alt Hacker News> And in the background of this something ominous: Companies can't just pivot back to higher quality after they've destroyed all their inhouse knowledge. (...) They can't move back upmarket after that's done.
The knowledge isn't the problem. It can be quickly regained, and progress of science and technology often offer new paths to even better quality, which limits the need for recovering details of old process.
The actual problem is, there is no market to go up to anymore. Once everyone is used to garbage being the only thing on offer, and adjust to cope with it, you cannot compete on quality anymore. Customers won't be able to tell whether you're honest, or just trying to charge suckers for the same garbage with a nicer finish, like every other brand that promises quality. It would take years of effort and low sales to convince the customers to start believing you're the real deal, which (as beancounters will happily tell you) you cannot afford. And even if you could, how are you going to convince people you're not going to start cutting corners again a few years down the line? In fact, how do you convince yourself? If it happened once, if it keeps happening everywhere around across all economy, it's bound to happen to your business too.
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10 year warranty on appliances instead of 1 would show the manufacturer was serious about quality !
> It can be quickly regained
I'm not sure what you mean with this?
Sure, hypothetically e.g. any western car manufacturer could poach a bunch of BYD employees. But it's not really practical for most businesses.
> The actual problem is, there is no market to go up to anymore.
This is the "Market for Lemons" problem, yes.
It's less of a problem than you might think. Convincing the entire wider world that you're legitimate is a problem. One made infinitely worse by store marketplaces like Amazon preferring to push "aqekj;bgrsabhghwjbgawrjwsraG" brand garbage.
So you just don't. The trick is to start small. The smallest you can sustain. (This doesn't work for cars, or anything that's sufficiently complex. You won't be taking on Salesforce.)
But so long as you can find a market niche where there's demand for quality, you can carve out a living, and from there, scale up.
The problem with that is twofold: Venture Capital has supplanted other forms of investment and "small business generating single digit millions in revenue" is utterly unappealing to VCs, even though the investment required is downsized accordingly.
And problem #2: The cost of starting a business is too high right now. Real estate and cost of living just make it unaffordable to even try. + Healthcare if you're in the US.
So, is that a market failure, or is that the market functioning as intended?
Wrong on the first point, right on the second. Institutional knowledge can't be easily regained. To build up the knowledge to, say, make a transistor, you need a bunch of people experimenting with a bunch of things. Published scientific papers and patents will get you part of the way there, but the final stretch is still up to you, including things like which equipment to buy, purity of supplies (and where to get them!), how long the chip needs to be bombarded by each kind of particles, how much air the cleanroom needs to move. All the tiny details. You have to discover them by trial and error. Actual chip manufacturing companies have found themselves unable to get good yield until they copied the floor plan of another working fabrication plant, and they still have no idea why that mattered, but that's an extreme case. Maybe nobody expected miniscule air contamination from one process step was affecting another nearby process step, and in the original plan they were farther apart.
Yes if you want to wire a neighborhood for internet you can skip DSL and go straight to fiber. That's not the problem. The problem is that nobody in your company knows how deep to put the fiber to minimize problems, how much redundancy is needed, how strong the mechanical armor around the fiber needs to be, how many fibers per cable to meet future capacity needs without excessive costs, which landlords are friendly to you, nobody has the right connections to city hall to get digging permits approved expediently, and so on.