The average life expectancy of public companies shrank from 65 years in the 1920s to less than ten in the 1990s. So has the life expectancy of CEOs. The average job tenure of the CEO fell from 8.1 years in 2000 to 6.3 years in 2009, according to Booz & Co, a consultancy. (via Economist)
- The worry is that regulators and owners both seem to be making it harder for bosses to look beyond quarterly earnings.
- France’s “SCAs” or Sociétés en Commandite par Actions have two tiers of partners: general ones jointly and severally liable for a company’s debts, and limited partners who are ordinary shareholders with little power and who can lose only what they invest. This might provide a model for investment banks.
- Kauffman Foundation has shown that one reason America has been better at generating jobs than Europe is its skill at creating innovative companies such as Amazon, eBay and Google. These companies took off when they went public.
- William Draper, one of Silicon Valley’s most successful investors, speaks for many when he argues that this ecosystem may be drying up. Venture capitalists are recouping their investment by selling new companies to established ones rather than preparing them for independent life. In 2010 five large companies gobbled up 134 start-ups—more than the entire crop of American IPOs that year. Two of the most talked-about start-ups of recent years—Skype and Zappos—chose to sell themselves to giant firms (Microsoft and Amazon respectively). This may not be good for the start-ups. Imagine if Microsoft or Apple had sold themselves to IBM in the 1980s and you get a sense of the problem.
I would’ve liked to see a parallel drawn between the rise of intellectual property divisiveness and erosion of the public domain and the decline of the public companies.