The fact that an article like this about Amazon (or any of the tech "giants") is in some way credibe (I think it is) is curious. IE, a company that does retail, sells media & tech infratructure could also go into financial products...
I think it's several things are going on.
First, this new breed of companies is highly eutrepreneurial and competant. Maybe it's youth. Maybe it's the fact that they emerged recently as winners from a high competition dynamic... If Google or Amazon declare they will now be running schools, I'd be a lot more interested than if Unilever or Shell did the same. I know we're concerned about their power, size, monopoly power & vested intertest in the anti-privacy camp, but credit is still due... I think.
Second is the power of ....power. The modern economy is top heavy. Most markets are structurally hard to break into. "Normal people" can't just start company doing banking, insuring, medicines, transport, tobacco, energy, gambling. There are upstart-hostile rules, locking out new and/or small players or structural reasons preventing small players.
"Can't" is strong. Uber started a transport company. But, there are structural and regulatory reasons that make most large markets much more closed than search engines and online shopping. There is no chance for a thousand entrants, with winners emerging from a wide field. This leaves the field open almost exclusively to large companies running lower risk gambles.
Third.. third is financing. Financing has changed in ways that I don't understand well enought to express concisely. There is a lot of financing available these days, via "back-channels." The less formal sectors like VC and (much bigger) corporate lending.
Think of what california's VC & angel complex does. It is, in many ways, the heart of the startup ecosystem. Promising founders get to take big chances without liability. This makes it possible to start a Google or an Uber.
How would SV look if founders had personal liability, like regular small business people? How would it look if they were limited to bootstrapping? Startup financing is an exception, and a relatively small one. Elsewhere on earth, finance is a much more closed shop. You have to be an insider of some sort.
Financing is (to quote Buffet) *resource allocation.
Take for example, "leveraged buyouts" and similar arrangements. Leveraged buyout means that I get a loan from you to buy company X, which then owes you repayment. Some form of this is how Russia's oligarch system came to be. It's how a lot (most) private sales of comapnies happen. It's how infrastructure companies happen. Mining.
I don't quite understand it. The big risks are go to the financer, but the profits don't. Regardless, the structure exists and being big is a prerequisite.
I think it's several things are going on. First, this new breed of companies is highly eutrepreneurial and competant. Maybe it's youth. Maybe it's the fact that they emerged recently as winners from a high competition dynamic... If Google or Amazon declare they will now be running schools, I'd be a lot more interested than if Unilever or Shell did the same. I know we're concerned about their power, size, monopoly power & vested intertest in the anti-privacy camp, but credit is still due... I think.
Second is the power of ....power. The modern economy is top heavy. Most markets are structurally hard to break into. "Normal people" can't just start company doing banking, insuring, medicines, transport, tobacco, energy, gambling. There are upstart-hostile rules, locking out new and/or small players or structural reasons preventing small players.
"Can't" is strong. Uber started a transport company. But, there are structural and regulatory reasons that make most large markets much more closed than search engines and online shopping. There is no chance for a thousand entrants, with winners emerging from a wide field. This leaves the field open almost exclusively to large companies running lower risk gambles.
Third.. third is financing. Financing has changed in ways that I don't understand well enought to express concisely. There is a lot of financing available these days, via "back-channels." The less formal sectors like VC and (much bigger) corporate lending.
Think of what california's VC & angel complex does. It is, in many ways, the heart of the startup ecosystem. Promising founders get to take big chances without liability. This makes it possible to start a Google or an Uber.
How would SV look if founders had personal liability, like regular small business people? How would it look if they were limited to bootstrapping? Startup financing is an exception, and a relatively small one. Elsewhere on earth, finance is a much more closed shop. You have to be an insider of some sort.
Financing is (to quote Buffet) *resource allocation.
Take for example, "leveraged buyouts" and similar arrangements. Leveraged buyout means that I get a loan from you to buy company X, which then owes you repayment. Some form of this is how Russia's oligarch system came to be. It's how a lot (most) private sales of comapnies happen. It's how infrastructure companies happen. Mining.
I don't quite understand it. The big risks are go to the financer, but the profits don't. Regardless, the structure exists and being big is a prerequisite.