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But isn't that the MO of every start-up? -Using VC money, make something. Hopefully this thing goes 'viral' or really scratches an itch everyone has. Doesn't m

by Balgair 10y ago

But isn't that the MO of every start-up? -Using VC money, make something. Hopefully this thing goes 'viral' or really scratches an itch everyone has. Doesn't matter what it is, really. -If you manage to have a thing people want, monopolize it. Become the only company in that sector, or at least have only 1-3 real competitors. Do whatever it takes to be that monopoly. This is an ugly process. -Now that you are king, slowly turn down the thumb screws. Progressively add in Ads, make a premium version that is paid and then reduce the free version to squat, sell the user data, etc. Whatever it takes to make the VCs happy. This is the real trick though, and the CEO that does this is mostly a different beast than the guy that made the monopoly. You HAVE to do it, but you can't do it too fast, otherwise the users bolt. It's a real balancing act and is mostly just luck. This is where snapchat is at now, maybe the early part of this. They have the 'cool' and the monopoly (mostly), now they gotta turn up the water's temperature.

woodruffw 10y ago
I think that's certainly arguable, at least for social network start-ups. Snapchat may currently be walking the same road as the rest, but it's not too late quite yet for them, IMO. They've added ads, but there are definitely other revenue streams they can look into (see further down the comment tree for one random one). That being said, it's a tough sell. Ads are easy money, especially when your customer base is in that golden range of 14 to mid-30s. It'll be interesting to see whether they can resist the quick cash-out and protect the interests of users (like myself, anyways).
lvs 10y ago
Yes, you've just described economically unproductive enterprises, i.e. those who offer a service or product that nobody would consciously pay for at a market rate if faced with the prospect of doing so. Another way to describe these are pyramid schemes, since they require ever-greater investment (like an IPO) in order to subsidize a product nobody deeply values. If your business model relies on the consumer believing that the product is free, then clearly the consumer doesn't value your product.

by Balgair 10y ago

woodruffw 10y ago

I think that's certainly arguable, at least for social network start-ups. Snapchat may currently be walking the same road as the rest, but it's not too late quite yet for them, IMO. They've added ads, but there are definitely other revenue streams they can look into (see further down the comment tree for one random one). That being said, it's a tough sell. Ads are easy money, especially when your customer base is in that golden range of 14 to mid-30s. It'll be interesting to see whether they can resist the quick cash-out and protect the interests of users (like myself, anyways).

lvs 10y ago

Yes, you've just described economically unproductive enterprises, i.e. those who offer a service or product that nobody would consciously pay for at a market rate if faced with the prospect of doing so. Another way to describe these are pyramid schemes, since they require ever-greater investment (like an IPO) in order to subsidize a product nobody deeply values. If your business model relies on the consumer believing that the product is free, then clearly the consumer doesn't value your product.