2 ms·

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.