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American tech giants are making life tough for startups (2018)

176 points by ddtaylor 4y ago

formerkrogemp 4y ago
How have conditions changed at all in the past 4 years?
frozenport 4y ago
>> buy young firms that might challenge them This is not the worst outcome for a startup
- itsgrimetime 4y ago
  Yeah but is it good for competition?
  - outside1234 4y ago
    No but it is not exactly tough for the startup :)
- spaetzleesser 4y ago
  But a bad outcome for the economy overall. In the medical industry this is extreme. The startup scene is basically a feeder pipeline for the big guys. Nobody even tries to start a self sustaining business.
  - louniks 4y ago
    I wonder if this can be viewed as (yet another?) example of companies externalizing the negatives. Pollution is the classic example, both during manufacture and at the end of the lifecycle. In this case, it would be financial risk. Founders bootstrap a start-up, either with their own money or outside investors, and these folks carry all the risk. The established players can safely wait until the startup either fails or succeeds, and buy into a sure thing in the latter case.
    - lotsofpulp 4y ago
      I think it is simply a consequence of technology enabling instant global communications and decreasing marginal costs precipitously giving bigger players an enormous advantage.
    - mateo411 4y ago
      I'm not sure about that. An acquisition is a risky thing for a company to do as well. It's never a sure thing and correctly pricing the acquisition or predicting if the company will be successful with the acquisition is also not guaranteed or easy.
    - nijave 4y ago
      For some highly regulated industries, it's hard to bring small products to market. In banking, there are tiered regulations based on your size (in the U.S.) so there's more overhead for large companies
- actionablefiber 4y ago
  It might be a nice payday for the founders but it's terrible for the business environment. It's basically a bribe to stop operating in that sector. Sure, it beats out Microsoft churning out the Teams to your Slack/Loop to your Notion, then rolling it into 365 and eating your enterprise market share alive without so much as a consolation prize, but as a user any time a great product hits the market, no matter how much I like it I have to worry if I can trust the company to be around for the long haul and stick to their offering.
  - scarface74 4y ago
    The entire “business” of startups is to get acquired. Few expect to go public.
    - nonrandomstring 4y ago
      I think we might more accurately say; the entire “business” of some investors is to get companies acquired. That's not the same motive as seen from inside the startup. And indeed, it's only some investors. I believe there are plenty who are in it for the long game, or are far more strategic in terms of ROI.
      - scarface74 4y ago
        Once the startup takes investor funding, it’s irrelevant what those inside the startup want. That being said, we all go to work to exchange labor for money. It’s naive for employees to see working for any for profit company as anything more than just a financial transaction. Investors know that the chances of a startup to go public and then be profitable enough to have long term stock gains is infinitesimally small. Can you name one startup that has been really successful - ie throwing off crazy profits and margins since Facebook? Investors aren’t interested in “lifestyle businesses”.
        jdsully 4y ago
        > Once the startup takes investor funding, it’s irrelevant what those inside the startup want. It really depends on the ownership structure, and that will depend on leverage at the time of fundraising. YC companies are unlikely to give up control until Series B (but like all things your mileage may vary).
- riazrizvi 4y ago
  We made them an offer they couldn't refuse.
  - daniel-cussen 4y ago
    Yeah I didn't get what that meant in the Godfather movie, but I got it when I read the book (which is amazing, so so good, not as good as the movie but still). It's not an offer if it can't be refused, it's just theft.
    - mateo411 4y ago
      > it's just theft. and extortion.
      - daniel-cussen 4y ago
        Yes, both.
jthacker 4y ago
I'm unable to read the article due to the paywall, but if the first paragraph is indicative of the thesis, then it is "startups that build incremental functionality on top of existing products are upset when the company improves their product with the same functionality". I'd say there are two issues at play here: 1. The large Tech companies are too big and do too many things. They should be broken up for no other reason than to protect the public from their eventual collapse or abuse of power. 2. As a startup, don't build an incremental product that can easily be scooped by a competitor, especially if that competitor is a mega corporation.
- zeruch 4y ago
  "s a startup, don't build an incremental product that can easily be scooped by a competitor" unless that's the goal (and sometimes it is).
ren_engineer 4y ago
the amount of data Google and Facebook have isn't talked about enough in this context, they most likely have internal tools that allow them to project which startups are becoming successful and either copy them early or just acquire them before the startup itself realizes how much potential they have Instagram acquisition for 1 billion as an example was a steal in hindsight, I bet facebook had more accurate forecasts for their growth than Instagram itself. I know Facebook did get some bad PR for collecting user data via a VPN app, but they didn't face any legal consequences- https://en.wikipedia.org/wiki/Onavo https://en.wikipedia.org/wiki/Onavo This doesn't even address how at a societal level these companies can basically create self-fulfilling prophecies by manipulating what stories and information is shown to people also makes me wonder about AWS/Amazon and what their policy is around copying some of their customers. They obviously fork or outright deploy managed open source projects to compete with them. I know Walmart doesn't let any of their suppliers use AWS either.
- jethkl 4y ago
  In prior life, I worked at place where we had access to data that contained user searches. We could plainly see that google searches, due to autocomplete, "quantize" results in a way that bing and others don't. The result is that google searches are almost inorganic crafted things, and they contain unusual artifacts. The impact on society is definitely real.
  - guerrilla 4y ago
    > The impact on society is definitely real. What impact do you mean and how do you know?
    - jethkl 4y ago
      For "what" -- I don't specify. Regarding "how I know", I start with several premises: 1) search engines are the dominant way to find information now. 2) conservatively, ≥80% of searches in US are through google. 3) google is not a passive observer of user search queries, but instead actively suggests queries to users. It follows that there must be some impact. The "engagement" effect is this: I start a search for Depeche Mode, but get distracted by suggestions for J Depp. In contrast, DDG suggests Depakote, Depression, Dept of Revenue and a few other things. Other search engines seem to be less aggressive.
stevewatson301 4y ago
https://archive.ph/nX06E https://archive.ph/nX06E
dzink 4y ago
There are several stacked catch 22s here. 1. Often the giants don’t pursue a space until a startup proves it’s viable - in that case you have to start something to make it happen. 2. Even internally there is a lot of competition at the giants for prime real estate and promo space on the apps to feature existing or new internal projects. The more types of projects the business launches, the more it has to kill because the mobile screen won’t grow any bigger. So there is a limit on how many acquired companies will actually keep living. If the team is any good, they are also pulled in other directions. For every github and instagram there are many more dead ends and even more so acquisitions of data. It makes you wonder: what if in addition to privacy policy and terms documents, each online property has an acquisition terms statement. That would state for users and future acquirers see what is up for grabs if the startup is ever acquired (would product keep operating as part of the deal, would data be erased, would software be open sourced, would users/employees get some kind of a distribution, etc.)
- daniel-cussen 4y ago
  In terms of acquisition statements, music labels I read do 5 year contracts, with all contracts renegotiated upon acquisition. Says it all, that's why YC says don't do a music startup. Just don't.
- Apocryphon 4y ago
  > All the while, Martino’s ultimate warning—that they might someday regret actually getting the money they wanted—would still hang over these two young men, inherent to a system designed to turn strivers into subcontractors. Instead of what you want to build—the consumer-facing, world-remaking thing—almost invariably you are pushed to build a small piece of technology that somebody with a lot of money wants built cheaply. As the engineer and writer Alex Payne put it, these startups represent “the field offices of a large distributed workforce assembled by venture capitalists and their associate institutions,” doing low-overhead, low-risk R&D for five corporate giants. In such a system, the real disillusionment isn’t the discovery that you’re unlikely to become a billionaire; it’s the realization that your feeling of autonomy is a fantasy, and that the vast majority of you have been set up to fail by design. > They ran an experiment. None of their lives have been ruined.” He knew they’d get good jobs, even if it meant the life of a project manager at Yahoo. “And none of their investors’ lives have been ruined either. When they close up shop, their investors will say, ‘That’s one more off the books. I don’t need to help them anymore. I get my time back.’” No Exit: Struggling to Survive a Modern Gold Rush by Gideon Lewis-Kraus https://news.ycombinator.com/item?id=7643902 https://news.ycombinator.com/item?id=7643902
WalterGR 4y ago
If anyone is curious, the submission from 2018 got 455 points and 164 comments: https://news.ycombinator.com/item?id=17221885 https://news.ycombinator.com/item?id=17221885
honkler 4y ago
and these "startups" are making life tough for small businesses (mom and pop stores). No sympathy from me.
- bryanrasmussen 4y ago
  yeah, just thinking about all the artisanal home grown mom and pop run email autocompleting companies that EasyEmail was putting out of business gives me the heebie-jeebies.
  - Apocryphon 4y ago
    Mailchimp was a little like that, as it was started in 2001, between tech bubbles, and was mostly a side project for years. https://www.forbes.com/sites/alexkonrad/2018/10/08/the-new-atlanta-billionaires-behind-an-unlikely-tech-unicorn/ https://www.forbes.com/sites/alexkonrad/2018/10/08/the-new-a...
- mourinhoalex 4y ago
  Big companies also make it hard for mom and pop stores? In the end competition is tough and when there are new players old ones suffer.
  - honkler 4y ago
    point is that it doesn't matter which one of them wins. Both screw over working class people.
- spideymans 4y ago
  How? Are you talking about real estate prices?
  - honkler 4y ago
    I'm thinking of so called "disruption" associated with startups. Whose lifestyle is actually disrupted? The have-nots.
peppertree 4y ago
Big tech gives employees RSUs. There's little risk for employees and huge upside. Startups offer options, which employees have to buy with their own cash, and deal with tax implications. Average engineer can only get burned so many times before realizing startups are crap deals.
- mourinhoalex 4y ago
  Agreed, startups give you sort of a lottery rush, you imagine how much money you can make and you can accept just out of the thrill of you having so much money. More often the stock options are worthless, and that's how many companies value them when counter offering.
  - tayo42 4y ago
    I thought those options could still be sold on secondary markets? I might be wrong though
- dilyevsky 4y ago
  Title should be “greedy investors and management making life tough for themselves”. Where did i put my tiniest violin in the world…
- pacetherace 4y ago
  Startups are not a crap deal. Startups that start with the dream of raising 100s of millions are crap deals.
- echelon 4y ago
  > startups are crap deals Not always. Get in at a 200+ engineer startup that is still growing, has a huge TAM, moat, lots of velocity, and a clear path to IPO, and you've got a pretty good shot at making great money. This is a good sweet spot for risk and reward. Try to model the outcomes yourself.
  - Afton 4y ago
    In general, you won't have enough information to accurately model this yourself, IMO. You might increase your edge, but you're still basically getting lottery tickets.
ssalazar 4y ago
This can cut both ways. Even after the recent massive dip, Snap's valuation is an order of magnitude greater than Facebook's notorious buyout offer. Twitter's Fleets feature lasted less than a year, and Im not sure that their Clubhouse-"inspired" feature has gained much traction. Its not clear that even Facebook will be able to disrupt Tiktok's momentum. Slack exists and is successful despite consolidated offerings from the tech giants (Google famously has a double-digit number of chat apps). Generally, startups have drastically less internal momentum, bureaucracy, tech debt, or politics to contend with and are much better positioned to push fresh ideas, and be responsive to customer needs rather than fitting a larger corporate narrative. But its fair to say that if a startup idea is really just a feature idea (even a really good, well-executed feature idea, like Calendly) and doesn't scale its ambition beyond that, the best outcome to hope for is a buyout, and at worst being built internally by a giant. On the other hand, its never been easier to start a software business thanks to incentives from the tech giants. Google Cloud is basically free to start up and gain traction with. Granted, there may be downsides to this, but not having to think too hard about infra opens up a lot of opportunities at the same time.
- deleted 4y ago
  [deleted]
- dasil003 4y ago
  Yeah, honestly I think the bigger negative impact on startups is the incredible profitability of these targeted advertising monopolies that has pushed market salaries so high that upper quartile programmers with 3-10 years experience inherently see their value as being $500k-$1M in total comp without any real notion of what kind of business structures can generate the kind of cash flow to justify those salaries beyond just burning VC capital in an oversaturated bull market. Even though I personally have benefitted from the upward pressure to software engineering comp, as consumers I believe we would have a way better ecosystem of tech products if engineers salaries weren't tied to VC economics.
  - ditonal 4y ago
    But engineer compensation has been larger pushed up by the FAANG companies which are highly profitable. There’s some VC fueled companies competing with them like Uber but on the whole engineer compensation went up not due to VC money but because big tech was able to generate millions in profits from engineers. Every FAANG company has a P/E ratio under 30 so these big engineer packages are from strong business fundamentals and profits, not VC economics. Startups have the ability to compete in ways like better equity deals but by and large they still highly prioritize their investor concerns over hiring concerns as reflected in things like liquidation preferences in ISO and stingy equity grants. Most of the founders would rather ride their startup to the grave then re-evaluate the “standard” terms of their equity compensation approaches which each year have become more favorable for VCs and less favorable for employees. Even though big tech has many problems and things I disagree with, at the end of the day they respect engineers by paying them their value while startup founders prefer to make engineers second class citizens then bemoan their hiring difficulties.
TameAntelope 4y ago
Not for nothing, but these "American tech giants" offer huge credit programs for startups to use their platforms for free to launch. AWS offers $100k for a year if you've raised some funds, and I saw that Azure is offering $150k pre-funding (I don't know if or what the time limit is on the Azure credits). I'm sure GCP offers something similar, though I don't know the details. These are huge, and a smart startup could quite easily leverage these to skip an entire funding round (with some amount of luck). I'm not sure if you can daisy-chain these offers, but if you can, a quarter of a million dollars saved on engineering infrastructure cost is pretty much the polar opposite of "making life tough for startups". You might note use the full amount of credits, but if you've found a product/market fit (and if you haven't after the first year, that may be it's own sign), and you've not been particularly cautious about your code's efficiency, $100k is a godsend, at least insofar as you not having to actually fork over cash for your missteps in the first year. I don't know if those programs were offered when this article is written, but they're offered now so the title is no longer true.
- systemvoltage 4y ago
  Voluntary actions from big corporations don't cut the mustard. They can cancel it any time, for any reason and without warning. It's nice of them but that's not why they're in the business of giving away credits.
- degrews 4y ago
  I'm skeptical. I feel like any startup for whom 100k is "huge" is not at a stage where they'd be spending anywhere near that amount on cloud infrastructure.
  - whymauri 4y ago
    Depends on the industry. At seed in computational biotech, we had a lean team. After validating our technology as much as we could, we played a lottery on AWS to get compounds. These workloads handled tens if not hundreds of billions of rows of data and part of the selling point was the parallelizibility, so we got badass instances to show we could turnaround results in minutes whereas other companies took months. We got a 100k and 150k AWS grant from AWS, and that was a big chunk of the computational budget. We were small, but the nature of HPC and our confidence in our algorithm meant we burnt the war chest on a YOLO and raised Series A.
alexashka 4y ago
When was it ever easy to do something new that threatens the existing power structure? Oh right, never :)
systemvoltage 4y ago
There is an interesting dichotomy. On one hand, you simply cannot build advanced semiconductors without thousands of people in scale. We wouldn't have cheap semiconductors if it wasn't for big corporations. On the other hand, the moat that they build in the process through various ways (market capture, lock-ins, IP threats, etc) are real obstacles for startups. Startups are the seeds that clear out old forests and rejuvinate the land. They're necessary but so are the forces that are their obstacles. Conversation here is generally sawtoothing between these two opposing forces but may be there is a role here for some minor form of regulation. A type of an economic free zone for startups where they're immune from large corporate pressures. America could benefit from a Shenzhen/Goungzhou type of a economic free zone.
- Apocryphon 4y ago
  Startups, once sufficiently successful, also simply metamorphose into the the big corporations they displaced, witness FANG. (And even Apple itself, once built to challenge IBM's dominance.) Seems like this is all something inherent to the nature of power, regardless of the domain.
  - systemvoltage 4y ago
    Yeah, although inherent to nature would necessitate some kind of a proper death. Without it, these ancient goliaths linger around with no sense and no purpose (HP, IBM, etc).

176 points by ddtaylor 4y ago

formerkrogemp 4y ago

How have conditions changed at all in the past 4 years?

frozenport 4y ago

>> buy young firms that might challenge them This is not the worst outcome for a startup

itsgrimetime 4y ago
Yeah but is it good for competition?
- outside1234 4y ago
  No but it is not exactly tough for the startup :)
spaetzleesser 4y ago
But a bad outcome for the economy overall. In the medical industry this is extreme. The startup scene is basically a feeder pipeline for the big guys. Nobody even tries to start a self sustaining business.
- louniks 4y ago
  I wonder if this can be viewed as (yet another?) example of companies externalizing the negatives. Pollution is the classic example, both during manufacture and at the end of the lifecycle. In this case, it would be financial risk. Founders bootstrap a start-up, either with their own money or outside investors, and these folks carry all the risk. The established players can safely wait until the startup either fails or succeeds, and buy into a sure thing in the latter case.
  - lotsofpulp 4y ago
    I think it is simply a consequence of technology enabling instant global communications and decreasing marginal costs precipitously giving bigger players an enormous advantage.
  - mateo411 4y ago
    I'm not sure about that. An acquisition is a risky thing for a company to do as well. It's never a sure thing and correctly pricing the acquisition or predicting if the company will be successful with the acquisition is also not guaranteed or easy.
  - nijave 4y ago
    For some highly regulated industries, it's hard to bring small products to market. In banking, there are tiered regulations based on your size (in the U.S.) so there's more overhead for large companies
actionablefiber 4y ago
It might be a nice payday for the founders but it's terrible for the business environment. It's basically a bribe to stop operating in that sector. Sure, it beats out Microsoft churning out the Teams to your Slack/Loop to your Notion, then rolling it into 365 and eating your enterprise market share alive without so much as a consolation prize, but as a user any time a great product hits the market, no matter how much I like it I have to worry if I can trust the company to be around for the long haul and stick to their offering.
- scarface74 4y ago
  The entire “business” of startups is to get acquired. Few expect to go public.
  - nonrandomstring 4y ago
    I think we might more accurately say; the entire “business” of some investors is to get companies acquired. That's not the same motive as seen from inside the startup. And indeed, it's only some investors. I believe there are plenty who are in it for the long game, or are far more strategic in terms of ROI.
    - scarface74 4y ago
      Once the startup takes investor funding, it’s irrelevant what those inside the startup want. That being said, we all go to work to exchange labor for money. It’s naive for employees to see working for any for profit company as anything more than just a financial transaction. Investors know that the chances of a startup to go public and then be profitable enough to have long term stock gains is infinitesimally small. Can you name one startup that has been really successful - ie throwing off crazy profits and margins since Facebook? Investors aren’t interested in “lifestyle businesses”.
      - jdsully 4y ago
        > Once the startup takes investor funding, it’s irrelevant what those inside the startup want. It really depends on the ownership structure, and that will depend on leverage at the time of fundraising. YC companies are unlikely to give up control until Series B (but like all things your mileage may vary).
riazrizvi 4y ago
We made them an offer they couldn't refuse.
- daniel-cussen 4y ago
  Yeah I didn't get what that meant in the Godfather movie, but I got it when I read the book (which is amazing, so so good, not as good as the movie but still). It's not an offer if it can't be refused, it's just theft.
  - mateo411 4y ago
    > it's just theft. and extortion.
    - daniel-cussen 4y ago
      Yes, both.

jthacker 4y ago

I'm unable to read the article due to the paywall, but if the first paragraph is indicative of the thesis, then it is "startups that build incremental functionality on top of existing products are upset when the company improves their product with the same functionality". I'd say there are two issues at play here: 1. The large Tech companies are too big and do too many things. They should be broken up for no other reason than to protect the public from their eventual collapse or abuse of power. 2. As a startup, don't build an incremental product that can easily be scooped by a competitor, especially if that competitor is a mega corporation.

zeruch 4y ago
"s a startup, don't build an incremental product that can easily be scooped by a competitor" unless that's the goal (and sometimes it is).

ren_engineer 4y ago

the amount of data Google and Facebook have isn't talked about enough in this context, they most likely have internal tools that allow them to project which startups are becoming successful and either copy them early or just acquire them before the startup itself realizes how much potential they have Instagram acquisition for 1 billion as an example was a steal in hindsight, I bet facebook had more accurate forecasts for their growth than Instagram itself. I know Facebook did get some bad PR for collecting user data via a VPN app, but they didn't face any legal consequences- https://en.wikipedia.org/wiki/Onavo https://en.wikipedia.org/wiki/Onavo This doesn't even address how at a societal level these companies can basically create self-fulfilling prophecies by manipulating what stories and information is shown to people also makes me wonder about AWS/Amazon and what their policy is around copying some of their customers. They obviously fork or outright deploy managed open source projects to compete with them. I know Walmart doesn't let any of their suppliers use AWS either.

jethkl 4y ago
In prior life, I worked at place where we had access to data that contained user searches. We could plainly see that google searches, due to autocomplete, "quantize" results in a way that bing and others don't. The result is that google searches are almost inorganic crafted things, and they contain unusual artifacts. The impact on society is definitely real.
- guerrilla 4y ago
  > The impact on society is definitely real. What impact do you mean and how do you know?
  - jethkl 4y ago
    For "what" -- I don't specify. Regarding "how I know", I start with several premises: 1) search engines are the dominant way to find information now. 2) conservatively, ≥80% of searches in US are through google. 3) google is not a passive observer of user search queries, but instead actively suggests queries to users. It follows that there must be some impact. The "engagement" effect is this: I start a search for Depeche Mode, but get distracted by suggestions for J Depp. In contrast, DDG suggests Depakote, Depression, Dept of Revenue and a few other things. Other search engines seem to be less aggressive.

stevewatson301 4y ago

https://archive.ph/nX06E https://archive.ph/nX06E

dzink 4y ago

There are several stacked catch 22s here. 1. Often the giants don’t pursue a space until a startup proves it’s viable - in that case you have to start something to make it happen. 2. Even internally there is a lot of competition at the giants for prime real estate and promo space on the apps to feature existing or new internal projects. The more types of projects the business launches, the more it has to kill because the mobile screen won’t grow any bigger. So there is a limit on how many acquired companies will actually keep living. If the team is any good, they are also pulled in other directions. For every github and instagram there are many more dead ends and even more so acquisitions of data. It makes you wonder: what if in addition to privacy policy and terms documents, each online property has an acquisition terms statement. That would state for users and future acquirers see what is up for grabs if the startup is ever acquired (would product keep operating as part of the deal, would data be erased, would software be open sourced, would users/employees get some kind of a distribution, etc.)

daniel-cussen 4y ago
In terms of acquisition statements, music labels I read do 5 year contracts, with all contracts renegotiated upon acquisition. Says it all, that's why YC says don't do a music startup. Just don't.
Apocryphon 4y ago
> All the while, Martino’s ultimate warning—that they might someday regret actually getting the money they wanted—would still hang over these two young men, inherent to a system designed to turn strivers into subcontractors. Instead of what you want to build—the consumer-facing, world-remaking thing—almost invariably you are pushed to build a small piece of technology that somebody with a lot of money wants built cheaply. As the engineer and writer Alex Payne put it, these startups represent “the field offices of a large distributed workforce assembled by venture capitalists and their associate institutions,” doing low-overhead, low-risk R&D for five corporate giants. In such a system, the real disillusionment isn’t the discovery that you’re unlikely to become a billionaire; it’s the realization that your feeling of autonomy is a fantasy, and that the vast majority of you have been set up to fail by design. > They ran an experiment. None of their lives have been ruined.” He knew they’d get good jobs, even if it meant the life of a project manager at Yahoo. “And none of their investors’ lives have been ruined either. When they close up shop, their investors will say, ‘That’s one more off the books. I don’t need to help them anymore. I get my time back.’” No Exit: Struggling to Survive a Modern Gold Rush by Gideon Lewis-Kraus https://news.ycombinator.com/item?id=7643902 https://news.ycombinator.com/item?id=7643902

WalterGR 4y ago

If anyone is curious, the submission from 2018 got 455 points and 164 comments: https://news.ycombinator.com/item?id=17221885 https://news.ycombinator.com/item?id=17221885

honkler 4y ago

and these "startups" are making life tough for small businesses (mom and pop stores). No sympathy from me.

bryanrasmussen 4y ago
yeah, just thinking about all the artisanal home grown mom and pop run email autocompleting companies that EasyEmail was putting out of business gives me the heebie-jeebies.
- Apocryphon 4y ago
  Mailchimp was a little like that, as it was started in 2001, between tech bubbles, and was mostly a side project for years. https://www.forbes.com/sites/alexkonrad/2018/10/08/the-new-atlanta-billionaires-behind-an-unlikely-tech-unicorn/ https://www.forbes.com/sites/alexkonrad/2018/10/08/the-new-a...
mourinhoalex 4y ago
Big companies also make it hard for mom and pop stores? In the end competition is tough and when there are new players old ones suffer.
- honkler 4y ago
  point is that it doesn't matter which one of them wins. Both screw over working class people.
spideymans 4y ago
How? Are you talking about real estate prices?
- honkler 4y ago
  I'm thinking of so called "disruption" associated with startups. Whose lifestyle is actually disrupted? The have-nots.

peppertree 4y ago

Big tech gives employees RSUs. There's little risk for employees and huge upside. Startups offer options, which employees have to buy with their own cash, and deal with tax implications. Average engineer can only get burned so many times before realizing startups are crap deals.

mourinhoalex 4y ago
Agreed, startups give you sort of a lottery rush, you imagine how much money you can make and you can accept just out of the thrill of you having so much money. More often the stock options are worthless, and that's how many companies value them when counter offering.
- tayo42 4y ago
  I thought those options could still be sold on secondary markets? I might be wrong though
dilyevsky 4y ago
Title should be “greedy investors and management making life tough for themselves”. Where did i put my tiniest violin in the world…
pacetherace 4y ago
Startups are not a crap deal. Startups that start with the dream of raising 100s of millions are crap deals.
echelon 4y ago
> startups are crap deals Not always. Get in at a 200+ engineer startup that is still growing, has a huge TAM, moat, lots of velocity, and a clear path to IPO, and you've got a pretty good shot at making great money. This is a good sweet spot for risk and reward. Try to model the outcomes yourself.
- Afton 4y ago
  In general, you won't have enough information to accurately model this yourself, IMO. You might increase your edge, but you're still basically getting lottery tickets.

ssalazar 4y ago

This can cut both ways. Even after the recent massive dip, Snap's valuation is an order of magnitude greater than Facebook's notorious buyout offer. Twitter's Fleets feature lasted less than a year, and Im not sure that their Clubhouse-"inspired" feature has gained much traction. Its not clear that even Facebook will be able to disrupt Tiktok's momentum. Slack exists and is successful despite consolidated offerings from the tech giants (Google famously has a double-digit number of chat apps). Generally, startups have drastically less internal momentum, bureaucracy, tech debt, or politics to contend with and are much better positioned to push fresh ideas, and be responsive to customer needs rather than fitting a larger corporate narrative. But its fair to say that if a startup idea is really just a feature idea (even a really good, well-executed feature idea, like Calendly) and doesn't scale its ambition beyond that, the best outcome to hope for is a buyout, and at worst being built internally by a giant. On the other hand, its never been easier to start a software business thanks to incentives from the tech giants. Google Cloud is basically free to start up and gain traction with. Granted, there may be downsides to this, but not having to think too hard about infra opens up a lot of opportunities at the same time.

deleted 4y ago
[deleted]
dasil003 4y ago
Yeah, honestly I think the bigger negative impact on startups is the incredible profitability of these targeted advertising monopolies that has pushed market salaries so high that upper quartile programmers with 3-10 years experience inherently see their value as being $500k-$1M in total comp without any real notion of what kind of business structures can generate the kind of cash flow to justify those salaries beyond just burning VC capital in an oversaturated bull market. Even though I personally have benefitted from the upward pressure to software engineering comp, as consumers I believe we would have a way better ecosystem of tech products if engineers salaries weren't tied to VC economics.
- ditonal 4y ago
  But engineer compensation has been larger pushed up by the FAANG companies which are highly profitable. There’s some VC fueled companies competing with them like Uber but on the whole engineer compensation went up not due to VC money but because big tech was able to generate millions in profits from engineers. Every FAANG company has a P/E ratio under 30 so these big engineer packages are from strong business fundamentals and profits, not VC economics. Startups have the ability to compete in ways like better equity deals but by and large they still highly prioritize their investor concerns over hiring concerns as reflected in things like liquidation preferences in ISO and stingy equity grants. Most of the founders would rather ride their startup to the grave then re-evaluate the “standard” terms of their equity compensation approaches which each year have become more favorable for VCs and less favorable for employees. Even though big tech has many problems and things I disagree with, at the end of the day they respect engineers by paying them their value while startup founders prefer to make engineers second class citizens then bemoan their hiring difficulties.

TameAntelope 4y ago

Not for nothing, but these "American tech giants" offer huge credit programs for startups to use their platforms for free to launch. AWS offers $100k for a year if you've raised some funds, and I saw that Azure is offering $150k pre-funding (I don't know if or what the time limit is on the Azure credits). I'm sure GCP offers something similar, though I don't know the details. These are huge, and a smart startup could quite easily leverage these to skip an entire funding round (with some amount of luck). I'm not sure if you can daisy-chain these offers, but if you can, a quarter of a million dollars saved on engineering infrastructure cost is pretty much the polar opposite of "making life tough for startups". You might note use the full amount of credits, but if you've found a product/market fit (and if you haven't after the first year, that may be it's own sign), and you've not been particularly cautious about your code's efficiency, $100k is a godsend, at least insofar as you not having to actually fork over cash for your missteps in the first year. I don't know if those programs were offered when this article is written, but they're offered now so the title is no longer true.

systemvoltage 4y ago
Voluntary actions from big corporations don't cut the mustard. They can cancel it any time, for any reason and without warning. It's nice of them but that's not why they're in the business of giving away credits.
degrews 4y ago
I'm skeptical. I feel like any startup for whom 100k is "huge" is not at a stage where they'd be spending anywhere near that amount on cloud infrastructure.
- whymauri 4y ago
  Depends on the industry. At seed in computational biotech, we had a lean team. After validating our technology as much as we could, we played a lottery on AWS to get compounds. These workloads handled tens if not hundreds of billions of rows of data and part of the selling point was the parallelizibility, so we got badass instances to show we could turnaround results in minutes whereas other companies took months. We got a 100k and 150k AWS grant from AWS, and that was a big chunk of the computational budget. We were small, but the nature of HPC and our confidence in our algorithm meant we burnt the war chest on a YOLO and raised Series A.

alexashka 4y ago

When was it ever easy to do something new that threatens the existing power structure? Oh right, never :)

systemvoltage 4y ago

There is an interesting dichotomy. On one hand, you simply cannot build advanced semiconductors without thousands of people in scale. We wouldn't have cheap semiconductors if it wasn't for big corporations. On the other hand, the moat that they build in the process through various ways (market capture, lock-ins, IP threats, etc) are real obstacles for startups. Startups are the seeds that clear out old forests and rejuvinate the land. They're necessary but so are the forces that are their obstacles. Conversation here is generally sawtoothing between these two opposing forces but may be there is a role here for some minor form of regulation. A type of an economic free zone for startups where they're immune from large corporate pressures. America could benefit from a Shenzhen/Goungzhou type of a economic free zone.

Apocryphon 4y ago
Startups, once sufficiently successful, also simply metamorphose into the the big corporations they displaced, witness FANG. (And even Apple itself, once built to challenge IBM's dominance.) Seems like this is all something inherent to the nature of power, regardless of the domain.
- systemvoltage 4y ago
  Yeah, although inherent to nature would necessitate some kind of a proper death. Without it, these ancient goliaths linger around with no sense and no purpose (HP, IBM, etc).