Silicon Valley start-ups threatened by big business

David Sacks, the chief executive of Yammer, who recently sold his business to Microsoft for $1.2 billion, has waded into the start-up concept and thinks that Silicon valley is doomed.

Writing on Facebook, Sacks said that Silicon Valley, as we know it, is coming to an end.

This is because to create a successful new company, you have to find an idea that no one else has spotted, which is capable of being launched and proven for $5 million.

Then you have to survive the onslaught of those big companies once they figure out what you’re onto.

After the posting created a bit of fury, Sacks, who has investments in start-ups like Uber and Cherry, clarified his statement. He said that Silicon Valley could still produce innovative software start-ups, but that these would be exceptions to the rule because there were too many big incumbents with deep pockets which could stuff them up.

Sacks’s argument did not sit well with many of his venture capital chums, especially Marc Andreessen who waded in with more than 20 comments. Andreessen said that the innovation and opportunity among small start-ups is “unending”.

Andreessen said that the big incumbents were less competent than Sacks gives them credit for. Andreessen should know because he sits on the boards of HP and eBay.

Many of the big companies are prone to the pitfalls of incumbency, including placing a higher priority on “stability over change”. They also lose talent to start-ups.