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>This is especially problematic in the Web 2.0 / Freemium world where too many company build their business models around trying to build massive scale of free customers and then convert a small share to low monthly payments. I guess it has worked for some companies? (Basecamp? Who else?)

Dropbox? Skype? I feel like there's a lot of freemium companies that make it.

I like this message though. Good advice for not just startups.

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It's not efficient to hunt rabbits. You have to lay traps and just wait for them to come. You can eat them as soon as they are trapped (sell them an app) or keep them in the trap (sell them a service, like Dropbox, or rent them to the zoos, like all AD/social-based sites). You have a problem when your rabbit trap starts attracting deers (the elephants are too big to see it) and you're not prepared. They can break your trap and also release all the rabbits.

The advice is that successful companies like Dropbox and Skype are so rare, that referring to them as a model is itself a trap. The chances of succeeding here are incredibly small. For every Dropbox, how many similar companies are there in the exact same space are there that have failed or are just barely surviving?

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