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Comment by jtrn

3 days ago

Here is the entire article compressed from 21k characters to 176:

It’s easier to get away with large margins and not spawn competitors if nobody scrutinizes you, and it’s easier not to get scrutinized if you are small or the domain is boring.

Not a knock on the article. It’s nice to double-click on a concept and explore it with examples and from many angles. But for me, it would have been easier to start with that framing, because it took way too long to understand the purpose of the article, atleast for me.

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jtrn

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jstummbillig  3 days ago

As always the writing could be denser, but that is very lossy compression. I enjoyed the full read!

  • jtrn  3 days ago

    Yes, I did too, and I actually thought about "lossy vs. lossless compression" when I wrote the comment. That's why I said that I was not trying to denigrate the article, but when I understood that this was the gist of the article, it clicked better. So it was bad framing to call it "compressed to." I should have said, "I found this summary to be a helpful framing to read before the main article."

tptacek  3 days ago

I cofounded a company that ultimately got rolled up (Matasano, into NCC Group US) and think this is not a really good summary of the article. Rollup strategy is interesting!

  • jtrn  3 days ago

    That’s why I had to summarize it. Because the article is a bit all over the place. It tried to jam in in way to many angles on one topic “invisible companies”.

    I reread listened to the article now and looked up some research due to the things that bugged me.

    The summary I made is what’s uniquely interesting about such firms. But from a rollup perspective it’s just one of potential mechanism for a firm to be on the cheap. And even if you think that is a usefull angle on the topic, it’s still covering just a the subset of such firms that are invisible AND has good margins AND the owner is willing to sell on the cheap due to ignorance of lack of buyers so they can’t get good offerings.

    I could have expanded the summary with: “ and because nobody’s bidding, they’re cheap to buy up and consolidate, which is where rollups make their money.“

    The problem with that is that it a claim, and it’s at best not well founded and maybe even wrong. There are many failures in the same industries the article celebrates. Loewen Group rolled up funeral homes and went bankrupt in 1999, the 1990s physician-practice rollups collapsed, Waste Management itself restated years of earnings in 1998 in one of the largest accounting scandals of its era. None of that is in the article.

    And many of the article’s examples (marina software, niche aircraft parts) are markets too small to support a second firm at efficient scale. If so, nobody enters not because they didn’t look but because they looked and correctly declined.

    So yea, the article is a bit scatterbrained and much more speculative than it pretends.