Insights
New Business Boom and Bust
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Consilient Observer
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June 15, 2022
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New Business Boom and Bust
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June 15, 2022
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New Business Boom and Bust
New Business Boom and Bust |
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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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