$.$ Which of the concepts learned in chapter two explains the situations below, which is what they had in common when they all failed or had to cull their operations?

Answer:

According to a joint study by the Kauffman Foundation and Inc., roughly two$-$thirds of the fastest$-$growing startups end up failing. Research from California State University also showed that companies studied that had fast revenue growth performed worse, long$-$term, than their slow$-$growing counterparts.

$1.$ Wise Acre Frozen Treats

Jim Picariello started Wise Acre Frozen Treats back in $2006,$ making organic popsicles in a schoolhouse kitchen. After a year and a half, he hired a single employee, and six months after that, hired $13$ more employees and entered a $3,000-$square$-$foot manufacturing facility. Picariello$$s product had won several awards, and interest in the company had skyrocketed; but by the end of the year, the company had gone bankrupt.

$2.$ Crumbs Bake Shop

As reported by the Wall Street Journal, Crumbs Bake Shop was once the biggest cupcake vendor in the world. Founded in $2003,$ the company got its kickstart in response to the then$-$growing trend of interest in cupcakes. Listed as one of Inc.$$s fastest$-$growing companies, the cupcake chain expanded to many different cities, with dozens of stores, but the growth was not sustainable. The high costs of maintaining physical retail locations, the declining interest in cupcakes and the company's push to open new locations despite falling sales ended up forcing the company to close most of its locations. Crumbs was then bought out of bankruptcy in $2014,$ and a handful of new stores were opened, but the momentum wasn$$t sustained; all physical locations were finally closed early last year.

$3.$ Zynga

For a while, it seemed like the game developers at Zynga were about to change the world. Founder and CEO Mark Pincus started the company with ample entrepreneurial experience but little experience in video gaming. At the time, free games were considered low$-$quality and not worth downloading, but Zynga games like Poker and Mafia Wars caught on and earned millions of downloads. By $2011,$ the company was so popular and flush with cash that it built its own data centers for $$100$ million. But the investment in new equipment and new games couldn$$t make up for Zynga's lack of innovation; by $2015,$ the company was initiating waves of layoffs and closed down its data centers in favor of more cost$-$efficient data service. Today, the company still exists but isn$$t the gaming powerhouse it used to be$.$