Does Small Business Rule?

In the mid 1800’s John D Rockefeller founded Standard Oil, which later became the foundation for almost the entire oil industry.  He created the first real national corporation, and later, the first international corporation.  There were no laws for setting this up back then, so they had to deal with a lot of complexity and resistance.  Before Standard Oil was created in the 1800’s, all business was local small business.   There was no real nationwide business.

Since that time we have become used to large corporations in every part of our lives, for example, Microsoft, Citicorp, Hewlett Packard, Disney and Wal-Mart.

Is it changing?

The internet is changing some of this, and is flattening how we work.  Instead of requiring hugely human intensive businesses, online, we’re now working with small, highly leveraged teams.  And instead of large corporations, on the internet the teams are relatively small.  Look at what Markus Frind has done with, or the guys, or Drew Curtis with Fark.  All these guys control as much traffic as a television station with few to no employees.  Even Google, one of the very largest online corporations only has 11,000 employees, compared to Wal-Mart, which has 1,800,000.

The ease of working remotely and connecting with and working with people in new ways is driving this on the internet, and some of the freelancer sites are leading the way.  For example, Odesk, with its outsourcing model, is a company that can allow individuals to organize themselves into teams and work remotely together as an entire company.  This model doesn’t scale particularly well – it is hard to have people working from different locations and have them collaborate as effectively as a team based in a single office.

The few cases where this works is when the collaboration is very simple.  A prime example is a company named LiveOps.  LiveOps provides phone support for large companies.  So if you’re Dominos, and you want to shorten the time it takes to answer the phones, you route all your calls to LiveOps.  LiveOps in turn recruits work from home people to answer the phones.  Their workers like this because they can work on a flexible schedule. Because LiveOps has so many people, and the concept is simple, the model works incredibly well for both sides and can scale.  LiveOps ends up with a huge team of work from home phone operators based around the country and can shift volume according to demand, and companies needing phone support can easily route it all via LiveOps.

So while LiveOps can work as a mega corporation because it has a very simple model, I think we’re going to see more growth of small businesses interfacing with each other in the future not less, where fewer people control more of the information that is passed around the world.  A successful website is incredibly high leverage and that doesn’t require a lot of people.

So my question to you is, for the internet, are we heading back to the early 1800’s where small business ruled?