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Yeah. It doesn't really work all that well. Xerox tried it with Xerox PARC, Digital with Western Digital, AT&T with Bell Labs, Yahoo with Yahoo Brickhouse, IBM with their PC division, Google with Google X & Alphabet & DeepMind, etc.

Being hungry and scrappy seems to be a necessary precondition for bringing innovative products to market. If you don't naturally come from hungry & scrappy conditions (eg. Gates, Zuckerburg, Bezos, PG), being in an environment where you're surrounded by hungry & scrappy people seems to be necessary.

For that matter, a number of extremely well-resourced startups (eg Color, Juicero, WebVan, Secret, Pets.com, Theranos, WeWork) have failed in spectacular ways. Being well-resourced seems to be an anti-success criteria even for independent companies.

That may have been true in the 70's and 80's. However, I worked for a 2000 person (startup) software company in the 90's that was acquired at 1.8B, another 4000 person (startup) software company in the 90's that was acquired at 3.4B, and then a few years ago, the acquirer of both was itself acquired for 18B.

I survived ALL the layoffs somehow. Boots on the ground agrees with "doesn't really work all that well" but the people collecting rents keep collecting. Given the size all of these received significant DOJ reviews though the only detail I remember is basketball sized court rooms filled with printed paper for the depositions. I'm sure they burned down the Amazon to print all that legalese, speaking of scaling problems.

buyout bingo!

i'm thinking:

- Lotus

- Macromedia

- CA

edit: i take it all back! my memory is not as good as i thought it was re: software companies. i will leave up my sorry list as penance for my crappy recent tech history skills.

Thanks for the comment. Chortle. That's hilarious.

Indeed, you are right on: Legent, Platinum, CA, and Broadcom in order from little fish to big. CA was the second largest software company in the world behind Microsoft then.

The weird part you couldn't see from this telling is that I worked in the Legent office in Pittsburgh, moved to Boston post-CA acquisition and worked in the CA office in Andover. Resigned and went to Platinum in Burlington. Moved to Seattle. Second CA acquisition in 5 years. I should have quit while I was ahead. Moved back to Pittsburgh. Worked in the exact same office I'd worked in 5 years earlier with the same crew. Weird feeling is a mild understatement. I still know people who work for Broadcom now. I should reach out.

a CA double-header! WOW!

i used to read BYTE mag over in the UK in the early 90s before i moved to USA; CA was such a heavy hitter in the early 90s!! i guess it never really was the same in the post-Wang era(s).

> Digital with Western Digital

Digital (DEC) had no substantial connection with Western Digital; see https://en.wikipedia.org/wiki/Western_Digital#History

I got the name wrong; officially it was Digital's Western Research Lab [1], hence colloquially "Western Digital".

[1] https://www.computerhistory.org/collections/catalog/10275038...

The problem with the intrapreneurship idea is that it's really hard to beat desperation as a motivator. I have seen people behave very differently in the context of a startup vs a corporate research lab thanks to this dynamic. Some people thrive in the corporate R&D environment, but the innovator's dilemma eventually gets to their managers.

Cisco has done a great job balancing this, actually - they keep contact with engineers who leave to do startups, and then acquire their companies if they become successful enough to prove the product.

After a bunch of ex-Cisco people ate Cisco’s core router lunch at Juniper, Cisco vowed it would never happen again. Until a bunch of ex-Cisco people ate WebEx’s lunch at Zoom.

In today's age of multimillion dollar seed rounds, I don't think there's much difference between a buzzy startup and a corporate R&D department

Getting a big seed round once makes you want that next round to keep going (and take even more money off the table).

Getting a X-million-per-year budget from a parent company gives you a very different sort of situation. IME this results in less urge to get something out the door and more urge to get "the best thing" built. Shipping early risks your budget in a way that "look at all this cool theoretical progress" doesn't, because the public and press can critique you more directly.

Lack of major owner equity basically means few intrapreneur efforts will succeed unless the 'founder' really couldn't succeed without the daddy company

> But it's also possible DeepMind as an institution lacked the pressure/product sense/leadership to produce consumable products/services. Maybe their instincts were more centered around R&D and being isolated left them somewhat directionless?

It seems like this is more a Google problem than a DeepMind problem though, no? Google created one of the most successful R&D labs for ML/AI research the world has ever known, then failed to have their other business units capitalize on that success. OpenAI observed this gap and swooped in to profit off all of their research outputs (with backing from Microsoft).

IMO what they’re doing here is doubling down on their mistakes: instead of disciplining their other business units for failing to take advantage of this research, they’re forcing their most productive research team to assume responsibility and correct for those failures. I expect this will go about as well as any other instance of subjecting a bunch of research scientists to internal political struggles and market discipline, i.e. very poorly.

> The typical solution to this (assuming there is one internally) is setting up a sub-compan

Is this really the solution? Is there an example of a company that escaped its fate with this tactic?

I think this is what Christensen and Schumpeter suggest, but I don’t think it works.

Maybe the closest is Microsoft, but they didn’t do this. They changed their revenue model by emulating AWS.