Story by Melissa Keane
Feudal or counter capitalism.
This is the notion of having a single entity propped up to gain market control, restrict resources and monopolise gains to the benefit of investors.
How it works? Every so often major capitals and banks would select an emerging market whether it be oil, manufacturing (in the past) and now tech etc. They then select the company they believe has the best model and likelihood of success and pump copious amounts of capital into it. These initial investors are often prepared for delayed gratification and ofcourse not all funds come from legitimate sources.
As this one business now has capital and resources it can engage in extreme practices whether these be buying out competitors, real estate blocking, licensing, marketing or simply price wars that smaller companies cannot compete with.
The business gains control and eventually can be worth billions. It can then go public allowing ita initial investors to now realise the benefits of their investment. Previously this took 15 to 20 years or more.
However, in a digital age with amazon, google and tech giants leading the charge of the wealthy. This time period can be circumvented. But there are major drawbacks as softbank recently realised with wework and uber. Both these companies received millions in funding from softbank. Uber’s IPO was hardly encouraging whilst wework postponed their own, removed their co founder and ceo, Adam Neumann and are basically both bleeding cash.
Investors have realised that the online and tech world means fast money but unless there is someway to foster longevity as with google and amazon they would lose momentum for one simple reason…hype never lasts.
Oracle ceo has described both wework and uber as nothing but glorified shells of what was already existing…co working spaces and taxi services. This isnt gold or property and wont always be here or be able to survive competition.
Its possibly why many tech billionaires now have serious investments in real estate, gold and other business.