46 ms·

Amazon met with startups about investing, then launched competing products

1125 points by mgav 6y ago

bigpumpkin 6y ago
"In 2016, a group of investors led by the Alexa Fund bought a stake in Nucleus, a small company that made a home-video communication device that integrated with the Alexa voice assistant. Nucleus’s founders and the venture-capital funds investing alongside the Alexa Fund had reservations about collaborating with an Amazon-backed firm, according to some of the co-investors. " "After striking the deal, the Alexa Fund got access to Nucleus’s financials, strategic plans and other proprietary information, these people said. Eight months later, Amazon announced its Echo Show device, an Alexa-enabled video-chat device that did many of the same things as Nucleus’s product. Nucleus’s founders and other investors were furious. One of the founders held a conference call with some investors to seek advice. He said there was no way his small company could compete against Amazon in the consumer space, according to people on the phone call, and began brainstorming ways to pivot his company’s product. An Amazon spokeswoman said that the Alexa Fund told Nucleus about its plans for an Echo with a screen before taking a stake in the company. Several people on the Nucleus side of the deal disputed that. Before Amazon introduced its product, the Nucleus device was sold at major retailers such as Home Depot, Lowe’s and Best Buy. Once the Echo began selling, those sales declined sharply and retailers stopped placing orders, said two people involved in the deal. Nucleus threatened to sue Amazon, which settled with Nucleus for $5 million without admitting wrongdoing, according to people familiar with the settlement. Both sides agreed not to discuss the matter. Nucleus reoriented its product to the health-care market, where it has struggled to gain traction, some of those people said." Wow, Gavin Belson must be furious.
- Jyaif 6y ago
  Best $5 million ever spent.
- disambiguation 6y ago
  > Wow, Gavin Belson must be furious. life imitating art
  - rvnx 6y ago
    Plot twist: Amazon discovers this topic is actually discussed on HN and asks for the 5 million USD back
- xyzzy_plugh 6y ago
  The Echo Show was conceived before the first Echo was ever released. I think I even saw a demo in 2014/2015. Source: I worked on the first Echo.
  - sib 6y ago
    Agreed. I worked on the first Echo and was one of the participants in the conversations about what became the Echo Show in 2012/2013.
- 8note 6y ago
  FaceTime was released in 2010 says wikipedia, and Siri launched in 2011. How is this concept different from putting your phone down on a table?
kumarvvr 6y ago
As a startup, you ought to protect your ip. Its the job of Amazon to guesstimate your worth. A billionaire will get away with shit, if they can.
- steve76 6y ago
  Poison pill them. polonium.io is now AWS Polonium. Then get the hell out of dodge. Another thing you can do is just dump all your problems on them. Send all your freaks to interview there, and file every workplace complaint they can. Best not to provoke people. Walk away from it eventually. Work for a dollar a year. If you don't they crush you. They crush you anyways, more so if you're a punk.
pseudolus 6y ago
Chinese Wall = Maginot Line
tekcyb-org 6y ago
I bet you Amazon thought of this before that company even formed. That's not an original idea.
- jacquesm 6y ago
  For the longest time (more than a decade) I ran a small company (< 50 employees) that fielded a video chat service. The whole thing revolved around a minor bug that just happened to be present in all major browsers. All that time I thought: next week someone else is going to clue in to this, it is so obvious. But nobody ever did. You can read more about it here: https://jacquesmattheij.com/the-several-million-dollar-bug/ https://jacquesmattheij.com/the-several-million-dollar-bug/ So I totally believe that the seed for the idea came from somewhere else.
  - dboreham 6y ago
    Isn't this more to do with how TCP and the socket interface is implemented (or more accurately its intended semantics) than a bug in browsers? Not draining any inbound data on a new connection prior to sending my request doesn't sound like a bug.
    - jacquesm 6y ago
      Yes, that's the practical reason. But a browser could of course have implemented HTTP in the way described in the RFC, instead they all took the easy and obvious way out. That's also why the bug was present in all browsers that had marketshare, it was the obvious thing to do, it is not as if they independently made the same mistake, they independently decided that it wasn't important enough to implement the protocol to the letter.
    - deleted 6y ago
      [deleted]
  - RobRivera 6y ago
    And this is why when I recant an answer based on docs or rfc, I use the phrase "X should do Y, but I'd have to verify it by hand"
k__ 6y ago
Makes sense. They look if they should buy or build.
rlewkov 6y ago
MSFT well know for this
deleted 6y ago
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m3kw9 6y ago
The meeting probably went like this. “I want (crazy %) for (low ball $) or we start one ourselves.
- rvnx 6y ago
  Well, I have been on both side (a company that wants to be acquired, and a large buyer), and yes, that's the discussion you have. It's normal and expected by all parties. When you want to buy a company it's because you want to launch yourself into that field.
throwaway_aws 6y ago
"An Amazon spokesman said the company doesn’t use confidential information that companies share with it to build competing products" Maybe...but in the past, AWS proactively looked at traction of products hosted on its platform, built competing products, and then scraped & targeted customer list of those hosted products. In fact, I was on a team in AWS that did exactly that. Why wouldn't their investing arm do the same?
- deleted 6y ago
  [deleted]
- bobbychairs 6y ago
  Not trying to come across as judgemental. But if I may ask, did you at the time feel like that was an ethical thing to do?
  - throwaway_aws 6y ago
    I joined after the team had gotten traction already. Both the GM and senior most product person on the team told me about their tactics independently. To be honest, I didn't think of it as anything sinister at that time. AWS had such high octane culture to move fast and innovate that I actually felt what they had done was quite smart. It was a super competitive culture and people did whatever was needed to build new things. On a day to day basis the only pressure was to build... I don't remember instances where ethical guidelines were brought up. So, in a way, the outcomes were a result of what people were rewarded on. Only after I left AWS I started thinking it was ethically iffy. I still believe Amazon is an amazing company and my time at AWS was one of the best learning experiences.
    - kbenson 6y ago
      "It is difficult to get a man to understand something when his salary depends upon his not understanding it." - Upton Sinclair. I wish we went into this in much more detail in high school when covering economics and ethics (if the school even bothers to teach ethics). It should be a prerequisite in any capitalistic economy (but not only those, it can easily be extended to other things). I've also worked in industries that I think don't operate very ethically. It's amazing what you can ignore as an outlier because the alternative is uncomfortable or means you have to make a large personal change.
toyg 6y ago
Silicon Valley is clearly not a comedy: https://youtu.be/JlwwVuSUUfc https://youtu.be/JlwwVuSUUfc
- newyankee 6y ago
  I wonder if founders are as petty as Gavin Belson
  - rurp 6y ago
    I would imagine it's common. There was an article on here not too long ago about how the entire Amazon HQ2 fiasco came about because Bezos was jealous that Elon Musk was getting more govt subsidies than him. If one of the most successful people in the world can be so focused on petty grudges, I imagine there are plenty of others doing the same.
    - akhilcacharya 6y ago
      Why would Jeff be jealous of Elon? That makes no sense.
  - samfisher83 6y ago
    You should listen to Michael Jordans hall of speech to see how pretty he was. He is considered the greatest basketball player in the world and he spend the whole speech belittling people.
    - toyg 6y ago
      In the docuseries he himself produced, MJ comes off as an absolute bully most of the time. It ruined a lot of the mythos for me.
      - Apocryphon 6y ago
        I remember as a kid there was a child's book about basketball players and it mentioned that MJ was an aggressive, confrontational player who trash talked the other team. It shaped a conception of him as a champion who is fiercely competitive to the point of pettiness (not unlike Bill Gates, funnily enough), not a champion who is known for noble sportsmanship.
vikramkr 6y ago
So this didnt come across in the title - but the first company they use as an example is one Amazon actually did invest in? And that was four years before the "competing" product (which is literally just providing data for AI training as far as I can tell)? I'm not sure what I'm missing, but that reads like if coke invested in an energy drink brand and four years later launched another energy drink brand. It's basically a commodity and it's 4 years after the fact- what's so controversial here?
kirillzubovsky 6y ago
Let’s be honest tho, what did they expect? In this case, Amazon gave them funding and a 4-year head start. The point of Alexa fund was to use Amazon money, and Alexa as a launch vehicle, to grow a product. Obviously Amazon had to gain something back.
xwdv 6y ago
Not as sinister as it seems. You could also not be approached for investment, launch your product, then get killed by a competing product from a big company, all the same.
- x86_64Ubuntu 6y ago
  It's different when the companies are being baited with investments to spill their secrets and visions to you, and then you take the idea and throw your infinite power behind it without them.
- dcow 6y ago
  But you would hypothetically be accounting for that outcome in your strategy. If I'm understanding the commentary correctly, Amazon would regularly invest in companies in order to gain access to their data and technology while another team used the info to undercut and kill their product. You don’t generally assume your investment partner is actively planning your demise by pretending to support you while siphoning off your life blood. I agree though that it’s not as sinister as it initially seems. Companies create competition at times to stimulate product development even though it’s a shitty operating mode for the ground soldiers involved. In that case though they’re spending entirely of their own resources and not leeching off other investments to actively undermine a successful exit. Perhaps startups are undervaluing their IP if this behavior is able to manifest easily. And in light of this news I’d be super hesitant as a board to allow any money from Amazon whatsoever.
Zhenya 6y ago
http://archive.is/ps8xv http://archive.is/ps8xv
lloyddobbler 6y ago
History repeats itself. This is straight out of Microsoft's playbook from back in the day.
- ChrisMarshallNY 6y ago
  Yup. Here's something that was written in the 1990s. http://www.microbizz.nl/foodforwindows.htm http://www.microbizz.nl/foodforwindows.htm
- jjkaczor 6y ago
  "back-in-the-day"? How about last month... (Ok... over the last year)... AppGet vs WinGet Maybe not a buyout - but dangling a job possibility, with interviews where the candidate's brain was picked over... https://www.techworm.net/2020/06/microsoft-appget-windows-package-manager.html#:~:text=As%20soon%20as%20WinGet%20was%20released%2C%20the%20tool,called%20AppGet%2C%20accused%20Microsoft%20of%20stealing%20his%20idea https://www.techworm.net/2020/06/microsoft-appget-windows-pa....
mathattack 6y ago
Wasn’t this whole behavior spoofed in Silicon Valley?
seizethecheese 6y ago
Amazon announced a copycat of us pretty quickly after we went through YC. I suspect it’s not some sinister top-down thing (unless they are actually reading all YC company descriptions). Most likely, the copycats are ambitious, unoriginal PMs pitching some budget. We facilitate subscriptions using a smart scale, and it works way better than a Dash button (Bottomless.com, YC W19). I’m actually surprised they haven’t launched yet and are taking so long. It’s pretty wild, the hardware on their launch page is exactly like ours, only they're so slow that it’s a copy of two versions ago and hasn’t even hit the market.
- 2sk21 6y ago
  Indeed, as a startup you do typically have a speed advantage!
  - seizethecheese 6y ago
    Hardware is hard for startups though.
- pyrrhotech 6y ago
  There's nothing sinister about a copycat. It just feels that way selfishly for the original creator. Capitalism works best in the long run with near perfect competition, copy cats are great for everyone except the first guy with the idea.
  - RhodesianHunter 6y ago
    > Capitalism works best in the long run with near perfect competition Unfortunately someone like Amazon using their size and market power to produce copycats is the opposite of perfect competition since they can operate at a loss or at cost and starve out any newcomers.
  - pyrrh0tech 6y ago
    Hey it's me pyrrhotech, and upon some additional reflection decided that I was wrong and maybe there are some issues with copycats. Just wasn't thinking straight before.
fsociety 6y ago
Amazon met with an unnamed startup I worked for to do this, luckily our investors warned us before the meeting.
xyzzy_plugh 6y ago
I think what is missing here is an insider's perspective. The volume of concepts that are being actively worked on, let alone conceived, is pretty incredible. I've been in Amazon meetings with startups before/during talks of investing. Usually it goes something like this: There are multiple principle engineers involved. There are multiple engineers from potentially related projects involved. Most of the decision making boils down to: - the obvious: would this investment likely be profitable? - does investing/acquiring this company enable us to ship sooner/gain a competitive advantage? Often times Amazon prefers to acquire companies not directly operating in the space Amazon needs them to, and then steering them to do what Amazon needs. Often times it's just talent acquisition. For all we know, Amazon already had competing products in the works (and let's be real, given how slowly Amazon moves, this is the most likely scenario) and decided that this investment wouldn't be worth it.
dcow 6y ago
If I’m reading commentary correctly, Amazon would invest in other companies using its Alexa fund in order to gain access to their data and then actively operate in a way that undermines the success of the company. Sounds like they’re essentially enjoying most of the benefits of purchasing a company but for a fraction of the price. Rather than spend their own capital to do the hard legwork of building and validating a product idea, they’re effectively spending others’ and then swooping in for the bait and switch kill. If I were a founder or board member I’d be super skeptical about ever taking money from Amazon in light of this news. If this isn’t illegal it at least seems wildly unethical. If it’s neither of those and considered an acceptable tactic, then perhaps companies are generally undervaluing themselves otherwise it wouldn't be financially feasible?
neonate 6y ago
https://archive.is/ps8xv https://archive.is/ps8xv
snird 6y ago
Am I the only one who thinks this is to be expected? Stealing good ideas is literally amazon biggest strategy in retail. They monitor best selling products, then launch their own brand and crash the competition. Why anyone expected them to change strategy with business ideas? This strategy served them well.
- klyrs 6y ago
  If nothing else, it doesn't come as a surprise because amazon consistently operates in an anticompetitive nature. I see this as building public understanding of why amazon should be broken up.
  - deleted 6y ago
    [deleted]
ApicalDendrite 6y ago
I worked on the Echo Show team. The product had been in development for over a year when we invested in Nucleus. I remember thinking it was very strange that Amazon was investing in that company when we were building such a similar product internally.
- rattray 6y ago
  Thanks, that's a really helpful perspective. I've definitely seen the same thing happen – an org that isn't sure it can build function X well might invest in a startup building X just in case. Of course, they may or may not take advantage of that situation by misusing confidential information. Either way the startup could lose (or just not have much negotiating power). So yeah, sounds like this may not be a case of AMZN misbehaving. But I'm still not sure I'd want to talk to them if I were a startup, at least until I know they really need us and are willing to pay a lot.
  - ApicalDendrite 6y ago
    Nothing I saw indicated that the Echo Show was in any way influenced by Nucleus. I suspect, but don't know directly, that this investment was more about trying to jumpstart an ecosystem of third-party Echo devices rather than hedging bets.
cik 6y ago
Why are people surprised by this? There was a period of time in the VC world (~2001) where this was di-rigeur. You were caught between a rock and a hard place, as pitching literally meant potentially enabling a competitor.
chevman 6y ago
Yes, this is often times how business operates. Guess what, we meet with potential competitors in our market and sometimes even contract with them to provide services on our behalf, and use that to gauge the market and current solutions!
throwawaymanbot 6y ago
Bezos.... is a giagantic Phallus... (being polite)
gentleman11 6y ago
Standard advice to to not keep your startup secret but to talk about openly to as many people as possible. Eg, quotes about how only 1/1000 startups die to competition, and the rest self destruct or fail to get traction. Is that still the case?
- deleted 6y ago
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- kristopolous 6y ago
  this is more than that. I've seen people try to play this game. They'll pretend they want to buy you/partnership/invest/be a client and then ask pointed questions: "What dependencies are you using on your backend for XYZ ... have you found any issues with that? If you were going to rewrite it, how would you approach it?" In the weeds questions about detailed implementation. "Do you have a detailed architecture diagram?" etc. People who haven't seen it are like "boy they are serious. Look at their diligence" These people need to up their street smarts game: "Nah bro, they're just stealing shit." How do you know? Check who's in the room/on the call. Ask yourself what kind of decisions these people would make. Find out who they are. Amazon has been actually pretty light with this practice. They're pretty picky but the right people have been in the room and they haven't really gone deep into the spy questions. The real nasty violators are companies like uber and microsoft. I wouldn't be surprised if they had actual corporate spy departments. We had GM try to do it but they were bumblers. It was kinda cute. It also seems to be mostly American. I've dealt with a lot of Japanese and Chinese businesses and they were all genuine. If they said they wanted a partnership for reason X, then they indeed want a partnership for reason X. If they want to steal the tech and go to other markets then there's clear nonexclusive and rights parts of the contract. It's not the "100% lies all the way down" of Uber.
ivalm 6y ago
This is a bit complicated. I’m not in Amazon but work for a (very large) org. Often we will have some product in mind and approach/maybe even partner with a vendor while at the same time having an internal effort. Occasionally we go with an internally developed solution, sometimes we go with vendor solution. I am sure some vendors feel bad that suddenly they are forced out by a “similar” internal product. However, in every case I’ve been involved it wasn’t sinister. There was a business need and the company actively invested into multiple parallel solutions, eventually an internal solution won after we used a vendor solution for some years(but sometimes it is the vendor that wins!).
- rattray 6y ago
  Yeah, I haven't read the article (paywall) but from the first paragraph or two it sounded like AWS invested in the company and launched a competitor 4 years later. To me, that sounds like the startup just wasn't able to perform well enough to beat an AWS-built solution, in the eyes of an executive. Of course, if I were doing a startup that played in AWS's space, I'd view them as a pretty formidable competitor and I wouldn't expect to get a great deal from an investment or acquisition from them, since unless I have a really special sauce they can probably build whatever we've done and sell it better. It's shitty, IMO, and probably drives startups away from a field in which they could sell to AMZN – since they know they won't get an awesome deal. Probably reduces innovation in the field overall.
darawk 6y ago
Isn't this just what you would expect a company of this size to do? "We want to launch a product in category X" "Ok, should we roll it ourselves, or buy something?" "Well, let's interview a few companies, see if there's any we like, and if not, we'll make it ourselves"
- jconley 6y ago
  Yeah, given the resources, I'd want to pursue all the possibilities in a promising product/market in parallel. They may have even had working prototypes for some time or even be near launch and they are just feeling out whether the startup would be competitive and/or complementary. Doubt it's anything evil. Just sounds like business minded people at work.
- bernardom 6y ago
  I don't understand how anyone is shocked by this.
- amitport 6y ago
  you forgot that big companies also have option C: A) copy; B) buy; C) sue you're always violating some patents by IBM and the like, sometimes they don't want to compete with a product only to get you off the table... and sometimes they can do that easily Oh, and there is the enterprise variation (option D?): talk with the costumers and demand that they stop working with the competition
anewguy9000 6y ago
um, duh? it happens everywhere all the time are you kidding? hey did you know google can read your email lol
idoh 6y ago
"Earth's most customer-centric company"
- deleted 6y ago
  [deleted]
mahastore 6y ago
Microsoft is famous for always doing a "better" copy than their competitors. :D They always come second but then start to overtake.
sdinsn 6y ago
Why would anyone with a brain hand over proprietary information?
dimgl 6y ago
I worked for a gaming startup that had Amazon do this to them. Pretty scummy.
code4tee 6y ago
There’s a big difference between stealing actual IP and executing on someone else’s idea (even if the idea was “stolen”). The sour grapes here seem to be coming from those who thought they “owned” having an idea but failed to fully execute on it. The winner is the one who actually does it.
wintorez 6y ago
https://www.youtube.com/watch?v=i6QvIrruZjw https://www.youtube.com/watch?v=i6QvIrruZjw
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blackswan101 6y ago
I'm surprised they haven't been hit by antitrust laws yet.
aws_pmthrowaway 6y ago
I was a senior manager on the very first product the article talks about. I was closely involved in designing the service and presenting it to Amazon senior leadership. WSJ quotes the CEO of a startup called DefinedCrowd as accusing us of stealing their ideas from a meeting 4 years earlier. What a bunch of conceit. I don't remember our team discussing DefinedCrowd even once. We focused on the many other more interesting players that are doing the same thing, and researching them by trying out their service etc. like anyone normally would. I'm sure someone talked with DefinedCrowd 4 years before that. Amazon, like all other tech companies, routinely has NDA conversations with startups that never go anywhere. I can't speak to the rest of the article, but the very first example is totally false. WSJ is looking for an angle, and this startup is probably looking for a way to blame Amazon for their own execution problems.
- fizx 6y ago
  Four years in the AI space is like two lifetimes.
- devindotcom 6y ago
  DefinedCrowd is pretty successful actually, just so you know this isn't sour grapes. And it isn't about a meeting 4 years ago, the very first line of the article says that Amazon was an investor (at seed stage, probably a few hundred K). So the problem isn't that someone heard about DefinedCrowd and decided years later to make something like it. Amazon made a significant investment in an early player in this space, and then started building a direct competitor while still presumably having both access and influence over that company. Doesn't seem responsible or ethical to me.
  - stepstop 6y ago
    This comment chain appears to answer you: https://news.ycombinator.com/item?id=23930812 https://news.ycombinator.com/item?id=23930812
- b20000 6y ago
  you mean NDAs that basically state that whatever you tell amazon belongs to amazon?
AndrewKemendo 6y ago
There's no way to really know how true this is but it certainly feels true if you're on the startup side - however most startups just aren't being realistic with themselves, and thinking they are special. For example, my previous company brought our 6DOF MonoSLAM SDK, 3D model processor and OpenGL viewer to Amazon from 2014-2017 pitching the "AR View" functionality that they eventually put in 2017 [1]. Was that a result of us coming and pitching it? Probably not because that use case and stack wasn't a novel concept even back to 2010. So the concept and stack was certainly there for them to do on their own. What we DID provide to Amazon however was a significant data point (based on our user velocity/interaction metrics and the rate of increase of 3D model generation from retailers) about whether the market was ready for that feature - and so they said ok it's probably time to do this. It just so happened that the cost of implementing it crashed to basically "trivial" in 2017 with the introduction of ARKit and so it was a no-brainer for them to roll out for a few years. What's the takeaway? These big companies aren't dumb, your idea isn't that novel and they probably have the team and technology to do it better than you for cheaper. [1] https://www.theverge.com/2017/11/1/16590160/amazon-furniture-placement-ar-feature-too https://www.theverge.com/2017/11/1/16590160/amazon-furniture...
- guessbest 6y ago
  Why even pitch the idea to big companies then? Seems like a no brainer to just avoid discussing technology with anyone on the M&A team of any large company with an development team, unless you went to the same college as their executive staff.
  - IshKebab 6y ago
    To try and sell it to them.
  - twic 6y ago
    Because that's where the money is.
- VRay 6y ago
  I dunno if they can necessarily do a better or cheaper job. A lot of the engineers at these megacorps are super burned out 9-to-5ers who don't particularly care about what they're doing, since it won't have that big an impact on their lives one way or the other if it succeeds. ("Woo, 20% bonus this year" vs "Team's being reorged, gotta hit up leetcode and find another corporate job")
riazrizvi 6y ago
Almost every established VC is a potential competitor as much as a potential backer, because they already have backed ventures in/near your market, you won't get approached by one without expertise in your market. Any of their other backed ventures might be mulling over a new strategic goal and doing indirect research on you via their sponsors. Before you say NDA, it's practically unenforceable, you can't stop a VC chatting about what they've seen in confidence to a trusted friend, the bar to prosecute breach is far too high. You can't stop someone seeing what you offer, and it's hard to prevent competitors from seeing how successful you are, especially giving the lack of privacy in consumer space. In this article, we don't know if Amazon used any IP, we are told they just copied the offering, which anyone is free to try. I bet the problem with DefinedCrowd is not so much they revealed too much, rather they revealed too little. How so? The VC dance is really about demonstrating to the uncertain backer-competitor that you are so good, it's not worth competing. That's a main point to inviting outside parties in. I imagine these guys were just so weak, they made competition more appealing that partnership.
- relaxing 6y ago
  No startup is so good they can’t get steamrolled by a company with Amazon’s resources.
  - riazrizvi 6y ago
    The decision isn't made by a trillion dollar 'Amazon'. It's made by a person inside Amazon with a limited budget, whose ROI is critical to their personal financial success. At the end of the day, the decision to compete will be an ROI question, Is it better/cheap enough to roll-my-own, or is it has this outfit done a good enough job that it is better to partner? Outstanding people are a precious commodity, so if the startup is really good, why wouldn't you partner with them? And if mediocre when you are really good, why would you?
iJohnDoe 6y ago
Google has done this and worse. Some of you may remember this one. https://news.ycombinator.com/item?id=18566929 https://news.ycombinator.com/item?id=18566929
- jcz_nz 6y ago
  This. There are other instances too. Short story is that you need to be extremely careful talking to G/A/F/M
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uses 6y ago
It's weird how questions of "is what we're doing, wrong?" can be so easily and inevitably obliterated by the profit motive.
kartayyar 6y ago
You as as a startup should be fully aware that a big player can enter the space at any time they want. This is not Amazon's problem. It's your problem. Also, it's a flawed abstraction to view large companies as a monolith: the investing arms are usually very separated from product teams. TLDR: If a large company wants to enter a space, that's their choice. Accept this as a fact of life if you want to go work on a startup.
kerng 6y ago
As a startup, if a company is serious in investing or buying they will make an offer. It's a common mistake to be lured into talks that drag out for weeks and months. If they are serious it will start with an offer.
jonplackett 6y ago
Not from Amazon but this happened to me when I had an app in the top 10 of the AppStore. This a-hole from Silicon Valley flew over to London, asked me loads of stuff, saying he wanted to buy it, offering large amounts of cash and then just launched his own version and some copies of other things I’d made. I’m still not sure if it was his plan all along or not - He did try and recruit me to his company at one point but when I refused, his parting words were “if someone offers you a seat on a spaceship, don’t ask which seat”. Really glad I didn’t take that seat.
- gt2 6y ago
  Can you link your app? Or his?
  - jonplackett 6y ago
    My app: https://apps.apple.com/gb/app/face-juggler-plus/id482482373 https://apps.apple.com/gb/app/face-juggler-plus/id482482373 I believe it was the very first (much copied) automatic face swap app A-hole’s app: https://apps.apple.com/gb/app/face-swap/id555094868 https://apps.apple.com/gb/app/face-swap/id555094868 Bit of background to making the app in this interview if anyone’s interested: https://www.indiehackers.com/interview/face-juggler-6f79cf6f66 https://www.indiehackers.com/interview/face-juggler-6f79cf6f...
- pylua 6y ago
  Seems like copycats are not allowed as per iOS store policy ?
  - jonplackett 6y ago
    If that is the case I don’t think it’s policed at all. You can’t copyright or patent an idea so people just do what they want - at least when you’re an indie developer.
- curious_fella1 6y ago
  > his parting words were “if someone offers you a seat on a spaceship, don’t ask which seat” Lol what a jackass
all_blue_chucks 6y ago
This just sounds like a failed acqui-hire to me.
datavirtue 6y ago
How else are managers supposed to propel their career and score bonuses?
MangoCoffee 6y ago
we need a pure-play cloud provider like TSMC. No one should trust the big three. (AWS, GCP, Azure)
- p0rkbelly 6y ago
  I think that was supposed to be OpenStack. It failed.
mrandish 6y ago
I'm a serial tech startup founder who has seen all sides of this up close. I've had startups I founded or co-founded IPO, be acquired by a Top 10 valley tech giant, acquire smaller startups, and (of course) go bust. I've self-funded, VC funded, angel funded and had corporate investors. In the acquisition, I ended up working for the Top 10 valley tech company for over a decade reporting directly to a key C-Suite exec and was deeply involved in company strategy, multi-billion dollar M&A, partnerships and investments. In all that time I never saw any hint of anything even remotely unethical involving investments or M&A at my acquirer/employer. The company always played strictly by the rules, sometimes to an almost excessive degree (avoiding even the possible appearance of impropriety). This was both innately cultural, constantly preached from the BOD to CEO on down, as well as tactical since the reputational cost of negative perception was simply considered too high. Word gets around the valley fast. The invisible cost of the potential partner or startup that chooses to pass on meeting with us due to reputation could be very high. That said, we would negotiate hard and do our due diligence, gathering public information in every legit way possible as we evaluated potential markets, product areas, acquisitions, partnerships and investments. Tons of startups were always contacting us to meet regarding investment, licensing, partnership, etc. So many that we'd actually meet with far less than 1 in 10, and even we'd usually just send a junior staffer to the mtg for a "first pass". Those first mtgs were almost always set up as NNPI (No Non-Public Info). We'd actually have the startup sign a doc in advance stating that they wouldn't share anything with us that wasn't already public info. This was then re-iterated at the beginning of the mtg. Afterward the junior staffer would then circulate a brief memo on the mtg outlining if there were any areas of interest and recommending whether there should be any follow-up with actual business unit or tech people with domain expertise. Most such mtgs had no follow-up. In the cases where there was follow-up, before mtg again we'd internally specify what our possible interests were (acquisition, investment, partnership, etc) and if acquisition or investment we'd have at least a first-pass thesis on what our interest was, usually at the level of "interesting tech", "good talent", "cool product - might slot into XYZ product line." Back when I was a fledgling startup founder on the other side of all this, it was sort of mysterious and I remember my first mtgs with Big Cos (including Google, Apple, Intel, Microsoft, etc). It was all very exciting until I realized that most of these 'first sniff' mtgs are with junior people and never go anywhere. Even if my acquirer/employer was unique in being highly ethical, the reality is that any startup founder who isn't intensely aware of the risk of Big Co becoming a competitor is incredibly naive. If senior Big Co execs are taking time to meet with you (vs junior Big Co staffers), it's because they are interested in something. As a founder, your job is to figure out what why they are interested. Sometimes they are just making small investments to foster an ecosystem their primary business relies on. Or they might be interested in acqui-hiring your startup. Or they might be looking at moving into the emerging market you're in and doing a Build vs Buy analysis or even considering a roll-up of smaller firms. Or they might be looking at buying one of your competitors and doing market due diligence. As a Big Co exec, I'd usually just tell a startup founder point-blank what my interest was, as it tends to save everyone time. Often the startup founders I'd talk to as a BigCo exec were actually too guarded, to the extent they'd hesitate to even informally have a 'get acquainted' drink at a conference or trade show. It's good to be cautious but at the same time, many of my most lucrative exits and deals began with such meetings. As a founder, I also often learned invaluable info from Big Co people at such informal mtgs. After all, Big Co folks tend to hear all the industry scuttle-butt and they actually subscribe to ALL those $10k market data reports us startup guys could never afford. Bottom line: when engaging with Big Cos, ask good questions, rationally evaluate the benefits vs risks, plan for the worst and hope for the best.
mytailorisrich 6y ago
This is business tactic 101. Yes, they were definitely naive if they shared confidential data easily.
PaulHoule 6y ago
You could replace Amazon with Kodak or Open Text or 100 other names and hear the same story. It happens to customers and suppliers.
holidayacct 6y ago
It's entirely possible they launched competing products because they know something everyone else doesn't. Did anyone bother to investigate why they didn't acquire these companies? I've worked at several startups and you'll be surprised at why some corporations don't purchase a startup. Some of them have awful cultures of psychological abuse, you walk in the door and you know something isn't right because the founder(s) have a cult-like environment that includes abusing his/her employees to the point where they are all afraid to say anything. Some startups have founders and employees that are lying about everything and when you actually dig into their source code and infrastructure they aren't doing anything they say they are doing. Some of them have the worst infrastructure imaginable and/or they have such poor software engineering practices that they will never be able to scale to meet the kind of demand a company like amazon has. Just because they have a good idea and a company doesn't mean they have an implementation that is worth investing in.
TheMagicHorsey 6y ago
If your business is so fragile that all anybody needs to do to out compete you is the description of your business idea, then I'd say you don't really have a business that is long for this world. If not Amazon, someone else is going to clone and eat you from San Francisco, Seattle, Hyderabad, or Shanghai. Ideas don't really mean much if you don't have excellent, industry leading execution.
dastx 6y ago
Have a colleague who said the same. They had come in for reasons I can't remember, and shortly after launched a product that worked strangely similar to their offering. People got laid off, including my colleague, not long after that.
novalis78 6y ago
Good friend of mine said his company invented the book preview and had tons of publisher relationships due to their service for public libraries and preview snippets. They sat in a meeting with Amazon executives early 2000s - allegedly similar story. They were first offered a partnership then Amazon canceled all talks after getting a good grip on the business and launched their version shortly thereafter.
joewrong 6y ago
reminds me of this entertaining article https://thehardtimes.net/culture/jeff-bezos-announces-plan-just-beat-shit-small-business-owners/ https://thehardtimes.net/culture/jeff-bezos-announces-plan-j...
ryanSrich 6y ago
Yeah Amazon does this every year, it’s called AWS Re:Invent.
skela224 6y ago
Sexy sec Ed be doing re qqstseApzxsswswddffaAvt Thanks dlrss
skela224 6y ago
Wpqcs
annoyingnoob 6y ago
I worked at a startup that made a VoIP product in the early 2000s. Microsoft was interested but declined after a technical review. Later they bought Skype instead. No hard feelings. But giving up too much technical detail was definitely a concern for us.
xyst 6y ago
Isn't this what Google did with Yelp? IIRC, google was in talks with yelp to buy them out. They either pulled out or lowballed them. Then a few months later they launched "Google Places" At the time, this was referred to as a "brainfuck" of smaller companies for their IP.
beervirus 6y ago
People in here like to shit on the patent system... but this is what it’s designed to protect against.
TenJack 6y ago
I wonder how this will hurt general product innovation in the long wrong? Seems like it could have a trickle down effect of diminishing companies money for research and development to come up with new products that benefit consumers.
balls187 6y ago
This is like 1/2 the RFP world. RFP, then build in-house. I mean, I'm betting Facebook's "Small Business Grant" program is going to harvest that data and put it to use too. As a startup, if your only defensibility is that you had a head start in product development, that's not much of a moat.
systematical 6y ago
I know this is not constructive, but they really are a horrible company and people should avoid using them whenever possible.
farzinkarimi 6y ago
booring
howon92 6y ago
Startups shouldn't be working on things that they can't do better than the big companies
b20000 6y ago
DURRRRRR of course, what did you expect?
rorykoehler 6y ago
Rocket Internet in Germany do that too. They gas lit us about wanting to invest and then launched a competing product. I wasn't surprised.
sleepyhead00 6y ago
While I cannot comment on a startup's or Amazon's perspective on this matter, I had interactions with Amazon employees that was in fact deceptive. Short story: Amazon representative tried to trick influencer into sending their traffic without compensation. Long story: At the time, I commercially represented an influencer (largest in a mainstream niche with an active targeted fanbase) who had been approached by Amazon to sell access to our online course on Amazon (as in: let customers buy a coupon code for our content platform). The paperwork we received to sign did not reflect the terms we had negotiated. It included some kind of fees etc. that had never been mentioned, basically shifting percentage in favour of Amazon using fine-print. This felt dishonest. We decided to do it anyway due to their promises of considerable sales for our program including projections. Then the representative showed us a listing of a direct competitor and told us the number of sales this competitor was able to generate. While it's nice to be on the receiving end of such information, it's unethical. Who knows how truthful the numbers were anyway. But then the week of deals started and nothing happened. No sales. This could have had many causes but instead of revisiting the offer or the listing or just say "bad luck", the representative kept insisting that the influencer send their traffic to Amazon which is usually a business transaction but that wasn't part of the deal. They kept insisting anyway, even a second representative. I'm not keen on doing business with Amazon after that encounter.
zanethomas 6y ago
Why is anyone surprised? Microsoft was doing this in the 80s.
catsarebetter 6y ago
Weren't they doing this a decade ago too? Might be mistaking it for another company...
edem 6y ago
The article is behind a paywall, is there a TL;DR?
apexalpha 6y ago
I think I've seen this on the show Silicon Valley. Braindrain they called it I think. So it can't be that uncommon...
PovilasID 6y ago
VCs will often meet with startups to get market analysis done for them. Maybe it's not the primary motivation of a meeting but information has to be presented to make the case for the business, so it gets recorded and used anyway. It can be used to look for alternative investment targets. Pitches have inherent risks to them, that have to be taken into consideration. Also I get that Amazon has much more resources but if they there able to copy it after one meeting... Was your project really that valuable? And would not be copied then you launched?
arvindhmani 6y ago
Isn't this exactly what Amazon does with AmazonBasics?

1125 points by mgav 6y ago

"In 2016, a group of investors led by the Alexa Fund bought a stake in Nucleus, a small company that made a home-video communication device that integrated with the Alexa voice assistant. Nucleus’s founders and the venture-capital funds investing alongside the Alexa Fund had reservations about collaborating with an Amazon-backed firm, according to some of the co-investors. " "After striking the deal, the Alexa Fund got access to Nucleus’s financials, strategic plans and other proprietary information, these people said. Eight months later, Amazon announced its Echo Show device, an Alexa-enabled video-chat device that did many of the same things as Nucleus’s product. Nucleus’s founders and other investors were furious. One of the founders held a conference call with some investors to seek advice. He said there was no way his small company could compete against Amazon in the consumer space, according to people on the phone call, and began brainstorming ways to pivot his company’s product. An Amazon spokeswoman said that the Alexa Fund told Nucleus about its plans for an Echo with a screen before taking a stake in the company. Several people on the Nucleus side of the deal disputed that. Before Amazon introduced its product, the Nucleus device was sold at major retailers such as Home Depot, Lowe’s and Best Buy. Once the Echo began selling, those sales declined sharply and retailers stopped placing orders, said two people involved in the deal. Nucleus threatened to sue Amazon, which settled with Nucleus for $5 million without admitting wrongdoing, according to people familiar with the settlement. Both sides agreed not to discuss the matter. Nucleus reoriented its product to the health-care market, where it has struggled to gain traction, some of those people said." Wow, Gavin Belson must be furious.

Jyaif 6y ago
Best $5 million ever spent.
disambiguation 6y ago
> Wow, Gavin Belson must be furious. life imitating art
- rvnx 6y ago
  Plot twist: Amazon discovers this topic is actually discussed on HN and asks for the 5 million USD back
xyzzy_plugh 6y ago
The Echo Show was conceived before the first Echo was ever released. I think I even saw a demo in 2014/2015. Source: I worked on the first Echo.
- sib 6y ago
  Agreed. I worked on the first Echo and was one of the participants in the conversations about what became the Echo Show in 2012/2013.
8note 6y ago
FaceTime was released in 2010 says wikipedia, and Siri launched in 2011. How is this concept different from putting your phone down on a table?

kumarvvr 6y ago

As a startup, you ought to protect your ip. Its the job of Amazon to guesstimate your worth. A billionaire will get away with shit, if they can.

steve76 6y ago
Poison pill them. polonium.io is now AWS Polonium. Then get the hell out of dodge. Another thing you can do is just dump all your problems on them. Send all your freaks to interview there, and file every workplace complaint they can. Best not to provoke people. Walk away from it eventually. Work for a dollar a year. If you don't they crush you. They crush you anyways, more so if you're a punk.

pseudolus 6y ago

Chinese Wall = Maginot Line

tekcyb-org 6y ago

I bet you Amazon thought of this before that company even formed. That's not an original idea.

jacquesm 6y ago
For the longest time (more than a decade) I ran a small company (< 50 employees) that fielded a video chat service. The whole thing revolved around a minor bug that just happened to be present in all major browsers. All that time I thought: next week someone else is going to clue in to this, it is so obvious. But nobody ever did. You can read more about it here: https://jacquesmattheij.com/the-several-million-dollar-bug/ https://jacquesmattheij.com/the-several-million-dollar-bug/ So I totally believe that the seed for the idea came from somewhere else.
- dboreham 6y ago
  Isn't this more to do with how TCP and the socket interface is implemented (or more accurately its intended semantics) than a bug in browsers? Not draining any inbound data on a new connection prior to sending my request doesn't sound like a bug.
  - jacquesm 6y ago
    Yes, that's the practical reason. But a browser could of course have implemented HTTP in the way described in the RFC, instead they all took the easy and obvious way out. That's also why the bug was present in all browsers that had marketshare, it was the obvious thing to do, it is not as if they independently made the same mistake, they independently decided that it wasn't important enough to implement the protocol to the letter.
  - deleted 6y ago
    [deleted]
- RobRivera 6y ago
  And this is why when I recant an answer based on docs or rfc, I use the phrase "X should do Y, but I'd have to verify it by hand"

k__ 6y ago

Makes sense. They look if they should buy or build.

rlewkov 6y ago

MSFT well know for this

deleted 6y ago

[deleted]

m3kw9 6y ago

The meeting probably went like this. “I want (crazy %) for (low ball $) or we start one ourselves.

rvnx 6y ago
Well, I have been on both side (a company that wants to be acquired, and a large buyer), and yes, that's the discussion you have. It's normal and expected by all parties. When you want to buy a company it's because you want to launch yourself into that field.

throwaway_aws 6y ago

"An Amazon spokesman said the company doesn’t use confidential information that companies share with it to build competing products" Maybe...but in the past, AWS proactively looked at traction of products hosted on its platform, built competing products, and then scraped & targeted customer list of those hosted products. In fact, I was on a team in AWS that did exactly that. Why wouldn't their investing arm do the same?

deleted 6y ago
[deleted]
bobbychairs 6y ago
Not trying to come across as judgemental. But if I may ask, did you at the time feel like that was an ethical thing to do?
- throwaway_aws 6y ago
  I joined after the team had gotten traction already. Both the GM and senior most product person on the team told me about their tactics independently. To be honest, I didn't think of it as anything sinister at that time. AWS had such high octane culture to move fast and innovate that I actually felt what they had done was quite smart. It was a super competitive culture and people did whatever was needed to build new things. On a day to day basis the only pressure was to build... I don't remember instances where ethical guidelines were brought up. So, in a way, the outcomes were a result of what people were rewarded on. Only after I left AWS I started thinking it was ethically iffy. I still believe Amazon is an amazing company and my time at AWS was one of the best learning experiences.
  - kbenson 6y ago
    "It is difficult to get a man to understand something when his salary depends upon his not understanding it." - Upton Sinclair. I wish we went into this in much more detail in high school when covering economics and ethics (if the school even bothers to teach ethics). It should be a prerequisite in any capitalistic economy (but not only those, it can easily be extended to other things). I've also worked in industries that I think don't operate very ethically. It's amazing what you can ignore as an outlier because the alternative is uncomfortable or means you have to make a large personal change.

toyg 6y ago

Silicon Valley is clearly not a comedy: https://youtu.be/JlwwVuSUUfc https://youtu.be/JlwwVuSUUfc

newyankee 6y ago
I wonder if founders are as petty as Gavin Belson
- rurp 6y ago
  I would imagine it's common. There was an article on here not too long ago about how the entire Amazon HQ2 fiasco came about because Bezos was jealous that Elon Musk was getting more govt subsidies than him. If one of the most successful people in the world can be so focused on petty grudges, I imagine there are plenty of others doing the same.
  - akhilcacharya 6y ago
    Why would Jeff be jealous of Elon? That makes no sense.
- samfisher83 6y ago
  You should listen to Michael Jordans hall of speech to see how pretty he was. He is considered the greatest basketball player in the world and he spend the whole speech belittling people.
  - toyg 6y ago
    In the docuseries he himself produced, MJ comes off as an absolute bully most of the time. It ruined a lot of the mythos for me.
    - Apocryphon 6y ago
      I remember as a kid there was a child's book about basketball players and it mentioned that MJ was an aggressive, confrontational player who trash talked the other team. It shaped a conception of him as a champion who is fiercely competitive to the point of pettiness (not unlike Bill Gates, funnily enough), not a champion who is known for noble sportsmanship.

vikramkr 6y ago

So this didnt come across in the title - but the first company they use as an example is one Amazon actually did invest in? And that was four years before the "competing" product (which is literally just providing data for AI training as far as I can tell)? I'm not sure what I'm missing, but that reads like if coke invested in an energy drink brand and four years later launched another energy drink brand. It's basically a commodity and it's 4 years after the fact- what's so controversial here?

kirillzubovsky 6y ago

Let’s be honest tho, what did they expect? In this case, Amazon gave them funding and a 4-year head start. The point of Alexa fund was to use Amazon money, and Alexa as a launch vehicle, to grow a product. Obviously Amazon had to gain something back.

xwdv 6y ago

Not as sinister as it seems. You could also not be approached for investment, launch your product, then get killed by a competing product from a big company, all the same.

x86_64Ubuntu 6y ago
It's different when the companies are being baited with investments to spill their secrets and visions to you, and then you take the idea and throw your infinite power behind it without them.
dcow 6y ago
But you would hypothetically be accounting for that outcome in your strategy. If I'm understanding the commentary correctly, Amazon would regularly invest in companies in order to gain access to their data and technology while another team used the info to undercut and kill their product. You don’t generally assume your investment partner is actively planning your demise by pretending to support you while siphoning off your life blood. I agree though that it’s not as sinister as it initially seems. Companies create competition at times to stimulate product development even though it’s a shitty operating mode for the ground soldiers involved. In that case though they’re spending entirely of their own resources and not leeching off other investments to actively undermine a successful exit. Perhaps startups are undervaluing their IP if this behavior is able to manifest easily. And in light of this news I’d be super hesitant as a board to allow any money from Amazon whatsoever.

Zhenya 6y ago

http://archive.is/ps8xv http://archive.is/ps8xv

lloyddobbler 6y ago

History repeats itself. This is straight out of Microsoft's playbook from back in the day.

ChrisMarshallNY 6y ago
Yup. Here's something that was written in the 1990s. http://www.microbizz.nl/foodforwindows.htm http://www.microbizz.nl/foodforwindows.htm
jjkaczor 6y ago
"back-in-the-day"? How about last month... (Ok... over the last year)... AppGet vs WinGet Maybe not a buyout - but dangling a job possibility, with interviews where the candidate's brain was picked over... https://www.techworm.net/2020/06/microsoft-appget-windows-package-manager.html#:~:text=As%20soon%20as%20WinGet%20was%20released%2C%20the%20tool,called%20AppGet%2C%20accused%20Microsoft%20of%20stealing%20his%20idea https://www.techworm.net/2020/06/microsoft-appget-windows-pa....

mathattack 6y ago

Wasn’t this whole behavior spoofed in Silicon Valley?

seizethecheese 6y ago

Amazon announced a copycat of us pretty quickly after we went through YC. I suspect it’s not some sinister top-down thing (unless they are actually reading all YC company descriptions). Most likely, the copycats are ambitious, unoriginal PMs pitching some budget. We facilitate subscriptions using a smart scale, and it works way better than a Dash button (Bottomless.com, YC W19). I’m actually surprised they haven’t launched yet and are taking so long. It’s pretty wild, the hardware on their launch page is exactly like ours, only they're so slow that it’s a copy of two versions ago and hasn’t even hit the market.

2sk21 6y ago
Indeed, as a startup you do typically have a speed advantage!
- seizethecheese 6y ago
  Hardware is hard for startups though.
pyrrhotech 6y ago
There's nothing sinister about a copycat. It just feels that way selfishly for the original creator. Capitalism works best in the long run with near perfect competition, copy cats are great for everyone except the first guy with the idea.
- RhodesianHunter 6y ago
  > Capitalism works best in the long run with near perfect competition Unfortunately someone like Amazon using their size and market power to produce copycats is the opposite of perfect competition since they can operate at a loss or at cost and starve out any newcomers.
- pyrrh0tech 6y ago
  Hey it's me pyrrhotech, and upon some additional reflection decided that I was wrong and maybe there are some issues with copycats. Just wasn't thinking straight before.

fsociety 6y ago

Amazon met with an unnamed startup I worked for to do this, luckily our investors warned us before the meeting.

xyzzy_plugh 6y ago

I think what is missing here is an insider's perspective. The volume of concepts that are being actively worked on, let alone conceived, is pretty incredible. I've been in Amazon meetings with startups before/during talks of investing. Usually it goes something like this: There are multiple principle engineers involved. There are multiple engineers from potentially related projects involved. Most of the decision making boils down to: - the obvious: would this investment likely be profitable? - does investing/acquiring this company enable us to ship sooner/gain a competitive advantage? Often times Amazon prefers to acquire companies not directly operating in the space Amazon needs them to, and then steering them to do what Amazon needs. Often times it's just talent acquisition. For all we know, Amazon already had competing products in the works (and let's be real, given how slowly Amazon moves, this is the most likely scenario) and decided that this investment wouldn't be worth it.

dcow 6y ago

If I’m reading commentary correctly, Amazon would invest in other companies using its Alexa fund in order to gain access to their data and then actively operate in a way that undermines the success of the company. Sounds like they’re essentially enjoying most of the benefits of purchasing a company but for a fraction of the price. Rather than spend their own capital to do the hard legwork of building and validating a product idea, they’re effectively spending others’ and then swooping in for the bait and switch kill. If I were a founder or board member I’d be super skeptical about ever taking money from Amazon in light of this news. If this isn’t illegal it at least seems wildly unethical. If it’s neither of those and considered an acceptable tactic, then perhaps companies are generally undervaluing themselves otherwise it wouldn't be financially feasible?

neonate 6y ago

https://archive.is/ps8xv https://archive.is/ps8xv

snird 6y ago

Am I the only one who thinks this is to be expected? Stealing good ideas is literally amazon biggest strategy in retail. They monitor best selling products, then launch their own brand and crash the competition. Why anyone expected them to change strategy with business ideas? This strategy served them well.

klyrs 6y ago
If nothing else, it doesn't come as a surprise because amazon consistently operates in an anticompetitive nature. I see this as building public understanding of why amazon should be broken up.
- deleted 6y ago
  [deleted]

ApicalDendrite 6y ago

I worked on the Echo Show team. The product had been in development for over a year when we invested in Nucleus. I remember thinking it was very strange that Amazon was investing in that company when we were building such a similar product internally.

rattray 6y ago
Thanks, that's a really helpful perspective. I've definitely seen the same thing happen – an org that isn't sure it can build function X well might invest in a startup building X just in case. Of course, they may or may not take advantage of that situation by misusing confidential information. Either way the startup could lose (or just not have much negotiating power). So yeah, sounds like this may not be a case of AMZN misbehaving. But I'm still not sure I'd want to talk to them if I were a startup, at least until I know they really need us and are willing to pay a lot.
- ApicalDendrite 6y ago
  Nothing I saw indicated that the Echo Show was in any way influenced by Nucleus. I suspect, but don't know directly, that this investment was more about trying to jumpstart an ecosystem of third-party Echo devices rather than hedging bets.

cik 6y ago

Why are people surprised by this? There was a period of time in the VC world (~2001) where this was di-rigeur. You were caught between a rock and a hard place, as pitching literally meant potentially enabling a competitor.

chevman 6y ago

Yes, this is often times how business operates. Guess what, we meet with potential competitors in our market and sometimes even contract with them to provide services on our behalf, and use that to gauge the market and current solutions!

throwawaymanbot 6y ago

Bezos.... is a giagantic Phallus... (being polite)

gentleman11 6y ago

Standard advice to to not keep your startup secret but to talk about openly to as many people as possible. Eg, quotes about how only 1/1000 startups die to competition, and the rest self destruct or fail to get traction. Is that still the case?

deleted 6y ago
[deleted]
kristopolous 6y ago
this is more than that. I've seen people try to play this game. They'll pretend they want to buy you/partnership/invest/be a client and then ask pointed questions: "What dependencies are you using on your backend for XYZ ... have you found any issues with that? If you were going to rewrite it, how would you approach it?" In the weeds questions about detailed implementation. "Do you have a detailed architecture diagram?" etc. People who haven't seen it are like "boy they are serious. Look at their diligence" These people need to up their street smarts game: "Nah bro, they're just stealing shit." How do you know? Check who's in the room/on the call. Ask yourself what kind of decisions these people would make. Find out who they are. Amazon has been actually pretty light with this practice. They're pretty picky but the right people have been in the room and they haven't really gone deep into the spy questions. The real nasty violators are companies like uber and microsoft. I wouldn't be surprised if they had actual corporate spy departments. We had GM try to do it but they were bumblers. It was kinda cute. It also seems to be mostly American. I've dealt with a lot of Japanese and Chinese businesses and they were all genuine. If they said they wanted a partnership for reason X, then they indeed want a partnership for reason X. If they want to steal the tech and go to other markets then there's clear nonexclusive and rights parts of the contract. It's not the "100% lies all the way down" of Uber.

ivalm 6y ago

This is a bit complicated. I’m not in Amazon but work for a (very large) org. Often we will have some product in mind and approach/maybe even partner with a vendor while at the same time having an internal effort. Occasionally we go with an internally developed solution, sometimes we go with vendor solution. I am sure some vendors feel bad that suddenly they are forced out by a “similar” internal product. However, in every case I’ve been involved it wasn’t sinister. There was a business need and the company actively invested into multiple parallel solutions, eventually an internal solution won after we used a vendor solution for some years(but sometimes it is the vendor that wins!).

rattray 6y ago
Yeah, I haven't read the article (paywall) but from the first paragraph or two it sounded like AWS invested in the company and launched a competitor 4 years later. To me, that sounds like the startup just wasn't able to perform well enough to beat an AWS-built solution, in the eyes of an executive. Of course, if I were doing a startup that played in AWS's space, I'd view them as a pretty formidable competitor and I wouldn't expect to get a great deal from an investment or acquisition from them, since unless I have a really special sauce they can probably build whatever we've done and sell it better. It's shitty, IMO, and probably drives startups away from a field in which they could sell to AMZN – since they know they won't get an awesome deal. Probably reduces innovation in the field overall.

darawk 6y ago

Isn't this just what you would expect a company of this size to do? "We want to launch a product in category X" "Ok, should we roll it ourselves, or buy something?" "Well, let's interview a few companies, see if there's any we like, and if not, we'll make it ourselves"

jconley 6y ago
Yeah, given the resources, I'd want to pursue all the possibilities in a promising product/market in parallel. They may have even had working prototypes for some time or even be near launch and they are just feeling out whether the startup would be competitive and/or complementary. Doubt it's anything evil. Just sounds like business minded people at work.
bernardom 6y ago
I don't understand how anyone is shocked by this.
amitport 6y ago
you forgot that big companies also have option C: A) copy; B) buy; C) sue you're always violating some patents by IBM and the like, sometimes they don't want to compete with a product only to get you off the table... and sometimes they can do that easily Oh, and there is the enterprise variation (option D?): talk with the costumers and demand that they stop working with the competition

anewguy9000 6y ago

um, duh? it happens everywhere all the time are you kidding? hey did you know google can read your email lol

idoh 6y ago

"Earth's most customer-centric company"

deleted 6y ago
[deleted]

mahastore 6y ago

Microsoft is famous for always doing a "better" copy than their competitors. :D They always come second but then start to overtake.

sdinsn 6y ago

Why would anyone with a brain hand over proprietary information?

dimgl 6y ago

I worked for a gaming startup that had Amazon do this to them. Pretty scummy.

code4tee 6y ago

There’s a big difference between stealing actual IP and executing on someone else’s idea (even if the idea was “stolen”). The sour grapes here seem to be coming from those who thought they “owned” having an idea but failed to fully execute on it. The winner is the one who actually does it.

wintorez 6y ago

https://www.youtube.com/watch?v=i6QvIrruZjw https://www.youtube.com/watch?v=i6QvIrruZjw

deleted 6y ago

[deleted]

blackswan101 6y ago

I'm surprised they haven't been hit by antitrust laws yet.

aws_pmthrowaway 6y ago

I was a senior manager on the very first product the article talks about. I was closely involved in designing the service and presenting it to Amazon senior leadership. WSJ quotes the CEO of a startup called DefinedCrowd as accusing us of stealing their ideas from a meeting 4 years earlier. What a bunch of conceit. I don't remember our team discussing DefinedCrowd even once. We focused on the many other more interesting players that are doing the same thing, and researching them by trying out their service etc. like anyone normally would. I'm sure someone talked with DefinedCrowd 4 years before that. Amazon, like all other tech companies, routinely has NDA conversations with startups that never go anywhere. I can't speak to the rest of the article, but the very first example is totally false. WSJ is looking for an angle, and this startup is probably looking for a way to blame Amazon for their own execution problems.

fizx 6y ago
Four years in the AI space is like two lifetimes.
devindotcom 6y ago
DefinedCrowd is pretty successful actually, just so you know this isn't sour grapes. And it isn't about a meeting 4 years ago, the very first line of the article says that Amazon was an investor (at seed stage, probably a few hundred K). So the problem isn't that someone heard about DefinedCrowd and decided years later to make something like it. Amazon made a significant investment in an early player in this space, and then started building a direct competitor while still presumably having both access and influence over that company. Doesn't seem responsible or ethical to me.
- stepstop 6y ago
  This comment chain appears to answer you: https://news.ycombinator.com/item?id=23930812 https://news.ycombinator.com/item?id=23930812
b20000 6y ago
you mean NDAs that basically state that whatever you tell amazon belongs to amazon?

AndrewKemendo 6y ago

There's no way to really know how true this is but it certainly feels true if you're on the startup side - however most startups just aren't being realistic with themselves, and thinking they are special. For example, my previous company brought our 6DOF MonoSLAM SDK, 3D model processor and OpenGL viewer to Amazon from 2014-2017 pitching the "AR View" functionality that they eventually put in 2017 [1]. Was that a result of us coming and pitching it? Probably not because that use case and stack wasn't a novel concept even back to 2010. So the concept and stack was certainly there for them to do on their own. What we DID provide to Amazon however was a significant data point (based on our user velocity/interaction metrics and the rate of increase of 3D model generation from retailers) about whether the market was ready for that feature - and so they said ok it's probably time to do this. It just so happened that the cost of implementing it crashed to basically "trivial" in 2017 with the introduction of ARKit and so it was a no-brainer for them to roll out for a few years. What's the takeaway? These big companies aren't dumb, your idea isn't that novel and they probably have the team and technology to do it better than you for cheaper. [1] https://www.theverge.com/2017/11/1/16590160/amazon-furniture-placement-ar-feature-too https://www.theverge.com/2017/11/1/16590160/amazon-furniture...

guessbest 6y ago
Why even pitch the idea to big companies then? Seems like a no brainer to just avoid discussing technology with anyone on the M&A team of any large company with an development team, unless you went to the same college as their executive staff.
- IshKebab 6y ago
  To try and sell it to them.
- twic 6y ago
  Because that's where the money is.
VRay 6y ago
I dunno if they can necessarily do a better or cheaper job. A lot of the engineers at these megacorps are super burned out 9-to-5ers who don't particularly care about what they're doing, since it won't have that big an impact on their lives one way or the other if it succeeds. ("Woo, 20% bonus this year" vs "Team's being reorged, gotta hit up leetcode and find another corporate job")

riazrizvi 6y ago

Almost every established VC is a potential competitor as much as a potential backer, because they already have backed ventures in/near your market, you won't get approached by one without expertise in your market. Any of their other backed ventures might be mulling over a new strategic goal and doing indirect research on you via their sponsors. Before you say NDA, it's practically unenforceable, you can't stop a VC chatting about what they've seen in confidence to a trusted friend, the bar to prosecute breach is far too high. You can't stop someone seeing what you offer, and it's hard to prevent competitors from seeing how successful you are, especially giving the lack of privacy in consumer space. In this article, we don't know if Amazon used any IP, we are told they just copied the offering, which anyone is free to try. I bet the problem with DefinedCrowd is not so much they revealed too much, rather they revealed too little. How so? The VC dance is really about demonstrating to the uncertain backer-competitor that you are so good, it's not worth competing. That's a main point to inviting outside parties in. I imagine these guys were just so weak, they made competition more appealing that partnership.

relaxing 6y ago
No startup is so good they can’t get steamrolled by a company with Amazon’s resources.
- riazrizvi 6y ago
  The decision isn't made by a trillion dollar 'Amazon'. It's made by a person inside Amazon with a limited budget, whose ROI is critical to their personal financial success. At the end of the day, the decision to compete will be an ROI question, Is it better/cheap enough to roll-my-own, or is it has this outfit done a good enough job that it is better to partner? Outstanding people are a precious commodity, so if the startup is really good, why wouldn't you partner with them? And if mediocre when you are really good, why would you?

iJohnDoe 6y ago

Google has done this and worse. Some of you may remember this one. https://news.ycombinator.com/item?id=18566929 https://news.ycombinator.com/item?id=18566929

jcz_nz 6y ago
This. There are other instances too. Short story is that you need to be extremely careful talking to G/A/F/M

deleted 6y ago

[deleted]

uses 6y ago

It's weird how questions of "is what we're doing, wrong?" can be so easily and inevitably obliterated by the profit motive.

kartayyar 6y ago

You as as a startup should be fully aware that a big player can enter the space at any time they want. This is not Amazon's problem. It's your problem. Also, it's a flawed abstraction to view large companies as a monolith: the investing arms are usually very separated from product teams. TLDR: If a large company wants to enter a space, that's their choice. Accept this as a fact of life if you want to go work on a startup.

kerng 6y ago

As a startup, if a company is serious in investing or buying they will make an offer. It's a common mistake to be lured into talks that drag out for weeks and months. If they are serious it will start with an offer.

jonplackett 6y ago

Not from Amazon but this happened to me when I had an app in the top 10 of the AppStore. This a-hole from Silicon Valley flew over to London, asked me loads of stuff, saying he wanted to buy it, offering large amounts of cash and then just launched his own version and some copies of other things I’d made. I’m still not sure if it was his plan all along or not - He did try and recruit me to his company at one point but when I refused, his parting words were “if someone offers you a seat on a spaceship, don’t ask which seat”. Really glad I didn’t take that seat.

gt2 6y ago
Can you link your app? Or his?
- jonplackett 6y ago
  My app: https://apps.apple.com/gb/app/face-juggler-plus/id482482373 https://apps.apple.com/gb/app/face-juggler-plus/id482482373 I believe it was the very first (much copied) automatic face swap app A-hole’s app: https://apps.apple.com/gb/app/face-swap/id555094868 https://apps.apple.com/gb/app/face-swap/id555094868 Bit of background to making the app in this interview if anyone’s interested: https://www.indiehackers.com/interview/face-juggler-6f79cf6f66 https://www.indiehackers.com/interview/face-juggler-6f79cf6f...
pylua 6y ago
Seems like copycats are not allowed as per iOS store policy ?
- jonplackett 6y ago
  If that is the case I don’t think it’s policed at all. You can’t copyright or patent an idea so people just do what they want - at least when you’re an indie developer.
curious_fella1 6y ago
> his parting words were “if someone offers you a seat on a spaceship, don’t ask which seat” Lol what a jackass

all_blue_chucks 6y ago

This just sounds like a failed acqui-hire to me.

datavirtue 6y ago

How else are managers supposed to propel their career and score bonuses?

MangoCoffee 6y ago

we need a pure-play cloud provider like TSMC. No one should trust the big three. (AWS, GCP, Azure)

p0rkbelly 6y ago
I think that was supposed to be OpenStack. It failed.

mrandish 6y ago

I'm a serial tech startup founder who has seen all sides of this up close. I've had startups I founded or co-founded IPO, be acquired by a Top 10 valley tech giant, acquire smaller startups, and (of course) go bust. I've self-funded, VC funded, angel funded and had corporate investors. In the acquisition, I ended up working for the Top 10 valley tech company for over a decade reporting directly to a key C-Suite exec and was deeply involved in company strategy, multi-billion dollar M&A, partnerships and investments. In all that time I never saw any hint of anything even remotely unethical involving investments or M&A at my acquirer/employer. The company always played strictly by the rules, sometimes to an almost excessive degree (avoiding even the possible appearance of impropriety). This was both innately cultural, constantly preached from the BOD to CEO on down, as well as tactical since the reputational cost of negative perception was simply considered too high. Word gets around the valley fast. The invisible cost of the potential partner or startup that chooses to pass on meeting with us due to reputation could be very high. That said, we would negotiate hard and do our due diligence, gathering public information in every legit way possible as we evaluated potential markets, product areas, acquisitions, partnerships and investments. Tons of startups were always contacting us to meet regarding investment, licensing, partnership, etc. So many that we'd actually meet with far less than 1 in 10, and even we'd usually just send a junior staffer to the mtg for a "first pass". Those first mtgs were almost always set up as NNPI (No Non-Public Info). We'd actually have the startup sign a doc in advance stating that they wouldn't share anything with us that wasn't already public info. This was then re-iterated at the beginning of the mtg. Afterward the junior staffer would then circulate a brief memo on the mtg outlining if there were any areas of interest and recommending whether there should be any follow-up with actual business unit or tech people with domain expertise. Most such mtgs had no follow-up. In the cases where there was follow-up, before mtg again we'd internally specify what our possible interests were (acquisition, investment, partnership, etc) and if acquisition or investment we'd have at least a first-pass thesis on what our interest was, usually at the level of "interesting tech", "good talent", "cool product - might slot into XYZ product line." Back when I was a fledgling startup founder on the other side of all this, it was sort of mysterious and I remember my first mtgs with Big Cos (including Google, Apple, Intel, Microsoft, etc). It was all very exciting until I realized that most of these 'first sniff' mtgs are with junior people and never go anywhere. Even if my acquirer/employer was unique in being highly ethical, the reality is that any startup founder who isn't intensely aware of the risk of Big Co becoming a competitor is incredibly naive. If senior Big Co execs are taking time to meet with you (vs junior Big Co staffers), it's because they are interested in something. As a founder, your job is to figure out what why they are interested. Sometimes they are just making small investments to foster an ecosystem their primary business relies on. Or they might be interested in acqui-hiring your startup. Or they might be looking at moving into the emerging market you're in and doing a Build vs Buy analysis or even considering a roll-up of smaller firms. Or they might be looking at buying one of your competitors and doing market due diligence. As a Big Co exec, I'd usually just tell a startup founder point-blank what my interest was, as it tends to save everyone time. Often the startup founders I'd talk to as a BigCo exec were actually too guarded, to the extent they'd hesitate to even informally have a 'get acquainted' drink at a conference or trade show. It's good to be cautious but at the same time, many of my most lucrative exits and deals began with such meetings. As a founder, I also often learned invaluable info from Big Co people at such informal mtgs. After all, Big Co folks tend to hear all the industry scuttle-butt and they actually subscribe to ALL those $10k market data reports us startup guys could never afford. Bottom line: when engaging with Big Cos, ask good questions, rationally evaluate the benefits vs risks, plan for the worst and hope for the best.

mytailorisrich 6y ago

This is business tactic 101. Yes, they were definitely naive if they shared confidential data easily.

PaulHoule 6y ago

You could replace Amazon with Kodak or Open Text or 100 other names and hear the same story. It happens to customers and suppliers.

holidayacct 6y ago

It's entirely possible they launched competing products because they know something everyone else doesn't. Did anyone bother to investigate why they didn't acquire these companies? I've worked at several startups and you'll be surprised at why some corporations don't purchase a startup. Some of them have awful cultures of psychological abuse, you walk in the door and you know something isn't right because the founder(s) have a cult-like environment that includes abusing his/her employees to the point where they are all afraid to say anything. Some startups have founders and employees that are lying about everything and when you actually dig into their source code and infrastructure they aren't doing anything they say they are doing. Some of them have the worst infrastructure imaginable and/or they have such poor software engineering practices that they will never be able to scale to meet the kind of demand a company like amazon has. Just because they have a good idea and a company doesn't mean they have an implementation that is worth investing in.

TheMagicHorsey 6y ago

If your business is so fragile that all anybody needs to do to out compete you is the description of your business idea, then I'd say you don't really have a business that is long for this world. If not Amazon, someone else is going to clone and eat you from San Francisco, Seattle, Hyderabad, or Shanghai. Ideas don't really mean much if you don't have excellent, industry leading execution.

dastx 6y ago

Have a colleague who said the same. They had come in for reasons I can't remember, and shortly after launched a product that worked strangely similar to their offering. People got laid off, including my colleague, not long after that.

novalis78 6y ago

Good friend of mine said his company invented the book preview and had tons of publisher relationships due to their service for public libraries and preview snippets. They sat in a meeting with Amazon executives early 2000s - allegedly similar story. They were first offered a partnership then Amazon canceled all talks after getting a good grip on the business and launched their version shortly thereafter.

joewrong 6y ago

reminds me of this entertaining article https://thehardtimes.net/culture/jeff-bezos-announces-plan-just-beat-shit-small-business-owners/ https://thehardtimes.net/culture/jeff-bezos-announces-plan-j...

ryanSrich 6y ago

Yeah Amazon does this every year, it’s called AWS Re:Invent.

skela224 6y ago

Sexy sec Ed be doing re qqstseApzxsswswddffaAvt Thanks dlrss

skela224 6y ago

Wpqcs

annoyingnoob 6y ago

I worked at a startup that made a VoIP product in the early 2000s. Microsoft was interested but declined after a technical review. Later they bought Skype instead. No hard feelings. But giving up too much technical detail was definitely a concern for us.

xyst 6y ago

Isn't this what Google did with Yelp? IIRC, google was in talks with yelp to buy them out. They either pulled out or lowballed them. Then a few months later they launched "Google Places" At the time, this was referred to as a "brainfuck" of smaller companies for their IP.

beervirus 6y ago

People in here like to shit on the patent system... but this is what it’s designed to protect against.

TenJack 6y ago

I wonder how this will hurt general product innovation in the long wrong? Seems like it could have a trickle down effect of diminishing companies money for research and development to come up with new products that benefit consumers.

balls187 6y ago

This is like 1/2 the RFP world. RFP, then build in-house. I mean, I'm betting Facebook's "Small Business Grant" program is going to harvest that data and put it to use too. As a startup, if your only defensibility is that you had a head start in product development, that's not much of a moat.

systematical 6y ago

I know this is not constructive, but they really are a horrible company and people should avoid using them whenever possible.

farzinkarimi 6y ago

booring

howon92 6y ago

Startups shouldn't be working on things that they can't do better than the big companies

b20000 6y ago

DURRRRRR of course, what did you expect?

rorykoehler 6y ago

Rocket Internet in Germany do that too. They gas lit us about wanting to invest and then launched a competing product. I wasn't surprised.

sleepyhead00 6y ago

While I cannot comment on a startup's or Amazon's perspective on this matter, I had interactions with Amazon employees that was in fact deceptive. Short story: Amazon representative tried to trick influencer into sending their traffic without compensation. Long story: At the time, I commercially represented an influencer (largest in a mainstream niche with an active targeted fanbase) who had been approached by Amazon to sell access to our online course on Amazon (as in: let customers buy a coupon code for our content platform). The paperwork we received to sign did not reflect the terms we had negotiated. It included some kind of fees etc. that had never been mentioned, basically shifting percentage in favour of Amazon using fine-print. This felt dishonest. We decided to do it anyway due to their promises of considerable sales for our program including projections. Then the representative showed us a listing of a direct competitor and told us the number of sales this competitor was able to generate. While it's nice to be on the receiving end of such information, it's unethical. Who knows how truthful the numbers were anyway. But then the week of deals started and nothing happened. No sales. This could have had many causes but instead of revisiting the offer or the listing or just say "bad luck", the representative kept insisting that the influencer send their traffic to Amazon which is usually a business transaction but that wasn't part of the deal. They kept insisting anyway, even a second representative. I'm not keen on doing business with Amazon after that encounter.

zanethomas 6y ago

Why is anyone surprised? Microsoft was doing this in the 80s.

catsarebetter 6y ago

Weren't they doing this a decade ago too? Might be mistaking it for another company...

edem 6y ago

The article is behind a paywall, is there a TL;DR?

apexalpha 6y ago

I think I've seen this on the show Silicon Valley. Braindrain they called it I think. So it can't be that uncommon...

PovilasID 6y ago

VCs will often meet with startups to get market analysis done for them. Maybe it's not the primary motivation of a meeting but information has to be presented to make the case for the business, so it gets recorded and used anyway. It can be used to look for alternative investment targets. Pitches have inherent risks to them, that have to be taken into consideration. Also I get that Amazon has much more resources but if they there able to copy it after one meeting... Was your project really that valuable? And would not be copied then you launched?

arvindhmani 6y ago

Isn't this exactly what Amazon does with AmazonBasics?