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I am generally wary of any company that isn't using a business model predicated on customers paying for a service. If the business model is "Attract lots of pe

I am generally wary of any company that isn't using a business model predicated on customers paying for a service. If the business model is "Attract lots of people and then sell ads." then the service will be oriented towards whatever provides the most clicks. If the business model is "Get big, and then get bought out." then the service will quite possibly vanish. For throwaway services that I can switch to a new provider for, this is possibly acceptable. But for anything I might want to base my own business on, or store information I will care about in the future, doing so would be foolhardy.

andrewcross 15y ago
I'll second this. It doesn't mean that these others can't exist (Foursquare is a big example), but there seems to be a valley of death for these types. Either go massively big or fail. At least with a pay for use pricing scheme a company can do well and grow slowly without having to hit that massive knockout.
- drumdance 15y ago
  As an entrepreneur, this is why I favor starting B2B businesses. Sure, I would love to create the next Internet/social phenomenon like YouTube, but those markets are largely winner take all. In B2B, you can be #2, #5, #10 or even higher and still have a successful business. Back in the 90s I worked with an email marketing company that scaled way too fast. The thinking was "get big or go home." Even as it cratered during the dot-com crash, small players were emerging all the time, and many of them are thriving today.
  - nithyad 15y ago
    Typically in a B2C business, users don't care much to know how long you have existed or how long you will exist. If you shut shop, they switch to using another free service. But that's not the case in B2B. I do agree that B2B is more lucrative. But, how do you convey to your potential customers that your service is here to stay. Businesses are not comfortable moving from one service to another. And, with so many start ups dying fast or pivoting fast, what's the best way for a service to build trust with its potential customers?
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JoeAltmaier 15y ago
But even bigger, succesful companies can be acquired and disappear forever. I don't think its any guarantee of stability that they are charging money for service, not any more. Heck, Verizon may buy Netflix, then what?
- nknight 15y ago
  It's a lot less likely that someone will spend $4+ billion on a company just to shut it down, than a few million.
  - JoeAltmaier 15y ago
    Didn't Intel buy Digital for $700M? And what's left of that.
    - nknight 15y ago
      DEC went through a long and complicated dismantling during the 90s. In the late 90s, Intel did eventually end up, through two different transactions, with most of the chip IP and fabs, including the StrongARM and the Alpha. StrongARM/XScale stayed relevant for a number of years, but the Alpha was already dead. There was little market for it, and the top guys had already left for AMD to design the Athlon. Compaq eventually picked up what remained under the DEC name, which wasn't much. What's left of DEC is scattered throughout the tech industry. What's left of their microprocessors is in Intel and AMD CPUs. (By the way, one example wouldn't exactly prove whatever point you're trying to make. The pattern of paying a few million to a few tens of millions of dollars for a startup to shut down its existing operations would still be far more common/likely.)
deleted 15y ago
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redmethod 15y ago
Agreed. If you're not paying for a service, it's a bad plan to build around it. Ad revenue funded companies are a dark place to end up in.

andrewcross 15y ago

I'll second this. It doesn't mean that these others can't exist (Foursquare is a big example), but there seems to be a valley of death for these types. Either go massively big or fail. At least with a pay for use pricing scheme a company can do well and grow slowly without having to hit that massive knockout.

drumdance 15y ago
As an entrepreneur, this is why I favor starting B2B businesses. Sure, I would love to create the next Internet/social phenomenon like YouTube, but those markets are largely winner take all. In B2B, you can be #2, #5, #10 or even higher and still have a successful business. Back in the 90s I worked with an email marketing company that scaled way too fast. The thinking was "get big or go home." Even as it cratered during the dot-com crash, small players were emerging all the time, and many of them are thriving today.
- nithyad 15y ago
  Typically in a B2C business, users don't care much to know how long you have existed or how long you will exist. If you shut shop, they switch to using another free service. But that's not the case in B2B. I do agree that B2B is more lucrative. But, how do you convey to your potential customers that your service is here to stay. Businesses are not comfortable moving from one service to another. And, with so many start ups dying fast or pivoting fast, what's the best way for a service to build trust with its potential customers?

deleted 15y ago

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JoeAltmaier 15y ago

But even bigger, succesful companies can be acquired and disappear forever. I don't think its any guarantee of stability that they are charging money for service, not any more. Heck, Verizon may buy Netflix, then what?

nknight 15y ago
It's a lot less likely that someone will spend $4+ billion on a company just to shut it down, than a few million.
- JoeAltmaier 15y ago
  Didn't Intel buy Digital for $700M? And what's left of that.
  - nknight 15y ago
    DEC went through a long and complicated dismantling during the 90s. In the late 90s, Intel did eventually end up, through two different transactions, with most of the chip IP and fabs, including the StrongARM and the Alpha. StrongARM/XScale stayed relevant for a number of years, but the Alpha was already dead. There was little market for it, and the top guys had already left for AMD to design the Athlon. Compaq eventually picked up what remained under the DEC name, which wasn't much. What's left of DEC is scattered throughout the tech industry. What's left of their microprocessors is in Intel and AMD CPUs. (By the way, one example wouldn't exactly prove whatever point you're trying to make. The pattern of paying a few million to a few tens of millions of dollars for a startup to shut down its existing operations would still be far more common/likely.)

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redmethod 15y ago

Agreed. If you're not paying for a service, it's a bad plan to build around it. Ad revenue funded companies are a dark place to end up in.