The Tendency Towards Managerial Capitalism Makes Startups Possible

In the modern economy, managerial capitalism is the prevailing way companies are run. While startups tend to resemble bourgeois capitalism at the beginning (founders with full ownership and control), they eventually transition to a managerial model to scale (managers with low ownership but full control). Ironically, this transition is why startups are possible in the first place—it creates an opportunity for new startups to innovate. We know this is true because the big established companies don’t continue innovating and building all the new things themselves.

Dwarkesh Patel’s interview with Marc Andreessen

  • A Moat or a Long Bridge

    In business strategy you’ll often hear a competitive advantage described as a moat, but most moats are more like a long bridge. The moat is the thing that prevents others from easily replicating another business. A long bridge takes a time build and is effectively a moat if it’s impractical to catch up or simply makes it a schlep.

  • The Shirky Principle

    Institutions end up perpetuating the problems they aim to resolve, either intentionally or unintentionally. For example, TurboTax addresses the issue that taxes are too complicated for individuals to handle independently and then lobbies Congress to hinder efforts to simplify tax preparation for individuals.