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.
Reddit is built on venture capital. It has raised over 1.3 billion dollars this way. You can find out how Reddit is financed over here.
Reddit is absolutely a startup, and that’s their problem. They never managed to turn their startup into a real business.
IMO this loss-leader venture capital bullshit undercutting real businesses should he illegal. Sadly for most internet users, banning that shit would make most internet services more expensive.
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.
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.
deleted by creator
Reddit is built on venture capital. It has raised over 1.3 billion dollars this way. You can find out how Reddit is financed over here.
Reddit is absolutely a startup, and that’s their problem. They never managed to turn their startup into a real business.
IMO this loss-leader venture capital bullshit undercutting real businesses should he illegal. Sadly for most internet users, banning that shit would make most internet services more expensive.
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.
deleted by creator
Wasn’t surprised, but I am disappointed.