Page 128 - ENTREPRENEURSHIP Innovation and entrepreneurship

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Source: New Knowledge 121

had already disappeared, whether out of business, bankrupt, or absorbed
by the few survivors.
Around 1910, there were up to two hundred automobile compa-
nies in the United States alone. By the early 1930s, their number had
shrunk to twenty, and by 1960 to four.
In the 1920s, literally hundreds of companies were making radio
sets and hundreds more were going into radio stations. By 1935, the
control of broadcasting had moved into the hands of three “networks”
and there were only a dozen manufacturers of radio sets left. Again,
there was an explosion in the number of newspapers founded between
1880 and 1900. In fact, newspapers were among the major “growth
industries” of the time. Since World War I, the number of newspapers
in every major country has been going downhill steadily. And the
same is true of banking. After the founders—the Morgans, the
Siemenses, the Shibusawas—there was an almost explosive growth
of new banks in the United States as well as in Europe. But around
1890, only twenty years later, consolidation set in. Banking firms
began to go out of business or to merge. By the end of World War II
in every major country only a handful of banks were left that had
more than local importance, whether as commercial or private banks.
But each time without exception the survivor has been a company
that was started during the early explosive period. After that period is
over, entry into the industry is foreclosed for all practical purposes.
There is a “window” of a few years during which a new venture must
establish itself in any new knowledge-based industry.
It is commonly believed today that that “window” has become
narrower. But this is as much a misconception as the common belief
that the lead time between the emergence of new knowledge and its
conversion into technology, products, and processes has become
much shorter.
Within a few years after George Stephenson’s “Rocket” had
pulled the first train on a commercial railroad in 1830, over a
hundred railroad companies were started in England. For ten
years railroads were “high-tech” and railroad entrepreneurs
“media events.” The speculative fever of these years is bitingly
satirized in one of Dickens’s novels, Little Dorrit (published in
1855–57); it was not very different from today’s speculative fever
in Silicon Valley. But around 1845, the “window” slammed shut.
From then on there was no money in England any more for new
railroads. Fifty years later, the hundred-or-so English railroad