The “new normal” in business, Part II

The banner image is from The Weird Thing about Today’s Internet in The Atlantic : the author muses on the concentration in the US Pacific Northwest of the five wealthiest companies in the world today by market capitalisation, all within that picture apparently. I was particularly taken by this quote:

In mid-May of 2007, these five companies were worth $577 billion. Now, they represent $2.9 trillion worth of market value! Not so far off from the combined market cap ($2.85) of the top 10 largest companies in the second quarter of 2007: Exxon Mobil, GE, Microsoft, Royal Dutch Shell, AT&T, Citigroup, Gazprom, BP, Toyota, and Bank of America.

And it’s not because the tech companies are being assigned astronomical price-to-earnings ratios as in the dot-com bust. Apple, for example, has a PE ratio (17.89) roughly equal to Walmart’s (17.34). Microsoft’s (30.06) is in the same class as Exxon’s (34.36).

My comment to that post was, however: “ Great post, but what about Baidu or Alibaba the Chinese Amazon?” So I went about finding market cap data for those two, as well as GAFA (Google, Amazon, Facebook, Apple) and others mentioned: Microsoft, Exxon Mobil and Walmart. In brief, GAFAM are the tenors of the future mentioned above, Alibaba is the Chinese response to Amazon, while ExxonMobil and Walmart are the tenors of the past.

So I took out a week trial subscription to Ycharts, Yahoo’s excellent financial data portal — kudos to them for posting clearly and intuitively such a vast array of data — and scraped the aforementioned data:

This makes for very dry reading, pretty uninspiring as-is, but Simon Rogers said “Opinions are free, but facts are sacred” [1], so those are the facts.

If you chart this simply in Excel, three groupings appear:

  • the solid lines for GAFA minus Apple plus Microsoft that trend up
  • the dashed lines of Exxon Mobil and Walmart that trend down
  • the dotted lines of Apple and Ali Baba that trend relatively flat

Those groupings are even better illustrated via linear trend lines in Excel:

So my quick search around The Atlantic article…

  1. bolstered what was said about the Pacific Northwest powerhouse, but it added that
  2. bigger or smaller isn’t necessarily better, as Apple and Ali Baba trend comparatively flat, and
  3. the old standbys like Exxon Mobil and Walmart trend down opposite to the young turks in the sector.

And this despite the fact that WalMart has reportedly re-invented the retail sector and thrived within diminishing margins in the brick&mortar sphere. And Exxon Mobil a fully integrated oil company weathered the recent storm in the resources sector better than many.

This quick look at a very complex subject is helped by simple visualisations of key data.

There is a lot more to scope to this, as mentioned in my LinekdIn Pulse post here quoting [1] above, as well as the Part I of this Medium quoting [2] below — it’s an evergreen topic as NewCo one of my Medium faves posted here quoting the same Atlantic piece, & for sheer eye candy here’s another one from one of my favorite bloggers Visual Capitalist — but at the atomic level of startups, very few of which may eventually scale into such success stories, is this passing of the baton from established norms to disruptors at all scales.

This is simple illustration puts a broader perspective on the fact that “The ‘new normal’ is to think differently about project change and transformational programmes” [2].