Perhaps VC, or even the whole funding side of the startup world is unsuitable an approach which does not occasionally produce Goole-sized companies. Maybe different investors can take advantage of different areas on the risk/reward curve.
In any case, the current wave proliferation of startups is premised on the idea that relatively little cash is needed to get a beachhead. I think it's also true that there are viable ideas that would generate millions or tens of millions per year, but not billions.
I like OKCupid as an example. They actually came out with a blog entry that outlined what they saw as the problem with paid dating sites (a big industry), that their free site works better. It made sense. Free sites have more users, so more people to meet in your area. They don't need dishonest pay-to-reply gimmicks. A bunch of reasons. OKCupid is a popular service with a lot of users. Even if they are generating far less per user than paid subscription sites, they are still able to generate some cash.
If generating less cash by being free results in a better service, the free service should win. If they can make enough to be profitable, pay employees well and keep the service going that's great. Then they sold the company (and pulled that blog post). The site exists, but it's stagnated a little. It seems like a good case study, because there seems to be pressure that builds up for such a service. They're popular enough that people on the street around the world know the name, but not making the kind of dose that interests big money. It seems like there is a pressure for these companies to stop existing. They are pressured to risk massive revenue growth, sell, whatever. The bottom line is that it seems hard for something like this to remain like this. There's a belligerent invisible hand nudging them off the game board.
It's a pity. A dating site isn't saving the world but for people who meet up (or hook up) on the site, it's a good thing.
We would be better off if companies like this could continue in this state. Why can't a business that size continue to exist?
At the end of the day, the investing strategies and internal logic of VCs or angels should not be the sole determining factor for what businesses can exist, should it?
Perhaps VC, or even the whole funding side of the startup world is unsuitable an approach which does not occasionally produce Goole-sized companies. Maybe different investors can take advantage of different areas on the risk/reward curve.
In any case, the current wave proliferation of startups is premised on the idea that relatively little cash is needed to get a beachhead. I think it's also true that there are viable ideas that would generate millions or tens of millions per year, but not billions.
I like OKCupid as an example. They actually came out with a blog entry that outlined what they saw as the problem with paid dating sites (a big industry), that their free site works better. It made sense. Free sites have more users, so more people to meet in your area. They don't need dishonest pay-to-reply gimmicks. A bunch of reasons. OKCupid is a popular service with a lot of users. Even if they are generating far less per user than paid subscription sites, they are still able to generate some cash.
If generating less cash by being free results in a better service, the free service should win. If they can make enough to be profitable, pay employees well and keep the service going that's great. Then they sold the company (and pulled that blog post). The site exists, but it's stagnated a little. It seems like a good case study, because there seems to be pressure that builds up for such a service. They're popular enough that people on the street around the world know the name, but not making the kind of dose that interests big money. It seems like there is a pressure for these companies to stop existing. They are pressured to risk massive revenue growth, sell, whatever. The bottom line is that it seems hard for something like this to remain like this. There's a belligerent invisible hand nudging them off the game board.
It's a pity. A dating site isn't saving the world but for people who meet up (or hook up) on the site, it's a good thing.
We would be better off if companies like this could continue in this state. Why can't a business that size continue to exist?
At the end of the day, the investing strategies and internal logic of VCs or angels should not be the sole determining factor for what businesses can exist, should it?