

Dear "Landlord" - vetler
http://raganwald.posterous.com/dear-landlord

======
jwr
This is well said and reflects my experience. These days I look for services
that a) take money, b) probably won't get acquired soon. (a) is easier than
(b), but if you look around you'll eventually find something.

Good examples are:

* Instapaper — Marco's one-man-shop, stable and profitable,

* Smugmug — family owned, users pay them money, stable and profitable,

* Dropbox — which I also pay for — but is still unlikely to find an acquirer.

I recently decided not to sign on several new services because I couldn't see
a business model.

I'd like pg to address this in one of his essays, given that YC is all about
building stuff people want without paying too much attention to the business
side of things (e.g. actual cash flow), and with the explicit goal of reaching
an exit for the founders.

~~~
tptacek
YC seems (I obviously don't speak for them) to like companies like Smugmug and
Instapaper --- see what Graham writes about Wufoo --- and over the long term,
companies with established niches can obtain valuations that outstrip that
niche. Black swans happen, and it's good to maximize your exposure to the good
ones.

But fundamentally YC is about shooting companies out of a cannon. Charging
users a fee puts user acquisition and retention at risk. For Instapaper and
Pinboard that risk is well worth the reward. But most YC companies have
acclimated themselves to the idea of working for a VC-funded board of
directors; if you're going to take VC, the risk is very often _not_ worth it
in the first year or two of your company, because traction trumps revenue in
most VC-funded companies.

The overwhelming majority of YC's returns come from exits from VC-funded
companies.

So the interests of free users and YC don't really so much line up here.

~~~
revorad
Actually, YC's real returns will come from IPOs of big profitable companies
like Airbnb and Dropbox, not exits any smaller than them.

And I think there's room for more Dropboxes. What I find strange is that so
few startups (YC-funded or not) even try the freemium model seriously. It took
Dropbox a long time and a lot of experimentation to find a scalable business
model, and they wouldn't have found it had they not been persistent.

Building something great is harder than making money, but even YC's success
depends on startups that can do both.

~~~
tptacek
Ok, but that just reinforces the point, right?

~~~
revorad
It reinforces jwr's point, not your argument that YC's interests are not
aligned with free users.

It's only companies with a good business model that can support free users as
a marketing cost in the long run. All others die once they run out of funding
cycles.

------
dhotson
I really wish I could pay for free services just for the peace of mind that
they'll stick around.

I've got my website on Tumblr and by using their service I feel like I'm
making a pretty big commitment to them, but since it's free it doesn't feel
like they have the same level of commitment to me.

I freaking love Tumblr and would be happy to pay. But right now it's not clear
to me if they're making any money at all and that's a big concern as a user.
Just remind me, how do those guys make money again?

Also, Pinboard founder Maciej Ceglowski wrote on the topic of being a free
user not that long ago:
<http://blog.pinboard.in/2011/12/don_t_be_a_free_user/>

The TL;DR version was: Exploding growth + free service = losing lots of money.
Ouch.

~~~
davidw
(It's _peace_ of mind. Piece of mind is something a brain surgeon finds stuck
to his shirt when he goes home for the day)

~~~
BasDirks
There is also "to give a piece of mind".

~~~
liedra
I'll give you a piece of my mind if you keep going on about this! (not really,
just giving an example :)

------
tptacek
I think it's a little .----- and more than a little hyperbolic to suggest that
Posterous wasn't a business, but rather just an exhibit for the team's
portfolio.

The fact is, Posterous tried and lost. By all accounts, valiantly.

I find myself nodding when Maciej writes "Don't Be A Free User", because he is
competing with free (and also because I want him to give me a tour of his
vault of golden coins). Pointing out that your pricing scheme makes you a
sustainable competitive alternative is fair.

But to the best of my knowledge, you aren't competing with Posterous. Why do
you feel the need to rub this in?

I sincerely apologize if I'm just missing some parodic element of this post.

~~~
raganwald
There is no criticism of Posterous or anybody else intended. _I apologise if
it comes across that way_.

I did, however, try to make a point that I would never move my _business_ onto
a free or pre-revenue site.

FWIW, I knew this could happen when I first started using Posterous, and I
deliberately cut my blogging in two. The stuff that is just hot air—like this
post—is on Posterous. I could honestly live with losing all of it,
permanently. It’s personal and not mission-critical to my livelihood.

The stuff that I cherish, the stuff with code, is on Github. That’s my
business, and I treat it differently. They seem to have a working business,
and I have an automatic backup strategy, I have other places I can re-host it,
I can Jekyl-ize it to a standard web host, I have my own exit plan.

So no quarrel with Posterous, I’m not losing a thing. I’m just pointing out
that while I might do something personal with a pre-revenue business, I’m not
betting real money on it.

~~~
tptacek
Consider striking the "exhibit for the portfolio" bit.

~~~
raganwald
Try the current flavour and see if it’s still as bitter.

~~~
tptacek
Way better!

------
SoftwareMaven
I'm not sure if it's the architects fault or the real estate investors. Land
is so cheap, and investors seem to really like watching architects build
stuff. For a long time, investors have believed if there are people in the
building, the coffee bar or the valet parking will make them a lot of money.

The problem is that it has also conditioned people to believe that all office
space should be free. Those who build incredibly efficient office space are
still going to have a hard time charging rent.

These architect aquisitions are every bit as much about the investors as they
are the architects. Until investors get selective and demand real value, I'm
not sure it's going away.

(Wow, I might need to go to prison for extended torture of an analogy.)

------
jacquesm
The biggest loss is the backlinks to your carefully created content.

For that reason alone I would never consider hosting something like a blog on
real estate owned by another party.

Another risk is that the domain sooner or later ends up in the hands of some
scammer or pill pusher.

------
kylec
Yeah, this has happened a number of times, enough that I'm wary of investing
time and energy into using a service that appears to not have any means of
making money. Last fall, I evaluated Posterous for my personal blog, but one
of the reasons I ended up going with Squarespace instead is because it's a
paid service:

[http://kylecronin.me/blog/2012/3/13/my-thoughts-on-
posterous...](http://kylecronin.me/blog/2012/3/13/my-thoughts-on-posterous-
acquisition.html)

~~~
nikcub
I don't think being a paid service makes it more likely that it will be around
forever, but it is a good input to use when weighing and comparing different
services. I would probably place as much emphasis on data portability and
content license terms.

This is, off course, assuming you are comparing products that are like-for-
like in features and that the product is good. Paying for a crap product won't
save it.

~~~
telent
Indeed. Google is a free service and Google Apps is a paid service, but I
wouldn't expect significantly more longevity from the latter just because I'm
paying them $x a year than I would from the loss-leader service.

~~~
robryan
I think it is a bad example because it is probably contributing less than 1%
to Googles bottom line. Much easier to cut than if it were the primary revenue
source for n individual company.

~~~
telent
For exactly that reason it's a really good example of the point I was making:
what you really need to know is whether a given product is strategic to its
supplier. "Am I paying for it?" is one indicator that it may be, but it's not
conclusive

------
edw519
I use Posterous, Weebly, Hacker News, and twitter, and love them all. I don't
pay a nickel to any of them and never will.

I hope very much that they all last forever.

But I will lose nothing if any or all of them disappear without giving me a
chance to retrieve my data. Why? Because everything I've ever posted to any of
them was already saved on my hard drive first. A simple solution for a frugal,
OCD hacker who wants the best of all worlds.

<HN201203141055.txt>

[UPDATE: Several people have suggested automating this or making it easier. My
response: If you're a hacker and more than 5% of what you type goes anywhere
other than your code repository, you should probably reevaluate what you're
doing before you make it any easier to do it.]

~~~
localhost
Interesting idea. I do a similar thing with OneNote on long outgoing mails
that I write that take a long time to compose.

However, how do you deal with threaded conversations and tracking the 1 liner
replies to those mails? There are a large # of mails that I write that fall
into this category.

Someone I know wrote his own email client that is essentially a long text
buffer where email conversations are persisted to a single text file. He has
commands that allow him to select portions of text from that file to compose
in his replies. He's used that system since the 1980's and still has all of
his email from back then logged into individual files.

~~~
icebraining
I don't get it, email is the easiest thing in the world to backup and view
offline. You can just run e.g. offlineimap to periodically download the
messages, and then you can use virtually any email client to view them

Tracking replies is done automatically as long as you actually click "reply",
because mail clients add the In-Reply-To header with the ID of the message
you're replying to.

I'm not trying to be obnoxious, I just don't understand what's the issue.

------
brudgers
Interesting metaphor.

The reason this doesn't happen with real-estate is because unlike startups -
there are no Facebooks.

Someone once explained Disney's town of Celebration to me this way:

It took Disney more than a decade to develop Celebration. They spent several
hundred million dollars. In the end, they made about $200 million. The ROI on
_Pocahontas_ was significantly better.

~~~
Drbble
Celebration is also ongoing PR for the Disney mystique, like Google's
autonomous car project.

------
JoelMcCracken
Took me a minute or so to figure what he was talking about. I am not sure what
the greater message is, here. Was Posterous "evil" for selling themselves to
Twitter? Or, should users generally beware any company that does not have a
revenue? At what level of revenue should users stop worrying? Not saying that
it is likely, but should users of Dropbox worry that Apple will acquire them?

Completely separately, Posterous lost all personal credit when they did that
anti-Tumblr campaign a while ago. Not that I care at all about Tumblr, but I
felt it was in bad taste. When a company does bad things, I cannot help but
imagine that they will do other "bad" things.

~~~
raganwald
I think it’s a question of lock-in. If someone wants to give a free service
away and there’s very little lock-in, great! If a new restaurant opens in my
neighbourhood, maybe the owner gives away free lunches to all the people
working nearby. Great, go have lunch.

But if there’s a big lock-in, as users you have to do your due diligence (we
used to jokingly call it “doing the dew”). Say there’s a service for managing
software projects. Well, if I’m going to bet hundreds of thousands of dollars
plus my career and reputation on a service, I want to ask a lot of questions,
that’s natural.

I’m actually cool with Posterous, I hope the folks behind it do really well.

~~~
JoelMcCracken
That makes sense.

I realized just now that I sounded very critical of Posterous. I also hope
they do very well.

Posterous' "badness" is more of a matter of corporate moral personality. As a
company develops, its leaders will have opportunities to make decisions which
show their opinions on things. It doesn't surprise me when their future
decisions also reflect those opinions.

For a high-profile example: Remember when Google decided it was going to start
censoring search results in China? At the time, it was huge, extremely
surprising news. However, it also showed a change in corporate opinion. Given
subsequent developments, you can "see" the change in corporate decisions.

------
dredmorbius
This used to be called "Who is not on LiveJournal[1]"

<http://linuxmafia.com/faq/Essays/winolj.html>

Notes:

1\. An interesting story itself: <http://en.wikipedia.org/wiki/LiveJournal>

~~~
zalew
> When Bubble 2.0 is dead and gone, we'll still be here.

of the alternatives he listed, 6 are dead.

of the supposedly dead and gone bubble 2.0 products he listed, all are up and
running.

------
davemel37
I think it is an interesting point that people get more value out of your
product when they are invested in it.

When friends call me for marketing advice, I enjoy talking about it, and am
always willing to share some insight for free, but this makes me wonder if I
am doing them a disservice.

Odds are, they just resent the advice, or even if they agree with it, how
likely are they to use it if it's free.

Seems like sharing ideas and free advice is a lose-lose.

If you really want to help people, make them pay for it!

------
zeedog
In my limited but growing experience dealing with free and paid users, I see
it this way: when a customer pays for your product, it's like they're saying
"I trust you." When you charge for something, you are asking for someone's
trust because you believe in what you've created. You owe it to yourself to
make people pay for what you build.

Maybe Aladdin said it best...do you trust me?
(<http://www.youtube.com/watch?v=kkwMEwenaQQ>)

------
nkurz
But what's the alternative?

Assume that Posterous was charging for their services with a monthly fee. Is
this any guarantee that they wouldn't take the same offer to sell? Or would
you just be out your monthly fees and still have to move?

The more money they have coming in, the more desirable an acquisition they
become. In theory, they might have less pressure to sell if they have cash
flow, but it's not clear this is enough to counteract their increased appeal
to an acquirer. Rather than indicting "free" services, it would seem more
rational to avoid "cloud" services whether paid or unpaid.

Perhap you should choose only services from companies you feel are too large
to be acquired (Google) or companies whose code is available to run on your
own if they were to close down (Github). Or stick with self-hosted solutions
with that plan that you can change hosts as necessary.

For any company you chose, I think you have to presume that while they will
try to keep their service running, they will be doing so primarily out of
self-interest. The more you can align your interests with theirs, the better
the chance that the service will continue and you won't have to move.

~~~
robryan
I think being paid there is more chance that they would be acquired for their
product and not just the team. There is still no guarantee of course.

~~~
ahoyhere
Paid product companies don't get bought nearly as often, either. In a lot of
ways it makes you an _unattractive_ acquisition target.

------
mark_l_watson
I think that Reginald is talking about social media platforms' APIs and other
infrastructure that 3rd parties can connect to for whatever business they are
in.

It is valid concern that, for example, Facebook may decide that providing
their graph APIs is suddenly not in their interest and cut off the service.

Same thing happened with some Google APIs like the Buzz feed. I only briefly
used the Buzz feed for a small customer task one time, and the termination of
Buzz and the feed does not hurt me, but it could have.

I find the user experience using G+ to be good, but the APIs are not in
anywhere near a form where I would build part of a business on them.

The situation is different with other infrastructure like AWS, Heroku, and
AppEngine: I understand the long term business model of the providers and
trust that these services will likely be available for a long time.

~~~
mark_l_watson
From reading the other posts, I see that I misinterpreted the article.

Saving blogging and other self promotion information is important. I hosted my
own blogging solution in the past, but now I compromise: use Blogger, map it
to a subdomain on my main web site, and make sure I back up Blogger's data so
I could re-host it with some effort. So, I trade off some control for making
life easier.

------
dkrich
I think we're currently in the era of the government-funded type of web
projects that serve a great purpose for a large number of people who wouldn't
otherwise be willing to pay for them. Right now the climate is such that
developers with an idea can very inexpensively get that idea built and used,
which can in turn, bolster their own resumes or possibly even result in an IPO
exit or acquisition.

Profit is not crucial because the only asset that has seen substantial
investment is time. However, I don't feel sorry for consumers of these
services. The services are, after all, free, and don't usually make any
guarantees that they will be around for ever. In this case we're talking about
a blogging website that's been around for a few years, not a bank. A little
perspective helps a lot.

------
obtu
That's nice, but what's the alternative?

Putting the onus on contributors to back up what they publish would be a crap
shot; even with backups there may not be a plan for recovery, and recovery may
be impossible if the contributor is unable or unwilling to handle it
themselves.

Commenters and other participants have it even harder, due to the variety of
sites and platforms they participate in (Lazarus can help saving one's own
comments now that CoComment is shutting down, wget can be used to rescue
content with advance warning).

Maybe the best alternative would be a commitment from the platforms to keep a
low-bandwidth, possibly throttled archive available; failing that, to
outsource the work to an organisation like the internet archive. This would be
a step up from the current standard, which is, at best, a period of warning
(lets external participants make backups), or a commitment to data liberation,
which unfortunately ends up with many contributors failing to republish their
content.

~~~
philwelch
It's probably well worth questioning the value of any of this crap above and
beyond whatever immediate social value it gives. I can't think of anything
more ephemeral and useless than blog comments--does it really matter whether
those are backed up for the ages?

It's probably worthwhile giving your users a chance to recover their content.
It's probably _not_ worthwhile to be a digital packrat.

~~~
smacktoward
_> I can't think of anything more ephemeral and useless than blog comments--
does it really matter whether those are backed up for the ages?_

You might be surprised. Archaeologists are forced to derive much of what they
know about vanished cultures from bits of ephemera from their daily lives --
things you'd find in a midden heap, like shards of discarded pottery, spat-out
plant seeds and gnawed animal bones, and the like. Why? Because _those are the
things that survived._

Would our understanding of those cultures be richer if we could hear their
songs and read their poetry? Undoubtedly. But we can learn an awful lot about
them from their ephemera, even without that.

~~~
philwelch
If we're worried about archaeologists, we should inscribe our blogs on stone
tablets and bury them underneath our houses. Short of that, backup tapes will
decay, hard drives will fail, and if the data somehow stays alive in the
"cloud" in a form that's accessible to archaeologists of the future, then
they'll surely have an utter surfeit of data.

------
chrislomax
This reminds me of the advert Google put out recently where it shows a father
documenting his daughters life in YouTube, and sending her emails (from birth)
with the videos on with a note of what it was all about in the email. She
comes back to the email 20 years later and sees the document of her life with
it all in.

I just don't buy it, how do we know Google will be around in 20 years, never
mind free solutions not supplemented with paid for services?

Nothing is guaranteed, nothing is secure, nothing is forever. I wish I could
say I could make a solution that would ease this problem but my solution might
not stand the test of time. Shit happens! Saving it to your hard drive means
you are only backing it up to something that could explode (dramatisation).
Further backing up to the cloud is relying again on a solution that you are
expecting to work and stick around, it may not!

You need to go into any situation like this with some level of acknowledgement
that it just might not work.

------
charlieok
For a second, he had me thinking that there were actually cool office
buildings somewhere filled with interesting people providing free office space
complete with coffee bars.

That actually sounded like a great deal. Easily worth the hassle of possibly
having to move out and find space elsewhere.

------
ryanoneill
This happens repeatedly outside the startup world as well. The company I work
for has relied on technology that Microsoft developed, supported, and
subsequently walked away from. That is the nature of both business and
technology.

------
tgrass
Is the De-Stijl Schroder house now an office?

~~~
raganwald
No, it’s a museum. It just happens to be a favourite building of mine and an
excellent example of making a complete break from convention, just like many
start-ups :-)

------
kappaknight
Is it a little ironic that the blog is posted on Posterous? I only say that
cause the complaint may disappear before its intended effect ring through the
rest of the startup community.

~~~
raganwald
That was one of the things that delighted me about writing it!

------
justinkelly
I've setup <http://p.ostero.us> It's a paid Octpress based blogging service
for the ex-posterous users - not more free rent - using an awesome blog
platform - and a ongoing income generating service

Hopefully this will help other posterous user wondering where to go

* <http://news.ycombinator.com/item?id=3713092>

------
ValG
An interesting satire on what's happening in the tech world, however, I'd be
hesitant to be quite as critical. In the end, the service is free, it's not
something that has to be provided. You should enjoy it while it's there and
appreciate it, not feel entitled to it. Is it a little bit of a dick move?
Yeah, but then again, what would you do if you were in their position?

~~~
telent
I don't think the issue is so much "what should they do now", because what
they should do now is constrained by what they _can_ do. The issue is "what
should they have done in 2008?" - should they for example have said "please
note that our current business model is not sustainable, and while you are
welcome to enjoy it while it's here you are cautioned not to behave as though
it will be here for ever"? Providing a limited, ephemeral, or best-effort
service is a perfectly OK thing to do provided your service users know that's
what you're doing and can (as raganwald says he has) tailor their behavour
accordingly

~~~
ValG
Great point, but it's unbelievably difficult do carry something like that out
practically. Who are the CEO's customers, the market the company is targeting,
or the company's employees? I'd argue both, the CEO is the visionary and
cheerleader for the staff, and also the public image for the customers. If you
come out and say we are not sustainable, guess how many employees you'll have
at the end of the week? Guess how many customers? After putting 100's or
1000's of hours into something, you'd be hard pressed to find anyone willing
to go that route

~~~
Drbble
This is where honesty has to be given its due. I expect A CEO to honestly
state the max plausible downside and upside of their business, and to have a
decent argument (which I take with a grain of salt) for why they expect the
upside to happen. Then I make my own estimate, somewhere between the extremes,
and act accordingly. The CEOs I respect (as employers, vendors, and
investments) behave this way.

~~~
ValG
not including warren buffet (ironic that he's considered one of the most
ethical guys in the business and he's on top of the world), name a few CEOs.
Not a call out, I just want to know who they are so I can start following them

~~~
Drbble
Joel Spolsky and Stackoverflow is a good example. They build a quality
product, treat users with respect, and (I guess) are on a good track
financially, and make their money in an aboveboard way. They even go so far as
to build in some defenses (like Creative Commons licensing) to proactively
preempt future possible evildoing.

Stephen Wolfram (though an egomaniac that has picked some unfair fights
against his employees) and his company Wolfram Research built a rather solid
offering in "old style" proprietary commercial software with Mathematica and
now Wolfram Alpha, making his money on incredibly high quality and pouring
decades of revenue back into product development and offering a generous free
tier of access and deep discounts for educational and personal use.

~~~
ValG
Thank you

------
markkanof
So where in the world does this kind of thing happen? To me it sounds like a
made up scenario and then an argument against the made up scenario. Could just
be that it doesn't happen in the parts of the world that I have lived and
worked though.

UPDATE: Thanks for the clarification everyone. I guess I'm way too literal
early in the morning.

~~~
rkudeshi
He's talking about startups getting acquired and then shutting down (see the
last link of his post referencing Posterous).

------
runako
Spot-on. I looked at using Posterous, but decided against doing so because
there was no way for anyone to pay them.

------
neosavvy
In response to that all I can say is I have a landlord issue as well.

<http://bitchlandlady.tumblr.com/>

------
flavy
Use a Key logger

------
aneth
This is an interesting analogy, yet laughably impractical and wrong.

Paid business models do not guarantee success. If they did, Posterous would
have charged. It seems land is so cheap, landlords have concluded the best
possible chance to find a business model is to be a free landlord. That is a
great world for tenants since they don't have to pay rent, and it's a tough
world for landlords since they have to maintain beautiful buildings with
donation boxes and ad banners.

Given the lack of tenant laws (imagine if there were tenant laws...) paying
rent is no guarantee of anything. You can be evicted, abused, moved around,
neglected, or anything else without warning or compensation. That's a good
thing, which demonstrates how strained and poor this analogy is.

Good luck finding quality, innovative, paid services to match Facebook,
Twitter, and Posterous. Let us know how that goes. You'll have some luck, but
I'm not sure your chances are much better. I call bullshit.

~~~
Drbble
Everything Apple and most of Microsoft is paid.

~~~
icebraining
Apple is an hardware company that writes software to go with it. It's apples
and oranges, if you excuse the pun.

------
shareme
I think we have missed the un-mentioned point...

What does this say about Twitter that they have to buy product staff? What
does that say about the value of their IPO?

The Thiel proposition would be, long-term, we should be betting against every
one who IPO'd thus far.

~~~
jpdoctor
We saw a lot of this during Internet bubble v1.0

The issue is that a bunch of folks who will flip IPO shares need to quote a
number-of-employees. The implication is that a high number of employees is an
indicator of the viability of the company.

