I think your explanation above captures why that’s not always going to be the optimal solution ;-p
It largely depends on what you want to optimize.
If you want to optimize the profit of the company:
hypergrowth is a risky all-or-nothing approach: it could lead to a monopoly in the long term, but the probability of failure is much higher
raising the price is a less risky approach that optimize your profit enough to differentiate your investments
Now the whole goal of economics is to distribute resources in an efficient way.
Hypergrowth does not achieve that goals neither when it succeeds to create a monopoly, nor when it fails to. So one might argue that any hypergrowing company should be split, to optimize the efficiency of the system.
It’s a continuous race to reach an overwhelming market share, so that you can destroy or buy any competitor.
You need the hypergrowth because there’s few space left for the second and no place for the third. And if no one is fast enough the biggest players settle in a strong oligopoly: if you are not in you are out.
This also requires a strong cultural pressure towards efficiency and productivity as core moral values: the whole article talk about people as if could talk about chickens in a farm.
The profit is THE value, in itself.
It’s not a measure of the positive social impact of the company, as it was in early economic theories. Even the hypocrisy of looking good is removed.
Note that I liked the article, as a pretty good example of the efficiency of capitalism in the software engineering field.
I really liked the writeup, but must ask: why must there be hypergrowth?
Sometimes when you hit product-market fit, there demand is so high that there’s no way around it.
There is always a way around it, and it’s pretty simple: raise the price till the demand fit your productivity.
Oh, I think your explanation above captures why that’s not always going to be the optimal solution ;-p
It largely depends on what you want to optimize.
If you want to optimize the profit of the company:
Now the whole goal of economics is to distribute resources in an efficient way.
Hypergrowth does not achieve that goals neither when it succeeds to create a monopoly, nor when it fails to. So one might argue that any hypergrowing company should be split, to optimize the efficiency of the system.
Because of capitalism at global scale.
It’s a continuous race to reach an overwhelming market share, so that you can destroy or buy any competitor.
You need the hypergrowth because there’s few space left for the second and no place for the third. And if no one is fast enough the biggest players settle in a strong oligopoly: if you are not in you are out.
This also requires a strong cultural pressure towards efficiency and productivity as core moral values: the whole article talk about people as if could talk about chickens in a farm.
The profit is THE value, in itself.
It’s not a measure of the positive social impact of the company, as it was in early economic theories. Even the hypocrisy of looking good is removed.
Note that I liked the article, as a pretty good example of the efficiency of capitalism in the software engineering field.