In his recent interview with At The Money, Aswath Damodaran compares the aging process of people to that of companies, noting both benefits and limitations. Aging brings financial security and fewer responsibilities, but also physical constraints.
Similarly, businesses evolve through stages like human beings—from needy startups to reckless “corporate teenagers” and mature entities. Companies often resist aging, spending money on efforts to regain their youth, influenced by consultants and bankers.
Damodaran argues that more money is wasted by businesses trying to act younger than they are, instead of embracing their stage in the corporate life cycle and acting accordingly.
Here’s an ex excerpt from the interview:
Damodaran: Let’s start with the similarities. I mean, aging brings its benefits and its costs, right? The benefits of aging is I now can get the senior discount at Denny’s on the pot roast.
Now, So that’s a minor benefit, but also brings the benefit of more financial security. You’re not responding. I mean, you don’t have the responsibilities you’d had when you’re younger, but it does come with constraints. I can’t jump out of bed anymore. So aging comes with pluses and minuses. And when I think about businesses, I think about in the same way.
A very young, a startup is like a baby, needs constant care and attention and capital. A young company is like a toddler, a very young company. You age, you become a corporate teenager, which means you have lots of potential, but you put it at risk every day. And then you move through the cycle just like a human being does.
And just like human beings, companies fight aging. They want to be young again. And you know what? There’s an ecosystem out there that is designed to tell companies they can be young again. Consultants, bankers, selling them products saying you can be young again. I think more money is wasted by companies not acting their age than any other single action that companies take.
And that’s at the core of how I think about corporate life cycles. You have an age at that age.
You can listen to the entire interview here:
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