Stripe raises $600M at nearly $36B valuation

Sadly, it’s also likely one of the largest and fastest transfers of wealth from small businesses to large corporations. As Amazon hires 100,000+ workers how many small businesses are shuttering for good?

Stripe is one of the “good” tech companies in this respect by helping to level the playing field for smaller businesses, but it’s not going to be enough.

The impact of Covid-19 on many businesses around the world is very sad.

That said, it's less clear to me that the medium-term impact will be pro-incumbent or pro-large company. Big incumbents tend to be less adaptable and to benefit from large fixed cost barriers to entry (e.g. real estate). We're seeing a lot of nimble small businesses migrate to online business models far faster than the behemoths they used to struggle to compete against.

I don't understand this idolization of small over large (or vice versa for others). The thing that matters most is that businesses best satisfy their customers, whether they are small or large.

There's no benefit to having a small business that provides inferior products or inferior service relative to a large company.

I buy from small companies all the time and many of those that I do will likely survive because they provide better goods and services than any large company.

Large companies have more power than smaller ones. This could be the power to offer poor products at inflated prices, or power to alter political processes to their favor.

Also small companies often employ and are owned by my neighbors.. Amazon doesn't and is owned by a bunch of hedge funds and a dude who buys $200M houses.

> There's no benefit to having a small business that provides inferior products or inferior service relative to a large company.

Sure there is - in terms of where the profit goes. The profit in a small business goes to the owner(s), who usually live somewhere in the local community, and in turn that money stays within the community to be spent on other businesses there.

When a Walmart comes along, the profits all move up the chain to a corporation that is nowhere nearby, effectively sucking the wealth out of small towns in exchange for slightly reduced costs thanks to efficient logistics.

The happy medium would be to find a way to have logistics as good as Walmart without having to actually be Walmart.

> or power to alter political processes

Doing away with large companies doesn't guarantee that this will end, though.

An example: while there are few large corporations providing physician services, the American Medical Association lobbies on behalf of the thousands of individual doctors and small private practices, often to the detriment of consumers anyway.

I keep thinking about a line from "Small is Beautiful":

> Rather than mass production we need production of the masses.

Something like that.

Small Is Beautiful: A Study of Economics As If People Mattered https://en.wikipedia.org/wiki/Small_Is_Beautiful

> First published in 1973, Small Is Beautiful brought Schumacher's critiques of Western economics to a wider audience during the 1973 energy crisis and the popularisation of the concept of globalization. In 1995 The Times Literary Supplement ranked Small Is Beautiful among the 100 most influential books published since World War II.

While this is true, I would be curious of the overall economic impact.

A business owner can have a successful business but they aren't really making tremendous profit, so how much of that money really remains in the local community.

The other aspect is also that real estate taxes need to be increased, which is the best way to ensure that funds inside a community stay there.

This way as more work moves remotely, through real estate taxes the local communities are still able to thrive.

I'm not disagreeing with what you are saying, but it isn't so black and white.

Smaller businesses are also more swift and responsive to needs in their environment (when they have enough resources). While big companies are prone to take risk-averse actions (layoffs, outsourcing, store closures), smaller businesses have less layers of management, so pivots and benevolent actions are more likely.

I admire people willing to take risks starting their own business instead of being another cog in the machine.

I guess you could say I’m privileged to be able to value more diverse offerings over the absolute lowest prices, but culture suffers when all you have are same 5 retailers and 20 restaurant chains in every town.

Also, economies of scale put small businesses at a disadvantage, even if their product isn’t inferior.

> Smaller businesses are also more swift and responsive to needs in their environment

And yet, the covid crisis demonstrates the opposite effect.

> While this is true, I would be curious of the overall economic impact.

Where have you been for the past decade? The economic impact is increasingly concentrated levels of wealth, where a handful of people are vacuuming up pretty much all of the wealth in America. The middle class (local business owners) is shrinking, the labour/wage worker class is growing, and the ultra-wealthy are getting richer.

> The other aspect is also that real estate taxes need to be increased

No, this also affects local businesses, who do not have the profit margins needed to survive. You need to find a way to limit the power big corporations have, while not hurting small/local business owners. A VAT tax is likely a much better solution to this problem.

Increasing real estate taxes is one way to ensure only big corporations with extensive logistics networks and high profit margins, that pay their laborers minimum wage would be able to survive. The point is to prioritize people over corporations, and your solution misses that completely.

By that logic, car dealerships in America are a positive because they keep profits locally. In reality, they just increase prices to consumers and limit competition through lobbying.

The cost advantage from Walmart is not just in logistics, it is specialization of labor, superior negotiating power against suppliers, and diversification of geographic risk. A small business will be less efficient and give up more profits to suppliers.

Large companies also employ my neighbors, and clearly for a better value as otherwise they would be with smaller ones. As for ownership, Amazon is part of the S&P 500 which is quite literally owned by millions of folks in their savings, 401k's etc. Hence the reality is not that simple.

Many small companies can serve a wider variety of customers more precisely. They also increase diversity so we don’t end up with a few large companies optimizing for their local maximum, which is rarely the market’s.

For big public companies, the owners can be distributed in many communities.

This is true, but the big incumbents will benefit from being able to buy up swaths of local business at a discount. Their advantages of scale will only increase

This is true, but are lower prices for consumers better for everyone in the community than keeping the profits locally? I don't think anyone knows. My guess is it creates different winners and losers.

I think he's thinking about local specialty retailers, which pretty much by definition cannot pivot into some online model. If you aren't deemed essential, you're likely going out of business as your market is eaten up by Amazon and Target/Walmart (which get to keep selling various non essentials since they're allowed to remain open, so they can sell groceries and drugs). Small local businesses will fail or take out crushing loans from the govt, and your mom+pop kitchen store is not more able to cope than Target with its well staffed IT dept, unbroken revenue stream, and deep pockets.

I'm not so sure about the tremendous benefits of having locally-wealthy people instead of remotely-wealthy people. As I've gotten more involved in local politics, I've discovered that local small business owners have a quite toxic influence on local politics. Who funds the campaigns opposing density? Often it's small business owners. In Seattle, the city was trying to create spaces where addicts could safely use needle drugs (and get services and be off the street). Who opposed this? Small business owners.

Additionally, because they fly under the radar and are less efficient, small businesses can be some of the most exploitative workplaces. Small businesses are also often exempted from pro-worker regulations, for example they do not have to provide healthcare to their employees. Several small businesses in cities I've lived in have waged years-long union-busting campaigns.

The point isn't that small businesses are worse than large ones, I just think they have a progressive halo which is often undeserved.

Looks like everyone responding to me completely ignored the fact that my point wasn't a defense of large businesses, it was about defending businesses that are more customer-centric. i.e. those businesses that better meets the needs of the customer by providing superior value. Many of the replies actually reinforce my point.

That could be restaurants that provide better quality food than the large chain restaurants. It could be a butchers that provide higher quality locally sourced meats than what I can get at Safeway and Walmart. It could be businesses making specialized gear that I use in my outdoor endeavors (Hyperlite Mountain Gear, Mountain Laurel Designs, Astral, Kokatat, Alpacka Raft, etc. etc.). It can be businesses that sell things the big businesses don't such as a specialty wine shop. There are tons of good small businesses that provide superior value. Selling the same products as Amazon and Walmart at a higher price with poorer customer service and worse return policy doesn't provide superior value.

A good business is one that provides superior value. Being large or small tells me nothing about the value being provided.

Everyone focusing on things like pricing power is missing the forest for the trees. If you don't have pricing power, the money is still leaving the community. Instead of going to the middleman that lives far away, it just goes to the manufacturers that live far away.

Furthermore, many of these large companies are public, which means everyone within any community has the opportunity of buying a piece of the company on the open market. The communities that buy the most of such large companies probably even keep more wealth in their community than the ones that don't. If enough local people buy shares, then it's possible that more profits flow into that particular community than flow out of that community.

With a small local retailer, it just means the money flows into the pocket of one person or one family in the community and no one else in the community can buy into that business and get the benefits of the value generated. This is what happens in places like Lake Chelan in Washington, where one family (the Campbells) has a stranglehold on politics and funnels everything to their businesses, which no one else locally is able to buy into.

Strong communities with a solid local economy are those that have many such small businesses that provide superior value. If your community does nothing that an Amazon or Walmart does, then there really isn't anything that's going to flow the balance of payments in your direction and the community will slowly die.

And plenty of small investors like me own Amazon via their manged funds

I'm struggling to see how local people influencing local politics is a bad thing. Would you prefer for remote corporations to control local politics?

And that wealth goes into people's pension funds, and gives them more money to spend in their community in retirement. Why the assumption that money magically disappears once it gets to Walmart?

It's interesting to see smaller companies adapt though. Local cafes in Australia are selling toilet paper and soap.

Overall I agree with your point. Many have shut their doors and I don't know if they'll reopen.

No, I'd just prefer we're equally critical of wealthy and corporate interests controlling our politics, regardless of where they live.

I wish we were equally critical of everyone controlling our politics regardless of wealth and location. No one's preferred policy positions are above criticism.