
Facebook’s Parse shutdown has a lesson to all tech customers - pavlov
https://medium.com/swlh/facebook-s-parse-shutdown-has-a-lesson-to-all-tech-customers-ecc43a83e36b
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r2dnb
>Small companies are often great because they can be like a partner that grows
together with you. Silicon Valley startups are, more often than not,
essentially looking to exploit you in order to maintain a hypergrowth graph
that ends up in a place where you don’t matter by definition.

That has always been my feeling too. The key word is commitment. The company
can be big but it depends on how committed they are to their services. For
example, I can commit myself to the .NET Framework of Microsoft because I know
that they won't be dropping it anytime soon, it is pivotal for them and tighly
coupled to their strategy.

Also some companies have a reputation for shutting down their services or
having unstable APIs. I don't know for you but personally I can't picture
myself building my company around technologies developed by Facebook. They
have their assets but I really don't trust them in terms of maintenance and
long-term commitment, but this is what matters in business. And I had this
sense long before the Parse thing.

My preference is to work with big companies having "obvious" commitments like
Microsoft and .NET.

When I'm not sure of this commitment, if I have the opportunity to work with a
small company that has a great product and I know is not seeking explosive
growth, this is a no brainer for me.

This is one of the reasons why I stopped to define myself as a startup. I
asked myself, if I was one my leads would I actually buy my products ? And I
figured that the term startup tends to be associated with a quest for big
acquisitions or explosive growth, while talking about a company conveys a
sense of stability. I'd commit myself in Learning a Framework or integrating
an API only if I know the company is serious about supporting the product for
the next 10 to 20 years.

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PhilWright
They gave too much away for free in order to get a large user base. They
needed a large number of users to impress VC's and get the next tranche of
money. Then the investors apply pressure to keep the growth going which means
they have to keep the freebies flowing. Now your on a treadmill that only ends
in selling out for a big exit. It worked, they sold to Facebook and the
founders/investors made out nicely.

The alternative strategy would be to price more realistically and bootstrap up
with positive cash flow. Of course, this takes longer and maybe someone else
will capture most of the market by using the previous strategy.

A free service still comes with a cost, the cost is the risk that they could
pull the plug because they don't have enough money or your just no important
to them.

Hence they constantly needed more VC money and to keep the investors happy a
sell out to a big company was the only viable exit.

This meant they were focused on selling the company as the exit strategy for
making money. If instead they had higher prices and gave less away for free
they would have been a viable standalone company and so had no need to sell
out.

~~~
saurik
This is one of the reasons I generally avoid services with wide free tiers,
and also feel that venture capital makes it impossible for markets to actually
optimize correctly :(.

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wrong_variable
Slightly off-topic.

This is why we went from using AWS to using our own servers based on commodity
hardware.

We went with mattermost instead of slack since we wanted to control our own
data.

Of'course it depends on how talented your developers are and how much
management want to bankroll your long term outlook - which unfortunately is
not the case for many companies out there.

