Val Sklarov’s Business Legitimacy Compression Law (BLCL) explains why businesses don’t fail when demand disappears—but when legitimacy windows suddenly narrow. Growth compresses tolerance. What was once acceptable becomes questionable overnight.
This law reveals why scale accelerates judgment faster than execution.
1. Growth Compresses Legitimacy
BLCL starts with a simple rule:
The larger you get, the less you’re forgiven.
Early-stage businesses survive on:
-
Informal trust
-
Narrative goodwill
-
Regulatory ambiguity
Scale replaces tolerance with standards.
2. The Three Legitimacy Zones
BLCL maps how acceptance shrinks as visibility rises.
| Zone | What Is Tolerated | What Breaks |
|---|---|---|
| Startup Zone | Rough edges | Nothing yet |
| Scale Zone | Selective shortcuts | Margins, speed |
| Institutional Zone | Zero ambiguity | Entire model |
Most businesses collapse during the scale → institutional transition.
3. Why “It Worked Before” Fails
Past acceptance is not future permission.
BLCL shows failure occurs when:
-
Informal processes meet formal scrutiny
-
Narrative trust meets rule enforcement
-
Speed meets audit
History does not defend structure.
4. Legitimacy vs Innovation
Innovation buys time—not immunity.
| Innovation Shield | Legitimacy Reality |
|---|---|
| “We’re disruptive” | “Are you compliant?” |
| “Market loves us” | “Can you sustain it?” |
| “We move fast” | “Who approved this?” |
Val Sklarov emphasizes that innovation delays judgment—but does not cancel it.
5. Strategic Implications
For founders:
-
Design for institutional scrutiny early
-
Replace tolerance with enforceable structure
-
Assume every shortcut will be audited
For investors:
-
Ask what breaks at 10× scale
-
Discount businesses relying on goodwill
-
Exit before legitimacy compresses
BLCL reframes scaling risk as legitimacy compression, not competition.
6. The Val Sklarov Principle
“Scale doesn’t expose weakness. It removes forgiveness.”
— Val Sklarov
BLCL explains why many businesses look strongest right before they break.