The FT challenges the premise that creating billion dollar businesses is a worthy goal. The construct is simple; that to create a billion-dollar business quickly, relies on the tendency to monopoly that seems to lie behind most of technology's huge winners. Great examples being Microsoft, Google, Amazon, Intel and even Apple.
Certainly there are pockets within these hopelessly profitable businesses where budgets seem irrelevant and buying from the most expensive supplier becomes a badge of honor. Indeed, I have heard complaints from individuals working within companies during this phase of the cycle that their business acumen is suffering because the ethos is that driving the best deal and generating ROI, is simply not important.
It will be interesting to see how this plays out over the next decade or two because the author is right, capitalism requires competition but the current cult of the CEO and the sexiness of billion-dollar tech companies has the tide running strongly against good economics.
This illustrates something potentially worrying about the urge to create instant successes. Many tech fortunes are built on explosive network effects and economies of scale that make it much easier for a single company to make supersized returns. Consumers can benefit but the flipside of every fortune is the failure of competition to do its job and erode the daunting advantage of that early winner taking all. The scrappy web-entrepreneur soon morphs into an establishment titan, widening what Warren Buffett calls the “moat” between his creation and the competition. Sometimes this is by providing ever more excellent service or a blizzard of exciting new products. But at other times it is by doing everything in his grasp to pull up the drawbridge, and impeding the emergence of the sort of competition that really spreads out the benefits.