5 ms·

"If your app name has become a verb the last thing you ever want to do is refocus." What? If you don't make money, you will go bankrupt. You can be a verb all

by roel_v 12y ago

"If your app name has become a verb the last thing you ever want to do is refocus." What? If you don't make money, you will go bankrupt. You can be a verb all you want, if it doesn't make money, it doesn't matter.

josephmx 12y ago
If your monetisation attempt kills your app, you will go bankrupt and it is a failure.
- dagw 12y ago
  You have two options. One will leave you bankrupt within a year or two with probability 1.0 and one will leave you bankrupt within year or two with probability 0.8. Which would you chose?
  - josephmx 12y ago
    Except if they had monetised in a way that isn't changing their entire app then they would have been more likely to stay successful. This change was poorly thought out and probably wasn't going to be successful, same as if Twitter spun their micro-blogging to another app, it wouldn't end well.
    - und3rw4t3rp00ps 12y ago
      IMHO - Dens is a romantic dude. He has just as many conceptual aspirations as he does commercial ones. Power users of 4sq. turn their worlds into farmville - mindlessly checking in everywhere they go (i.e. "home", "gym", "home" etc.). He wanted to disassociate the brand from that activity, and emphasize the utility of check ins (i.e. who else is here, how popular is that etc.). Could he have done this in a more elegant way? Maybe. But either way, the data he has compiled to entice advertisers is already quite substantial. If he successfully rebrands 4sq. as a resource and swarm as a tool, he's done exactly what he wanted to do.. as opposed to something close/safer.
    - wpietri 12y ago
      > This change was poorly thought out What's your evidence for that? I could entirely believe they thought it through very carefully, knew that this was a likely outcome, and did it anyhow because it was the best chance they saw for success. Remember, this is the third checkin app in this series. It started life as a student project. The first commercial version was Dodgeball [1], which was created, grown, and purchased by Google before the iPhone even existed. Google wasted the opportunity, so Crowley started Foursquare and did it again. Personally, I suspect they discovered that the whole check-in dynamic was fading. E.g., it's something people did for a while out of novelty and they expected its true long-term audience to be small. Once you take VC money, it's "go big or go home". A small, modestly profitable company is not something your investors are interested in; they would rather you gamble and lose. And Foursquare took $162 million [2] so they had to go very big indeed. The "success" period of the article's graph looks like VC-failure to me. [1] https://en.wikipedia.org/wiki/Dodgeball_%28service%29 https://en.wikipedia.org/wiki/Dodgeball_%28service%29 [2] https://www.crunchbase.com/organization/foursquare https://www.crunchbase.com/organization/foursquare
      - furyg3 12y ago
        This logic blows my mind. Winning back your penny at the penny slots isn't the result you're playing for, but it's a better result than losing the penny. I don't know the details of the FourSquare pivot, and hindsight is 20/20, but if I had even a small chance at medium-to-long term profitability (good brand, loyal followers, but flat growth), and a minuscule chance at riches by burning down the building, I wouldn't light the match.
        wpietri 12y ago
        Which person are you projecting yourself onto here? The CEO doesn't have that choice. He'll get replaced by the investors. The VC investors don't have that choice. It's not their money they're working with. They've promised their investors, the limited partners, that they'll go after high risk, high reward scenarios. If they don't make those gambles, they won't get the capital needed to run. The limited partners also don't generally have that choice with this money. They are people who manage large pools of cash, and part of what they need is long-term, high-reward investments, which are necessarily high risk. [1] They have other money in safe, low-return investments. This money is for go-big-or-go-home bets. This is the devil's bargain people make when they take VC money. There are other ways to build businesses, but they aren't the kind that will let you spend $100m-2b before you get to break-even, which is apparently what it takes to build a social network. [1] http://www.theequitykicker.com/2010/12/01/where-do-vcs-get-their-money-from/ http://www.theequitykicker.com/2010/12/01/where-do-vcs-get-t...
- codingdave 12y ago
  If you grow so big that you are verb, and yet still have not monetized, then you had a deep flaw in your business plan from day one.
  - aioprisan 12y ago
    Many apps try to just get traction instead and grow on that front, that they're as big as possible, then worry about monetization.
deleted 12y ago
[deleted]
bandrami 12y ago
Ah, you fell for it too. How much does it actually cost to run the foursquare that millions of users liked? Hint: not very much. If you can't make that "not very much" back from ads, you should sell to someone who can.
- wpietri 12y ago
  If you settle for barely breaking even, your investors will replace you with somebody who believes they can take your company and have a chance of making ridiculous money. They will do that even if it is a 20% of wild success and an 80% chance that you will drive away the millions of users. Why? Because merely covering core operational costs doesn't do anything to pay back the investors who put in $160 million.
  - bandrami 12y ago
    Why do you have "investors" with a low-margin, low-cost business model?
    - wpietri 12y ago
      I'm having trouble understanding what you want to know here. Is this whole VC funding thing new to you? Assuming so, the short answer is that the venture capital ecosystem is about investing in businesses before we know what kind of businesses they'll turn out to be. This was especially true for free-to-use social apps like Facebook, Twitter, and Foursquare. Those only make sufficient money if their scale is very large. It's also hard to know what their true monetization opportunities are until they reach scale, which is why Twitter and Facebook didn't really bother with pursuing revenue until they were huge. This worked out pretty well for the winners. But it has a known failure mode for the losers: things that might have been good small businesses end up getting totally destroyed in the rush for glory and riches.
    - bdcravens 12y ago
      You're describing pretty much every B2C startup ever. Many of which I promise you're using today.

by roel_v 12y ago

josephmx 12y ago

If your monetisation attempt kills your app, you will go bankrupt and it is a failure.

dagw 12y ago
You have two options. One will leave you bankrupt within a year or two with probability 1.0 and one will leave you bankrupt within year or two with probability 0.8. Which would you chose?
- josephmx 12y ago
  Except if they had monetised in a way that isn't changing their entire app then they would have been more likely to stay successful. This change was poorly thought out and probably wasn't going to be successful, same as if Twitter spun their micro-blogging to another app, it wouldn't end well.
  - und3rw4t3rp00ps 12y ago
    IMHO - Dens is a romantic dude. He has just as many conceptual aspirations as he does commercial ones. Power users of 4sq. turn their worlds into farmville - mindlessly checking in everywhere they go (i.e. "home", "gym", "home" etc.). He wanted to disassociate the brand from that activity, and emphasize the utility of check ins (i.e. who else is here, how popular is that etc.). Could he have done this in a more elegant way? Maybe. But either way, the data he has compiled to entice advertisers is already quite substantial. If he successfully rebrands 4sq. as a resource and swarm as a tool, he's done exactly what he wanted to do.. as opposed to something close/safer.
  - wpietri 12y ago
    > This change was poorly thought out What's your evidence for that? I could entirely believe they thought it through very carefully, knew that this was a likely outcome, and did it anyhow because it was the best chance they saw for success. Remember, this is the third checkin app in this series. It started life as a student project. The first commercial version was Dodgeball [1], which was created, grown, and purchased by Google before the iPhone even existed. Google wasted the opportunity, so Crowley started Foursquare and did it again. Personally, I suspect they discovered that the whole check-in dynamic was fading. E.g., it's something people did for a while out of novelty and they expected its true long-term audience to be small. Once you take VC money, it's "go big or go home". A small, modestly profitable company is not something your investors are interested in; they would rather you gamble and lose. And Foursquare took $162 million [2] so they had to go very big indeed. The "success" period of the article's graph looks like VC-failure to me. [1] https://en.wikipedia.org/wiki/Dodgeball_%28service%29 https://en.wikipedia.org/wiki/Dodgeball_%28service%29 [2] https://www.crunchbase.com/organization/foursquare https://www.crunchbase.com/organization/foursquare
    - furyg3 12y ago
      This logic blows my mind. Winning back your penny at the penny slots isn't the result you're playing for, but it's a better result than losing the penny. I don't know the details of the FourSquare pivot, and hindsight is 20/20, but if I had even a small chance at medium-to-long term profitability (good brand, loyal followers, but flat growth), and a minuscule chance at riches by burning down the building, I wouldn't light the match.
      - wpietri 12y ago
        Which person are you projecting yourself onto here? The CEO doesn't have that choice. He'll get replaced by the investors. The VC investors don't have that choice. It's not their money they're working with. They've promised their investors, the limited partners, that they'll go after high risk, high reward scenarios. If they don't make those gambles, they won't get the capital needed to run. The limited partners also don't generally have that choice with this money. They are people who manage large pools of cash, and part of what they need is long-term, high-reward investments, which are necessarily high risk. [1] They have other money in safe, low-return investments. This money is for go-big-or-go-home bets. This is the devil's bargain people make when they take VC money. There are other ways to build businesses, but they aren't the kind that will let you spend $100m-2b before you get to break-even, which is apparently what it takes to build a social network. [1] http://www.theequitykicker.com/2010/12/01/where-do-vcs-get-their-money-from/ http://www.theequitykicker.com/2010/12/01/where-do-vcs-get-t...
codingdave 12y ago
If you grow so big that you are verb, and yet still have not monetized, then you had a deep flaw in your business plan from day one.
- aioprisan 12y ago
  Many apps try to just get traction instead and grow on that front, that they're as big as possible, then worry about monetization.

deleted 12y ago

[deleted]

bandrami 12y ago

Ah, you fell for it too. How much does it actually cost to run the foursquare that millions of users liked? Hint: not very much. If you can't make that "not very much" back from ads, you should sell to someone who can.

wpietri 12y ago
If you settle for barely breaking even, your investors will replace you with somebody who believes they can take your company and have a chance of making ridiculous money. They will do that even if it is a 20% of wild success and an 80% chance that you will drive away the millions of users. Why? Because merely covering core operational costs doesn't do anything to pay back the investors who put in $160 million.
- bandrami 12y ago
  Why do you have "investors" with a low-margin, low-cost business model?
  - wpietri 12y ago
    I'm having trouble understanding what you want to know here. Is this whole VC funding thing new to you? Assuming so, the short answer is that the venture capital ecosystem is about investing in businesses before we know what kind of businesses they'll turn out to be. This was especially true for free-to-use social apps like Facebook, Twitter, and Foursquare. Those only make sufficient money if their scale is very large. It's also hard to know what their true monetization opportunities are until they reach scale, which is why Twitter and Facebook didn't really bother with pursuing revenue until they were huge. This worked out pretty well for the winners. But it has a known failure mode for the losers: things that might have been good small businesses end up getting totally destroyed in the rush for glory and riches.
  - bdcravens 12y ago
    You're describing pretty much every B2C startup ever. Many of which I promise you're using today.