5 ms·

I think there is a distinction here - the Mafia protects people from itself - but Google doesn't itself sue startups.

jacquesm 9y ago
But the upside is similar: If nobody sues Google still has the equity and Google needs the trolls to stay around to make sure people will buy into this program.
- caf 9y ago
  Sure, but that's exactly the case with commercial fire insurance versus actual protection rackets too.
  - jacquesm 9y ago
    Commercial fire insurance does not typically take equity in the places they insure.
    - caf 9y ago
      Does payment in the form of equity rather than cash affect the incentives in a negative way? It's not enough to call out a distinction: how does it make a difference? If anything, the equity should mean that Google's incentives are more closely aligned with the startup's than the fire insurer's are with the insured.
      - jacquesm 9y ago
        Yes, because obviously if that equity turns out to be worth a very large amount of money and the company is never sued Google is not going to turn around and say 'oh, sorry for this vastly disproportionate payment, here is your repayment'. In fact, the best outcome for Google would be if nobody ever got sued. (That's also the best outcome for the companies but there is no way of knowing if they would have gotten sued had they not paid their protection fee.)
        caf 9y ago
        How is that different to "You paid an awful lot of fire insurance premiums over the years but never had a fire"? The insurance company certainly isn't giving you a refund either. It seems to me that if the equity turns out to be worth a lot, then the value of the protection is greater as well - the potential losses are likely to pretty closely track the company's value.
        reitanqild 9y ago
        Supporting you here: I see this as somebody inside google trying to do a oldschool google win-win (provide better results - make healthy profits). As long as the equity stake is reasonable this sounds like a great deal. To me this isn't the mafia but the security company teaming up with you. Seems like a giant win for everyone but the trolls,
        ohyeshedid 9y ago
        >How is that different to "You paid an awful lot of fire >insurance premiums over the years but never had a fire"? The difference is that you aren't paying your fire insurance premiums with partial ownership of your house.
        johncolanduoni 9y ago
        The best outcome for any insurance company is if their contractural obligations never make them do anything. What's your point?
    - neltnerb 9y ago
      When I read this, my first thought was that the ownership stake is helpful in some way for the legal defense. I'll be curious what numbers they're talking about once they are available.
    - brudgers 9y ago
      Fire insurance companies are not in a position to legally set fire to the buildings of those who refuse their services either. Here Google's scheme is monitizing its patent portfolio. Currently, the calculation is that this racket provides a better ROI than hiring lawyers and suing. There's still money on the monitize patents table.
  - pmontra 9y ago
    Google could lobby to end software patents. Insurance companies can do little to end fire.
    - fuzzfactor 9y ago
      Insurance companies do make an effort to prevent and mitigate fires, including lobbying.
- michaelmrose 9y ago
  I think Google needs the startups to survive so that they can have innovative companies to buy in the future. Taking equity in the future is a way to pay for protection that will enable said companies to survive without having to pay out of pocket for said survival.
nickpsecurity 9y ago
The other distinction is that the mafia would be the big NPE's, big incumbents with patent portfolios, drug companies given patent rights aren't sector-specific enough, politicians they bribe to make patent suits hell for targets, and a corrupt judge in East Texas. They work together to make all the bad things happen for their mutual gain.
Sacho 9y ago
The Mafia didn't just protect people from itself, it also protected them from unorganized crime and other organizations.
brudgers 9y ago
Google has the patent portfolio to do so. Currently it is monetizing that portfolio by offering protection for vigorish. There is no law that prevents Google from providing an object lesson that demonstrates the wisdom of startups paying proper respect. This is a new line of B2B rent seeking. It is not a not for profit foundation endowed with the patent portfolio and funds sufficient to operate off investment returns. It's a tax on the startup ecosystem.

But the upside is similar: If nobody sues Google still has the equity and Google needs the trolls to stay around to make sure people will buy into this program.

caf 9y ago
Sure, but that's exactly the case with commercial fire insurance versus actual protection rackets too.
- jacquesm 9y ago
  Commercial fire insurance does not typically take equity in the places they insure.
  - caf 9y ago
    Does payment in the form of equity rather than cash affect the incentives in a negative way? It's not enough to call out a distinction: how does it make a difference? If anything, the equity should mean that Google's incentives are more closely aligned with the startup's than the fire insurer's are with the insured.
    - jacquesm 9y ago
      Yes, because obviously if that equity turns out to be worth a very large amount of money and the company is never sued Google is not going to turn around and say 'oh, sorry for this vastly disproportionate payment, here is your repayment'. In fact, the best outcome for Google would be if nobody ever got sued. (That's also the best outcome for the companies but there is no way of knowing if they would have gotten sued had they not paid their protection fee.)
      - caf 9y ago
        How is that different to "You paid an awful lot of fire insurance premiums over the years but never had a fire"? The insurance company certainly isn't giving you a refund either. It seems to me that if the equity turns out to be worth a lot, then the value of the protection is greater as well - the potential losses are likely to pretty closely track the company's value.
        reitanqild 9y ago
        Supporting you here: I see this as somebody inside google trying to do a oldschool google win-win (provide better results - make healthy profits). As long as the equity stake is reasonable this sounds like a great deal. To me this isn't the mafia but the security company teaming up with you. Seems like a giant win for everyone but the trolls,
        ohyeshedid 9y ago
        >How is that different to "You paid an awful lot of fire >insurance premiums over the years but never had a fire"? The difference is that you aren't paying your fire insurance premiums with partial ownership of your house.
      - johncolanduoni 9y ago
        The best outcome for any insurance company is if their contractural obligations never make them do anything. What's your point?
  - neltnerb 9y ago
    When I read this, my first thought was that the ownership stake is helpful in some way for the legal defense. I'll be curious what numbers they're talking about once they are available.
  - brudgers 9y ago
    Fire insurance companies are not in a position to legally set fire to the buildings of those who refuse their services either. Here Google's scheme is monitizing its patent portfolio. Currently, the calculation is that this racket provides a better ROI than hiring lawyers and suing. There's still money on the monitize patents table.
- pmontra 9y ago
  Google could lobby to end software patents. Insurance companies can do little to end fire.
  - fuzzfactor 9y ago
    Insurance companies do make an effort to prevent and mitigate fires, including lobbying.
michaelmrose 9y ago
I think Google needs the startups to survive so that they can have innovative companies to buy in the future. Taking equity in the future is a way to pay for protection that will enable said companies to survive without having to pay out of pocket for said survival.

nickpsecurity 9y ago

The other distinction is that the mafia would be the big NPE's, big incumbents with patent portfolios, drug companies given patent rights aren't sector-specific enough, politicians they bribe to make patent suits hell for targets, and a corrupt judge in East Texas. They work together to make all the bad things happen for their mutual gain.

Sacho 9y ago

The Mafia didn't just protect people from itself, it also protected them from unorganized crime and other organizations.

brudgers 9y ago

Google has the patent portfolio to do so. Currently it is monetizing that portfolio by offering protection for vigorish. There is no law that prevents Google from providing an object lesson that demonstrates the wisdom of startups paying proper respect. This is a new line of B2B rent seeking. It is not a not for profit foundation endowed with the patent portfolio and funds sufficient to operate off investment returns. It's a tax on the startup ecosystem.