Interesting, this also shows up in business as “the innovators dilemma”. Small businesses are willing to explore riskier technologies that are only profitable to smaller segments (exploration). Eventually, they can exploit this and find ways to make that technology palatable to larger audiences (exploitation). As they get bigger, they can’t justify going after technologies with small audiences because it doesn’t help their bottom line (slack destroyed).
Eventually, they get replaced by the next firm who went through the loop.
I don’t think that’s all there is to it. Big firms have R&D. (Indeed, I have been told that big firms target spending specific percentages on R&D because spending too much or too little looks bad and would make their stocks go down, or something like that.)
I think big firms get eaten by Moloch in some fashion (lost purposes turn everything fake?), whereas startups have nicely aligned incentives (because it’s worth nothing unless it succeeds, so weird internal power dynamics are not that valuable to fight over compared to fighting for the common goal).
Yeah I think there are a lot of forces working in parallel:
Inertia of Bigger Companies
Drive to Short-Term Profits
Hard to invest in early stage ventures because expense can’t be justified.
Lack of Pioneers
There’s just more startups than big companies.
Big firms have R&D.
Yes but the stages from early stage exploratory R & D → Profitable company are rarely there. Most of the large company R & D products that succeed are either fast follow (creating a product in a space where there’s already proven demand) or come from turning internal tools into products (so the expense doesn’t need to be justified).
It’s very hard for large companies to keep around exploratory projects that are profitable to a very small market, and iterating around that small market long enough for the technology to be ready for a larger market. If created at all (when you can’t justify a larger market) they tend to get the plug pulled to early. Hard to justify putting people on a project that’s barely eeking by
Interesting, this also shows up in business as “the innovators dilemma”. Small businesses are willing to explore riskier technologies that are only profitable to smaller segments (exploration). Eventually, they can exploit this and find ways to make that technology palatable to larger audiences (exploitation). As they get bigger, they can’t justify going after technologies with small audiences because it doesn’t help their bottom line (slack destroyed).
Eventually, they get replaced by the next firm who went through the loop.
I don’t think that’s all there is to it. Big firms have R&D. (Indeed, I have been told that big firms target spending specific percentages on R&D because spending too much or too little looks bad and would make their stocks go down, or something like that.)
I think big firms get eaten by Moloch in some fashion (lost purposes turn everything fake?), whereas startups have nicely aligned incentives (because it’s worth nothing unless it succeeds, so weird internal power dynamics are not that valuable to fight over compared to fighting for the common goal).
Yeah I think there are a lot of forces working in parallel:
Inertia of Bigger Companies
Drive to Short-Term Profits
Hard to invest in early stage ventures because expense can’t be justified.
Lack of Pioneers
There’s just more startups than big companies.
Yes but the stages from early stage exploratory R & D → Profitable company are rarely there. Most of the large company R & D products that succeed are either fast follow (creating a product in a space where there’s already proven demand) or come from turning internal tools into products (so the expense doesn’t need to be justified).
It’s very hard for large companies to keep around exploratory projects that are profitable to a very small market, and iterating around that small market long enough for the technology to be ready for a larger market. If created at all (when you can’t justify a larger market) they tend to get the plug pulled to early. Hard to justify putting people on a project that’s barely eeking by