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Bursts of Color - Whale Hunting

Bursts of Color - Whale Hunting
By Geoff Donaker • Issue #71 • View online
In 2007 Marc Andreesen published what I think of as his best blog post (of many good ones): The Moby Dick theory of big companies.
Following is a taste, though I suggest taking a few minutes to read the whole thing, even if you’ve done so before.
The most important thing you need to know going into any discussion or interaction with a big company is that you’re Captain Ahab, and the big company is Moby Dick.
Captain Ahab would never be able explain to himself or anyone else why Moby Dick would do whatever it was he’d do.
The behavior of any big company is largely inexplicable when viewed from the outside.
I always laugh when someone says, “Microsoft is going to do X”, or “Google is going to do Y”, or “Yahoo is going to do Z”.
Odds are, nobody inside Microsoft, Google, or Yahoo knows what Microsoft, Google, or Yahoo is going to do in any given circumstance on any given issue.

So What?
This theory has many implications for startups, and Marc includes a bunch of them in the post. My starter set includes:
  1. Any such “big deal” in discussion has a 5% chance of happening, so our main plans must assume the other 95%
  2. If the big deal does happen, it will take 6-12 months longer, and the terms will be worse, than whatever was first agreed (not unlike the rule of thumb for home renovations)
  3. To have any luck with a big company, we must cultivate relationships with a bunch of different stakeholders; any one champion there is imperfect and a single point of failure
A Special Note on M&A
The Moby Dick theory and its lessons count double for acquisitions. Big company Corp Dev folks get paid to court startups, collect information and daydream about potential M&A deals. Across many such discussions I’ve had over the years, the ratio of [Acquisitions Completed / Acquisition Negotiations] is a very small number…probably sub 1%. So if a big company exec tells you they want to buy your company, please (please) protect yourself and your company by assuming it will not happen – even if the big company rep says all the right things. More tactical thoughts on what we can do to optimize M&A another time.
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Geoff Donaker

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