Interesting post. I think there is a large distinction between “vc backable” startups and the rest (sushi restaurants, tire shops). Successful startups ride an exponential technological, regulatory or social trend and create massive amounts of value very quickly, reaching massive markets that would otherwise be underserved. (most also fail). Here’s a great essay by Paul Graham https://www.paulgraham.com/growth.html
I disagree with consumers only being “mildly priviledged by competition” because the alternative would be monopoly or oligopoly and arbitrary pricing power by incumbents (there’s a reason why antitrust suits happen all the time). Deel v Rippling is an almost comically bad situation, but prices are almost certainly lower and pressure to create a better product far higher than in a counterfactual world where Deel did not exist. As another example, consider Delve, Scytale and the other automated compliance providers following Vanta. Delve costs half as much and certifies SOC 2 twice as fast. Scytale provides other features, like providing in house auditors instead of just referrals. No two companies are exactly alike, and a company usually earns the right to exist by being different in a crucial way (different vertical, different pricing, different features, different secret etc)
I disagree with consumers only being “mildly priviledged by competition” because the alternative would be monopoly or oligopoly and arbitrary pricing power by incumbents
Certainly, what I mean to say is that these particular instances of competitive behavior I’ve highlighted result in little benefit to consumers, not that competitive pressure is useless. But it is the case that a lot of competition in capitalism that is just entrepreneurs wastefully wrestling shareholder value from each other, and I’m not sure why I haven’t heard of this criticism before.
Interesting post. I think there is a large distinction between “vc backable” startups and the rest (sushi restaurants, tire shops). Successful startups ride an exponential technological, regulatory or social trend and create massive amounts of value very quickly, reaching massive markets that would otherwise be underserved. (most also fail). Here’s a great essay by Paul Graham https://www.paulgraham.com/growth.html
I disagree with consumers only being “mildly priviledged by competition” because the alternative would be monopoly or oligopoly and arbitrary pricing power by incumbents (there’s a reason why antitrust suits happen all the time). Deel v Rippling is an almost comically bad situation, but prices are almost certainly lower and pressure to create a better product far higher than in a counterfactual world where Deel did not exist. As another example, consider Delve, Scytale and the other automated compliance providers following Vanta. Delve costs half as much and certifies SOC 2 twice as fast. Scytale provides other features, like providing in house auditors instead of just referrals. No two companies are exactly alike, and a company usually earns the right to exist by being different in a crucial way (different vertical, different pricing, different features, different secret etc)
Certainly, what I mean to say is that these particular instances of competitive behavior I’ve highlighted result in little benefit to consumers, not that competitive pressure is useless. But it is the case that a lot of competition in capitalism that is just entrepreneurs wastefully wrestling shareholder value from each other, and I’m not sure why I haven’t heard of this criticism before.