They even state "for many apps, like Instagram [...]" as a good example when revenue is not needed. I'm flabbergasted.
It is very unlikely that you will be extremely popular and not find a way to make money. It is very likely that you can figure out a way to make money but not be very popular.
Making money is, relatively speaking, easy. Focus on the hardest problems you have first, not the easiest ones.
Is this a strategy people should always aim for? No. But there are legitimate reasons why revenue should not be the top priority, and this post does a good job at narrowing it down.
Without revenue you can say it would have been very hard for them to, you know, exist as a company for some period of time.
Same thing as being a programmer. MySQL isn't the correct DB for everyone, so it helps to know when it's appropriate and when it's not.
(And regardless, eventually you will need to make money)
If you manage to be sneaky with an exit strategy, you never need to make money as you bail with a ton of cash before that becomes neccessary.
And when things like Instagram come around, the amount of people making businesses purely with the motive of sneaky exit strategies starts to completely overshadow the amount of businesses created that are genuinely valuable.
Then things can get very messy.
But putting off revenue != built to flip. Having a ton of usage and figuring out how to make money is easy. Getting a ton of usage is hard. They are focusing on the hard problem first, and the easier problem second.
Here's evidence I have: Steve Anderson, one of Instagram's earliest investors and a board member, is also on our board. Just because they're not trying to make money on year 1 doesn't mean they weren't ever planning on making money.
In addition, if they wanted to build a large independent business why would the sell out so early?
What evidence do you have to the contrary?
Also, I never alleged that Instagram specifically was built to flip (although I can see little to suggest that it wasn't, although that is not the same thing), I merely pointed out that phenomena such as Instagram encourages a lot of people to enter the market with that as their motive, often enough to drown out other businesses. And that kind of behaviour was a major factor in the death of the last web boom.
Furthermore, the namedropping of someone you share a corporate interest with is generally an admission of probable bias and using it as an argument in favour of your position isn't particularly convincing.
That sounds more like faith based economics than anything else, of couse some of them must be doing this.
And offering a service for free at point of use can often be much easier than turning it into revenue later, especially if you have millions in the bank from investment already. There are plenty of stale corporate corpses littering that particular road, but with founders that did quite nicely out of it.
I'd love to hear more from Richard about how they tested the impacts of moving from the $5 to the free plan.
And yes, it's definitely a solid strategy to delay revenue for users. I'm sure someone will argue this is Web 1.0-bubbly thinking. But, provided you're doing it in the way that Richard suggests, it's not totally insane. Twitter might not have found a great business yet, but at least they've gotten past one of the big hurdles -- getting people to come to the party.
Might as well take it a step further and consider waiting on building a product. Why define your business with a real product when you can, like Zombo.com, do anything?
But enlighten me good sir: How can I get some pesky revenue? I at least don't have a product to get in the way but would actually like some money.
Thank you kind sir!
If you don't want to take money or you're not in a market that is strongly viral then obviously you have to be concerned about revenue much earlier. If you are though then focusing on revenue in the short run may be detrimental.
Really? "Most people" with a new business end up with stable but unexciting businesses?
I suspect most people end in failure, not Stable Business. In a post full of deeply questionable logic, this little gem takes the cake for me. I suspect some anecdotal evidence from otehr commenters will back this up or that there is a bevy of statistics to prove that this is true, even in the rarefied atmosphere of web companies.