Amazon Met With Startups About Investing, Then Launched Competing Products (wsj.com) 71
Some companies regret sharing information with tech giant and its Alexa Fund. From a report: When Amazon.com's venture-capital fund invested in DefinedCrowd, it gained access to the technology startup's finances and other confidential information. Nearly four years later, in April, Amazon's cloud-computing unit launched an artificial-intelligence product that does almost exactly what DefinedCrowd does, said DefinedCrowd founder and Chief Executive Daniela Braga. The new offering from Amazon Web Services, called A2I, competes directly "with one of our bread-and-butter foundational products" that collects and labels data, said Ms. Braga. After seeing the A2I announcement, Ms. Braga limited the Amazon fund's access to her company's data and diluted its stake by 90% by raising more capital. Ms. Braga is one of more than two dozen entrepreneurs, investors and deal advisers interviewed by The Wall Street Journal who said Amazon appeared to use the investment and deal-making process to help develop competing products.
In some cases, Amazon's decision to launch a competing product devastated the business in which it invested. In other cases, it met with startups about potential takeovers, sought to understand how their technology works, then declined to invest and later introduced similar Amazon-branded products, according to some of the entrepreneurs and investors. An Amazon spokesman said the company doesn't use confidential information that companies share with it to build competing products. Dealing with Amazon is often a double-edged sword for entrepreneurs. Amazon's size and presence in many industries, including cloud-computing, electronic devices and logistics, can make it beneficial to work with. But revealing too much information could expose companies to competitive risks.
In some cases, Amazon's decision to launch a competing product devastated the business in which it invested. In other cases, it met with startups about potential takeovers, sought to understand how their technology works, then declined to invest and later introduced similar Amazon-branded products, according to some of the entrepreneurs and investors. An Amazon spokesman said the company doesn't use confidential information that companies share with it to build competing products. Dealing with Amazon is often a double-edged sword for entrepreneurs. Amazon's size and presence in many industries, including cloud-computing, electronic devices and logistics, can make it beneficial to work with. But revealing too much information could expose companies to competitive risks.
alternatives (Score:1)
Amazon stole the idea / products... (Score:4, Funny)
An Amazon spokesman said the company doesn't use confidential information that companies share with it to build competing products. Dealing with Amazon is often a double-edged sword for entrepreneurs. Amazon's size and presence in many industries, including cloud-computing, electronic devices and logistics, can make it beneficial to work with. But revealing too much information could expose companies to competitive risks.
Summary, it may look like we stole your idea, because we did, but we actually didn't because we're bigger then you are, and you told / showed us how to steal it, so ya we completely stole your idea.
Re: (Score:3, Insightful)
Re:Amazon stole the idea / products... (Score:5, Interesting)
Take the calculus example, if after calculus other versions of Newtons work started showing up, closely correlated to the release, that wouldn't be a strange occurrence, that would be theft.
Re: (Score:3, Interesting)
you can't have this problem continuously and claim innocence.
The problem long predates Amazon. Even Newton and Leibniz accused each other of stealing.
The ideas in TFA all seem fairly obvious to me.
If the inventors really thought they were non-obvious, they should have got a patent. This is exactly what patents are for.
Re: (Score:2)
Except the patent system is broken in the US. First, it's not supposed to apply to mathematics, and yet it does. And your patent is only as strong as your legal team. The patent office rubber stamps everything and then leaves it to others to try and defend or overturn it on their own dime. A small company with a patent will be steamrolled by Amazon's lawyers.
Also, a lot of these things are not necessarily patentable (don't listen to your company's patent lawyers when they lie about this). The ideas may b
Original idea, do not steal. (Score:2)
This gave me an idea. Patent your stuff anyway, and if a big player steals it, immediately sell the patent to a patent troll company. I hear some of those companies are perfectly willing to go after big players. Call them "nail patents" after "nail houses". Staple patents?
I need to patent this idea.
Re:Amazon stole the idea / products... (Score:5, Insightful)
Re: (Score:2)
What they should have done is a matter of opinion. In hindsight should they never have trusted Amazon as an investor. And this is what will happen in the the future. Startups cannot trust anyone to support them when this becomes common practise. The economy needs startups and these need to be protected.
What rational reason could one have to let Jeff Bezos, who is currently the richest man in the world, go through with such practises? Only someone who wants to see the world burn and with it startups would fi
Re: (Score:2)
Or at least an NDA.
I'm glad to see companies are starting to recognize obvious ideas and implement their own competitors instead of spending umpty-billion on acquiring them.
Now, if Amazon is leveraging their size to give them an unfair *competitive* advantage, then that should be harshly punished.
Re: (Score:2, Informative)
You say that, but humanity has a long history of many people coming up with a similar solution to the same problem.
Humanity also has a long history of people brazenly stealing other people's ideas.
Re: (Score:3)
This is a bit different. It's like if Newton met with Liebniz and said "I can help publish your books more widely, just let me have a look at them and I'll give you some feedback. And don't worry, i've invented this thing called an NDA which means you're perfect safe!"
Re: (Score:2)
There is however still the matter of independence. In an independent development do the parties not know of one another nor their methods and all that is know is the problem that is being solved.
Turning around by 180 degrees and starting your own project still only means you're making a fork.
Re: (Score:1)
Re: (Score:2)
Didn't Walmart use to do this via it's vendors, forcing them to make the products
cheaper and thinner and overall reduce the life of it working from many years to
few years ? And if you didn't they would find vendors to duplicate your product?
I read about that back in the 90's
Re: (Score:2)
Re: (Score:2)
while I don't believe most of what I read, I do use it as part of source referencing.
and now you added more to it.
I recall the article being about the makers of lawn mowers, and the lawn mower
company is a famous brand with the color red ( john deer is green). They go to do
the new updated sales pitch at Walmart's product review and purchasing place. And
the company flat our refused to change from thick metal casings to thin flimsy casing
Sorry can't add more to the reference.
Re: (Score:2)
History repeats itself.
Microsoft did this to GO! computer waaaaaay back in the day...
https://www.amazon.com/Startup-Silicon-Adventure-Jerry-Kaplan/dp/0140257314 [amazon.com]
Re: (Score:2)
MS did things like this to a lot of companies, even Apple.
Re: (Score:1)
Re: (Score:1)
No! (Score:2)
Just say NO to revealing any technical information of the product until the sale (of the business) is complete.
Re: No! (Score:1)
You can reveal information, and in fact it is how it is usually done (buyer needs to know what it's buying). But don't be naive, make them sign an NDA first.
Re: (Score:3)
Re: No! (Score:5, Interesting)
But don't be naive, make them sign an NDA first.
All VCs categorically refuse to sign NDAs.
Re: No! (Score:2)
Re: (Score:2, Insightful)
If all startups categorically refuses to share technical info without one, VCs would soon change their practices.
There are way more startups than there are VCs.
VCs don't sign NDAs because it opens them up to frivolous lawsuits over obvious ideas.
VCs really aren't interested in "stealing ideas". They don't invest in ideas, they invest in businesses. A good idea without a competent team to implement it is worthless.
If you have a good idea that you passionately believe in and a good team with a track record of success, then the VC will want to invest in YOU. Stealing your idea and taking to another company, which won'
Re: No! (Score:4, Interesting)
Re: (Score:2)
Just say NO to revealing any technical information of the product until the sale (of the business) is complete.
That doesn't work. You might buy a product that's just a demo with no real tech behind it. It would be like buying a home you've only seen in pictures and not visiting it until you close only to find out the pictures were before a flood.
Re: (Score:2)
Actually, we bought our current house and acreage without visiting it (although we did get a zillion photographs from the realtor, so we knew what we were getting into).
Re: (Score:2)
So, you are saying that you need to find a naive buyer. They do exist, but good luck.
Re: (Score:2)
Don't reveal your business plans either, as those aren't patentable, don't reveal who your big customers are who have signed up in advance, who your suppliers are, and so forth. Often the technical information is pretty obvious, you look in textbooks and recent academic papers, and stuff like that. But how you plan to turn tamagotchis or pet rocks into an actual business that can make a profit is not so obvious. A lot of corporate espionage has nothing to do with the technology of the product.
EEE all over again (Score:4, Informative)
Embrace, extend, and extinguish. Amazon taking up the old school MS style.
Re: (Score:3)
Microsoft continues to behave this way as well.
https://www.theverge.com/2020/... [theverge.com]
https://medium.com/@keivan/the... [medium.com]
Re: (Score:2)
Ha, old habits die hard, or not at all.
Re: (Score:2)
I have a friend who started a job at a new company. One week later Microsoft bought them out, because they had plans for a similar technology, everyone was laid off and the company effectively disbanded. Microsoft never released their own version. My friend only worked there one week but gained a massive amount of real world experience in that time :-)
Suits versus shotguns (Score:3)
When people approach with shotguns one knows they mean business. When they come in suits and talk about helping does one never know what they want, but they always want something.
The coming generations will have to sit on the porch with a shotgun and a suit.
Shame on you, Amazon.
Re: (Score:2)
Well, Sue... (Score:2)
You have a non-disclosure agreement and a patent on this right? Sue...
The problem here is that Amazon is NOT prevented from building something just because you have a non-disclosure. They can claim they independently came up with the same idea using employees who didn't know anything about your idea and where not subject to the non-disclosure's terms because they never had access to the protected information. You know Amazon will claim this, and unless you have evidence they are lying, you will be lucky
Re: (Score:3)
And if you don't like this, shame on you for not getting the patent...
You've never started anything in your whole life.
Re: (Score:2)
And if you don't like this, shame on you for not getting the patent...
You've never started anything in your whole life.
The only protection you have is to make it your intellectual property.. So copyright it, patent it or register that trademark. IF you haven't protected yourself, don't come crying to me about how the big evil Amazon has taken advantage of you. They haven't...
Re: (Score:3)
To believe it was alright for Jeff Bezos, the richest man in the world, to exploit startups this way makes you bitter and cynical idiot who cannot grasp that there might be something wrong here.
Many startups don't have the capital, which is why they need investors. For Amazon to step in, reach out a hand as an investor, but then to ruin startups is detrimental for the entire economy as it sets a bad example. This is not how you make America Great Again.
Re: (Score:2)
To believe it was alright for Jeff Bezos, the richest man in the world, to exploit startups this way makes you bitter and cynical idiot who cannot grasp that there might be something wrong here.
Many startups don't have the capital, which is why they need investors. For Amazon to step in, reach out a hand as an investor, but then to ruin startups is detrimental for the entire economy as it sets a bad example. This is not how you make America Great Again.
You assume Amazon is using the information they gain from the venture capital discussion to produce a competing product. This is far from an established fact. There are other explanations here that DON'T involve malfeasance by Amazon. IF Amazon independently develops something, are they not entitled to market their product? Now if they are violating a non-disclosure agreement, then haul their butts to court and get them to pay you damages, but you will have to prove your contention that they violated th
Re: (Score:2)
This is far from an established fact.
Any company who accepts information from another over a product development is no longer independent. This is not only an established fact, it's the very definition of a dependency.
What makes this worse is that Amazon has gained this information while pretending to be an investor. What is unestablished here is if Amazon ever intended to actually invest or if it was all about the ends justifying the means.
Re: (Score:2)
You can't be serious?
So, all you have to do is *discuss* something under an NDA with a big company and they cannot *ever* develop a similar product? Do you not get that BIG companies are, well, BIG? Can you not imagine that Amazon's Venture Capital business can be separate from their Cloud Computing platform business?
I've worked for companies who had separate divisions who worked on competing bids for the same contract and competed with different external partners. We had to be *very* careful to not t
Re: (Score:2)
You can't be serious? So, all you have to do is *discuss* something under an NDA with a big company and they cannot *ever* develop a similar product?
Oh, I'm serious. Only if you were, too! The answer to your question lies within your theatrics. Or say, what do you define as a similar product and what as the same product?
Is a brush similar to a vacuum as they both serve to cleaning the floor? ...
You'll have to make up your mind if you want to discuss the issue based on the idea if it is ok for a very large, rich and powerful company to ruin small businesses or if it is not. If it's ok then we could just abandon all rules, laws, patents, agreements and re
Re: (Score:2)
I ask you to carefully consider what you are saying. J
Re: (Score:2)
So all I have to do is say open an online retail outlet that sells clothes and Volia, all the existing online retailers who are bigger than me must close up shop so I get a fair chance?
No, obviously not, because others came before you. You still don't grasp the situation.
Define "product" (Score:5, Interesting)
If your idea isn't really that new nor innovative, and just involves doing a lot of grunt work entering data or writing code to process data, then anyone else is free to do it too, including Amazon. From what little I can gather on DefinedCrowd (almost all the search results for what they actually do are just marketing buzzwords), they just developed some algorithms to filter marketing data used to train AI.
One thing I remember about media reporting of the Stacker lawsuit [wikipedia.org] was that Stac's innovation (compressing data before it was written to disk) was always prominently mentioned because it was a cool idea that nobody had thought of yet at the time. The summary here doesn't really explain what this company makes, which makes me suspect it's not really that innovative nor new. Amazon probably met with them, either didn't like their financials or personnel, and decided they were better off building it themselves from scratch rather than acquiring this company. (OTOH this could be a poorly written summary, and this company's product could be very innovative and protected by patents. In which case they have the tools necessary to fight Amazon, just perhaps lacking the funding.)
Re: (Score:2)
Why would anyone trust Buy n Large at this point? (Score:2)
er, I mean Amazon.
Seeing ideas in action (Score:5, Informative)
Seeing ideas in action is very valuable. Even if they do not divulge how the internals are set up, a working prototype is more than enough to jump start competition. That is why companies do not want to leak products that are still under development.
Look at what happened with Samsung and Apple. Seeing the iphone caused them to change their entire phone portfolio, and they came up with the Galaxy series. Just seeing it was possible it more than enough. The same goes for random stuff, like people finishing hard levels in video games, or sports tricks on video sites.
Now, they come and pitch their ideas at Amazon HQ. Of course even if they don't give the details, or have a patent, Amazon will have more than enough to jump start the copycats. You have already proven the idea works, and prototyped an interface. The rest is just coders hacking the thing anew.
Is Amazon turning evil? (Score:2)
Essentially the same services? Really? (Score:3)
They don't look the same to me.
Amazon sells a service used to determine how well your AI is working on your specific problem... DefinedCrowd sells training data... They are obviously related but not "essentially the same" service.
Casting couch business model (Score:2)
Not Only, But Also... (Score:5, Interesting)
https://www.3leggedthing.com/b... [3leggedthing.com]
About 6 months later, browsing Amazon for accessories, I happened to see a company offering what looked at first glance like a complete rip-off product.
https://www.amazon.com/Benro-C... [amazon.com]
So I got in touch with "Three Legged Thing" to ask them if they were aware that a Chinese company, Benro, were ripping off their patented designs. Turns out they knew all about it. Out of the blue they had received a phone call from an Amazon "buyer" who tried some pretty strong-arm tactics to persuade 3LT to resell their products via Amazon. They claimed that their data analysis showed a pent-up demand for the product and claimed they would buy an initial number of tripods and even told 3LT what discount they would be given. But 3LT weren't interested in reselling and although (IIRC) it took a court case to get Amazon to go away, everything went quiet.
But then it turns out that Amazon have a large and likely growing deal with Benro, a Chinese company who, funnily enough, now produce a range of tripods that rip off all of 3LT's best design features.
If you thought that a company like Amazon would not be willing to support blatant trademark and patent infringement, well, I think you might be wrong. But how do you suppose a Chinese company got to hear about a tiny British tripod manufacturer, that had barely just started production, and managed to rush out cheap clones so quickly? It all just seems rather coincidental...
Re: (Score:2)
Should have gotten a patent then.
Re: (Score:2)
Re: (Score:2)
Yepp, that's Amazon for you. And many others too. (Score:2)
Don't trust 'em. Never.
Single platform folly (Score:2)
The mistake here is that the business plan is simply a feature enhancement to an existing single platform. If they prove their legs in the market, it will be trivial for the platform to replicate the feature with their army of in-house developers.
One way to persist in this dynamic is if your idea can bridge multiple
BRAIN RAPE! (Score:1)
I was a victim of similar investing fraud (Score:1)
I put $100k+ in two separate investments into a company whose name I now forget, in Tampa, FL IIRC, doing "two-way pagers" back in the mid-90s, well before smart phones.
WebMD met with them to discuss investing/partnering; then came out with a competing product and I lost 100% of my investment.
Life goes on, and, I've got this story I can share regarding this current event. God bless.
Sounds familiar (Score:2)