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September 09, 2005

Comments

Srikanth Thunga

To talk about it from the opposite point of view,
Imagine a big company getting into all the new stuff being done by startups. I believe that around 9 on 10 startups close shop. Now, if 90% of the invested money of the big company goes without making any dough, shareholders/employees will start complaining. In a few years, it will not even be a big company with losses and all.

As an example, GE tried to do a lot of stuff before Jack Welch came on board. They were trying out new stuff to come out with disruptive technology but at the end, that is not what they do best. Jack Welch made sure that they concentrate on being best in the big things. The best thing companies like that can do is wait for someone else to come up with disruptive stuff and gobble them up like what microsoft used to do and what google/yahoo are doing right now.

It makes more sense for big companies to not get into disruptive technologies because the return on investment is pretty low.

Even for startups, say 10 companies are trying some disruptive stuff and only 1 succeeds. In actual calculation of return on investment, a big company which gobbles up the winner will make more money than when compared to the amount made(winner company) to amount lost(of the 9 other companies).

The money lost by startups are venture money whereas a big company cant afford to lose so much money.

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To talk about it from the opposite point of view,
Imagine a big company getting into all the new stuff being done by startups. I believe that around 9 on 10 startups close shop. Now, if 90% of the invested money of the big company goes without making any dough, shareholders/employees will start complaining. In a few years, it will not even be a big company with losses and all.

As an example, GE tried to do a lot of stuff before Jack Welch came on board. They were trying out new stuff to come out with disruptive technology but at the end, that is not what they do best. Jack Welch made sure that they concentrate on being best in the big things. The best thing companies like that can do is wait for someone else to come up with disruptive stuff and gobble them up like what microsoft used to do and what google/yahoo are doing right now.

It makes more sense for big companies to not get into disruptive technologies because the return on investment is pretty low.

Even for startups, say 10 companies are trying some disruptive stuff and only 1 succeeds. In actual calculation of return on investment, a big company which gobbles up the winner will make more money than when compared to the amount made(winner company) to amount lost(of the 9 other companies).

The money lost by startups are venture money whereas a big company cant afford to lose so much money.
+1

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