On Dominant Organizations
Sridhar March 22, 2008 04: 24 pm
As I was reading Paul Graham’s latest essay on small and large companies, I remembered something I noticed several years ago, something akin to Moore’s Law:
The dominant technology company in a generation reaches its pinnacle at about half the size of the dominant company in the previous generation, and it retains its dominance for half as long.
IBM was dominant for roughly 30 years. Microsoft’s domination lasted about 15 years. Google’s domination started at around 2005, I would think.
Why would such a thing be true? Same technological forces that are reshaping our lives are also impacting economies of scale. Technologies are lowering transaction costs, thereby making organizations reach their peak economic power at smaller scales. A related point which uses the Coase Theorem is made here.
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Excellent comment on coase “The theorem states that when trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights”.
Without a doubt, zoho, myspace, youtube, facebook are turning it on!
Kudos!