(1) Building is more expensive than you think it is. For instance, if you're not staffed to build something, you have to recruit. Recruiting is dreadfully slow and painful. "Go hire 10 engineers" could take a year.
(2) Building (obviously) takes more time; the time you spend building is time-to-market that you're conceding to competitors. When you buy a competitor, that gap is erased; you get the benefit of their earlier time-to-market.
(3) Building comes with enormous risks. Deciding to build a cloud monitoring platform is not the same thing as executing on a cloud monitoring platform that the market will embrace. It may in fact be more likely that you will, on some important but perhaps subtle axis, fail utterly. Now you've made a huge investment in your target market and gotten negative returns.
(4) Acquirees are proven in the market. If an acquiree sucks, you buy one of their competitors (unless they suck on an axis you can readily remediate, in which case you probably get a big discount).
I think this is a fantastic post, not just in response to this question but as a response to "Why can't company G just make something like it and take you guys out?"
Fundamentally, and quite succinctly, you've explained why building a successful business/project/technology is hard. And because it's so hard, those that have made something successful and with traction have something of value.
Comments
(1) Building is more expensive than you think it is. For instance, if you're not staffed to build something, you have to recruit. Recruiting is dreadfully slow and painful. "Go hire 10 engineers" could take a year.
(2) Building (obviously) takes more time; the time you spend building is time-to-market that you're conceding to competitors. When you buy a competitor, that gap is erased; you get the benefit of their earlier time-to-market.
(3) Building comes with enormous risks. Deciding to build a cloud monitoring platform is not the same thing as executing on a cloud monitoring platform that the market will embrace. It may in fact be more likely that you will, on some important but perhaps subtle axis, fail utterly. Now you've made a huge investment in your target market and gotten negative returns.
(4) Acquirees are proven in the market. If an acquiree sucks, you buy one of their competitors (unless they suck on an axis you can readily remediate, in which case you probably get a big discount).
(5) Acquirees come with customer traction.
I think this is a fantastic post, not just in response to this question but as a response to "Why can't company G just make something like it and take you guys out?"
Fundamentally, and quite succinctly, you've explained why building a successful business/project/technology is hard. And because it's so hard, those that have made something successful and with traction have something of value.