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Silicon Valley disruptors: Impact of leading tech companies stifling disruptor development

Silicon Valley disruptors: Impact of leading tech companies stifling disruptor development

Summary

Silicon Valley is known for being the home of the disruptive startup, but since the likes of Google (now under the parent company Alphabet) and Facebook emerged and became companies generating vast revenues, the treadmill for disruptors appears to have struck problems. The Facebook of tomorrow so far shows few signs of emerging from what is supposed to be the home of the tech startup. Numerous reasons exist for why what has been described as the ‘kill zone’ - a point at which the big players either copy or acquire a startup company, preventing rivals from developing - exists. Included are aggressive acquisition strategies from leading players and the capacity for replication they enjoy.

Hefty market shares in online activities such as internet searches has enabled the big players’ access to a scale of resources allowing rival products to be easily and swiftly copied. Avoiding being copied is now extremely tough for promising startups, restricting the likelihood of disruptors becoming the Facebook or Google of tomorrow.

If the big names in tech - Microsoft, Alphabet or any of the others - do not copy a promising startup, frequently the decision will be taken to acquire a startup before the products in development reach the point of becoming a serious threat and source of competition.

For disruptors to survive and thrive in the business environment in any location around the world, inhabiting a climate in which new ideas can flourish and grow to rival established players is essential.

Scope

  • Examines the problems disruptors are having amid copycat tactics from leading players
  • Looks at the impact of aggressive acquisition strategies from major tech firms
  • Assesses the business climate in Silicon Valley for disruptors
  • Examines the wider effects of intense competition between major tech companies
  • Analyses the arguments regarding breaking up the big tech firms
Reasons to buy
  • Why do major tech companies buy so many startups?
  • What impact is intense competition having on disruptors?
  • Why are so many features from startups being copied?
  • Would breaking up the big tech players work?
  • What are the prospects for disruptors?


Overview
Catalyst
Summary
Disruptors struggle for attention amid copycat tactics from tech giants
Major players have little to lose in copying hopeful disruptors
Investors and startups are both struggling in predatory environment
Fears of copycat products from tech giants is hurting innovation
Big hitters are buying out startups before any disrupting can occur
Best route to success for startups is now to be acquired by a tech giant
Tech firms are buying companies to assess creating internal alternatives
Prospects for disuptors are diminishing in current business climate
Securing funding is becoming ever harder to achieve, hampering disruptor dreams of success
Some are beginning to leave Silicon Valley, raising fears over future prosperity as home to innovative disruptors
Leading players are copying one another, making it harder for new entrants
After Snap rebuffed being acquired, several companies raced to copy key features
Intensifying competition among major players is toughening life for startups
Breaking up major tech players would help rejuvinate innovative startups
Sharing data from tech giants would help disruptors become major entities in their own right
Regulating leading tech companies as utilities could help to develop disruptors, but political reality suggests otherwise
Conclusions
Power wielded by leading tech companies is harming hopeful disruptors
Appendix
Sources
Further Reading
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Disclaimer
List of Figures
Figure 1: Facebook revenues, 2010 to 2017 ($bn)
Figure 2: Percentage of establishment entry into US economy 2000 to 2015
Figure 3: Instagram purchase by Facebook announced
Figure 4: WhatsApp
Figure 5: Cloudflare
Figure 6: Fattmerchant
Figure 7: Snapchat
Figure 8: Alphabet revenues ($bn) 2011 to 2017
Figure 9: George Soros

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