This is so true: Countries with a lot of small companies are often stagnant. You don't want your company to stay small. You want it to dominate the market by getting big and overthrowing all the competitors. Yes, the strongest survive.
There are lots of reasons smaller companies can follow up a behemoth and beat them, such as better timing / market conditions, less dysfunctional organizations, etc.
Lots of reasons. Small efficient companies can be much more easily killed by variance / randomness than huge bloated monsters. Successful small companies tend to become large companies, laying the seeds of doom. Successful small companies may just be bought out by the large companies - you can't buy a large company until you are a large company, but the same is not true of small companies. And so on.
Big companies means efficiencies of scale. Small companies that succeed and grow inevitably become big companies. If they don't, it means the qualities that make them effective don't scale to the rest of the economy.
Is there any reason why this growth potential still exists for smaller companies? We're in a thread about how large companies are able to undercut smaller competitors.
I would like to see this from another angle though - not why they grow so big - but what it takes to kill such a company (i.e. cause it to fail).
One of the big advantages the giants have is that while no doubt they hire very capable engineers, the number of engineers who need to leave to make a dent on their performance is a really large number, and gives them a really long notice to correct things. In other words, at any given point of time they have many more 'dispensable' employees.
A second benefit of being a giant is that you can forego revenue streams which would be the size of an entire business at a competitor to gain some advantages in the market - for e.g. Google made Android free. I don't think they could have pulled off such a move when they were younger and poorer. This diversity of income streams gives them plenty of time to leave behind lagging products/services and concentrate on the cash cows - that is, they can apply the Pareto principle at a much much larger scale.
Contrast that with the potential disruptors who simultaneously compete with the large companies for employees, could sometimes get killed if just a few key hires leave, rarely have diversity of huge income streams to allow them to change course, and then have to bear the burden of regulation without the cushion of the cash pile. It lends a more stable environment for the large companies to move in the direction where the market expects them to go without having the tremors which the small companies face when they try to do similar things. During those tremors - engineers at the smaller companies - don't usually like to stick around and see what happens. This has been compounded of late because of the huge salary difference between working at a giant versus working at a smaller company.
Does it matter if it's large? I was just talking to a friend who started a small company, merged with a bigger company and thought he had done everything right. After a few years, he regretted selling the company. Small is beautiful. We learned this as children. Challenge the mantra of size and growth.
But a large company also have drawbacks - like the lack of agility and bureaucracy and inefficiency.
If the small company really were truly better (and by a large magnitude), they would have a chance. After all, how did google beat the original behemoth of yahoo?
Yet, not all small companies grow into those big companies.
What is it that enables a small company to become a behemoth?
Any opinions?
Thanks.
reply