A friend recently pointed me to a July study by Oliver Wyman titled Assessing the Impact of Big Tech on Venture Investment. I was immediately intrigued because this is a question I’m asked all the time and one for which I don’t have a good answer. On the one hand, I see how platform giants could expand startup activity because they seed an ecosystem, improve labor quality, and provide capital (as customers, investors, and acquirers). On the other hand, I see how their sheer dominance—and the ability to leverage their power into adjacent markets by favoring their own content or wares—makes it difficult to compete in their space. In fact, reporters have told me that most VCs won’t touch startups operating anywhere near these companies’ orbits, a phenomenon that is apparently so common it’s been given a nickname: “kill-zones”. I took a close look at the numbers to try and figure out what’s going on.
Mounting evidence of widespread industry consolidation has many worried about the future health of the American economy. Excessive industry concentration can have negative effects on innovation, job creation, wages, and productivity—hallmarks of competitive markets with many startup companies. But, there is at least one intriguing exception to this trend: microbreweries. I dug into Census Bureau data to find out the magnitude of this trend—looking at brewery industry business counts and employment by firm size.