At a certain point, big companies don't have any choice about whether they do acquisitions. If they want to be in a certain business and some startup already has an unbeatable lead, they have to buy it.
Maybe, but that startup exists in the first place only because the big companies willed it. How did that startup come to be? It got some investment money. And why did anyone invest in it? It wasn't for the hopes of an IPO because the chances are too low. The only reason that startup came to be is because the investors liked the odds of that startup being acquired. Like I said, if tomorrow morning Google, Apple, IBM, Facebook etc. decide they're not buying startups anymore but employing all developers directly and doing their own risky development, the startup scene will vanish in an instant. So the author is right in that the startups exist to serve the big companies. The reason the big companies don't do that is that they know that true innovation flourishes under perceived freedom. So we all win, but big-tech still wins the most.
And why did anyone invest in it? It wasn't for the hopes of an IPO because the chances are too low.
That's not true. VCs will only invest in a startup if they think it has a chance of an IPO. Angels prefer that sort of startup too, though they are not as rigid about it as VCs.
OK, so the possibility of an IPO is a necessary condition for investment, but is it sufficient? Would any kind of investor put money in if they think there is a chance of an IPO (with the odds being what they are now) but zero chance for an acquisition? Isn't acquisition the attractive fallback that tilts the odds more favorably? Wouldn't a scenario of no acquisitions stack the odds against the startup so high as to preclude investment? That is the big question. Aren't acquisitions the motor behind the startup system? Aren't they its bread and butter?
