Here at Codelitt Incubator, we talk a lot about innovation. That’s not an accident. See, innovation is what fuels us. We obsess over it every day in both our products and our work with our partners. Why? Because we have to. All corporations have to. If they don’t, they stagnate and die. 89% of the Fortune 500 went out of business between 1955 and 2015. For startups, that’s great. For large corporations, that’s a pretty scary statistic. Everyone thinks they’re invincible until the day their company’s little arrow turns from green to red for the very last time. There are countless individual cautionary tales, but what if we took a broad look at the Fortune 500? Can we glean any insights by just looking at the year a group was founded?
*A note on data: I could not find any Fortune 500 lists that included the year the company was founded in, so I found the information myself. Some of the data is inaccurate, so for some companies I adjusted the year they were founded in.(e.g., Alphabet was founded in 2015, but I used Google’s founding year, 1998). Some companies did not have a concretely specified founding year.
Here's a link to the PDF I made with the list of companies, and the year they were founded.
Download it here.
So, what can we learn from this data set?
Let’s look at some of the simple facts we can extrude from it.
While it’s impossible to make fully fleshed out conclusions just from this data, we can make some strong assumptions. It seems as if since the Fortune 500 list debuted in 1955, new companies have been knocking out older, more established companies. What’s astounding is the constant growth of newer companies being added to the list, despite the fact that they’ve had less time to mature. 43 companies that are on the list were founded between the year 2000 and the year 2016. This is five more companies than were founded between 1960 and 1970, despite the 40-year head start.
Why is this happening?
Firstly, it’s impossible to tell exactly why companies have fallen out of the top 500 from only this data. Although it’s possible that companies made less revenue because of factors such as world finance, consumer spending, and even the weather, we can make assumptions as to why so many new companies are joining the ranks.
Startups act differently than huge, mature corporations. People in startups are laser focused on innovating in their field, learning quickly, and growing. People in mature corporations are focused on selling their current products, thinking about “version 27” of their core product, and maintaining the status quo. Startups are quick; corporations are slow. Startups innovate; corporations optimize P&L's. Startups grow; corporations die. Are these universal rules? Of course not. Some of the biggest corporations are great innovators. But the statistics do offer us a complete picture of one fact: New companies are quickly replacing old companies on the Fortune 500 list.
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