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Don't take VC money if you don't wanna be forced to find a 10x exit for those investors. The investors want an exit, so they have to IPO. To IPO at a reasonab
by BaseballPhysics 3y ago
Don't take VC money if you don't wanna be forced to find a 10x exit for those investors.
The investors want an exit, so they have to IPO. To IPO at a reasonable valuation, they need to demonstrate significant revenue potential. And to get significant revenue, they need to monetize the hell out of the userbase.
You can do that through:
1. Ads--monetize your user's attention.
2. Subscriptions--monetize your user's attachment to your service.
3. Surveillance capitalism--monetize your user's data.
Very few services have shown the ability to hit that 10x target with #2, and thus Reddit chose paths #1 and #3.
The lesson: Once again, for those in the back row 1) if you're not paying for the product, you are the product, and 2) don't build communities on closed platforms unless you're comfortable with the potential of a rug-pull.
- moneywoes 3y agoHow to build a business of this size without VC money?
- JohnFen 3y agoThe old-fashioned way, over time. But I would question the goal of building a business this size. Why do you want to?
- rvz 3y agoIt's possible, Basecamp, Jetbrains, and Zoho have done so.
- BaseballPhysics 3y agoSlowly. Or don't. Who decided every company must be a global blitzscaled decacorn monopoly?
- JohnFen 3y ago> if you're not paying for the product, you are the product The problem with this saying is that it implies that you can avoid being the product by paying for the product. But that is increasingly not true, and is a bad bet.
- BaseballPhysics 3y agoIt sure helps with incentive alignment, but I agree, we should also be demanding laws which ensure at minimum transparency, and ideally regulation, of how individualized data is collected, stored, bought, and sold, while collectively refusing to operate with companies that insist on viewing their customers as just another resource to be mined.
- JohnFen 3y agoI don't think it really helps with incentive alignment, honestly. Many companies -- particularly tech companies -- are of the "maximize profit no matter what" mindset. That mindset would view not spying on paid users as gross negligence. I mean, how many times just on HN have you heard the sentiment that "leaving money on the table" is always a bad thing?
- rvz 3y agoThis, precisely.