Comment by Ozzie_osman | Hacker News Reader

Comment by Ozzie_osman | Hacker News Reader

Parent Full thread

I think there were a bunch of other great replies to this, but just to chime in: I think there are positive and negative impacts on "startup culture".

The negative: - added friction to building a startup, since one exit path is harder.

The positive: - more focus on profitable companies, as opposed to ones that will only be viable if acquired. - a more competitive market, which might be better in the long run for start-ups

I don't think the question we should be asking, though, if the effect on startup culture. I think what we should be asking is: what is the effect on users/consumers?

To that end, imagine if the online ecosystem today included Instagram, WhatsApp, DoubleClick, Zappos, YouTube, Waze, just to name a few. Yes maybe some of them wouldn't have survived, but maybe that would have been the right thing to do.

And I think that's the question regulators should be asking too. Whenever a large company is acquiring a smaller one: is this clearly good for consumers or not? I mean, if Intuit can make a good, believable case that this is good for users (ie "Once we buy Credit Karma we can give all our users free tax filing) or something like that, by all means, that's great... but I doubt that's what's happening here.

How many of the companies below would have ever brought a product to market if Apple hadn’t acquired them? Are consumers worse off for Apple acquiring them?

https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitio...

How would regulators know whether Apple acquiring the 100+ companies it acquired would be bad for consumers in advance?

Do you really trust regulators to be both competent and apolitical?

The positive: - more focus on profitable companies, as opposed to ones that will only be viable if acquired. - a more competitive market, which might be better in the long run for start-ups

That would probably exclude every single YC backed company.

Only two have gone public - DropBox and PagerDuty - and DropBox has never been profitable. I doubt any of them have ever been profitable.

I meant "profitable" in the viable sense. Like either profitable now or could reasonably be so in the future, without requiring monopolistic pricing.

YC has been in existence for over 15 years. Not one viable self sustaining standalone company has come out of it.

I’m not saying that as a criticism to YC, just a statement of fact.

How many profitable VC backed tech companies were founded in the last ten years?

Oh I'm not defending YC or claiming anything about its companies (I didn't pull them into the conversation at all).

I was just arguing that providing some rules around acquisition of smaller competitors by larger companies with monopolies could push startups towards more viable business models.

I’m using YC as a stand in for “VC backed tech companies” because it’s the one that people on HN are probably the most familiar with. The same could be said about the other VCs.

I think I'm missing something. Yes, the VC industry has massively funded many companies. Some of those are not profitable. Some of those are even not viable. That's not a good thing. Maybe we would all be better off if funding was generally better allocated towards viable companies.

I’m using Apple as an example here because I am most familiar with their acquisitions and the products that came from them.

Why is it important for the end users of the companies are viable and not the products?

Would consumers have been better off if most of the companies that Apple acquired, integrated into billions of devices and sold to consumers didn’t exist because they couldn’t foresee a viable business model outside of an acquisition?

For Apple specifically, I'm not sure which products you're referring to, but Apple does wield a lot of monopolistic power. And maybe some acquisitions there made sense, but there could have been alternative paths (for instance, maybe if some of those companies had stayed independent, they would have been integrated into Apple as well as other manufacturers via a different business model, like licensing, being part of the supply chain, etc). In general, a viable product should lead to a viable business, since the company making the product should be able to capture the value it's delivering... but yes, there are some exceptions where you need products to be really tightly integrated and acquisitions make sense. In fact, I'd argue that with _less_ M&A we'd be more likely to live in a world where (viable product) == (viable company), because the market would be more efficient.

Anyway, my argument for more regulatory oversight doesn't depend on ALL acquisitions being bad, so finding evidence that some were good for consumers doesn't necessarily negate it.

I feel like what we would end up disagreeing on though is whether we can trust regulatory oversight to do a good job of making that decision. I don't trust regulation in general, but in this case specifically, I'd trust it more than giving large companies free reign.

Here is the list I was referring to.

https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitio...

Just some examples Next, SoundJam (iTunes), PA Semi (processors), AuthenTec (finger print sensor), Apple Music (Beats), Siri, etc.

Knowing Apple what is more likely, they would license tech or just create it in house? How do smaller companies prevent that? Patent trolling? What if the companies wanted to be acquired by Apple? Does the government step in and say you aren’t allowed to sell your business? Instead of acquiring the company what’s to stop Apple from doing an acqui-hire? Are you going to tell them they can’t work for Apple?

Government intervention in businesses unless there is a severe negative externality is almost universally bad.

Monopolies, like externalities, are a huge source of market failure.

Though ironically sometimes the solution to negative externalities is a (regulated) monopoly.

So now we are suppose to discourage companies from getting big? Everytine a company gets big do we really want the government to step in? Do your trust your government? Wouid you trust your government if it was the “other” party?

It amazes me that people on HN willingly want to give up their agency to the government.

Huh? Where did anyone say anything about companies getting big? At this case you're just making strawman arguments.

What I (and I think others) are against is anti-competitive behavior. I don't trust the government a whole lot (even my party) but I trust it more than I would a company behaving monopolistically.

By HN standards, Apple (with a 40% market share) and Amazon (10% of all retail sales) is a monopoly.

The difference is that the government has the power of law to compel me to do something. A company doesn’t. Given that choice, a government with less power is better.

I get the sentiment for YC, but “not one” is pretty impossible. Airbnb reported a profit in 2017 and 2018. https://www.bloomberg.com/news/articles/2019-01-15/airbnb-sa...

It did lose money in 2019, but because of preIPO marketing and advertising. Marketplaces have great network effects and profit margins, seems like a very viable self sustaining standalone company. https://www.fastcompany.com/90418766/report-not-even-airbnb-...

“said it made money for a second straight year, based on a common measure that excludes some expenses”

It’s like WeWork’s “Community Adjusted Ebitda” or Uber’s “we aren’t doing as bad as it looks as long as you exclude 13 different expenses.”

Reply on news.ycombinator.com