It seems no company is happy with being the virally adored single product little niche 50 employee powerhouse.
It's so much sexier to bloat the org and then try to justify the economics afterward.
Imagine you had such a company, someone offered you $700 million for 10% of the company valuing it at $7 billion.
You don't understand why they'd value it that highly. But if you're willing to pretend you do for a few years, you can siphon off enough of that money that even your great-great-great-grandkids won't have to work a day in their lives.
Would you turn down that deal? Because I doubt I could resist it.
So yes DEFINITELY possible to do a 37signals, but you need starting capital. Or at least an ability to live for free for 24 months while you figure out how to make cash from your business.
Most companies of that nature are started by either of the following scenarios:
- Kid(s) from a middle-to-upper class family who can live off their parent/grandparent's money for a few years while they figure things out. Maybe even family throws in a few hundred grand as a gift to get you started. Definitely have collateral for a loan.
- Already successful founders who have the ability to drop 200-500k into their company to get started, and already able to live off their wealth.
If you don't want your billions of dollars I'll happily take them of your hands.
How do they know what they want?
There's a LCD across humans, the bare minimum - a place to live, food, and clothes.
I'd rather give them the option if possible.
It's easy to answer a question when there's no exclusive options.
By the way, when you have an option of cashing out at 700million (and killing your business) OR continuing to build a business that genuinely provides something good for the society (albeit maybe not as profitably), do think first what kind of lesson you are giving your kids when you make that choice. You may provide them with the money but not much meaning to spend that money in a good way.
I don't know where/when it started. It seems like one of those ideas that mostly the bottom 99% of the income spectrum hold onto.
Why the super-rich aren’t leaving much of their fortunes to their kids https://www.washingtonpost.com/lifestyle/style/why-the-very-...
8 billionaires whose kids won’t inherit their fortunes, from Facebook’s Mark Zuckerberg and Netflix co-founder Reed Hastings, to late Apple CEO Steve Jobs’ wife, Laurene Powell Jobs https://www.scmp.com/magazines/style/celebrity/article/31485...
Gates has stated publicly he plans to leave each child $10 million.
Buffet has stated publicly that his kids will only get $2 billion each.
Articles like the ones you've posted are just fuel for a false narrative.
There are lots of people in this world who have grown up wealthy and aren't anything close to the spoiled brat you are describing.
The kids go to prestigious private schools, where they get a better education than you, then get propelled into jobs that simply aren't available to most, like politics, or non-profit boards, and the like. Some will end up taking jobs basically recreationally, like my billionaire highschool teacher. They might be somewhat entitled, in the sense that they don't feel that their life of largely leisure is undeserved, but in our current economic system they're regularly told they're not wrong.
These are the terrifying rich, and the ones that are actively running the world. They're effectively checked out from the money economy, and spend their time primarily in the power economy. The illusion that "oh, rich kids grow up to be spoiled, ineffectual brats" only works to their benefit.
It's noticeably distinct from the feeling of "you can never truly fail" which is more common with the upper middle class and seems be significantly better for your long-term mental health.
I don't think this means you need to actually not leave your children gobs of money, but in my experience it certainly helps to act like you're not for the duration of your kids' childhood.
There's this really insidious meme that just because their parent(s) made astronomically absurd amounts of money, children should be able to spend their entire lives doing nothing productive, treating regular people like shit, and wrecking the environment all in the name of enjoying themselves.
I genuinely believe that every human being should be given the means to survive without having to work for it—even a bit more, because psychological needs are a thing, too. The vast majority of people have an innate drive to do something, to contribute to our world, to make other people's lives better, to create something real.
Being given enough money that you can just pop from NYC to Paris on a whim on the family private jet—or even just buy a new jet to do so, because the other jet is in use—is entirely different.
Being disconnected from work, and from people without enough money to treat other humans like animals, is genuinely an unhealthy thing.
You could make a better life for your kids, and a lot more people, without building "generational wealth". The alternative in this case is not "run reddit in destitution". I'd argue those who pursue your "winner take everything" approach are the ones lacking perspective.
- I can make $20M today and sell my company off, and I'm set for pretty much anything I'd want for life, and I don't have to work if I don't want to.
OR
- I can make $1 mil a year and run this company indefinitely theoretically, and have to keep working.
That's a more realistic expectation.
Furthermore, trying to start a company with no real wealth to start with is a massive challenge, which means you're not starting a company alone, you're going to some sort of investor. And investors don't like "lifestyle" companies, they like make big money fast, and sell.
So everything pressures you to go in one direction.
Edit: If you sell off, the investor is in control. And investors want to be facebook.
With the 2 being a buffer, and 2% annualized being an inflation adjusted return.
So, for instance, 5k/month spend gives you 6 million.
So that gives some slack. If 10 million and 100 million is the same infinity you've got some negotiating leverage to prevent yourself from selling your soul
I'm ok if using a 3rd party app means paying a modest fee to use Reddit and not see ads. I have no idea what a reasonable rate is, but Reddit Premium is not it. I don't get that kind of value out of it.
The really good move here would’ve been profit sharing on ads between Reddit and third party apps. But heck these devs were fine displaying ads for Reddit for nothing in return.
Reddit didn’t care.
Normally ads have strict requirements for the placement (show one ad every x amount of posts), which would be hard to enforce across all 3rd party clients. Not to mention that they might be targeted towards the user, measure exposure time, and record interactions. I think the only way to do this is having some sort of SDK, but they probably determined that the cost would be too high.
Second, Reddit had/has an opportunity to hear to actually dictate the ad placement rules themselves. They don’t need to promise a certain number of placement, but rather a certain number of clicks.
Finally, they could have made the ad API something that’s locked behind a human review until the app got popular enough. I agree that it’s simply not worth it to fully automate this. Realistically there’s less than 15 clients that would need to implement this.
I’d be making enough money to live and not worry. I’d have enough saved for my kids to get a pretty nice jump start too.
My great great great grandkids? I don’t care. Heck I can’t predict next week. Having that much money could end up having them get killed in a future revolution.
With growth enshittification will eventually come and people flee. Then a new cycle begins…
That said, TECH stock investors mostly are growth investors, because the dividends are typically fairly paltry.
But the point remains, that regardless of it's thin veneer of being the funding source of disrupters what VC really seeks is to use the stock market chicanery that major banks who underwrite FB do in order to rig the game in the favour for an obscene profitable exit: hence why they were allowed to buy pre-market in the case of FB.
Or my favorite from the pandemic: Doordash. wherein Softbank incurred so much loss after several years to consuldate market share in this stupid race to the bottom and had to cash in on the market being flooded with cheap money during COVID and getting that IPO to get maximum ROI from an otherwise terrible business model whose understanding of last mile logistics was incredibly poor to say the least, and had no problem exploiting its contractor model labour force or taking a large sum from it's restaurant owner partners.
Seriously can we just admit VC is mainly just banksters trying to do what they always done in New York or in London in the Valley, and other tech cities?
0: https://www.crunchbase.com/funding_round/reddit-series-unkno...
Why can't it be more sexy to run a sustainable small business? - I think they could run reddit profitable with less staff, which focuses on the core functionality instead of trying to grow into new markets and segments.
Sure, there is a risk that some new platform disrupts that segment they are serving, but even then there is enough of a longtail to prepare an alternative and hardly those bets on expanding reach works.
Let's look at Twitter as a sample case: the features which were successful, were the ones where they followed what users were doing and supported that (adding @-mentions, adding retweets, adding quote retweets, some degree of threading support, etc. all came after users used those things) most things where they added stuff their PMs invented is mostly forgotten already, but building all that cost resources.
(And then, of course, they spread their investments out so that the one big success that gives them 1000x their money back pays for all the companies that flamed out chasing inadvisable growth.)
Investor returns, obviously. The whole funding model is throw money, make it big, monetize, sell out.
I do think it would maybe be possible to make company like Reddit "just" be profitable and keep on chugging but that's not what the investors throwing millions at it want.
The funding model is antithesis to "just a sustainable company in their niche"
I'm all for the founders having a good life and having fun, but they shouldn't have to try hyperscaling.
Problems like that are entirely the creation of venture capital and stock market. The wider society have very little effect on that. And partially allows them to outcompete "healthily growing one" by allowing companies to run on negative income for years, even decades.
Investor mentality is what spawns that. The ability for people not caring about the company or the niche it is in to force the direction or buy out the competition.
And I don't think that can easily go away any time soon, and it is very double-edged sword as obviously some good had come from "someone with good idea getting money from investors to realize it"
What's sexy or not is determined more by the one doing the looking than the one being looked at. I find sustainable, non-exploitive small businesses much sexier, but I doubt most VCs do.
But I guess it's the same reason people participate in a lottery - the small chance of winning big is a bigger thrill than a boring investment.
Others start businesses because they believe in the product or service and the value it can bring to people. Making money is important because it allows that to happen, but isn't the primary goal.
Personally, I'm not going to say one sort is better than the other in some absolute sense, but my personality falls more into the latter camp. I have no interest in making money just to make money. I am interested in doing cool things, and need money to do them.
The third party clients hurt ad revenue, kill them. Once the stock is out the door the problems that result aren't going to hurt them, just the suckers who fell for it.
There's Valve or JetBrains, which are not even niche or small but very successful that have stayed private, focused and avoided money from the public markets. But yes the software industry desperately needs a Mittelstand economy. Probably won't happen without actually breaking apart some of the platforms though.
Historically breakups have increased total shareholder value so it would even be a good deal for investors. In Spain for example where Uber is regulated they're essentially just a software vendor rather than trying to capture the market. If they were just a 100 person company licensing software worldwide that sounds like a more attractive business than what they are now.
It's kind of hilarious how few people even manage to benefit from the system as it is, which is mostly just VCs, managers at bloated firms and people who get rid of their stock at the right time.
The investors want an exit, so they have to IPO. To IPO at a reasonable valuation, they need to demonstrate significant revenue potential. And to get significant revenue, they need to monetize the hell out of the userbase.
You can do that through:
1. Ads--monetize your user's attention.
2. Subscriptions--monetize your user's attachment to your service.
3. Surveillance capitalism--monetize your user's data.
Very few services have shown the ability to hit that 10x target with #2, and thus Reddit chose paths #1 and #3.
The lesson: Once again, for those in the back row 1) if you're not paying for the product, you are the product, and 2) don't build communities on closed platforms unless you're comfortable with the potential of a rug-pull.
But I would question the goal of building a business this size. Why do you want to?
Or don't.
Who decided every company must be a global blitzscaled decacorn monopoly?
The problem with this saying is that it implies that you can avoid being the product by paying for the product. But that is increasingly not true, and is a bad bet.
That mindset would view not spying on paid users as gross negligence. I mean, how many times just on HN have you heard the sentiment that "leaving money on the table" is always a bad thing?
I was on digg. I was on reddit. I was on Twitter. I was on Facebook. Every platform has its day, and I like investing in things for the long term. It's a much harder battle, but even my code is now used by MS/GitHub to train ML. It's so hostile and folks are so used to it that I feel like I have to tip-toe around saying "No, this isn't okay for me."
[1] https://pluralistic.net/2023/01/21/potemkin-ai/#hey-guys (credit to mostlysimilar! thank you! I despise Medium but hadn't found this link)
Um, no. It's Reddit being led by a corrupt CEO seeking short-term profits through an IPo(. That's not capitalism.
I'm also very curious as to what you would suggest as an alternative to "capitalism".