I think this article completely bypasses the root causes of the issue in order to paint Silicon Valley dominating businesses in the worst light possible.
Look, the real issue is simple: all of these "web startups" are not very innovative. All of them are roughly the same: ever so slightly more novel way to deliver roughly the same set of data to users in exchange for app or token of money. How is that "ground breaking"?
Thing is, when everyone is doing roughly the same thing, which costs perhaps a few engineering months to build, how can startups ever compete with the big guys who are hell bent on ensuring their success? It's like trying to open supermarkets to compete with Walmart, or building gasoline car to compete with Toyota, except it's cheaper for the Big Five to copy than for Toyota, because the media (information) is inherently more traceable.
I remember when Windows 98, XP, Google, Gmail, Prime (and Uber, eBay, and paypal) came out. They blew everyone's mind. They changed how we work and live. What's so hot about SnapChat? I mean, it's probably ever so slightly more entertaining than, says, Hangout or WhatsApp, but it's just minor tricks on top of roughly the same set of features. Of course these competitors will drive it out of the marketplace. It holds no long term competitive advantages.
There are businesses that don't deserve to die. For example, a local store provides not just goods, but a community center and an identity for a small town; it gives more value than mere commerce. The decline of these should alarm us. On the other hand, some businesses do deserve to die. And lack of long term advantage, lack of innovation, lack of additional value sounds exactly "should die".
What's missing from this piece is a broader historical perspective. This pattern of conglomeration happens in almost every industry, e.g. the "Big Three" automakers.
It doesn't have to be bad. Seven of the top 10 pharma companies are over a hundred years old. They are highly concentrated. But there's never been a better time to be a biotech startup. Life science startups are going from founding to billion dollar IPO in <18 months. The near lock the big pharma companies have on distribution allows the startups to focus on innovation. It's hard to build a hundred billion dollar drug company today, not so hard to build a mere $1B company.
The same is true in food. Kraft, Mondelez, etc. have huge market power, but are also active in the M&A market, paying $300M for Krave Jerky, $600M for RXBar, and $700M for Blue Bottle—all in the last 18 months or so.
These patterns aren't that different than what we've seen with Facebook acquiring almost all upstart competitors. This isn't great for billion dollar VC funds, but it's not clear at all its bad for entrepreneurs.
Right, but in pharma and food brands, it’s an evergreen process. For the past 20 years, a lot of breakthrough drugs have come out of start-ups. When they get to a certain phase in FDA trials, the winners get bought up by the big players, because nobody in their right mind wants to carry the overhead to ship one drug. Meanwhile, new startups are always forming.
Same with food brands - there are always new food companies shipping a single new product in a hot new market like kombucha, or kale chips, or iced coffee. They build a following and get bought, but new brands are incubating at the front of the trend curve.
The point is, there’s a steady state in some industries where start-ups are better at capturing trends and moving fast, while big companies have the expertise to scale and meet regulatory requirements. One side needs the other.
I think consumer services, platforms, and software hit deep market saturation many years ago. All this to me sounds like consumer plays.
Right now the innovation has again turned to business software and services. I see most of the intersecting things in tech playing out in corporate offices instead of on my phone or my home computer nowadays.
I think it’s easier and definitely more headline grabbing for articles like his to focus on the consumer stuff. The real story now though I feel strongly is in the business space.
You're looking at the features rather than the true value of these apps, the users. Snapchat has the biggest reach into the most impressionable market, teenagers. That's why it is valuable.
That's actually kind of grandparent's point - if your only "innovation" is managing to market to a slightly different set of users, you have no moat, and a big company with some engineer-hours to spend can duplicate what you've done for every market segment you haven't reached yet.
My interactions with teenagers makes me wonder though if Snapchat actually has a reach into that market. Right now their reach is providing a tool that teenagers enjoy, mostly because things disappear and their parents don't see it. As soon as they start to attempt to leverage that reach in anyway that seems obvious, or if that reach infringes on the core experience, I'll bet they're on to the next thing and we're left with something else that was once valuable "because of the users!"
Snapchat is valuable from a monetary perspective, but actual real value is little to none. No one is going in 10 years will say Snapchat changed our lives or progressed society's knowledge. People will look back wondering why it made a handful people beyond wealthy.
Considering AIM just got shut down, that's a rather poor long term outlook.
Which I think is the point. To be a new billion dollar company (vs pump and dump) you need to either make 100's of millions in profit for a few short, but profitable years. Or, have steady profits and steady growth over a very long time scale.
You're not wrong, but the 'frightful 5' were all transformative for society. The point is that the big companies quash non-transformative small companies.
Teenagers grow up, and the next crop of teenagers would use not Snapchat but QuickBlah or FastYap or something else. There is no inherent advantage to Snapchat, it's just luck that they happened to be the one there. It's like finding a suitcase with money on the street - valuable, but not sustainable.
The same teenagers also don't have much spending power now. And besides, teen trends change pretty quickly, so their main targets are teens it does not bode well.
That is the key transition. Once they start greying, users will perceive any new platform as unwelcome change. But until then, you have to eventually give them better reasons for staying than just "this is younger and wilder than that other thing".
Facebook's ticket for growing up in lockstep with their core user generation was coordination and communication for loosely coupled groups with some real life connection. People who move into a new development, the "parent cohort" around a daycare class, new hires who joined a company at roughly the same time and so on. All that is young adult stuff that fits well with what Facebook offers.
Nonpermanent asynchronous video messaging? If interpersonal exchange is always a blend between information propagation and entertainment, Snapchat seems dangerously lopsided towards entertainment. That is good for getting people excited (quick growth), but probably not so good for long term retention. MySpace was similar.
WhatsApp and Instagram were innovative but were acquired.
The only reason Instagram isn’t a $100B company in its own right is because Facebook had a better vision for it than investors. If Instagram were able to raise at a $5B valuation rather then be acquired, then Facebook would now have a serious competitor.
Similarly, Facebook messenger wasn’t as popular as WhatsApp.
Facebook could have been acquired by Yahoo or Microsoft but wasn’t.
> The only reason Instagram isn’t a $100B company in its own right is because Facebook had a better vision for it than investors.
What has FB done with it that was so great, though? IMO Instagram's user experience has declined since FB bought it. I personally don't like Stories, though I understand why many people do. The timeline used to be strictly reverse-chronological, and now it's a useless mess like the FB timeline. It's also peppered with ads, which I hate. Nowadays I use Instagram a lot less than I used to.
Sending SMS over the web. May not be particularly interesting in the US, but in countries where texting is expensive, being able to do it for "free" was a godsend.
Wait, they invented internet messaging??? That existed since forever. Calling it "SMS" doesn't change much. Yes, they exploit the greed of cell providers as leverage, but that's a very tactical innovation (not to dismiss it, tactical innovations can be very lucrative) but nothing strategically new.
> Wait, they invented internet messaging? That existed since forever...Nothing strategically new.
WhatsApp enabled low-cost internet messaging on a global scale by taking the existing messaging technology, perfecting the user interface and positioning the product correctly (i.e. text messaging instead of instant messaging).
Sure, people could have used AIM, but then they would need to collect the emails or screen names of their close friends and encourage people to use AIM with that system. WhatsApp succeeded by framing it in the context of text messaging (something you do on your phone with friends) instead of in the context of internet messaging (something you do at a computer, and less personally). Tying the messaging to something that was already familiar and ubiquitous (phone numbers) while keeping the interface essentially the same was a real innovation.
There is a tremendous amount of innovation opportunity when two situations collide: 1) a new platform of user software emerges or becomes realistically cheap, and 2) useful systems or software exists that is extremely useful, but decentralized or frustrating to use. Mobile app stores and taxis are a good example, which resulted in Uber and Lyft.
Your criticism is substantially the same as people dismissing Dropbox’s legitimate innovation because rsync already existed. If you dig deeply enough, most real innovation can be described as a kernel of something old enhanced by something that’s new. It’s more consistent to use this heuristic for identifying innovation than it is to go by whatever personally impresses you.
> and positioning the product correctly (i.e. text messaging instead of instant messaging).
Basically framing & marketing. Yes, that's important. But not exactly a technological innovation, rather finding a right set of words to convince the users to use existing technology.
> dismissing Dropbox’s legitimate innovation because rsync already existed.
There are substantial differences between what rsync did and what Dropbox did, especially in the area of storage and automation. rsync is just a tool to get bytes from point A to point B, Dropbox solves the end-user problem. Whatsapp doesn't add much to solutions that already existed - besides using phone number as ID instead of email, there's nothing different in UI or capabilities or solutions of this service that hadn't existed for decades before.
Uber and Lyft give me things I couldn't do before - i.e., get transportation cheap on 5-minutes notice. Whatsapp just rehashes what already existed for decades with a new label on the box. It was a successful label, good for them, but that is not what we talk about when we talk about innovations, usually.
Tying the messaging to something that was already familiar and ubiquitous (phone numbers) while keeping the interface essentially the same was a real innovation.
As the original poster of this thread, thanks, I think that's a good answer to my question. It seems a small step considering SMS, but then again I can't remember any other app doing that, and hindsight makes many things appear simple.
As I understand it they also had a stronger focus on usability for first-time Internet users in many countries. For example, porting the app to many devices (not just smart phones) and using phone numbers as user identifiers instead of usernames.
I don't know if you call that tactics or strategy, but it made a difference for user growth. Users don't care who invented it, they care if they can get it to work easily.
Products that are clones of other successful products. Which is tens of millions of products. There aren't many industries with single vendors. I think the definition perfectly captures how most people think about innovation.
These simply didn't have market penetration and network effects in the Indias and Indonesias of the world. Probably did not have a dominant network even in the US. Maybe they we a bit ahead of their time of easy internet availability anytime.
The other innovation was WhatsApp used phone numbers already stored on phone address book as identifiers, allowing rapid user onboarding and spread without much effort by the user. Again maybe these others happened before the smartphone revolution making this possible
Yes, but we already had free messengers. As I pointed out in another post, Windows Live Messenger already worked on a bunch of phones (including J2ME).
No, I'm asking why it's more innovative than Windows Live Messenger.
This debasement of the concept of innovation is exactly what I'm railing against.
I think Whatsapp is a good app, and their business is obviously successful. I just don't see the innovations. And I think it's important to preserve the word for those who merit it, even if they don't have the interest or skill to build a successful business.
> Similarly, Facebook messenger wasn’t as popular as WhatsApp.
That depends wildly on country. That's only the narrative from a non-US perspective.
In the US, WhatsApp is basically unheard of, and most people I know use Messenger for everything because we're all on Facebook anyway so we might as well use the same service for everything.
or FB bought Whatsapp as insurance against competition. If an independent Whatsapp can make $1 for ever $10 they make Facebook lose, FB would value Whatsapp 10x what investors would, but not because of "vision"
Exactly. And WhatsApp was way ahead in striking preferred access deals with telecoms in the developing world. Facebook was able to piggyback on those, and develop it into the internet.org initiative to try to create a beachhead in these markets that it had less traction in.
Exactly, innovation is dead. Now its a bunch of remix artist that are trying to make a quick buck. Whatsapp is purposely going stale (what is the deal with only being able to sync with gdrive or icloud, what if I want to switch my OS, how to get my data out?) in the hopes that people will move to messenger like how Google just killed gtalk in the hope that customers will move to one their many messenger.
This is the case in hardware also. Every phone looks like an iphone & tablets are a larger phone, I miss the days when Nokia & Samsung used to release phones of various form factors.
I am missing something, I think? Walmart and Toyota both have competition. Just yesterday, there was a good read about Dollar General. There are young automaking companies in China and India, though not really in the US market.
> All of them are roughly the same: ever so slightly more novel way to deliver roughly the same set of data to users in exchange for app or token of money. How is that "ground breaking"?
What you describe is the justification for state-run media versus newspapers, magazines, TV shows, movies, and games. All of these could be considered the same set of data from the state's point of view.
I was trying to illustrate the cultural limitations of the big five.
Just because an app has only a slight difference (for now) doesn't mean they should be ignored or excluded. The technology of social communication today is akin to the printing press of the 15th century. We have thousands of years forward to be social, buy things, and enchant users... so why limit it to the early, myopic giants?
As long as everyone plays by the rules of a free market, or close enough, then consumer choice is what ignores the players for the superior offerings. They win if they can make a better product, and the Giants often have an easier job of making a better product because of the advantages of being a tech giant.
Independent news sources provide investigations critical to the state, which state run media do not. It's like GNU/Linux or Android to Windows or iOS. They provide excellent value as well as competitive advantages.
People seem to think that Microsoft is a company that at some point sucked at innovation. In fact, the reason Microsoft let a generation of startups blossom was mostly because they got hit by antitrust.
Google, FB and Amazon are probably ripe for antitrust, too, but the government won't move.
Because the rest of them watched and learned from Microsoft's mistake. When the antitrust campaign started, Microsoft was giving a paltry $10K to political campaigns. By the time it ended, they were giving $1M a year to BOTH sides, and wound up with a hand-slap. The rest have cozied up to the federal government since the start, and have no fear of antitrust efforts. What they really need now is to be categorized as public services so that they can enjoy some of that sweet, sweet regulatory capture that Verizon, AT&T, and Comcast benefit from.
Its a shame that they couldn't use some of that lobbying power at least to fight the telcoms. At least we'd get higher quality internet with more choices out of it.
It's hard to go after the FAANG companies for anti-trust when they all compete with each other in so many ways -- facebook and google have multiple competing services, apple, google and amazon all build consumer hardware, and facebook is dipping it's toes in, they all have music services.. Netflix has tons of competitors outside of the big five, but amazon and google both have streaming movie services. Amazon and Google both have cloud services.
Really the only two that have a genuine monopoly are Google in search and Facebook in social networks, and I think perhaps Amazon in online retail.
The big thing is that the US government needs to recognize how vertical integration harms consumers. While Apple and Google and Amazon may all compete with each other in multiple venues, very little of that is cross-compatible. People with one product or service from a company often has little option but to use the rest of that company's products and services. The ecosystem effect means that even if there is a handful of "competitors", those services on an individual level often aren't available to consumers. If you have your stuff purchased in iTunes, you have massive monetary cost preventing you from switching to Android, for example.
One of the stories I hadn't heard of until recently when discussing the AIM closure, is that the FTC ordered AOL once to make AIM cross-compatible with their two largest competitors or face antitrust action. Had someone like Google been subjected to the same, we'd have had Gmail, YouTube, etc. on Windows Phone, and it wouldn't have died from the lack of Google apps support.
I'd be more than in favor of ordering vertically integrated companies to support at least two competitors' platforms in every way they support their own.
That's quite the can of worms, but what an interesting topic.
I see your point and agree that vertical integration is harmful. I would like to offer the automotive industry as an interesting comparison of an industry with similar compatability issues.
All of the major components produced by the big manufacturers tend to be incompatible (without heavy engineering effort). When parts on a car are compatible between many makes and models it tends to be a third party parts manufacturer that has made it but a concerted effort from the big manufacturer that allowed that to happen. Think brake pads, tires, air filters, spark plugs. In most cases engines, their computers, interiors, transmissions and so on, are all make specific and also usually model specific.
No one is compelling BMW to make sure their engine fits into a Jeep. When I buy a BMW I am locked into their infrastructure and without their parts and support I could find myself without a working vehicle.
While you can often mix and match manufacturers parts so long as you can wield a few tools and have time and knowhow, it's pretty rare that someone wants to. Similar to emulators or jailbroken phones, IFTTT, APIs and integrations, it's easy to see there is a desire for this kind of flexibility but again it's often only a particular type of individual with a particular desire that makes it happen.
I feel that this desire for interoperability is niche. My mother on her Windows phone has been perfectly happy. I have never met anyone who wasn't in tech that has complained about interop. So while I agree it would probably be a good step to introduce more flexibility there, I don't think it's critical to protecting consumers against monopolistic behavior. If you buy an iPhone you are locked into Apple for that device, but you can still buy an Android. Just like I am locked into BMW while I own their car, but could still move to an Audi.
It's not just parts though. The car analogy is more like, I can't drive my car to your house because your house was built by BMW and my car is an Audi. It's like we all live in corporate-controlled subdivisions with proprietary, incompatible rail lines instead of roads.
And we've already seen them collaborate to suppress wages through cartel-behavior. Anti-trust regulators seem to have a limited view on what necessitates punitive measures or even trust-busting.
Well sure, if you mean that by antitrust Microsoft wasn't able to force their tech on everyone. Microsoft wanted everyone running windows, programming in .net, using IE and activex. And they would do anything to get that to happen, including breaking the law and acting incredibly immoral.
A lot of us are still very happy to see Microsoft fail, because they world they wanted us to live in was horrible.
The EU is already moving on multiple cases against Google. The US would have too if Google wasn't so politically connected with the Obama administration, but the anti-trust movement is slowly building itself up again now.
It takes a very small amount of research to note how often Google visited the White House, how much money Google invested in political campaigns over the last number of years, and how FTC staff found more than adequate reason for an antitrust investigation of Google until the White House ordered it dropped. Eric Schmidt, the chairman of Google's board, was considered part of Hillary Clinton's campaign staff and personally funded the company that provided a lot of the Clinton campaign's web dev.
(Hopefully this is enough specifics for you to find any sources that may be of interest to you.)
I think this is a pretty bold claim and would appreciate the sources you found probative.
If the statements you offer constitute sufficient evidence for you, I would say that numerous companies and industries have more contact with our lawmakers than what you have described.
'Google executives set foot in the Obama White House more often than those of any other corporation – its head lobbyist visited 128 times. Google spread its money across Washington with joyous ecumenicism. Google spent about $17m on influence peddlers of both partisan varietals. By one count, Google poured more into its DC apparatus than any other public company.'
As I stated, I was providing you with more detailed statements for you to do your own research. My comment was intended as a starting point, not a bible on the topic.
Microsoft had no concept of the Internet (and still don't -- all their Internet products are google/amazon knockoffs, except for Skype which was much better before acquisition).
> The best start-ups keep being scooped up by the big guys (see Instagram and WhatsApp, owned by Facebook)
Well, I don’t know. „Scooped up“ sounds very hostile, in reality these startups were sold for a fortune. Also, the fact that you’re able to buy an innovative startup does not necessarily mean that you’ll integrate or run it successfully. Take for example google’s Nest or Motorola acquisition. Acquiring and sustaining is quite difficult.
"Scooped up" is hostile - to end users. In the battle between Facebook Messenger and Instagram, Facebook was forced to innovate Facebook Messenger and actually add gasp features. Wait, no that was sidestepped when Facebook announced they'd bought Instagram. It wasn't until SNAP refused to sell out, that Facebook was forced to do anything something to Messenger (though in their desperation, they ruined it).
For those among us at HN hoping to be acquired for giant piles of money, "scooped up" sounds almost paternal, but for the people who actually use the end product (which may different than the customers in the case of ad ware like Facebook), it's a warning sign to flee the platform.
Even sustaining a merger is difficult, but what a company really wants when acquiring a tiny startup, long starved of "proper" resources, is for that startup to finally flourish and become the progenitor to a whole new industry with the help of the new parent company, and make all the shareholders piles more money. However, merging an acquisition is so difficult, and parent control (and branding) is so poisonous, that "Google came out with a camera that spies on you all the time" barely sounds like hyperbole. (I mean, it is, but there's nuance lost when talking about Alphabet-plus-all-child-companies level when they operate significant portions of the cloud, vs Nest, which as an upstart competitor, did not.
Also the definition of "best start up" was not clearly defined, and perhaps only defined after they were bought for billions.
If you defined a good startup by the amount of profit they generated, then instagram and whatsapp would have done worse than a lemonade stand. Even to this day it is not clear how much profit whatsapp has generated.
Why would they need social media or whatever? The startups themselves advertise their own success. It wasn't a secret that Whatsapp was growing tremendously.
There seems to be a concerted effort to paint the silicon valley elite companies as "dangerous"? I'm not sure it's unwarranted, but it seems relatively recent to me, as if to drum up political support for regulation. What's interesting to me is the big technology/infrastructure/media corporations that are escaping this broad brush, including AT&T and Comcast.
Don't you think it might have something to do with the fact that they're growing larger and more powerful and influential? It wasn't that long ago that Apple became the world's largest company, Jeff Bezos was recently named the world's richest man, etc.
Exactly. They aren't the picked upon underdogs no matter how many of us might still think of them that way. They are major power centers in our societies that can and do go toe to toe with other major power centers. These major power centers are and always have been jockeying with each other.
In a different context, Madison wrote "ambition must be made to counteract ambition" -- the idea was that if these powerful institutions were wrestling with each other, then that would create a space underneath them where the general public could, unnoticed by the struggling titans, have some freedom of action.
So the last thing I want is for the institutional media or the government to give SV a pass. Or vice versa.
> They aren't the picked upon underdogs no matter how many of us might still think of them that way.
Well, when you narrow the scope to "obvious tech" and brand names end users recognize. However, Silicon Valley is still small compared to the influence of, say, Wall Street.
I guess what I'm saying is that some other institutions may benefit from letting them occupy the public eye.
If you compare: Apple, Facebook, Amazon, Google (Alphabet), and Microsoft on the one hand to JP Morgan Chase, Bank of America, Wells Fargo, Citigroup, and Goldman Sachs on the other, the tech companies have 2.6 times the market cap, 1.6 times the revenue, 1.1 times the net income available to common (a measure of profit) and .7 times the domestic work force.
I wouldn't say they are small compared to Wall Street.
Thanks for mentioning it. I find it easy to avoid Facebook, Google, Amazon. I have nothing against Apple, for their recent design mishaps hurt them more than me.
But, avoiding Verizon/AT&T and Comcast are significant daily sacrifices that require creative solutions which I have not committed to.
My newly built community has Verizon only and nobody else to provide cable internet. This is a good reminder to ask my community on my HOA Facebook page to get other providers, which will involve a lot of digging up of yards and mess.
P.S: My username is anti-social wrt social networks, not wrt people. I have zero friends on FB.
I hope thought leaders start the trend of a reverse network effect or start open protocols for networking.
There have been quite a few articles recently on how the Left has gone from positive on tech to neutral at best and hostile at times, and the Right has also gone from neutral to semi-actively hostile.
> What's interesting to me is the big technology/infrastructure/media corporations that are escaping this broad brush, including AT&T and Comcast.
Doesn't everyone hate AT&T and Comcast already? The danger with the Big Five is that a lot of people still think of them as loving providers of wonderful things.
We need to see this in a deeper historical pendulum that swings (in the U.S.) between extreme tolerance of monopolies (railroad barons, etc, way back when) to extreme intolerance of them - the nadir of tolerance being the 1970's when Xerox was killed off for buying patents it was already using, and had been founded on! (Because that gave it now-exclusive rights to the tech.) We notice the change in how Silicon Valley is viewed because the good press was so very, very good; even when their conduct was not.
All of the big 5 have loads of potential enemies (or entities who would benefit from their loss), including but not limited to actual nation states. It's IMO unlikely that the uptick in anti-tech-hegemon publicity we're seeing lately is due to any single actor or interest.
It's a political attack against Mark Zuckerberg's upcoming presidential run. The propaganda machines are starting now by painting a picture of Silicon Valley elite being out of touch, dangerous, etc. etc.
One might look at the founding of Fox News and its relationship to the GOP and be forgiven for thinking the last thing has already happened, even though it only reaches diehard GOP voters.
This would be more like...if Trump ran Breitbart for a decade, and Breitbart had a following consisting of most of the US population and could easily be used to sway huge portions of the electorate because you spent the last decade figuring out how to manipulate your viewers.
Probably a better example is if the GOP owned a private intelligence firm that had data on every citizen and could manipulate what they saw/read/said
In that case, I'm fine with it. The last thing this country needs is another out of touch billionaire thinking they're qualified to run the country just because they have a bunch of money.
> The Five run server clouds, app stores, ad networks and venture firms, altars to which the smaller guys must pay a sizable tax just for existing.
Hmm... thats not actually whats going on. Its not like start ups wouldn't have to pay hosting costs if the big 5 didn't exist. If anything these ability to host at Google/MSFT/Amazon lowers the barrier to entry for startups.
Perhaps, but bear in mind, instead of a multitude of potential hosts, that hosting tax must go to the Big Five. Which means the Big Five will always have a financial advantage entering any market.
Is that true, though? You can certainly host on Rackspace, avoid AWS entirely, and so on. Amazon will have cheaper hosting than you no matter how you get it, but that's merely a function of scale, not monopoly.
Google traffic/ads and the iOs app store are the only two spots that seem truly captive.
AWS is quite expensive. It's not the case that it's cheap. Rather, you pay more for convenience.
The idea that startups "must" pay AWS or equivalent is the kind of idiotic junk that only rags like the NYT could come out with. Nothing stops you buying your own hardware and racking it. For many companies that's in fact a better option than paying for cloud services!
I don't expect anyone will actually be racking their own hardware, but "AWS or CGE only" still sounds pretty narrow to me. Are VCs really going to object to Oracle's bare metal setup, or RackSpace with OpenStack?
Another poor quality article with little research. It started with big tech companies are bad and followed that with some reasons. Lot of start-up don't succeed because they are not innovative and lack vision. The ones that did add value are doing well likes of uber, Netflix, airbnb, slack. In fact, if the author expands his world view a bit more and looks across the globe than he will find many more such examples. Even within the big five there is significant amount of competition and currently it is good for customers. This article is just crying wolf without offering any substantial reasons. Big companies buying of smaller competitors isn't some cunning move neither it is something new. This happened all the time even earlier. In fact the rise of cloud services has reduced the entry barrier for tech companies significantly by reducing upfront capital costs. Imagine if before starting a factory you first had to build a coal powered electric plant, not many would venture i guess. The argument about snapchat paying google for cloud services is just absurd. It would be costlier for snap to build this on their own.
Note that Snap booked only $330 million in ad revenue for the first half of this year. In other words, it's paying more than half of its revenue to Google.
I wonder if it's possible that small companies are better at creating user value, but big companies monopolize the mechanism of delivering customer value, which is advertising.
> In January, Snap signed a cloud hosting deal with Google. It agreed to pay Google $400 million a year for the next five years. Note that Snap booked only about $330 million in ad revenue in the first half of this year. In other words, it’s paying more than half of its revenue to Google.
This figure is hard to put in context without knowing how much of Google's own revenue goes to operating it's data centers. Sure, they're not paying that money to another single giant company, but they're still paying it.
> Fewer than 1 percent of start-ups end up as $1 billion companies.
Is that the goal for society, to have more $1 companies (vs. having that value rolled into a larger, pre-existing organization)? Is there an assumption that more $1 billion companies will somehow mitigate the power of the Big Five? Are the Big Five stifling innovation?
Feels like it's only a problem if the big boys enter into non-complete agreements (like the hiring issue a few years ago).
To put it another way: do we need/want to spread the value from the "Frightful Five" to something like 7, 8, or more companies? Is a "Terrible Ten" better/worse than five?
There's a fine line there, though, right? We want competition, but we also want integration. I'm not happy that there isn't deeper integration with Apple hardware and Google software. having Google search + Google assistant + Apple Phone + Somebody else chat isn't what I'm looking for as a user.
The source is at the link below. Its not 1 percent of startups but rather "1 percent of startups that raised seed rounds in the US in 2008-2010". There were ~1000 of those startups, of which 10 became unicorns.
What are we calling a start-up? You're going to have to set at least a modestly limited definition.
Any relatively new business? Sure, there are tens of millions of those started every year globally.
Six million small businesses are formed each year in the US (any new business with less than 500 employees), most of those are small, usually single person, self-employment entities. That's clearly too broad however.
Closer to the definition of a corporation being formed with the intent to hire other employees, it's more like half a million per year in the US. [1] It's probably safe to say it's at least five or ten times that globally.
> fewer than 1 percent of start-ups end up as $1 billion companies
Not every company needs to achieve a billion dollar evaluation. This eat-the-world mentality is incredibly toxic. An an entrepreneur one should be satisfied with making tens of millions in revenue, but of course you can't stop there when VCs are involved.
Dropbox isn't even mentioned in the article. Dropbox is fighting against at least four of the five giants : iCloud Drive, One Drive, Google Drive and Amazon Drive. Guess who should buy Dropbox (or Facebook Drive?)
I frequently see people saying that they'd love it if Microsoft dropped a One Drive Linux client. My guess is that those companies could compete with Dropbox, with little real additional effort.
The article actually says "fewer than 1%", but they don't include the "fewer" as part of the link text, which seems like a poor choice.
The linked article reports the actual value in their cohort to be 0.91%[0], which is surprisingly close to 1%.
For what it's worth, this cohort is of companies that received their initial seed in 2008–2010. Obviously it takes a while for a company to hit $!Bn valuation, but the landscape has changed a fair bit in 7-9 years, so the current number may be a lot lower (or a lot higher).
> Snap, the company that makes the disappearing messaging app Snapchat. Although it is one of the most innovative consumer-focused internet companies
Isn't this part of the problem?
Snap, albeit innovative and fast as they are in creating new paradigms should in no way be the most innovative consumer-facing company.
There's an imbalance here somewhere.
Maybe when it makes sense for everyone to create their own infrastructure, the hold of the five will loosen up. That might require another wave of infrastructure improvements that the huge companies will not be able to compete with the collective many.
I meant: there must/should be more innovative companies that are targeting more fundamental problems.
Of course every company should be as innovative as maximising profit allows.
To reiterate I meant there ought to be lots more companies with bigger dreams than that of Snap, no matter how innovative Snap is. That Snap IS considered one of the most innovative companies is indicative of the problem.
Snap is only considered one of the more innovative companies in consumer facing social. That's it. There's no sense in expanding that to include everything in tech, they are not one of the top few most innovative consumer companies in all of technology.
That Snap gets pegged as that, is a fake set-up to write articles that stick to a script that the writer wants to push. It's equivalent to asking someone's opinion when you've already entirely made up your mind, except in this case it has a particularly negative effect as it's being pushed out into the world as a form of media propaganda.
Here's how it works (to use a famous example of this setup): we expected flying cars and all we got was 140 characters. That's a bullshit setup, it fails to even question whether flying cars make sense, and then sets up Twitter as an ideal example of today's level of innovation (which it never was). While Thiel was pushing that bogus premise, incredible innovation (both hardware and software) had occurred in mobile all around the world in a mere ten years from 2007 to 2017. Drastically improved communication, as one example, is far more important than flying cars.
Innovation is so terrible today! Then hold up mediocre examples of innovation while ignoring the vast, extraordinary innovation going on (from quantum, to crispr, to AI).
That's a big theme lately. They all create copies of latest-billion-dollar business-targeted services, and release before they're fully baked. That's totally the startup approach, but it doesn't feel like an approach that works well when there's already a market leader doing the same thing but significantly better.
BI is another similar area. Quicksight and Data Studio are amazingly deficient compared to Tableau. Data studio can't join SQL tables, and Quicksight leaves you hitting bugs every other page and tried too hard to support fancy charts, but entirely forgot the basic "display some tabular data" option. (Power BI by MSFT does a bit better as I understand it, but is msft-tech-focused. Haven't tried it).
> The best start-ups keep being scooped up by the big guys (see Instagram and WhatsApp, owned by Facebook).
I was under the impression that that was the point. From the investors' perspective, you're playing volunteer R&D/HR for Amazon or Google or Facebook in hopes that they'll take notice and buy your devs and users off you. That's what an "exit strategy" is, and we all know that every startup needs one. The bit about changing the world and revolutionizing the way we communicate is a sop to keep the engineers happy and productive.
I completely agree with this premise. Nowhere is it more obvious than in OSS companies. There is no open source business model that cannot be disrupted by the cloud bigs which also include Microsoft.
I don't think there's any "there" there, w/r/t this article. All it's really saying is "some companies build infrastructure and they profit when other companies use their services". Well duh. In this regard Google or Amazon are no different from the local electric utility. Well, with the exception of that fact that there are many cloud hosting providers to choose from and there is actually some competitive pressure there, where electric providers almost always have a true monopoly.
So Snap is paying Google $400MM USD / year or whatever... OK, now ask "how much would it cost Snap to build their own datacenter(s), host and manage their own services, provide electricity, cooling, etc..." It might or might not add up to the same as they're paying Google, but it would definitely be a significant chunk of money. It's not like Google is taking their money and not providing some value in return!
The flipside of this is that services like AWS, Google Cloud etc. make it FAR, FAR easier and cheaper to spin up a new (software) business. For some of the stuff we're doing at Fogbeam, we would never even be able to start if we had to build a datacenter, buy servers, etc., etc. But we can deploy on AWS for a minimal spend during development, and then scale our use of AWS as we start to generate revenue. If/when the day comes that the economics make sense, we could look at moving to a colo center or even build a dedicated data center.
Personally, I don't begrudge Google, Amazon, etc. the money they're making. shrug
I agree that the article is kind of useless, but I think you're maybe over-estimating the difficulty of racking your own machines. You don't have to build your own physical building to run your own hardware, and unless you're using tens of thousands of machines they don't die that often. The savings from bringing it in house can be substantial.
On the other hand, if you need some of the more exotic cloud services that don't exist or exist very badly in the self hosted space i.e. you are really paying for access to their software stacks, then sure.
The savings from bringing it in house can be substantial.
Oh yeah, absolutely. I don't dispute that. But I don't see any reason to think that anybody put a gun to the head of any Snap executives and made them sign the deal with Google. Apparently they thought they were getting their money's worth, or else why sign up?
Anyway, all I'm trying to get at is that it isn't like Google are somehow victimizing some poor, defenseless, startup. These guys made a deal that they thought made sense, and they know their business better than any of us.
Who said anything about being capital efficient? The point is that this article is all hyperbole trying to paint Google / Amazon / etc. as vultures who are just ruining startups. And my position is that those startups have to pay somebody for the services they're getting from AmaGoogFaceSoft, even if it means building the services from scratch themselves.
And when you balance all of that against the fact that AmaGooFaceSoft enables startups that probably couldn't even exist otherwise (due to large initial capital demands) it's ridiculous to say that those large vendors are somehow detrimental to startups in this regard.
I see this article as nothing but click-bait preying on the currently prevailing "woe is me, the sky is falling" negativity meme.
So Snap is paying Google $400MM USD / year or whatever... OK, now ask "how much would it cost Snap to build their own datacenter(s), host and manage their own services, provide electricity, cooling, etc..." It might or might not add up to the same as they're paying Google, but it would definitely be a significant chunk of money
The reality of monopoly and collusion is here and it’s real!
When I started my first company it was easy to access customers(30k+) via all types of cheap online marketing. But around 2012, a massive shift started happening towards “content aggregators” and a closed web. Which made marketing a lot more expensive and less effective.
The big guys have closed the web and are now taxing business for access to people's attention.
China has the same problem the US has. BAT (Baidu, Alibaba, Tencent) control most of the Internet in China. So China only enforces the claims that NYT makes, at least for the China market.
IMHO there's also something in the culture that favours startups in the US vs Europe - my feeling is that in Europe most of the avenues for social mobility were locked down tight by the elite a long time ago, whereas due to relative youth of the US as a nation that process of entrenchment is still underway.
My god it’s much harder to start up in Europe! Most startup literatures are actually US-centric but I didn’t realise just how massive the differences in the U.K. and US are. Considerations like VAT, soon-to-be GDPR, bureaucratic nightmares and the fact that getting funding is an almost cut-throat process...
Sure you can start up in the US, but just getting in the country is already hard. And why should this be the only option for poor startups!
Those are indeed tricky things, but surely they are much easier than actually getting users to care about your product in this attention economy? Unless the product is in an underserved niche, in which case scaling up will prove near impossible.
I would argue it's actually easier to start up in many European countries, due to social safety nets, free health care and universities etc. Eric Ries has made the same case. However getting traction in the US without being there physically is really hard!
Don't overestimate the difficulty of screwball EU regulation. The blighted cookie law is really the least of it. Even just selling something over the internet inside the EU is so difficult due to the disastrous VAT rules that you practically have to pay third parties to handle it for you, at least at the start.
There are several basic problems. The EU sees tech firms as a foreign source of money that it can squeeze "for free" because there are so few tech firms in Europe to start with. So it passes hostile laws all the time that make business hard under the assumption that big companies can handle it anyway. The Commission does not really care about small companies but the problem is replicated at the local level (UK and Ireland being notable exceptions in my view). The attempts in Spain and Germany to force search engines to pay newspapers is a good example of European countries killing off their own startups in an attempt to extract money from Google and Facebook.
The second is that it gets caught up in politics a lot. The EU places its political priorities first, always. One of the primary ways it achieves its primary goal of replacing European countries with a new super-state is passing lots of EU-level law. It spends huge effort finding places where it can create new regulations, even if none are really necessary.
The "right to be forgotten" is a classic example of the issues here. A right that was discovered by the EU's courts, then written into law by people who do not answer to any voters (thus have no incentive to keep regulation in check), which basically makes it impossible to create a startup search engine of any kind. The EU cookie law is also like that.
it is indeed very sane to locate in Europe for very early stages. The one problem you'll have is funding. Aside from that, everything else is nice. Yet, this one problem means we don't have hard-sccaling companies.
I guess Docker is the archetypical company : started in Eu, moved in the US for $$
The government should force public corporations to hold internal democratic elections every few years to select a new board and executives and limit how many terms a CEO can stay in office.
The government is so busy fighting dictatorships overseas that it's forgetting about the dictatorships that are growing on its own soil.
The owners - ie shareholders - can force elections whenever they want. The problem is really one of profit motive; why would they want to replace a CEO who's making them money? The natural trend of free markets is towards consolidation, eventually ending up with a small number of firms which can extract what economists call "monopoly rent".
The shareholders shouldn't have a say. Only the employees should have a say. The shareholders aren't the ones who are forced to spend their entire lives there.
Otherwise it's like allowing rich foreign investors to vote for the US president just because they own a lot of shares in US companies.
shrug that's capitalism - it's the price paid for having the investors fund a business in the first place, giving up control. There are employee-run businesses, co-operatives, but they can be outspent by the VC-funded businesses.
Mandating transfer of power from the owners to the workers is, very literally, Communism. A description without implying value judgements of the relative systems.
Part of what you wrote elicited a deep sigh on my behalf. Transferring power from owners to workers is not literally communism, at all. Transfers of power happen all the time when new legislation is passed to create worker protection laws or to weaken them. By your definition, OSHA would be labeled as communism since it transferred a certain amount power within a business to the workers by given them an increased amount of rights while working for an employer. And, to be sure, I've heard management also label OSHA as communist, but it's not.
Look, as you mentioned, there are many different kinds of workplace organizational structures. Corporations with a board are one, employee run companies are another, and cooperatives are yet another. However, the government does have a hand in and does set rules for what structures are allowed. That was part of the contention between VW and the state of Tennessee about the works council. It didn't appear to be allowed under law, so they tried to back walk one through a union, which ultimately failed. In my opinion, that back walking should have never been necessary and the structure should have been allowed.
That's a long way to say that we as a society do have a role in deciding what organizational structures are and are not allowed for businesses. We already do it, but the tone tends to be that a traditional corporate structure is the pinnacle and anything else that transfers power to workers is communist. That, again, is not true and we should be having a more honest and candid conversation about these structures and the kind of society that we want.
not exactly. A company could be funded by bonds instead of shares. Bonds offer the financial obligation without the control. It's a question of social contract and property law if the modern legal fiction of a "corporation" should exist.
> Mandating transfer of power from the owners to the workers is, very literally, Communism. A description without implying value judgements of the relative systems.
It'll force companies that are still growing with a powerful CEO to stay private (or possibly just be destroyed, if they're already public) because of CEO churn.
The effect of that will be that 'in' parties will get to participate in the growth, while the greater market (eg, retirement funds) get cut out of that. The effect will be that the rich get richer, while the public subsidizes their gains by buying in only at the very tail. (Essentially, just pushed down the line even further than now.)
I think America actually is powerful because corporations aren't democratic. It allows the US to function as a macro-democratic republic (where the public controls the rules of the game) but micro-feudalistic society (where you have fiefs implementing those rules). Kings are efficient; republics are stable. So our infrastructure is republican, while our 'features' are feudalistic. If you believe in capitalism, this allows for efficient distribution of resources.
What I think the US does wrong is not lubricate the transition between fiefdoms. Social safety nets lubricate transitions so that inefficient (poorly managed, badly conceived, etc) fiefdoms collapse quickly but the people who are involved aren't harmed and can smoothly transition into other ones of their choosing. That's the creative destruction of capitalism, optimized.
So from my view, it's not that the problem is how corporations are managed, it's that America won't invest in her ideals -- at a societal level. So of course they don't work.
Disclaimer: Work at publicly traded corp; views are mine, not employers.
Deals can be mutually beneficial -- my point is exactly that allowing them to partially cash out while remaining in control leads to stability and earlier cashing out, both of which help the public.
The suggestion I replied to was bad for everyone, because it forcibly negates a deal that's good for everyone.
My comment is too long, so I'm going to post it in two parts.
First, I want to point out that you're right. It is true when you say, "Companies aren't public to be nice." That's true and I'm not going to argue that. The fact is, they aren't.
However, that's not how it has always been. I'm not really able to find any good citations so I'm taking a little time to make something for you.
It's important to understand the history of incorporation. To be incorporated (thus traded publicly) confers certain rights to a body of people.
I know, people complain about Citizens United and how "corporations are people." But, that's actually pretty much always been true.
"Corporations are invariably classified as "legal persons" by all modern systems of law, meaning that like natural persons, they may acquire rights and duties." [1]
Because of this notion, once upon a time, the right to incorporate was controlled by the State.
"At the Declaration of Independence, corporations had been unlawful without explicit authorization in a Royal Charter or an Act of Parliament of the United Kingdom." [2]
In other words, the State controlled the ability to incorporate - in this case it was the monarchy. You needed a royal charter, at the least. (We still use the word charter.)
Now, here's the kicker... We wanted to establish the right for a group of individuals to incorporate. We'd already decided that representative groups were a right (the right to peacefully assemble is a good indicator) and so we decided that we wanted to allow more freedom to incorporate.
But, we knew that incorporation could lead to some negative consequences. The founders were pretty smart, in some ways.
We also knew that the Federal Government was capable of being too large. This is a subject of great depth and we'll not get into it. Suffice to say, people aren't actually always being racists when they assert the importance of State's Rights.
One of the earliest concerns about State Rights was actually about incorporation. The Feds had decided that a group of people had a right to incorporate without actually residing in the State they'd chosen to incorporate in.
So, this led to many things but we're only concerned with one aspect. (I'm trying to be brief.)
Namely, we didn't just want people to have the ability to incorporate without any controls. We still wanted government oversight and we still wanted to ensure that incorporated entities were a benefit to the public.
So, back then - and in certain States (I'm unable to find an exact number in the time I've allowed myself to make this post), to incorporate actually required both introduction and vote on the Senate floor.
"Prior to the late 19th century, most companies were incorporated by a special bill adopted by legislature." [3]
By now, you're probably wondering what the whole point is of this wall of text, seemingly from a mad man. Well, I'm getting to that.
So, way back then, we had the legislature approving of each individual group that sought to incorporate. On top of that, they were very willing and able to revoke their charter and to dissolve their corporation.
"Early state corporation laws were all restrictive in design, often with the intention of preventing corporations for gaining too much wealth and power." [4]
In other words, one of the absolute principles for founding a corporation was that it must be of benefit to the public. A corporation had to start and maintain their good to the public. A corporation had to provide a public good, they had to benefit the public, they had to be good stewards and citizens. That was explicitly what they had to do.
So, you're right. Corporations don't have to be "nice." However, they used to have to be "nice." They used to have to be beneficial to the greater society. They had an obligation - because they were conferred rights they'd not normally have. To incorporate absolved the individual, and the shareholder, from many legal responsibilities and, in exchange, we (via our elected representatives) insisted that they provide a benefit to society as a whole.
I'd think that qualifies as "nice." Don't you?
Anyhow, we maintained this for quite some time. We enforced this with things like the Sherman Antitrust Act [5] and other such legislation. The Sherman Antitrust act is an important indicator of the obligations of corporations. This was better explained in 1993 in Spectrum Sports v. McQuillan [6] which explained it thusly:
"The purpose of the [Sherman] Act is not to protect businesses from the working of the market; it is to protect the public from the failure of the market. The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself." [7]
Again, you're right! I'm absolutely not arguing with you. A company isn't public to be nice. However, it doesn't have to be that way - and it hasn't always been that way. There's absolutely no reason why a corporation should be allowed to exist if it is not, in fact, benefiting the public good.
Why should we, the citizens, allow corporations those very nice protections from legal liability if we're not getting some benefit from those same corporations? Today, it's very much an automated and inexpensive process to incorporate (it's more difficult to get listed on a stock exchange and to be publicly traded) and there's no actual requirement for the incorporated entity to benefit the public.
The whole point is you're right - and that's a bad thing. When the public loses control of the corporations, they cease to become public. The whole point of "public" is that there should be a benefit to the public. When we reduce the obligations to the public, incorporated entities have caused trouble. Here's an excellent example:
"Through the 1920s, power concentrated in fewer hands as corporations issued shares with multiple voting rights, while other shares were sold with no votes at all. This practice was halted in 1926 by public pressure and the New York Stock Exchange refusing to list non-voting shares." [8]
What did that cause?
"It was possible to sell voteless shares in the economic boom of the 1920s, because more and more ordinary people were looking to the stock market to save the new money they were earning, but the law did not guarantee good information or fair terms. New shareholders had no power to bargain against large corporate issuers, but still needed a place to save." [8]
"The Wall Street Crash saw the total collapse of stock market values, as shareholders realized that corporations had become overpriced. They sold shares en masse, meaning meant companies found it hard to get finance. The result was that thousands of businesses were forced to close, and they laid off workers. Because workers had less money to spend, businesses received less income, leading to more closures and lay-offs. This downward spiral began the Great Depression." [8]
The thing is - it doesn't have to be this way. We, the citizens, have the power to force our elected representatives to actually adhere to the spirit of the regulations.
To incorporate and to be a publicly traded venture is a privilege. Doing so, to become incorporated, infers a great many legal protections. To be able to be publicly traded, to be able to be owned by the public, should require a level of responsibility to that same public - not just to the stakeholders but to the general public. Why? Because those people who own the stock are also given legal protections.
I own a significant amount of stock in publicly traded companies. Those companies can rape, murder, pillage, and burn - and, no matter what, I'm not even remotely legally accountable for their behavior. All I do is reap the rewards.
For that protection, for those privileges, those publicly traded entities should very well have an obligation to be "nice." To be able to have those protections, to be able to profit at the will of the people, should actually involve an obligation to those people. Remember, it's not just the incorporated entity, nor the publicly traded shares, that get benefit - the owner of the shares benefit as well. To have those benefits granted to those entities means those entities very much should have an obligation to the general public.
There's absolutely nothing stopping us from making this an issue. There's nothing stopping us from speaking out. There's nothing stopping the legislatures from ensuring that publicly traded companies benefit the public that allows them to have those very rights that enabled them to accumulate their wealth and to operate as a business. Nothing.
The system is broken, not working as designed, and it needs to be changed.
That said, again... You're right. Companies aren't public because they have to be "nice." However, that's the problem. They should be "nice" because they're allowed to be public. They should be "nice" because they're allowed to incorporate. They should be "nice" because they're afforded rights the average individual does not, in fact, have. When you commit a crime, you go to jail. When an incorporated entity commits a crime, the shareholders are never legally accountable. On top of that, many of the actual executives are never legally accountable.
It's a damned shame. It's an absolute problem and this problem has skewed the opinions of the public - the same public who should be benefiting from the corporations and their privilege to be traded publicly.
Fix the system because your statement is right - and that's the problem.
Addendum: I am in no way displeased or mad at you. My post is not indicative of you being a problem. My post attempts to shine a light on the system being the problem. It is, in no way, meant to reflect poorly on you. You are, after all, just a reflection of the system. Your statement was 100% right. That's the problem.
If you founded a successful company, how would you feel if you were legally forced one day to resign from running it, even though you've done nothing wrong? Under either capitalism or communism, this seems unfair.
> If you founded a successful company, how would you feel if you were legally forced one day to resign from running it
Not particularly happy, but once a company is worth multiple hundreds of billions of dollars, the public interest if probably better served by the company's incentives being more closely aligned with wider society's wishes.
The fact that someone is allowed to be the leader of a massive too-big-to-fail company for the rest of their lives just because they happened to be employee #1 seems extremely unfair.
We should stop pretending that the CEO is the one doing the work and delivering the value.
Absolutely anyone can be a great CEO if they have lots of smart people under them.
This is kind of a narrow way too look at things, isn't it? I think a founder of a company is more than "Employee #1". They are literally the person who envisioned and created the company. That deserves respect and if the founder is not harming the company or breaking laws, I don't see any reason why my government should have the legal ability to make them step down.
Look, the real issue is simple: all of these "web startups" are not very innovative. All of them are roughly the same: ever so slightly more novel way to deliver roughly the same set of data to users in exchange for app or token of money. How is that "ground breaking"?
Thing is, when everyone is doing roughly the same thing, which costs perhaps a few engineering months to build, how can startups ever compete with the big guys who are hell bent on ensuring their success? It's like trying to open supermarkets to compete with Walmart, or building gasoline car to compete with Toyota, except it's cheaper for the Big Five to copy than for Toyota, because the media (information) is inherently more traceable.
I remember when Windows 98, XP, Google, Gmail, Prime (and Uber, eBay, and paypal) came out. They blew everyone's mind. They changed how we work and live. What's so hot about SnapChat? I mean, it's probably ever so slightly more entertaining than, says, Hangout or WhatsApp, but it's just minor tricks on top of roughly the same set of features. Of course these competitors will drive it out of the marketplace. It holds no long term competitive advantages.
There are businesses that don't deserve to die. For example, a local store provides not just goods, but a community center and an identity for a small town; it gives more value than mere commerce. The decline of these should alarm us. On the other hand, some businesses do deserve to die. And lack of long term advantage, lack of innovation, lack of additional value sounds exactly "should die".