8 ms·

>The reality is that if an idea is really good, the people who came up with it know it better than anyone and that gives them a tremendous advantage in terms of

>The reality is that if an idea is really good, the people who came up with it know it better than anyone and that gives them a tremendous advantage in terms of knowing what is important and what isn't. I have to disagree with you emphasizing this point. If someone/entity manages to get your idea or code, they may be able to sell the solution at a fraction of the cost since their R&D was lower than yours. When the entity is 10x+ your size, they can also afford to gather the resources that increase their odds of success (e.g. marketing specialists, engineers,etc) at a rate which you can't compete. By then, you may have spent 2-3 years creating a business that is destroyed by an external entity acting in bad faith. These things happen quite often.

orasis 7y ago
At $55M in funding they won’t be undercutting anything - quite the opposite, they’ll need to turn a healthy profit or die.
- carbocation 7y ago
  At $55M in funding, they can undercut for years, since they won't need to turn a healthy profit for quite some time. For example, Uber and Lyft. (Point being: survival is not just about the long run, but also the short run.)
  - adventured 7y ago
    Further to that point about undercutting for years, it's not going to be just $55m. If Otonomo have raised ~$55m, it means they have very powerful, very rich backers (Bessemer, NTT, SK, Aptiv). They might realistically have another $100m over the coming years instead, if they continue making progress.
jaxn 7y ago
I tend to agree with the original comment, particularly for products that are still evolving. We have a competitor who copies our features, but they don't know why we built the feature. The result is they end up copying the wrong stuff or tweaking the feature in a way that completely misses the point. But, I agree with you in that creating a feature isn't an advantage in and of itself. Rather, it is the domain expertise that led to the creation of the feature that is the true advantage.
- endymi0n 7y ago
  Agree with generally not worrying about the competition — we were a little worried since a valley startup of ex-Big4 people cloned us 3 years ago, but they haven‘t managed to come far, despite a whopping 8MM seed round (we were bootstrapped). This example however seems to play in a different league, the extent of ripoff here is absolutely staggering. If I were OP, I‘d immediately call Daimler‘s PR department. After the whole dieselgate shitshow, none of the German automakers are out for the slightest bit of negative PR... https://www.globenewswire.com/news-release/2019/01/10/1685883/0/en/UPDATED-Daimler-Partners-with-Otonomo-to-Provide-Connected-Car-Customers-with-New-Services-while-Delivering-on-the-Promise-of-Data-Privacy.html https://www.globenewswire.com/news-release/2019/01/10/168588...
- chmod775 7y ago
  Try adding some random stuff that you get for basically free with your choice of backend / implementation. This will waste their time if its a harder problem with their backend / implementation. Another fun thing you can do is using something that looks like a 3rd-party service/API, but is really just another domain controlled by your company. Make it something specific to your business, so they'll be tempted to use it. IF they use it, the least you can do is terminate their access at an inconvenient time. This will frustrate their customers as they scramble to do their own implementation. Final thing you can do is not doing incremental updates, but instead doing big rollouts with many features at once. That way they'll always be weeks to months behind you. Basically, when someone is following you, mine the path to the point that it's cheaper and more effective for them to find their own. Edit: Bonus round is talking about some near-useless feature on your dev blog that would be hilariously expensive and complicated to build, without actually building it. Hope they waste time on it.
  - dylan604 7y ago
    >Final thing you can do is not doing incremental updates, but instead doing big rollouts with many features at once. > >That way they'll always be weeks to months behind you. This reminds me of the old days when Adobe Illustrator and Macromedia Freehand. I learned both apps, as each release from one would leap frog the other in features. I actually learned from a roommate that was taking college courses, and I would do his homework assignments. Not do them for him, but on my own just to learn the software. Saved me from needing to take the course!
matz1 7y ago
Then can't you too find other investor for yourself ? You have the advantage being the one that come out with the idea to sell it to the investor. Or heck pitch it to the same investor too.
- stingraycharles 7y ago
  They should definitely reach out to the investor. But not before getting proper legal advice on the matter.
  - frandroid 7y ago
    eyeroll Investor: "Oh I wonder what other IP we can steal from them under the guise of due diligence"
- PeterCorless 7y ago
  No investor will get involved with a company that is presently undergoing major intellectual property litigation. IP lawsuits are the kiss of death for VCs.
  - matz1 7y ago
    Do you mean kiss of death for both Otonomo and smartcar ?
mikekchar 7y ago
What I find a bit crazy is why don't large corporations do this more often? I literally told my manager when I worked at Corel that we should do this: Find a promising looking startup, clone their offering and blow them out of the water by virtue of the fact that we have 500 sales and marketing people with 20 years of experience (not to mention by being second to the market we can learn how to avoid all the legacy problems the startup endured). We were in a "new ventures" team and I figured instead of going along with cockamamie schemes dreamed up by our PGMs that had virtually no hope of success, we should enter markets that had at least some advance proven success. Nope. Not going to happen. We needed to build something that nobody had ever thought of before. While I can understand the idea, I still think its a massive mistake for an established company. Why enter markets where you can't play to your strengths (muscle)? I never could figure it out...
- deleted 7y ago
  [deleted]
- BigJono 7y ago
  My theory on this is that small dev teams are an order of magnitude more productive than large ones, and most large companies cannot help themselves when it comes time to assign team sizes. You can definitely win a war with superior marketing, but it's not a sure thing if your product is inferior.
- ci5er 7y ago
  Some SLC companies did pull this off well. I'm working with some Russians now that have teams that replicate US services for Russia, China, India and Brazil, simply with the idea of flipping them post-launch and pre-growth. They are getting rich, so it appears to be working.
hota_mazi 7y ago
And this is exactly why software patents are not as evil as most people think. They are being abused, but if you can close that loophole (prevent non practicing entities from enforcing patents), then software patents are critical to protect innovation.
- chii 7y ago
  Only if the software patent is really an innovation, not just restating something already known in a different way. Patents need fixing from both ends - the enforcement end for non-practicing entities, as well as the assignment end, where patents are examined under harsher conditions.
conanbatt 7y ago
OTOH, if a company can only sustain its business model because it has the advantage of state protection, it necessarily means naturally defensible business products get less investment and artificially defensible business products get a bump. Which is better, is hard to say. It should be clear however that patent and patent giving has massive costs on the state and a great boon to lawyers. And at the same time, its still not enough, as you still need to do counter-espionage at companies anyway.

orasis 7y ago

At $55M in funding they won’t be undercutting anything - quite the opposite, they’ll need to turn a healthy profit or die.

carbocation 7y ago
At $55M in funding, they can undercut for years, since they won't need to turn a healthy profit for quite some time. For example, Uber and Lyft. (Point being: survival is not just about the long run, but also the short run.)
- adventured 7y ago
  Further to that point about undercutting for years, it's not going to be just $55m. If Otonomo have raised ~$55m, it means they have very powerful, very rich backers (Bessemer, NTT, SK, Aptiv). They might realistically have another $100m over the coming years instead, if they continue making progress.

jaxn 7y ago

I tend to agree with the original comment, particularly for products that are still evolving. We have a competitor who copies our features, but they don't know why we built the feature. The result is they end up copying the wrong stuff or tweaking the feature in a way that completely misses the point. But, I agree with you in that creating a feature isn't an advantage in and of itself. Rather, it is the domain expertise that led to the creation of the feature that is the true advantage.

endymi0n 7y ago
Agree with generally not worrying about the competition — we were a little worried since a valley startup of ex-Big4 people cloned us 3 years ago, but they haven‘t managed to come far, despite a whopping 8MM seed round (we were bootstrapped). This example however seems to play in a different league, the extent of ripoff here is absolutely staggering. If I were OP, I‘d immediately call Daimler‘s PR department. After the whole dieselgate shitshow, none of the German automakers are out for the slightest bit of negative PR... https://www.globenewswire.com/news-release/2019/01/10/1685883/0/en/UPDATED-Daimler-Partners-with-Otonomo-to-Provide-Connected-Car-Customers-with-New-Services-while-Delivering-on-the-Promise-of-Data-Privacy.html https://www.globenewswire.com/news-release/2019/01/10/168588...
chmod775 7y ago
Try adding some random stuff that you get for basically free with your choice of backend / implementation. This will waste their time if its a harder problem with their backend / implementation. Another fun thing you can do is using something that looks like a 3rd-party service/API, but is really just another domain controlled by your company. Make it something specific to your business, so they'll be tempted to use it. IF they use it, the least you can do is terminate their access at an inconvenient time. This will frustrate their customers as they scramble to do their own implementation. Final thing you can do is not doing incremental updates, but instead doing big rollouts with many features at once. That way they'll always be weeks to months behind you. Basically, when someone is following you, mine the path to the point that it's cheaper and more effective for them to find their own. Edit: Bonus round is talking about some near-useless feature on your dev blog that would be hilariously expensive and complicated to build, without actually building it. Hope they waste time on it.
- dylan604 7y ago
  >Final thing you can do is not doing incremental updates, but instead doing big rollouts with many features at once. > >That way they'll always be weeks to months behind you. This reminds me of the old days when Adobe Illustrator and Macromedia Freehand. I learned both apps, as each release from one would leap frog the other in features. I actually learned from a roommate that was taking college courses, and I would do his homework assignments. Not do them for him, but on my own just to learn the software. Saved me from needing to take the course!

matz1 7y ago

Then can't you too find other investor for yourself ? You have the advantage being the one that come out with the idea to sell it to the investor. Or heck pitch it to the same investor too.

stingraycharles 7y ago
They should definitely reach out to the investor. But not before getting proper legal advice on the matter.
- frandroid 7y ago
  eyeroll Investor: "Oh I wonder what other IP we can steal from them under the guise of due diligence"
PeterCorless 7y ago
No investor will get involved with a company that is presently undergoing major intellectual property litigation. IP lawsuits are the kiss of death for VCs.
- matz1 7y ago
  Do you mean kiss of death for both Otonomo and smartcar ?

mikekchar 7y ago

What I find a bit crazy is why don't large corporations do this more often? I literally told my manager when I worked at Corel that we should do this: Find a promising looking startup, clone their offering and blow them out of the water by virtue of the fact that we have 500 sales and marketing people with 20 years of experience (not to mention by being second to the market we can learn how to avoid all the legacy problems the startup endured). We were in a "new ventures" team and I figured instead of going along with cockamamie schemes dreamed up by our PGMs that had virtually no hope of success, we should enter markets that had at least some advance proven success. Nope. Not going to happen. We needed to build something that nobody had ever thought of before. While I can understand the idea, I still think its a massive mistake for an established company. Why enter markets where you can't play to your strengths (muscle)? I never could figure it out...

deleted 7y ago
[deleted]
BigJono 7y ago
My theory on this is that small dev teams are an order of magnitude more productive than large ones, and most large companies cannot help themselves when it comes time to assign team sizes. You can definitely win a war with superior marketing, but it's not a sure thing if your product is inferior.
ci5er 7y ago
Some SLC companies did pull this off well. I'm working with some Russians now that have teams that replicate US services for Russia, China, India and Brazil, simply with the idea of flipping them post-launch and pre-growth. They are getting rich, so it appears to be working.

hota_mazi 7y ago

And this is exactly why software patents are not as evil as most people think. They are being abused, but if you can close that loophole (prevent non practicing entities from enforcing patents), then software patents are critical to protect innovation.

chii 7y ago
Only if the software patent is really an innovation, not just restating something already known in a different way. Patents need fixing from both ends - the enforcement end for non-practicing entities, as well as the assignment end, where patents are examined under harsher conditions.

conanbatt 7y ago

OTOH, if a company can only sustain its business model because it has the advantage of state protection, it necessarily means naturally defensible business products get less investment and artificially defensible business products get a bump. Which is better, is hard to say. It should be clear however that patent and patent giving has massive costs on the state and a great boon to lawyers. And at the same time, its still not enough, as you still need to do counter-espionage at companies anyway.