1/ Concentration of activity in industry and agriculture (even coffee shops!) is justified by economic theory on the grounds of economies of scale.

That's the idea that the per unit cost of a product drops with rising scale of production. It is true to a point but oversold.

2/ Per unit cost of production does drop with rising scale but here are a few key caveats.

The costs drop rapidly with scale at first but beyond a certain scale (let's call it "optimal scale"), stop dropping or even start increasing as dis-economies of scale kick in.

3/ The second point is crucial: the optimal scale, the scale at which unit costs stop dropping, itself is decreasing with technology advances. This is true for many industries.

Translated into plain language, it means that smaller scale production is viable in many sectors.

4/ As an example, software development needed expensive computers at first but today is accessible to anyone. Smaller scale production became viable in software.

This is true across many industries.

Then what explains consolidation in software? Monopolies erected illegally.

5/ In America, very many industries have been consolidated, far beyond any real economic rationale, as @matthewstoller explains in his book Goliath.

https://www.goodreads.com/book/show/40538538-goliath

These trends have also been exported out of America.

6/ As anyone who works for a large company knows, there are real dis-economies of scale that come with size due to communication and coordination issues that grow faster than linearly with size.

That's one of the things I watch for as Zoho grows.

7/ Finally concentration of production and economic activity ends up gifting more and more of the productivity gains to land owners and real estate operators.

You earn more in Mumbai but also spend far more in rent or mortgage!

This is a subtle but vital point.

8/ Forces of technology enabling efficient smaller scale production, dis-economies of scale of large companies, political furor over illegal monopolies and finally real estate costs absorbing so much of productivity gains all point towards production becoming more decentralized.

9/ That's the core thesis behind my rural push. Broadband making communication super easy and cheap (I am posting this from a small village) is a key enabler.

I believe these trends are all real and entrepreneurs would be wise to pay attention.