Rick Segal: “Memo to BigCo, Shut Up”

Rick Segal posts a cautionary tale of Web 2.0 mania causing large companies to toy with the emotions of startups with visions of doing the acquisition dance in their heads, only to leave the wallflowers standing alone. Rick Segal is my kind of VC: he blogs, he questions the orthodoxy of his industry and he’s not afraid to go on a rant. Add Rick to your newsreader if you haven’t already.

Web 2.0 is important, a major shift appears to be underway. But something smells fishy. VC may be broken, the only exit is acquisition, BigCo’s are acquiring startups for “strategic reasons” or to acquire talent and then abandoning innovation, getting stuck with the hard work of building a business model only to be taken out by a new, more innovative startup seeking acquisition, and the cycle continues. Or BigCo sits on ass and plays kingmaker while eager young pups jostle for attention, wasting everyone’s talents, time and attention. This is a sucky and anti-innovative situation.

I’ve been exploring these themes a lot lately (here & here), but I sure don’t have it figured it out yet. It has something to do with the tension between network economics and the desire of capital to internalize the market. Web 2.0 and Capital may be a paradox, or they may present a new kind of arbitrage opportunity. More on this later…

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