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NRO’s domestic-policy blog, by Reihan Salam.

David Carr on the Virtues of Smallness



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In a column on “a fundamental shift in Web behavior,” David Carr describes the success of various niche media properties and the relative failures of larger organizations:

Many of the news sites that are now having success on the Web — Business Insider,Gawker and Mashable, to name a few — are built on sensibility, which is generally a product of a small group of like minds. Innovation usually requires the “two pizza rule” — a working group should be no larger than one that could be well fed by two pies — with the emphasis on lightweight hierarchy, rapid decisions and constant reiteration of those decisions as the market responds.

I’m strongly inclined to overinterpret Carr’s findings, i.e., to apply the “two pizza rule” to the world more broadly. Like a lot of nerds, I’m a fan of 37signals, the company that makes Basecamp and other technology products aimed at small firms. The following is a passage from their recent book Rework, from an excerpt on Tim Ferriss’s blog:

Small is not just a stepping-stone. Small is a great destination in itself.

Have you ever noticed that while small businesses wish they were bigger, big businesses dream about being more agile and flexible? And remember, once you get big, it’s really hard to shrink without firing people, damaging morale, and changing the entire way you do business.

Ramping up doesn’t have to be your goal. And we’re not talking just about the number of employees you have either. It’s also true for expenses, rent, IT infrastructure, furniture, etc. These things don’t just happen to you. You decide whether or not to take them on. And if you do take them on, you’ll be taking on new headaches, too. Lock in lots of expenses and you force yourself into building a complex businesss—one that’s a lot more difficult and stressful to run.

Don’t be insecure about aiming to be a small business. Anyone who runs a business that’s sustainable and profitable, whether it’s big or small, should be proud.

There is, however, a small problem with this analysis, which becomes clear in an earlier section:

What is it about growth and business? Why is expansion always the goal? What’s the attraction of big besides ego? (You’ll need a better answer than “economies of scale.”) What’s wrong with finding the right size and staying there?

Do we look at Harvard or Oxford and say, “If they’d only expand and branch out and hire thousands more professors and go global and open other campuses all over the world . . . then they’d be great schools.” Of course not. That’s not how we measure the value of these institutions. So why is it the way we measure businesses? [Emphasis added]

I agree with 37signals entirely: we shouldn’t mindlessly accept the notion that growth is good for our various personal undertakings, including the firms we found, because we need to take into account our own needs, priorities, and sensibilities.

Yet I think the Harvard and Oxford examples are uniquely inapt, because Harvard and Oxford, at least in theory, have a broader social mission. One could argue that making these schools highly selective allows them to best achieve a broader social mission. But one could just as convincingly argue that exclusivity is not the ideal if the social mission is to spread knowledge and high-quality instruction. In that case, we actually do want these institutions to branch out and expand. That doesn’t have to mean hiring thousands more professors and opening other campuses. Rather, it could mean making a concerted effort to offer more courses to more people via the Web, as MIT, Stanford, Yale, and other schools are starting to do, with MIT perhaps the furthest along.

And this is where the profit motive comes in. Per the 37signals insight, it actually might be a very good thing for the administrators and alumni and other immediate stakeholders of Harvard and Oxford to maintain a high level of exclusivity. But if we think of the wider taxpaying public as a stakeholder, the calculation shifts, or rather it ought to shift, to take into account the interests of the wider community.

Perhaps one can make an analogy to closely-held firms and publicly-held firms. If I own my business, I can decide that I want it to be a so-called “lifestyle business” and leave it at that. But if my goal is to become very rich, growing the company to the point where I can take it public remains an attractive strategy. This in turn creates entirely new constituencies that create the growth imperative.

It’s thus easier to understand why a growing number of firms are choosing to remain closely-held or privately-held.

To return to Carr’s column, I’m intrigued by the lifecycle of Web media and the problems of scale. The Awl, for example, was founded by refugees from Gawker Media, which itself had once been a very small organization. Business development was run by David Cho, by all accounts a young and exceptionally bright guy who has since left for Grantland, a highbrow sports brand from ESPN.com and multimedia genius Bill Simmons. It occupies a somewhat more bohemian niche than the Gawker properties. The Awl has arguably already expanded beyond the level at which all of its content meets a high standard of cheek and intelligence. Jezebel become a huge success because of its feminist, politically conscious, anti-materialist stance, which placed it in opposition to the sensibility of mainstream women’s media. Yet now that it’s become very successful, management is strongly inclined to make it more commercially-friendly, which in turn is making the site more like the mainstream women’s media that it was born to critique, engage, and counter. This cycle has accelerated.

In a recent conversation with a worldly friend — who spent years in Africa’s Great Lakes region and South Asia before entering the non-profit world — he argued that ideas are increasingly spread not by institutions but rather by “personal brands,” and that the most effective institutions in the world of ideas are those that are small and nimble enough to reflect the sensibilities of a particularly capable, compelling person or very small group of people. I realize that this is a somewhat familiar view in most domains, but it was interesting to hear it in the context of think tanks. For example, among a small coterie of writers and thinkers, thoughts immediately turned to Tim Carney of the Washington Examiner when Michele Bachmann confronted Texas Gov. Rick Perry about his Merck ties. Having written about corporatism, crony capitalism, and related themes for the better part of a decade, Carney is closely associated with the corporatist critique. And this would presumably be true regardless of the institutions with which he happens to be affiliated.

I don’t believe that these intellectual and cultural trends are reversible, though of course Tim Wu’s argument in The Master Switch is that a cycle of decentralization and recentralization is inevitable. As Tim Lee argued in his Ars Technica review, my sense is that the cycle Wu describes has in a very real sense been broken. Regardless, this more individualistic gestalt, and this intensifying bias towards smallness, is also linked to inequality, as Clay Shirky suggested way back in 2003 in the context of blogs.



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