Thinking that every startup has to start charging its users now because the economy is bad is just as mistaken as thinking a few years ago that no startup had to charge its users because the economy was good.
However, I think what we saw in the last 5 years was an unhealthy focus on free where products that people may have been willing to pay for were driven to free because they were either subsidized by VC dollars, subsidized by cash cow business like Google's search, or eventual acquisitions by acquirers not necessarily looking for sustainable businesses. This may well have eroded a lot of potential value in that consumers have gotten used to these services being free and will likely not be willing to pay for them in the future.
You already do.
A lot of genuinely smart individuals post, comment, or author a lot of the content that appears here. Many accomplishments abound, including:
1) selling a shareware app written years ago.
2) founding and editing the top tech blog.
3) making a lot of money playing poker seriously.
4) completing their degrees early in life.
5) having written thousands of small and large programs over the past thirty years.
6) having an influential role at a company ten years ago.
Those who are in the game and not for the glitz are the ones whose opinion matters, and that opinion is to go for it, by definition. They go for it, and make decisions that put the company, customers, and themselves in the best position whenever decisions needs to be made.
That's what I meant: that YC is happy to fund startups that don't make money initially, if that's the right strategy for that kind of startup. So if you're planning to start the next Facebook or Twitter, by all means apply.
Since this articles was basically agreeing with the original 37Signals article, I'll comment on that as well. 37Signals tends to sensationalize their thoughts and try make any model that isn't theirs sound tired or thoughtless. It's fine for driving traffic to their blog and they are successful at what they do. They aren't billionaires either nor have they run a large scale company where their "getting real" concepts aren't quite so easy. You can't analyze every problem down to a simple solution.
They should be looked at as leaders for companies who have early revenues and profitability but their credibility for commenting on other models is extremely questionable and needs to be taken with a grain of salt.
Where does that leave the others dependent on similar user-generated-content-with-a-social-angle (which would describe so many of the consumer-oriented YC companies too)? Call me pessimistic, but I just don't see how the numbers add up to profitability, even ramen profitability for most such sites.
I have been in situations of ramen profitability and after a while (like 2 years) it gets tiresome. Even the most relentlessly resourceful people tend to throw in the towel and move on. This recession (depression?) looks like it will be around for a while.
You cannot do better than that. Optimal isn't always great, but it is optimal.
I'm guessing if they chose to they could get rid of employees, the swish office, and be profitable pretty much when they decide to, if they can't grow earnings or get acquired.
I wasn't saying it would disappear, just that it would become less common. If we can figure out a way to measure, I'll take you up on that.