As someone who has taken part in and observed the creation of that most illusive product, computer software, I can say that time, money and luck must exist in goodly proportions for success to happen. Moving from brainstorm to napkin to business plan to investment is a hard but important start. Building a proof of concept, prototype, engineering and functional specification plan is the next big stake in the sand. Follow all of that with multiple releases, testing and marketing and sales and the process is almost complete. Ongoing support and upgrades are necessary for the life of the product. All for something that you cannot hold in your hand and may change in form and substance 180-degrees from inception to completion. Risky business. Try getting money to underwrite this type of product today. Impossible for a category of products that is so important to us an in which we have exhibited the most innovation.
Unfortunately, today, only large companies can support the process described above. Small companies can’t get the money and as a result the marketplace loses much of its dynamism. If only large companies can hire and buy new ideas and mold them to serve their own interests and product interoperability then we lose choice and competitiveness. The world becomes less open and we have fewer choices.
But that’s where we are today. The example above can be substituted with any green energy product, kitchen appliance or entertainment device. The only area that is active is health care. In most areas we’re copying existing products, lowering prices and in the process moving more and more jobs offshore. The downward pressure on pricing is getting so bad with Chinese tainted products and low quality Indian customer services for example that it is becoming like it was in the fifties and sixties when it was generally accepted that everything from Japan was junk.
Article comments
1 - Dave Nalle
While I think your general points may be valid, there are some huge exceptions where innovation and large-scale success is happening for small businesses and entrepreneurs. One outstanding example of this is the boom in small companies making iPhone apps and turning huge profits on minimal investment from a few clever ideas.
Dave
2 - roguebutterfly
I totally agree that there are exceptions. But where would those applet be without iTunes and Apple? There are thousands of applications listed on VersionTracker and Download.com that are deserving of users. Apple is supplying hardware and marketing. Very expensive components.
3 - Joanne Huspek
What about those of us who deal with nuts and bolts and not the techy stuff that can be a runaway best seller? I'm talking about people like me who just want to earn enough to be able to ensure a retirement, seeing as the government is going to be broke and our 401Ks are going to be worth pennies on the dollar. Add to that where we are (SE MI) where even in my suburb every other commercial property is empty and has a For Sale or Lease sign on it. The recession has been here for almost a decade. Our business has declined steadily since 2001 due to more factors than I care to think about. What happens here is going to happen everywhere. I give it about three to five years for all y'all to catch up with us.
We are more than screwed. We are royally skewered.
4 - roguebutterfly
I agree. Ninety-nine percent of all of the businesses I see closing their doors are not high-tech companies. But the talk is usually about innovation and new technologies that drive new hires and the other small companies that supply these industries.
For example, there wouldn't be so many small players making money on eBay today if the US government hadn't supported building the infrastructure to carry the internet 30 years ago through DARPA. Venture capital from the US government. There would be no APple as we know it if Xerox hadn't built a research group. No UNIX powering servers to run companies without Bell Labs. There is a trickle down effect that gets things moving.