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I think another way to beat silicon valley competitors is to not take as much VC funding. In some ways, it reminds me of when boxers try to move up weight class
by tqi 3y ago
I think another way to beat silicon valley competitors is to not take as much VC funding. In some ways, it reminds me of when boxers try to move up weight classes beyond their "natural" weight. Often the abilities required at the new weight comes at the expense of the very things that made them excel at their previous weight. Similarly, successful companies who need to hit X00s millions in revenue to justify its funding level are forced to work on features or business models that aren't actually viable, and thus are vulnerable to smaller competitors.
- gtirloni 3y agoHow do you define "beat" here? It seems you're advocating for not playing the game at all so there's nothing to beat.
- tqi 3y agoFair point, by "beat" I mean create a sustainable business. I think that in a lot of cases orienting a company around building a $100M/yr business and a $1B/yr business are mutually exclusive, because product/sales/marketing teams invariably are incentivized to focus only on the high upside speculative future stuff rather than shoring up the existing business lines. So agreed, you're not really beating them at becoming the "Uber for X", you're just building a business that is in the X space?
- ignoramous 3y agoThe implication is that the go big or go home pretenders may crash while you remain in the game.
- bdcravens 3y agoSurvive and prosper at the scale that makes sense for your business, rather than VC scale.
- tqi 3y agoYeah to expand on that a bit, I think VCs have a portfolio of bets and need extreme, outlier wins in order to come out ahead. So even if the scale doesn't make sense for a business, VCs will push them to pursue it because it is optimal for the VC.
- leetharris 3y agoThis works unless they have so much VC cash that they lower their prices into massively negative margins for long enough to kill competition. Then they either die or jack the prices up. This has happened to two companies I've worked at. It's the biggest problem with VC funding. It creates an unhealthy ecosystem.
- piva00 3y agoAnd that tactic is usually called dumping in international trade, it's one aspect of the VC-funding tech culture that I don't understand how hasn't been fought with regulation, it's incredibly anti-competitive since the price is artificially low and only sustained by losses through a massive amount of capital. It isn't healthy for the free market, it might lower prices for customers for the period while dumping makes sense and a competitor outlives others but it will inevitably lead to increased prices when a company finally engulfs a big enough marketshare to be safe. Predatory pricing is a ridiculous practice, killing a lot of innovation.