Monthly Archives: January 2009

Too Big to Succeed

The constant creation and destruction of companies, industries, and ideas is a force known as creative destruction and is a cornerstone of capitalism. Without the risk of failures like bankruptcy, where is the incentive to work harder, to develop a better product, to improve efficiency, to take chances? Bankruptcy also provides another important function: it frees up capital and talent to pursue better opportunities. Think of Google’s parabolic growth over the past eight years. How many of those new employees were from companies that had failed when the dot-com bubble burst? Would there have been money to fund the next round of companies like YouTube or Facebook if venture capitalists had not allowed many of their earlier investments to fail, instead of continually throwing good money after bad? Continue reading

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