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Silicon Valley’s acquisition fever is bad for innovation

washingtonpost.com

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Re: Silicon Valley’s acquisition fever is bad for innovation

#11

Post by jfasi »

Acquisition fever is certainly a force pushing innovation downward, and I think the argument this article puts forward is sound. On the whole, however, I think innovation in the technology sector is driven by other factors. In particular, the barriers to entry for a new company in the technology space are extremely low.

Once upon a time a young company needed to devote significant monetary and human capital to building their software and hardware platform. Today, they can use open source frameworks and commodity hardware. Marketing once meant medium to big media buys, which had high entry costs and provided little to no insight into their success. Today you can literally buy attention by the individual customer, and enjoy a deep and detailed understanding of the success of your campaign. In addition the (relative) abundance of early stage investors means if you have an idea, you can bring it into reality with (relative) ease.

Innovation is so cheap that it doesn't have to happen inside a big company anymore. If a team gets bought out and cannot pursue a new opportunity, someone outside the company will step up and go after it.

Re: Silicon Valley’s acquisition fever is bad for innovation

#13

Post by trhway »

binarybits wrote: post #8
trhway wrote: post #2

and the alternative would be? why would VC invest money with such an ease if there wouldn't be a good chance of a good exit? And how would you have innovation without VC? I mean take any place outside Bay Area - such anyplace would be an exaple of innovation without easy VC. >WhatsApp is the kind of unconventional startup that could have changed the world if it had grown into an independent public company. future is…

My point isn't that startups shouldn't have profitable exits. It's that I'd like to see more of those exits be IPOs that leave the companies independent, rather than acquisitions.

many many "exits" wouldn't make for good IPOs on their own and that would thus put negative pressure on VC.

Re: Silicon Valley’s acquisition fever is bad for innovation

#14

Post by GFK_of_xmaspast »

binarybits wrote: post #8
trhway wrote: post #2

and the alternative would be? why would VC invest money with such an ease if there wouldn't be a good chance of a good exit? And how would you have innovation without VC? I mean take any place outside Bay Area - such anyplace would be an exaple of innovation without easy VC. >WhatsApp is the kind of unconventional startup that could have changed the world if it had grown into an independent public company. future is…

My point isn't that startups shouldn't have profitable exits. It's that I'd like to see more of those exits be IPOs that leave the companies independent, rather than acquisitions.

The last bubble was lots of IPOs, was that really any better?

Re: Silicon Valley’s acquisition fever is bad for innovation

#16

Post by Aloisius »

As long as these newly minted millionaires & billionaires continue the Silicon Valley tradition of reinvesting their money back into new startups then I think we'll more than offset the potential innovation we lose by them being locked away and their own companies merged/shuttered.

Now if the culture ever changes and people start hording their money, then I'll agree we have problems.

Re: Silicon Valley’s acquisition fever is bad for innovation

#17

Post by soDotNet »

GFK_of_xmaspast wrote: post #14
binarybits wrote: post #8

Earlier quoted context omitted.

My point isn't that startups shouldn't have profitable exits. It's that I'd like to see more of those exits be IPOs that leave the companies independent, rather than acquisitions.

The last bubble was lots of IPOs, was that really any better?

>The last bubble was lots of IPOs

Agree. I still remember what happened during dotcom 1.0. So many IPOs that sizzled out.

Re: Silicon Valley’s acquisition fever is bad for innovation

#18

Post by _delirium »

trhway wrote: post #2

and the alternative would be? why would VC invest money with such an ease if there wouldn't be a good chance of a good exit? And how would you have innovation without VC? I mean take any place outside Bay Area - such anyplace would be an exaple of innovation without easy VC. >WhatsApp is the kind of unconventional startup that could have changed the world if it had grown into an independent public company. future is…

> And how would you have innovation without VC?

Well, for an example you could look at: pretty much all innovation. VC-backed startups that are innovating are pretty rare, unless you mean business-model innovation. A typical startup is monetizing innovation that's already been done, at big companies or in academia or at bootstrapped startups, but that hasn't been effectively monetized yet. VCs don't want to sink money into R&D.

Re: Silicon Valley’s acquisition fever is bad for innovation

#20

Post by oori »

ericflo wrote: post #19

He says "Suppose that Yahoo had pledged to allow Google to operate independently...Chrome and Android likely would never have gotten off the ground." But Android was...an acquisition.

"..but it just wouldn't have occurred to the people running Yahoo's search subsidiary to branch out into web browsers and mobile OSes" - That's probably true, regardless if via acquisition or in-house development.
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