I would guess that he means the tax base was too small. The large size of Texas with all of its hostile peoples (both Indians and Mexicans) required a large army that the small population could not afford.Could you explain, what you mean with that Texas failed because its size?
I always thought, the reason for its failure was that, when Mirabeau Lamar became president and reversed the policies of Houston. He wanted the goal of total extinction of the indians. First he went after the Cherokee and then attacked the Comanche. But the Comancheria was nearly a great power. After the council house massaker during the peace talks, the troops of the Comancheria managed to destroy Linneville, the second bigest port city of Texas in 1840. That is bad for trade. Lamar constantly pumped more money into the war effort, than Texas made. This source (Mirabeau B. Lamar | TSLAC) says that during his turn, Texas collected 1 million dollar in taxes, but spent almost 5 million dollars. So my impression was that Texas was simply broke, so they had to join their bigger neighbour.