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It also lines up pretty well with the fact that a lot of early stage SV-style startups don't monetize before they have a lot of users. You don't want to lose 10
by simongr3dal 8y ago
It also lines up pretty well with the fact that a lot of early stage SV-style startups don't monetize before they have a lot of users. You don't want to lose 10% in the early stages of exponential growth. 10% less users later on would not be a big deal however.
- ambicapter 8y agoI'd assume that the 10% later on is a relatively larger dollar amount in revenue, no?
- gwern 8y agoBut you're not sacrificing growth then. When you sacrifice growth for revenue up front, you're sacrificing not just 1 user but that user and all subsequent users they would've brought in via downstream/compounding effects plus the associated economies of scale (which may well be the only thing that will make you eventually profitable, ads or no ads).
- jonfw 8y agoAssuming that advertising is going to be a primary source of revenue, than you aren't going to have much revenue to lose before you start advertising. The idea is that companies don't advertise at first to take advantage of the exponential growth and user retention when they start getting hot, and once they have market share they start to target profit rather than growth.
- kemitche 8y agoIt depends - if you're going from zero revenue, then, losing 10% of your users to go from zero dollars to N dollars is a great deal. If you have existing other revenue sources, then you definitely have to factor that into the equation.
- scarface74 8y agoI am so glad that I’ve never worked for a non B2B company. It’s so much easier having 10-20 large companies as customers that pay real six and seven figure amounts for your services than chasing after a few pennies.