[ethanbond]

It’s a little silly to ascribe that entirely to their management practices and not at least a little to the fundamentals of the industry.

In reality it is probably almost 100% due to fundamentals and almost 0% due to management practices (Amazon perhaps an exception).

It was destined to be ultra high margin and destined to have a few huge winners due to facts well outside of the control of the FAANGs themselves.

[marcinzm]

Then it should be easy to find companies with different management practices that did just as well. We can talk hypotheticals all day and get nowhere.

[ethanbond]

It is easy: look to other industries. Koch Industries, KKR, bp, Walmart, JPMC, Saudi Aramco, Volkswagen, etc.

Now why can't you find others inside the same industry who compete with these and behave dramatically differently? First of all, management practices across the FAANGs are not uniform and yet they're all up there with one another, so clearly it isn't because there's one incredible management style.

Perhaps instead their trajectory is primarily defined by their industry, as I stated.

[dopidopHN]

How is management at Zappos for instance ?

[marcinzm]

You mean the Amazon subsidiary that was bought out in 2009?

[piva00]

That only means that Amazon had money enough in the bank for acquiring a potential future competitor, just like most of FAANG has been doing since they became behemoths.

When you have enough money to stamp out any potential competition by simply buying them out I think we can't really rely on comparing management approaches anymore, it's just a finance game: I got more money than you, I will make you go away.

[marcinzm]

That's not my point. My point is that Zappos is not a company anymore and hasn't been for almost 15 years. If it had survived during that time and grown to 5k+ employees then it would be a good example. People keep bringing up hypotheticals but not a single large company with a good culture and good business metrics.

[ethanbond]

> not a single large company with a good culture and good business metrics

There are plenty of mega-companies that are very, very different and very, very successful. Koch Industries is a good example. Do they manage with a Silicon Valley ethos?

There's a perfectly reasonable explanation as to why there are not other companies in tech who rival these ones, and that's mentioned in my very first post: the consumer software industry naturally lends itself to monopolization, which we also know observationally has been happening.

[dopidopHN]

I have no idea, I was genuinely asking

[itsoktocry]

>In reality it is probably almost 100% due to fundamentals

Can you explain what inherent "fundamentals" are associated with these companies that destined them to be successful despite themselves? I mean, Microsoft was founded almost 50 years ago. Their success was a given? Management practices have had no effect there? We can argue about the ratio, but it sounds like silly post-hoc reasoning to claim that these companies didn't work to get to where they are, one way or another.

[ethanbond]

Microsoft isn't FAANG.

The fundamentals being that they had the most significant bull run in history on top of the lowest interest rates in history on top of the two largest communication-technology transformations in history (Internet then mobile) which happened to produce a near-zero cost distribution channel for a product format (internet-connected software) which has near-zero opex and which has natural network effects.

A very small set of companies were going to win this regardless of anyone's management practices. I think 99.999% of reasonable-sounding conclusions you can draw from their success will be wrong, including "the management style is really really good" or "logos should have blue in them."

> it sounds like silly post-hoc reasoning to claim that these companies didn't work to get to where they are

I am not sure where I made that claim

[TimPC]

Some of the conclusions seem far fetched. But some seem inherently reasonable.

For example, all of the successful tech monopolists paid a premium for engineering and management talent and had processes designed to hire the best (clearly not perfect but effective enough to make lots of good hires). I’m not sure how far we want to stretch the implications of that but at a minimum there is something substantially different between the top 10% of engineers and the bottom 50% of engineers and that difference seems to matter some.

[ethanbond]

Which is exactly another dynamic produced by the natural agglomeration effects: once someone starts winning they can simply outspend the almost-winners for talent, resources, marketing, etc.

Over time this starves the almost-winners into “losers because they didn’t do the right management style.” Which, to find this theory even remotely plausible, we have to ignore the fact that many of the almost-winners-turned-losers did and continue to mimic the management styles of the big kids.

[scarface_74]

> Microsoft isn't FAANG.

This is a horrible well actually. FANG (notice the missing A) was a term coined by Kramer and means absolutely nothing. Apple originally “wasn’t a FAANG” when the term was first coined and it already had a market cap higher than the other four companies.

As far as market cap and impact on the industry, Netflix is a nothingburger. Microsoft has been one of the top five most valuable companies since 2000.

[ethanbond]

> This is a horrible we’ll actually

So is ignoring the actual substance of the response. Would've been silly if my argument was "MSFT isn't FAANG so therefore...", but it wasn't.

[jmalicki]

Using fundamentals is misunderstanding the term.

When investment analysts say fundamentals, they're talking about things like demonstrated business performance.

You're using the word "fundamentals" to mean what investors call "beta", which is almost the opposite of what it means.

[ethanbond]

Ah, I was not trying to use the finance term of art but I see why that's a confusing word choice here. Can't edit but take fundamentals here as "the base dynamics of the industry."

Thanks for the flag!