
Amazon met with startups about investing, then launched competing products - mgav
https://www.wsj.com/articles/amazon-tech-startup-echo-bezos-alexa-investment-fund-11595520249
======
throwaway_aws
"An Amazon spokesman said the company doesn’t use confidential information
that companies share with it to build competing products"

Maybe...but in the past, AWS proactively looked at traction of products hosted
on its platform, built competing products, and then scraped & targeted
customer list of those hosted products. In fact, I was on a team in AWS that
did exactly that. Why wouldn't their investing arm do the same?

~~~
former-aws
Cannot up vote this enough. During my time both at Retail and AWS it was
perfectly normal to trawl production customer data and come up with ideas to
launch competing products. Prices were always set lower or free offering
justified as data-driven and customer obsession. I hated the gas lighting
their customers and left in disgust of the company and its leadership which
encourages that behavior.

~~~
rckoepke
What types of AWS data would be trawled? Are we talking about data inside S3
buckets, database schemas, particular architecure styles, the fact that a
product is consuming {x, y, z} amounts of cloud resources, or simply "spending
$m / year" in gross?

~~~
whoisjuan
I can confidently tell you that Amazon's employees cannot see customers data
inside S3 buckets or EC2 instances. They are extremely serious about that
stuff since they know that will erode their customer's confidence.

But there's probably other superficial business data that's helpful to
evaluate that.

~~~
TimSchumann
> I can confidently tell you that Amazon's employees cannot see customers data
> inside S3 buckets or EC2 instances.

From a technical standpoint, that statement is false.

Every employee might not have the credentials to, but for AWS to function as
it does, SOMEONE inside the company has to have those credentials.

If you change 'cannot' to 'don't', well then we've just gotta take you at your
word, which is where we started anyway.

~~~
count
Except they get audited by 3rd parties on statements like that, and have
controls tested. It's not like they're just ... digital ocean or somebody.

~~~
jasonjayr
Do you have evidence of this claim re DO?

I worked with a DO on an technical issue, and they were steadfastly against me
granting them temporary access to our servers even though it would have made
the issue easier to diagnose. Cloud provider that verifiably get caught doing
this will quickly lose the trust of all their large customers

~~~
webo
DO doesn't have a great track record for customer trust. I run personal
workload but couldn't recommend it over AWS to a larger company.

    
    
      - https://news.ycombinator.com/item?id=23117660
      - https://news.ycombinator.com/item?id=20064169

~~~
StopHammoTime
Sales != Engineering (in regards to the first one), AWS have had similar
issues. The second one wasn't good.

[https://www.zdnet.com/article/aws-error-exposed-godaddy-
serv...](https://www.zdnet.com/article/aws-error-exposed-godaddy-server-
secrets/)

~~~
hinkley
There comes a point where your pricing is so opaque and confusing that it's
indistinguishable from lying.

Those people are jealous of AWS.

------
AndrewKemendo
There's no way to really know how true this is but it certainly feels true if
you're on the startup side - however most startups just aren't being realistic
with themselves, and thinking they are special.

For example, my previous company brought our 6DOF MonoSLAM SDK, 3D model
processor and OpenGL viewer to Amazon from 2014-2017 pitching the "AR View"
functionality that they eventually put in 2017 [1].

Was that a result of us coming and pitching it? Probably not because that use
case and stack wasn't a novel concept even back to 2010. So the concept and
stack was certainly there for them to do on their own.

What we DID provide to Amazon however was a significant data point (based on
our user velocity/interaction metrics and the rate of increase of 3D model
generation from retailers) about whether the market was ready for that feature
- and so they said ok it's probably time to do this. It just so happened that
the cost of implementing it crashed to basically "trivial" in 2017 with the
introduction of ARKit and so it was a no-brainer for them to roll out for a
few years.

What's the takeaway? These big companies aren't dumb, your idea isn't that
novel and they probably have the team and technology to do it better than you
for cheaper.

[1] [https://www.theverge.com/2017/11/1/16590160/amazon-
furniture...](https://www.theverge.com/2017/11/1/16590160/amazon-furniture-
placement-ar-feature-too)

~~~
guessbest
Why even pitch the idea to big companies then? Seems like a no brainer to just
avoid discussing technology with anyone on the M&A team of any large company
with an development team, unless you went to the same college as their
executive staff.

~~~
twic
Because that's where the money is.

------
seizethecheese
Amazon announced a copycat of us pretty quickly after we went through YC. I
suspect it’s not some sinister top-down thing (unless they are actually
reading all YC company descriptions). Most likely, the copycats are ambitious,
unoriginal PMs pitching some budget.

We facilitate subscriptions using a smart scale, and it works way better than
a Dash button (Bottomless.com, YC W19). I’m actually surprised they haven’t
launched yet and are taking so long.

It’s pretty wild, the hardware on their launch page is exactly like ours, only
they're so slow that it’s a copy of two versions ago and hasn’t even hit the
market.

~~~
throwaway-cdo
Throwaway to avoid being ID'd.

I was on the team that was peripherally involved in building the Amazon Dash
collection of products. The scale idea has been floating around within the
company since 2015/2016\. It takes long to do this at scale and a cost-
effective point.

There were also other similar products that were scrapped because there was no
way we could sell them at a reasonable price.

~~~
matthewmcg
Try saying this one three times fast: Smart Sally in Sales scales sales from a
smart scale.

~~~
schwartzworld
Peggy Babcock Peggy Babcock Peggy Babcock

------
aws_pmthrowaway
I was a senior manager on the very first product the article talks about. I
was closely involved in designing the service and presenting it to Amazon
senior leadership. WSJ quotes the CEO of a startup called DefinedCrowd as
accusing us of stealing their ideas from a meeting 4 years earlier.

What a bunch of conceit. I don't remember our team discussing DefinedCrowd
even once. We focused on the many other more interesting players that are
doing the same thing, and researching them by trying out their service etc.
like anyone normally would.

I'm sure someone talked with DefinedCrowd 4 years before that. Amazon, like
all other tech companies, routinely has NDA conversations with startups that
never go anywhere.

I can't speak to the rest of the article, but the very first example is
totally false. WSJ is looking for an angle, and this startup is probably
looking for a way to blame Amazon for their own execution problems.

~~~
devindotcom
DefinedCrowd is pretty successful actually, just so you know this isn't sour
grapes. And it isn't about a meeting 4 years ago, the very first line of the
article says that Amazon was an investor (at seed stage, probably a few
hundred K).

So the problem isn't that someone heard about DefinedCrowd and decided years
later to make something like it. Amazon made a significant investment in an
early player in this space, and then started building a direct competitor
while still presumably having both access and influence over that company.
Doesn't seem responsible or ethical to me.

~~~
stepstop
This comment chain appears to answer you:
[https://news.ycombinator.com/item?id=23930812](https://news.ycombinator.com/item?id=23930812)

------
darawk
Isn't this just what you would expect a company of this size to do?

"We want to launch a product in category X"

"Ok, should we roll it ourselves, or buy something?"

"Well, let's interview a few companies, see if there's any we like, and if
not, we'll make it ourselves"

~~~
jconley
Yeah, given the resources, I'd want to pursue all the possibilities in a
promising product/market in parallel. They may have even had working
prototypes for some time or even be near launch and they are just feeling out
whether the startup would be competitive and/or complementary. Doubt it's
anything evil. Just sounds like business minded people at work.

------
ApicalDendrite
I worked on the Echo Show team. The product had been in development for over a
year when we invested in Nucleus. I remember thinking it was very strange that
Amazon was investing in that company when we were building such a similar
product internally.

~~~
rattray
Thanks, that's a really helpful perspective.

I've definitely seen the same thing happen – an org that isn't sure it can
build function X well might invest in a startup building X just in case.

Of course, they may or may not take advantage of that situation by misusing
confidential information.

Either way the startup could lose (or just not have much negotiating power).

So yeah, sounds like this may not be a case of AMZN misbehaving. But I'm still
not sure I'd want to talk to them if I were a startup, at least until I know
they really need us and are willing to pay a lot.

~~~
ApicalDendrite
Nothing I saw indicated that the Echo Show was in any way influenced by
Nucleus.

I suspect, but don't know directly, that this investment was more about trying
to jumpstart an ecosystem of third-party Echo devices rather than hedging
bets.

------
bigpumpkin
"In 2016, a group of investors led by the Alexa Fund bought a stake in
Nucleus, a small company that made a home-video communication device that
integrated with the Alexa voice assistant.

Nucleus’s founders and the venture-capital funds investing alongside the Alexa
Fund had reservations about collaborating with an Amazon-backed firm,
according to some of the co-investors. "

"After striking the deal, the Alexa Fund got access to Nucleus’s financials,
strategic plans and other proprietary information, these people said. Eight
months later, Amazon announced its Echo Show device, an Alexa-enabled video-
chat device that did many of the same things as Nucleus’s product.

Nucleus’s founders and other investors were furious. One of the founders held
a conference call with some investors to seek advice. He said there was no way
his small company could compete against Amazon in the consumer space,
according to people on the phone call, and began brainstorming ways to pivot
his company’s product.

An Amazon spokeswoman said that the Alexa Fund told Nucleus about its plans
for an Echo with a screen before taking a stake in the company. Several people
on the Nucleus side of the deal disputed that.

Before Amazon introduced its product, the Nucleus device was sold at major
retailers such as Home Depot, Lowe’s and Best Buy. Once the Echo began
selling, those sales declined sharply and retailers stopped placing orders,
said two people involved in the deal.

Nucleus threatened to sue Amazon, which settled with Nucleus for $5 million
without admitting wrongdoing, according to people familiar with the
settlement. Both sides agreed not to discuss the matter.

Nucleus reoriented its product to the health-care market, where it has
struggled to gain traction, some of those people said."

Wow, Gavin Belson must be furious.

~~~
xyzzy_plugh
The Echo Show was conceived before the first Echo was ever released. I think I
even saw a demo in 2014/2015\. Source: I worked on the first Echo.

~~~
sib
Agreed. I worked on the first Echo and was one of the participants in the
conversations about what became the Echo Show in 2012/2013.

------
dcow
If I’m reading commentary correctly, Amazon would _invest_ in other companies
using its Alexa fund in order to gain access to their data and then actively
operate in a way that undermines the success of the company. Sounds like
they’re essentially enjoying most of the benefits of purchasing a company but
for a fraction of the price. Rather than spend their own capital to do the
hard legwork of building and validating a product idea, they’re effectively
spending others’ and then swooping in for the bait and switch kill.

If I were a founder or board member I’d be super skeptical about ever taking
money from Amazon in light of this news.

If this isn’t illegal it at least seems wildly unethical. If it’s neither of
those and considered an acceptable tactic, then perhaps companies are
generally undervaluing themselves otherwise it wouldn't be financially
feasible?

------
ivalm
This is a bit complicated. I’m not in Amazon but work for a (very large) org.
Often we will have some product in mind and approach/maybe even partner with a
vendor while at the same time having an internal effort. Occasionally we go
with an internally developed solution, sometimes we go with vendor solution. I
am sure some vendors feel bad that suddenly they are forced out by a “similar”
internal product. However, in every case I’ve been involved it wasn’t
sinister. There was a business need and the company actively invested into
multiple parallel solutions, eventually an internal solution won after we used
a vendor solution for some years(but sometimes it is the vendor that wins!).

~~~
rattray
Yeah, I haven't read the article (paywall) but from the first paragraph or two
it sounded like AWS invested in the company and launched a competitor 4 years
later.

To me, that sounds like the startup just wasn't able to perform well enough to
beat an AWS-built solution, in the eyes of an executive.

Of course, if I were doing a startup that played in AWS's space, I'd view them
as a pretty formidable competitor and I wouldn't expect to get a great deal
from an investment or acquisition from them, since unless I have a really
special sauce they can probably build whatever we've done and sell it better.

It's shitty, IMO, and probably drives startups away from a field in which they
could sell to AMZN – since they know they won't get an awesome deal. Probably
reduces innovation in the field overall.

------
jonplackett
Not from Amazon but this happened to me when I had an app in the top 10 of the
AppStore. This a-hole from Silicon Valley flew over to London, asked me loads
of stuff, saying he wanted to buy it, offering large amounts of cash and then
just launched his own version and some copies of other things I’d made. I’m
still not sure if it was his plan all along or not - He did try and recruit me
to his company at one point but when I refused, his parting words were “if
someone offers you a seat on a spaceship, don’t ask which seat”. Really glad I
didn’t take that seat.

~~~
curious_fella1
> his parting words were “if someone offers you a seat on a spaceship, don’t
> ask which seat”

Lol what a jackass

~~~
jonplackett
It was good because it made me 100% sure I’d done the right thing.

------
snird
Am I the only one who thinks this is to be expected?

Stealing good ideas is literally amazon biggest strategy in retail. They
monitor best selling products, then launch their own brand and crash the
competition.

Why anyone expected them to change strategy with business ideas? This strategy
served them well.

~~~
klyrs
If nothing else, it doesn't come as a surprise because amazon consistently
operates in an anticompetitive nature. I see this as building public
understanding of why amazon should be broken up.

------
vikramkr
So this didnt come across in the title - but the first company they use as an
example is one Amazon actually did invest in? And that was four years before
the "competing" product (which is literally just providing data for AI
training as far as I can tell)? I'm not sure what I'm missing, but that reads
like if coke invested in an energy drink brand and four years later launched
another energy drink brand. It's basically a commodity and it's 4 years after
the fact- what's so controversial here?

------
fsociety
Amazon met with an unnamed startup I worked for to do this, luckily our
investors warned us before the meeting.

------
sleepyhead00
While I cannot comment on a startup's or Amazon's perspective on this matter,
I had interactions with Amazon employees that was in fact deceptive.

Short story: Amazon representative tried to trick influencer into sending
their traffic without compensation.

Long story:

At the time, I commercially represented an influencer (largest in a mainstream
niche with an active targeted fanbase) who had been approached by Amazon to
sell access to our online course on Amazon (as in: let customers buy a coupon
code for our content platform). The paperwork we received to sign did not
reflect the terms we had negotiated. It included some kind of fees etc. that
had never been mentioned, basically shifting percentage in favour of Amazon
using fine-print. This felt dishonest.

We decided to do it anyway due to their promises of considerable sales for our
program including projections. Then the representative showed us a listing of
a direct competitor and told us the number of sales this competitor was able
to generate. While it's nice to be on the receiving end of such information,
it's unethical. Who knows how truthful the numbers were anyway.

But then the week of deals started and nothing happened. No sales.

This could have had many causes but instead of revisiting the offer or the
listing or just say "bad luck", the representative kept insisting that the
influencer send their traffic to Amazon which is usually a business
transaction but that wasn't part of the deal. They kept insisting anyway, even
a second representative.

I'm not keen on doing business with Amazon after that encounter.

------
code4tee
There’s a big difference between stealing actual IP and executing on someone
else’s idea (even if the idea was “stolen”).

The sour grapes here seem to be coming from those who thought they “owned”
having an idea but failed to fully execute on it. The winner is the one who
actually does it.

------
m3kw9
The meeting probably went like this. “I want (crazy %) for (low ball $) or we
start one ourselves.

~~~
rvnx
Well, I have been on both side (a company that wants to be acquired, and a
large buyer), and yes, that's the discussion you have. It's normal and
expected by all parties.

When you want to buy a company it's because you want to launch yourself into
that field.

------
kerng
As a startup, if a company is serious in investing or buying they will make an
offer.

It's a common mistake to be lured into talks that drag out for weeks and
months.

If they are serious it will start with an offer.

------
balls187
This is like 1/2 the RFP world.

RFP, then build in-house.

I mean, I'm betting Facebook's "Small Business Grant" program is going to
harvest that data and put it to use too.

As a startup, if your only defensibility is that you had a head start in
product development, that's not much of a moat.

------
lloyddobbler
History repeats itself. This is straight out of Microsoft's playbook from back
in the day.

~~~
ChrisMarshallNY
Yup. Here's something that was written in the 1990s.

[http://www.microbizz.nl/foodforwindows.htm](http://www.microbizz.nl/foodforwindows.htm)

------
neonate
[https://archive.is/ps8xv](https://archive.is/ps8xv)

------
toyg
Silicon Valley is clearly not a comedy:
[https://youtu.be/JlwwVuSUUfc](https://youtu.be/JlwwVuSUUfc)

~~~
newyankee
I wonder if founders are as petty as Gavin Belson

~~~
samfisher83
You should listen to Michael Jordans hall of speech to see how pretty he was.
He is considered the greatest basketball player in the world and he spend the
whole speech belittling people.

~~~
toyg
In the docuseries he himself produced, MJ comes off as an absolute bully most
of the time. It ruined a lot of the mythos for me.

~~~
Apocryphon
I remember as a kid there was a child's book about basketball players and it
mentioned that MJ was an aggressive, confrontational player who trash talked
the other team. It shaped a conception of him as a champion who is fiercely
competitive to the point of pettiness (not unlike Bill Gates, funnily enough),
not a champion who is known for noble sportsmanship.

------
gentleman11
Standard advice to to not keep your startup secret but to talk about openly to
as many people as possible. Eg, quotes about how only 1/1000 startups die to
competition, and the rest self destruct or fail to get traction.

Is that still the case?

~~~
kristopolous
this is more than that.

I've seen people try to play this game. They'll pretend they want to buy
you/partnership/invest/be a client and then ask pointed questions: "What
dependencies are you using on your backend for XYZ ... have you found any
issues with that? If you were going to rewrite it, how would you approach it?"

In the weeds questions about detailed implementation. "Do you have a detailed
architecture diagram?" etc. People who haven't seen it are like "boy they are
serious. Look at their diligence"

These people need to up their street smarts game: "Nah bro, they're just
stealing shit."

How do you know? Check who's in the room/on the call. Ask yourself what kind
of decisions these people would make. Find out who they are.

Amazon has been actually pretty light with this practice. They're pretty picky
but the right people have been in the room and they haven't really gone deep
into the spy questions. The real nasty violators are companies like uber and
microsoft. I wouldn't be surprised if they had actual corporate spy
departments.

We had GM try to do it but they were bumblers. It was kinda cute. It also
seems to be mostly American. I've dealt with a lot of Japanese and Chinese
businesses and they were all genuine. If they said they wanted a partnership
for reason X, then they indeed want a partnership for reason X.

If they want to steal the tech and go to other markets then there's clear
nonexclusive and rights parts of the contract. It's not the "100% lies all the
way down" of Uber.

------
cik
Why are people surprised by this? There was a period of time in the VC world
(~2001) where this was di-rigeur. You were caught between a rock and a hard
place, as pitching literally meant potentially enabling a competitor.

------
iJohnDoe
Google has done this and worse. Some of you may remember this one.

[https://news.ycombinator.com/item?id=18566929](https://news.ycombinator.com/item?id=18566929)

~~~
jcz_nz
This. There are other instances too. Short story is that you need to be
extremely careful talking to G/A/F/M

------
mathattack
Wasn’t this whole behavior spoofed in Silicon Valley?

------
riazrizvi
Almost every established VC is a potential competitor as much as a potential
backer, because they already have backed ventures in/near your market, you
won't get approached by one without expertise in your market. Any of their
other backed ventures might be mulling over a new strategic goal and doing
indirect research on you via their sponsors. Before you say NDA, it's
practically unenforceable, you can't stop a VC chatting about what they've
seen in confidence to a trusted friend, the bar to prosecute breach is far too
high.

You can't stop someone seeing what you offer, and it's hard to prevent
competitors from seeing how successful you are, especially giving the lack of
privacy in consumer space. In this article, we don't know if Amazon used any
IP, we are told they just copied the offering, which anyone is free to try.

I bet the problem with DefinedCrowd is not so much they revealed too much,
rather they revealed too little. How so? The VC dance is really about
demonstrating to the uncertain backer-competitor that you are so good, it's
not worth competing. That's a main point to inviting outside parties in. I
imagine these guys were just so weak, they made competition more appealing
that partnership.

~~~
relaxing
No startup is so good they can’t get steamrolled by a company with Amazon’s
resources.

~~~
riazrizvi
The decision isn't made by a trillion dollar 'Amazon'. It's made by a person
inside Amazon with a limited budget, whose ROI is critical to their personal
financial success. At the end of the day, the decision to compete will be an
ROI question, _Is it better /cheap enough to roll-my-own, or is it has this
outfit done a good enough job that it is better to partner_? Outstanding
people are a precious commodity, so if the startup is really good, why
wouldn't you partner with them? And if mediocre when you are really good, why
would you?

------
uses
It's weird how questions of "is what we're doing, wrong?" can be so easily and
inevitably obliterated by the profit motive.

------
holidayacct
It's entirely possible they launched competing products because they know
something everyone else doesn't. Did anyone bother to investigate why they
didn't acquire these companies?

I've worked at several startups and you'll be surprised at why some
corporations don't purchase a startup.

Some of them have awful cultures of psychological abuse, you walk in the door
and you know something isn't right because the founder(s) have a cult-like
environment that includes abusing his/her employees to the point where they
are all afraid to say anything.

Some startups have founders and employees that are lying about everything and
when you actually dig into their source code and infrastructure they aren't
doing anything they say they are doing.

Some of them have the worst infrastructure imaginable and/or they have such
poor software engineering practices that they will never be able to scale to
meet the kind of demand a company like amazon has.

Just because they have a good idea and a company doesn't mean they have an
implementation that is worth investing in.

------
Zhenya
[http://archive.is/ps8xv](http://archive.is/ps8xv)

------
PovilasID
VCs will often meet with startups to get market analysis done for them. Maybe
it's not the primary motivation of a meeting but information has to be
presented to make the case for the business, so it gets recorded and used
anyway. It can be used to look for alternative investment targets. Pitches
have inherent risks to them, that have to be taken into consideration.

Also I get that Amazon has much more resources but if they there able to copy
it after one meeting... Was your project really that valuable? And would not
be copied then you launched?

------
k__
Makes sense.

They look if they should buy or build.

------
novalis78
Good friend of mine said his company invented the book preview and had tons of
publisher relationships due to their service for public libraries and preview
snippets. They sat in a meeting with Amazon executives early 2000s - allegedly
similar story. They were first offered a partnership then Amazon canceled all
talks after getting a good grip on the business and launched their version
shortly thereafter.

------
TheMagicHorsey
If your business is so fragile that all anybody needs to do to out compete you
is the description of your business idea, then I'd say you don't really have a
business that is long for this world. If not Amazon, someone else is going to
clone and eat you from San Francisco, Seattle, Hyderabad, or Shanghai.

Ideas don't really mean much if you don't have excellent, industry leading
execution.

------
wintorez
[https://www.youtube.com/watch?v=i6QvIrruZjw](https://www.youtube.com/watch?v=i6QvIrruZjw)

------
rorykoehler
Rocket Internet in Germany do that too. They gas lit us about wanting to
invest and then launched a competing product. I wasn't surprised.

------
xyst
Isn't this what Google did with Yelp? IIRC, google was in talks with yelp to
buy them out. They either pulled out or lowballed them. Then a few months
later they launched "Google Places"

At the time, this was referred to as a "brainfuck" of smaller companies for
their IP.

------
howon92
Startups shouldn't be working on things that they can't do better than the big
companies

------
annoyingnoob
I worked at a startup that made a VoIP product in the early 2000s. Microsoft
was interested but declined after a technical review. Later they bought Skype
instead. No hard feelings. But giving up too much technical detail was
definitely a concern for us.

------
xyzzy_plugh
I think what is missing here is an insider's perspective.

The volume of concepts that are being actively worked on, let alone conceived,
is pretty incredible. I've been in Amazon meetings with startups before/during
talks of investing. Usually it goes something like this:

There are multiple principle engineers involved. There are multiple engineers
from potentially related projects involved. Most of the decision making boils
down to: \- the obvious: would this investment likely be profitable? \- does
investing/acquiring this company enable us to ship sooner/gain a competitive
advantage?

Often times Amazon prefers to acquire companies not directly operating in the
space Amazon needs them to, and then steering them to do what Amazon needs.
Often times it's just talent acquisition.

For all we know, Amazon already had competing products in the works (and let's
be real, given how slowly Amazon moves, this is the most likely scenario) and
decided that this investment wouldn't be worth it.

------
dastx
Have a colleague who said the same. They had come in for reasons I can't
remember, and shortly after launched a product that worked strangely similar
to their offering. People got laid off, including my colleague, not long after
that.

------
TenJack
I wonder how this will hurt general product innovation in the long wrong?
Seems like it could have a trickle down effect of diminishing companies money
for research and development to come up with new products that benefit
consumers.

------
dimgl
I worked for a gaming startup that had Amazon do this to them. Pretty scummy.

------
mrandish
I'm a serial tech startup founder who has seen all sides of this up close.
I've had startups I founded or co-founded IPO, be acquired by a Top 10 valley
tech giant, acquire smaller startups, and (of course) go bust. I've self-
funded, VC funded, angel funded and had corporate investors. In the
acquisition, I ended up working for the Top 10 valley tech company for over a
decade reporting directly to a key C-Suite exec and was deeply involved in
company strategy, multi-billion dollar M&A, partnerships and investments.

In all that time I never saw any hint of anything even remotely unethical
involving investments or M&A at my acquirer/employer. The company always
played strictly by the rules, sometimes to an almost excessive degree
(avoiding even the possible appearance of impropriety). This was both innately
cultural, constantly preached from the BOD to CEO on down, as well as tactical
since the reputational cost of negative perception was simply considered too
high. Word gets around the valley fast. The invisible cost of the potential
partner or startup that chooses to pass on meeting with us due to reputation
could be very high.

That said, we would negotiate hard and do our due diligence, gathering public
information in every legit way possible as we evaluated potential markets,
product areas, acquisitions, partnerships and investments. Tons of startups
were always contacting us to meet regarding investment, licensing,
partnership, etc. So many that we'd actually meet with far less than 1 in 10,
and even we'd usually just send a junior staffer to the mtg for a "first
pass".

Those first mtgs were almost always set up as NNPI (No Non-Public Info). We'd
actually have the startup sign a doc in advance stating that they wouldn't
share anything with us that wasn't already public info. This was then re-
iterated at the beginning of the mtg. Afterward the junior staffer would then
circulate a brief memo on the mtg outlining if there were any areas of
interest and recommending whether there should be any follow-up with actual
business unit or tech people with domain expertise. Most such mtgs had no
follow-up. In the cases where there was follow-up, before mtg again we'd
internally specify what our possible interests were (acquisition, investment,
partnership, etc) and if acquisition or investment we'd have at least a first-
pass thesis on what our interest was, usually at the level of "interesting
tech", "good talent", "cool product - might slot into XYZ product line."

Back when I was a fledgling startup founder on the other side of all this, it
was sort of mysterious and I remember my first mtgs with Big Cos (including
Google, Apple, Intel, Microsoft, etc). It was all very exciting until I
realized that most of these 'first sniff' mtgs are with junior people and
never go anywhere.

Even if my acquirer/employer was unique in being highly ethical, the reality
is that any startup founder who isn't intensely aware of the risk of Big Co
becoming a competitor is incredibly naive. If senior Big Co execs are taking
time to meet with you (vs junior Big Co staffers), it's because they are
interested in something. As a founder, your job is to figure out what why they
are interested. Sometimes they are just making small investments to foster an
ecosystem their primary business relies on. Or they might be interested in
acqui-hiring your startup. Or they might be looking at moving into the
emerging market you're in and doing a Build vs Buy analysis or even
considering a roll-up of smaller firms. Or they might be looking at buying one
of your competitors and doing market due diligence. As a Big Co exec, I'd
usually just tell a startup founder point-blank what my interest was, as it
tends to save everyone time.

Often the startup founders I'd talk to as a BigCo exec were actually too
guarded, to the extent they'd hesitate to even informally have a 'get
acquainted' drink at a conference or trade show. It's good to be cautious but
at the same time, many of my most lucrative exits and deals began with such
meetings. As a founder, I also often learned invaluable info from Big Co
people at such informal mtgs. After all, Big Co folks tend to hear all the
industry scuttle-butt and they actually subscribe to ALL those $10k market
data reports us startup guys could never afford.

Bottom line: when engaging with Big Cos, ask good questions, rationally
evaluate the benefits vs risks, plan for the worst and hope for the best.

~~~
jcz_nz
Your particular experience does not mirror that of others.

The risk here isn't Big Co Exec. It's the aspiring PM who wants to make a name
for themselves at the Big Co.

NDA's aren't worth the paper they are printed on; when it comes to that,
you'll just discover that Big Co has retainers in place with all the law firms
you'd want to work with.

~~~
mrandish
Sure, that's why I said "Plan for the worst, hope for the best". It's always
possible, even if mtg with an ethical company, the junior person you're
meeting with that day _could_ be a new-hire who's an idiot and tries to get
actionable information.

NDAs aren't deterrents. At the same time, any secret that can be casually
conveyed in a mtg, typically isn't all that valuable. If you have a strategic
investor as an outside board member, a smart founder will ensure nothing
disclosed in a board mtg or board materials is specific enough to be
competitively actionable. If you do it correctly, they shouldn't gain any non-
public info more specific than broad sales growth, and there are a lot of
completely legal ways for interested Big Co competitors to get good intel on
sales growth which are much cheaper and easier than investing.

That's why we generally passed on even evaluating most startup investments.
They just weren't worth the time to manage plus if we really planned to be
active in that space the legal exposure would require a formal "Chinese Wall"
between our investment and our business unit, usually managed and audited by
an outside law firm. If we were truly interested in the space, I'd always
argue we should just acquire the startup now, buy one of their competitors or
tilt up our own 'build it' version.

------
blackswan101
I'm surprised they haven't been hit by antitrust laws yet.

------
sdinsn
Why would anyone with a brain hand over proprietary information?

------
ryanSrich
Yeah Amazon does this every year, it’s called AWS Re:Invent.

------
PaulHoule
You could replace Amazon with Kodak or Open Text or 100 other names and hear
the same story. It happens to customers and suppliers.

------
apexalpha
I think I've seen this on the show Silicon Valley. Braindrain they called it I
think. So it can't be that uncommon...

------
systematical
I know this is not constructive, but they really are a horrible company and
people should avoid using them whenever possible.

------
anewguy9000
um, duh? it happens everywhere all the time are you kidding? hey did you know
google can read your email lol

------
kumarvvr
As a startup, you ought to protect your ip.

Its the job of Amazon to guesstimate your worth.

A billionaire will get away with shit, if they can.

------
beervirus
People in here like to shit on the patent system... but this is what it’s
designed to protect against.

------
joewrong
reminds me of this entertaining article
[https://thehardtimes.net/culture/jeff-bezos-announces-
plan-j...](https://thehardtimes.net/culture/jeff-bezos-announces-plan-just-
beat-shit-small-business-owners/)

------
catsarebetter
Weren't they doing this a decade ago too? Might be mistaking it for another
company...

------
mytailorisrich
This is business tactic 101.

Yes, they were definitely naive if they shared confidential data easily.

------
MangoCoffee
we need a pure-play cloud provider like TSMC.

No one should trust the big three. (AWS, GCP, Azure)

~~~
p0rkbelly
I think that was supposed to be OpenStack. It failed.

------
zanethomas
Why is anyone surprised? Microsoft was doing this in the 80s.

------
arvindhmani
Isn't this exactly what Amazon does with AmazonBasics?

------
chevman
Yes, this is often times how business operates.

Guess what, we meet with potential competitors in our market and sometimes
even contract with them to provide services on our behalf, and use that to
gauge the market and current solutions!

------
idoh
"Earth's most customer-centric company"

------
all_blue_chucks
This just sounds like a failed acqui-hire to me.

------
mahastore
Microsoft is famous for always doing a "better" copy than their competitors.
:D They always come second but then start to overtake.

------
kartayyar
You as as a startup should be fully aware that a big player can enter the
space at any time they want. This is not Amazon's problem. It's your problem.

Also, it's a flawed abstraction to view large companies as a monolith: the
investing arms are usually very separated from product teams.

TLDR: If a large company wants to enter a space, that's their choice. Accept
this as a fact of life if you want to go work on a startup.

------
tekcyb-org
I bet you Amazon thought of this before that company even formed. That's not
an original idea.

~~~
jacquesm
For the longest time (more than a decade) I ran a small company (< 50
employees) that fielded a video chat service. The whole thing revolved around
a minor bug that just happened to be present in all major browsers.

All that time I thought: next week someone else is going to clue in to this,
it is so obvious. But nobody ever did.

You can read more about it here:

[https://jacquesmattheij.com/the-several-million-dollar-
bug/](https://jacquesmattheij.com/the-several-million-dollar-bug/)

So I totally believe that the seed for the idea came from somewhere else.

~~~
dboreham
Isn't this more to do with how TCP and the socket interface is implemented (or
more accurately its intended semantics) than a bug in browsers? Not draining
any inbound data on a new connection prior to sending my request doesn't sound
like a bug.

~~~
jacquesm
Yes, that's the practical reason. But a browser could of course have
implemented HTTP in the way described in the RFC, instead they all took the
easy and obvious way out. That's also why the bug was present in all browsers
that had marketshare, it was the obvious thing to do, it is not as if they
independently made the same mistake, they independently decided that it wasn't
important enough to implement the protocol to the letter.

------
skela224
Wpqcs

------
edem
The article is behind a paywall, is there a TL;DR?

------
rlewkov
MSFT well know for this

------
pseudolus
Chinese Wall = Maginot Line

------
xwdv
Not as sinister as it seems. You could also not be approached for investment,
launch your product, then get killed by a competing product from a big
company, all the same.

~~~
dcow
But you would hypothetically be accounting for that outcome in your strategy.
If I'm understanding the commentary correctly, Amazon would regularly _invest_
in companies in order to gain access to their data and technology while
another team used the info to undercut and kill their product. You don’t
generally assume your investment partner is actively planning your demise by
pretending to support you while siphoning off your life blood.

I agree though that it’s not as sinister as it initially seems. Companies
create competition at times to stimulate product development even though it’s
a shitty operating mode for the ground soldiers involved. In that case though
they’re spending entirely of their own resources and not leeching off other
investments to actively undermine a successful exit.

Perhaps startups are undervaluing their IP if this behavior is able to
manifest easily. And in light of this news I’d be super hesitant as a board to
allow any money from Amazon whatsoever.

------
kirillzubovsky
Let’s be honest tho, what did they expect? In this case, Amazon gave them
funding and a 4-year head start. The point of Alexa fund was to use Amazon
money, and Alexa as a launch vehicle, to grow a product. Obviously Amazon had
to gain something back.

