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Herkou’s exit wasn’t that great though. Granted, $200m isn’t an insignificant amount of money, but Netlify and Vercel are valued at billions. They would have to

Herkou’s exit wasn’t that great though. Granted, $200m isn’t an insignificant amount of money, but Netlify and Vercel are valued at billions. They would have to sell for 10x what Heroku sold for to meet expectations. I just don’t see the valuations lining up, but I’ll probably be wrong. I also don’t know who they get acquired by. I don’t see AWS making acquisitions like this. From what I’ve seen, it seems like they try to buy companies at lower valuations (than multiple billions).

thewarrior 5y ago
These companies can be disruptive innovators by focusing on Niches that the big companies won’t care about because they’re tiny. For eg - managed react applications. IIRC Firebase was acquired by google. But the plan is to go after all of AWS slowly from a different direction. Cloud flare is doing the same thing and their stock is going gangbusters. Cloud services are one of the most profitable businesses to ever exist. There’s so much lock in and network effects. Especially with managed solutions like these.
- ignoramous 5y ago
  But: The Innovator's Solution to the Innovator's Dilemma is well-understood at this point. Incumbents know well to not ignore upstarts. Knowing (Intel v ARM [0]) and reacting are two different things, of course. [0] ref "red teaming at Intel", https://news.ycombinator.com/item?id=21095977 https://news.ycombinator.com/item?id=21095977
  - thewarrior 5y ago
    It’s not easy because of all the bureaucracies and inefficiencies at large companies. Most employees at AWS are probably barely inspired compared to the people working at Vercel who can also ship much faster. Nothing new here just what PG has been saying for years.
    - ignoramous 5y ago
      > It’s not easy because of all the bureaucracies and inefficiencies at large companies. The Innovator's Solution addresses these and other issues. http://web.mit.edu/6.933/www/Fall2000/teradyne/clay.html http://web.mit.edu/6.933/www/Fall2000/teradyne/clay.html: Even after correctly identifying potentially disruptive technologies, firms still must circumvent its hierarchy and bureaucracy that can stifle the free pursuit of creative ideas. Christensen suggests that firms need to provide experimental groups within the company a freer rein. "With a few exceptions, the only instances in which mainstream firms have successfully established a timely position in a disruptive technology were those in which the firms' managers set up an autonomous organization charged with building a new and independent business around the disruptive technology." This autonomous organization will then be able to choose the customers it answers to, choose how much profit it needs to make, and how to run its business.
subpixel 5y ago
That's my take. What matters is how much control you cede when you take $200+M. If you can hold onto control of your company and take a few million off the table, why not?
- ushakov 5y ago
  typically you shouldn’t lose more than 20% each round
ignoramous 5y ago
> I also don’t know who they get acquired by. I don’t see AWS making acquisitions like this. From what I’ve seen, it seems like they try to buy companies at lower valuations (than multiple billions). No reason why this won't change. A market leader needs to consolidate their position year-after-year. GitHub was a great acquisition AWS missed. They shouldn't want to miss the next GitHub.
- grp000 5y ago
  Yeah, or Amazon just copies their business model and launches it as another service on AWS.
  - ignoramous 5y ago
    Copying just the business model would not break through network effects, the kind of which GitHub has. Also see: https://medium.com/s/story/jeff-bezos-jack-ma-and-the-quest-to-kill-ebay-bb4992dc5020 https://medium.com/s/story/jeff-bezos-jack-ma-and-the-quest-...
quartz 5y ago
Heroku's exit was pretty huge for its time. In fact it was the largest YC exit to-date. For context Heroku was created in 2008 just after the housing crash. By the time they exited Facebook was still 2.5 years away from going public and a solid seed round still looked like a few hundred grand if you were a hot company (on top of the ~17k you'd get from YC).

thewarrior 5y ago

These companies can be disruptive innovators by focusing on Niches that the big companies won’t care about because they’re tiny. For eg - managed react applications. IIRC Firebase was acquired by google. But the plan is to go after all of AWS slowly from a different direction. Cloud flare is doing the same thing and their stock is going gangbusters. Cloud services are one of the most profitable businesses to ever exist. There’s so much lock in and network effects. Especially with managed solutions like these.

ignoramous 5y ago
But: The Innovator's Solution to the Innovator's Dilemma is well-understood at this point. Incumbents know well to not ignore upstarts. Knowing (Intel v ARM [0]) and reacting are two different things, of course. [0] ref "red teaming at Intel", https://news.ycombinator.com/item?id=21095977 https://news.ycombinator.com/item?id=21095977
- thewarrior 5y ago
  It’s not easy because of all the bureaucracies and inefficiencies at large companies. Most employees at AWS are probably barely inspired compared to the people working at Vercel who can also ship much faster. Nothing new here just what PG has been saying for years.
  - ignoramous 5y ago
    > It’s not easy because of all the bureaucracies and inefficiencies at large companies. The Innovator's Solution addresses these and other issues. http://web.mit.edu/6.933/www/Fall2000/teradyne/clay.html http://web.mit.edu/6.933/www/Fall2000/teradyne/clay.html: Even after correctly identifying potentially disruptive technologies, firms still must circumvent its hierarchy and bureaucracy that can stifle the free pursuit of creative ideas. Christensen suggests that firms need to provide experimental groups within the company a freer rein. "With a few exceptions, the only instances in which mainstream firms have successfully established a timely position in a disruptive technology were those in which the firms' managers set up an autonomous organization charged with building a new and independent business around the disruptive technology." This autonomous organization will then be able to choose the customers it answers to, choose how much profit it needs to make, and how to run its business.

subpixel 5y ago

That's my take. What matters is how much control you cede when you take $200+M. If you can hold onto control of your company and take a few million off the table, why not?

ushakov 5y ago
typically you shouldn’t lose more than 20% each round

ignoramous 5y ago

> I also don’t know who they get acquired by. I don’t see AWS making acquisitions like this. From what I’ve seen, it seems like they try to buy companies at lower valuations (than multiple billions). No reason why this won't change. A market leader needs to consolidate their position year-after-year. GitHub was a great acquisition AWS missed. They shouldn't want to miss the next GitHub.

grp000 5y ago
Yeah, or Amazon just copies their business model and launches it as another service on AWS.
- ignoramous 5y ago
  Copying just the business model would not break through network effects, the kind of which GitHub has. Also see: https://medium.com/s/story/jeff-bezos-jack-ma-and-the-quest-to-kill-ebay-bb4992dc5020 https://medium.com/s/story/jeff-bezos-jack-ma-and-the-quest-...

quartz 5y ago

Heroku's exit was pretty huge for its time. In fact it was the largest YC exit to-date. For context Heroku was created in 2008 just after the housing crash. By the time they exited Facebook was still 2.5 years away from going public and a solid seed round still looked like a few hundred grand if you were a hot company (on top of the ~17k you'd get from YC).