As a startup founder looking to fund Avogadro One, one of the most frequent questions I get from prospective investors is along the lines of "What prevents a larger company from building something similar?"
Larger companies (referred to as 'incumbents' in industry slang) are a big pain of course. Not only because they have the resources to bring out a similar product, but also because they have monopolistic power over certain elements of the infrastructure. In August, I published a post in which I
complained about discussed the unfair advantage that major search engines get over smaller players. Incidentally, in the past couple of weeks I came across a couple of blog posts from other people who discuss the effects major corporations have on the innovation ecosystem.
One was published a couple of days ago by Aytekin Tank, founder of Jotform, where he discusses the "Embrace, Extend, Extinguish" mantra that Microsoft applied in the 90's and which Google seems to be playing right now. For a multibillion corporation, it doesn't cost much to acquire a rising company/product only to shut it down a couple of years later or to launch its own free version of a popular product to kill off competition, abandoning its own creation when it is no longer needed. He ends his post with the following:
However you look at it, embrace, extend, extinguish is pivotal to Google’s strategy. Granted, no one in Google is sending explicit instructions as Bill Gates once did, but they don’t need to — the end result is the same.
EEE certainly looks different today than it did in 2000; it’s subtler, friendlier, more politically correct.
But it’s just as dangerous. The war isn’t over. We must fight to diversify the internet, uphold open standards, and stamp out monopoly.
Another post was by Fred Wilson from AVC, where he discussed how venture funding has changed to work around "kill zones":
So, anecdotally, based on our activity and other venture capital activity that I have observed, I would say that the big tech incumbents have most definitely shaped where venture capital is going and where it is not going.
He then adds, corroborating what I said earlier in my own post:
And, I would venture, that big tech is increasingly vulnerable to a number of attack vectors, many of them self-induced, which should be attracting entrepreneurs to more directly go after the core franchises of big tech.
We are in good company on this one!
So then, "What prevents a larger company from building something similar?"
Technically, nothing. ¯\_(ツ)_/¯ With billions of dollars in treasury, they could buy a small country if they really wanted to! But large corporations
are greedy have large wants, declining tolerance for high-risk decisions, short-term goals (especially if they are public), and lack of interest in "small" niches. They won't bother with building a perfect product for a few hundred or thousand users. They want millions, and they want them now. Startups, on the other hand, want to become your best friend because they know you will be their best friend when it comes to recommending them to your other friends. And so do we!
In order to help Avogadro One to become your best friend, please help us by answering a few questions in this Google form (isn't it ironic?). (OK, there are more than a few questions, and most of them are open, but we would really appreciate your help. This is what friends are for, right?)
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