Small Business and Economic Growth

Have you spent much time working for small/growing businesses, operating one, or talking to those who fund them?

There are a lot of truly terrible small business CEOs. You look at someone running a successful small business and they don’t look that special because there are seventeen more just like him down the street. You don’t see the far larger group of folks who folded because they didn’t pay attention to their customers, their margins, or their supply chain.

I actually think it’s quite unlikely that the Lowes family just got lucky. Probably there were ten other businesses who wanted to do the same, and weren’t any more talented, but got unlucky. But there were hundreds more who wanted to do the same, and couldn’t hack it. Survivor bias works two ways.

Yes! And the same is true for economists. They stumble around blindly and by sheer dumb luck come upon some theory, which if it happens to be good is rewarded by the market. I like it! It’s sort of an economic calvinism, where free will is impossible and the market is God.

Actually Lowes was the result of a visionary brother-in-law who was lucky enough to have his vision coincide with the post WWII building boom.

Adding to @reason’s point, at some point resources locked up by large incumbents have to be freed up to be used by newcomers — most of which will fail. The danger to capitalism and the market economy is that those who were successful (smart + lucky) in the past convert their wealth to political power and use it to hang onto society’s resources.

But just because you had yesterday’s great idea is no guarantee of having the best idea today.

I would argue the exact opposite – any time you see a market dominated by large, behemoth corporations, you know that there is something stopping innovation (often the lobbyists for these corporations.)

Large corporations (with VERY FEW exceptions) stifle innovation. They are large, unable to change or adapt quickly, and rather than evolve with the times, they seek to stop time, through legislation and anticompetitive actions (acquiring small companies only to kill them off, etc.)

By contrast, innovation almost always begins with a small startup company. Apple and Microsoft both started small, for example. Only Apple has been able to secure innovation, while Microsoft (while amazingly innovative in the 80s and early 90s) has been struggling to find any innovation for over a decade, with no sign of hope.

While there is always luck involved in life and business, attributing the meteoric rise of most companies that started small and grew big to pure dumb luck is a very half-baked premise, which indicates more of a lack of historical information collection on the part of the post author than any true insight about the business in question (Lowe’s.)