Underestimating the Competitors
What kept these startups from joining the club? They met entrenched competitors that proved to be much more nimble than the typical big company ever used to be. Digital Equipment's fatal lack of response to the disruptions created by the PC is a case in point. But this time around, the big established firms have responded much more quickly with products of their own. And that makes it a lot tougher for the little guys to get big.
These days, when an entrepreneur develops a winning technology, it is a sure way of attracting the attention of people like Bill Gates and Larry Ellison, who have almost certainly read Christensen's The Innovator's Dilemma. In fact, they could have written the book, because that's exactly how Microsoft and Oracle came to power. Each of these companies developed new products, MS-DOS and the relational database, that changed the competitive landscape to their advantage.
Because large software companies are responding faster to new technologies, entrepreneurs are finding the going a lot tougher. Innovation may still originate with the startup, but it is the large company that is often the one to capitalize on it, either by buying up a small firm or developing its own product. And that's a good thing for the CIO, because it provides more choice. The CIO can go with a startup if it is important to deploy the product first, or wait a bit longer and buy a comparable product from one of the established companies, with all of the benefits that provides.