When I heard the “angel investor” say, “It doesn’t scale,” I knew that was code for “I can’t get richer on it.” The speaker is a man I respect, and he’s prudent to balance the risk and reward of potential investments, but at the same time, the massive outliers, and these days, largely unregulated behemoths of capitalism that he hopes to seed, have us choking on our affluence.
The most obvious recent example is BP’s Deepwater Horizon site, currently pumping millions of gallons of crude oil into the Gulf of Mexico. In spite of the outrage toward the company, BP is not evil. They are a public company in business to make a profit on the insatiable demand for petroleum products. The product demand drives a very profitable market price, so oil producers like BP invest millions of dollars in R&D to develop the technologies required to extract the black gold from remote places like 5,000 feet below the ocean surface. The problem is that because safety systems are a cost that erode profit, very little R&D is spent on them and the ongoing result is an oil slick with the potential to be kissing East Coast beaches this summer.
Like the largely unregulated Wall Street mega-institutions that nearly collapsed the global economy in 2008, BP is “too big to fail,” because of the dire consequences of its failure. Yet now it has failed and since the oil industry has not been compelled to invest in technologies to avert or respond to such a breakdown, the result is the largest environmental disaster in modern history; and still unabated, a failure of potentially planet altering consequences.
How’s that for scale?