Mark Andressen's Startup Guide, Part 5: Moby Dick's Big Company Theory

Original author: Marc Andressen
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Previous parts: First part , Second part , Third part , Fourth part .

“- The fountain is on the horizon! - heard from the mast.
- Where? The captain asks.
“Three rumba down the drain, sir.”
- Left steering! Keep it up!
“Got it, sir!”
- Hey, watchman! Now do you see him?
- Yes, yes, sir! They are there a whole herd of sperm whales! And fountains are allowed, and they jump from the water.
- As you see, give voice!
- Yes, sir. There’s a fountain! Another - another - one more!
- Is it far?
- Miles two and a half.
- Thunder and lightning! So close! All hands on deck!"
J. Ross Brown. “Sketches during whaling”, 1846

In the life of every startup, there comes a time when you have to deal with large companies.

You may be looking for a partner or distributor. Maybe you want to get an investment. Sometimes you need an alliance for marketing or sales organization. From time to time, you need the permission of a large company to do something. Or maybe a big company came to you and offered to buy your startup.

The most important thing you need to know at the beginning of any conversation and relations with a big company is that you are Captain Ahab, and the big company is the white whale Moby Dick [metaphor and all the quotes in the article based on the text of Herman Melville's novel “Moby Dick or White Whale ”- approx. trans.].

“And we did not spend two days swimming, when one day at dawn we saw a great many whales and other sea monsters. Of these, one possessed a truly gigantic size. He approached us, keeping his mouth wide open, raising waves on the sides and foaming the sea in front of him. "
Tuk. Translation of True Story by Lucian

When Captain Ahab went in search of Moby Dick's great white whale, he had absolutely no idea whether he would find Moby Dick or Moby Dick allowing himself to be found; or Moby Dick will try to immediately overturn the ship, or instead play like a cat with a mouse; or Moby Dick is generally preoccupied with his gigantic white girlfriend.

What happens is up to Moby Dick. And Captain Ahab can never explain to himself or anyone else why Moby Dick did this anyway. You are Captain Ahab, and the big company is Moby Dick.

“- Look at Captain Ahab, young man, and you will see that he has only one leg.
“What do you want to say, sir?” Has he lost his second leg due to a whale?
- Because of the whale ?! Come closer, young man; this leg was devoured, chewed, bitten by the worst of the sperm whales that had ever smashed a whaleboat into chips! ABOUT! ABOUT!"
Moby Dick

And that's why. The behavior of any large company is very unpredictable for an outside observer.

I always laugh when someone says: “Microsoft is going to make X” or “Google is going to make Y” or “Yahoo is going to make Z”.

Most likely, even inside Microsoft, Google or Yahoo, no one knows what Microsoft, Google or Yahoo is going to do under any circumstances on any issue. Of course, maybe the CEO knows if the issue is really important, but you are hardly dealing with issues of this level, so it does not matter.

Within each large company, there is a very, very complex system of many thousands of people, of whom at least hundreds, and probably thousands, are in senior positions and think that they have a certain authority in making decisions.

For any issue, many people inside the company take part in a kind of voting - it can be eight people, ten, fifteen, twenty, sometimes much more.

When I worked at IBM in the early 90s, they had a formal decision-making procedure called concurrence — a written list of fifty or so managers from all divisions of the company who made this decision was compiled on any given issue can influence, no matter how much, and their opinions were gathered. Moreover, absolutely any manager could veto the final decision. This is an extreme case, but even a non-extreme version of the procedure — and all large companies have one, they must have one — is incredibly difficult to understand, even from within the company, not to mention an outside observer.

"... and whale breathing often has an extremely strong odor, from which clouding of the brain can occur."
Ulloa. "South America"

You can imagine this as a clash of opposing forces that affect the dynamics of decision-making on any issue within the company.

Consensus, concessions, mutual settlements, politics, alliance, arguments, educational work, revenge for past mistakes, control over spheres of influence, development groups, product managers, marketers, sales managers, corporate marketing, financial department, eychars, legal, strategic departments, business development department, overseas departments, investors, Wall Street analysts, market analysts, good press, bad press, articles that you did not even know about, customers, potential customers, former customers, potential lienty competitors, partners, the figures of financial statements for that quarter, the plan for this quarter, the rating of securities scheduled meeting last week, the scheduled and canceled a meeting this week, the bonus program, new employees in the company, leaving the company's employees,

You can’t even determine all the factors that will influence the decision of a large company, all the more understand them and even more so try to influence them somehow.

“Those whales that are larger, they rarely dare to attack. Other whales are so terrifying that they are even afraid to pronounce their names in the sea and carry dung, lime, juniper and the like in the whale boats to scare them away. ”
Hugo von Troil. "Letters of Banks and Solender sailing to Iceland in 1772."


Back to Moby Dick.

Moby Dick can covertly track you for three months, and then suddenly jump out of the water and make a giant noise, and then disappear for six months, then come back and throw your boat aground or, conversely, give you the exact tip you need, to harpoon his giant carcass.

And you will never understand why.

A large company can study you for three months, then come to you and declare your plans for investment or partnership with you, or purchase you, then disappear for six months, and then again emerge with a directly competing product that will kill you, or, conversely, acquire you and make you and all your employees fabulously rich.

And you will never understand why.

The positive side of relations with a large company is that before you is a potential mountain of whale meat as a trophy.

Sorry, confused metaphors. Having the right relationship with the right big company can have a huge impact on the success of the startup.

“And no matter what else finds itself in the chaos of the jaws of this monster, whether it beast, ship or stone, it instantly disappears in its huge fetid throat and dies in the black abyss of his belly.”
Holland translation of "Moral" by Plutarch

The negative side of relations with a large company is that it can overturn you - by hitting you in one way or another, and completely destroy you, but more likely, involving you in a partnership on bad terms, which will result in losses for you or just a waste of a giant the amount of time in meetings that will distract from the main goal.

So what to do?

First , do not found startups that need to have relationships with large companies to succeed.

The risk of never reaching the right deal is too great, no matter how hard you are willing to work to achieve it.

And even if you get the right deal, it’s likely that everything will not work as you intended.

“Taban! Cried the senior assistant to the captain, when, turning, he saw over the very nose of the boat the wide open mouth of a sperm whale, threatening them with imminent death. “Taban, to whom life is dear!”
Wharton - Death to the Whales

Second , never let the thought that a deal with a large company is completed until a signature is placed and / or money is received in your bank account.

There is always something, because of which a deal that looked final, shatters into fragments or disappears without a trace.

“At dawn, the sentinels again took up posts at the top of the masts.
- See him? Ahab shouted as soon as enough light spilled over the waves.
“Nothing, sir!”
Moby Dick

Third , be extremely patient.

Big companies always play the game "hurry up and wait." Over the past few years, I had to deal with one large technology company from the East Coast, which played the game “hurry up and wait” at least four times - they even made me immediately and hastily fly across the country for lunch with a second person companies that were called a prerequisite - and at the same time, they never promptly did what they were supposed to do.

If you want to get along with a large company, it will take much longer than you think.

“For God's sake, Mr. Chase! What happened?" - I replied: "The ship collided with a whale, and the hull was broken."
"The description of the death of the Essex whaler from Nantucket, who was attacked in the Pacific by a large sperm whale, was compiled by Owen Chase of Nantucket, a senior assistant to the captain on the ship." New York. 1821


Fourth , beware of bad deals.

Right now, I recall one top-rated startup from San Francisco, which showed extremely high hopes, had excellent technology and a unique market offer, and at the very beginning of my activity I entered into two partnership deals with large, reputable companies, after which I completely lost all my ability to carry out my main business.

Fifth , never in your life assume that a large company will make what you consider obvious.

What is obvious to you - or to any outside observer - is probably not obvious to those inside the company, if you take into account all other factors that will have an impact.

Sixth, you need to be aware that large companies are more concerned with what other large companies are doing than what any startups are doing.

What can I say, they think about other large companies even more than about their own customers.

Moby Dick thought more about other big white whales than about annoying little people on a funny boat.

“And suppose you even managed to harpoon a whale; imagine how you would manage with a frisky wild three-year-old with the help of only one rope tied to the tail of his tail. ”
"Bones and rags." The chapter on whaling


Seventh , if transactions with large companies intend to become a key part of your strategy, then be sure to hire a professional who has done this before.

Only the best and most experienced whalers had a chance to overwhelm Moby Dick. That is why senior sales and business development managers get paid so much money. They are worth it.

“- Oh Ahab! Cried Starbek, “even now, on the third day, it is not too late to stop.” Take a look! Moby Dick is not looking for a meeting with you. It's you, you're chasing him in madness! ”
Moby Dick


Eighth , do not let the obsession get hold of you. Do not turn into captain Ahab. Of course, talk to large companies about anything, but always be ready to end the conversation and get back to your main business.

You rarely find a startup for which a deal with a large company leads to success, and the absence of a deal leads to a gigantic defeat.

(However, look at Microsoft and Digital Research around 1981. A really big whale swam there.)

Last for today.

“And the whale dived under the seized hull of the ship and sailed along the shuddered keel; then, turning around under the water, he again flew to the surface, but on the other side, in the distance, and, finding himself a few yards from the boat of Ahab, froze for a while in stillness on the waves.

- ... I’m swimming right towards you, oh, everything that crushes, but not all, the overcoming whale; until the last I fight with you; I strike you from the very depths of the underworld; in the name of hatred I spew out my last breath on you. Let all the coffins and all the hearse drown in one pool! Even if not one of them gets me, then let me be torn to pieces, still chasing you, though chained to you, oh damn whale! So I throw the weapon!

A harpoon whistled in the air; a broken whale rushed; tench ran in a gutter with a flaming speed - and caught on. Ahab bent to set him free; he freed him; but a sliding loop managed to wrap him around his neck; and soundlessly, as the Turks crush their bow in the seragloth with a bowstring, he was carried away from the whaleboat before the team managed to clutch its captain. A moment later, a thick flare at the free end of the line flew out of the empty tub, knocked down one rower and, whipping through the water, disappeared into the bottomless abyss.
Moby Dick

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