Graham & Coase: when big companies are a good idea

He puts his finger on the right question: why do large firms exist? But I disagree with the answer. I think a better answer is: they don't. That is, they existed in the past for reasons of industrial scale; but they exist now (at least in post-industrial fields) only by inertia. The wheels of history grind slowly and the monoliths haven't been ground to bits yet. But they will be: into smaller, more productive, hopefully more humanly satisfying bits. It just takes a long time for people to get over the things that everybody "knows" about reality, such as that great companies inevitably grow into behemoths.

Google is an interesting case, because they manifested so many seminal changes, for example their hacker-centric culture. And they still do some amazing work - yet astonishingly little compared to what one would expect from an organization with tens of thousands of such smart people.

This is explained if you consider that we are early in the post-industrial age. It takes time for new organizational forms to develop. This is also an opportunity, because anyone who can see a little further ahead has a chance to leapfrog over their cohort the way Google did. Somebody is going to figure out how to grow a company without dissipating the bulk of its human energy in meetings, politics, and other depressing shit.