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Silicon Valley is dominated by a few big tech companies that hire tens of thousands of employees they don't really need, in large part just to keep them out of
by staunch 11y ago
Silicon Valley is dominated by a few big tech companies that hire tens of thousands of employees they don't really need, in large part just to keep them out of the hands of a competitor.
With Alphabet, Inc., Google is in the process of decentralizing itself into a version of YC. They're essentially VCs now. At some point someone (maybe Alphabet) is going copy the YC model effectively and scale it up to tens of thousands of startups. It's just too damn profitable and efficient to not become the standard way Silicon Valley works.
It would be neat if in a few years all the big tech companies are basically YC alternatives and most people work for a small startup that actually makes something.
- mayank 11y agoAlphabet companies are more like business units, with all the associated bureaucracy and overhead, than startups. Think more GE than YC.
- staunch 11y agoIt's convenient if Wall Street views it that way because then it's not scary ("It's just like GE!"). But Calico was never related to Google, and it's the startup they mention as the model example. Larry Page's full-time job is investing in companies and managing his portfolio. He's a VC. The only real question is how far he goes, and he tends to go pretty far.
- tptacek 11y agoThis describes many more companies than Google. If Google really is alphabetizing because they want to be more like a VC, they have a long way to go before they get anywhere close to the level Cisco has been operating at for decades.
- staunch 11y agoIt's a safe bet that Larry Page can move a lot faster than anyone at Cisco.
- philwelch 11y agoI think a better analogy might be Berkshire Hathaway.
- shasta 11y ago> hire tens of thousands of employees they don't really need, in large part just to keep them out of the hands of a competitor. ... but the competitor does need them?
- tptacek 11y agoI don't know if there are companies that do this (I'm not saying there aren't), but this does not match my ground-level understanding of how and why big tech companies are hiring. The ones I'm talking to are hiring because they are constrained on what they can build by the availability of specific kinds of engineers in their organization. Zero is the number of companies I've talked to who have ever mentioned competition with other tech companies as a recruiting concern. I'm sure that's A Thing That Happens, particularly in executive hiring, but I don't think most companies are hoovering up developers so they can hoard them.
- w1ntermute 11y ago> they are constrained on what they can build by the availability of specific kinds of engineers in their organization Can you give any details/examples of what these 'specific kinds of engineers' are?
- kasey_junk 11y ago"ones that can deliver software" would be the constraint at my organization.
- w1ntermute 11y agoWell, yes, that's pretty much always required, but I'm interested in hearing more specific requirements.
- viraptor 11y agoI'm guessing it means just normal requirements. As in, you need a web dev to create web services, EE to design hardware, etc.
- tptacek 11y agoI didn't mean to single out a particular specialty, only to call out that there are different kinds of developers, and companies can get constrained on one kind or another.
- 11y ago
- GolfyMcG 11y agoThis is what a PE (Private Equity) Firm basically does from my understanding. They are a company, that buys, (hopefully) improves, and then sells companies. For example, a PE Firm might have some expertise in mining. They hear about a company that builds some sort of mining technology. They've done pretty well so far but they've really leveled out. The PE Firm decides to buy them, install a new CEO, revise some business practices to help cut costs, and now as the same business they bought but with a better bottom-line. They then sell it. What you're describing is like an earlier stage PE firm.
- CPLX 11y agoOf note: YC is a private equity firm
- mikeyouse 11y agoYep, Venture Capital is just a subclass of Private Equity.
- gmarx 11y agoThat's what they are supposed to do. In practice many of them borrow a bunch of money on the acquired company's credit and funnel it to themselves before selling. It's kind of like the legal version of a "bust out" (as seen on "The Sopranos" and "Goodfellas" :)
- wilschroter 11y agoI don't think Google would benefit from a YC-style approach. Google can afford to buy the winners because they have mountains of cash. They also can only invest the time in companies that have significant upside because the numbers they need to move the meter are so significant. YC is a different animal altogether. They use relatively small sums of money in hopes they will find a lottery ticket.
- samstave 11y agoYeah, this is Yahoos biggest failure to be sure. I've even said this on HN a few years ago, that if yahoo were smart they'd have already taken their billions they sit on and exactly copy YC
- jgalt212 11y ago> It's just too damn profitable and efficient to not become the standard way Silicon Valley works. Not sure I agree with that assertion. While YC companies market cap is approx $30B (a recent Bloomberg cited estimate), the profits of these companies are minuscule. The public tech giants do need to show profits for all their efforts. So this model works only so long as all these "experiments" aka start ups are relatively inexpensive to run and don't chip away at the bottom line too much.