In 2005, years before Apple’s Siri and Amazon’s Alexa came on the scene, two startups—ScanSoft and Nuance Communications—merged to pursue a burgeoning opportunity in speech recognition. The new company developed powerful speech-processing software and grew rapidly for almost a decade—an average of 27% per year in sales. Then suddenly, around 2014, it stopped growing. Revenues in 2019 were roughly the same as revenues in 2013. Nuance had run into strong headwinds, as large computer firms that were once its partners became its competitors. 

Nuance’s story is far from unique. In all major industries and technology domains, startups are facing unprecedented obstacles. New companies are still springing up to exploit innovative opportunities. And these companies can now tap into an extraordinary flood of venture capital. Yet all is not healthy in the startup economy. Innovative startups are growing much more slowly than comparable companies did in the past.  Read More