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There’s no such thing as “a startup within a big company”

• jackric 6y ago
  Flagged for nag-wall. Can't see the whole article
  • jonas_kgomo 6y ago
    open in incognito
• kludgekraft 6y ago
  What is the main reason though? The BigCo being too risk averse? Or employees having too much of a safety net? Or BigCo processes weighing the team down? A combination of these?
  • rovek 6y ago
    I don't know if there is a "main reason" for all instances. For me, on this kind of project at one of the Biggest Co's, it seemed a bit like the safety net point you make and it creeps into everything. There didn't seem to be much pressure because the project was never going to be pulled and had infinite money. This seemed to manifest in "good people" (my opinion) working at about 40% capacity and new hires having a background in companies more like BigCo than InternalStartup. Edit: To clarify my last point, my assumption being that the point of InternalStartup was to allow deviating almost entirely from BigCo's approach to everything and that those people from OtherBigCo would be less likely to have that mindset.
  • sgt101 6y ago
    If you work for someone with $80bn of shareholder capital at risk you can take 1/10000th of the risk at work than if you have $8M of shareholder capital at risk. It's that simple.
    • notahacker 6y ago
      That depends on what the risk is. If the risk is to the credibility or business model or relationships of the $80bn core business, then sure, the big company absolutely must be more conservative. On the other hand, if only a tiny fraction of that $80bn is needed to underwrite losses from your skunkworks' niche product taking too long to launch, lack of rapid uptake isn't an existential threat (even if the project gets canned, most of the team will still have jobs and they might even keep the profitable part of the project alive) and resources can be shared with other areas of the business, there are other risks that are easier to take.
  • AdrianB1 6y ago
    Big companies are risk adverse. At the same time, the motivation for the people is missing, in a startup you have the chance to become a billionaire or at least a multi-millionaire, in a big company you can get them a billion and be the employee of the month with a $100 gift card. I saw it myself some years ago when I got my company a ~ 5 million/year saving project all by myself with a one-time cost of ~ 20k, I got a $250 reward on top of the regular salary. That was a lesson to not care too much. 2 years ago I got them over half a million per year in a 3 days of work mini-project, I got nothing, not even a formal thank you note. That project was not regular work, it was none of my business and I came with the idea and the execution alone, so you cannot say I was paid for such work. Translate this into a risk adverse big company play-pretending to do startup stuff.
  • frongpik 6y ago
    It's ownership that's the problem. A would-be entrepreneur can't negotiate a 50% stake with executive rights in a bigco.
• kingkongjaffa 6y ago
  There is, the concept is known as a skunkworks. https://en.m.wikipedia.org/wiki/Skunkworks_project https://en.m.wikipedia.org/wiki/Skunkworks_project
  • cdavid 6y ago
    What's interesting about skunkworks is much it gets invoked by people vs how much it actually happens in practice. We engineers love skunkworks: working on cool stuff, without accountability and a lot of freedom ? Who would not want that ! But there are very few situations where this is sustainable, for reasons well explained by OP.
    • jiofih 6y ago
      Strongly recommend reading the book - they had tons of accountability as critical projects were handed to them on tight deadlines. Yes, working on cool stuff, but delivering at an extremely high level.
      • sgt101 6y ago
        The final accountability of someone dying if you screw up must weigh heavily on people designing aircraft. I think it would make me pretty diligent...
    • ChuckNorris89 6y ago
      >We engineers love skunkworks: working on cool stuff, without accountability and a lot of freedom I'm pretty sure people who keep saying this have no idea what working at Skunkwork was actually like. If you read Ben Rich's book, which I recommend you do, you'll find out that they had tons of accountability, the more classified their projects were, the more they were drowning in paperwork. No employee was to be left alone with the blueprints and if one of two needed to go to the bathroom then the plans had to be locked in a safe during that time. Also, the hours of work and the stress they were under was insane as shit would break unexpectedly all the time. I'm sure this is not what engineers love, and what they tink they mean by Skunworks is cowboy coding and being paid handsomely to play like kindergarten kids in the sandbox with the latest shiny toys, while leaving work at 5 PM.
• Macha 6y ago
  Got hit with a medium login wall.
  • acco102 6y ago
    https://archive.vn/TBDz0 https://archive.vn/TBDz0
  • patatino 6y ago
    no login wall in incognito
• sixhobbits 6y ago
  I mean, sure, but it also misses the point a bit. "Startup in a big company" doesn't mean "yo take some cashdollar and try build and release something to the public", but it does mean "hey, take a small team and do your own thing with less oversight and process overhead from higher-ups". The team I worked in at AWS was like this and it felt a lot like startup teams I've worked with. That didn't mean we could take 'brand and legal risk', and if that's what you want then definitely go and start your own thing. If you want more autonomy and higher velocity than is normal at corporates, then a 'startup within a big company' might actually work out for you.
  • bovermyer 6y ago
    Yeah, this. People who are used to actual startup culture and talk about how "startups" at big companies don't work have a different internalized concept of what startup autonomy looks like. The success criteria are different, and measured differently.
  • virgilp 6y ago
    While I worked for Adobe, one of the executives there (Mark Randall, serial entrepreneur that was "acquired" by the company, awesome guy) launched the "Red box" initiative that eventually become https://www.kickbox.org/ https://www.kickbox.org/. The red box was essentially a "toolbox" that he created on how to build a startup (set of training materials + $1000USD credit card that you could use however you wish), and the purpose was to get enough proof so that you get executive buy-in to continue your idea - if you achieved that, you got the "blue box" (whose content was a "secret" but was essentially custom-tailored support for your project). The entire process banks on the fact that you validate your ideas _without_ involving the Adobe brand, because if you slapped "Adobe" over it of course people and press would get interested. There were some legal caveats here and there (e.g. you couldn't outright lie and claim you were _not_ with Adobe), but I think it is to some extent the closest thing that you can get to "startup within a big company". I personally got to the blue box - but then I gave up, when I realized that to get it to actually ship I had to sacrifice nights and weekends. Which would have been maybe fine - except that I knew that I didn't get to keep any upside. I had most of the risks of a startup, but very little of the payoff. Great learning process, but for me - it only managed to convince me that I shouldn't try within a corporation, if I want to try I need to actually do it by myself.
• Deestan 6y ago
  A lot of affirmations that it is not possible, with examples of where it didn't happen, but doesn't really go into "why" at all. The closest they get was near the end by alluding to risk-aversion and having to wear Google badges to the cafeteria.
• ajb 6y ago
  I worked for a startup within another company. It got spun out and the CEO used it as his own escape hatch, while selling off the remaining parts of the original company. The startup had a successful exit, although it didn't become a unicorn. Any time someone makes a categorical statement like these, you know it's not wholly true. There are more permutations to the real world than anyone can think of up front.
  • johannes1234321 6y ago
    I think there is a key point to this: Being a startup in a large corp works if you are the "famous" manager inside the corp and get your personal playing ground (skunk works?) project and are building something new. It works less, when you are being acquired and want to keep your independence. When acquiring the acquirer will look close at you to align the acquired product with the corporate interests.
• corty 6y ago
  I'm not sure why everyone seems so focused on the cafeteria thing. I'm not sure people and their attitudes towards amenities are really the problem here. From my understanding, the differerence is the companywide attitude to risk. A startup has a "grow at any cost, or maybe perish" attitude. If things go south, bankruptcy will take care of the leftover excess risk (barring criminal charges). A bigco cannot easily go bankrupt, even less a single department. There are tons and tons of capital to eat through if the accumulated risk is realized in cost. So a bigco has to do something about that risk somehow, because most of the company wants to keep what capital it has, only a small part of it really wants to risk things. So the only means to have a situation where you don't risk bigco for a single department is not making it a department. Make it a Ltd. in a holding or something.
  • captainmuon 6y ago
    If people really think of founding enterprises as a gamble with potential infinite reward, but limited downside (as bankrupcy will take care of it), I would say our economy has a problem...
    • franciscop 6y ago
      Why? Limited downside does not mean small, it just means limited. It can perfectly destroy a person's finances if they invest all their lifesavings in it. And the reward for a company is normally a % of how much value they provide to their customers (yes, I know, not always, but generally that's true). Unbounded does not mean infinite.
    • chrisco255 6y ago
      It's this that makes entrepreneurship more abundant in the first place. If you have an economy with no risk taking you have no growth and no dynamism. Sure, 80-90% of businesses will fail, it's essential that people can fail without too much personal risk after all, but the 1 in 100 businesses that go onto grow to employ hundreds or thousands thanks to an effective business model are more than enough to make up for the failures. When someone fails in a startup it's not like they drop out of the economy altogether. Its not like they learned nothing. They go on to become effective employees at other companies, producing value there.
• cs02rm0 6y ago
  It's just big company talk to pretend they're cool and innovative. Obviously ridiculous garbage that probably got someone a good annual review score. A small company I was working with had heard that IBM, who had a customer in common, were operating some sort of "garage" thing that the customer really liked. Rumours were flying around, someone had heard it was a video conferencing app, they were desperate to know more about this secret sauce. Eventually I got to speak to an opposite number from them on a piece of work that joined with our own. They were calling any team of people a garage (because of the Amazon, Apple, etc stories). That's all it was, just a different word for team, like toddlers playing let's pretend.
  • theta_d 6y ago
    When I worked at IBM Cloud they copied the Spotify model of squads and tribes and guilds. I remember having to watch a video about it on my first day.
    • lonesword 6y ago
      When I worked at a startup we copied the Spotify model as well. We called it "functional teams" and so on but the idea was the same - we watched the spotify videos as well. To be honest it helped. I think this is a point in IBM's favor because they saw something better, and adopted it even though "it was not invented here".
    • 2sk21 6y ago
      Indeed, it was the same in the Watson group where I worked about 6 years ago. It was pure cargo cult activity that ultimately resulted in much lower productivity.
      • jonfw 6y ago
        I actually liked my experience with the guild structure, as somebody new to the industry. I had my specialty, was the leader in my team in my particular specialty, but that's mostly because I was the only one in my team with the specialty. The guild structure got me the opportunity to network with people who were more experienced in that area
• k__ 6y ago
  The main problem I see is ownership. If you don't really own your company, you won't ever behave as if you owned it. It's basically a less rigid version of a big corp job, not more, not less. Which isn't bad, big corps have to rejuvenate themselves in some way, but selling it people as a "win-win" because they get to work in a big corp AND do a startup is a simply a lie.
• patatino 6y ago
  If you sell your company for millions/billions to a FAANG company, stop lying to yourself, you did it for the money, which is fine. Pack up your things and do something else with that money
• 5600k 6y ago
  > Perhaps Corp-Tech should move to employee share buy back where employees must sacrifice some of their salary for equity or change equity to vest by a product related metric to connect the teams performance with the employee returns. This doesn’t work all that well in my experience. Employees focus in the stock which is not in line with the success of the product. ESPPs aren’t bad. They’re seen as a bonus by most employees and some get excited watching the stock climb. Some may try to use that as a motivator. But it’s more like watching your favorite team on TV that you’ve bet on with no control. That doesn’t inspire the right behavior. Vesting stock based on some product metric would still be hindered by the futility of attempting to tie stock price to the actual success of the product.
• username90 6y ago
  Ask yourself this, would your "startup within a big company" have managed to lure Mark Zuckerberg or Larry Page to join them instead of founding their own companies? And even more important, would it even let such people have lead a significant part of the company in order to realize their ideas? If you answer no to either of those, there is your answer to why your "startup within a company" can't hit it as big as real startups.
• varispeed 6y ago
  This happens with companies who are not big enough to take over other companies, so they try to latch on the loophole in capitalism by spawning different products often completely unrelated to original purpose of the company. Such company will have a competitive advantage over someone starting from scratch with a similar product. Question is should it be allowed? This ultimately leads to creation of those companies that are too big to fall, that have enough budgets to buy laws designed to keep competition at bay, do creative accounting and other measures that small company cannot afford to do. Fortunately these "startups" within a company usually fail and are not as effective as take overs. I think take overs should be illegal unless the technology your are buying is going to be incorporated into the original company line of products and does not spawn completely new business.
• GiftCard22 6y ago
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• s_dev 6y ago
  Because a startup within a company will always be making more money for other people than you. Only when you own a startup and that means outside a 'company' can you ensure your efforts profit you primarily.
  • zirkonit 6y ago
    Most successful startups have less than 50% founder economic equity, some - FAR less. It's the capital holders who primarily profit from your work, whether you're an entrepreneur founder, or a salaried employee.
• muglug 6y ago
  I know this is not what the article is talking about, but there have been some success stories of companies incubating startups. An obvious example is Tinder, incubated at IAC.
  • redis_mlc 6y ago
    I'm not sure Tindr is a good example, since it has a more complicated founding history and IAC was initially not the sole owner: > In March 2014, media and internet conglomerate IAC increased its majority stake in Tinder Also, IAC (Match Group) owns most of the top US dating sites, so they were already in the dating market. https://en.wikipedia.org/wiki/Tinder_(app) https://en.wikipedia.org/wiki/Tinder_(app)
• acomjean 6y ago
  Wait. In a lot of these startup companies the business plan seems to be grow the customer base and worry about profit later.(youtube, Instagram, waze) Selling to a big company with a lot of capital seems to be the goal or a survival technique. Johnson and Johnson I’m told handles the aquiring of businesses well (it’s a business conglomeration of hundreds of entities). I know someone who left after their division was sold from JnJ and everything started going south. https://en.m.wikipedia.org/wiki/Johnson_%26_Johnson https://en.m.wikipedia.org/wiki/Johnson_%26_Johnson
• sys_64738 6y ago
  Lockheed Skunk Works.
• jiriknesl 6y ago
  There are lots of startups within big companies. Example is Zonky (peer to peer lending startup) within Home Credit - multibillion dollar lending entreprise. But they have been created with a strong team which felt ownership. And as Home Credit was growing like crazy themselves too, they left this internal startup to self-manage too.
• nojito 6y ago
  This isn’t true. The digital service team for the US Government is indistinguishable from a high quality startup/consultancy that goes around and solves pretty cool problems in modern ways.
  • rgblambda 6y ago
    Can you give some examples of those projects? I would have thought a government in house software team would be doing things like replacing paper forms with web forms and replacing old COBOL applications with Java, along with being an approval board for government contracts.
• lifeisstillgood 6y ago
  I think this misunderstands the process by which any project gets funded. There is not a nice orderly process where the CEO says 'right we are now going to build a website so users can track their order - here is the spec, and the cash go do it.' The CEO (or other CxO) picks from a multitude of projects that already exist in different forms of completion - both internal and external. For every conceivable project in a large company, there are already 5 different unofficial versions of the project - two spreadsheets on an analysts desk, one knocked up by a senior lead who needed a solution and 2 being hawked around by a MD who had some spare cash and let someone run with a side hustle. On top of which there are 3 SaaS options and Oracle probably has one to sell you, and McKinsey will do a demo next Thursday. I will lay good money that when they bought Waze there are two projects in Google already that did the whole 'tell us what is on the road ahead' thing. But the CEO picked an external buy - and those projects went the way of the Dodo. By time you have big co sign off to do a 'internal' start up, you have basically hit Seed / series A level. Someone with money believes in you. You are past the major points of startup failure (I don't know what the stats are for failed before raising A and after but I bets its waaay lower) I have been in both sides - the small scrappy start up, the funded start up and the getting something off the ground unofficially in a bigco. And they all feel the same until you get 'blessed from above' The Series A slowdown - this is point where all the crazy starts to slow - you actually have lawyers to read things, etc etc, someone starts to consider holiday pay and HR stuff. In a bigCo this hits all at once - all compliance needs to come in. People look over your shoulder. But its not that different to the Board suddenly asking new questions. So, yes entrepreneur startups are different to 'intrapreneur' startups, but not that much. Its a fight to get anything off the ground, usually in spare time, and internal politics looks a lot like marketing plus who you know in the real world. Finally - yes if google is giving out equity for free, then yes incentives are misaligned. This seems to be a google problem (one exacerbated by the fact that most previous tech giants had smaller tech giants after their lunch within a decade or two - we don't seem to see that in FAANG.)
• dkobia 6y ago
  I worked in a startup lab within a huge multinational company. In many ways it felt like a startup because we had very limited runway to incubate and commercialize our ideas, so that definitely put the fire under our feet. Despite an effort to firewall us from the larger organization the culture and processes of the mothership always seemed to leak in and contaminate the organic startup flows. Additionally a large organization is extremely risk averse unlike a real startup and this manifests itself in a multitude of ways.
• ckgjm 6y ago
  The mindset would be very different. There’s always a sense of urgency to get things done with the realisation that there’s no safety net. You ask yourself different questions going to work and that drives different level of passion.
• wiremine 6y ago
  I'm a VP for a software firm focused on IoT. I work closely with both actual startups and Fortune 500s companies looking to launch new connected products. I agree there is no such thing as a start up within a big company. But that's not the point. The point is to innovate. And a lot of innovation can happen within a true start up. But a lot of innovation can happen inside big companies, too. I see it all the time. Most of it, though, is just incremental innovation, not massively disruptive innovation. But that's true of most startups, too. Most startups (the ones that survive) are incremental in their impact: they make incremental improvements to some part of our world, and they get bought. Very few transform into the next Fortune 500 giant and have that level of impact on society. Final thought: I have seen a few world-shaking ideas emerge from corporate America. The problem is it typically cannibalizes the core business, or is so outside the core business, and the C-suite doesn't know what to do with it.
• kenrose 6y ago
  My own experience ([1]): the biggest different between "startup inside BigCo" and an actual startup is availability of resources. "Startup inside BigCo" generally revolves around spinning up a new team that's product focused and delivering quickly. Depending on which BigCo you're at, delivering quickly could be a departure from how things are normally done. e.g., You don't have to worry about writing a big up front proposal doc, going to the architectural review board, or using the standard infra tooling. For engineers on a team, this "feels" like a startup. There are daily standups. They talk to users and have a sense of ownership on what's built. There can even be some sense of urgency to ship quickly. While "BigCo startup" teams mimic a lot of the same procedures and activities as a startup, there is an underlying support structure at BigCo that isn't there in an actual startup. IMO, that makes the experiences substantially different. Some examples: - The cost of failure is different. At BigCo, if the project fails, it's generally OK. Each engineer can be reassigned to some new team at BigCo. At a startup, if the project fails, the entire company fails. - There are more people to ask for help. At BigCo, if you're stuck on some hairy engineering issue, you have a swell of engineering talent to lean on for help and guidance. At a startup, you have StackOverflow, Google, and maybe some folks in your personal network to lean on for help. - There's more than just product development. At BigCo, generally only the engineering / product development team is structured like a startup. After the code is "done", the regular product marketing org, marketing org, and sales org (if that's a thing), can kick into gear. At a startup, there is no such massive support structure. - On the topic of marketing, having the brand of BigCo is a huge boon to a new product. For mobile apps, there's a lot more trust in seeing "NewProduct by BigCo" vs. just "NewProduct" in the app store. Your rockstar CEO may even tweet out the launch announcement to his millions of followers. - And yes, at BigCo, when it's lunchtime, you can go to the cafeteria and decide if you want the steak or the coq au vin for lunch. (well, before COVID at least) --- [1] - I've worked for really small startups (< 8 people), really big companies (I was person 2000+), and small companies that became big (joined at 20, left at 200+, now at 500+).
• cletus 6y ago
  I saw several of these attempted at Google. They never went anywhere. Probably the most public was Google Wave. Here's the problem: you can't create the same environment without the same risks and rewards. Google employees get compensated very well, better than all but the luckiest startup employees. If the "startup" fails, no biggie. You just move to another project. At the same time, the "startup" needs to retain talent so you're competing with other projects. So what happens? The "startup" creates an incentive structure that rewards mediocrity that has nothing to do with the original goals. This happened with Wave and it happened with Waymo.
• srg0 6y ago
  So, we're commenting what appears to be a comment on another person commenting his career choice. Just in case, this is the original piece written by Noam Bardin: https://paygo.media/p/25171 https://paygo.media/p/25171
• xyzelement 6y ago
  This seems kind of obvious and does this article stem from someone taking the term startup too literally? Obviously it's not the same - nobody hears "startup in a big company" and assume start-up things like "paid inequity, on your ass if this fails, barely health insurance, etc.". Those things are part and parcel of a startup life and both create the conditions and attract the kind of people who do that. Startup within a large company always just meant a fairly independent team that is exploring a new space, and having been "there" a bunch of times I can tell you it's awesome. I am now at a real startup that's awesome as well but different. Just making the point that to write this scathing article drawing a distinction that is actually just obvious, seems pointless.
• nojvek 6y ago
  When I was at PowerBI in Microsoft, all the execs hailed it as Startup within Microsoft. Come work here instead of Uber. I worked like a dog, sometimes till 2am in morning. My manager would routinely ask us to come on weekends. I was naive, I thought we are growing customer base, this is what a startup looks like. The ultimate realization was in a startup you have equity, a decent amount in a good startup. At Microsoft it was a base salary and set amount of stock. What we did moved very little of the top revenue metric. It made little difference if I worked like a dog, or slacked. The promos were very much “buddy buddy” system. In the end I realized you can’t have startups in big companies (esp as an engineer you don’t have the huge upside if the startup is successful, your upside is capped) Startups work because you have skin in the game, when you build something people want, you get to reap rewards proportional to it. That correlation and feedback loop is very important. At big companies you don’t have the the same correlation. Some big shot exec they hired reaps far far more on the work you did. Equity is what builds wealth.
  • abhinav22 6y ago
    Off topic, but were you involved in PowerQuery/PowerPivot as well? I have moved away from Excel, but was one of the first users of PQ/PP, it was a great step forward and my understanding is PowerBI was an extension of that. Congrats because everybody I know loves PowerBI! Well done, even if the rewards may not have been commiserate.
    • nojvek 6y ago
      Was involved in early PowerQuery while it was still part of Excel. PowerBI was fun to work on. I got to learn angular (the good and bad parts).
  • somberi 6y ago
    I would like to offer an extended view from the wealth accumulation angle. True, equity builds wealth, but in a startup, since there is no floor protection, when the startup becomes worthless (can happen for any number of reasons, and often do), then one wishes one had taken a salary (and reinvested in stocks or as seed investment - ways to gain equity exposure). One could argue that PowerBI, in this example, gained any traction at all because it benefited from the large customer base and marketing muscle of Microsoft. To extend further on the point Nojvek makes about how PowerBI moved very little of the topline revenues of the company; this also means that the bonus accrued to the author was because _some other team moved the needle_. This grouping of risk for a mean payoff, could be a desirable outcome as well, if one has better avenues to invest the capital. It all comes down to how one views risk, its mitigation, and wealth accumulation horizon.
• anthony_r 6y ago
  What exactly is a startup here? (serious question)
• decafninja 6y ago
  On a similar note are "tech company inside a non-tech company". Sometimes referred to as "innovation labs".
  • whymauri 6y ago
    Now this I sprint away from as quickly as possible.
• TuringNYC 6y ago
  You should check out: - Skunkworks groups - Corporate Venture - Corporate Labs - Spin outs
• offtop5 6y ago
  Having worked for several startups I'll argue they're extra overrated. You're very likely to work much harder, what's a holiday when you're the only QA person or the only engineer. And for what, on the off chance the IPO goes public and you make hundreds of thousands of dollars. Give me a big company job during the day, and I can work on my startup idea at night .
• netfortius 6y ago
  It depends, i.e. I would not be so definitive on the "no such thing" part, for sure. I witnessed (and enjoyed) such a startup experience, myself, a few years back, when Arity came into existence, from "under and within" Allstate. Spending even one single day working in Northbrook (Allstate HQ), and another one @ the Mart, in Chicago (Arity office), and you could immediately tell the two worlds apart.
• gwbas1c 6y ago
  IMO, the bigger issue is that many people don't know what a startup is. Yet, as a culture we glorify a "startup." Everyone wants to work for one, even though they don't really know the clear line between a startup and an exit. I remember seeing billboards in Silicon Valley. They were from AOL, trying to recruit. They said, "You're the startup, we're the VC." At the time, AOL had no defining characteristic that made it appear like a startup, even for people who don't fully understand what a startup is. Another time, I was in a post-acquisition "startup." I recognized the situation and focused on the area with clear product-market fit. The "CEO" tried to continue to find new product-market fits and blew through our R&D budget. (The R&D budget was supposed to improve the existing product, not find new ones.) When the situation came to a head, only people who worked on the clear product-market fit area remained. (Everyone who behaved like we were a "startup" was let go.)
  • Apocryphon 6y ago
    It's also complicated by how in the 2010s we saw the rise of unicorns that could amass huge amounts of funding, and remain late-stage startups for long indefinite amounts of time. Was AirBnB really a startup, even a late-stage startup, in 2019? For the average employee, was the experience any different from working at FAANG?
• ignoramous 6y ago
  With all due respect to the author, I think the article kind of romanticizes start-up founders and their perils. Amazon famously dubs itself with being the biggest startup in the world. There's a company that espouses Clay Christensen's philosophy of building enduring businesses. Over the years, a lot has been said and written about how Amazon manages to do it, I mean, this is better demonstrated by Jeff, its founder, whose wealth went from $10B in 1997 to $1B in 2002/3, but still bet big on AWS (2003), Prime (2005), and Kindle (2007) in an unprecedented run of series of innovations that'd could have killed the company. -- "working backwards" I want to draw some parallels to the YC application process with how Amazon operates, from what I've read and what I've experienced as an ex-employee: A lot of product development is funded at Amazon after review of what's called a PR/FAQ doc [0] (this is the "working backwards from the customer" part). The PR needs to clearly articulate in a headline or two what the product is about; whilst the first paragraph must present a complete summary of what the product would be in its v1 form at launch. The next few paragraphs detail the current problem and the proposed solution interlaced by imaginary quotes from would-be customers; and the concluding paragraph has a clear call-to-action on exactly how customers can make use of the proposed solution. If you've ever filled out a YC form, you'd find yourself going through a similar exercise. And on what merits is a product funded [1]? - If it works, would it be really big? - Is the customer / target market well-served today? - What in Amazon's approach is the key differentiator? And is that compelling enough? - Should / can Amazon build it in-house, or do they need to buy some / all of the expertise? Again, pretty similar to the process YC has [2]. -- "two-pizza teams" [3] The team that's put together to run is encouraged to own the product end-to-end ("single-threaded owners" aka STOs), in the truest sense of the word: That is they're free to duplicate effort, not be beholden to another team's priorities, build whatever they need to, buy whatever they need to, and so on... Other STOs running existing but overlapping business or businesses at the risk of being cannibalized by this newer one do not absolutely get any say. This approach to incubating newer products within Amazon is what led them to build AWS in the first place, because they didn't want various internal engineering teams to be truly duplicating their efforts in building "undifferentiated parts of their businesses" which, on the Internet, is building all that Infrastructure required to start small and yet be able to scale. AWS, interestingly, itself was removed / isolated from Amazon's Infrastructure team at the time and was completely a separate under-taking (there's probably a Harvard case-study in there somewhere demonstrating the effectiveness of STOs). -- "disrupt yourself" The other thing Amazon does is it is truly customer-focused as opposed to product-focused or competitor-focused. If I were to take the example of Android: How many customers do Google have a direct line to? If you are a FireOS user, you could chat with customer service about its annoyances, send an email to kindle-feedback@ or even escalate it to jeff@ and all those complaints are root-caused and fixed to whatever extent deemed necessary, with FireOS MayDay being an extreme example of this customer-obsession. Amazon believes in listening to its customers and disrupting its own cash-cows if it means it delivers value to the customer. No one flinches a bit in taking these decisions. -- "you can't fight gravity" [4] As opposed to reacting technology changes constantly and riding the wave, Bezos instead believed in focusing on universal constants (like gravity) that never change: For example, for Amazon's e-commerce business, those constants are customers would always want lower prices, larger selection, and faster deliveries". That was never going to change. But this simple framework then lets his management team decide on what bets to take with respect to technologies that help move the needle in the right direction, because if they don't, someone else will eat their lunch by doing those three things. -- "the best way to predict the future is to invent it" To truly create an atmosphere of invention within Amazon, there are a lot of processes in-place, to make sure bureaucracy ("a single no" vs "a lot of yes") doesn't kill a promising idea. Of course, there's nuisance here, in that some decisions need to be carefully vetted ("one-way doors") vs ones that needn't be ("two-way doors") and the key is knowing which is which (and escalate when in doubt). -- "simplify" If you follow AWS, you'd know how primitive and lacking the v1s really are: For instance, Lambda launched with just NodeJS support with no observability story of note, no "local development" environment, no support for other runtimes, and just 1 minute of execution time. This stems from the PR/FAQ process (distill down the v1 to the absolute minimum but deliver comprehensive value to the under-served) and two-pizza teams (too many resources to work on a problem is never approved of, so it is paramount to do things that don't scale for the v1). -- This isn't to say Amazon hasn't been disrupted at all: It has been, by instacart, daipers.com, doordash among some examples that come to mind. I am no expert (either in the ways of the likes of Amazon or the nimble start-ups), but I believe that to reduce innovation / invention being a playground for start-ups just because they've no access to a "fancy cafeteria" is telling half the story [5] and probably misinterpreting symptoms for cause. [0] https://www.youtube.com/watch?v=aFdpBqmDpzM https://www.youtube.com/watch?v=aFdpBqmDpzM [1] https://www.hbs.edu/forum-for-growth-and-innovation/podcasts/disruptive-voice/Pages/podcast-details.aspx?episode=15834284 https://www.hbs.edu/forum-for-growth-and-innovation/podcasts... [2] YC also fund all sorts of "uninteresting" ideas too (from outside, what looks like a spread and pray, but is likely a heuristic that they are working off of from). [3] https://www.youtube.com/watch?v=XavPl5t9dS8 https://www.youtube.com/watch?v=XavPl5t9dS8 [4] https://www.youtube.com/watch?v=O4MtQGRIIuA https://www.youtube.com/watch?v=O4MtQGRIIuA [5] I mean, at the end of the day, Waymo wasn't even a startup by the time Google acquired it and also it isn't like Google doesn't have a track record of successful acquisitions...
• rmac 6y ago
  this topic has been beaten to death (read these) https://www.goodreads.com/book/show/2615.The_Innovator_s_Dilemma https://www.goodreads.com/book/show/2615.The_Innovator_s_Dil... https://www.goodreads.com/book/show/11797471-the-idea-factory https://www.goodreads.com/book/show/11797471-the-idea-factor... you have to ask yourself: why would the most talented and/or visionary and/or defiant individuals want to stay at a large company to build new products? Be it in Labs, Spin-outs, Spin-ins, corporate accelerators, skunkworks projects, or what have you. The craziest of the crazy will go out on their own and try to build something. Most will fail. Those that persist eventually combine luck+opportunity and turn their hallucinations into mainstream-disruptive innovations.
• nabla9 6y ago
  In economics there is a research subject called "Theory of the firm". In 2016 Holmström and Milgrom got Economics Nobel for their research of theory of contracting and incentives especially as applied to the theory of the firm. It's theory that is actually interesting to read. They have papers like: The firm as an incentive system, The Boundaries of the Firm, Incentive Contracts, Asset Ownership, and Job Design, An Economic Theory of Promises, The Firm as a Subeconomy,
• JackFr 6y ago
  There is no such thing as "a startup within a big company" on it's face is a tautology, so we can assume the author was not speaking literally. So if he's not speaking literally, what does 'startup' mean? Is it characterized by the ownership structure? The maturity of the market? The culture of the team? The flexibility and nimbleness of the management team to pivot and move targets? Since none of this is clear I think its possible that there is some disagreement even with the best intentions on both sides.
• signa11 6y ago
  in the days of m.p.l.s _engineers_ at csco, there used to be...
• yters 6y ago
  Sometimes it is analogous, such as creating a new internal product and trying to get internal customers. The best part is if the effort fails I still keep my job and salary. On the other hand if it succeeds I can get a promotion and raise. Much less risk than real world startup, and better expected payoff.
• aerosmile 6y ago
  The predominant sentiment in the comments is that equity is worthless, which very well may be a fair statement. It would also explain why relatively few people decide to start companies, let alone do it back to back several times after getting burned over and over again. But those same people will then argue that founders should not get 10x more equity than employees [0] (which, for the record, may or may not be justified, but you can't argue that founders would be better off keeping their jobs at mega corps, and also at the same time criticize their upside). My personal take on this is: - Stay at the mega corp if you're exclusively optimizing for wealth generation. I don't know if I would recommend pursuing the Skunkworks opportunities, since they are by definition not core to the business and your contributions won't produce a lot of profit for the company for a long time. It's unlikely that the company will remunerate you more than someone who's paying all the bills. After all, this career path is all about maximizing your risk-adjusted likelihood of wealth generation. - Start your own startup if the journey matters to you. Important caveat: you will get better at this over time, so if it made sense to you to start your first company, it will make even more sense to stick to this career path and do it over and over again. Don't invest your own money, and hope for the best but expect each company to fail. Be ok with earning sub-market salary, and treasure the upside of being your own boss. This approach works best if you're able to raise pre-product seed financing, which brings me to the next point... - Before you start your own company, be an early employee at a startup that's run by a serial (and ideally successful) entrepreneur. You will get the worst of both worlds - not enough salary and not enough equity - but you will dramatically improve the odds of success when you start your own company (and will also improve the chances of raising a pre-product seed round). Don't do it otherwise. What I wouldn't do: keep a job at the mega corp, and work on new ideas nights and weekends. This may seem like having your cake and eating it too, but it works far less frequently than you would expect (you end up sucking at your job and at your startup, not to mention that your work-life balance is possibly worse than in any other scenario). Again, the alternative would have been to be an early employee and learn first-hand about entrepreneurship. [0] https://news.ycombinator.com/item?id=17288343 https://news.ycombinator.com/item?id=17288343
  • nonplussed 6y ago
    I can't stress the the "ideally successful" part enough. I've worked at a couple startups where the entrepreneur was serial but this was their first "success". I felt I learned very little. Both companies reached a comfortable point and then the founder didn't know what to do beyond that. I came to understand why there's a lot of stories of VCs forcing out the founder and bringing in a new CEO who had experience in growing a company.
• gijoeyguerra 6y ago
  Of course there isn't. The financial risks (all the risks in general) are totally different. Risks, and lack thereof, drive behaviors, decisions.
• dbattaglia 6y ago
  I worked for a "startup within a Big Co." for a few months, set up as an "innovation lab" for a big stuffy 3-letter HR tech / payroll vendor everyone knows (at least in the US). It wasn't bad, and I felt like they really tried to make things feel all fun and "silicon alley" (I'm in NYC), but boy did that whole facade disappear once you realized you need to use on corporate VPN to view things on the public internet and a second one to connect to source control. Or when the companies patent lawyer comes by to talk to the team about the importance of patenting every last little idea you have. I don't even blame them either, they are a huge company that can't just change the way they fundamentally do business. But it does make the whole thing feel a bit artificial. I'm sure for startups that are acquired it's a bit different but in the end the same result.
• data_spy 6y ago
  This is correct. When I was at Allstate they had a 'labs' team to come up with innovative new technology. They were the only ones with standing desks, treadmill desks, bicycle desks, and over two years the only thing they accomplished was design a phone holder for a bicycle. They had much greater success using Kaggle for data science competitions in terms of innovation.
• throwaway234378 6y ago
  When Google acquired Waze, Waze was nearly running out of money / dead. Google paid the acquisition very well. It's something Waze people didn't talk about.
• hacknat 6y ago
  Google is very aware of this, which is why Google Ventures is a thing. It's much better, ironically, to put yourself in a position to only provide benefits to another company and prevent yourself from extracting any benefit for yourself.
• mrcwinn 6y ago
  Former CEO at Creative Market here (though at the time, I was VP Eng). Call me an optimist, but I believe this can work, though I accept the premise of the headline generally. We were acquired by Autodesk in 2013. We may make for an odd case study: we had a very unique opportunity to spin out and return to be an independent startup in 2017, thanks to Autodesk's support - not to mention the leadership of our co-founding CEO at the time. (Parenthetically, I could write a book about acquisitions and spinouts, but that's for another day.) During my time at Autodesk, we were very much a "startup within a big company." They wanted us to continue doing what we do, because it was clearly working. We continued to grow. We continued to have more resources and support thanks to Autodesk. We found ways to preserve our culture, but also adopt some of Autodesk's. We built relationships and got to know people in other business units. We never felt like there was some ulterior motive or felt our hand forced. There are disadvantages, sure, but I think it would lack nuance to pin all that blame on the acquiring company. Relationships are a two-way street. If you're going to sell, I think it's incumbent on the founders to normalize being proud of being a part of that bigger company. I think it's okay to say, we're going to change and we're going to reach out and connect with the larger organization. It may not be helpful to try to be the "pirates" within the organization, like the Mac team during Jobs' first stint. It's isolating and corrosive to be the smaller piece of the puzzle, yet view yourself as the greater cause. People can criticize big companies. In many cases, that criticism is warranted, fair, and important if we're going to increase competition and innovation. For my own part, looking back on my time there, I always felt valued and respected as an Autodesk employee. I was always proud to hold my employee badge.
• softwaredoug 6y ago
  Maybe you can't have startups at big companies, but you can look at your career and personal brand like an entrepreneur. Who are your customers/employers? What market niche are you capturing? How good are you at demonstrating your leadership in that niche? What do you need to change to put yourself in a better position with current/potential employers?
• emidln 6y ago
  IDK, I worked for a startup (Curiosity.com) within a big company (Discovery Communications) that spun off and raised a series A to become an actual company (and was later reacquired by the same big company).
• vyrotek 6y ago
  It worked ok for Carvana which was incubated within DriveTime. They eventually spun off as a separate company and went public. DriveTime is still private.
• Fede_V 6y ago
  If you are a great engineer that can get a job at FAAG, joining a start up is almost never worth it from a strictly financial point of view. 17 years ago, Paul Graham was able to post this essay: http://www.paulgraham.com/wealth.html http://www.paulgraham.com/wealth.html - nowadays, the compensation in tech has shifted upwards so much (https://www.levels.fyi/ https://www.levels.fyi/) - that start ups are just not competitive when you adjust for a risk premium. Finance captures this concept using metrics such as the Sharpe ratio (https://en.wikipedia.org/wiki/Sharpe_ratio https://en.wikipedia.org/wiki/Sharpe_ratio) - which measures how much extra returns you are getting in exchange for the additional risk you take on. For start ups - your expected returns are lower, and the risk is very significantly higher. Are there other great reasons to join start ups? Absolutely: several start ups are working on exceptionally cool science problems, some are solving tasks that will make a meaningful improvement in the lives of people (https://detroitwaterproject.org/ https://detroitwaterproject.org/, etc), some people just prefer working in a small company, you get a chance to work with your friends - but - if you are going to work for a generic SAAS company, don't accept a pay cut. The VC that's financing your start up evaluates their investments with a spreadsheet and zero affection. Ask them how they sacrifice their own income to work on more interesting work, and they'll (politely) laugh in your face.
  • lcfcjs 6y ago
    What's a FAAG?
  • caturopath 6y ago
    Big tech salaries are at this point high enough that even with some acquisitions, I see folks getting payoffs that didn't catch them up to where they'd be financially if they went the big tech route.
• jl2718 6y ago
  This can mean many things. Examples: - we don’t know what we’re doing yet - we’ll be overworking you - our funding is getting cut off - we’re irrelevant to the corporation - we have an open office - we fire quickly - we wish we didn’t work here
• deleted 6y ago
  [deleted]
• s17n 6y ago
  OP and Noam Bardin both dance around the core issue which is that you can't give more than a handful of people enough equity to actually care about your company.
  • arduinomancer 6y ago
    100% agree Reading both articles, the whole time it’s like “No shit guys, you were the owners”
• theqult 6y ago
  Thanks Captain Obvious
• drewzero1 6y ago
  This reminds me of the story of Saturn within General Motors. As I understand it, it was created to compete with popular imports like Honda and was given a long leash from GM to be "a different kind of car company" (in the words of their marketing). The first generation of cars were a lot different from any of GM's previous compact offerings. GM started reining in Saturn and moving toward badge engineering. Eventually it became the same kind of car company, because at the very top it always was.
• aeoleonn 6y ago
  The 4000 person video game company I work at, has in some of its job descriptions something about "understands what it's like to move at a fast paced startup" yet, the company: - was founded in early 2000's - has about 4,000 employees - from my experience, does not move fast. too much bureaucracy & too many management-compliance related tasks impede developer speed, focus, and context-stability.
• jonas_kgomo 6y ago
  A startup studio is essentially this. Also, every big company has a X for Startups, plus open-source projects. Most big companies derisk by acquiring competitors, you can think of that as a startup inside a big company. * where X is an element of FAAMG
• aloukissas 6y ago
  It's interesting that nobody has yet to bring up all the Cisco startups (ok, ok spin-offs), i.e. Andiamo, Insieme, etc. Yes, typically they were all independent companies but the people there all but wore Cisco badges (they mostly used Cisco buildings, too). Very successful model to bypass issues e.g. hitting quarterly earnings goals, while innovating at startup speed.
• frellus 6y ago
  I was in a "startup inside a <mid-sized> Company" (about 5 years old at that point, pre-IPO) a few years back. It operated independently, separate building, separate recruiting with a large amount of equity compared to the main company. The benefits were that we could hire major talent who wanted to take some risk but not complete risk (i.e. our funding was "secured"), politics were completely removed, we operated in semi-stealth and we had an already established base of customers to do POCs and get feedback from. It was successful and post-IPO of the main company it merged fully and became a fully branded product under the same umbrella. It was almost like a Cisco-style "spin-out-spin-in" but way less equity. The downside was if the project failed for technical risk reasons, we would all be axed, of course, and the partially vested equity wouldn't have been worth as much of course. I think really think the biggest benefit was the removal of politics and distractions from the main company. Other large companies (Ex. Oracle) you cannot innovate internally unless you do it faster than someone can find it and kill it. After a company reaches a certain size and maturity, the only growth is through M&As not through internal innovation and taking risks IMHO.
• jariel 6y ago
  It can be it just entirely depends. Some people here arguing about equity - that's fine - but some people actually like to work on new stuff as well. Stuck doing integration in 25 year old windows code? Now you can go to XBox and work on totally new and different stuff? Might be fun. The key is I think expectations.
• k5i 6y ago
  there's also no such thing as a startup that can puke a product and have 20M+ users in a week.
• habosa 6y ago
  I work at Google and there's one thing in particular that makes this totally impossible: legal. Talk to any startup about their early days. They took legal risks, knowingly or not, that would make a BigCo lawyer sick to their stomach. No startup launches on Day 0 fully compliant with every regulation and with best-in-class user data protection, etc. If you're a startup within the big company your legal risks are the big company's risks. And they're 100x worse because everyone knows if they sue you they can sue the parent company and get paid, unlike when you sue a near-bankrupt startup. If a big company wants a startup they need to break off a chunk of cash and start a separate company. Not a subsidiary, a totally separate company in which they happen to be the first investor. At which point that company will lose most of the BigCo advantages such as infrastructure and talent.
• getlawgdon 6y ago
  I've run three startups/skunkworks within medium sized and one very large global business.I assure you it can be done.
• captainbland 6y ago
  There can be relatively autonomous greenfield project teams that choose their own tech stack within big companies which I think have the best balance between work, life and work satisfaction. Of course they rarely last for long, at some point you'll probably be integrating your project with some big legacy project at which point you've essentially become yet another maintainer of the local dev resource blackhole and might occassionally need to do some work for the original project you worked on (although maybe not; if you've done your job well you might find anyone can pick it up!). But hey it's pretty good while it lasts.
• welt 6y ago
  The only exception to this is Valve, but they have a lot of failed startups under their belt if that's how you think about it.
• mensetmanusman 6y ago
  This will only get less and less unlikely as it becomes obvious that only the management folks benefit greatly in compensation from risk-taking. There is no way they would let their lowly engineers make seven figures if success was found. And the recent experience at Google, with engineers making seven figures, is some thing for them to point to saying “look, they will leave the company if they make too much money!”
• WalterBright 6y ago
  It's been done: Kelly Johnson's "Skunkworks" as a part of Lockheed.