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Comment by kurtle | Hacker News Reader

This article disappoints me because it seems to boil down to:

  BAD: making money by selling software
  GOOD: making money by selling ads

So how do you make money selling ads? By getting a bunch of users and auctioning off their private information.

I wish more people in the position to fund software development would support a model where your users are your customers and not just eyeballs to be sold to the highest bidder.

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No, what you write down is just one implementation of the idea outlined in the article. The general case is closer to:

BAD: counting on the intrisic quality of your software to keep competitors at bay

GOOD: using switching costs / network effects as barriers to entry

That's not GOOD, that's profitable EVIL.

Barriers to entry are what capitalism is all about. (Real world capitalism, not the utopian capitalism from Econ 101.)

Patents, R&D, trade secrets, network effects, natural monopolies... all of these are competitive advantages that capitalistic companies want to have. It's the reason that "nobody else can provide what we do". Otherwise you're just trading commodities and you won't realize economic profits.

Now I'm not ascribing any morality to this. You can call it evil if you like. Just know that this definition makes 90% of businesses "evil".

Don't forget regulation. Complex regulation with a large compliance department to dot the i's and cross the t's is a great way to keep new entrants out. Why do you think there are so few new banks?

That's why this is a nice parable. The moral of the story is different depending on how you look at it.

(not being sarcastic)

That's a completely incorrect read of the USV thesis. What about marketplaces like Etsy? What about networked enterprise businesses like siftscience?

A better way to look at it is... If you put your users first, and create a site with enough utility and value to bring in a massive network of people..You'll be worth much more even if you have to start by monetizing with ads...but don't worry, eventually you can sell products and services between dentists and patients, dentist and vendors, and patients and retailers.

TL;DR put people first, your users are your defense. Monetization will fall into place if you have a network effect.

you left out the transactions part which is in the same sentence as the ads part. i would imagine, if this fable were true, that dentistry.com would make maybe 20-30% of its revenue from ads and 70-80% from transactions. that's about the ratio at Etsy. ads drive transactions so it's a good model for everyone.

Selling ads is no less moral or just than charging for software.

but ads are so hot right now!

http://imgur.com/gallery/qV1BzKb

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