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But the tech conglomerates don't just copy and kill you, first they ask to acquire you and then when they get rejected they copy and kill you. It costs less to
by jonwachob91 6y ago
But the tech conglomerates don't just copy and kill you, first they ask to acquire you and then when they get rejected they copy and kill you. It costs less to acquire a company with an existing project and team that is successful than it costs to stand up a new team on a new product that is unproven.
VC's like having conglomerates that have lots of cash to throw around and can acquire their investments at nice multiples. Even if the startup sucks, they are almost guaranteed a decent exit as long as it doesn't suck TOO much.
- cblconfederate 6y ago> first they ask to acquire you and then when they get rejected they copy and kill you Is that like a law or sth? And do they "ask nicely", or essentially blackmail?
- tschwimmer 6y agoVCs don’t rely too heavily on this. In fact, taking a early buy out is one of the outcomes that can be very good for a founder but terrible for a VC. VCs need outsize returns to boost the market overall portfolio, which has many zero outcomes. Getting acquired for 110% of your series A valuation doesn’t do anything for them. That said, getting acquired as a strategic acquisition is a good outcome for VCs. However that’s much more rare and isn’t specific to big tech companies.
- matthewdgreen 6y agoThis is the 'outsource our R&D to venture-backed startups' model, rather than the 'have actual innovation and competition' model. Hey, it's still better than our defense contracting industry, which explicitly outsourced their R&D expenses to Congress.
- srtjstjsj 6y agoAh yes, I remember how Google copied and killed WhatsApp with GTalk, Facebook with Google+, and SnapChat with Photos.