This can cut both ways.
Even after the recent massive dip, Snap's valuation is an order of magnitude greater than Facebook's notorious buyout offer.
Twitter's Fleets feature lasted less than a year, and Im not sure that their Clubhouse-"inspired" feature has gained much traction.
Its not clear that even Facebook will be able to disrupt Tiktok's momentum.
Slack exists and is successful despite consolidated offerings from the tech giants (Google famously has a double-digit number of chat apps).
Generally, startups have drastically less internal momentum, bureaucracy, tech debt, or politics to contend with and are much better positioned to push fresh ideas, and be responsive to customer needs rather than fitting a larger corporate narrative.
But its fair to say that if a startup idea is really just a feature idea (even a really good, well-executed feature idea, like Calendly) and doesn't scale its ambition beyond that, the best outcome to hope for is a buyout, and at worst being built internally by a giant.
On the other hand, its never been easier to start a software business thanks to incentives from the tech giants.
Google Cloud is basically free to start up and gain traction with.
Granted, there may be downsides to this, but not having to think too hard about infra opens up a lot of opportunities at the same time.
Yeah, honestly I think the bigger negative impact on startups is the incredible profitability of these targeted advertising monopolies that has pushed market salaries so high that upper quartile programmers with 3-10 years experience inherently see their value as being $500k-$1M in total comp without any real notion of what kind of business structures can generate the kind of cash flow to justify those salaries beyond just burning VC capital in an oversaturated bull market.
Even though I personally have benefitted from the upward pressure to software engineering comp, as consumers I believe we would have a way better ecosystem of tech products if engineers salaries weren't tied to VC economics.
But engineer compensation has been larger pushed up by the FAANG companies which are highly profitable. There’s some VC fueled companies competing with them like Uber but on the whole engineer compensation went up not due to VC money but because big tech was able to generate millions in profits from engineers. Every FAANG company has a P/E ratio under 30 so these big engineer packages are from strong business fundamentals and profits, not VC economics.
Startups have the ability to compete in ways like better equity deals but by and large they still highly prioritize their investor concerns over hiring concerns as reflected in things like liquidation preferences in ISO and stingy equity grants. Most of the founders would rather ride their startup to the grave then re-evaluate the “standard” terms of their equity compensation approaches which each year have become more favorable for VCs and less favorable for employees.
Even though big tech has many problems and things I disagree with, at the end of the day they respect engineers by paying them their value while startup founders prefer to make engineers second class citizens then bemoan their hiring difficulties.
> But engineer compensation has been larger pushed up by the FAANG companies which are highly profitable.
If you go back and re-read this is exactly my point. Google, Facebook, Amazon have structural advantages that make them more profitable than the majority of useful services ever could be, much of which is based on the unregulated and morally questionable use of massive amounts of user behavior data. This sucks the oxygen out of the room for startups who could provide an honest product for an honest price, but might not be able to get the economies of scale to pay $500k per senior engineer. In other skilled labor professions $100k-$200k is considered well compensated, and that creates a larger sweet spot which enabled more diversity of services. With software + internet the potential for near-zero-marginal-cost global scaling push everything towards a winner-take all mentality, and so small shops providing diverse and higher quality niche products get squeezed for talent.
Again, I have benefitted personally from this dynamic, but I'm also old enough to be saddened at the unfulfilled promise of lower software build and distribution costs that we envisioned at the blossoming of the web and the release of Microsoft's iron grip on software profitability in the late 90s.
GP said "senior", which can be interpreted either literally (as in the title "senior software engineer") or more broadly as software engineers with elevated seniority.
Some data for "senior software engineer" in the US indicate:
"The middle 57% of Senior Software Engineers makes between $117,200 and $203,000, with the top 86% making $375,000"
"The middle 57% of Staff Software Engineers makes between $107,389 and $262,186, with the top 86% making $572,331."
Since levels/titles are truly comparable across companies (nor across time), it's very hard to get a true sense of what those numbers even mean. But I think it's fair to say that you shouldn't expect a median nation-wide "software engineer" salary to match the expectations of the "right person you really want to hire for your position but you can't find".
That surprising to me (perhaps due to bay area bubble), how do I hire people at that rate? Is it entirely about the location? Are the skill set expectations different?
You can do a lot better than that internationally. When I was in the startup founder world my peers were paying their developers about $30K/year, and getting decent (but not great) talent in Thailand, Vietnam, India, Eastern Europe, etc.
The downsides are that all your employees are a.) remote b.) not great English speakers and c.) generally mediocre developers, and this all has negative impact on developer velocity and the caliber of features you can ship. If you're chasing a niche this is often a great trade-off, because it can make your business profitable even at revenue levels that can't support a big-company product. If you're chasing the next big thing this is usually a stupid idea, because somebody's going to raise $50M, hire top-quality ex-FANGs at half a million each, put them in a room together, and win the market before you can ship your first couple features.
I think you will find a lot of these people doing embedded, desktop, or enterprise intranet stuff rather than slick web/mobile products or massively scalable backend APIs. Using dated and uncool stacks. Dated and uncool practices. Windows centric. Hiring more about years of experience with particular framework versions than LeetCode or system design interviews.
Two perrenial favorite pieces on this website include Dark Matter Developers [0] and We Only Hire The Trendiest [1].
Amazon was break even for a long time on the retail segment, and nobody argues that AWS is profitable due to "unregulated and morally questionable use of massive amounts of user behavior data". Amazon's profits come from the fact that so many companies are willing to pay drastically more for AWS than for standard colocation services, even if they're mostly just using compute, disk, network and databases.
"the unfulfilled promise of lower software build and distribution costs that we envisioned at the blossoming of the web and the release of Microsoft's iron grip on software profitability in the late 90s."
Is it unfulfilled? Many of us don't use Windows these days, which is a nice improvement for those who choose other platforms, and the web/cloud has driven build and distribution costs much lower. When was the last time a software startup had to sink money into the logistics of CD burning and boxed retail deals?
I feel like you've neglected that there was a massive lawsuit against big tech where Google, Adobe, Apple, Paypal, and others actively colluded with each other to suppress wages:
It really wasn't until after this lawsuit, along with Facebook actively making better offers, that tech salaries started to skyrocket. I'm the sure the bull market for 8 years didn't hurt either.
> It really wasn't until after this lawsuit, along with Facebook actively making better offers, that tech salaries started to skyrocket.
No, the lawsuit had nothing to do with it. The market exploded because Facebook refused to join the cartel. The lawsuit fined the companies involved risible amounts and no one involved got fired or jail. Irrelevant.
Management and executives are DEFINITELY underpaying us relative to what we bring to the table for them. This is true of every industry going on decades of increasing productivity and stagnating pay. What's new here besides greater awareness and labor churn? Will there be an actual change going forward? Of course the demographics favor workers now, but the laws and politics often don't. Immigration and outsourcing and automation can change that power dynamic very quickly. What're you going to do? Form a union? Start a company? Vote? Quit and work elsewhere? Interesting times we live in.
Maybe that is one of the reason headcounts have ballooned and complexity has increased so much -- an attempt to minimize individual impact. VCs and MBAs famously refer to this as the bus principle: what would happen if the key employee or executive got hit by a bus today? How would the company fare? The metaphor is quite telling in its priors, assumptions, and priorities.
All of my friends and aquaintinces in nursing, tax, retail, and trucking have a few people who are trying to break into programming because of the benefits and pay. Outsourcing, scope creep, and automation exist and are expanding in my industry as well. How long until this drags down programmers as well? With the potential end of this bull marker will programming compensation stop being the highest paid field? I do wonder and doubt.
I suspect that software engineers, as broad as that term encompasses, will eventually see the effects of pay and work which up to now they've been largely insulated from. More work being handed off to you for a minimal or nonexistent pay bumb. Or slower wage growth than we've been accustomed to seeing. That's my prediction anyways.
My other point is that, based upon the revenue and profit generated per employee for many of these mega corporations, software engineers should be paid more, but I think lately we have astronomical pay relative to other industries in the 3-10 year experience mark for most of the roles in the labor market.
This is one of the reasons why I'm skeptical that Apple opening up iOS to sideloading will lead to Meta, Google, or Amazon rival third party iOS app stores hosting apps with more invasive tracking and lack of privacy protections.
These tech giants are great at xeroxing products and features, not so good at selling them in such a way that users can be convinced to switch. The existence of so many cookie-cutter clones that never get anywhere, from entire cloud gaming platforms, to mobile payment methods, to slapping Snapchat-style stories into an app for no reason, shows that it's easy to envision and build, hard to get actual users.
Stripe's session had something unsettling in their presentation. They boasted about how well they're good at dealing with bureaucracy and byzantine laws in fintech so we, as their customers, don't need to worry about them. In a way, they're admitting that the moat is built by the bureaucrat class and they're the beneficiaries of being inside the perimeter. They deserve it but we should sometimes take two steps back and confer to ourselves – "Wait...why have we built a giant moat in the first place?". Large corporations have perverse incentives to increase the moat by working with the only coercive entity we have - the Government.
Future has in for us more state corporatism than I'd like. It is sort of dystopian, but that word has been diluted these days.
In the specific case of Stripe, Ill gladly take a larger bureaucratic moat in exchange for PCI compliance.
The cryptocurrency world is rediscovering this tradeoff all over again.
Stripe is more like the bridge over the moat, than the people inside the perimeter defending it. Unless you can point to them lobbying for more rules only they could meet?
Finance laws are indeed extremely complicated and many are very questionable, but I don't know how much to blame government for that. Money is at the centre of so many conflicts, crime and disasters that a lot of those rules are the scar tissues from previous wounds. You can argue to get rid of them and cryptocurrency has provided a useful sandbox for people to try that, but a lot of the problems those rules were designed to create came back (e.g. AML law proved quite effective at stopping ransomware, hence why it all gravitated to cryptocurrencies). I worked on Bitcoin for a long time and the experience definitely made my view of financial law a lot more muted. The downsides of the regulations are only occasionally admitted to by the authorities and they aren't that good at building convincing arguments for it (because they don't have to be). But it's not like the laws exist purely thanks to Dastardly Dick.
In the absence of government, those same large private entities would simply build similar bureaucracies in their stead, and we would have even less recourse against them. Vote with your dollar or vote with your vote, the dilemma exists in both real and imagined societies.
Moats should be built through technological advancement, not appeasing regulations. I think you misread, I am not advocating absence of the government. But we should question decades of regulation that has piled up in a way that provides giant moats that do not do anything to build a better product (no strike for Stripe, speaking generally) but to satiate those regulations and prevent others from building anything.
To be fair, calling Snap, TikTok or Slack a startup is pushing the definition of a "start-up" a bit. This article _was_ written in 2018 when these were all smaller, but even back then these weren't too small.
Snapchat has been around since 2011, Slack has been around since 2013, and Musical.ly has been around since 2014. By 2018 they all had significant user bases; Musical.ly had been in acquisition talks with Facebook in 2016 [1], and was acquired for $1 billion by ByteDance in 2017 [5]. Snapchat had famously been offered $3 billion in 2013 by Facebook [2]. Slack was big enough to buy HipChat and Stride from Atlassian [3][4].
By 2018, I'd say these companies were already in a good position to compete with tech giants; but I wonder about the smaller startups. Say companies that have been founded in the past 5 years; have they had an unfairly hard time? Do they see any future where they can actually compete with a tech giant, and not just shoot for a buy-out? I don't have data on this, but I'd be curious to know how the trends have been shifting here.
> Im not sure that their Clubhouse-"inspired" feature has gained much traction
I have no idea what the numbers look like, but I'm aware of people using Twitter Spaces (even though I no longer use Twitter!), while I'm not aware of anyone using Clubhouse.
I'm currently using Google's chat and spaces at work. It's passable. They have a "threaded" view that I was really excited about at first but you can't collapse the threads so people just reply to whatever the first thread is that they see.
If they could get the UI right on the threaded bits and add a standalone desktop app, they'd be very close to "good enough" for most places that need some central chat option.
I haven't tried out their web hooks yet, but it's on my experiment list. The rest of the Google Workspace offering just makes life so much easier though.
> Even after the recent massive dip, Snap's valuation is an order of magnitude greater than Facebook's notorious buyout offer
you need to do the math for both companies.
If Snap took the offer and held the FB stock, it would be at the exact same valuation that SNAP is currently at
hmm, please explain.
is the ceo of snap still holding SNAP shares? it is liquid and the ability to sell off or keep is true whether he had FB shares or SNAP shares
TikTok required billions of dollars on ad spend to be able to compete. Definitely shows you can break into being a top-tier social product, but it maybe requires a lot of money to do in a short amount of time.
While I don't disagree with you at all, the current startup scene doesn't feel organic. So many of these "startups" are severely bloated and should have gone public ages ago.
A simple look at the employee headcount at most unicorns is startling. A startup that's years away from IPO shouldn't have 5,000+ employees. At that point, you lose much of the agility startups are supposed to have in the first place.
The constant inflow of private funding have allowed startups to acquire way too many bad habits and bureaucratic layers.
Big tech gives employees RSUs. There's little risk for employees and huge upside. Startups offer options, which employees have to buy with their own cash, and deal with tax implications. Average engineer can only get burned so many times before realizing startups are crap deals.
Agreed, startups give you sort of a lottery rush, you imagine how much money you can make and you can accept just out of the thrill of you having so much money.
More often the stock options are worthless, and that's how many companies value them when counter offering.
Not always. Get in at a 200+ engineer startup that is still growing, has a huge TAM, moat, lots of velocity, and a clear path to IPO, and you've got a pretty good shot at making great money. This is a good sweet spot for risk and reward.
In general, you won't have enough information to accurately model this yourself, IMO. You might increase your edge, but you're still basically getting lottery tickets.
Personal experience working at a startup with massive growth, moat, took Softbank money in 2014 before it was infamous, stuck in series D. You can model all you want but it's still lottery.
Not for nothing, but these "American tech giants" offer huge credit programs for startups to use their platforms for free to launch.
AWS offers $100k for a year if you've raised some funds, and I saw that Azure is offering $150k pre-funding (I don't know if or what the time limit is on the Azure credits). I'm sure GCP offers something similar, though I don't know the details.
These are huge, and a smart startup could quite easily leverage these to skip an entire funding round (with some amount of luck). I'm not sure if you can daisy-chain these offers, but if you can, a quarter of a million dollars saved on engineering infrastructure cost is pretty much the polar opposite of "making life tough for startups".
You might note use the full amount of credits, but if you've found a product/market fit (and if you haven't after the first year, that may be it's own sign), and you've not been particularly cautious about your code's efficiency, $100k is a godsend, at least insofar as you not having to actually fork over cash for your missteps in the first year.
I don't know if those programs were offered when this article is written, but they're offered now so the title is no longer true.
I'm skeptical. I feel like any startup for whom 100k is "huge" is not at a stage where they'd be spending anywhere near that amount on cloud infrastructure.
Depends on the industry. At seed in computational biotech, we had a lean team. After validating our technology as much as we could, we played a lottery on AWS to get compounds. These workloads handled tens if not hundreds of billions of rows of data and part of the selling point was the parallelizibility, so we got badass instances to show we could turnaround results in minutes whereas other companies took months.
We got a 100k and 150k AWS grant from AWS, and that was a big chunk of the computational budget. We were small, but the nature of HPC and our confidence in our algorithm meant we burnt the war chest on a YOLO and raised Series A.
Voluntary actions from big corporations don't cut the mustard. They can cancel it any time, for any reason and without warning. It's nice of them but that's not why they're in the business of giving away credits.
1. Often the giants don’t pursue a space until a startup proves it’s viable - in that case you have to start something to make it happen.
2. Even internally there is a lot of competition at the giants for prime real estate and promo space on the apps to feature existing or new internal projects. The more types of projects the business launches, the more it has to kill because the mobile screen won’t grow any bigger. So there is a limit on how many acquired companies will actually keep living. If the team is any good, they are also pulled in other directions. For every github and instagram there are many more dead ends and even more so acquisitions of data.
It makes you wonder: what if in addition to privacy policy and terms documents, each online property has an acquisition terms statement. That would state for users and future acquirers see what is up for grabs if the startup is ever acquired (would product keep operating as part of the deal, would data be erased, would software be open sourced, would users/employees get some kind of a distribution, etc.)
In terms of acquisition statements, music labels I read do 5 year contracts, with all contracts renegotiated upon acquisition. Says it all, that's why YC says don't do a music startup. Just don't.
> All the while, Martino’s ultimate warning—that they might someday regret actually getting the money they wanted—would still hang over these two young men, inherent to a system designed to turn strivers into subcontractors. Instead of what you want to build—the consumer-facing, world-remaking thing—almost invariably you are pushed to build a small piece of technology that somebody with a lot of money wants built cheaply. As the engineer and writer Alex Payne put it, these startups represent “the field offices of a large distributed workforce assembled by venture capitalists and their associate institutions,” doing low-overhead, low-risk R&D for five corporate giants. In such a system, the real disillusionment isn’t the discovery that you’re unlikely to become a billionaire; it’s the realization that your feeling of autonomy is a fantasy, and that the vast majority of you have been set up to fail by design.
> They ran an experiment. None of their lives have been ruined.” He knew they’d get good jobs, even if it meant the life of a project manager at Yahoo. “And none of their investors’ lives have been ruined either. When they close up shop, their investors will say, ‘That’s one more off the books. I don’t need to help them anymore. I get my time back.’”
No Exit: Struggling to Survive a Modern Gold Rush by Gideon Lewis-Kraus
An industry where people can get rich making something useful enough people want to buy it. It’s no less honorable or meaningful than any other way of doing that, like an insurance agent, wedding planner, toy manufacturer or sporting goods store and a lot better than being in a zero sum prestige racket.
It's funny because No Exit, and that article which is the abridged version of it, was published eight years ago. The industry has been in this steady-state for a while until COVID hyperinflation upended everything.
the amount of data Google and Facebook have isn't talked about enough in this context, they most likely have internal tools that allow them to project which startups are becoming successful and either copy them early or just acquire them before the startup itself realizes how much potential they have
Instagram acquisition for 1 billion as an example was a steal in hindsight, I bet facebook had more accurate forecasts for their growth than Instagram itself. I know Facebook did get some bad PR for collecting user data via a VPN app, but they didn't face any legal consequences- https://en.wikipedia.org/wiki/Onavo
This doesn't even address how at a societal level these companies can basically create self-fulfilling prophecies by manipulating what stories and information is shown to people
also makes me wonder about AWS/Amazon and what their policy is around copying some of their customers. They obviously fork or outright deploy managed open source projects to compete with them. I know Walmart doesn't let any of their suppliers use AWS either.
In prior life, I worked at place where we had access to data that contained user searches. We could plainly see that google searches, due to autocomplete, "quantize" results in a way that bing and others don't. The result is that google searches are almost inorganic crafted things, and they contain unusual artifacts. The impact on society is definitely real.
For "what" -- I don't specify. Regarding "how I know", I start with several premises:
1) search engines are the dominant way to find information now.
2) conservatively, ≥80% of searches in US are through google.
3) google is not a passive observer of user search queries, but instead actively suggests queries to users.
It follows that there must be some impact. The "engagement" effect is this: I start a search for Depeche Mode, but get distracted by suggestions for J Depp. In contrast, DDG suggests Depakote, Depression, Dept of Revenue and a few other things. Other search engines seem to be less aggressive.
interesting take, but I don't see any problems here. Conspiratorial hallmarks? I'll try to defend. My comments about ≥80% market etc. are common knowledge and the conclusion is consistent. And my post prior to that is about my observations from a few years ago. Whatever you think of that claim, it is consistent with what is widely known (or easily inferred) about Google: they have top-tier engineering talent that has incentive to get tidy searches sent to them by dynamically generating "is similar to" canonical and trending matches, and aggressively pushing those matches to users before hitting submit. My claim is simply that I noticed Google succeeded in building a better version of this than their competition. I don't see anything suspect there.
The interesting artifact of this is that the dominant set of queries becomes a very small proper subset of natural/organic queries.
This is something I wonder about Amazon/Google/Microsoft specifically: since they’re hosting basically every startup, how much are they able to leverage that data to their own benefit? AWS alone must have quite a detailed insight into which products and services are gaining traction just based on traffic data, or even how much they’re billing customers.
My friend worked in ops at Google, and they had super strict rules about accessing customer data (basically you never could) and strict monitoring around access. Even if someone gave you permission you still couldn't do it. You couldn't even access your own data with the internal tools.
I had a similar experience with AWS when I worked at Netflix. We were trying to diagnose a really strange problem and I asked the engineer to look at our data from their tools to help me find it. They told me they couldn't access that data, that the tools blocked them. Then I tried to give them an SSH key for one of our instances and they told me they would get fired for doing that and could not under any circumstance log into our box.
Sure, the average employee doesn’t have access to this information. But do you seriously believe there isn’t a way for the inner circle (VPs and above) to do this kind of data mining covertly?
Sheryl Sandberg was using her power to silence reporting on her partner’s sexual harrasment charges. Ebay execs were terrorizing a random couple. But no, they would never look into customer data! Pinky promise!
> Sure, the average employee doesn’t have access to this information.
Exactly. There will be strict controls for nearly all employees, but the rules don't really apply to top executives. Anyone in IT or Infosec who has to try to enforce policies on top execs has encountered this in their career.
If there is a substantial business advantage in seeing some data the company has, you can bet the execs are seeing that data.
But what I mean is you wouldn't even need to look at customer data. Just knowing how much traffic is going to which services would tell you a lot about a business. I don't know if they somehow obfuscate that as well.
Given that Amazon is known for knocking off physical brands belonging to its 'retail partners' in its online store and then undercutting and outranking the originals [1], why would they not do the same with software hosted on AWS?
A lot of AWS itself is just copied open source projects [2].
AWS has very strict rules around accessing any kind of customer data. All of Amazon has some pretty significant red tape and hurdles to get security clearance to launch any piece of working software. No, that won’t stop a shitty product manager from looking over sales data to figure out if a certain business is worth exploiting, but accessing AWS customer data is an entirely different ball game. It’s like: jumping over a fence vs trying to break into Area 51.
I can almost guarantee that this egregious level of snooping on AWS customer data would never happen, and if somehow it did happen, it’s a nefarious individual with SIGNIFICANT authority to influence entire teams to extract, analyze, and get insights from this data. Again, I don’t think anyone at Amazons leadership is that insane to put their entire professional career in jeopardy, for something that someone would have a 100% guaranteed leak.
The people working there aren’t exactly idiots who’d easily fall in line and do something like this.
I’d like to be clear - I’m not defending Amazon. I no longer work there, and for what it’s worth, I think it’s a miserable place to work. A culture of back stabbing, inventing abstractions to drive promotions, people literally crying, disconnected leaders focused more on empire building to get promotions instead of doing what’s actually right for customers. Even then, the notion that AWS could line up teams, even on a secret project to do something so disdainful is an extreme stretch.
Amazon has been caught copying customer products to sell as their own before [1], and AWS has been accused more than once of doing the same [2].
It's a pattern of behavior from Amazon, and given their backstabbing, cut throat culture (that you mentioned) isn't it fair to say that it's possible for Amazon employees looking to get ahead at all costs would violate those strict rules?
It could be that Amazon treats AWS differently than their retail business. Any AWS data stealing scandal could easily drive away multi-million dollar contracts. But they've gone through many retail scandals without seemingly affecting anything.
You’re talking about something completely different. This wasn’t AWS having access to customer workloads. I am current employee at AWS. The amount of alarm bells that would go off, audits and complicity by line level employees to make this feasible and it not come out is astronomical.
I’m going to try my best to look at things from the outside.
I’m sure there are some people that do. But AWS also knows what is it’s customers need and would be far more likely to go after those markets. Than go after a second level derivative like bandwidth.
I personally couldn’t imagine that it would go over to well if someone wrote a proposal in the form of a PRFAQ saying we should go after $x market because we noticed that a customer’s bandwidth was high.
I mean it depends on what 'customer data' means. I would hope the files on the vms and s3 and what not are verbotten. That's one meaning of customer data.
But what about who is a customer? When I set up some stuff on AWS with a corporate email account, we got emails and phone calls right away from a very interested (and not very useful) sales person; I suspect because the corporate domain was high profile. Email domain is customer data, but it seems they looked at that. (OTOH, maybe all signups get a high touch sales process)
Or how about just a top N list of customers by spend (or bandwidth) or top N medium-big customers by growth? That's customer data, and would be super useful for (anti-)competitive reasons, but kind of hard to say no, you can't know who the big customers are.
But I don't mean they would have to access customer data. If, for instance, they just took a look at how much they were billing certain clients for bandwidth over time, they could already use that as a reasonable growth metric. Do you know for a fact that they don't do that?
I know for instance they do something similar in terms of ripping off successful products on Amazon.com as Amazon Basics.
you wouldn't need customer data, you can just look at basic infrastructure stats or even how much they are spending on AWS over time and estimate a startups growth and revenue. AWS rolls out clones of various developer tool startups all the time
I've actually been wondering about this for years. Nearly every startup I've worked at used Google Apps and put all their strategy documents and trade secrets into platforms owned and operated by Google. I'm sure there's something that assuages this concern in the contracts, just as I'm equally sure there's some clause that completely invalidates that and lets Google do whatever they want. I wonder if they actually do mine their data to identify startups for acquisition / competition, they certainly are incentivized to do so.
There is an interesting dichotomy. On one hand, you simply cannot build advanced semiconductors without thousands of people in scale. We wouldn't have cheap semiconductors if it wasn't for big corporations. On the other hand, the moat that they build in the process through various ways (market capture, lock-ins, IP threats, etc) are real obstacles for startups. Startups are the seeds that clear out old forests and rejuvinate the land. They're necessary but so are the forces that are their obstacles. Conversation here is generally sawtoothing between these two opposing forces but may be there is a role here for some minor form of regulation. A type of an economic free zone for startups where they're immune from large corporate pressures. America could benefit from a Shenzhen/Goungzhou type of a economic free zone.
Startups, once sufficiently successful, also simply metamorphose into the the big corporations they displaced, witness FANG. (And even Apple itself, once built to challenge IBM's dominance.) Seems like this is all something inherent to the nature of power, regardless of the domain.
Yeah, although inherent to nature would necessitate some kind of a proper death. Without it, these ancient goliaths linger around with no sense and no purpose (HP, IBM, etc).
yeah, just thinking about all the artisanal home grown mom and pop run email autocompleting companies that EasyEmail was putting out of business gives me the heebie-jeebies.
It might be a nice payday for the founders but it's terrible for the business environment. It's basically a bribe to stop operating in that sector. Sure, it beats out Microsoft churning out the Teams to your Slack/Loop to your Notion, then rolling it into 365 and eating your enterprise market share alive without so much as a consolation prize, but as a user any time a great product hits the market, no matter how much I like it I have to worry if I can trust the company to be around for the long haul and stick to their offering.
> what if in addition to privacy policy and terms documents, each
online property has an acquisition term
> It might be a nice payday for the founders but it's terrible for the
business environment.
At the founding stage we tend to choose from highly quantised "types"
of company, usually from a boilerplate legal template; limited
liability, independent trading company, partnership, charity,
non-profit and suchlike. I am no expert in company law, but as far as
I know, at least in the UK, "Articles of Incorporation" (the charter
of the company) can be almost anything that's legal.
Hence I've long been of the opinion that founders should build-in
"non-acquisition" clauses, making it impossible for predators to
simply scoop up a promising company, perhaps for some fixed period
like 10 or 20 years. That would solve some of the issues under
discussion here. It would also change the ecology and motivations
within which companies are created, grown and invested in.
>Hence I've long been of the opinion that founders should build-in "non-acquisition" clauses, making it impossible for predators to simply scoop up a promising company
This sounds good and all, and I would be tempted to do it, but a non-acquisition clause does not prevent the big companies from cloning you either.
>as a user any time a great product hits the market, no matter how much I like it I have to worry if I can trust the company to be around for the long haul and stick to their offering.
I still get upset about what Google did to Sparrow. I'm extremely gun shy when trying things these days. I don't want to like new products or get used to their features, because I don't trust they will be along for the long-haul.
This can be an issue even without acquisitions, as companies can simply go out of business. With the current business model of "take on debt until acquired or SPAC", it doesn't give me much confidence in the long-term prospects of many new tech companies. The first thing I always look for is how they are making money. If they don't have an answer to that question, I generally stay away.
I think we might more accurately say; the entire “business” of some
investors is to get companies acquired. That's not the same motive
as seen from inside the startup. And indeed, it's only some
investors. I believe there are plenty who are in it for the long
game, or are far more strategic in terms of ROI.
Once the startup takes investor funding, it’s irrelevant what those inside the startup want.
That being said, we all go to work to exchange labor for money. It’s naive for employees to see working for any for profit company as anything more than just a financial transaction.
Investors know that the chances of a startup to go public and then be profitable enough to have long term stock gains is infinitesimally small.
Can you name one startup that has been really successful - ie throwing off crazy profits and margins since Facebook?
Investors aren’t interested in “lifestyle businesses”.
> Once the startup takes investor funding, it’s irrelevant what those inside the startup want.
It really depends on the ownership structure, and that will depend on leverage at the time of fundraising. YC companies are unlikely to give up control until Series B (but like all things your mileage may vary).
I don't know what the contractual structure entails, but I thought
this recent post from R Bronson [1] is an exemplar of strategic
investment in "good cause" projects without a nose for short term ROI,
planned acquisition or any 'controlling' investor behaviours.
But a bad outcome for the economy overall. In the medical industry this is extreme. The startup scene is basically a feeder pipeline for the big guys. Nobody even tries to start a self sustaining business.
I wonder if this can be viewed as (yet another?) example of companies externalizing the negatives. Pollution is the classic example, both during manufacture and at the end of the lifecycle. In this case, it would be financial risk. Founders bootstrap a start-up, either with their own money or outside investors, and these folks carry all the risk. The established players can safely wait until the startup either fails or succeeds, and buy into a sure thing in the latter case.
I think it is simply a consequence of technology enabling instant global communications and decreasing marginal costs precipitously giving bigger players an enormous advantage.
I'm not sure about that. An acquisition is a risky thing for a company to do as well. It's never a sure thing and correctly pricing the acquisition or predicting if the company will be successful with the acquisition is also not guaranteed or easy.
For some highly regulated industries, it's hard to bring small products to market. In banking, there are tiered regulations based on your size (in the U.S.) so there's more overhead for large companies
Yeah I didn't get what that meant in the Godfather movie, but I got it when I read the book (which is amazing, so so good, not as good as the movie but still).
It's not an offer if it can't be refused, it's just theft.
I'm unable to read the article due to the paywall, but if the first paragraph is indicative of the thesis, then it is "startups that build incremental functionality on top of existing products are upset when the company improves their product with the same functionality". I'd say there are two issues at play here:
1. The large Tech companies are too big and do too many things. They should be broken up for no other reason than to protect the public from their eventual collapse or abuse of power.
2. As a startup, don't build an incremental product that can easily be scooped by a competitor, especially if that competitor is a mega corporation.
Generally, startups have drastically less internal momentum, bureaucracy, tech debt, or politics to contend with and are much better positioned to push fresh ideas, and be responsive to customer needs rather than fitting a larger corporate narrative. But its fair to say that if a startup idea is really just a feature idea (even a really good, well-executed feature idea, like Calendly) and doesn't scale its ambition beyond that, the best outcome to hope for is a buyout, and at worst being built internally by a giant.
On the other hand, its never been easier to start a software business thanks to incentives from the tech giants. Google Cloud is basically free to start up and gain traction with. Granted, there may be downsides to this, but not having to think too hard about infra opens up a lot of opportunities at the same time.