Artisanal wooden jigsaw puzzles made in the USA.
Cart 0

Talk With Data: Biggest Companies Actually Smaller Than They Used To Be

Been hearing concerns about whether our biggest companies are getting too big. Are those concerns based on reality, or just based on hype? What does the data say?

Well, there are a lot of ways to try to be precise about measuring "how big" is a company, but one standard way is the company's market cap. 

Here's some great data (shared by Jerry Neuman on Twitter) showing that the market cap valuation of the biggest companies has actually mostly been going down since 1927, though it has ticked up the last couple years:   

What does this data mean overall to our economy? One can come up with many stories, but also many counter-stories of what is either driving this trend or what it in turn causes.  

And of course, market cap doesn't tell the whole story. Another perspective that we don't have data on is how much each big company dominates its particular business activity, but that is also a bit misleading of a question if you don't look at barriers to entry and risks of turn-over of the most dominant player (for example, MySpace was once super-dominant in its field, but most teenagers have never heard of it, because it was easy-to-lose that dominance).

Those types of subtler questions are much more challenging to answer with data, and depend a lot more on the specifics of the business activity, e.g. how easy is it for a brand new car company like Tesla to win (and keep) market share is a different question than how easy is it for a brand new language teaching software company like DuoLingo to win (and keep) market share?  

 



Older Post Newer Post


Leave a comment

Please note, comments must be approved before they are published