Thinking About Alternate Universes

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Felix Salmon pushes back on the idea that established companies have screwed up repeatedly by not buying startup internet companies that eventually became giants:

But how valuable were those opportunities, really? If Blockbuster had spent $50 million on Netflix, then it would just have run out of money that much more quickly. There’s no chance that Blockbuster’s management would have let Netflix grow, unencumbered, in the way that it did independently. Similarly, Google would have been stifled as part of Excite: it would have been nothing more than one of many search algorithms competing on the internet.

Buying internet companies is very, very hard: even if they are set to be very successful on their own, that’s no reason to believe that they will have similar success in-house. Google bought Foursquare back in 2005, when it was called Dodgeball, but then closed it down; only when its founders left Google and recreated the company as Foursquare on their own were they able to succeed.

I think that’s right. When my grandfather’s hitch in the Navy was up in 1920, he chose to be discharged in Los Angeles. At one point shortly after that he was offered the chance to buy an acre of land on Wilshire Boulevard for $500, and this naturally led to stories later in life about how it was a missed opportunity because that acre today would be worth a million dollars.

But of course, that’s not what would have happened. More likely, the land would have been worth $1,000 in 1925 and he would have sold it then. A tidy profit, to be sure, but nothing more. Still no riches to hand down to his grandchildren.

It’s the same with most internet startups: you have to think not about what they’ve become in the real world, but what would have happened to them in the alternate universe where they got purchased early in life. The answer is that most of them would wither away if they were part of some larger, more established company with powerful internal factions determined not to let a new division kill their cash cows. These kinds of acquisitions can sometimes work OK if you’re buying something brand new that doesn’t cannibalize an existing part of your business, but even then it’s a crapshoot.

I’m curious: is there a big company anywhere in the world that has a pretty good track record buying small internet startups and then nursing them into giants? In theory, big companies do offer some benefits: money, distribution channels, legal departments, etc. In reality, that never seems to be enough to make up for the loss of independence. Are there exceptions? I can’t think of any, but maybe I don’t pay close enough attention.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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