There is a tendency in nature for apex species to get larger and larger. But there is a counterbalance where nature has a tendency of making larger species extinct quickly. This is also true in business: the bigger the business, the more fragile it becomes. Rats vs. elephants A rat can fall from 50 times its height and scamper away unharmed. Back to business Like apex predators, large companies are fragile by nature because they require so many resources (human capital, financial capital, etc. In 2012, the Startup Genome Project conducted a study where they analyzed more than 3,200 startups and found that 74 percent of those businesses failed — not because of competition or bad business plans, but because they grew too quickly. Putting growth over profit was their downfall — they grew to apex predator size, but were too fragile to stay in business long-term. Does this growth or scale serve more than just my own ego? How will this growth or scale affect my profit? When you start to question growth, and not just assume it’s always beneficial, you can start to weigh the real risks and rewards of scale.
There is a tendency in nature for apex species to get larger and larger. But there is a counterbalance where nature has a tendency of making larger species extinct quickly. This is also true in business: the bigger the business, the more fragile it becomes.
When it comes to scale, there are clear parallels between evolution and business.
The most dominant creatures in nature also tend to be the largest. T-Rex’s, bears … even our own evolution started with our early ancestors being about half the height we are now.
This shouldn’t be much of a surprise.
Larger animals have strong advantages — they can be great at catching prey, they don’t have to be as fearful of other animals swallowing them whole, and they can dominate large areas of space.
But the largest species are also the most fragile. They require a lot of food (unlike smaller animals). They move slowly. And their top-of-the-food-chain status means they typically can’t adapt quickly — since they’ve never had to.
Rats vs. elephants
A rat can fall from 50 times its height and scamper away unharmed.
An elephant dropped from only twice its height doesn’t fare so well.
Elephants are also in danger of extinction due to poaching and habitat destruction. Whereas rats have proliferated steadily over millions of years — surviving ice ages, urbanization, and even subway pizza microbes.
“The tendency for evolution to create larger species is counter-balanced by the tendency of extinction to kill them off.”
– Aaron Clauset of the Santa Fe Institute (quoted in LiveScience)
And just like nature’s creatures, the most dominant businesses tend to be large, but the most enduring businesses tend to be smaller companies of one.
Back to business
Like apex predators, large companies are fragile by nature because they require so many resources (human capital, financial capital, etc.), and they can’t move quickly or pivot when needed.
In 2012, the Startup Genome Project conducted a study where they analyzed more than 3,200 startups and found that 74 percent of those businesses failed — not because of competition or bad business plans, but…
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