Can there be too much competition between startups?

TechCrunch | 3/14/2019 | Staff
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Competition is the core of capitalism. Competition between companies lowers prices — on average — and ensures that they are forced to innovate lest they lose their markets to others. Competition between workers ensures that people strive to do their best work lest their jobs go to more qualified or faster or cheaper replacements.

Obviously, there is a spectrum here from lethargic monopoly to cutthroat competition that causes more problems than it’s worth (environmental damage in the hopes of cutting costs, fraud, deceit, etc.). Drawing that line though is really, really hard though, and there are unfortunately not many non-academic discussions of how much competition is needed to spur innovation.

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So it was surprising to read an entire chapter about this dilemma comparing China and the U.S. in Kai-Fu Lee’s book AI Superpowers (yes, yes, I am dreadfully behind on this particular book review).

Book - AI - Lee - Conceptions - Innovation

While the book is about AI, Lee is trying to undo American conceptions of Chinese innovation early on in the text. Yes, the country was once a copycat haven, but that has changed as the learnings of copying have led to originality:

The first act of copying didn’t turn into an anti-innovation mentality that its creator could never shake. It was a necessary steppingstone on the way to more original and locally tailored technology products.

American - Tech - Companies - China - Effort

In his narrative, American (tech) companies didn’t fail in China because they were incompetent, but rather because they never made the effort to localize:

American public companies tend to treat international markets as cash cows, sources of bonus revenue to which they are entitled by virtue of winning at home. […] American companies treat China like just any other market to check off their global list. They don’t...
(Excerpt) Read more at: TechCrunch
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