Web start-up guru Paul Graham recently talked about Why There Aren’t More Googles. The basic gist of it is that venture capitalists tend to be too conservative, investing in businesses that are based on already established revenue models. Nobody wants to bet on the new horse. But the most innovative start-ups are the ones that end up raking in a fortune!

But when most people think of the fairy-tale dream start-up story, they think of YouTube. Founded in February of 2005, sold to Google in November of 2006 for $1.65 billion USD. Start your site, and twenty-one months later, you’re a millionaire. Wouldn’t that be nice?

The difference is, it takes an innovative, forward-thinking company to recognize and acquire an innovative start-up. Google itself was an overnight success story, pushed through to greatness mostly by the sheer stubbornness of its founders. Having run that gauntlet themselves, they know how to recognize a good idea headed by a tough entrepreneur. This is a skill that Old Guard companies like Microsoft fail to grasp – so much so that bloggers all over the web are asking whether Microsoft is doomed, and has prompted Paul Graham himself to pronounce Microsoft dead.

Microsoft… dead. Imagine what a huge gap that would leave. Like the huge multinational banks in the United States which are getting bailed out during their economic turmoil, Microsoft seems almost too big to fail. If they did, there would not be another Microsoft. Their niche instead would rapidly be filled with the New Guard: smart, innovative, small companies that think fast and take risks… and know how to cooperate with the competition!