The Big Five and Start-Ups: Analysis of Interaction Between the Two

The tech giants are too big. But so what? Hasn’t that always been the case?

“As the men who run Silicon Valley will be the first to tell you, a company’s size doesn’t matter here. For every lumbering Goliath, there are always one or two smarter, faster Davids just now starting up in some fabled garage, getting ready to slay the giants when they least expect it.

“So if you’re worried about the power of the Frightful FiveAmazon, Apple, Google, Facebook and Microsoft — just look at how IBM, Hewlett-Packard or monopoly-era Microsoft fell to earth. They were all victims of ‘creative destruction,’ of an ‘innovator’s dilemma,’ the theories that bolster Silicon Valley’s vision of itself as a roiling sea of pathbreaking upstarts, where the very thing that made you big also makes you vulnerable.”

The Times article stated that, “Well, maybe not this time.

The technology industry is now a playground for giants. Where 10 or 20 years ago we looked to start-ups as a font of future wonders, today the energy and momentum have shifted almost completely to the big guys. In addition to the many platforms they own already, one or more of the Five are on their way to owning artificial intelligence, voice assistants, virtual and augmented reality, robotics, home automation, and every other cool and crazy thing that will rule tomorrow.

Start-ups are still getting funding and still making breakthroughs. But their victory has never been likely (fewer than 1 percent of start-ups end up as $1 billion companies), and recently their chances of breakout success — and especially of knocking the giants off their perches — have diminished considerably.”

Yesterday’s article explained that, “The best start-ups keep being scooped up by the big guys (see Instagram and WhatsApp, owned by Facebook). Those that escape face merciless, sometimes unfair competition (their innovations copied, their projects litigated against). And even when the start-ups succeed, the Five still win.”

Mr. Manjoo added that, “For the Five, the start-up economy has turned into a heads-I-win-tails-you-lose proposition — they love start-ups, but in the same way that orcas love baby seals.”

On the other hand, the Times article indicated that, “The small guys won’t concede any this, of course. Unbridled optimism fuels start-up world, and many investors and start-up executives I talked to in recent weeks argued that with the insane amounts of money pouring into start-ups, the Five don’t have the whole game won.

“They said the Five’s platforms had made starting companies cheaper and easier, and pointed to several successful start-ups that managed to elude the Five’s clutches in the last few years: Netflix, Uber and Airbnb. And when you look at business-focused companies that aren’t household names, you come up with dozens more, from Slack to Stripe to Square.”

The Times article also pointed out that, “‘In a lot of ways I’d say it hasn’t changed,’ said Joey Levin, the chief executive of IAC, an internet and media company based in New York. ‘I’ve been around the internet long enough, and the first thing we used to ask in every meeting when I started was, ‘Why won’t Microsoft do your business?’ Then six years later it was, ‘Why doesn’t Google do it?’ Now it’s a combination of why can’t Facebook, Google, Apple or Amazon do this?

“Mr. Levin’s position is interesting. Even if you may not have heard of it, IAC has been battling giants online for a long time. The company grew out of the media tycoon Barry Diller’s television holdings of the 1990s; over the last two decades, IAC created a string of digital brands that tried to find some foothold outside the fiefs of the giants. Among them are Expedia,, Tinder, and Vimeo.

“Some of these companies became the biggest brands in their categories, while others were also-rans that came up short against the day’s tech giants. In many cases, though, IAC made money by shrewdly navigating the giants. Sometimes it worked with the behemoths, other times it competed with them, and always it looked for opportunities above and beneath and between the giants, like a clever pigeon picking up crumbs around a picnic table.”

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