It’s a race between horse-racing aficionados and economists. That’s how the race has always been run. And it may just be that when you’re picking a winner, you shouldn’t get ahead of yourself.”
As a result, the market for high-end products or services was left to take its course. If a new company appeared, it would have a tough time penetrating the marketplace without a huge marketing budget. As with real estate and pharmaceuticals, there would be a long lead time before large corporations began buying their way into the new territory, with a lot of back and forth between the buyer and the seller.
One of the largest players in this arena was a small Silicon Valley startup called Quorum.
Like any start-up, Quorum had no employees and no marketing department. In fact, no one could tell you who the founders or the founders’ children were, who owned or directed any of the company’s assets, or what was going on in the company.
Quorum had also no employees or a marketing department, but it owned a number of high-value, exclusive domains. It’s not clear this strategy paid, but Quorum grew to 10 employees and $200 million in annual revenue.
Quorum’s success, though, didn’t last. In 2010, its founders and their families sold off most of their stock and Quorum went bankrupt, leaving the founders unemployed — along with all their investors and lawyers — and unable to pay back creditors.
Two years later, Quorum went back into bankruptcy with roughly $100 million in debt.
The saga of Quorum also underscored a serious problem: The way the internet works today, when companies go bankrupt, the losses are passed on to consumers much more cheaply than those losses on traditional products have been.
As a result, a lot of the high-tech products we’re used to seeing today, such as Apple and Amazon, are still making fortunes in their old days when they started out, if they are big enough. Facebook, Google, Yahoo and LinkedIn have all had years in which they’ve made billions of dollars. But as a percentage of overall US consumer spending and as a share of total corporate profits, they’re nowhere near their former heights.
So, while these companies are still making loads of money to this day, their fortunes aren’t just tied to their initial product.
As David Einhorn wrote in a recent article for Fortune: “With new platforms
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