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Let's assume you're right. Then essentially, startups are primarily making money by exploiting the irrationality and inefficiency of modern corporate decision m

by asdflkj 19y ago

Let's assume you're right. Then essentially, startups are primarily making money by exploiting the irrationality and inefficiency of modern corporate decision making? That's not very nice. I wouldn't call it stealing, but it's a far cry from PG's squeaky-clean ideal of "creating wealth". But I don't think you're exactly right, either (though most of your points are well taken). First of all, >$B acquisitions account for a small percentage of all acquisitions, and using them as a model isn't instructive. Do you think Google was afraid that Zenter would displace it? Second of all, when assessing the average startup's risk profile, success shouldn't be defined as displacing the BigCo. It should be defined as making some money (say, a few million). If there is a 99% chance that nobody will want to pay for it, are you really making something people want?

nostrademons 19y ago
> Do you think Google was afraid that Zenter would displace it? No, but I think Google was afraid that it would displace Presently, its presentation software. Since Google wants to play in the "online office software" market, they're afraid of someone else becoming a market leader in one of the sub-markets for that and fragmenting that market before they can dominate it. They also bought one of Zenter's competitors. > If there is a 99% chance that nobody will want to pay for it, are you really making something people want? It's not enough just to make something people want. You have to make it better than everyone else. This is implicit in startup advice, but it applies here because we're talking about mature markets. With startups, it's assumed that you're not going to build something someone else is already doing better, because then you're not really making something people want (they want your competitors instead). And you don't generally worry about someone coming along with a better product later, because if you have a head-start and work your ass off, they'll want to buy you rather than spend the time, money, and risk of developing it themself. However, if you then spurn their acquisition offer, they have no choice but to try and beat you, and there's a good chance that they will, because they have more resources. You've still made something people want, but then you force BigCo to waste money duplicating it (and possibly duplicating it better) instead of buying you.
- asdflkj 19y ago
  So basically, the reason not to try to go for revenue is that BigCo will crush you, unless they buy you. But will they every time? In Zenter's case, it was inevitable that it would come to that. But are BigCos after every market that exists? Does Google care if $1M can be made a year from something that has nothing to do with any of their products? Duplicating your technology is worth it if a lot of money is at stake, by BigCo's definition of "a lot". But if there isn't? I don't think you will deny that, in theory, there are markets such that if you want to capture them, it's better to go for revenue than for exit. The question that interests me, what percentage of all markets do they comprise[1]? Everyone seems to completely ignore them in favor of the Zenter way, as per pg's advice. Are they insignificant, or underestimated? [1]Of course, there will be no precise percentage figure, unless someone can come up with a list of all the things that people want. pg's next essay, maybe?
  - nostrademons 19y ago
    Oh, I think the majority of markets are ones where it's better to go for revenue rather than exit. By a large margin. After all, most of the country is not Silicon Valley, and most industries outside of tech (and to a lesser extent biotech) do not support acquisitions the way tech does. Actually, I think that even if you're going for an exit, it's better to go for revenue - at least enough to support yourself profitably. You're in a much better negotiating position if you don't need to be acquired. But I assumed that if you're here, you're interested in the normal tech-startup lifecycle. Come out with an innovative product, grow very fast, disrupt some markets, and then get bought. Because that's what PG has experience in, that's what his friends do, and that's what most of the sites featured here do. If you're in a brick & mortar business, you're much better off talking to local entrepreneurs than reading here. Just make sure that you know which strategy you're pursuing (revenue-based growth vs. quick acquisition), and that everything you do - market, team, capital structure, business model, positioning, technology platform, engineering process - supports it. Some tech entrepreneurs think that they'll do a technology business that's based upon slow revenue-based growth - I worked for 2 years at one. However, there's a very real risk of having the market pass you by, and being marginalized in a tiny corner where you're essentially relegated to consulting. If you're going to grow slowly, you need to pick your market niches carefully, you need a robust software engineering process, and you can't afford to enter a market with lock-in.

by asdflkj 19y ago

nostrademons 19y ago

> Do you think Google was afraid that Zenter would displace it? No, but I think Google was afraid that it would displace Presently, its presentation software. Since Google wants to play in the "online office software" market, they're afraid of someone else becoming a market leader in one of the sub-markets for that and fragmenting that market before they can dominate it. They also bought one of Zenter's competitors. > If there is a 99% chance that nobody will want to pay for it, are you really making something people want? It's not enough just to make something people want. You have to make it better than everyone else. This is implicit in startup advice, but it applies here because we're talking about mature markets. With startups, it's assumed that you're not going to build something someone else is already doing better, because then you're not really making something people want (they want your competitors instead). And you don't generally worry about someone coming along with a better product later, because if you have a head-start and work your ass off, they'll want to buy you rather than spend the time, money, and risk of developing it themself. However, if you then spurn their acquisition offer, they have no choice but to try and beat you, and there's a good chance that they will, because they have more resources. You've still made something people want, but then you force BigCo to waste money duplicating it (and possibly duplicating it better) instead of buying you.

asdflkj 19y ago
So basically, the reason not to try to go for revenue is that BigCo will crush you, unless they buy you. But will they every time? In Zenter's case, it was inevitable that it would come to that. But are BigCos after every market that exists? Does Google care if $1M can be made a year from something that has nothing to do with any of their products? Duplicating your technology is worth it if a lot of money is at stake, by BigCo's definition of "a lot". But if there isn't? I don't think you will deny that, in theory, there are markets such that if you want to capture them, it's better to go for revenue than for exit. The question that interests me, what percentage of all markets do they comprise[1]? Everyone seems to completely ignore them in favor of the Zenter way, as per pg's advice. Are they insignificant, or underestimated? [1]Of course, there will be no precise percentage figure, unless someone can come up with a list of all the things that people want. pg's next essay, maybe?
- nostrademons 19y ago
  Oh, I think the majority of markets are ones where it's better to go for revenue rather than exit. By a large margin. After all, most of the country is not Silicon Valley, and most industries outside of tech (and to a lesser extent biotech) do not support acquisitions the way tech does. Actually, I think that even if you're going for an exit, it's better to go for revenue - at least enough to support yourself profitably. You're in a much better negotiating position if you don't need to be acquired. But I assumed that if you're here, you're interested in the normal tech-startup lifecycle. Come out with an innovative product, grow very fast, disrupt some markets, and then get bought. Because that's what PG has experience in, that's what his friends do, and that's what most of the sites featured here do. If you're in a brick & mortar business, you're much better off talking to local entrepreneurs than reading here. Just make sure that you know which strategy you're pursuing (revenue-based growth vs. quick acquisition), and that everything you do - market, team, capital structure, business model, positioning, technology platform, engineering process - supports it. Some tech entrepreneurs think that they'll do a technology business that's based upon slow revenue-based growth - I worked for 2 years at one. However, there's a very real risk of having the market pass you by, and being marginalized in a tiny corner where you're essentially relegated to consulting. If you're going to grow slowly, you need to pick your market niches carefully, you need a robust software engineering process, and you can't afford to enter a market with lock-in.