Might be a bit of a dumb question but I can't figure out why. If there truly is a good idea out there and a big firm wants to do it and beat a smaller startup (which might later be bought by the big firm's competitors anyway), they have all the money, resources, leadership, and expertise to make it happen. Plus the safety net if they somehow fail. Why aren't big companies just making all the progress in the world?
Why don't big companies just innovate and steal startup ideas if they're really good?
byu/No-Magician-5820 inEntrepreneur
Posted by No-Magician-5820
26 Comments
Because big companies have their own ideas they’re working on….that’s how they became a big company…?
Big companies would rather just buy a start up that’s already done most of the research and leg work. It’s much less risky than investing money into starting up a new business line within a company.
ETA : large companies (like Google, Meta, Microsoft, etc) will also invest in small start ups and acquire equity, with an eye on an eventual total acquisition of the start up if it begins to succeed.
There’s a lot of legal issues in doing this but beyond that, the issue is size. They are large companies that can run effectively because of a hard infrastructure they’ve built. They cannot add multiple ideas to this infrastructure without compromising it. So it is more economical to simply buyout start ups, keeping the founders and staff optimally and letting it run as its own structure, but as a sub division of the parent company. That’s why many companies you know are actually owned by one major conglomerate
they have there existing business that is already working and are focused on improving their market share there
an idea is nice but execution is a whole other universe, archiving product market fit, establishing a market, landing clients etc
it would make zero sense venturing into a total different market from scratch
now obviously if you pitch hubspot a CRM mvp with some very smart features, dont be surprised if they even pay you for access, then steal some ideas.
Because it takes time, energy, and resources to implement any idea. All of that time spent on trying to implement a new idea is time taken away from the company trying to scale its main business. If it’s truly a killer idea that will knock it out of the park, big businesses WILL steal ideas and go after them. But there is only so much bandwidth to go after so many ideas.
Big companies are usually in a position that’s stable in the market, startups based on innovation are more prone to take risky moves to explore how the market will react.
You also have to consider that being in a stable position in the market would make it difficult to create change in almost every aspect of the production, management and r&d.
Take into account that sometimes big companies don’t believe in the innovative ideas of startups because the consolidated position in the market with their product makes them think that they will keep their market share for a long time and will let them be resilient towards any possible change, only to implement innovation later, which is usually the worst possible move
Because they dont care about making a couple millions. They are in business for 100m+ opportunities
It’s not that easy for big companies to just maneuver and they have big agendas they work on, 5-10 year plans, the best companies are the ones that adapts, and Apple in that perspective is falling back in AI game
ego.
politics.
red tape.
people with employee mindset.
don’t want to break the norms.
etc etc
Sometimes they do. Often they don’t because they would need to budget for that, hire people, maybe create a new department. Big companies have traditionally sucked at having an internal “start up” culture/innovation department, but some do.
I’ve worked at big companies where we’re well aware of what new and existing competitors are doing and we do nothing. Other times, we completely copy them. If management really sees it at a threat or opportunity they can move on it, but it takes a lot more to move a big company than a small one.
Also, a lot of people in big companies are afraid to take a risk and fail for fear of it holding back their progression in the company. It’s much safer to just keep doing what they’ve been doing and follow the well worn path.
So, a big company is like the government. It’s relatively slow to make any changes and there is tons of bloat to deal with.
A fresh startup is like a guerilla army, not playing by the rules, quick to adapt, and can gain a lot of support quickly.
Paying off the leader of a guerilla army can be massively cheaper than fighting them head on.
In addition to the risk issue, employees of big companies have no skin in the game and the wrong mentality for creating a startup. There have been companies which try to do this but they end up wasting a lot of money as the employees are rewarded for justifying their existence instead of getting results.
Because ideas are not worth much and execution is everything
Porque pueden…
Same reason you’d pay 100 times as much to buy a potted plant instead of growing it from a seed. It’s just easier, proven, and you have an instant result. The startup has survived trial by fire and they’ve done a bunch of work that requires cultivated subject matter expertise and lots of time.
Ideas aren’t worth much of anything. *Maybe* with some good, defensible patents around it, or if its an easy add to an existing platform (ephermial “stories” and reels into instagram, for example). Now, an idea with *traction,* customers, and revenue is another animal entirely, and they are getting acquired left and right.
There’s a whole book that’s essentially the Bible for this question, The Innovator’s Dilemma-Clayton Christianson.
TLDR when you’re the incumbent disruption isn’t always desirable. You’re making money from the status quo so you don’t have the incentive and/or capabilities to easily change directions.
Companies are actually very complicated at scale
Incentives and bureaucracy
The compensation of public company CEOs is tied to earnings per share growth- this year, this quarter. New ideas that may take a long time to develop and monetize get deprioritized over growing the existing business
Marry that with the risk-averse, consensus-driven cultures of large companies, and you get something that just isn’t conducive to embracing new ideas and building startups around them
This is why acquisition is preferred. The risk is reduced, product-market fit is already proven out, a team is in place
Big companies from Sears to Ford had a policy of just stealing anything they liked and battle out some little company in court
Automatic windshield wipers being an example
< $100M does move the needle for some companies
Some companies rather not risk the opportunity cost to improve their product
Some companies do wreck startups and succeed in capturing the market
Some large companies get wrecked because they aren’t hyper focused like startups can be
They do. We call those companies “Amazon, Facebook, and Google.”
Ideas come dime a dozen. A successful startup is rightly implemented , and has discovered its market. That’s what big companies buy.
1. They do sometimes though not nearly as often as founders would think
2. Cost / risk its easy to think of a company like Apple as having infinite money but the reality is if your the guy who decides to steal X idea and “go for it” and it fails your going to kill your career
Patents & Copyrights are gold.
Entrepreneurs get bought out every day, they also get their idea’s stolen.
I think it comes down to execution more than the idea itself. I’ve seen firsthand how a great concept can fail without the right focus, agility, and culture to bring it to life. Big companies have resources, but they often move slower and can’t pivot as quickly as smaller teams. Even if they could replicate an idea, capturing the same energy and timing is much harder than it looks.
They do. Most innovation throughout history has been driven by big companies. It takes resources to do R&D.