Many startup companies run mostly on VC money instead of actually making enough revenue.
Due to the way investor money works, you can keep your company running on VC money for many years. Making the company profitable in the early stages isn’t entirely necessary as long as the investors get their money back within a reasonable time period.
The idea is, that if you’re able to make your shiny new service very popular, that will be the valuable product you can eventually sell in a merger, IPO or whatever. In some cases like Skype, the intellectual property was also an important part of the deal; not just the userbase. After that, the new owners are free to enshitify the service as much as they like. It’s their problem to make the service actually profitable in the long run while the founders get to drive their Lamorghinis in Dubai.
That’s when the new owners really have to crank up the data leeching and ads, which will kick out a decent percentage of the previous users, but that’s ok as long as enough of them remain.
It’s depressing, really. People have been misled that the “everything in exchange for nothing but eyeballs” model is viable and that’s why the general population keeps moving between problematic giant platforms.
I understand why they don’t want to pay. Paying for things sucks when you can get them for free elsewhere. Open source and community led projects like Lemmy show that things could be done better. Lemmy development is largely funded by a nonprofit foundation, Lemmy servers are run by volunteers, Lemmy apps are often open source or at least free. However, all of this free stuff comes at the cost of glacial development speeds. Lemmy is already running into an issue where they need to match certain goals to continue receiving funding from NLNet, pushing common fesurre requests and bug fixes down the priority list.
As a developer, it’s a little sad and to see the downvotes come in the second I tell people to pay for the stuff they use. I always just assume the people who do that are kids or people without jobs who can’t afford to pay and are frustrated at the barrier to entry apps are throwing up.
I want VC money to make everything free for me, too. Put all of the risk on some rich people and get free shit in return. But you can’t reap the benefits from that without the risk of businesses switching over to money making strategies when the free money disappears.
You’re ignoring that the users and in many cases the mods were the ones adding value to Reddit. It’s a running joke that Reddit corporate is always working on things nobody asked for. Reddit has had 18 years to figure out how to figure out a profitable ad business and they’ve failed miserably. I think charging for api access to put up a barrier for people to continue to add value to the site they own is stupid and short sighted.
It’s absolutely sustainable- but once you aren’t satisfied with sustainability and want it to produce an ever growing profit, that’s when things start going sideways and eventually downhill.
I guess the era of getting everything for free wasn’t entirely sustainable after all. Who would have thought.
We never got anything for free. That’s not how capitalism works my dude. We paid, and are still paying, with our data. Only now they want more
Many startup companies run mostly on VC money instead of actually making enough revenue.
Due to the way investor money works, you can keep your company running on VC money for many years. Making the company profitable in the early stages isn’t entirely necessary as long as the investors get their money back within a reasonable time period.
The idea is, that if you’re able to make your shiny new service very popular, that will be the valuable product you can eventually sell in a merger, IPO or whatever. In some cases like Skype, the intellectual property was also an important part of the deal; not just the userbase. After that, the new owners are free to enshitify the service as much as they like. It’s their problem to make the service actually profitable in the long run while the founders get to drive their Lamorghinis in Dubai.
That’s when the new owners really have to crank up the data leeching and ads, which will kick out a decent percentage of the previous users, but that’s ok as long as enough of them remain.
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The downvotes in our comments tell an interesting story. It seems that people don’t want to hear about the strange world of VC money.
It’s depressing, really. People have been misled that the “everything in exchange for nothing but eyeballs” model is viable and that’s why the general population keeps moving between problematic giant platforms.
I understand why they don’t want to pay. Paying for things sucks when you can get them for free elsewhere. Open source and community led projects like Lemmy show that things could be done better. Lemmy development is largely funded by a nonprofit foundation, Lemmy servers are run by volunteers, Lemmy apps are often open source or at least free. However, all of this free stuff comes at the cost of glacial development speeds. Lemmy is already running into an issue where they need to match certain goals to continue receiving funding from NLNet, pushing common fesurre requests and bug fixes down the priority list.
As a developer, it’s a little sad and to see the downvotes come in the second I tell people to pay for the stuff they use. I always just assume the people who do that are kids or people without jobs who can’t afford to pay and are frustrated at the barrier to entry apps are throwing up.
I want VC money to make everything free for me, too. Put all of the risk on some rich people and get free shit in return. But you can’t reap the benefits from that without the risk of businesses switching over to money making strategies when the free money disappears.
Please tell me how it really is.
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Wasn’t surprised, but I am disappointed.
You’re ignoring that the users and in many cases the mods were the ones adding value to Reddit. It’s a running joke that Reddit corporate is always working on things nobody asked for. Reddit has had 18 years to figure out how to figure out a profitable ad business and they’ve failed miserably. I think charging for api access to put up a barrier for people to continue to add value to the site they own is stupid and short sighted.
It’s absolutely sustainable- but once you aren’t satisfied with sustainability and want it to produce an ever growing profit, that’s when things start going sideways and eventually downhill.
Late stage capitalism in action
We never got anything for FREE.
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