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They transitioned that to a paid feature because they had to keep the lights on.

Small groups of engineers can do amazing things but in most companies amazing things worth doing run out and staff keeps growing. Salaries need to be paid and diminishing returns start.

I have been thinking about the economics of being done with a piece of commercial software. Shut down feature additions, lower the price in regular increments, and open source after a high bar of total revenue is reached.

Alternatively work out a company sale that doesn't include the name or the product. Sell the team, the office space, the experience, and a copy of the product which must be rebranded or reengineered into something else but leave the original product and name on the market with a maintenance staff and original copyright.

The real problem is that everything is focused on becoming a thousands-strong workforce and a valuation of billions. IMO lot of software could be small or medium sized businesses making a small but steady profit. But the whole VC/startup culture has made this fundamentally unsexy.

It’s the issue of hypergrowth or ‘blitzscaling’.

Plenty of companies will deliver just as much, if not more, with a 30 person strong team, as they would with 600, or 10,000.

But a thirty person strong team isn’t going to get a multi-million cash injection unless they plug it all into a swanky office and an ever-growing wage bill.

I greatly admire Basecamp and it’s founders, DHH and Jason Fried, for completely bucking this trend. And they’re as successful as ever.

Instagram reached 100 million users and sold for over $1 billion with a 6-person team (they had just hired a few more people when they sold). Investors don't care how many people you have; they care about how fast the business is growing.

As one of the co-creators of blitzscaling, it's important to note that we're careful in the book to say that most businesses shouldn't blitzscale. Basecamp is a great example of how bootstrapping can work. You can also listen to the story of MailChimp on the Masters of Scale podcast.

Whatsapp, possibly the exception that makes the rule, had $1.5B valuation and $50M vc influx with a tiny team.

Because they had the user's phone numbers. This seemingly little thing is what made them valuable.

Bingo, right there. Once you have taken X bajillion dollars from a VC, you have to find some way of pretending that you can become worth that valuation (plus some profit for the VC's). Thus, a perfectly valid small-to-medium company becomes a moneypit big company.

You nailed it - Evernote is just trying to make their investors happy while doing there best to not piss off users TOO much. Having been in this situation myself I can tell you it's a not great for customers at all. But you do what you must to survive.

Engineers are expensive. If you want to even launch, you need money to pay people (if even just yourself.) Boostrapping does work (see Basecamp,) but that business evolved out of a consulting business and wasn’t started from scratch, so they had advantages of paying clients subsidizing Basecamp development. A new kind of “micro-VC” where 10x returns weren’t the goal might be a start, but then it would be tough to raise money without substantial validation first. So there is a chicken-egg problem.

They also came out of the golden era of blogging where you could develop a significant audience subscribed directly through RSS without requiring some middleman distribution or aggregator taking your eyeballs. I guess it can still be done today with social media, but there’s just so much content out there it’s much harder to develop a loyal user base like 37signals did back in the day.

Hopefully Evernote will manage to 'fail' into that kind of successful business, and continue focusing on their core product.

So much THIS. Thank you for saying it.

That's a much more customer-friendly version of a common late stage strategy in enterprise software: shut down feature additions, keep the price high, milk support contracts and if all that's not enough, sue your customers!

I like your sunset strategy better as a customer, but it sounds like something you could only really do if you don't have investors.

It's not just enterprise. You described Adobe. Their patent on tabs just expired.

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