The ‘Amazon will destroy your startup’ fallacy


“But what happens if Amazon or Google decides to do the same thing?”

This is a popular venture capitalist question for tech entrepreneurs, with Amazon [fortune-stock symbol=”AMZN”] and Google [fortune-stock symbol=”GOOG”] serving as stand-ins for a much larger group of powerful corporate incumbents. In fact, it’s a primary plot-line on HBO’s Silicon Valley. The basic notion is that huge companies with huge resources are able to crush the little guy if they just put their mind to it.

Or even the not-so-little guys. Just think about all of the consternation over Google challenging Uber. Or Apple [fortune-stock symbol=”AAPL”] challenging Spotify. Or, yes, Amazon challenging Instacart.

But here’s the thing: It rarely happens.

To be clear, this is not to say that most startups succeed, or that big companies don’t often use their wealth to acquire ancillary businesses. Instead, it’s simply to point out that existing tech companies rarely see…

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