Why are there so few Googles - and Tigers for that matter

Debate is joined via Paul Graham, rubbishing Umair' Haque's thesis of why there are so few Googles:

Umair Haque wrote recently that the reason there aren't more Googles is that most startups get bought before they can change the world.

Google, despite serious interest from Microsoft and Yahoo—what must have seemed like lucrative interest at the time—didn't sell out. Google might simply have been nothing but Yahoo's or MSN's search box.

Why isn't it? Because Google had a deeply felt sense of purpose: a conviction to change the world for the better.

This has a nice sound to it, but it isn't true. Google's founders were willing to sell early on. They just wanted more than acquirers were willing to pay.

It was the same with Facebook. They would have sold, but Yahoo blew it by offering too little.

In essence, Paul's thesis is that:

The reason there aren't more Googles is not that investors encourage innovative startups to sell out, but that they won't even fund them. I've learned a lot about VCs during the 3 years we've been doing Y Combinator, because we often have to work quite closely with them. The most surprising thing I've learned is how conservative they are. VC firms present an image of boldly encouraging innovation. Only a handful actually do, and even they are more conservative in reality than you'd guess from reading their sites.

Actually, much though I admire both their work, I am a bit puzzled by neither knowing the answer to the question (See note below), as it has been known for a long, long time - but a good way to explain it is from a similarly titled book written some 30 year ago called "Why Big Fierce Animals Are Rare" by Paul Colinvaux.

There just is not room for a lot of Tigers at the top of any food chain, and the majority of young tiger cubs don't make it to adulthood either. Conversely Tigers are not flexible enough to mop up all the opportunities for food either, so there are gaps for lesser predators too, which is why you get Leopards and Lynxes co-existing with them.

In other words its an ecosystem thing, and the global economy is just another ecosystem.

(Afterthought - What's harder to predict is whether any one Co will survive or not - PointCast is a classic example of hanging on too long to the detriment, Google to its benefit - in hindsight you could argue Google found an uncontested niche, but I doubt it was as clear as that at the time. I suspect it comes down to game theory of the principals - the founders make all their returns on the hand they are playing, so why not push it to the max - vs the funders who play a portfolio game and would happily fold while well ahead. I suspect you could call the outcome by looking at ownership structure and the point of maturity of company)

(The Note below - far be it for me to suggest that both these worthies are pursuing their own agendas )