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Maybe because the products suck and there are very few business models for software? I'm gonna focus on the software product segment, and my evaluation might be
by netbioserror 2y ago
Maybe because the products suck and there are very few business models for software? I'm gonna focus on the software product segment, and my evaluation might be flawed, but I think that software is an inherent race to the bottom for three important reasons:
1) Dependence on proprietary software is at best a short-term support boon, and in the majority of cases a crippling liability when the vendor changes support terms or goes under (personal experience talking).
2) Open source software is a slow but inevitable creep towards feature-matching and quality that has borne ample fruit already.
3) As ephemeral information with near-zero material cost other than labor, software finds most low-hanging fruit quickly, while higher-hanging fruit attract the formation of non-profit foundations to continue development; there just aren't many more interesting software products to offer.
Working business models in the tech industry seem to revolve around the provisioning of hardware because buying software just isn't an appealing proposition to customers in most cases.
Sure, LLMs are interesting software, but they're a perfect demonstration: Open source LLMs already exist and gather huge momentum when released; the field is still so new that novel and efficient solutions are not the exclusive realm of proprietary research; and because of these factors, business models can't revolve around interesting model capabilities so much as provisioning the hardware they run on.
- deleted 2y ago[deleted]
- Flatcircle 2y agoThis comment should be its own HN post. For some reason it hit me like a ton of bricks. So true
- jnwatson 2y agoThere are plenty of B2B opportunities where it just doesn't make sense for an open source competitor to emerge. There are plenty of hobbyist programmers willing to work on operating systems. Accounting systems? Way fewer. International export compliance? Zero. There is plenty of opportunity in boring, unsexy niches. We have enough CRMs and Jira clones though.
- scythmic_waves 2y agoAs someone working in a niche area, I can confirm. It's shocking how little tech adoption there is in my industry. Plenty of low hanging fruit. However I still sympathize with the parent comment. The niche-industry-exception state of affairs will become less true over time. And then you're left with the same set of incentives (minus dedicated hobbyists).
- wayoverthecloud 2y agoWithout going into too much details, could you share some niche areas? And what kind of tech adoption are missing?
- overview 2y agoPlease point the way!
- jitl 2y agoEven with a zillion Jira clones, Jira is doing quite well and growing. Maybe one day some OpenJira clone thing will be dominant but it could be 10-20 years, which is about how long it took Postgres to rise to relevance alongside Oracle
- jitl 2y agoMeh? I think there’s a good amount of 2021 unicorns with poor fundamentals raising on hype and froth over growth numbers but burning cash, but there’s also plenty of 2021 unicorns with good business fundamentals with very long runways. I don’t think any of the figures in the article are an indictment of software as a business model. The unit economics & distribution potential remains very strong. But what’s the point of doing an IPO in a market that’s clearly down on tech? You’d only want to do it for legitimacy or you need the cash and can’t get good terms from private investors. Much better move to chill and wait for the vibes to improve. Note my perspective is colored by working at 2 SF unicorns that had (Airbnb) / have (Notion) a long duration from founding to IPO or from unicorn to IPO. Airbnb seems to be doing okay, so does Notion… neither business ever went off the deep end burning cash for quick growth numbers to wow speculative investors.