I have thought about this a lot over the years and tried to spot these companies - many of them are the type of business that Berkshire Hathaway would love to find.
Some of them are a little more visible simply because they’ve scaled and developed a moat - logistics, particularly trucking in the UK, and international cargo shipping, stand out here for me. But also social care, floristry and grocery wholesaling, weird sectors in aviation (I worked in that for a while), all sorts.
And then I look at family businesses that shouldn’t be able to exist all the time. In my nearest town centre there is a grocer, a fish shop and a butchers on the high street. Common sense tells us the extra large supermarket built on the outskirts of the town in the 1990s should have obliterated them, but no.
In the UK there is a common assumption that a lot of vape shops, barbers and even some takeaways are fronts for money laundering (and that definitely happens - there is a chicken shop in one Northern town I know that to my knowledge has no ability to actually sell you chicken, nor can the 4 others next door to it). But there are definitely some that are making good money via the legal route.
As a software guy I look for opportunities to sell to them and there’s one theme that stands out across many of them that is also an invisible sector: have you noticed how many small companies make and sell touchscreen tills/cash registers? In the UK it seems to be a thriving cottage industry.
I used to think that all those Persian carpet stores on University Avenue in Palo Alto were a way to get immigrants jobs in the US. But no. Turns out the carpet store guy had been renting upstairs office space to startups in exchange for an equity stake. That worked out very, very well for him.
Oriental carpet stores are interesting businesses. I always wondered how they stayed open until I met someone whose family has been in the business for several generations.
Individual sales are in the thousands, so they operate more like high-end jewelry stores than a "normal" business. One sale a day is minimum 250K/year.
The store itself seems to be more of just a show room. There are other sales routes too. Selling into hotels would be an example. There are also maintenance services, so a high end rug in some sense can be seen as a recurring revenue source.
I recall going to a carpet/tapestry shop in Turkey where, as we enjoyed the ever-present sales-pitch tea, the owner showed us his wares. After the 5 grand mark, he just stopped listing prices. For the final assortment, he brought out some exquisite silk tapestries about the size of welcome mats. He joking clarified that these were tapestries, to be hung on walls. If you bought one without having a wall to hang one on, he'd be happy to fly out and build you one.
My family is Persian and I grew up in Turkey. You definitely develop an appreciation for carpets, and it's sooooooo heartbreaking to see people use art as an entryway rug, simply because they don't know :(
Oriental carpet stores seem to be doing alright still in the bay; less so in Manhattan, though you would think the same opportunity to rent property to startups could exist. Many of them have shut down or are only open by appointment. None of them offer the personal service I suspect the author is insinuating exists still. Near as I know that level of bespoke care died off a couple of decades ago unless you are very wealthy. No doubt the competition (but not competition) of sites like etsy, temu, ebay, and the large number of people who think things look sorta like something nicer contributed to the death of the end-to-end streets of Persian carpet stores. I still remember purchasing a knock off for under $85 during the dotcom boom. Nothing was individually dyed; it was all mostly just meant to look that way, like most 'oriental' carpet now. The materiels going into making the new-fangled rug bears no resemblence to those which make an old-style one. God-forbid you drop the wrong beverage or something on a really good old hand-made rug and the dye runs. Shopping in those large Persian rug stores are still lovely, when you can find one that is open (by appointment or not). They rarely have posted hours either.
I had a phase when we bought several rugs at the price point you're talking about and also found some "subprime" sources of rugs that were authentic but not so go good and much more affordable.
Then I had a house full of oriental rugs and haven't needed a new one ever since.
Furniture in general is a low turnover industry and tough.
One of the ironic reasons that Ikea/Wayfair do well is their stuff looks good but is basically garbage and can't survive a move or two so people are forced to buy from them more often than they would with better brands. Better brands are too expensive (and also a bit stodgy usually) so younger and poorer people just keep getting the same lower end stuff repeatedly.
Guitars don't seem to be like that. Like sometimes my son is talking with my son about his latest guitar with my wife and that guitar is newer than the guitar that my wife thinks is his latest guitar. If he hasn't bought a new guitar he just made a new one.
[The Amidi family through] its various holdings and brands, currently owns and manages more than 1 million square feet of real estate space along with assets under management exceeding $2 billion.
Yes. Startups which started with office space above one of his carpet stores include Logitech, Google, and PayPal. Plus, one of the carpet stores became the first Apple Store location, before Apple built the glass box.
They were loaded before owning real estate next to Stanford. It isn’t some mom and pop they were upper crust
> Rahim co-founded the Amidi Group in 1980, a conglomerate of privately-held business enterprises consisting of several domestic and international entities with significant manufacturing, distribution, trading, retail, and real estate holdings
I worked at a small bike shop in the 90s and when we had issues with our point of sales system we would call a number on the till and it connected us to the single developer who maintained all the software for it!
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.
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!
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.
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."
My impression is that these companies are less invisible than ever thanks to the massive growth in private equity since Ross' era (the 50s-80s). I keep hearing stories about pest control businesses and HVAC companies that get inundated with messages from search funds.
I wish there were a clear and easy way to identify these small services owned by PE, who often go out of their way to avoid people finding out.
Usually I find out by noticing symptoms of worsening quality, costs increasing more than I might expect, ramp up in aggressive cross selling of services and subscriptions, shifting to call services that are clearly not local and know nothing of our area, etc.
In some cases I'll get an employee that knows the situation and let's spill the PE sale and then I need to find a new service provider.
My new pest control folks sold me partly by showing customer satisfaction numbers from independent third-party review sites. The sales guy made the point that their customer satisfaction had stayed high after their PE buyout, but my old service had gone downhill since their PE buyout.
All of those are clearly AI-generated. You shouldn’t trust any “edutainment” videos made that way, chances are there has been zero fact-checking and that the creator hasn’t even watched the result of their slop.
This is a great topic. Lets say for a second the information is factual, then are these AI videos good? Sometimes I see these AI videos that tackle more obscure topics that are still interesting. These topics may have been monetarily prohibitive to do. Maybe too risky or getting all the animation and content too costly for the payout. But now with AI, all the data can be easily gathered.
Now lets talk about factuality. A human creator can just as easily lie or not fact-check all their sources. But if they do decide to fact-check, wouldn't it be easier to just task the AI to fact check. Simply tell it, "leave out any data that has not been fact checked and mapped back to a reliable source."
> A human creator can just as easily lie or not fact-check all their sources
Not "as easily". A human creator can make a video without fact checking anything, but people using AI can push out thousands of bullshit videos in the same amount of time.
The human creator also actually sees the content they put into their video and can catch the most obvious errors that don't even require fact checking. Humans using AI can just keep spewing out slop as fast as possible without having any idea of what any of the videos actually contain.
If you spend any time trying to find such companies you'll see that for every invisible profitable company you'll find 20 invisible unprofitable disaster companies.
Search funds have existed for a long time now, and it's hard work.
There are many opportunities to start the your own invisible company. I once started a small business ($33k/year) that sold exactly one product to one company for a few years. One thing the article glosses over in the Steven Ross discussion is that this guy was clearly entrepreneurial: he was able to see the gaps and find or build solutions to fill them. You can in fact build a business around solving a "simple" problem for one business, and because it is a small scale you are essentially invisible to the would-be competition.
I worked for a different Steve Ross (Dolphins owner, Related Companies, etc), and we did this in house.
From 2008-2017, “we” (I was a contractor 08-09, and employee 15-17) basically turned every spreadsheet into a web application internally.
We added authentication and authorization, used a LOT of ETL-type processing to move data around. So many things could have been packaged and sold, but that was the “secret sauce” that kept the company so profitable.
Then the end in 2017 when a new CIO came in, killed off IT (laid off all non-managers over the course of a year), and replaced everyone with South African consultants to turn IT from a cost center to a profit center.
Our startup noticed our first major-brand customer had a high-stakes B2B process depend on a spreadsheet that looked handmade and perhaps error-prone.
There was a moment of thinking This could be one of those startup pivot points, when what you thought was the incidental to your exciting technology solution, is actually the simple CRUD app/integration SaaS that customers need even more.
Then there was a moment of thinking We don't want to be the communication middleperson on that high-stakes communication, if there was ever a dispute.
Also, either it wasn't a perceived pain point of the customer, or they intended their ongoing CRM-ish conversion to address it eventually.
So we listened to the customer on what problems they (or at least the stakeholder executives' KPIs) actually wanted us to solve, and we continued to consume that spreadsheet in a manual and "zero-impedence" way, for the little bit we could use that info.
(A management consulting firm or YOLO/fly-by-night startup might do that one, though.)
There is a bit of a trap for smart people with high agency where they assume "well, someone else will just go do <thing>". They assume this b/c they probably have multiple examples in their own life of being the only person to do <thing> when no one else was.
That being said, if I've learned anything during 20 years in various industries ranging from publishing to hedge funds:
1. People have very different brains
e.g. quants can't do sales and vice versa.
2. People don't have infinite time and money
Even billionaires have items on their "want to do" list that don't get done b/c it's either too complex, would require too many people, too much time etc
3. Some people are great at systems building and other are terrible
This could really be downstream of item 1 but it's worth pointing out that building a system of people and processes is it's own specific skill. If you live in an organization where specialization is rewarded, you'll find that there are fewer and fewer people who have this skill.
4. People underestimate what it takes to do <thing>
The classic case is the HN "Oh you want to start a software consulting company b/c you like programming? That's like saying you want to start a pizza parlor b/c you like making pizza. Making the pizza is only 10% of the job."
Fortune's Formula by William Poundstone strongly insinuates Kinney Services got started as a gambling front, so possibly a poor example of a boring business turning a healthy profit.
the lesson of history (Heian Japan, Wilhelmine Germany) is that people with status can control the definition of status and make it apply exclusively to themselves. It doesn't end well, but it doesn't stop people from trying.
It makes me think of my college girlfriend. Her dad owned a bar, only one, that he eventually expanded to several, but even with only one, they had a home address on a canal on a small island south of Long Beach, vacationed all over the world for weeks at a time, owned a boat, dude bought his daughter a slightly less than million dollar Victorian in San Francisco in 2007 that is probably worth $10 million by now.
He'd started in his 20s as an industrial process engineer and eventually opened a string of carpet stores, then got into restaurants, earned a commercial real estate license and started buying his own stores instead of leasing, then had the opportunity to buy this bar, a rundown, tiny, poorly lit dive in Belmont Shore, a terrible place in a great location, and it eventually became the number one seller of Jameson on the entire west coast. What made owning a bar so profitable? No food, which is low margin, expensive and difficult to get approval for, requires more skill on the part of your labor to make well and handle. Low labor costs because they earn tips and don't need a real salary. Fixed space cost since he owned the building. But more than anything, sheer luck. At some point in the late 90s, his bar acquired a reputation as an easy place to get laid and it's had lines a hundred feet out the front door every night of the week ever since. Neither he nor his staff played any role in this. It's random rumors from college students creating a trend and he's the benefactor. Ended up with a cash business that 20 years ago was earning revenue in excess of a million dollars a month.
How is a competitor supposed to enter the market and replicate that? Land is scarce, so you can't just pop up into the same location if there isn't an empty building already. You can't replicate a multi-decade earned reputation except by waiting decades and earning it yourself. You can't magically become the place young people want to be even if you serve exactly the same drinks with roughly identical looking bartenders in a roughly identical looking interior. More succinctly said, you can't copy the intangibles.
> Economists aren’t naive, so they don’t really believe these things entirely. But they assume they are mostly correct over the medium to long term.
Spoiler alert from the article: turns out economists are wrong. This will sound inflammatory, but has the field of Economics produced anything of value to society? It seems to be a social "science" based on incorrect generalizations about human psychology and studies that don't replicate. At the end of his long career, Alan Greenspan (their Michael Jordan) basically said "whoops, I was wrong that people would behave rationally."
What does humanity get from the field of economics that justifies the amount of attention and status we give economists?
I do. Do we think economists are actually generating this understanding? I'd be curious to know about policy changes which have been the result of non-obvious insights from the field of economics.
I think it's one of our better attempts to understand a very large complex system! I think it's inherently very hard to do. I do think you can critique a lot of things about the field and ideology, and so on, but I don't think that's an inherent problem of economics.
> non-obvious
I'd maybe question this a bit. I suspect that many things we consider obvious are only so because of the field of economics -- but that's admittedly only an initial hunch.
I mean, economics is a study in self modifying systems that change based upon what you learn about them. Much like chaos theory wasn't something we innately understand, the same is true for economics.
Hence economics is a probabilistic field. The things that occur have a probability behind them. Instead of a policy that needs X to happen the policy can be adapted to "If A then B, if X then Y".
I think macro economics has provided significant value to society even if the model isn't precise with perfect predictions. We do have worthwhile models that the government can use to avoid making serious monetary mistakes in the face of the real business cycle. We are unlikely to trigger the awful depths of the great depression again.
The main problem I see with public economists is Goodharts law: When the predictive model becomes visible to the agents in the economy, there are stable strategies to counteract those models. So if economists want to remain good predictors of real outcomes, they have to collect massive amounts of data to feed the model but then remain mostly invisible afterward, so that the agents being analyzed don't change behavior too much.
In some sense, a known bad model that is used to set central policy may be good because the rest of the economic agents can work on a diversity of better models without correlating as much with each other and the known central model.
One of my favorite topics, and one that many people argue exists. The conventional thinker really dislikes this concept, as if it points out some personal flaw of theirs. I mention that only because it really sticks out, the personalized perspective people take on this idea of invisible companies they cannot see.
I have thought about this a lot over the years and tried to spot these companies - many of them are the type of business that Berkshire Hathaway would love to find.
Some of them are a little more visible simply because they’ve scaled and developed a moat - logistics, particularly trucking in the UK, and international cargo shipping, stand out here for me. But also social care, floristry and grocery wholesaling, weird sectors in aviation (I worked in that for a while), all sorts.
And then I look at family businesses that shouldn’t be able to exist all the time. In my nearest town centre there is a grocer, a fish shop and a butchers on the high street. Common sense tells us the extra large supermarket built on the outskirts of the town in the 1990s should have obliterated them, but no.
In the UK there is a common assumption that a lot of vape shops, barbers and even some takeaways are fronts for money laundering (and that definitely happens - there is a chicken shop in one Northern town I know that to my knowledge has no ability to actually sell you chicken, nor can the 4 others next door to it). But there are definitely some that are making good money via the legal route.
As a software guy I look for opportunities to sell to them and there’s one theme that stands out across many of them that is also an invisible sector: have you noticed how many small companies make and sell touchscreen tills/cash registers? In the UK it seems to be a thriving cottage industry.
I used to think that all those Persian carpet stores on University Avenue in Palo Alto were a way to get immigrants jobs in the US. But no. Turns out the carpet store guy had been renting upstairs office space to startups in exchange for an equity stake. That worked out very, very well for him.
[1] https://en.wikipedia.org/wiki/165_University_Avenue
Oriental carpet stores are interesting businesses. I always wondered how they stayed open until I met someone whose family has been in the business for several generations.
Individual sales are in the thousands, so they operate more like high-end jewelry stores than a "normal" business. One sale a day is minimum 250K/year.
The store itself seems to be more of just a show room. There are other sales routes too. Selling into hotels would be an example. There are also maintenance services, so a high end rug in some sense can be seen as a recurring revenue source.
It's a interesting little corner.
I recall going to a carpet/tapestry shop in Turkey where, as we enjoyed the ever-present sales-pitch tea, the owner showed us his wares. After the 5 grand mark, he just stopped listing prices. For the final assortment, he brought out some exquisite silk tapestries about the size of welcome mats. He joking clarified that these were tapestries, to be hung on walls. If you bought one without having a wall to hang one on, he'd be happy to fly out and build you one.
My family is Persian and I grew up in Turkey. You definitely develop an appreciation for carpets, and it's sooooooo heartbreaking to see people use art as an entryway rug, simply because they don't know :(
Yeah, and if you're in the sub-continent, you better not walk all over the carpet with your shoe on!
[flagged]
Oriental carpet stores seem to be doing alright still in the bay; less so in Manhattan, though you would think the same opportunity to rent property to startups could exist. Many of them have shut down or are only open by appointment. None of them offer the personal service I suspect the author is insinuating exists still. Near as I know that level of bespoke care died off a couple of decades ago unless you are very wealthy. No doubt the competition (but not competition) of sites like etsy, temu, ebay, and the large number of people who think things look sorta like something nicer contributed to the death of the end-to-end streets of Persian carpet stores. I still remember purchasing a knock off for under $85 during the dotcom boom. Nothing was individually dyed; it was all mostly just meant to look that way, like most 'oriental' carpet now. The materiels going into making the new-fangled rug bears no resemblence to those which make an old-style one. God-forbid you drop the wrong beverage or something on a really good old hand-made rug and the dye runs. Shopping in those large Persian rug stores are still lovely, when you can find one that is open (by appointment or not). They rarely have posted hours either.
Just buy them direct in Kabul, and get the guy to age it for you by driving his truck over it until you have the desired "weathering".
I had a phase when we bought several rugs at the price point you're talking about and also found some "subprime" sources of rugs that were authentic but not so go good and much more affordable.
Then I had a house full of oriental rugs and haven't needed a new one ever since.
Kinda like.. pianos?
Furniture in general is a low turnover industry and tough.
One of the ironic reasons that Ikea/Wayfair do well is their stuff looks good but is basically garbage and can't survive a move or two so people are forced to buy from them more often than they would with better brands. Better brands are too expensive (and also a bit stodgy usually) so younger and poorer people just keep getting the same lower end stuff repeatedly.
Guitars don't seem to be like that. Like sometimes my son is talking with my son about his latest guitar with my wife and that guitar is newer than the guitar that my wife thinks is his latest guitar. If he hasn't bought a new guitar he just made a new one.
> That worked out very, very well for him
Amazing.
https://amidigroup.com/about-amidi-group / https://archive.vn/0LEOpYes. Startups which started with office space above one of his carpet stores include Logitech, Google, and PayPal. Plus, one of the carpet stores became the first Apple Store location, before Apple built the glass box.
This guy was really good at picking winners.
They were loaded before owning real estate next to Stanford. It isn’t some mom and pop they were upper crust
> Rahim co-founded the Amidi Group in 1980, a conglomerate of privately-held business enterprises consisting of several domestic and international entities with significant manufacturing, distribution, trading, retail, and real estate holdings
I worked at a small bike shop in the 90s and when we had issues with our point of sales system we would call a number on the till and it connected us to the single developer who maintained all the software for it!
>make and sell touchscreen tills/cash registers
Probably 2 or 3, all based in China, that will happily print your company logo on the machines.
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.
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!
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.
As always the writing could be denser, but that is very lossy compression. I enjoyed the full read!
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."
Nicely done! There is some shadiness in staying invisible tho
My impression is that these companies are less invisible than ever thanks to the massive growth in private equity since Ross' era (the 50s-80s). I keep hearing stories about pest control businesses and HVAC companies that get inundated with messages from search funds.
I wish there were a clear and easy way to identify these small services owned by PE, who often go out of their way to avoid people finding out.
Usually I find out by noticing symptoms of worsening quality, costs increasing more than I might expect, ramp up in aggressive cross selling of services and subscriptions, shifting to call services that are clearly not local and know nothing of our area, etc.
In some cases I'll get an employee that knows the situation and let's spill the PE sale and then I need to find a new service provider.
Indeed, a good example Private Equity is (in the UK) buying out all the small vet practices or small groups of practices.
With the expected outcome when those vampires touch anything.
My new pest control folks sold me partly by showing customer satisfaction numbers from independent third-party review sites. The sales guy made the point that their customer satisfaction had stayed high after their PE buyout, but my old service had gone downhill since their PE buyout.
I agree, nowadays is impossible to hide, but maybe they are still invisible to most people outside our bubble
There's a whole genre of YouTube cartoon videos about this.
Dry cleaners.[1]
Parking lots.[2]
7 boring businesses.[3]
[1] https://www.youtube.com/watch?v=_B0cASirKyE
[2] https://www.youtube.com/watch?v=La4SAUvmKz4
[3] https://www.youtube.com/watch?v=ebaiF97mCtM&pp=ugUEEgJlbg%3D...
If only all of these weren't AI slop :(
Well they sounded reasonably ok to me, didnt see them all but have seem real worse AI slop in youtube these days
All of those are clearly AI-generated. You shouldn’t trust any “edutainment” videos made that way, chances are there has been zero fact-checking and that the creator hasn’t even watched the result of their slop.
https://www.youtube.com/watch?v=-Gnrp_caPvo
This is a great topic. Lets say for a second the information is factual, then are these AI videos good? Sometimes I see these AI videos that tackle more obscure topics that are still interesting. These topics may have been monetarily prohibitive to do. Maybe too risky or getting all the animation and content too costly for the payout. But now with AI, all the data can be easily gathered.
Now lets talk about factuality. A human creator can just as easily lie or not fact-check all their sources. But if they do decide to fact-check, wouldn't it be easier to just task the AI to fact check. Simply tell it, "leave out any data that has not been fact checked and mapped back to a reliable source."
> A human creator can just as easily lie or not fact-check all their sources
Not "as easily". A human creator can make a video without fact checking anything, but people using AI can push out thousands of bullshit videos in the same amount of time.
The human creator also actually sees the content they put into their video and can catch the most obvious errors that don't even require fact checking. Humans using AI can just keep spewing out slop as fast as possible without having any idea of what any of the videos actually contain.
If you spend any time trying to find such companies you'll see that for every invisible profitable company you'll find 20 invisible unprofitable disaster companies.
Search funds have existed for a long time now, and it's hard work.
There are many opportunities to start the your own invisible company. I once started a small business ($33k/year) that sold exactly one product to one company for a few years. One thing the article glosses over in the Steven Ross discussion is that this guy was clearly entrepreneurial: he was able to see the gaps and find or build solutions to fill them. You can in fact build a business around solving a "simple" problem for one business, and because it is a small scale you are essentially invisible to the would-be competition.
every large XLS-file/table in any large/mega Corp is basicly crying to get "re-invented" as a SaaS service and being sold to them (-:
I worked for a different Steve Ross (Dolphins owner, Related Companies, etc), and we did this in house.
From 2008-2017, “we” (I was a contractor 08-09, and employee 15-17) basically turned every spreadsheet into a web application internally.
We added authentication and authorization, used a LOT of ETL-type processing to move data around. So many things could have been packaged and sold, but that was the “secret sauce” that kept the company so profitable.
Then the end in 2017 when a new CIO came in, killed off IT (laid off all non-managers over the course of a year), and replaced everyone with South African consultants to turn IT from a cost center to a profit center.
He lasted another couple years then left.
Possibly, but straight anecdote...
Our startup noticed our first major-brand customer had a high-stakes B2B process depend on a spreadsheet that looked handmade and perhaps error-prone.
There was a moment of thinking This could be one of those startup pivot points, when what you thought was the incidental to your exciting technology solution, is actually the simple CRUD app/integration SaaS that customers need even more.
Then there was a moment of thinking We don't want to be the communication middleperson on that high-stakes communication, if there was ever a dispute.
Also, either it wasn't a perceived pain point of the customer, or they intended their ongoing CRM-ish conversion to address it eventually.
So we listened to the customer on what problems they (or at least the stakeholder executives' KPIs) actually wanted us to solve, and we continued to consume that spreadsheet in a manual and "zero-impedence" way, for the little bit we could use that info.
(A management consulting firm or YOLO/fly-by-night startup might do that one, though.)
This was my mantra when I ran strategy for a corporate venture studio: every existing spreadsheet is a prototype for a potential new product
There is a bit of a trap for smart people with high agency where they assume "well, someone else will just go do <thing>". They assume this b/c they probably have multiple examples in their own life of being the only person to do <thing> when no one else was.
That being said, if I've learned anything during 20 years in various industries ranging from publishing to hedge funds:
1. People have very different brains
e.g. quants can't do sales and vice versa.
2. People don't have infinite time and money
Even billionaires have items on their "want to do" list that don't get done b/c it's either too complex, would require too many people, too much time etc
3. Some people are great at systems building and other are terrible
This could really be downstream of item 1 but it's worth pointing out that building a system of people and processes is it's own specific skill. If you live in an organization where specialization is rewarded, you'll find that there are fewer and fewer people who have this skill.
4. People underestimate what it takes to do <thing>
The classic case is the HN "Oh you want to start a software consulting company b/c you like programming? That's like saying you want to start a pizza parlor b/c you like making pizza. Making the pizza is only 10% of the job."
Fortune's Formula by William Poundstone strongly insinuates Kinney Services got started as a gambling front, so possibly a poor example of a boring business turning a healthy profit.
Reminds me of the dark forest
https://en.wikipedia.org/wiki/Dark_forest_hypothesis
Anyone know how to find these invisible companies? The article mentioned adjusting your search filters? What search device are they using?
https://ricor.com/product/
https://en.wikipedia.org/wiki/Hidden_champions
I run an invisible company that provides search for invisible companies. I would tell you more about it, but then...
Yes, I've heard of your search engine : Alta-No-Vista.
I didn’t see that one coming
That's the problem with these engines: you never see them coming!
It makes me think of my college girlfriend. Her dad owned a bar, only one, that he eventually expanded to several, but even with only one, they had a home address on a canal on a small island south of Long Beach, vacationed all over the world for weeks at a time, owned a boat, dude bought his daughter a slightly less than million dollar Victorian in San Francisco in 2007 that is probably worth $10 million by now.
He'd started in his 20s as an industrial process engineer and eventually opened a string of carpet stores, then got into restaurants, earned a commercial real estate license and started buying his own stores instead of leasing, then had the opportunity to buy this bar, a rundown, tiny, poorly lit dive in Belmont Shore, a terrible place in a great location, and it eventually became the number one seller of Jameson on the entire west coast. What made owning a bar so profitable? No food, which is low margin, expensive and difficult to get approval for, requires more skill on the part of your labor to make well and handle. Low labor costs because they earn tips and don't need a real salary. Fixed space cost since he owned the building. But more than anything, sheer luck. At some point in the late 90s, his bar acquired a reputation as an easy place to get laid and it's had lines a hundred feet out the front door every night of the week ever since. Neither he nor his staff played any role in this. It's random rumors from college students creating a trend and he's the benefactor. Ended up with a cash business that 20 years ago was earning revenue in excess of a million dollars a month.
How is a competitor supposed to enter the market and replicate that? Land is scarce, so you can't just pop up into the same location if there isn't an empty building already. You can't replicate a multi-decade earned reputation except by waiting decades and earning it yourself. You can't magically become the place young people want to be even if you serve exactly the same drinks with roughly identical looking bartenders in a roughly identical looking interior. More succinctly said, you can't copy the intangibles.
Constellation Software (mentioned in the article) is such an interesting company.
I love the narrator Scott Brick. He's prolific audio books narrator.
This reminds me of the Dark Forest theory but for businesses.
> Economists aren’t naive, so they don’t really believe these things entirely. But they assume they are mostly correct over the medium to long term.
Spoiler alert from the article: turns out economists are wrong. This will sound inflammatory, but has the field of Economics produced anything of value to society? It seems to be a social "science" based on incorrect generalizations about human psychology and studies that don't replicate. At the end of his long career, Alan Greenspan (their Michael Jordan) basically said "whoops, I was wrong that people would behave rationally."
What does humanity get from the field of economics that justifies the amount of attention and status we give economists?
Do you think there's any value in trying to understand how human societies work at scale?
The value is mostly in succeeding and communicating the mechanism. There's very little value in merely trying to understand.
But I think economists did pretty well: supply and demand, marginalism, opportunity cost, Coase theorem... Not physics-level well but well.
I do. Do we think economists are actually generating this understanding? I'd be curious to know about policy changes which have been the result of non-obvious insights from the field of economics.
I think it's one of our better attempts to understand a very large complex system! I think it's inherently very hard to do. I do think you can critique a lot of things about the field and ideology, and so on, but I don't think that's an inherent problem of economics.
> non-obvious
I'd maybe question this a bit. I suspect that many things we consider obvious are only so because of the field of economics -- but that's admittedly only an initial hunch.
Have you heard how FCC spectrum auctions work?
I mean, economics is a study in self modifying systems that change based upon what you learn about them. Much like chaos theory wasn't something we innately understand, the same is true for economics.
Hence economics is a probabilistic field. The things that occur have a probability behind them. Instead of a policy that needs X to happen the policy can be adapted to "If A then B, if X then Y".
I think macro economics has provided significant value to society even if the model isn't precise with perfect predictions. We do have worthwhile models that the government can use to avoid making serious monetary mistakes in the face of the real business cycle. We are unlikely to trigger the awful depths of the great depression again.
The main problem I see with public economists is Goodharts law: When the predictive model becomes visible to the agents in the economy, there are stable strategies to counteract those models. So if economists want to remain good predictors of real outcomes, they have to collect massive amounts of data to feed the model but then remain mostly invisible afterward, so that the agents being analyzed don't change behavior too much.
In some sense, a known bad model that is used to set central policy may be good because the rest of the economic agents can work on a diversity of better models without correlating as much with each other and the known central model.
Economy is at the stage where medecine was in the 18th century. It's more of an alchemy than a science.
Insert "always was" meme here.
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If you own or work for an invisible company, upvote this comment
Alas, mine is far too visible. But I will spare you the associated downvote.
One of my favorite topics, and one that many people argue exists. The conventional thinker really dislikes this concept, as if it points out some personal flaw of theirs. I mention that only because it really sticks out, the personalized perspective people take on this idea of invisible companies they cannot see.