Realist, not conformist analysis of the latest financial, business and political news

Lifecycles of companies

From our Swindon Correspondent:

There are generally, 6 stages in the life of a tech company:-

1. Inception. A couple of smart kids start something in a garage. Massive innovation.
2. Fast growth. The business moves to some good offices, number of staff increases. They take on smart, fast moving people who are innovating big. A few people know them.
3. Steady growth. The business is now something of a household name. They get their own small head office. Staff are more like normal business. Innovation continues, but the bureaucracy starts to grow.
4. Bureaucracy. The business is a household name. They have multiple offices, or something designed by a smart-ass architect. There’s still staff coming in, but they’re mostly seeing it as a nice warm place to sit and be bureaucrats. The innovators start leaving as it’s just not interesting. They might even be making lots of money, but it’s mostly just living off what was built in earlier phases, or large dumb wasteful projects that go nowhere for years.
5. Decline. A new disruptor arrives on the scene. They innovate in a field you’re involved in. You can’t keep up because in the previous phase, you replaced the innovators with bureaucrats. You’re outsmarted.
6. Terminal decline and death. You slowly or quickly disappear, maybe holding onto a few customers who habitually use you.
I think there might also be something about when government starts taking an interest in you, and I think it’s quite some time into stage 4. Google are already there. Firing James Damore is very much bureaucracy state behaviour. They wouldn’t have cared when it was a tiny number of staff in an office. And how much have they really innovated in the last decade? Things like this:-
Britain’s competition watchdog has set out recommendations for new regulations to tackle the dominance of Google and Facebook in the online advertising market.

The Competition and Markets Authority (CMA) said Wednesday that it had proposed the creation of a “Digital Markets Unit” designed to rein in platforms with “a position of market power” when it comes to digital ads.

The new unit would enforce a code of conduct on Google, Facebook and other major players in the industry to make sure they don’t “engage in exploitative or exclusionary practices.” It would have the power to impose fines on the companies if necessary.

It all sounds like nonsense to me, but it wouldn’t surprise me if regulators arriving on the scene is a sign, unrelated to what they do, that a business is done, in the same way that Joe Kennedy observed that a market is a bubble when shoe shine boys are giving you stock tips.
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Excavator Man
Excavator Man
9 months ago

Some examples are very instructive, and various businesses follow different (even if similar) trajectories. Take for example ACT/Apricot, whose business model depending on IBM not launching their PC in the UK quickly enough. Starting with the imported Victor 9000 PC, which was in fact far superior to IBM’s own, and rebadged as the ACT Sirius 1, the company launched the Apricot (a ‘golden apple’!) which was also superior. The company grew and grew. Its mistakes take a lot of fingers to count on, like trying for the US market when IBMs competitors like Dell and Compaq were already filling the… Read more »

Spike
Spike
9 months ago
Reply to  Excavator Man

Yes, DEC was also guilty of innovating like crazy, several different architectures, several different operating systems per architecture, “broadly similar but different,” salesmen bewildered by their own competing products. But it went down because of some notorious bad guesses on the future. Apple does indeed seem to create its own future in which to prosper.

Bloke on M4
Bloke on M4
9 months ago
Reply to  Excavator Man

I think founders help to keep things going and once founders retire or die, things start falling apart. Like Dyson killing off his car project was the sort of thing founders can do.

I don’t see a lot coming from Apple that isn’t coasting on what Steve Jobs did.

Spike
Spike
9 months ago

The CMA’s move implies that these businesses cannot do the right thing in response to boycotts, lawsuits, and damage to reputation, but only through administrative edicts. Recall that, when the regulators came for Microsoft, they had to invent a marketplace of “PCs not running UNIX” in order to claim that Microsoft was a monopoly. Google is hardly the only search-engine company; Facebook is the only one doing what Facebook does, but hardly the only one enabling social interactions. Microsoft has survived and the current targets are actively playing ball with gov’t. (How can they be acting “exclusionary” when there are… Read more »

Pat
Pat
9 months ago

May I suggest that established companies in any field often welcome regulation as it raises barriers to entry.

jgh
jgh
9 months ago

Why one earth would you do anything techy in a garage? It’s cold and damp, exactly the worse place possible to put computers. You want to be inside in the dry and warm.

Quentin Vole
Quentin Vole
9 months ago
Reply to  jgh

Not in Southern California, it isn’t. 🙂

Bloke on M4
Bloke on M4
9 months ago
Reply to  jgh

If you’re running enough servers, it’s warm enough 😉

ANNRQ
ANNRQ
9 months ago
Reply to  jgh

Famously, that’s where Hewlett and Packard started their company.

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