Money That Hurts Innovation
The relationship between money and innovation has fueled many debates. Some argue that the more financial resources a company has, the better chances it has to develop new methods and products to support its core business. Others say the role of money is overrated, and that success relies on more than seed capital. As a result, a company with too much capital removes the incentive for creative solutions and damages its long-term future.
These days, China’s big tech companies appear willing to overpay for the development of new products that look good in the eyes of their shareholders, Rein says. This is bad, he adds, because new companies might need to struggle less with developing a workable business plan and simply focus on the concept they put forward.
“Tencent and Alibaba are not just throttling the market, but in many ways they are hurting innovation,” Rein says. “Because right now basically people are saying, ‘Let’s start a company. Let’s create something that sounds innovative, even if it’s not. Let’s not necessarily plan on research and development for five years, let’s instead create something that sounds good and then sell it to Tencent or Alibaba.'”