Monday, November 29, 2021 [Tweets] [Favorites]

Tech Giants

Ben Lovejoy:

The breaking up of a bunch of old-school industrial conglomerates is leading some to question the very long-term prospects of the “new conglomerates” – tech giants like Apple, Amazon, Facebook, and Google.

But a piece in the WSJ argues that they have two advantages over companies like General Electric, which could see them last even longer …

[…]

The dismantling of General Electric, Toshiba, Johnson & Johnson, Siemens, DowDuPont, United Technologies and other sprawling business empires in recent years has been heralded as the end of the conglomerate and the demise of the idea that brilliant management teams can succeed operating in very different industries. But just as those giants of traditional industry are being dismembered, today’s tech giants have arisen as latter-day conglomerates—what some even call “neo-conglomerates.” They boast valuations bigger than any other companies in history, and have diversified their businesses through acquisitions and new starts just like conglomerates of old[…]

Who can say when technology changes so quickly, but the new giants arguably have more lock-in and are quasi monopolies/duolopies.

Romeen Sheth:

Check out the difference between the world’s largest companies in 2005 and 2021.

Update (2022-01-05): Hacker News:

Which FAANG is the most likely to decline in the years ahead?

The overwhelming choice is Facebook, followed by Netflix.

1 Comment

> Traditional conglomerates – large companies whose business activities span a range of business types – were based on two ideas. First, good management is good management, so if they can be successful in one sector, they can be successful in others.

I would argue that the Jobs (among others) put a wrinkle in the idea of "it doesn't matter what the company sells as long as it brings in competent MBAs". And I think that misguided idea also played a big role in the downfall of corporations like Siemens. If your first answer to "what are we trying to accomplish as a company" is "make money", that often works as a quick fix, but isn't sustainable. If it's "make products we genuinely think are good", that'll take a lot longer and will fail in many cases — but when it does work, it works well. A company like Siemens was overtaken by folks who saw the entire business as a bunch of beans to count, and bit by bit, departments started failing.

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