Sean King

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San Juan, Puerto Rico, United States

Friday, June 12, 2009


Michael S. Malone: Entrepreneurship has been the single most important contributor to the economic health of this country for at least a century now - and if you were going to systematically destroy that vitality, you couldn’t come up with a better strategy than the one Washington has put in place over the last six months. Indeed, you can make the case that the sole contribution the Obama administration has made to entrepreneurship in America to date is to force all of those millions of unemployed people to desperately set up their own businesses in order to survive.

You might imagine that this would be upsetting to all of those Valley tycoons who played such an important role in underwriting, advising and legitimizing Candidate Obama. But you would be wrong.

What I think is most misunderstood by outsiders is that the electronics industry is not monolithic, and that its players do not all share the same interests. And nowhere is this divide greater than between start-up companies and the giant, well-known corporations - even though the latter, just a few years before, were start-ups themselves.

For example, you may think that the competitive challenge that big tech companies fear most is from other big tech companies. You know: Apple v. Microsoft, HP v. Dell, Cisco v. Juniper, MySpace v. Facebook. But in fact, that isn’t the case. Sure, those are dangerous competitors; but far more threatening is that clever new start-up that seems to appear out of nowhere. That’s the threat that wakes up Fortune 500 tech CEOs at 3 a.m. That little start-up not only competes with you, it can render your entire business - even your entire industry - obsolete and you don’t even see it coming. Think desktop publishing and the printing industry, the iPod and the music industry - and just look at the terror that Twitter seems to be creating at Google and Facebook these days.

Once you understand this dynamic, a lot of the paradoxical recent business behavior in high tech suddenly becomes explicable. For example, why did the big tech companies embrace such regulations as Sarbanes and stock options expensing - even though they would cost them billions of dollars with no obvious gain? And why would they support a Presidential candidate who seemed to have little understanding of, or sympathy for, market capitalism and business?

Because it was the best strategy to crush the start-ups.

I have made this very point myself. Socialism makes it much more difficult for poor or average folks to become rich, and even more insidiously, it makes it much more difficult for the rich to become poor.

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