
The Internet startup model is broken and how to fix it - uxjulie
http://blog.julieng.me/post/30379283972/the-internet-startup-model-is-broken-and-how-to-fix-it
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nchuhoai
I really liked the post (and the sentiment about 6wunderkinder as a Bostonian
in Germany). However, I also really liked the reasoning of Nate Weiner on why
he chose to make Pocket free:

[http://blog.ideashower.com/post/21276590202/why-pocket-
went-...](http://blog.ideashower.com/post/21276590202/why-pocket-went-free)

As you pointed out, it's up to us customers what kind of vision we want to
support, the "low-risk", immediate revenue model or the long-tail, high-risk,
winner-takes-it-all model. I totally agree that too few people are aware of
the inherent differences and then cry if the latter fails or gets shutdown
after an acquihire.

That being said, I prefer Pocket over Instapaper

~~~
uxjulie
Thanks for sharing that post explaining why free. I hadn't seen it.

Yes, it's up to the customers. But we'll see what happens. I'm curious what
Pocket's new business model is. And whether it'll be around or acquihired
within a few years.

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talkingquickly
I agree it often seems crazy companies with no clear revenue model raising
millions in funding but I'm not sure the approach of looking at each one
individually and saying "it doesn't look like they could generate sufficient
revenues to justify that investment" takes into account why they're getting
the investment.

At such an early stage most startups are at best guessing what their main
revenue source will be, the only thing they've demonstrated is that they're
able to build something people want. My understanding is that the bet VC's are
taking isn't that all or even most of them will work out a way to monetize
this sufficiently to make a return on investment, it's that one or two of them
will work it out in a big way and be successful to the point that they more
than compensate for the majority of others which just about broke even or
never cracked it at all.

If anything these investments are just an acceptance than no-one really knows
what's going to work and one solution to this is to put money into teams which
seem to be able to make something people want and hope that by allowing them
what look like unrealistic costs to begin with, they'll come up with something
game changing. Not suggesting that's the best approach to building companies
but I don't think it's a completely unreasonable one.

The point's made a lot better than I can in this lecture
([http://blakemasters.tumblr.com/post/21869934240/peter-
thiels...](http://blakemasters.tumblr.com/post/21869934240/peter-thiels-
cs183-startup-class-7-notes-essay)) from Peter Thiel's startup class (with
Roelof Botha and pg).

~~~
uxjulie
I agree with you and that lecture is great. But let's face it. Most startups
fail and are not revolutionary. Many are copies of existing services.

I celebrate the few that really inspire me, like Twitter, Instapaper or Square
and others. But I am disgusted by the Colors and Pockets out there.

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JoeAltmaier
Strange argument, that we fix the internet somehow, by boycotting products
that don't match our expectations of what an internet business should be.

I thought the free market determined what survived? Adding this pressure - has
to conform to a blog writers vision - just adds another hurdle to success. Was
something about the free market broken? Will a half-dozen annoyed blog-readers
make any difference? What's the goal here.

~~~
uxjulie
Well I personally think a bubble is coming because we're busy creating
products and services that don't produce revenue and value. Free markets
generally work but can fail miserably when gone unchecked. That happened only
a few years ago. And I personally believe it's irresponsible on the web.

My point and goal is for us, the workers of the web to recognize that and
steer away from that irresponsibility, if possible. We don't need millions for
another photo app, reading app or social network. Let's build something
useful.

~~~
JoeAltmaier
The investment in web trash is not significant. If its a bubble, it won't be
of the magnitude of a S&L or mortgage meltdown - it'll be some privileged
Valley execs and coders getting disappointed.

Photo apps and social networks are possibly the single most useful invention
of the last decade. Variations may bore you or seem silly, but there is
probably room in the market for some tweaks on these themes. If they make
money, then it was worth it.

If you have some future-radar that can predict which will fail, perhaps you
can convince some VC or Angel firm to employ you. Otherwise they'll have to
make their best guess and plonk their money down where they think best.

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alttab
When Cheddar was posted here a while back, I scoffed at it and said "Great,
another Todo app that they are trying to charge like a service."

This article provides a little more context around it. I think we'll see more
single-man shops proliferate as venture funding tones down over the next few
years. All in all, when that happens I think everyone will win:

1) Consumers will have more choices as developers set off on their own.

2) Consumers won't get bait-switched when a start-up sells out to turn a
profit for investors.

3) Investors won't have to play the numbers game as much. These dudes are
already rich so personally I don't care what happens to them.

4) Developers/business owners won't be at the mercy of investor pressure or a
board and are finally a master of their own domain. Quitting your job to take
funding for a venture simply changes who your boss is.

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adrianmn
Ain't broke don't fix!

Both bootstrapping and VC/funding model work fine they just each embrace
different business models. Bootstrappers mostly focus on revenue from day 1
while the others are more focused on rapid growth and exit potential.

There is nothing wrong with any of them and the world is a better place by
having different models as each offers unique innovation opportunities.

~~~
danmaz74
What is "wrong" (or at least suboptimal) is when good bootstrapped products
get killed by money-heavy venture capital backed ones that fizzle out when
they finish their money. That is pretty frustrating.

~~~
njx
what is wrong is bootstrapped companies don't get exposed in media (techcrunch
etc) and every VC funded company is guaranteed the exposure. Exposure creates
mindshare and mindshare leads to pocketshare. The bootstrapper eventually
suffers because whether the VC funded company makes money or not, the
opportunity for exposure is very limited. On the other hand bootstrappers need
to be more creative and keep pushing the limits.

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jhull
I think the argument here can be summed up as:

Don't shop at Home Depot, Amazon or Whole Foods. Shop at the neighborhood
Hardware store, the corner Bookstore and the local Farmer's market (for tech.)

