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Jun 7th, 2014 Share: Share on Twitter Share on Facebook Share on LinkedIn

The Hourglass Shaped World

A few weeks ago I heard Scott Kupor, founding partner at venture firm Andreessen Horowitz, talk about how venture capital firms are changing: He sees a future where there will be a few mega-firms, a whole bunch of small firms and pretty much nothing in the middle. He pointed to a blog post by Manu Kumar of K9 Ventures which describes the changing landscape at the lower end of the investment spectrum.

I believe he’s right. And his argument stretches far beyond venture (a point Scott made too): We see this hourglass shaped reality forming everywhere. From grocery stores where we have the Walmarts of this world and the local speciality shops and pretty much nothing in the middle to wealth distribution around the world (the rich get richer and the middle-class vanishes).

This has implications for you: When you build your business you need to make a conscious choice if you want to be one of the mega-companies or if you want to be a highly-specialized niche player. There is little to no room in-between. Be big and realize economies of scale and scope. Be small and stay nimble and agile. Be in the middle and you get squeezed by both the big and small guys. And make no mistake — both positions (big and small) can be highly profitable, impactful and rewarding.

Your decision. Make it rather sooner than later.

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