3 ms·

How can they compete with well capitalized start ups?

deleted 2y ago
[deleted]
crimsoneer 2y ago
One question here is what does "competing" mean... Can they compete on user growth? Probably not, because that's the core VC model. Can they compete on product quality... Maybe?
drekipus 2y ago
The goal isn't to compete, only exist.
chromanoid 2y ago
Stability, sustainability, EU legislation compliance and taking care of your individual problems. If it goes well, the companies will grow with you and don't outgrow you. I think there is a growing Digital Mittelstand in Germany already. I myself work for such a company. We have some strong VC-backed competition. So far the company, self-financed, fares quite well. I think the author misses a plethora of B2B markets when coming up with examples. There Mittelstand can be a very stable, (if desired) regional long time partner.
- whstl 2y ago
  I have worked for a couple of those as well. Super interesting niche products, that were crucial for people's day to day work, sustainable work pace, always shipping interesting features every other week. A lot of focus on quality (the QA:Dev ratio was 1:1 in one of those for example). A lot different from the "we must rule the world or die" from regular startups outside Germany. Incidentally one of those companies I was in just died, after getting from 50-90 (when I was there) to 900 employees. I'm glad I left before the decline.
MHard 2y ago
I think the idea would be to compete in different segments. Startups often focus on problems where hypergrowth is at least possible with massive investments. But the examples listed in the article advocate for ideas that might generate millions but not billions in revenue. Some of the ideas the author is proposing are already happening in Germany. There are grants to develop games for instance which pay you a monthly salary for 1 year and a while back there was a similar one for open source projects.
- llm_trw 2y ago
  There is a huge gap in the market, I'd say between capital investment of $50,000 and $5,000,000, where a ton of ideas which can make 20%+ ROI per year once mature live. But because they will never hyper scale they can't be financed by startups, and banks are too scared and stupid to invest. I've done the math for a document segmentation pipeline that every RAG system needs and you'd be able to get one off the ground for around $2,000,000 USD and be rolling in cash instantly. Good speaker diarization is another family of models that will print money once solved, but again, there isn't the possibility for hyper scale. Meanwhile at least a dozen companies I've spoken to have wasted on the order of $10,000,000 trying to solve these problems in house and failed.
raverbashing 2y ago
By not going away like Pongo, Brzl does in 10 months And I agree, there's probably a market for reliable, local services for some services. In the same way there is desktop SW from companies you never heard about (and far smaller than Amazon) doing things you never imagined were a problem
api 2y ago
The hardest thing is competing with free. Well funded startups can "dump" free products and services into the market to kill competition and capture the market. Large corporations also dump open source into the market to commoditize their compliments or kill competition. Dumping is illegal in a lot of commodities markets and physical goods industries but it's standard operating practice in software. It's hard to even imagine how different the software world would look if dumping were at least regulated.
alkonaut 2y ago
Most businesses aren't going to be well-capitalized startups. Because that kind of capital usually goes to businesses that can scale very quickly and to a large size. But say I have an idea for a business, where the total number of customers worldwide is 100. The max number of employees ever sustainable by this business is, say, 50. But to reach that would take 20 or 30 years of organic growth , maybe a bit less with huge investment. It's what most businesses look like. It's not going to attract a ton of startup money. But it's also not going to be out-competed by a startup.
jillesvangurp 2y ago
Startups are like fruit flies. Most startups never get to sustainable revenue. Being well funded just means they burn brightly. You blink and they are gone. The vast majority of startup founders I've talked to over the last 15 years have gone through several startups. Well over 90% of those startups are long gone and forgotten. VC money evaporated. Staff disbanded, acquihired, poached, etc. Small companies compete by making money. Even a modest amount of money can be sustainable. If you can get to about half a million per year in revenue (enough to employ a few people), a small group of people can get a lot of stuff done. That sounds easy but it's not. The first few hundred thousand revenue are really hard. You are dealing with customers that are demanding results, haggling over pricing, and facing the brutal realities of product market fit all while you are running out of money and time. That's what building a company means. Early success is very fragile. My pro-tip to startups is to stop calling yourself a startup as soon as you can. Set yourself apart from the wannabes. People will take you more seriously. And the last thing a potential customer wants to hear is that you are this cute startup that is still figuring things out. That just sounds super flaky as a sales pitch. They don't need to invest in you; they need to buy your product and for that they need to believe in your product. And your product had better do it's job or they'll want their money back. If you make money, you should be wary of investors. And if you don't, even more so. There's no such thing as a free lunch. You're a company that's making money, that has a plan, that knows what they are doing. The sooner you believe that's true, the sooner you'll make your company a success. Most startups have none of those qualities.
mtrimpe 2y ago
Most tech startups create a monopoly by hiding real-time access to user data behind closed down apps which can force-include ads in your feeds. A simple EU regulation that requires offering real-time distribution of user data to third parties would massively level the playing field.

deleted 2y ago

[deleted]

One question here is what does "competing" mean... Can they compete on user growth? Probably not, because that's the core VC model. Can they compete on product quality... Maybe?

drekipus 2y ago

The goal isn't to compete, only exist.

chromanoid 2y ago

Stability, sustainability, EU legislation compliance and taking care of your individual problems. If it goes well, the companies will grow with you and don't outgrow you. I think there is a growing Digital Mittelstand in Germany already. I myself work for such a company. We have some strong VC-backed competition. So far the company, self-financed, fares quite well. I think the author misses a plethora of B2B markets when coming up with examples. There Mittelstand can be a very stable, (if desired) regional long time partner.

whstl 2y ago
I have worked for a couple of those as well. Super interesting niche products, that were crucial for people's day to day work, sustainable work pace, always shipping interesting features every other week. A lot of focus on quality (the QA:Dev ratio was 1:1 in one of those for example). A lot different from the "we must rule the world or die" from regular startups outside Germany. Incidentally one of those companies I was in just died, after getting from 50-90 (when I was there) to 900 employees. I'm glad I left before the decline.

MHard 2y ago

I think the idea would be to compete in different segments. Startups often focus on problems where hypergrowth is at least possible with massive investments. But the examples listed in the article advocate for ideas that might generate millions but not billions in revenue. Some of the ideas the author is proposing are already happening in Germany. There are grants to develop games for instance which pay you a monthly salary for 1 year and a while back there was a similar one for open source projects.

llm_trw 2y ago
There is a huge gap in the market, I'd say between capital investment of $50,000 and $5,000,000, where a ton of ideas which can make 20%+ ROI per year once mature live. But because they will never hyper scale they can't be financed by startups, and banks are too scared and stupid to invest. I've done the math for a document segmentation pipeline that every RAG system needs and you'd be able to get one off the ground for around $2,000,000 USD and be rolling in cash instantly. Good speaker diarization is another family of models that will print money once solved, but again, there isn't the possibility for hyper scale. Meanwhile at least a dozen companies I've spoken to have wasted on the order of $10,000,000 trying to solve these problems in house and failed.

raverbashing 2y ago

By not going away like Pongo, Brzl does in 10 months And I agree, there's probably a market for reliable, local services for some services. In the same way there is desktop SW from companies you never heard about (and far smaller than Amazon) doing things you never imagined were a problem

api 2y ago

The hardest thing is competing with free. Well funded startups can "dump" free products and services into the market to kill competition and capture the market. Large corporations also dump open source into the market to commoditize their compliments or kill competition. Dumping is illegal in a lot of commodities markets and physical goods industries but it's standard operating practice in software. It's hard to even imagine how different the software world would look if dumping were at least regulated.

alkonaut 2y ago

Most businesses aren't going to be well-capitalized startups. Because that kind of capital usually goes to businesses that can scale very quickly and to a large size. But say I have an idea for a business, where the total number of customers worldwide is 100. The max number of employees ever sustainable by this business is, say, 50. But to reach that would take 20 or 30 years of organic growth , maybe a bit less with huge investment. It's what most businesses look like. It's not going to attract a ton of startup money. But it's also not going to be out-competed by a startup.

jillesvangurp 2y ago

Startups are like fruit flies. Most startups never get to sustainable revenue. Being well funded just means they burn brightly. You blink and they are gone. The vast majority of startup founders I've talked to over the last 15 years have gone through several startups. Well over 90% of those startups are long gone and forgotten. VC money evaporated. Staff disbanded, acquihired, poached, etc. Small companies compete by making money. Even a modest amount of money can be sustainable. If you can get to about half a million per year in revenue (enough to employ a few people), a small group of people can get a lot of stuff done. That sounds easy but it's not. The first few hundred thousand revenue are really hard. You are dealing with customers that are demanding results, haggling over pricing, and facing the brutal realities of product market fit all while you are running out of money and time. That's what building a company means. Early success is very fragile. My pro-tip to startups is to stop calling yourself a startup as soon as you can. Set yourself apart from the wannabes. People will take you more seriously. And the last thing a potential customer wants to hear is that you are this cute startup that is still figuring things out. That just sounds super flaky as a sales pitch. They don't need to invest in you; they need to buy your product and for that they need to believe in your product. And your product had better do it's job or they'll want their money back. If you make money, you should be wary of investors. And if you don't, even more so. There's no such thing as a free lunch. You're a company that's making money, that has a plan, that knows what they are doing. The sooner you believe that's true, the sooner you'll make your company a success. Most startups have none of those qualities.

mtrimpe 2y ago

Most tech startups create a monopoly by hiding real-time access to user data behind closed down apps which can force-include ads in your feeds. A simple EU regulation that requires offering real-time distribution of user data to third parties would massively level the playing field.