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Yes it's refreshing to see, but it would be a much, much worse world if this was the only type of company. I get the cynicism towards companies that spend fore
by jegutman 11y ago
Yes it's refreshing to see, but it would be a much, much worse world if this was the only type of company. I get the cynicism towards companies that spend forever on "user acquisition" and there have been some companies that never turned a profit. But if you want to build infrastructure that has relatively high fixed costs and really low marginal costs (which by the way defines most of the software industry) there's always going to be a need for up front capital and returns to that capital.
So you could claim a company is spending too much on user acquisition, but another way of framing it is financing their fixed costs and working their ass off to get to a point where they can sustain their fixed costs from the variable costs of their user base.
- Benjammer 11y agoHow does user acquisition finance fixed costs if there is no clear revenue stream yet? Are we assuming everyone is depending mostly on ad revenue?
- jegutman 11y agoI mean ad revenue is definitely one model like this. But even Dropbox, Uber, Tesla, Netflix and many others would fit under that category. Sometimes the generating revenue part itself is expensive to build, if you can't even get tons of people to use your product for free you're going to have trouble getting there (but that's a lot more for advertising-based revenue). I think a lot fewer companies have no revenue stream that you're suggesting. Sometimes very early companies haven't figured out revenue, but they also haven't figured out product. Sometimes they're closely tied together, sometimes they're not.
- propogandist 11y ago> Sometimes very early companies haven't figured out revenue, but they also haven't figured out product. Then they shouldn't be considered a business.
- jegutman 11y agoOkay, go write a strongly worded letter to twitter explaining that they're not a business. There's a difference between no product and imperfect product / market fit.