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I think the issue here is simply Money In < Money Out.

As an outside observer, it's easy enough to realize that Posterous could have monetized but that doesn't really answer the question of whether they could have monetized _enough_ to pay their ongoing costs.

Most likely they were bleeding money at an extremely fast rate and probably running out, fast, which is why they sold for $10 million and over time under Twitter's wing weren't able to figure out a monetization strategy that would be worth the ongoing costs of running the business. The case is even more convincing once you consider the opportunity cost of keeping high-quality talent away from Twitter.

From where I'm sitting, you hit the nail on the head.

They COULD have monetized, theoretically, but not once the die was cast.

Yes, lots of people have built CMS platform businesses where they charged money. But Posterous was probably, as you say, bleeding money, because they were not designed from day 1 to subsist on $12-49/mo subscriptions.

The choice of the "grow big or go home" model of startup results in a catch-22 when you cannot grow big, nor do you want to go home. The only thing you can fall back on is (if you're lucky) a 7 or very low 8 digit acquihire. Which is what this always has appeared to be:


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