The Long Tail and the Army of Davids

Glenn Reynolds writes about the robustness of a small-business economy.   I think he’s exactly right – a hundred small businesses employing 100 people each are much more resilient than 1 large business employing 10,000 people.

  • The small businesses can (should) have better relationships with their customers
  • The small businesses can diversify in a number of different ways
  • The small businesses can experiment with different techniques
  • The small businesses spot trends earlier

Admittedly larger busineses have some advantages too:

  • They are usually more efficient
  • They can leverage their size to make bigger bets

Having said that, the big bets often fail, and the efficiency almost always (if not always) comes at a cost to flexibility.   And they are far too often blindsided by changes in the world around them.  Efficiency, in my opinion, is generally overrated as a key principle of business, because the long term costs are so very, very high.

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