I am graduated in AI field. I love robotics and intelligent systems, so I worked on some new products by myself at home that have new ideas and are interesting(at least me and my friends think!). I decided to apply for a accelerator or incubator, bu I faced whit a question like this in those forms:

Who are your largest competitors and why? Differentiators? How can you defend your business model?

And when I thought about it, there is no competitor at the moment(because of new idea and product), but the large companies like google,apple,microsoft,sony,samsung,etc would become our competitor at AI(Artificial Intelligence) field! And I think they can remove me from the market very soon and very easy!

So, I don't know what should I do? Should I forget my AI field ideas and make a company in that field because of those huge companies?

Is it possible to find that, when does companies enter to a business? Or is it possible to make a deal with them to have our individual company? Or I must try to become their employee and just this(Actually if the accept me :) )?

  • $\begingroup$ No company can “remove” another from the market. If your company becomes valuable, another company may offer to BUY your company, but whether to sell or not is up to you. I would suggest becoming a company though. $\endgroup$ – MAA Jan 23 '18 at 12:58
  • $\begingroup$ I love your suggestion too, but let's consider someone has an idea to making a new translator app that when you talk with, it translates you in other languages in real-time(it's only an example). Maybe it looks great and you think if you make this app, you can sell millions of it. So you decide to go to an incubator or accelerator and they will ask the above question and will say what if google decides to create a better than you? The google with billions of dollars and thousands of engineers will killing you at the moment! $\endgroup$ – user8663682 Jan 23 '18 at 13:21
  • $\begingroup$ You don't need to make millions on your first app. You just need to make enough to live on with the hope that you'll come up with new ways to utilize your current ideas that will enable your company to continue to make money and hopefully grow. Product ideas are a dime a dozen, it's actually following through to make a working product and how well you market that product that makes all the difference. Following through and having a working product would already put you ahead of 99.9% of the people out there. $\endgroup$ – Dunk Jan 25 '18 at 0:30

Legal perspective

Big companies have no reluctance is taking other people ideas:

  1. usually legal systems does not provide protection for ideas themselves,
  2. even if an idea is protected by intellectual protection rights (IP, as a side note please consider long procedure for application for patents, etc.), litigation is costly and long-lasting. You will have significantly smaller resources to be able to protect your idea (even if you win, by the time of the court ruling the market will be taken).

Thus, an idea is not purchasable for big companies. IP, prototype or a small company with IP is.

Business perspective

Even if you will have purchasable IP/prototype/company, big companies still decide which is the most beneficial: to buy or to reproduce. Most often the latter is cheaper. This is because if a larger company can, as you say, remove you from the market very easily, it probably will. If you are considering building your own company, I suggest seeing Michael Skok’s framework, especially chapter ‘Disruptive business models’ and ‘Getting Behind the Perfect Investor Pitch’. In short: if there are no technical barriers for possible competition, make a business model impossible to be replicated by competitors (real life example: Netscape market position was taken by Microsoft’s Internet Explorer because Microsoft could sell IE with every copy of Windows; Microsoft’s lost huge part of the market to the Google, because Google's business model comprised of delivering free products to consumers and profit based on advertisements).

Please also consider that creating a new market takes not shorter than 3 years from the release of the product, sometimes even 7 years (source: S.Blank, B.Dorf, The Startup Owner's Manual).

If you are interested in methods of evaluation return of investment

However, if you are interested how big companies evaluate new ideas for investment (usually for development by themselves), most important factors are soft criteria. Those depend on the project, please find some exemples of such criteria below:

  • technology (in short: is it the way to go?)
  • competition (the questions you’ve described can be good examples of some of questions, which companies have to answer before going into investment)
  • missed opportunities (what would be the better investment, which the company could miss if it will engage in the project at hand?)
  • profitability in general (how much the value of the company will increase as a result of the investment? when the project will yield return?)
  • advisability and viability (in general: labour-, capital- and resource- intensity of the project)
  • means - what is the funding structure (who is bringing their financial contribution? will the gathered means be sufficient?)
  • in cases when capital is to be transferred to an outside entity (e.g. while investing in smaller company) - credibility of the team, which will lead development works (can they deliver? what were their previous projects? what is their commitment to the project?),
  • ‘extras’ (additional cost-, income-, manufacturing- and/or public image- advantages)

There are many interesting mathematical models to calculate return on investment (ROI, ROE, Payback Period, Accounting Rate of Return, Net Present Value, Internal Rate of Return etc.) but these are only used after all the soft questions can be answered positively.

Hope it helps. I intended to make a small comment, but ended with few paragraph answer :)

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  • $\begingroup$ Thank you! Great answer. But you made another question for me...may you explain more about soft criteria and give some examples about this too? $\endgroup$ – user8663682 Jan 28 '18 at 5:57
  • $\begingroup$ @user8663682, I'm glad you find it useful. I extended my answer with few examples of investment criteria. $\endgroup$ – Pawel Kam Jan 29 '18 at 0:18

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