5 ms·

Do you have examples of sites with a "fobillion" (or close) users that still failed? I'm really curious. The examples I can think of, like friendster, really we

by mariorz 18y ago

Do you have examples of sites with a "fobillion" (or close) users that still failed? I'm really curious. The examples I can think of, like friendster, really went under because of lack of users. I agree that you shouldn't bank on getting this fobillion users and after that monetizing them. But that's because the real hard part is getting that much users in the first place.

fallentimes 18y ago
That was an obvious hyperbole. The point is: 50,000 or even 100,000 users =! success, and you don't necessarily need users to make money (although it helps!).
- emmett 18y ago
  The grow-users-before-revenue strategy has several spectacular success stories: Google, YouTube, Facebook, Flickr, MySpace, etc. etc. That's not to say it's the only valid strategy, but it's certainly a valid strategy. In fact, it probably has the highest payoff, albeit with the highest variance.
  - fallentimes 18y ago
    -Google, obviously. Anomaly. -Youtube might have been fucked if it didn't get acquired. It was hemorrhaging cash like Pac Man Jones & Robert Downey Jr. trapped in a strip club. -Flickr was _priced_ like a talent acquisition. -Like most acquisitions, the Myspace acquisition has largely failed according to Google, their primary advertiser. Additionally, Myspace's contribution to News Corp's earnings have been piss poor. I agree that it's a valid strategy (especially for a company like Justin.TV), but IMHO opinion most companies have tunnel vision when it comes to turning in to a real business. It almost makes them risk seeking. Although getting acquired is nice, it sure as hell isn't a strategy - it's a cop out. I'm trying to come up with companies that tried this strategy and either worked (issued dividends continuously) or was acquired and actually benefited (i.e. was worth their acquisition price based on DCF) their acquiring company. I'm sure there are examples, I just can't think of any off the top of my head.
    - mariorz 18y ago
      Listen, I understand that this is the kind of thing you might expect to read in a 1998 edition of Wired and does not fit with the 'getting real' mantra, but (at the very least) eyeballs are monetizable trough advertisement. It's a time tested strategy that has worked just fine in other mediums. Sites like youtube and myspace did not need to worry about the monetizing part as they got acquired quickly, had they not, maybe the story would be different. I still can't think of sites with a huge and active userbase that failed.
      - fallentimes 18y ago
        Ugh that getting real shit makes me barf. Applying blanket statements like "you shouldn't need to take VC money" only demonstrates the tunnel vision of working on one business for so long. Much of their advice is very good, but there's too many absolutes for my liking.. Anyway, all I'm saying is too many people are applying the blanket statement "worry about monetization later" when not all of them should be. In my opinion, it can be easier for businesses to reach the tipping point of paying customers (i.e. break even) vs. the tipping point of users (???, profitability?, acquisition?). I think MM touched on this. Myspace hasn't show itself to be a real business yet and either has Youtube. I still can't think of user based acquisitions that have quantifiably proved themselves to be a wise decision, though I think Youtube will.
        mariorz 18y ago
        >In My opinion, it can be easier for businesses to reach the tipping point of paying customers (i.e. break even) vs. the tipping point of users (???, profitability?, acquisition?). I think MM touched on this. Completely agree, but the possible payoff in the latter case tends to be quite higher. >Myspace hasn't show itself to be a real business yet and either has Youtube. I still can't think of user based acquisitions that have quantifiably proved themselves to be a wise decision, though I think Youtube will. I think that's hard to say. Take hotmail for example, while it might have not generated a $100 mil in revenues yet (or maybe it has?), I would doubt that the purchase was a strategic decision they regret over at Redmond. I think the same could be said for Youtube. If NewsCorp has regrets over the MySpace purchase, they are quite likely much more due to FB´s growth than to MySpace's current revenue. If all these companies decided to grow users before revenue when they where a startup, it makes little sense to try to squeeze revenues quickly out of them, at the expense of user growth, once they've been acquired by a company with much larger pockets. I think the logical thing to do, in those cases, would be to continue the same growth strategy for a few years while calmly exploring ways to monetize them. Startups that don´t get acquired are obviously more pressed to find a way to monetize quickly.
  - arockwell 18y ago
    Of the companies in that list the only one that I am sure actually turned a profit is Google. Youtube, Facebook, and MySpace don't have a business model. No idea about Flickr, but iirc they were acquired for a pretty low dollar amount.
  - bad_user 18y ago
    From my pov those are anomalies, rather than the norm. For every Google, Youtube and Facebook, there are thousands of startups with similar strategies that fail. I think it is safer to go the long route and start small, working your way to the top, charging a price right from the beginning. If your application is useful, users will pay for it.
    - axod 18y ago
      By doing that you limit your growth rate, and your maximum size. Charging up front puts people off, whereas if you slowly incrementally introduce revenue later, they will probably be hooked by then.
      - bad_user 18y ago
        When you're introducing revenue later, you have to provide extra value. This means more features and so you're endangering your core values. When you're starting to charge for existing features, by limiting the free accounts, you will surely upset your existing users. Google tried to introduce advertising in YouTube videos, and the community was not happy about it ... and imagine a site like YouTube placing a limit on how many videos you can watch. No matter how hooked your users are, you still can lose them, not to mention that popular services like YouTube got cloned and there is competition waiting for those users. People have been charging money or other goods in exchange for products/services since forever. I don't really understand this trend of releasing products for free. The only viable exit strategy is for your company to be acquired by a big player, but if you want your business model to be sustainable you should question this trend.
    - emmett 18y ago
      I exactly agree that they're anomalies...but they're by far the most profitable anomalies. Almost all the top websites grew users before revenue! High variance, high payoff. It is certainly safer to start small and grow revenue first; it's also likely not to produce the next Google (or Yahoo, or Facebook, or YouTube, etc.)
    - maximilian 18y ago
      I think that is the exact difference between building a "small" business and a startup. Businesses are made to be essentially sustainable from the start (or at least soon after start). Startups are trying to become large in a hurry and are cool with losing a lot of money upfront to generate it later. Obviously however, there are a million examples of companies and businesses that blur the line.

by mariorz 18y ago

fallentimes 18y ago

That was an obvious hyperbole. The point is: 50,000 or even 100,000 users =! success, and you don't necessarily need users to make money (although it helps!).

emmett 18y ago
The grow-users-before-revenue strategy has several spectacular success stories: Google, YouTube, Facebook, Flickr, MySpace, etc. etc. That's not to say it's the only valid strategy, but it's certainly a valid strategy. In fact, it probably has the highest payoff, albeit with the highest variance.
- fallentimes 18y ago
  -Google, obviously. Anomaly. -Youtube might have been fucked if it didn't get acquired. It was hemorrhaging cash like Pac Man Jones & Robert Downey Jr. trapped in a strip club. -Flickr was _priced_ like a talent acquisition. -Like most acquisitions, the Myspace acquisition has largely failed according to Google, their primary advertiser. Additionally, Myspace's contribution to News Corp's earnings have been piss poor. I agree that it's a valid strategy (especially for a company like Justin.TV), but IMHO opinion most companies have tunnel vision when it comes to turning in to a real business. It almost makes them risk seeking. Although getting acquired is nice, it sure as hell isn't a strategy - it's a cop out. I'm trying to come up with companies that tried this strategy and either worked (issued dividends continuously) or was acquired and actually benefited (i.e. was worth their acquisition price based on DCF) their acquiring company. I'm sure there are examples, I just can't think of any off the top of my head.
  - mariorz 18y ago
    Listen, I understand that this is the kind of thing you might expect to read in a 1998 edition of Wired and does not fit with the 'getting real' mantra, but (at the very least) eyeballs are monetizable trough advertisement. It's a time tested strategy that has worked just fine in other mediums. Sites like youtube and myspace did not need to worry about the monetizing part as they got acquired quickly, had they not, maybe the story would be different. I still can't think of sites with a huge and active userbase that failed.
    - fallentimes 18y ago
      Ugh that getting real shit makes me barf. Applying blanket statements like "you shouldn't need to take VC money" only demonstrates the tunnel vision of working on one business for so long. Much of their advice is very good, but there's too many absolutes for my liking.. Anyway, all I'm saying is too many people are applying the blanket statement "worry about monetization later" when not all of them should be. In my opinion, it can be easier for businesses to reach the tipping point of paying customers (i.e. break even) vs. the tipping point of users (???, profitability?, acquisition?). I think MM touched on this. Myspace hasn't show itself to be a real business yet and either has Youtube. I still can't think of user based acquisitions that have quantifiably proved themselves to be a wise decision, though I think Youtube will.
      - mariorz 18y ago
        >In My opinion, it can be easier for businesses to reach the tipping point of paying customers (i.e. break even) vs. the tipping point of users (???, profitability?, acquisition?). I think MM touched on this. Completely agree, but the possible payoff in the latter case tends to be quite higher. >Myspace hasn't show itself to be a real business yet and either has Youtube. I still can't think of user based acquisitions that have quantifiably proved themselves to be a wise decision, though I think Youtube will. I think that's hard to say. Take hotmail for example, while it might have not generated a $100 mil in revenues yet (or maybe it has?), I would doubt that the purchase was a strategic decision they regret over at Redmond. I think the same could be said for Youtube. If NewsCorp has regrets over the MySpace purchase, they are quite likely much more due to FB´s growth than to MySpace's current revenue. If all these companies decided to grow users before revenue when they where a startup, it makes little sense to try to squeeze revenues quickly out of them, at the expense of user growth, once they've been acquired by a company with much larger pockets. I think the logical thing to do, in those cases, would be to continue the same growth strategy for a few years while calmly exploring ways to monetize them. Startups that don´t get acquired are obviously more pressed to find a way to monetize quickly.
- arockwell 18y ago
  Of the companies in that list the only one that I am sure actually turned a profit is Google. Youtube, Facebook, and MySpace don't have a business model. No idea about Flickr, but iirc they were acquired for a pretty low dollar amount.
- bad_user 18y ago
  From my pov those are anomalies, rather than the norm. For every Google, Youtube and Facebook, there are thousands of startups with similar strategies that fail. I think it is safer to go the long route and start small, working your way to the top, charging a price right from the beginning. If your application is useful, users will pay for it.
  - axod 18y ago
    By doing that you limit your growth rate, and your maximum size. Charging up front puts people off, whereas if you slowly incrementally introduce revenue later, they will probably be hooked by then.
    - bad_user 18y ago
      When you're introducing revenue later, you have to provide extra value. This means more features and so you're endangering your core values. When you're starting to charge for existing features, by limiting the free accounts, you will surely upset your existing users. Google tried to introduce advertising in YouTube videos, and the community was not happy about it ... and imagine a site like YouTube placing a limit on how many videos you can watch. No matter how hooked your users are, you still can lose them, not to mention that popular services like YouTube got cloned and there is competition waiting for those users. People have been charging money or other goods in exchange for products/services since forever. I don't really understand this trend of releasing products for free. The only viable exit strategy is for your company to be acquired by a big player, but if you want your business model to be sustainable you should question this trend.
  - emmett 18y ago
    I exactly agree that they're anomalies...but they're by far the most profitable anomalies. Almost all the top websites grew users before revenue! High variance, high payoff. It is certainly safer to start small and grow revenue first; it's also likely not to produce the next Google (or Yahoo, or Facebook, or YouTube, etc.)
  - maximilian 18y ago
    I think that is the exact difference between building a "small" business and a startup. Businesses are made to be essentially sustainable from the start (or at least soon after start). Startups are trying to become large in a hurry and are cool with losing a lot of money upfront to generate it later. Obviously however, there are a million examples of companies and businesses that blur the line.