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Small businesses need AI to survive
Big company, small company
At a big company, AI is a board-level strategic imperative. For a small business owner, it is a new competitive reality that is largely existential, and the cost of being a late adopter is far greater than it was in earlier waves like the internet, mobile, or cloud.
Running a campground
Picture running a campground. Every season, you hold your breath on whether people will show up and whether you will cover your fixed costs. The shift scheduling has to be right, the booking system has to stay up, and no one can be double booked.
A tool that makes any of that easier is one owners love, because they are looking for any hack that makes their lives easier. For them it is a survival imperative, which makes innovating with small businesses more fun than innovating with Fortune 100 companies. Beacon owns six businesses in the campground space.
Why do bigger firms adopt new technology first?
Larger operations spread the fixed cost of learning a new tool across more output, while small operators have less spare time and money to test one. Economist Zvi Griliches studied the spread of hybrid corn across US states and found that adoption followed an S-shaped curve. The pace tracked how profitable the change was in each place. His paper appeared in Econometrica in 1957.
Why do reservation systems matter so much for campgrounds?
A campsite night that goes unsold cannot be sold later, so a campground's inventory expires every day. Airlines faced the same problem with seats and built computerized reservation systems to manage it. American Airlines and IBM's SABRE system went live in 1960. Double booking a site costs a campground a guest and a refund in the same moment.
How did earlier tech waves reach small firms?
Cloud computing reached small companies when Amazon Web Services launched its S3 storage service in 2006 and rented computing by the hour. A firm no longer had to buy servers up front. Smartphones and app stores, starting with the iPhone in 2007 and the App Store in 2008, gave small shops a way to reach customers through a device nearly everyone carried.
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