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That was a factor, but more fundamentally it was companies with wild valuations and no realistic prospects of becoming a profitable and self-sustaining business
by JCM9 4y ago
That was a factor, but more fundamentally it was companies with wild valuations and no realistic prospects of becoming a profitable and self-sustaining business. There is some of that out there right now. Market corrections exist in part to flush those companies out of the system.
- tluyben2 4y agoSome of that? There are a lot of companies that raised 20m+ without any hope of ever paying that back and actually heavily depending on new rounds of funding to survive at all. This was all wrapped up as ‘pump everything in growth’ which works as long as it works and that was no different in 1999 when companies were also just buying users (one of my clients at the time gave away free groceries the first month of your membership; guess what the retention was after that month) with investor money. When that dried up, all users left in a a few months and the companies were gone. This will happen again. Everyone I know (business and personal) uses a lot of freemium services from startups they will never pay for; they will simply leave the second they have to pay or when ads appear. And that has to happen for these companies to have a chance at all.