4 ms·

New ideas thrive best without constraints. Large companies may have more resources but they must have institutional constraints to manage a large workforce. St

New ideas thrive best without constraints. Large companies may have more resources but they must have institutional constraints to manage a large workforce. Startups will always have a leg up on new ideas because of their flexibility. There’s no bullshit holding back a small team from executing. That’s a big reason why startups are so effective at pulling the rug out from underneath larger companies who seem to be invincible.

dalbasal 9y ago
Consider what startups are/have actually been building... collectively. There are a lot of individual startups, but most of the money driving them comes from the market cap of "tech giants" directly or indirectly. First, VCs invest based on the probability of a startup becoming a tech giant. Second, most exits are buy-outs by existing giants using their market cap as currency. Ultimately, either new giants are created or existing giants are made bigger. That's where all the startup money comes from, and that's where it ends up in success scenarios. Startups are a part of that, not the antidote to it. What are these tech giants, and why are they worth so much? As Thiel put it, monopoly. MS learned this game early. They understood, platforms and moats, network effects and ringfenced markets. Google is a search monopoly. Amazon has its fiefs. Uber raised all that money because it looked like they could become a monopoly. Now "their" market looks a little more competition-friendly. There are actual market dynamics pressuring prices down to marginal costs... Hey! how are we supposed to justify $100bn market cap with competition?!! Unicorns are a dime a dozen (well $1bn, technically). Unless the market crashes, we'll probably have 3-5 dragons(TM) within 3-5 years worth >$1 trillion each. They will all be relatively unexposed to market forces.

dalbasal 9y ago

Consider what startups are/have actually been building... collectively. There are a lot of individual startups, but most of the money driving them comes from the market cap of "tech giants" directly or indirectly. First, VCs invest based on the probability of a startup becoming a tech giant. Second, most exits are buy-outs by existing giants using their market cap as currency. Ultimately, either new giants are created or existing giants are made bigger. That's where all the startup money comes from, and that's where it ends up in success scenarios. Startups are a part of that, not the antidote to it. What are these tech giants, and why are they worth so much? As Thiel put it, monopoly. MS learned this game early. They understood, platforms and moats, network effects and ringfenced markets. Google is a search monopoly. Amazon has its fiefs. Uber raised all that money because it looked like they could become a monopoly. Now "their" market looks a little more competition-friendly. There are actual market dynamics pressuring prices down to marginal costs... Hey! how are we supposed to justify $100bn market cap with competition?!! Unicorns are a dime a dozen (well $1bn, technically). Unless the market crashes, we'll probably have 3-5 dragons(TM) within 3-5 years worth >$1 trillion each. They will all be relatively unexposed to market forces.