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Consilient Observer
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Juni 15, 2022

New Business Boom and Bust

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Juni 15, 2022

New Business Boom and Bust


Consilient Observer

New Business Boom and Bust

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Juni 15, 2022

 
 

How Capitalism Experiments

 
 
  • A child's developing brain creates a huge number of synaptic connections, reinforces the ones that are used, and prunes the ones that are not used.
  • This process appears wasteful, but scientists have shown that it creates a network of neurons that functions well in a wide range of potential environments.
  • Burgeoning industries commonly follow the same pattern as they develop, with new companies representing the synaptic connections, the marketplace the environment, and the exit of companies the decrease in connections.
  • New companies enter the industry with a novel approach or technology to address the business challenge, and the marketplace "selects" the products or services that best fit the industry's needs.
  • We discuss this pattern for companies, describe why investors should care, and offer some current examples of where this pattern of entry and exit is playing out.
 
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