I think you guys are missing the point of the article. Of COURSE they aren't discouraging entrepreneurship and of course people need to have an exit strategy in mind. However, the article is advising against people who think that building a business with no revenue model will get them VC funding... heads up, it WON'T. Number of users do not always equal money. Just because your business has 'potential' doesn't mean VCs will invest in it. They will invest in it if it has results. The reason Facebook bought it is because they are in the business of making money off of sheer volume of users. Nobody is bashing Facebook here. Nobody is bashing anybody here. It's just saying that stories like Instagram are extremely atypical of even highly successful entrepreneurs and to try and do what they did is simply a crapshoot.
I can't agree with this more. I recently came across this issue and I struggled with it for months, looking back I am not sure why. The answer is really easy.
I basically had three main choices:
1) I could charge all users
2) I could give it away for free and try to build a user base.
3) or I could sort of do both at the same time.
The second option (to give it away for free and build a user base) is very tempting. After all, we see companies like Instagram and 4square getting these crazy valuations. I'm sure that there are some companies that are in the same boat as instagram that are being bought out for millions and just not getting the publicity. I don't think that this is an unrealistic
goal at all.
But it's all about the money. Time is money and I'm not planning on waisting my time with wishful thinking.
The first option also looks nice, but in some instances it could possibly stunt growth or lead to slow growth, I think it depends on the business and the market. I for one, have never used instagram and I never would have paid for it. But some people would. So maybe it is good that instagram didn't charge.
I am striving for something more middle. The factor that I keep in mind is that
I want to get profitable as fast as possible, so that I can still do what I want to do and keep my company
flexible enough for whatever may come in the future. Too many people don't focus on getting profitable. But at the same time, so many focus too much on becoming profitable. And that in itself is a stunt factor to potential growth.
I am betting there is a social media bubble forming.
I agree with this. If you look at the internet it's becoming a giant social network. Sites are linking to Facebook, Twitter, and everything else like crazy. Sites are using their own blogs, message boards, and so on. Google is on the verge of changing the way that they show results to make the results more personal. Bing is trying to incorporate Facebook into their searches. Facebook even changed for the Timeline for a major reason, they didn't just change for the hell of it. Big tech companies (and non-tech companies) have stake in the mainstream social media. Sites like Twitter have changed the way that people communicate in the middle of a Crisis. And social media is a tool that is used in just about every single industry. The internet has become a major avenue for sharing, innovation, knowledge transfer, and maybe it is even helping with this whole globalization thing. The internet has defiantly changed over the last ten years and it makes me very happy to see this change as I build my own social network. Some people may say that the market is saturated, but I see gold.
And as technology becomes more fused with our lives, will the bubble ever pop? Well, maybe if a huge solar flare turns off the lights....
