There is a history of mediocre startups merging to create a powerful force that dominates their industry.
The benefits are great for everyone.
You have a team full of hyper motivated founders who prefer high equity over salary.
You are all nimble and waste less time copying and competing with eachother.
X and Paypal famously merged to beat Ebay before it would crush them.
Reddit and Infogami – although they may have done pretty well before that.
Auctomatic, the first startup founded by the Stripe brothers and YC Partner Harj Tagger was a merge of their company and his. Similar to Paypal, it was also vying for a piece of Ebay’s pie.
Some comments by Paul Graham and on Hacker News itself: https://news.ycombinator.com/item?id=2348516