Title comes from Tina Sharkey’s description of business relationships with API-enabled companies.

The most recent nextNY community conversation has already been covered in detail, but here are a few more comments

With developers empowered to knock out alpha releases of web services over a long weekend, companies with tech enabling these projects (Google Maps, AIM) have the ability to look farther and farther down the long tail for new opportunities. An interesting dynamic is that while access to these technologies fosters innovation, it can also be perceived as having a limiting effect.Given the challenges of building a profitable business on the consumer-facing end of the internet, “a very fluid and often fickle world”, to borrow a quote from the other night, it is not entirely surprising that more companies than not take buyouts when they come along, although surely this comes too soon (benefits the acquirer more than acquiree) in at least some instances (Flickr).

Calculating the return on Web2.0 acquisitions is a fool’s errand for someone as uninformed as I, but Yahoo’s seeming inability to capitalize on del.icio.us, which I see on Google’s end with dodgeball, as well as the disappointing returns todate from the GOOG’s purchase of dMarc, would seem to indicate that large caps and nano caps (femto caps even!) can get together sooner, but still have trouble making magic happen.

But can everybody win? Can innovation flourish while the MegaCos of the world venture farther and farther afield from the meaty middle? Thoughts along those lines inspired the sketch below. The traditional paradigm has been for MegaCo Inc. to move a business from the Question Mark quadrant (high growth sector, low market share) into the Stars quadrant (high growth, high share,happy executives!). This is traditionally expensive and risky for big, slow-moving MegaCos. API-enabled companies can now pay a sliver of lost revenue to their cash cow — either as a transfer of direct opportunities (AIM) or in the allocation of resources to foster innovation versus profits (Google) — and attract a swarm of eager entrepreneurs, out which will hopefully emerge a Star or two, secured faster and cheaper than via the traditional method. This works (Blogger,Flickr) except when it doesn’t (YouTube), but on balance it seems to be a smart approach because the portfolio cost is small and the potential rewards are huge.

Buuut, I think if you believe the pace at which consumers expect innovation is accelerating (and having lived in Japan, I come down squarely on the “Yes” side of that issue) then the changing landscape for successful startups has upside for everyone. As winners get absorbed by MegaCos and their features get frozen in carbonite, agile startups retain their inherent advantages and use the now stagnant competitionas fodder for the next round of must-have web services.

Jonah Keegan is an entrepreneur with a business, a blog and a few other things.