Jiva Technology

Are web companies going the way of Premier League Football?

It’s hardly news that English club football has become dominated by clubs with the biggest chequebook – it’s not just that it allows them to buy the best players, it’s the fact that the size of the wage bill is the single best predictor of teams’ success. Forget the brilliance of the manager, the size of a clubs’ support or the brilliance of its youth policy. If you or I are found ourselves in the hot seat of a premier league club with a war chest fit for Croesus, we’d be in with a shout. Money talks and all the rest walks.

But that’s not how it used to be. Clubs somehow acquired a happy confluence of quality young players who felt like hanging around with a manager who was above average and a new dynasty could be born. Think Shankley and Liverpool, Revie at Leeds or Clough at Nottingham Forest. It’s hard to believe that the latter were back to back winners of the (now) Champions League.

Of course all this has absolutely nothing to web companies except I have an uneasy feeling that the same principle – money talks – now applies to the web. Duh! You might say, but let me hit you with two unrelated (ish) facts – Uber recently raised $1bn at a valuation of $40bn and Apple recently surpassed a market cap of $700bn. Even now, $1bn of cash to spend is a lot of money and $700bn is hardly conceivable unless you’re the Government of a large country.

In reality, these things are related, because if there’s a chance a company can be worth $700bn, it’s worth investing a cool billion just to crush the life out of the competition. Which is exactly what Uber is doing. You don’t need a billion dollars of investment to build a company, but you do need it to make sure that you can run everyone else out of town. It’s all about the weight of the money, not the quality of the innovation. Decent companies like Hailo and Lyft may well be losers simply because they only raised several hundred million dollars.

I’m not sure that this is the tech world we once knew, just as the Premier League has long since stopped being Bovril and steak pies on a Saturday afternoon.

 

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