The new economy was officially ushered in ten years ago when the Internet began to become a part of everyday life.  Well, duh. Doesn’t everyone know that by now?

However, the largest changes have occurred so gradually, so slowly, and so many of them we are only seeing now.  One example is that many publicly traded companies, whose reign consumers never thought they’d see end, are  beginning to close their doors left and right.

But wait.  Isn’t it obvious that the recession is to blame for the mass closings of big boxes and other behemoth companies?  Although the recession is partly to blame, it is important to understand that there is another reason.  The mass bankruptcies of these huge publicly traded companies is also a result of the new economy beginning to come into full bloom.

What does this mean? Essentially what the new economy coming into full bloom means is that bigger is no longer better.  No longer is economy of scale an advantage, in fact, its quickly becoming a liability.

As an MBA I was taught to take a successful business model and replicate, replicate, replicate until you take the company public.  Then, as Robert Kiyosaki says, “You can print your own money.”

But I just don’t think you can do it that way anymore.   What’s happening to the Fortune 500 is living proof.  However grim this news is for large companies, this is good news for small companies.  Small companies that have grown slowly despite pressure to blow up and go public as quickly as possible will begin to see the prudence in their decision to remain small.  This is also good news for entrepreneurs who feel pressure to go big.

Any further insight into what this new economy could mean for investors?

Posted by Corey Curwick on January 30, 2009