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A large corporation doesn't have the agility or culture to experiment with risky projects. Nor do they want to, because when a bigcorp project publicly fails th

by gizmo 11y ago

A large corporation doesn't have the agility or culture to experiment with risky projects. Nor do they want to, because when a bigcorp project publicly fails the PR hit will shave billions off their market cap. A startup on the other hand can take these risks freely. Startups are expected to fail, so the fallout can be managed easily. Recognizing this advantage, entrepreneurs start businesses with the express purpose to be sold to a large company. That's the goal from day #1. So the product is really the company itself: the people, the IP, the early-adopter customer base, the proof-of-concept tech. The large business has money and infrastructure necessary to turn something small into something big. The startup can experiment freely and be risky and irresponsible. It's a win-win. The large business doesn't care if the startup makes $1M or -1$M, because both numbers round to zero. Startups that focus on profitability at the expense of growth tend to turn into lifestyle companies. When companies without traction get acquired, it's typically a talent acquisition. The tech gets discarded. Not much money is involved, but the entrepreneurs get to claim a successful exit. This makes it much easier for them to raise money for their next venture. When companies are forced to sell because they've run out of money that's not a success, but a graceful failure.

bsbechtel 11y ago
>>A large corporation doesn't have the agility or culture to experiment with risky projects. Nor do they want to, because when a bigcorp project publicly fails the PR hit will shave billions off their market cap. In general I agree with you, but Apple, Google, and Amazon all have very risky, very high profile internal projects in their portfolios. These are also the main companies playing the acquisition game in SV.
- austenallred 11y ago
  Regardless of how risk-tolerant a company is, no company would ever pretend to have a monopoly on successful innovation. The only scenario in which there would be zero acquisitions would be if the company could create everything that would be of value to it within the company. Of course, that will never happen.
- onion2k 11y ago
  In general I agree with you, but Apple, Google, and Amazon all have very risky, very high profile internal projects in their portfolios. When you're that big a failure tends to be written up as "They tried and couldn't do it, so it must be impossible. But weren't they brilliant for trying!" Failure is marketed as success.
- wernercd 11y ago
  So they have some R&D... but how much can each company really do at any given moment? For every research project Apple or Microsoft does, how many projects are under work at $random_startup? For ever good thought Apple or MS has, how many ideas does someone come up with that otherwise would have never been considered?
  - dm2 11y ago
    It's advantageous to have both environments pumping out new technologies, obviously. The environment at Google and MS is that they have near unlimited resources (legal, monetary, intelligence, computing, patents) to create a working product that can be mass-produced quickly if it's a success. A large company might have some red-tape to go through, but it will also already have all of the HR and management systems setup so that project managers can focus on creating the product. The Project Tango device for example went from concept to thousands of 100% working devices in developers hands in just 1.5 years. The low-level drivers are integrated with Android in a way that no 3rd-party startup would be able to do. The talent they acquired (former DARPA director, Kinect engineers) would have not been possible without large company resources. Ideas are not what is important, we all have brilliant ideas that millions of other people have had. You have to be able to take those ideas and actually create a product or service that people can use.
- qq66 11y ago
  Their high risk internal projects are billion-dollar gambles like virtual reality and self-driving cars that need their scale and resources. They don't typically experiment with anonymous chat apps, photo apps that change the image to make it look like it's from the '70s, etc.
- volaski 11y ago
  Exactly like you said, Apple had Ping. Google had Google plus, Wave, Google Glass, and countless other projects that failed horribly. And you can't say these failures didn't affect them at all. These PR hits DO shave billions off their market cap, not to mention their confidence to take more risks.
codingdave 11y ago
You say "lifestyle companies" as if that is a bad thing. I enjoy working for a small company where we are paid well, stable, profitable, have been for years, and everyone still leads a very fulfilling life outside of work. And even so, our growth rates are well above average... just not the hyper growth expected of a startup.
- vinceguidry 11y ago
  The defensiveness is unwarranted. He wasn't saying it like it was a bad thing, it's just a different mindset, that's all. It's good that there are different reasons and mindsets to entrepreneurship and there's no reason for anyone to get territorial about their preferred method. Plenty of room for everyone.
amirmc 11y ago
> "... entrepreneurs start businesses with the express purpose to be sold to a large company. That's the goal from day #1." This is a rather narrow view and is not necessarily true. Plenty of people start companies to solve (or even explore) problems. Liquidity events (M&A, IPO, etc) are not always the end-game.
- mod 11y ago
  I think it's just missing a word--I didn't read it the way you did. entrepreneurs often start businesses with the express purpose to be sold to a large company
  - amirmc 11y ago
    I'd still take issue with that but at this point we'd end up discussing the semantics of 'entrepreneur', 'startup' and 'business'.
S4M 11y ago
> When companies without traction get acquired, it's typically a talent acquisition. The tech gets discarded. Why would a big company want the "talent" that couldn't produce any useful tech even given the freedom working in a startup provides?

by gizmo 11y ago

bsbechtel 11y ago

>>A large corporation doesn't have the agility or culture to experiment with risky projects. Nor do they want to, because when a bigcorp project publicly fails the PR hit will shave billions off their market cap. In general I agree with you, but Apple, Google, and Amazon all have very risky, very high profile internal projects in their portfolios. These are also the main companies playing the acquisition game in SV.

austenallred 11y ago
Regardless of how risk-tolerant a company is, no company would ever pretend to have a monopoly on successful innovation. The only scenario in which there would be zero acquisitions would be if the company could create everything that would be of value to it within the company. Of course, that will never happen.
onion2k 11y ago
In general I agree with you, but Apple, Google, and Amazon all have very risky, very high profile internal projects in their portfolios. When you're that big a failure tends to be written up as "They tried and couldn't do it, so it must be impossible. But weren't they brilliant for trying!" Failure is marketed as success.
wernercd 11y ago
So they have some R&D... but how much can each company really do at any given moment? For every research project Apple or Microsoft does, how many projects are under work at $random_startup? For ever good thought Apple or MS has, how many ideas does someone come up with that otherwise would have never been considered?
- dm2 11y ago
  It's advantageous to have both environments pumping out new technologies, obviously. The environment at Google and MS is that they have near unlimited resources (legal, monetary, intelligence, computing, patents) to create a working product that can be mass-produced quickly if it's a success. A large company might have some red-tape to go through, but it will also already have all of the HR and management systems setup so that project managers can focus on creating the product. The Project Tango device for example went from concept to thousands of 100% working devices in developers hands in just 1.5 years. The low-level drivers are integrated with Android in a way that no 3rd-party startup would be able to do. The talent they acquired (former DARPA director, Kinect engineers) would have not been possible without large company resources. Ideas are not what is important, we all have brilliant ideas that millions of other people have had. You have to be able to take those ideas and actually create a product or service that people can use.
qq66 11y ago
Their high risk internal projects are billion-dollar gambles like virtual reality and self-driving cars that need their scale and resources. They don't typically experiment with anonymous chat apps, photo apps that change the image to make it look like it's from the '70s, etc.
volaski 11y ago
Exactly like you said, Apple had Ping. Google had Google plus, Wave, Google Glass, and countless other projects that failed horribly. And you can't say these failures didn't affect them at all. These PR hits DO shave billions off their market cap, not to mention their confidence to take more risks.

codingdave 11y ago

You say "lifestyle companies" as if that is a bad thing. I enjoy working for a small company where we are paid well, stable, profitable, have been for years, and everyone still leads a very fulfilling life outside of work. And even so, our growth rates are well above average... just not the hyper growth expected of a startup.

vinceguidry 11y ago
The defensiveness is unwarranted. He wasn't saying it like it was a bad thing, it's just a different mindset, that's all. It's good that there are different reasons and mindsets to entrepreneurship and there's no reason for anyone to get territorial about their preferred method. Plenty of room for everyone.

amirmc 11y ago

> "... entrepreneurs start businesses with the express purpose to be sold to a large company. That's the goal from day #1." This is a rather narrow view and is not necessarily true. Plenty of people start companies to solve (or even explore) problems. Liquidity events (M&A, IPO, etc) are not always the end-game.

mod 11y ago
I think it's just missing a word--I didn't read it the way you did. entrepreneurs often start businesses with the express purpose to be sold to a large company
- amirmc 11y ago
  I'd still take issue with that but at this point we'd end up discussing the semantics of 'entrepreneur', 'startup' and 'business'.

S4M 11y ago

> When companies without traction get acquired, it's typically a talent acquisition. The tech gets discarded. Why would a big company want the "talent" that couldn't produce any useful tech even given the freedom working in a startup provides?