Why Startups Don’t Make Money Anymore

http://wyattpeak.com/2009/01/15/why-startups-dont-make-money-anymore/

by wyattpeak • 18 years ago

15 15 18 years ago

wyattpeak.com

tower102• 18 years ago

This is a gross generalisation. Plenty of startups are making money.

ajkirwin• 18 years ago

Name, say.. 10. That are actually MAKING money, VC rounds and such don't count.

catone• 18 years ago

A ton of SaaS apps are, I think. Like Lighthouse, the 37signals apps, Freshbooks... SlideRocket probably will in the near(ish) future, if they're not already, etc. Then there's the micro ISVs like Balsamiq.

Plenty of startups are making money.

(Quick caveat: I haven't actually read the article yet... so it might be talking about a totally different kind of startup.)

tower102• 18 years ago

Most of the startups that are making money are the ones you've never heard of. This is a pointless exercise...however, here are some that I believe are making money that you may have heard of (happy to be corrected as I don't know for sure that they're all making money):

1. GitHub 2. eBuddy 3. Dogster 4. StyleDiary 5. ThisNext 6. Kaboodle 7. Stateless Systems 8. RedBubble 9. Wufoo 10. NationMaster

Rod• 18 years ago

Dude, not all startups are in the software business. I know a few startups in the hardware business which are growing spectacularly. Contrary to popular belief, not every startup wants to be the "next Facebook" ;-)

ramchip• 18 years ago

Another post saying that web companies should charge their users instead of just relying on ads.

eli_s2• 18 years ago

This is really obvious advice, but people need to hear it. There are loads of developers working on the next great social consumer facing product that will revolutionize the way people interact yada yada yada - the only downside being that they have no idea how they will monetize.

jskopek• 18 years ago

I'd agree with you on the point the site is trying to make, but what I find interesting is the rationalization for this behaviour.

The meat of the article, IMO, is this paragraph: "This system breaks down, however, when products stop costing anything to produce. The cost of provisioning service to a single user of a site is effectively zero, close enough that it can seem worthwhile to give it away in order to expand your userbase. Unfortunately, in doing so, you lose the revenue stream which has supported businesses since the dawn of commerce."

defunkt• 18 years ago

The author seems to be confusing social media with the entire web industry. Zappos, Threadless, Etsy, Basecamp... there are plenty of newer sites making money by charging for goods or services.

As far as innovative revenue models go for social sites, I've always held LiveJournal in high esteem. I don't know the status of the site today, but five or so years ago you could buy a premium account then pay for add-ons: more photos, privacy features, and the like. Last time I checked out WordPress they did something similar (pay $5 to get custom css, etc).

jbarciauskas• 18 years ago

This is absurd on it's face. The marginal cost of software has been 0 for almost three decades ( arguably, it has 0 marginal cost by definition). That didn't stop Microsoft from becoming one of the largest, most successful companies in the world. The issue with social media is the lack of barriers to entry, plus the limited value offered by most social networking sites. If I want to interact with my friends, usually I will just call them. Facebook is a fun distraction, but it is not providing me with a service I value enough to shell out cash for, and if they did charge, everyone would just pick up and move on (cf Friendster, not that they charged but that users left en masse).

josefresco• 18 years ago

It doesn't matter what your plan to monetize is if you don't have the users/traffic.

Every anti-advertising blog post and article skirts around this inconvenient truth.

Why Startups Don’t Make Money Anymore

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