This chart makes it clear how big the difference is: http://bit.ly/Qcrv3R
I'm sure the US has more people who decide to "roll the dice" and rapildly end up either spectacularly successful or spectacularly flaming out; I've seen far less evidence that there's anything wrong with a culture where slower but more consistent growth is rewarded.
The graph we really need is not "number of big companies founded at given dates" but rather "number of companies which will ultimately become big founded at given dates".
The other thing we in the software world mustn't forget is that we have marginal costs of approximately zero (or should I say picodollars?), which makes smaller companies disproportionally more competitive. The only advantage of being big in software is bigger leverage (which is usually in direct competition with agility) whereas elsewhere economies of scale are pronounced.
And regarding "number of companies which will ultimately become big founded at given dates":
I'd love to see some numbers on companies that are big but got there slowly. I suspect it doesn't happen, leaving aside artificially competition-stifled markets such as state-blessed monopolies. Given the nature of exponential growth, I'd be surprised if any of those Global Fortune 500 had no period of fast growth.
Slow growth is also likely to be correlated to inability to react to disruption. So companies in <high-growth country> would necessarily out-compete companies in <steady-growth country> in a free, globalised market economy.
Yes, but not a meaningful one. For the purposes of this discussion, "slow growth" is anything under 100% per year.
I'd love to see some numbers on companies that are big but got there slowly. I suspect it doesn't happen
Interesting. I don't have any data, and I'm failing at finding any right now, but I think of Coca-Cola as being a company which reached its current size primarily through steady growth. I'm sure there are large pharmaceutical and chemical companies which have had slow growth curves -- while any one product may have a sharp growth curve, the company as a whole won't. Insurance companies and banks also tend to grow slowly, and of course Berkshire Hathaway is an example, with a highest ever Y/Y growth rate of 59.3%.
I suspect there's a certain amount of observation bias: Companies which grow slowly are boring, so we don't think about them.
I guess I can try comforting myself by stating that it says "In Europe", not "by Europeans". :)
If you look at big business, say the Fortune 500 for example, these organisations are typically much more high profile than their smaller brethren, but there are still... well, only 500 of them. And while the list includes giant individual employers like Walmart, those businesses collectively still only employ something like 20M-30M people depending on how you count. Similarly, while your revenues are probably $5B+ if you made the 500 this year, plenty of the businesses towards the lower end of the list only made perhaps $20M-30M in profit, and one or two didn't even land a profit at all.
Depending on whose definition you take for the maximum number of employees, companies of up to 100-300 people might be considered SMEs. At that point, you could certainly be earning profits that compete with the lower end of the Fortune 500, and there are a lot more SMEs out there than industry giants.
And that's just the most basic, raw economic data about business performance and employment, without even considering cultural differences and efficiencies and innovation and numerous other factors that make smaller businesses important to the wider economy.
There are only 500 F500's because the F500 is the top 500 companies. It feels weird to have to point out that there is in fact a 501th company. You probably haven't heard of #500, but #499 --- second from the bottom of the list --- is KeyCorp, one of the country's largest regional bank chains.
I was just trying to demonstrate that although "big" businesses tend to get a lot of attention, they don't actually employ a large proportion of the working population, nor do they necessarily make much more profit than a large SME. In other words, really big business isn't the driver behind a successful economy, something else is. I contend that the "something else" is SMEs.
"Small firms represent 99.7 percent of all employer firms; employ half of all private sector employees; pay 44 percent of total U.S. private payroll; create more than half of the non-farm private GDP; hire 43 percent of high tech workers..."
I think Silhouette has got the details pretty wrong, but if he had said that SMEs were as important to the U.S. economy as BigCos, and especially the Fortune 500, then it looks like the SBA agrees with him.
[1]: The data between businesses with no employees and businesses with less than 500 employees is mutually exclusive; you can't use those carts to make any points about the contributions to the economy of businesses with less than 500 employees, including those without employees, because that data is missing. "Annual Payroll" is a pretty bad data point to use for judgements about contributions to the economy; "sales or receipts" would be better, but that's only available for all employer firms, with no further breakdown, for some reason. All in all, pretty useless here.
[2]: http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24 -- seems to be down right now, try the Google cache: http://webcache.googleusercontent.com/search?q=cache:Wv_OfwD...
How so? All the specific figures I quoted were lifted directly from mainstream reporting of the Fortune 500 for 2012, starting with Fortune's own web site.
This doesn't make much difference to my argument anyway. Whoever's figures you take, it's clear that in raw numbers SMEs are a significant contributor, at least on par with big business. But if we're talking about what really drives an economy and keeps it developing, I would argue that a disproportionate amount of the innovation and a lot more flexibility is found in SMEs. BigCos are good at industrialising and achieving economies of scale, but they aren't particularly good at innovating or creating new markets. All I'm saying in this thread is that SMEs don't sacrifice their own direct contribution to the economy at the same time.
Census offers statistics on which employer size brackets employ how many people. ~41MM people in the US are employed by firms with fewer than 100 employees, ~72MM people are employed by those with more than 100 employees. In the smaller company bracket, more people are employed by companies with between 20 and 100 employees than at smaller companies.
All the Fortune 500 tells you is the size of the 500 most profitable companies. And my earlier point was simply this: the "501th company", which just missed being included on the F500, is presumably gigantic; KeyCorp just barely got onto the list.