What’s obvious is that if the market takes a long time to react, the company will run out of capital and die, plunging their investors with them.
The question though is if that’s bad for the system or just for some of the actors. From a financial perspective, primarily, from the company’s investors, it’s terrible. They’ll lose their money.
But is it bad for the system at large?
One of the aspects that make System Thinking so compelling is the fact that all systems are connected. So while, on one side the system at large exposes a particular behavior, on another subsystem you might bear testimony to something completely different (i.e., Chaos theory
Let’s forget financial sustainability for a second (a subsystem). If we focus on the impact of certain startups on the broader system, then a new picture emerges.
Startups, spurred by their investors, push the boundaries of innovation and try to provide ever-increasing value to the market. The effects of such innovations affect the end consumers and their latent behaviors.
For most failed startups, this effect is trivial and negligible. But a few do capture the market’s imagination. And while the market’s reaction, from an economic perspective, might be timid, they do react in other ways. One of these ways is by reinforcing an emerging behavior. A behavior that will stay in place independently of the startup that reinforced it.