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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

#31

Post by morganherlocker »

ekianjo wrote: post #25
chromatic wrote: post #23

Earlier quoted context omitted.

Redefine "innovation" as "generate money for VCs". Then anything which lets you sell eyeballs to advertisers (or metadata about eyeballs to advertisers) becomes innovative, if you do it at the right scale.

That's not really the meaning of innovation, though.

Some amount of innovation seems inevitable for any successful startup. Most of us could build a site in a weekend that does image sharing, but it would take some serious innovation to scale the site up to a billion users without blowing the bank on infrastructure. Doing the same thing people have been doing, but at 1/10 the cost is clearly innovative.

Whether its scale, raw idea, business model, speed, quality, or whatever; there has to be something new to get any significant traction. Are all types of innovation equal? Of course not, but all types provide some sort of value. Throw open source into the mix and you start to see the network effect in play where even "useless idea" startups provide value (although the creators may not get much return on it) in the form of assisting more useful ideas come to fruition.

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

#32

Post by AznHisoka »

Aloisius wrote: post #16

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.

Where does it end though? At some point (god damn it) someone has to innovate and give us flying cars!

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

#33

Post by AznHisoka »

myzerox wrote: post #15

It's bad for innovation at Whatsapp but great for innovation in Silicon Valley as capital flows back into the cycle.

Yes, it flows back again, so the founders of Whatsapp can go fund another photo sharing or messaging app with another twist.

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

#34

Post by chromatic »

ekianjo wrote: post #25
chromatic wrote: post #23

Earlier quoted context omitted.

Redefine "innovation" as "generate money for VCs". Then anything which lets you sell eyeballs to advertisers (or metadata about eyeballs to advertisers) becomes innovative, if you do it at the right scale.

That's not really the meaning of innovation, though.

You're absolutely right, but in the same way that the financial industry spends its resources coming up with ever more exotic financial derivatives from which it can skim rent, the VC industry spends its resources comes up with ever more exotic ways to scale free userbases to extract money from IAP, ads, or data mining. That only gets called "innovation" in press releases because the word doesn't sound completely cynical yet.

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

#38

Post by wbl »

morganherlocker wrote: post #31
ekianjo wrote: post #25

Earlier quoted context omitted.

That's not really the meaning of innovation, though.

Some amount of innovation seems inevitable for any successful startup. Most of us could build a site in a weekend that does image sharing, but it would take some serious innovation to scale the site up to a billion users without blowing the bank on infrastructure. Doing the same thing people have been doing, but at 1/10 the cost is clearly innovative. Whether its scale, raw idea, business model, speed, quality, or wh…

That innovation is now commoditized: AWS will let you buy it. The first few times it was a big benefit to society to get invented, but the next social app won't advance what society can do the same way the first one did.

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

#40

Post by chromatic »

ChuckMcM wrote: post #6

Sigh, survivor bias taints this analysis so hard it hurts. There are lots and lots and lots of innovative startups that don't get acquired and go through the whole process without all that much press. You don't see them, it's boring to read "Startup that changes the ways machine tools are stocked at machine shops turns in another year." The really crazy ones (either crazy funding like Color, or crazy exits like Whats…

Acquisitions are a way that investors get their money back, so they encourage investors to invest in startups, and by its nature that encourages innovation. Perhaps not as much as random $100K grants given out on the street corner would, but it does encourage company formation and execution. IPOs do the same thing.

I have trouble understanding this paragraph. It seems to argue that acquisitions encourage company formation and execution. So far so good--but what's the definition of innovation in this discussion anyhow?

Perhaps the most confusing idea to me is suggesting that investing in startups does encourage innovation, but not as much as randomly giving out grants would. Is it possible to compare the efficacy of the VC, M&A, IPO ecosystem to those targeted grants or even a guaranteed wage? To me, that is worth exploring.

Instead I fear we get SV press releases heralding innovation in something--anything--other than yet another example of cashing out for the established network of moneyed interests.

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