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I think there were a bunch of other great replies to this, but just to chime in: I think there are positive and negative impacts on "startup culture". The nega
by Ozzie_osman 7y ago
I think there were a bunch of other great replies to this, but just to chime in: I think there are positive and negative impacts on "startup culture".
The negative:
- added friction to building a startup, since one exit path is harder.
The positive:
- more focus on profitable companies, as opposed to ones that will only be viable if acquired.
- a more competitive market, which might be better in the long run for start-ups
I don't think the question we should be asking, though, if the effect on startup culture. I think what we should be asking is: what is the effect on users/consumers?
To that end, imagine if the online ecosystem today included Instagram, WhatsApp, DoubleClick, Zappos, YouTube, Waze, just to name a few. Yes maybe some of them wouldn't have survived, but maybe that would have been the right thing to do.
And I think that's the question regulators should be asking too. Whenever a large company is acquiring a smaller one: is this clearly good for consumers or not? I mean, if Intuit can make a good, believable case that this is good for users (ie "Once we buy Credit Karma we can give all our users free tax filing) or something like that, by all means, that's great... but I doubt that's what's happening here.
- scarface74 7y agoHow many of the companies below would have ever brought a product to market if Apple hadn’t acquired them? Are consumers worse off for Apple acquiring them? https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Apple https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitio... How would regulators know whether Apple acquiring the 100+ companies it acquired would be bad for consumers in advance? Do you really trust regulators to be both competent and apolitical? The positive: - more focus on profitable companies, as opposed to ones that will only be viable if acquired. - a more competitive market, which might be better in the long run for start-ups That would probably exclude every single YC backed company. Only two have gone public - DropBox and PagerDuty - and DropBox has never been profitable. I doubt any of them have ever been profitable.
- Ozzie_osman 7y agoI meant "profitable" in the viable sense. Like either profitable now or could reasonably be so in the future, without requiring monopolistic pricing.
- scarface74 7y agoYC has been in existence for over 15 years. Not one viable self sustaining standalone company has come out of it. I’m not saying that as a criticism to YC, just a statement of fact. How many profitable VC backed tech companies were founded in the last ten years?
- Ozzie_osman 7y agoOh I'm not defending YC or claiming anything about its companies (I didn't pull them into the conversation at all). I was just arguing that providing some rules around acquisition of smaller competitors by larger companies with monopolies could push startups towards more viable business models.
- scarface74 7y agoI’m using YC as a stand in for “VC backed tech companies” because it’s the one that people on HN are probably the most familiar with. The same could be said about the other VCs.
- Ozzie_osman 7y agoI think I'm missing something. Yes, the VC industry has massively funded many companies. Some of those are not profitable. Some of those are even not viable. That's not a good thing. Maybe we would all be better off if funding was generally better allocated towards viable companies.
- scarface74 7y agoI’m using Apple as an example here because I am most familiar with their acquisitions and the products that came from them. Why is it important for the end users of the companies are viable and not the products? Would consumers have been better off if most of the companies that Apple acquired, integrated into billions of devices and sold to consumers didn’t exist because they couldn’t foresee a viable business model outside of an acquisition?