Hacker News Reader

Comment by bjelkeman-again | Hacker News Reader

I wouldn’t start one company. I would take a leaf out of Y Combinator’s book, and start funding lots a small startups, as well as advising them. I’d would attempt at investing in such a way that I create an ecosystem of companies that can learn from each other and support each other. I’d focus on climate resilience. Lots of current practices will be disrupted by changes we are already seeing. Easy? Probably not, but I think it could work well.

View on HN

Google's done that repeatedly with Google Labs, GMail Labs, Google X, Area 120, department-internal projects like Search Demo Days, 20% time, Google Ventures, giving high-performing employees a charter to work on whatever they want for a couple quarters, etc.

It never seems to work, and it never seems to work for the reasons outlined in The Innovator's Dilemma. Big companies are held hostage by their customers. A new company needs to a.) find new customers b.) be hungry and c.) have total freedom to configure the market around oneself. None of these exist within the cushy environment of a big company - a.) is contradictory with maintaining Google's brand image, b.) is contradictory with continuing to pay the people involved in these efforts, and c.) is contradictory with Google getting first dibs on the spoils of these efforts.

Google seem to solve that by spinning-out while keeping significant(probably) equity.

What's wrong with that ?

I thought that was what the creation of Alphabet was meant to solve.

I wouldn’t start one company. I would take a leaf out of Y Combinator’s book, and start funding lots a small startups, as well as advising them

There are only two YC companies that have gone public and both of those are still losing money -- PagerDuty and Dropbox and as far as I know, none have reached profitability.

Profitability=tax

Are you really saying that these companies are losing money so they don't have to pay taxes?

Yes most companies do that on the books, including movie productions, Amazon, etc. It’s not because their business model still doesn’t work, it’s because the point of corporate income tax is to make sure the corporation doesn’t hoard money and instead reinjects it into business expenses such as payroll.

I realize that, but the companies I’m referring to - the VC backend companies and the YC backed public companies aren’t cash flow positive.

Yes but my point is that if they're reporting profits it'd mean they'd have run out of things to spend money on (R&D, employees, product dev, etc). The whole point of VC funding is that so much money will go towards product dev that they'd need external funding.

And how does that apply to a public tech companies that are still losing money like PagerDuty, Dropbox, Mongo, and ElasticCo?

They have the same obligation to shareholders to increase future profits, not to hoard cash, which is what income tax discourages.

I would call income tax a good problem to have, one which these companies don't have

A company like Dropbox does not need to keep its headcount to maintain their current product and extract profits (of which they lose a big chunk to corporate income tax). If they wanted to show profit they can easily tighten, focus, and get rid of R&D and new product development.

They aren’t cash flow positive. No company chooses not to be cash flow positive to avoid taxes. That’s not how things work. Do you feel the same way about Uber and Tesla? Do you think they aren’t showing a profit to avoid taxes or because they still haven’t figured out how to sell their products at a cost that will cover fixed and variable costs?

If Y Combiantor is doing that already why should Google? They can observe the development and then buy the winner (with a premium)

If Google/Alphabet does too many investments which fail shareholders will cry.

Reply on news.ycombinator.com