Startups, Feudalism and Big Tech. Have we evolved at all?

Posted by | March 27, 2014 | Conversations, Ramblings | No Comments
startups, tech giants and the feudal system

Startups, Feudalism and Big Tech. Have we evolved at all?

Day in, day out, working away and paying their dues, pledging allegiance, making deals, all just to scrape by. For safety and for defence, people in the Middle Ages formed small communities around a central lord or master. Most people lived on an estate, which could consist of a castle, a church, a village, and the surrounding farm land. These communities were isolated, with occasional visits from peddlers, pilgrims on their way to the Crusades, or soldiers from other fiefdoms.  In the Feudal system, the king awarded land grants or “fiefs” to his most important nobles, his barons, and his bishops, in return for their contribution of soldiers for the king’s armies. At the lowest echelon of society were the peasants, also called vassals or serfs. In exchange for living and working on his land, the lord offered his peasants protection and a few other benefits, a kind of Game of Thrones setup without the dragons.

Now you may ask, what does all that have to do with start-ups, tech giants and the world we live in today?  Well a lot, I think.

Look at how the less privileged people in the Feudal system needed the big guys to offer protection and to provide an organized system of wealth distribution – the way of making a living.

Although this is clearly an over simplification of a complex social system, comparisons may be drawn with the feudal system and tech giants today.  They take the role of Feudal lords as they are in control of the real estate, they are the lords of the manor and everyone else feeds into the system.

Apple Kingdom

Today, if you want to sell your app and get some visibility, a gate keeper in the Apple Feudal system will have to check it to ensure all other vassalian’s under their realm are safe to use it.  All of that before you get your foot in the door, and if you achieve any success there will of course be fees. It is presented as if Apple are doing you a favour in paying you for roughly two out of every three days you work on your product (you get 70% of sales revenue – do you have any other single cost of running your business that alone accounts for 30% of the gross revenue?) Sure they have to pay their knights and clergy, right?

Google Kingdom

OK, so you have created a great new product, but people just can’t find it!  It is buried below the fold by paid advertisements, and we know that it is not a good place for business to be!  You can always pay to show up on the top of the page, but it is a costly game, and we all know how hard it has become to rank organically. Plus frequent changes of algorithms can really impact your business.  I wouldn’t be surprised if one day in the near future all first page results become sponsored ads.

Let’s not even get into examining eBay and Amazon, and how their systems squeeze sellers and the supply chain by taking their cut from the top, before taxes, shipping and all other associate selling and fulfilling costs.

Fees and commissions charged by some of today’s biggest tech businesses make banks and loan sharks look silly.
As Steve Jobs stated in his 1994 interview with Rolling Stone magazine “unfortunately, people are not rebelling against Microsoft. They don’t know any better.”  And, nothing has changed in nearly 20 years since Steve Jobs’ observation on MS dominance of the market.  People are not rebelling against Apple, Amazon and eBay.  These guys are having a free reign simply because they are so big that life would be very hard without them, even though none were here or so powerful 30 years ago.

The other option is to live like 30 years ago. I say no to that, and I bet you do too, but the current system of things could benefit from changes, and this creates massive opportunities!

Do you see the size of the hole open for innovation?

History suggests that Feudalism morphed into modern capitalism after war, disease and peasant revolutions.  I don’t think we should repeat history and wait for tragedy to get us moving in a new direction.  Let’s deliberately choose a better way to do business, and keep that in mind as we travel the Startup road.
As an entrepreneur creating the future, answer this and share your thoughts via comments below – are you building a Feudal system or a free environment?  How are you making a better world with your creation?

Why will people be better off with your product and how does it surpass the giants of today or the old system described above?

Sure, monetizing strategies are important and money does help you get more of the things money can buy, but does your Startup follow in the footsteps of the big techs or the old Feudal system, or does it provide people with a new level of freedom that they didn’t know could exist?


About Celso

Over 15 years experience in building businesses from services and manufacturing to media and ecommerce. Few things excite Celso more than transforming ideas into businesses and making sales. Celso is a regular contributor to the growing startup ecosystem in Melbourne

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