Entrepreneurs are redesigning the basic building block of capitalism
1–10 of 31 posts
Re: Entrepreneurs are redesigning the basic building block of capitalism
#2Hm... no.
These innovations are just a child of capitalism, not something unexpectedly changing it.
Re: Entrepreneurs are redesigning the basic building block of capitalism
#3The exception was the post war managerial capitalism that Galbraith wrote about. This is really just a return to the older model.
Re: Entrepreneurs are redesigning the basic building block of capitalism
#4Hm... no. These innovations are just a child of capitalism, not something unexpectedly changing it.
I don't think the article was claiming that this is an innovation outside of the capitalist box - just that it's a form of capitalism that's different from the way it's been practiced in past decades.
Re: Entrepreneurs are redesigning the basic building block of capitalism
#5This article tries to refute two different types of arguments, and in the process confuses them. The empirical arguments ("this isn't happening!") it refutes quite well.
The normative argument ("this is a bad thing!") it does less well at. Ownership in these companies is cut off from the rest of the economy, but the Economist seems to think that this trend is only worth reporting if the social issues can be brushed off. They cannot. SeedInvest is not a substantial source of capital on the same level as privately VC funds. Mutual funds, maybe.
Re: Entrepreneurs are redesigning the basic building block of capitalism
#6Not a great article, and I think it misses the one big thing that is genuinely revolutionary about the Silicon Valley form of entrepreneurship. And that's that venture-backed entrepreneurial companies are, by and large, the new Research & Development Departments. Acquihires can in fact be great deals for VCs, founders, employees, and acquirers. Many companies are curtailing their own research agendas and relying upon smart technology investments to position them for the 5-10-15 year time horizon. I suspect we will ultimately consider this a vastly more efficient form of capital allocation than the old-fashioned "R&D Department" at IBM, GE, DuPont, AT&T, etc.
Re: Entrepreneurs are redesigning the basic building block of capitalism
#7Hm... no. These innovations are just a child of capitalism, not something unexpectedly changing it.
I don't think the article was claiming that this is an innovation outside of the capitalist box - just that it's a form of capitalism that's different from the way it's been practiced in past decades.
The article does relatively little to justify that though. It's not as if companies being privately owned before they go public (or private equity buyouts of public companies) is a new thing. The time-to-IPO is the only non-anecdotal difference in ownership structures it notes, and that's easily explained away by market conditions.
Indeed the first example it cites - Uber - is arguably an example of the opposite to the trend it purports to spot... it's a market traditionally dominated by plucky privately held small companies that's becoming centralised under a large company or two that probably will go public. Even if Uber (and Lyft and a couple of others) doesn't IPO they still are and will be owned and managed in a way that resembles a public company more than your neighbourhood cab firm.
I'd give the article more props for identifying interesting but not really connected phenomena in new companies if it didn't include lines like "whereas nobody is sure who owns public companies, startups go to great lengths to define who owns what". The idea that startup share options are more transparent than employee shareholdings in publicly held companies traded on liquid markets is dangerously misleading nonsense that looks really out of place in a publication aimed at the financially literate
Re: Entrepreneurs are redesigning the basic building block of capitalism
#8Not a great article, and I think it misses the one big thing that is genuinely revolutionary about the Silicon Valley form of entrepreneurship. And that's that venture-backed entrepreneurial companies are, by and large, the new Research & Development Departments. Acquihires can in fact be great deals for VCs, founders, employees, and acquirers. Many companies are curtailing their own research agendas and relying upon…
By which metric would you measure this "efficiency"?
The difference between VC-backed-startups vs traditional R&D departments is that the first one seems more short sighted, and with a tendency towards a narrow subset of IT problems with high scalability and disruptive potential, while the second one works on a wide array of industries and applications where the parent company already has the benefits of economies of scale.
Re: Entrepreneurs are redesigning the basic building block of capitalism
#9Not a great article, and I think it misses the one big thing that is genuinely revolutionary about the Silicon Valley form of entrepreneurship. And that's that venture-backed entrepreneurial companies are, by and large, the new Research & Development Departments. Acquihires can in fact be great deals for VCs, founders, employees, and acquirers. Many companies are curtailing their own research agendas and relying upon…
What is so genuinely revolutionary about that form?
A large land owner could raise a small army and supporting farms, then join the local nobility. The land owner and his tenants could then enjoy the benefits of being part of the larger realm.
Re: Entrepreneurs are redesigning the basic building block of capitalism
#10Not a great article, and I think it misses the one big thing that is genuinely revolutionary about the Silicon Valley form of entrepreneurship. And that's that venture-backed entrepreneurial companies are, by and large, the new Research & Development Departments. Acquihires can in fact be great deals for VCs, founders, employees, and acquirers. Many companies are curtailing their own research agendas and relying upon…
Which Silicon Valley companies are pursuing the high risk R&D these days? I can only think of a few that are building high risk hardware (Theranos, some of the small photonics shops), and even many of those have proof-of-concepts already built in academia. Many of the medtech startups I've seen revolve around algorithms, which is kind of hard to compare in terms of risk profile to Bell Labs putting a bunch of researchers in a room to figure out how semiconductors work or needing a couple million to build a prototype.
When I think of R&D departments these day I think of non-silicon/non-electronic computing, lab-on-a-chip, and maybe some other medtech stuff. I'm under the impression that companies doing these sorts of things are currently a minority of "Silicon Valley entreprenuership".