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Not exactly, and I'm not even sure 'freemium' falls into these categories anyway. Selling in a way that is deliberately designed to drive off competition is ill

by grkvlt 11y ago

Not exactly, and I'm not even sure 'freemium' falls into these categories anyway. Selling in a way that is deliberately designed to drive off competition is illegal, assuming you can prove it. Selling below cost is just called 'making a loss' and is perfectly legal, if generally unsustainable ;) Here are two scenarios: 1. I sell product A at a loss, intending to attract customers who will then buy product B at much higher margin, making me a large profit - legal. 2. I sell A at a loss to attract company X's customers and drive them out of business, then raise the price of A once they go bust - illegal and predatory pricing.

amelius 11y ago
Yes, but what is happening right now is that start-ups are taking funding, build a brand on VC money, hence drive everybody else practically out of business (and blocking potential newcomers), while making losses year after year. To me that sounds pretty much like predatory pricing (and anti-competitive behavior in general).
- nostrademons 11y ago
  Only in the particular industries they operate in. And the whole point of this essay (and the reason this is a problem) is because these are bad industries, known to have bad economics, and companies are using VC money to paper over the bad economics. Just ignore the herd and look for overlooked industries which don't have bad economics. That's what you have to do to survive as a startup founder anyway. It's pretty analogous to the family next door who goes and buys a yacht on credit cards even though their income can't support the payments. Yes, it's annoying to watch people have nice things they didn't earn, and yes, they do marginally prop up the price of yachts. However, were you really planning on buying a yacht anyway? They will get their come-uppance when the bills come due, and it's not worth worrying too much about what other people are doing in the meantime.

by grkvlt 11y ago

amelius 11y ago

Yes, but what is happening right now is that start-ups are taking funding, build a brand on VC money, hence drive everybody else practically out of business (and blocking potential newcomers), while making losses year after year. To me that sounds pretty much like predatory pricing (and anti-competitive behavior in general).

nostrademons 11y ago
Only in the particular industries they operate in. And the whole point of this essay (and the reason this is a problem) is because these are bad industries, known to have bad economics, and companies are using VC money to paper over the bad economics. Just ignore the herd and look for overlooked industries which don't have bad economics. That's what you have to do to survive as a startup founder anyway. It's pretty analogous to the family next door who goes and buys a yacht on credit cards even though their income can't support the payments. Yes, it's annoying to watch people have nice things they didn't earn, and yes, they do marginally prop up the price of yachts. However, were you really planning on buying a yacht anyway? They will get their come-uppance when the bills come due, and it's not worth worrying too much about what other people are doing in the meantime.