The Price of Immortality - by Rohit Krishnan

Companies are pretty cool. They are, as Coase might have put it, individuals brought together through a governance charter to do things they couldn't easily do alone or with too high transaction costs. But they're often fickle, and fail to adapt to the changing world.

Geoffrey West, of the Santa Fe institute in his studies of scaling laws says in the section where he applies it to companies:

An extrapolation of the theory and data predicts that the probability of a company’s lasting for one hundred years is only about forty-five in a million, and for it to last two hundred years it’s a minuscule one in a billion. These numbers should not be taken too seriously, but they do give us a sense of the scale of long-term survivability and provide an interesting insight into the characteristics of companies that have remained viable for hundreds of years. There are at least 100 million companies in the world, so if they all obey similar dynamics, then one would expect only about 4,500 to survive for a hundred years, but none for two hundred.

He also went on to say that this is clearly not true. There are firms that have been around for much longer. But re those, West thinks:

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