Rapid Growth of Large Companies

Thurow ¢ Europe's problem is not lack of entrepreneurs. The real problem is that it is difficult to rapidly grow a successful start-up into a world-class company. Take the 10 biggest companies in the U.S. Six of them were founded since 1960. If you take the 10 biggest companies in Europe, none of them were founded after 1960. You can argue that Nokia is a new company, because it changed to reinvent itself from a wood products company to an electronics company. But it is an exception.

We should not make an apology for not having "shooting star" companies.

Attali ¢ The birth of companies is good in most of Europe. If the company is Seibel, which had very rapid growth, then that is good. But if it is a company with rapid growth like Enron in Texas (a company that rose quickly through hedging derivatives in the energy industry and then fell rapidly, wiping out pensions and retirements for many Enron employees and other individual shareholders), then maybe we should be more cautious. We should not make an apology for not having "shooting star" companies.

The emergence of new large companies among the top group may be good, if the new companies are strong. The other side of the coin is to say that the other former young companies are dead. The life expectancy of companies in America is shorter than the life expectancy of companies in Europe. This is not good. The fact that companies are new and short-lived is not proof of quality.

There will be two kinds of companies in the future that we can characterize as either theatres or circuses. In the theatre, people are together for only one mission: to make a movie or a play. That company exists just long enough for the production. In the circus, such as a long- lasting company like Ringling Bros. and Barnum & Bailey, the shows and products are changing every year, but the circus continues to exist. A healthy economy is full of circuses, not theatres.