Why Big Tech Can't Always Win: Rethinking Investor Questions Aditya Agarwal


Investors often pose a simplistic question: “Why can’t Google, Amazon, Apple, or another Big Tech company do what you're doing?” My response would be straightforward: these companies can build anything. They are conglomerates, and that's their purpose. If an investor genuinely believes that Big Tech will eventually build everything, they might as well stop investing altogether.

However, there are more productive ways to frame this question, which can help articulate a startup’s product strategy and go-to-market direction. Let's explore some better questions.

Firstly, a more insightful question would be: “Can you reach a reasonable scale within 3-4 years?” Big companies inherently move slowly; their operational latency is significantly higher than that of a startup. As a startup, moving slowly means failure, but moving rapidly might give you a lead that larger companies cannot easily close.

This idea aligns with a classic concept in business: every startup's battle with an incumbent boils down to whether the startup can achieve distribution before the incumbent achieves innovation.

Another thought-provoking question is: “Can you implement growth and distribution strategies that a heavily scrutinized big company cannot?” Large companies face immense oversight and regulatory constraints. As a startup, you have the flexibility to operate under the radar—at least for a while—without the same level of scrutiny.

There are specific reasons why companies like Amazon couldn't build businesses like Uber, Airbnb, or DoorDash, despite having the right DNA and culture to do so. Likewise, there are reasons why they cannot build companies like Anduril.

A further question to consider: “Can you build something that is 10 times better than the status quo?” In my experience, large companies can build solutions that are 2-3 times better, but rarely can they achieve something that is 10 times better.

To compete against a larger company with significant resources, you must offer an extraordinarily novel solution that justifies being 10 times better. This is rare, so be cautious not to fool yourself into believing you have this advantage without strong justification.

Another valuable question is: “What technology choices can you make today that are unconventional or even controversial, but could be the right ones five years from now?” Big companies are often entrenched in their past decisions, burdened by their own inertia. As a startup, you are not weighed down by these legacy choices.

Finally, ask yourself: “Is there a high-risk, high-reward technical decision that you can leverage?” This path requires conviction, a contrarian mindset, and the ability to be correct when others are wrong.

If an investor asks the lazy question of why Big Tech can't do what you're doing, challenge them to provide a more thoughtful perspective—or consider finding a different investor who understands the nuances of innovation and competition.

By shifting the conversation from "Why can't Big Tech do this?" to "How can we uniquely succeed where they cannot?" you can demonstrate your startup's distinct value and potential for disruptive innovation.

Shopify 창업자의 인터뷰를 들었는데, 정말 무릎을 탁 치면서 들은 부분:
- 창업자가 2008년 무렵에 실리콘밸리에서 투자를 받으려고 VC를 만나고 다녔는데, 여러곳에서 거절당함.
- 거절한 이유를 설명해준 VC 왈: "니네 시장이(TAM이) 너무 작다. 미국 전체에 쇼규모 이커머스 쇼핑몰 4~5만개 밖에 안되는데, 그거 절반을 먹어도 큰 회사 안됨"
- 최근에 그 VC를 다시 만남. VC가: "우리가 그때 도대체 뭘 놓친거임??" 물어봄.
- 창업자 왈: "그 VC가 당시에 놓친건 없음. 실제로 당시에 시장은 그 정도 사이즈였음. 그건 그 수요 (소규모 이커머스 쇼핑몰을 열고싶다는)를 가 실제로 이미 시장에 반영됬다고 가정함. 우리 가설은 그 요구는 얼마든지 더 있는데, 그게 너무 어려워서 (friction이 높아서) 안한다는것. 지금은 Shopify 사용하는 쇼핑몰이 백만개가 넘음."
- "자유시장을 신봉하는 사람들은: 고객의 수요가 언제나 이미 시장에 어떤식으로든 반영되어 있고, 거기에 맞는 가장 좋은 공급을 만드는 방식으로만 비즈니스가 작동한다고 생각하는 경향이 있음."
- "하지만 이건 사실이 아님. 많은 경우, 수요와 공급 사이엔 마찰 (friction) 이 있음. 시장에 수요를 표현하지 못한다고 해서, 수요가 존재하지 않는건 아님. 그 마찰을 제거하면 갑자기 수요가 생겨나는것 처럼 보일수 있고, 그것이 많은 스타트업들에게 기회임."

이상현님.

남들에게 보이지 않는 변화 vs 나에게 너무 명확한 변화

Why do we exist? Why do we work? Why pursue better technology? For our customers.

직접 사업도 해보고 스타트업에 투자해보면서 배운 것 중 하나는 회사가 구성원들의 자아실현의 도구로 변하는 순간부터 꺾이기 시작한다는 것이다.

이런 현상은 주로 기술 기반 스타트업에 많이 나타나는데, 회사가 초심을 잃고 연구소처럼 변해가는 걸 보게 된다.

이런 회사들의 특징은 기술 연구와 새로운 기능 개발에 치중하고 기술 관련 인력은 계속 뽑으면서 제대로 된 영업과 마케팅 인력 충원에는 소홀히 한다.

매출과 손익은 회사가 지속가능하기 위한 필수조건임에도 왜 그걸 개발자가 고민해야 하느냐는 분위기가 회사에 퍼지기 시작하면 대부분은 돌이킬 수 없기에 초반부터 분위기를 잘 만드는 것이 필요하다.

SH Park

Ask their incentive. Find how I can benefit your interest, curiosity, money, and whatever.

Chang Kim

Which cold call request do you think has a better chance?

A: “Hi John, I’m a founder starting a new venture in (a field that John doesn't have interest in). I’d love to pick your brain and get some advice. Do you have any time available this week?”

B: “Hi John, I was chatting with Sue (John's MBA classmate), and she suggested I reach out to you! We’re starting a new company in (an area John is indeed interested in). By the way I found your recent thesis blog post very helpful in shaping our GTM focus. I’d love to chat sometime in (ample heads up, e.g. in the next several weeks)”

A doesn't consider John's benefit at all (why does he have to do this? what does he gain from this interaction?), it's only about you - therefore very selfish, disrespectful, and rude.

B is hard, because you have to put in the work. You need to do research and navigate your way in (common connections and interests). But this is considerate, and has much higher chance of leading to somewhere.

Problem is, way too many people still take the approach A..

Lee Kuan Yew offers invaluable lessons for entrepreneurs. Highly recommended reading, along with his other works.

리콴유의 눈으로 본 세계(2013)

싱가포르의 국부인 리콴유 전 총리가 30여년간 총리직과 외교업무를 담당하며 직접 보고 느낀 국가별 특징과 미래 전망들. 11년 전임을 감안해도 인사이트가 대단하다.

미국, 중국
https://m.blog.naver.com/s2s2s2189/223482560767?isFromSearchAddView=true

유럽, 중동, 북한
https://m.blog.naver.com/s2s2s2189/223483643865?isFromSearchAddView=true

한국, 일본, 인도
https://m.blog.naver.com/s2s2s2189/223487846759?isFromSearchAddView=true

Early stage venture investing is like poker. You make a small initial investment, which is like the ante in poker, and you get a seat at the table. Then you watch the founder and team execute until they need more money. That is like the first set of cards you get. Then you get the chance to invest more money. That is like putting more chips on the table. This repeats a few more times and eventually the company succeeds or fails. That's like the river and the reveal.

In order to play the hand correctly, you need to have reserves. You can't invest all of your money in the ante. You need to have more chips so you can keep seeing more cards. A lot of investors, particularly newbies, don't understand this and run out of money too early in a deal and don't get to keep investing in their best companies. That's like not being able to play your best hands in poker. That's a disaster since you only get a few of those.

Reserves and recycling are two techniques that can significantly enhance the returns on a venture capital fund. We use both of these techniques at USV. They are built into our culture, our DNA, and our processes.

https://avc.xyz/reserves,-recycling,-and-returns?s=09

The theme of Brian's talk was that the conventional wisdom about how to run larger companies is mistaken. As Airbnb grew, well-meaning people advised him that he had to run the company in a certain way for it to scale. Their advice could be optimistically summarized as "hire good people and give them room to do their jobs." He followed this advice and the results were disastrous. So he had to figure out a better way on his own, which he did partly by studying how Steve Jobs ran Apple. So far it seems to be working. Airbnb's free cash flow margin is now among the best in Silicon Valley.

There are things founders can do that managers can't, and not doing them feels wrong to founders, because it is.

In effect there are two different ways to run a company: founder mode and manager mode. Till now most people even in Silicon Valley have implicitly assumed that scaling a startup meant switching to manager mode. But we can infer the existence of another mode from the dismay of founders who've tried it, and the success of their attempts to escape from it.

The way managers are taught to run companies seems to be like modular design in the sense that you treat subtrees of the org chart as black boxes. You tell your direct reports what to do, and it's up to them to figure out how. But you don't get involved in the details of what they do. That would be micromanaging them, which is bad.

One theme I noticed both in Brian's talk and when talking to founders afterward was the idea of being gaslit. Founders feel like they're being gaslit from both sides — by the people telling them they have to run their companies like managers, and by the people working for them when they do. Usually when everyone around you disagrees with you, your default assumption should be that you're mistaken. But this is one of the rare exceptions. VCs who haven't been founders themselves don't know how founders should run companies, and C-level execs, as a class, include some of the most skillful liars in the world. [1]

Whatever founder mode consists of, it's pretty clear that it's going to break the principle that the CEO should engage with the company only via his or her direct reports. "Skip-level" meetings will become the norm instead of a practice so unusual that there's a name for it. And once you abandon that constraint there are a huge number of permutations to choose from.

For example, Steve Jobs used to run an annual retreat for what he considered the 100 most important people at Apple, and these were not the 100 people highest on the org chart. Can you imagine the force of will it would take to do this at the average company? And yet imagine how useful such a thing could be. It could make a big company feel like a startup. Steve presumably wouldn't have kept having these retreats if they didn't work. But I've never heard of another company doing this. So is it a good idea, or a bad one? We still don't know. That's how little we know about founder mode. [2]

I also have another less optimistic prediction: as soon as the concept of founder mode becomes established, people will start misusing it. Founders who are unable to delegate even things they should will use founder mode as the excuse. Or managers who aren't founders will decide they should try to act like founders. That may even work, to some extent, but the results will be messy when it doesn't; the modular approach does at least limit the damage a bad CEO can do.

https://paulgraham.com/foundermode.html

QnA에는 이런 내용들이 나옵니다. 궁금해하실 것 같아서 🙂

- 자신을 속이지 마세요. 그러려면 이성적으로 사고하고 객관적으로 바라보기 위해 늘 노력해야 합니다.

- 충만한 인생을 살고 싶다면 자신의 열정을 따라가야 합니다.

- 저는 우리 회사 직원들에게 한 회사를 충분히 이해했다면 10년 후 최악의 시나리오를 예측할 수 있어야 한다고 말합니다.

- 당신이 무언가를 안다고 생각할 때는 먼저 알지 못하는 것이 무엇인지를 알아야 합니다. 우리가 이해할 수 있는 것에는 분명히 한계가 있기 때문입니다. 능력 범위에서 가장 중요한 개념은 경계가 있다는 것입니다. '범위'니까요. 경계가 어디인지를 알지 못하면서 능력 범위를 안다고 하면 틀림없이 모르고 있는 것입니다.

- 유용한 지식은 몇 가지 조건을 충족해야 합니다. 무엇보다, 증명될 수 있어야 하죠. 그리고 뒷받침하는 논리와 당신이 보는 사실이 모두 이를 지지해야 하며, 일련의 상황을 확실히 해석할 수 있는 능력과 비교적 유용한 예측 능력을 보유해야 합니다.

- 한 기업을 이해하려면 해당 비즈니스와 경영진을 반드시 이해해야 하며, 해당 산업의 기본 규칙도 알아야 합니다. 이처럼 이해해야 할 것이 훨씬 더 많기 때문에 가치투자가 상대적으로 쉽지 않은 것입니다.

- 제가 기업을 분석한다면 무엇보다 비교적 예측이 가능한 산업부터 시작할 것입니다. 그런 다음 시야를 조금 더 넓혀 이 산업과 관련 있는 분야에서 우수한 기업들이 있는지를 조사할 것입니다. 여기서 우수하다는 것은 자기자본이익률이 경쟁사보다 매우 높다는 의미입니다. 그러고 나서 저는 이들 중 어느 기업이 가장 흥미롭고, 제가 조사 및 분석할 능력이 되고, 제 능력 범위 내에 있는지를 찾을 것입니다.

- 당신에게 가장 중요한 일은 만일 기회가 당신의 능력 범위 내에 들어온다면, 절대 놓쳐선 안 된다는 것입니다.

- 저는 성격상의 어떤 표준을 기반으로 좋은 기업가가 될 수 있는지 아닌지를 판단하지 않습니다. 시장경제는 다양한 특성을 가진 모든 부류의 사람들이 자신에게 맞는 기업을 만들어 큰 성공을 거둘 수 있게 하니까요.

- 멍거는 세상의 작동 원리에 대단히 관심이 많았고, 투자 대상을 물색할 때도 단순히 싼 기업보다는 강하고 훌륭한 회사에 이끌렸습니다. 이런 회사들은 돈을 버는 원리를 알고, 이익을 낼 수 있는 강력한 힘을 가지고 있기 때문입니다.