3 ms·

Devil's advocate: more acquisitions creates more incentive to launch a start-up. More startups create more competition.

paxys 2y ago
It's not a simple "acquisitions are good" or "acquisitions are bad" discussion. There is an ideal amount of M&A activity in an economy which is more than "no startup ever gets acquired" and less than "every startup is bought out by big tech". In recent years we have been closer to the first extreme, and very few startups have had exits of any kind.
- mattboardman 2y ago
  Arguing good or bad on a single data point is reductive. I'm raising awareness that there is a counter argument for assuming excessive M&As is "bad."
mrguyorama 2y ago
A startup made for the purpose of acquisition was never a competitor. If you are willing to sell to the big player in your industry you are not competing, you are an opportunist. A startup that wants to compete will run very differently from a startup that wants to be purchased. A big whale company that gobbles up some of the fifty startups that only have like 2% of the market total is not a competitive market at all.
- mattboardman 2y ago
  >A startup made for the purpose of acquisition was never a competitor You cannot get acquired unless you represent a percentage of market share, have IP which will lead to greater market share, and/or have employees who can expand market share for a product. >A big whale company that gobbles up some of the fifty startups that only have like 2% of the market total is not a competitive market at all. A big whale company performing that many M&As to little startups is essentially fueling future competitors. If I was an investor I would see that market as valuable for the unicorn breakthrough possibility or at least an eventual acquisition exit event.
  - mcmcmc 2y ago
    > A big whale company performing that many M&As to little startups is essentially fueling future competitors. What an absolute load. They are stamping out competition, concentrating market power, and making red oceans even redder. If you were an investor I wouldn’t give you my money to gamble with.

It's not a simple "acquisitions are good" or "acquisitions are bad" discussion. There is an ideal amount of M&A activity in an economy which is more than "no startup ever gets acquired" and less than "every startup is bought out by big tech". In recent years we have been closer to the first extreme, and very few startups have had exits of any kind.

mattboardman 2y ago
Arguing good or bad on a single data point is reductive. I'm raising awareness that there is a counter argument for assuming excessive M&As is "bad."

mrguyorama 2y ago

A startup made for the purpose of acquisition was never a competitor. If you are willing to sell to the big player in your industry you are not competing, you are an opportunist. A startup that wants to compete will run very differently from a startup that wants to be purchased. A big whale company that gobbles up some of the fifty startups that only have like 2% of the market total is not a competitive market at all.

mattboardman 2y ago
>A startup made for the purpose of acquisition was never a competitor You cannot get acquired unless you represent a percentage of market share, have IP which will lead to greater market share, and/or have employees who can expand market share for a product. >A big whale company that gobbles up some of the fifty startups that only have like 2% of the market total is not a competitive market at all. A big whale company performing that many M&As to little startups is essentially fueling future competitors. If I was an investor I would see that market as valuable for the unicorn breakthrough possibility or at least an eventual acquisition exit event.
- mcmcmc 2y ago
  > A big whale company performing that many M&As to little startups is essentially fueling future competitors. What an absolute load. They are stamping out competition, concentrating market power, and making red oceans even redder. If you were an investor I wouldn’t give you my money to gamble with.