Beliefs, Not Companies, are “Too Big to Fail”

What makes a company “too big to fail”? The traditional answer is “size”: if a company as big as Bear Stearns or AIG suddenly needs to liquidate, the market will miss their unique role in clearing transactions or making a market. Then, as they dump their extra-special assets, it will cause widespread panic and needless disruption.

I believe that this is entirely wrong. A company becomes too big to fail when it’s a leveraged bet on a universally agreed-upon belief that happens to be false. Read the rest of this entry »


Being “Busy” Is a Lazy Way to be Productive

Fred Wilson loves meetings. Paul Graham hates meetings. They’re roughly in the same business (identifying promising companies, and helping them realize their promise), and I’ve never met someone who reads one or the other and not both.

So what’s the deal? Read the rest of this entry »

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A Better Stimulus Plan: Drug Dollar Amnesty

Now that Fortune, Time, NPR, and New York Magazine are all talking up marijuana, it’s time to answer the eternal question: why are illegal drugs recession-proof? The answer isn’t just physiology (since marijuana is not physically addictive, any argument about inelastic demand is going to have to hold true for, say, Starbucks or Hagen-Dasz).

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