I’ve written about this many times over the years. These are companies built purely on intellect — companies where there are a few individuals who are capable of doing things that are unique in their enterprise. Imagine a General Motors where there was only one worker who could make really fine exhaust systems. That wouldn’t work in Detroit but it does work in Silicon Valley because the output of that one person can be amplified a thousand or a million times.
Look at Google and its acquisitions, for example. Google notoriously buys companies only to discard their products. This is clearly because Google is acquiring the people for their potential. Yet analysts wring their hands over the lost products as though that was what really mattered and the acquisitions had somehow failed. The truth is the products were inconsequential all along.
Are some individual contributors worth $100 million? Yes, though Wall Street gets that backward, too, thinking CEOs are worth that kind of money, which they aren’t.
Couldn’t have said it better myself.