However, all of this brings up the issue of functionality in comparison design. I'm sure there were websites at the time that had spent money and time on a good design, but those aren't the ones that succeeded. The ones that ended up becoming the internet giants of 2011 were the ones with hideous interfaces and childish logos, but evidently with great functionality. Does that mean that all the time we are spending on design is useless, or that design itself is useful and has become a bigger factor in what makes a website successful today?
I fully agree with you there. If your product has potential, design is not a key factor. Design becomes a key factor when your product characteristics are similar, if not equal, with competitors. That's the main reason we are seeing a surge of design in web/UI lately: higher competition and lack of innovation.
This also reaffirms my theory that getting there first, when it comes to features, has much higher impact than long design phases (that can eventually be postponed).