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Sounds like in your case it worked out, but I would consider AWS to be an insane outlier...also from a company still founder-led (Bezos is an exec with proven s

Sounds like in your case it worked out, but I would consider AWS to be an insane outlier...also from a company still founder-led (Bezos is an exec with proven startup success--hence why Amazon exists in the first place!). I think the point of the author is that, inside a big company, the fundamental risk/reward incentives that drive startup innovation are removed. Autonomy alone doesn't drive people to make crazy decisions. Risk/reward incentives do. Google is never going to say to one of their internal employees: "We're cutting your salary to $50k/yr, but you get 80% ownership of the business you create if you succeed. But there's a 95% chance you won't. And if you don't succeed you're fired. Good luck!" That's the equivalent environment needed if you want to mimic the human decisions and behavior that drive innovation inside startups.

varjag 6y ago
That's the environment startups exist in due to economic realities of having little money to go on rather than some grand strategy. There is a possibility a better balance of risk/reward (say 5% of ownership and 150k salary) could well produce just as good or better outcomes.
- pembrook 6y ago
  The problem is, if this employee is the perfect person to create this business, why are they working at Google and not on their own starting this venture already? Why waste time letting one of your clearly risk averse in-house employees (hence why they work at Google in the first place), fumble around for 5-10 years trying to build something? While your competitors might be doing the same thing and will actually succeed? And while the rest of your employees start complaining, "why can't we also play startup for 5-10 years on the Google gravy train like John?" Google can just sit back and let the real startup ecosystem do its thing. Then buy whatever they see that has shown success in areas of strategic value to Google. No PR or legal risk while the startup does necessary but shady things to force itself into being. This is a much better model, hence why innovation is most often acquired, not incubated.
  - varjag 6y ago
    I assume 150k at Google is enough salary demotion to provide motivational filter, but feel free to adjust the figure as you see fit.
    - brandall10 6y ago
      I think the point he was making is it’s a half measure compared to having no safety net. The “adjust as you see fit” would be not operating under the Google umbrella at all. The simple act of having to do the rounds to repeatedly secure financing and letting that, or the actual performance of the business, gate growth or survival and being a cofounder or employee in this environment has a different emotional and operational strain on the business. I worked in a company like this btw for about five years, we were started as a subsidiary of a successful medical device company by that ceo as a “what if”, to take the already developed dispensing hardware by our parent and adopt it to the general supply chain management industry. We were doing decent business ($30M ARR for a 40 person company) and were minimally profitable but eventually shuttered by our parent company after it became apparent the hockey-stick like growth was not coming. I’ve also worked at startup that failed after about 6 years. The difference between how those two companies screeched to a halt was stark. In one case it came out of the blue and suddenly 1/3 of the employees were sucked up into the parent company and the rest got pink slips. In the other case it was a really wild final year with the writing clearly on the wall, multiple furloughs and downsizing for survival.
  - paulryanrogers 6y ago
    Big companies buying startups looks like the most likely 'successful' outcome today. Yet with effective antitrust maybe it shouldn't be.
    - umeshunni 6y ago
      And with sufficient public market deregulation to allow startups to IPO early.

varjag 6y ago

That's the environment startups exist in due to economic realities of having little money to go on rather than some grand strategy. There is a possibility a better balance of risk/reward (say 5% of ownership and 150k salary) could well produce just as good or better outcomes.

pembrook 6y ago
The problem is, if this employee is the perfect person to create this business, why are they working at Google and not on their own starting this venture already? Why waste time letting one of your clearly risk averse in-house employees (hence why they work at Google in the first place), fumble around for 5-10 years trying to build something? While your competitors might be doing the same thing and will actually succeed? And while the rest of your employees start complaining, "why can't we also play startup for 5-10 years on the Google gravy train like John?" Google can just sit back and let the real startup ecosystem do its thing. Then buy whatever they see that has shown success in areas of strategic value to Google. No PR or legal risk while the startup does necessary but shady things to force itself into being. This is a much better model, hence why innovation is most often acquired, not incubated.
- varjag 6y ago
  I assume 150k at Google is enough salary demotion to provide motivational filter, but feel free to adjust the figure as you see fit.
  - brandall10 6y ago
    I think the point he was making is it’s a half measure compared to having no safety net. The “adjust as you see fit” would be not operating under the Google umbrella at all. The simple act of having to do the rounds to repeatedly secure financing and letting that, or the actual performance of the business, gate growth or survival and being a cofounder or employee in this environment has a different emotional and operational strain on the business. I worked in a company like this btw for about five years, we were started as a subsidiary of a successful medical device company by that ceo as a “what if”, to take the already developed dispensing hardware by our parent and adopt it to the general supply chain management industry. We were doing decent business ($30M ARR for a 40 person company) and were minimally profitable but eventually shuttered by our parent company after it became apparent the hockey-stick like growth was not coming. I’ve also worked at startup that failed after about 6 years. The difference between how those two companies screeched to a halt was stark. In one case it came out of the blue and suddenly 1/3 of the employees were sucked up into the parent company and the rest got pink slips. In the other case it was a really wild final year with the writing clearly on the wall, multiple furloughs and downsizing for survival.
- paulryanrogers 6y ago
  Big companies buying startups looks like the most likely 'successful' outcome today. Yet with effective antitrust maybe it shouldn't be.
  - umeshunni 6y ago
    And with sufficient public market deregulation to allow startups to IPO early.