markets that aren't likely to be "disrupted" is to go for the crumbs, not the cake. It's a shame so many entrepreneurs have been deluded by the appeal of "disruption."
Here's a Y Combinator example: Casetext says it is "disrupting" the legal research market dominated by Westlaw and LexisNexis[1]. Anybody who has any experience in this market knows how absurd this is. Bloomberg has invested approximately $1 billion trying to make a dent in this market, with limited success[2]. You simply cannot disrupt the incumbents because they have too many advantages.
That doesn't mean there's no opportunity in the legal research market, however. There are quite a few focused/niche legal research services that are doing well. I know one that counts close to 90% of the Amlaw 100 as subscribers. This service will never be a billion dollar business, or even a $100 million business, but back-of-the-envelope math says it's a business most founders would feel blessed to have started.
[1] https://news.ycombinator.com/item?id=8011009
[2] http://www.adweek.com/news/press/fortune-reports-bloombergs-...
Re: Corporate America Hasn’t Been Disrupted
#10democracy->oligarchy->dictatorship->collapse->democracy