Survival Of The Funded

The internet has been a fantastic tool for all of us and changed our lives in many ways and while it's still open to anyone with a connection it been throttled by service providers and centralised by large sites with infinite sums of money. I think to the outsider or consumer of digital products they do not fully grasp the magnitude of what is happening behind their screen.

Tech giants have become somewhat of the darlings of the world; people celebrate the achievements of Facebook, Google, Tesla, SnapChat, Instagram, Netflix, Apple, to name a few. These companies are household names the world over and their CEOs are world-famous leaders praised for their genius.

I don't doubt the fact that they are smart people and have a team of brilliant people working with them, but what I suspect is that they would be as shining an example of success had they not been propped up by near-infinite money.

Image source: - forbes.com

Be taken over or be squashed

While they seem like innovative companies with meteoric rises is fueled with a whole lot of money to strong-arm their way into acquiring the most significant part of the total market share. If an innovative company wanted to compete in their space, they are

either bought over and closed down
bought over and integrated into existing systems
bought over and underfunded and stripped down till they die and migrate users to monopoly
priced out of the market
forcing competitors to burn capital to acquire users at a higher cost to drive them into an unstainable run

When you have near infinite money backing your potential because you sell a good story you have the luxury of time, and you can outwait the competition as you turn on the heat under them.

Choking capital

While these companies may be worth billions and seen as a success, what they produce doesn't provide as much productivity to warrant the investment. If we took those billions and spread it across all the most promising companies, we would have more competition, better productivity and lower prices. But because capital is choked out by these companies, they now have a sort of false sense of success.

Of course, you're going to be the success if you're the only game in town.

An example in the social media space

Let's take a look at our beloved Steemit, we all want it to grow and become a competitor to the big social media sites, but how can we expect that if we don't have near the funding, they have to compete. I've read many users speaking about how they can take on YouTube, Facebook, Reddit etc. and yes it has potential if consumers wake up, but they're not going to wake up any time soon.

Facebook - $2.3B in funding
SnapChat - $3.1 billion in funding before going public
Instagram $57.5 million before being bought by Facebook and pumped with cash
Twitter - $1.5 billion in funding before going public
Reddit -$ 550 million
Youtube - $11.5 million before being bought by Google and pumped with cash

Now can you see the cost of doing business in this space? These sites burn money like there is no tomorrow to try and acquire users at any price and then sell them back to advertisers at a premium over 10 years to become wildly profitable.

Since there isn't competition for these users attention, these companies can charge a premium and could put anyone out of business that can threaten them.