Kids on HN don't understand what it was like when Microsoft was the only software company in town with a future. Kind of like Standard Oil back in the Rockefeller days.
Apple was dying, Google and Facebook didn't exist, Netscape had its "air supply" cut off and Borland, Delphi, and IBM looked like they were headed for the trash can of history. It's like trying to explain the Soviet Union to someone who was born in the 1990s. It just seems like a bunch of old men with bad haircuts, how scary could that possibly be?
I remember the conversations people had back then. You had basically 3 business models if you were going to run a software company. It was something like:
1. Stay so small/niche that Microsoft won't notice or care about you.
2. Avoid selling software as your primary source of income. This is basically a variant of #1.
3. Try to get bought by Microsoft. Ha, just kidding! Everybody knows that Microsoft doesn't buy stuff that's 'Not Innovated Here'.
3. Gamble. Hope you corner your market and extract as much value as possible from that market before Microsoft figures out what you're doing and enters your market. Or (later) C&D's you over some patents they have.
The weird thing is that outside the Bay Area (in some parts of Canada, at least), I still see startups recruiting for a #1-like business model, more-or-less: "The best $SOCIAL_MEDIA iPhone app in $CITY" or whatever. They're not actually afraid of Microsoft anymore, but it's like the mentality didn't go away.
