CrowdVine also let people setup custom white-label social networks, though I suppose its founder didn't have as neat of a background story as a Ning founder.
It's probably a nice business model, but not a "startup" by PG's standards, since this type of thing doesn't grow rapidly, intentionally.
I love Hacker News, but my least favourite thing about it all is how we glorify 'startups'. It's honestly just a really weird business model, that seems like it's bound to inspire things like the recent Zenefits scandal, Uber and Airbnb's disregard for regulation, etc. etc. etc. I dunno... like this story implies, it just seems totally ass-backwards to focus on growth before you're profitable, and pretty unhealthy to boot.
I kinda have to agree. Obviously, I don't have hard numbers to support the notion, but having seen two full boom-bust cycles (I started working in tech in '97) and, looking at what feels more and more like the precipice of a third, I'm strongly inclined to believe that the "growth über alles" mentality that can tend to be a defining aspect of "startup-hood" has probably actually destroyed more good ideas than it's fostered.
Personally, I would love a solid business model where the point is to have flatter management / pay structures instead of making everybody rich. Enough that everyone gets paid well and has some autonomy, but decisions don't get locked up by too much democracy.
I've started to prefer (including by using it to influence where I spend money) companies that grow the old fashioned way: Make some money and use it to make a little more. Or heaven forbid, were bootstrapped.
Why? Seems from experience to be far less likely to produce an "Our Incredible Journey" message.
I don't want to sign up for a service, love it, find it useful and be told GTFO after 2 years, ps Google bought us.
I've also got very wary of using any new Google, Facebook etc service. Chances are, it won't last.
There's something incredibly unhealthy about the way it's all about getting to $1bn and to hell with the product, customers, that got you there etc. I also think the burn rates have got out of hand. Surely there's a better way than burning £20m a year to produce something you'll shutter without a second thought when it runs out. What happened to seeking profit and longevity?
Nice comment, you seem to address few of my thoughts on bad products, longevity and customer support.
I am a bit concerned though companies don't care about the customer and customer support any more... I wonder if they are counting on peoples laziness on searching and moving to an alternative product/service or is it as simple as there are no alternatives with different policies?
Good support is expensive and not terribly amenable to scripting, unless you want to do it badly (or not at all). It's certainly possible to differentiate by providing great support, it's just convenient (and very profitable in the short term) to not bother. Great support is hard!
I think the public have got far too accepting of little or no support. Yes it's easy to switch, but most people don't unless it's a commodity service - you have to risk the unknown, maybe migrate years of data with little certainty that support in the new home will be better. Sales support tends to be great (and unscripted from more aware staff).
There's a magic size, let us imagine it at 100 people where nearly all human endeavours become crap. Try getting support out of your electric utility, car maker, government, phone service, national charity, hard drive maker etc. Personally I think it's connected with the size where they will still hurt at, or at least talk about, your loss.
It's certainly possible to get far beyond this size and still give great support - look at Amazon and Apple. Amazon got far beyond that size before starting to become a bit rubbish. Essentially until they started ruining the brand trying to move into food, tablets, 3rd party merchants and everything. Apple have the advantage of their restricted OSX hardware, iOS app store and so on that they have a fairly known quantity to provide support for. I think the key to be in this category is what you think your brand stands for.
I think in many, particularly social spaces, it's easy to forget we're not the customer. eg, you can actually get responsive support out of Google adwords or if you buy a Nexus from them (not always great support, but they answer promptly enough). So we're never getting support for search, G+, Facebook or Twitter. I'm sure there;s scope to do it much better, even for the free services.
Lastly, I think specifically in the startup space when you're aiming for 20% growth a month, or even a quarter is going to make it far more difficult to do well. Especially if your offering is evolving as fast - even your staff will struggle to stay aware. So it becomes about great user stories, and outreach (PR) and devcons. Good for growth, but chances are individual customers get lost in the gaps. I think the tendency to shoot for an IPO or buyout is unhealthy here - individual experience matters less if you don't need to care about ongoing trading profit whilst getting big fast. That said there's plenty of services I don't think would have happened, or be great without being big. Small Spotify doesn't get music licences, small Uber doesn't have availability when you need it, etc.
I see your point. Now that you mention, it makes sense that the fear of the unknown may be preventing people from changing, even though they are not satisfied with they're current support.
Although, I think it can still be of a very high risk not to have a good support even when you want to be profitable in short term. I can see a few companies rushing into launching new/unfinished products, trying to get the market with their innovations before someone else. That can go really bad if they don't provide a good support for their new/unfinished/faulty product or service (maybe bad word spreading can haunt them?).
And yes, I can see the brand as a relevant part in this matter. The amount and quality of the support provided can definitely help defining a brand and what it stands for.
Great examples on Google products, Spotify and Uber! Regarding free products (search, G+, etc), I still think the free experience can lead to a product up-selling, cross-selling and perhaps in some cases to get customer's loyalty, so I think this kind of support, although non-profitable in short term, can still be relevant.
Startups, I don't have much of an input really.. it does look a bit overwhelming to me to set 20% growth a month goals.. so I don't really know what to expect.
Don't forget people don't usually switch because of support, more because something is not working or they've upset you. People can switch utilities or bank easy enough, yet they almost never do, unless they're really upset. Better the devil you know, I guess.
Good support can pay off for word of mouth referrals, especially if they've had a bad time elsewhere. I think it works best for techie things like web hosting, or a SaaS where you're integrating and likely need a little support. For an ISP you never phone support, until you hate them because it's broke, then they switch to the next cheapest, which will be just as bad. (I stuck with a small ISP who gives astonishing support, they cost only a little more) :)
I think the problem is when the regulatory body forms an unhealthy relationship with the companies that end up becoming monopolies (regulatory capture, good old fashioned corruption, revolving doors between the two, erc) and discourage new entrants.
Disclosure: I don't work for a "startup" but have started my own businesses before in the 80's and 90's. I work at a University now in tech.
I may get downvoted for this comment. Oh well.
I think I get PG's label of startup and why it matters to him and to HN followers. But let us not forget that most businesses are not started as a PG like "startup" and never go through the PG "startup" approach. Look around at the restaurants, small manufacturers, service companies like printer repairs and more. These are the companies that drive the economy.
I am tech centric and like many startups and what they seem to offer but I think sometimes things on HN get distorted. I am not anti-startup. In fact I'll be at SXSW and paying attention to the headline grabbers to see what interests me.
I hope MightyBell survives and I wish Gina the best of luck.
Let us not forget the small business persons that struggle everyday to survive and grow just a little, one customer at a time.
I think the startup model isn't much better than a lottery.
You can have good engineering, good product and good vision and still lose horribly, you can shift the probabilities a little but beyond that I don't think you can.
Of course the belief that you are going to succeed is required as well so you end up with lots of people 100% sure they are going to succeed for which a small percentage do (for a given definition of succeed).
I think the whole culture around SV-style startups is both fascinating and disconcerting.
As I write this, you've got nothing but agreement below you. No angry screeds about how important startups are.
We have an endless stream of mockery about unicorns. You know about the Zenefits, Uber, and Airbnb's issues precisely because you heard about them on HN; hardly the case that they've been hidden.
HN may value entrepreneurs and consider startups at least a valid life style choice, but if you really look, I think the gestalt merely thinks that it glorifies startups... if you look at what is actually being expressed, it's quite harsh on the excesses of the startup world.
It seems to be TechCrunch and such that cheerlead moreso than HN, which is usually being cynical, crotchety, and contrarian about "startups".
I think we largely do - sometimes we're critical of specific moments or companies, but I think we do more than 'consider startups a valid lifestyle choice'. There's too much PG circlejerk and 'guide to how to X your startup's Y' for me to think otherwise.
... but then, I did just about double my lurker HN karma with this post so maybe you're onto something. ;)
Agreed. Hacker News has pretty interesting content and discussion, but the price seems to be a fetishistic focus on all things startup-related. I wish there was a site like this that didn't mainly exist as an adjunct to an incubator.
I really wish startups would pay attention to this: “The nice thing about revenue is it’s not diluted capital”. Far too often I see people look at their valuations as something like a scorecard for success. And if you can cash out, then I suppose more power to you. But this programmer is tired of the ".com", "web 2.0", "unicorn" bubbles... I wish companies would concentrate on providing value to their customers.
I wish companies would concentrate on providing value to their customers.
That's just it, though. "Customers" are just another measure of your value to the people to whom you're actually beholden: investors. As long as you're providing value (perceived or actual) to them, you're winning this game. Ideally, that involves providing value to customers, as well, but it's demonstrably not necessary.
It isn't clear what the above comment actually means by"customers". If they are talking about perceived value to a customer who is the advertiser, and they are selling them your value, I sort of follow the point.
In whatever case, you are correct if you are insinuating that the perceived v. Actual value delta is dubious in that it usually doesn't taper off. Once things get way out of whack the correction can be over night
I haven't really had the chance to go back and look at this thread. I found the responses really interesting because of exactly what you said here. Each person seems to have a definition of "customer" and "value" and it's different :-)
What I originally meant by customer was the person who paid for the service/good being developed. I don't personally consider investors to be customers. They are partners in my eyes.
Also, interestingly, I don't necessarily consider users to be customers. For example Facebook users are not customers since they don't pay anything for the service. The customers are the people buying ads. The most interesting thing is that Facebook probably does not provide much value at all. If people would have to pay $15 a month for it, I suspect it would fail quickly. But the gathering of all those faces is worth something to the advertisers. So Facebook (and Google, etc) are caught in a fairly tight squeeze of diminishing returns on adding value to the users. They need to spend enough to bring enough faces to get advertising, but more money/facility is not useful.
In almost every job I've worked in, my users are not my customers. In a few jobs I've had no customers -- just speculating investors. It becomes a race to the bottom where we try to make the lease expensive thing that will attract faces (or in the case of speculating investors, create a disruption).
Can you imagine having a business plan where you go to an investor and say, "I want to make something that is worth $1000 a year to a user"? If I can find 1000 users, that's a million dollars a year -- enough to fund a decent development team. I know. It's ludicrous. Why would we try to make something that someone values as much as their daily cappuccino?
I don't expect my short rant to change anyone's mind. But maybe after people discover that the "fractions of a penny per face with billions of faces" market is not so large as they thought, we'll have more CEOs trying to think about how to make a product that users want to pay for.
what is being said here is maybe you should minimize the number and scope of investors.
your response is 'your' value is whatever your 'investors' think it is.
The key point in this is businesses aren't founded to gather investors, businesses are founded to make money. If you can make money more efficiently by taking on investors then you should, if you can make money more efficiently by not taking on investors then you should not.
You seem to think we have some point of disagreement.
The key point in this is businesses aren't founded to gather investors...
Maybe together, we can explain that to the rest of Silly Valley, where "getting funded" has for some time now demonstrably been a more important goal than, I don't know, "getting traction".
Why? There are people on both sides of the interest-rate trade, so any change in rates creates winners and losers. Higher rates aren't inherently "better" than lower rates.
Personally, I want LOW rates. I'm young and have a mortgage and car payment. I want cheap money, so that I can put it to use investing in my future. Why should I pay more to subsidize the Baby Boomer's retirement funds? They've had an easy enough road as it is.
Those low rates have probably also propped up the the value of your house. Look at the ratio of the median house price to income over time, and you will be less convinced that low interest rates have been helpful.
Your mortgage costs more because interest rates are low, making lending easy, making it easy to take out loans, meaning all the buyers can get bigger loans, meaning you have to bid more to win.
Second order effects. Interests rates are not low in a vacuum.
It is likely that because there's nowhere else to make good returns, there's a lot of money sloshing into stupid non-value-focused dotcoms that will dry up when interest rates go back up, creating competition for those dollars. Again, second order effects. You're not thinking economically if you're not thinking about those.
>"Second order effects. Interests rates are not low in a vacuum."
Uh, no. My mortgage is inarguably cheaper due to low rates. So is my car payment.
Is it possible that the price of the asset I'm borrowing against is higher because low rates are inflating asset prices? Possibly. It depends where I live and when I bought my house. If I just re-fi'd at lower rates, it's cheaper, period. Besides that, the inflated price shows up as an asset on my personal balance sheet.
These second-order effects are relevant, but not substantial.
"Is it possible that the price of the asset I'm borrowing against is higher because low rates are inflating asset prices? Possibly."
Is it possible that 1 + 1 = 2? Possibly. Does a bear shit in the woods? Possibly. Is the pope a catholic? Maybe. Do low interest rates spur inflating asset values? Absofuckingloutely.
This is true in almost exactly the reverse of the sense you intend; interest rates are low as a fairly direct result of poor results on a number of economic measures; its true that the conditions in which low interest rates occur are bad, but that's not because of low interest rates, it is what low interest rates are a response to.
Inflation in prices is one of the signals which leads to higher interest rates. (While there are some wrinkles, pretty much the main purpose of monetary policy is short-circuiting destructive positive feedback loops in the economy by introducing negative feedback mechanisms to counteract them.)
Short term, as a borrower, low rates are fantastic.
But really, long term, they're the sign of a sick economy. The rate of return of investment across an economy is the interest rate. Think of it like a balance sheet - if the economy is able to expense liabilities at a really low rate, then assets are also expensed at a really low rate.
Stable interest rates are great (across an economy, not individual rates - plus this gets really hard to measure where a banking system isn't the main source of capital, but I digress no more) are great. It allows planning.
Low (real) rates can seem great, but over the long term in a North American/European banking-funding centric economy (i.e. measurable), it indicates low increases on return of capital. And because of the low rates, an economy that is troubled in generating growth. My liability is your asset. If my liability is returning 0.5% real per year, as (real) growth, we're sitting stagnant.
As pointed out by someone else, a low rate also means revenue generating assets have a much higher price. That's because they're returning revenue, not growth.
Interest rate control is used to affect inflation by constraining employment and hence wages. That's the 'linkage' by which the central bank 'lever' acts on the real economy.
We have low inflation and moderate unemployment. Pushing up rates will cause deflation and unemployment. If we want rates to go up we have to push up consumer price and wage inflation.
You can repeat that as often as you want, but it simply isn't true. It's post hoc, ergo propter hoc reasoning: we see low rates in times of trouble, therefore low rates caused the trouble?
>My liability is your asset
Exactly. So whatever return you aren't earning on your capital, I'm saving on my use of that capital.
>You can repeat that as often as you want, but it simply isn't true. It's post hoc, ergo propter hoc reasoning: we see low rates in times of trouble, therefore low rates caused the trouble?
It simply is true, although not because of that reasoning.
It's a stupid/evil reaction to an over-leveraged economy that has come crashing down. The presumption built into the idea that lowering interest rates would help is twofold:
A) If you just started getting people into even more debt then the economic woes would fix themselves because people will start spending again. As if more debt were the solution to too much debt. Hence Japan is still terrified of raising rates 20 years later. Because ramping up debt is not a solution to too much debt.
B) If people's asset prices are now worth more (houses, etc.) then they'll feel richer and spend more. Except that only applies to a minority. The majority don't have much in the way of significant assets and are instead getting royally screwed by rentiers capitalizing on those higher asset prices.
In the wider economy, things are better with low interest rates on unsecured loans, government bonds, and especially business working capital (think traditional manufacturing inventory).
The only problem is loans being used for leverage in asset price speculation. We need to find some way of rationing leverage while keeping working capital cheap.
>Why? There are people on both sides of the interest-rate trade, so any change in rates creates winners and losers. Higher rates aren't inherently "better" than lower rates.
I didn't say they were inherently better. I said that it was the policy that led to all of these stupid investments being funded.
When debt is cheap (and right now it is absurdly cheap) it leads to yield chasing behavior by investors. That leads them to funnel money into often ridiculous investments, triggering bubbles where people get funded ridiculous amounts to mail pet food or open a social networking site for cats.
Hence : bubbles everywhere.
>I'm young and have a mortgage and car payment.
I save up for things before buying them.
Oh, the main reason I can't afford to do that and buy a house is because of low interest rates.
>Why should I pay more to subsidize the Baby Boomer's retirement funds?
It's really depressing how easy it was for elite propagandists to get millenials to blame their own grandmas for the sins of the 0.1%.
It wouldn't even be as bad if they weren't open about their intentions to divide and conquer these voting blocs.
No issues here using uBlock with Adblock Warning Removal List, Anti-Adblock Killer, EasyList, Peter Lowe's list, EasyPrivacy and Fanboy's Enhanced Tracking List enabled.
And then if you do disable adblock, it's difficult to read the article because there's a never-ending stream of animated big macs and bank ads and crap pasted beside it, helpfully fixed position so you don't accidentally scroll it off the screen.
I say as someone who makes his living largely from ads, if you have to force someone to view your ads, they're not going to click on them anyway! What's the point? All you've done is potentially driven away a reader.
For something like McDonald's what's the point of tracking a click? Few will click and it's not like you can order a Big Mac and fries online. They'll most likely track it to some type of in-store sales/visit number based on where they have targeted the ads.
I for one encourage our new adblock paywall overlords. To extrapolate this idea further... How much more blatant could you be in saying, "To us, the ads are more important than the content." Which inevitably progresses toward better ads and worse content... It is a perverse thing to do, but a useful filter bubble imposed by the content providers themselves. Likely far more accurate than my own ability to judge the quality of the content in the long term in most cases.
$1 per week is not acceptable amount for accessing random Wired content (that would be $52 a year). Perhpas $0.1 a week, or even $0.01 per week.
Or small amount per view (for example $0.01 or even lower, much lower amount), but, the big but, this would considerably put peoples privacy into risk and this would contradict the use case of many ad block users.
So here is the deal Wired - you implement an anonymous payment network and you stop sending data to Google, Facebook and others, or people would just stop visiting your site. Well, this is my prediction and time will tell how much truth is there in it.
I'm looking forward to the day one of the world's oldest and most annoying web magazines falls off the web because it doesn't understand the web any more.
I don't have this problem, I got a perfectly clean page without any ads or social media icons.
I'm running the latest Chrome with uBlock Origin (bunch of filters incl. privacy, social and anti-anti-adblock) and Ghostery. I don't know why you're having this problem, maybe try adding a few blocklists?
For this kind of anti-adblocking that loads the full page before hiding it, we can just display and read the full page with the "article view" feature. I use the Clearly extention for that because Firefox's native version is rarely available.
But yes, it's a very bad business practice to give the middle finger to those interested in your products, even if you can't monetize their presence yet.
When I hit Wired and their ad-block detection I do a select all, copy and paste into a text editor... wonder how long it will take them to block this work-around!
If it helps, I use Disconnect, uBlock Origin, and Privacy Badger as my blocking solutions, and although they blocked a ton of stuff, I didn't get harassed about ad-block and could see the whole page.
Is it bad that when I saw the name of this article, I thought it would be a critique of the unicorn webserver, probably related to scalability or some other architecture problem?
this is not a story about ning going down, this is a live example on how to kill your own business by wired. another few minutes of my life not wasted, thanks abp and an ambush popup!
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[ 4.3 ms ] story [ 142 ms ] threadhttp://techcrunch.com/2007/11/15/social-networking-platform-...
CrowdVine also let people setup custom white-label social networks, though I suppose its founder didn't have as neat of a background story as a Ning founder.
It's probably a nice business model, but not a "startup" by PG's standards, since this type of thing doesn't grow rapidly, intentionally.
Why? Seems from experience to be far less likely to produce an "Our Incredible Journey" message.
I don't want to sign up for a service, love it, find it useful and be told GTFO after 2 years, ps Google bought us.
I've also got very wary of using any new Google, Facebook etc service. Chances are, it won't last.
There's something incredibly unhealthy about the way it's all about getting to $1bn and to hell with the product, customers, that got you there etc. I also think the burn rates have got out of hand. Surely there's a better way than burning £20m a year to produce something you'll shutter without a second thought when it runs out. What happened to seeking profit and longevity?
I'm very glad I had my time in startups though!
I am a bit concerned though companies don't care about the customer and customer support any more... I wonder if they are counting on peoples laziness on searching and moving to an alternative product/service or is it as simple as there are no alternatives with different policies?
I think the public have got far too accepting of little or no support. Yes it's easy to switch, but most people don't unless it's a commodity service - you have to risk the unknown, maybe migrate years of data with little certainty that support in the new home will be better. Sales support tends to be great (and unscripted from more aware staff).
There's a magic size, let us imagine it at 100 people where nearly all human endeavours become crap. Try getting support out of your electric utility, car maker, government, phone service, national charity, hard drive maker etc. Personally I think it's connected with the size where they will still hurt at, or at least talk about, your loss.
It's certainly possible to get far beyond this size and still give great support - look at Amazon and Apple. Amazon got far beyond that size before starting to become a bit rubbish. Essentially until they started ruining the brand trying to move into food, tablets, 3rd party merchants and everything. Apple have the advantage of their restricted OSX hardware, iOS app store and so on that they have a fairly known quantity to provide support for. I think the key to be in this category is what you think your brand stands for.
I think in many, particularly social spaces, it's easy to forget we're not the customer. eg, you can actually get responsive support out of Google adwords or if you buy a Nexus from them (not always great support, but they answer promptly enough). So we're never getting support for search, G+, Facebook or Twitter. I'm sure there;s scope to do it much better, even for the free services.
Lastly, I think specifically in the startup space when you're aiming for 20% growth a month, or even a quarter is going to make it far more difficult to do well. Especially if your offering is evolving as fast - even your staff will struggle to stay aware. So it becomes about great user stories, and outreach (PR) and devcons. Good for growth, but chances are individual customers get lost in the gaps. I think the tendency to shoot for an IPO or buyout is unhealthy here - individual experience matters less if you don't need to care about ongoing trading profit whilst getting big fast. That said there's plenty of services I don't think would have happened, or be great without being big. Small Spotify doesn't get music licences, small Uber doesn't have availability when you need it, etc.
EDIT: Didn't realise I'd written that much!
I see your point. Now that you mention, it makes sense that the fear of the unknown may be preventing people from changing, even though they are not satisfied with they're current support.
Although, I think it can still be of a very high risk not to have a good support even when you want to be profitable in short term. I can see a few companies rushing into launching new/unfinished products, trying to get the market with their innovations before someone else. That can go really bad if they don't provide a good support for their new/unfinished/faulty product or service (maybe bad word spreading can haunt them?).
And yes, I can see the brand as a relevant part in this matter. The amount and quality of the support provided can definitely help defining a brand and what it stands for.
Great examples on Google products, Spotify and Uber! Regarding free products (search, G+, etc), I still think the free experience can lead to a product up-selling, cross-selling and perhaps in some cases to get customer's loyalty, so I think this kind of support, although non-profitable in short term, can still be relevant.
Startups, I don't have much of an input really.. it does look a bit overwhelming to me to set 20% growth a month goals.. so I don't really know what to expect.
Don't forget people don't usually switch because of support, more because something is not working or they've upset you. People can switch utilities or bank easy enough, yet they almost never do, unless they're really upset. Better the devil you know, I guess.
Good support can pay off for word of mouth referrals, especially if they've had a bad time elsewhere. I think it works best for techie things like web hosting, or a SaaS where you're integrating and likely need a little support. For an ISP you never phone support, until you hate them because it's broke, then they switch to the next cheapest, which will be just as bad. (I stuck with a small ISP who gives astonishing support, they cost only a little more) :)
That's a good thing as far as I'm concerned.
It's a balance. It's hard.
I may get downvoted for this comment. Oh well.
I think I get PG's label of startup and why it matters to him and to HN followers. But let us not forget that most businesses are not started as a PG like "startup" and never go through the PG "startup" approach. Look around at the restaurants, small manufacturers, service companies like printer repairs and more. These are the companies that drive the economy.
I am tech centric and like many startups and what they seem to offer but I think sometimes things on HN get distorted. I am not anti-startup. In fact I'll be at SXSW and paying attention to the headline grabbers to see what interests me.
I hope MightyBell survives and I wish Gina the best of luck.
Let us not forget the small business persons that struggle everyday to survive and grow just a little, one customer at a time.
You can have good engineering, good product and good vision and still lose horribly, you can shift the probabilities a little but beyond that I don't think you can.
Of course the belief that you are going to succeed is required as well so you end up with lots of people 100% sure they are going to succeed for which a small percentage do (for a given definition of succeed).
I think the whole culture around SV-style startups is both fascinating and disconcerting.
Considering who runs HN, I'd be more surprised if there were no glorification - or at least very positive attidude - of startups.
Do "we"?
As I write this, you've got nothing but agreement below you. No angry screeds about how important startups are.
We have an endless stream of mockery about unicorns. You know about the Zenefits, Uber, and Airbnb's issues precisely because you heard about them on HN; hardly the case that they've been hidden.
HN may value entrepreneurs and consider startups at least a valid life style choice, but if you really look, I think the gestalt merely thinks that it glorifies startups... if you look at what is actually being expressed, it's quite harsh on the excesses of the startup world.
It seems to be TechCrunch and such that cheerlead moreso than HN, which is usually being cynical, crotchety, and contrarian about "startups".
... but then, I did just about double my lurker HN karma with this post so maybe you're onto something. ;)
That's just it, though. "Customers" are just another measure of your value to the people to whom you're actually beholden: investors. As long as you're providing value (perceived or actual) to them, you're winning this game. Ideally, that involves providing value to customers, as well, but it's demonstrably not necessary.
In whatever case, you are correct if you are insinuating that the perceived v. Actual value delta is dubious in that it usually doesn't taper off. Once things get way out of whack the correction can be over night
What I originally meant by customer was the person who paid for the service/good being developed. I don't personally consider investors to be customers. They are partners in my eyes.
Also, interestingly, I don't necessarily consider users to be customers. For example Facebook users are not customers since they don't pay anything for the service. The customers are the people buying ads. The most interesting thing is that Facebook probably does not provide much value at all. If people would have to pay $15 a month for it, I suspect it would fail quickly. But the gathering of all those faces is worth something to the advertisers. So Facebook (and Google, etc) are caught in a fairly tight squeeze of diminishing returns on adding value to the users. They need to spend enough to bring enough faces to get advertising, but more money/facility is not useful.
In almost every job I've worked in, my users are not my customers. In a few jobs I've had no customers -- just speculating investors. It becomes a race to the bottom where we try to make the lease expensive thing that will attract faces (or in the case of speculating investors, create a disruption).
Can you imagine having a business plan where you go to an investor and say, "I want to make something that is worth $1000 a year to a user"? If I can find 1000 users, that's a million dollars a year -- enough to fund a decent development team. I know. It's ludicrous. Why would we try to make something that someone values as much as their daily cappuccino?
I don't expect my short rant to change anyone's mind. But maybe after people discover that the "fractions of a penny per face with billions of faces" market is not so large as they thought, we'll have more CEOs trying to think about how to make a product that users want to pay for.
what is being said here is maybe you should minimize the number and scope of investors.
your response is 'your' value is whatever your 'investors' think it is.
The key point in this is businesses aren't founded to gather investors, businesses are founded to make money. If you can make money more efficiently by taking on investors then you should, if you can make money more efficiently by not taking on investors then you should not.
The key point in this is businesses aren't founded to gather investors...
Maybe together, we can explain that to the rest of Silly Valley, where "getting funded" has for some time now demonstrably been a more important goal than, I don't know, "getting traction".
Wish for interest rates to be higher then. That the government policy that's driving this.
Why? There are people on both sides of the interest-rate trade, so any change in rates creates winners and losers. Higher rates aren't inherently "better" than lower rates.
Personally, I want LOW rates. I'm young and have a mortgage and car payment. I want cheap money, so that I can put it to use investing in my future. Why should I pay more to subsidize the Baby Boomer's retirement funds? They've had an easy enough road as it is.
So the fact that I'm paying less interest AND the value of the asset has increased isn't helpful?
Again, I'm not making the argument that low rates are "good"; I'm saying they're good for me.
Your mortgage costs more because interest rates are low, making lending easy, making it easy to take out loans, meaning all the buyers can get bigger loans, meaning you have to bid more to win.
Second order effects. Interests rates are not low in a vacuum.
It is likely that because there's nowhere else to make good returns, there's a lot of money sloshing into stupid non-value-focused dotcoms that will dry up when interest rates go back up, creating competition for those dollars. Again, second order effects. You're not thinking economically if you're not thinking about those.
Uh, no. My mortgage is inarguably cheaper due to low rates. So is my car payment.
Is it possible that the price of the asset I'm borrowing against is higher because low rates are inflating asset prices? Possibly. It depends where I live and when I bought my house. If I just re-fi'd at lower rates, it's cheaper, period. Besides that, the inflated price shows up as an asset on my personal balance sheet.
These second-order effects are relevant, but not substantial.
Until interest rates go up and it deflates again. That's not a reliable asset.
With all due respect, you really don't know what you're talking about here. Your model of economics is too linear and static.
Benefits of interest rates are ambiguous, as I argue. Inflated asset prices benefit asset owners, as I argue:
https://www.stlouisfed.org/publications/inside-the-vault/spr...
Yeah, 24 years later and Japan putting up interest rates is just around the corner.
When policies last for entire generations treating them as a temporary aberration is a mistake.
Is it possible that 1 + 1 = 2? Possibly. Does a bear shit in the woods? Possibly. Is the pope a catholic? Maybe. Do low interest rates spur inflating asset values? Absofuckingloutely.
This is true in almost exactly the reverse of the sense you intend; interest rates are low as a fairly direct result of poor results on a number of economic measures; its true that the conditions in which low interest rates occur are bad, but that's not because of low interest rates, it is what low interest rates are a response to.
Inflation in prices is one of the signals which leads to higher interest rates. (While there are some wrinkles, pretty much the main purpose of monetary policy is short-circuiting destructive positive feedback loops in the economy by introducing negative feedback mechanisms to counteract them.)
But really, long term, they're the sign of a sick economy. The rate of return of investment across an economy is the interest rate. Think of it like a balance sheet - if the economy is able to expense liabilities at a really low rate, then assets are also expensed at a really low rate.
Stable interest rates are great (across an economy, not individual rates - plus this gets really hard to measure where a banking system isn't the main source of capital, but I digress no more) are great. It allows planning.
Low (real) rates can seem great, but over the long term in a North American/European banking-funding centric economy (i.e. measurable), it indicates low increases on return of capital. And because of the low rates, an economy that is troubled in generating growth. My liability is your asset. If my liability is returning 0.5% real per year, as (real) growth, we're sitting stagnant.
As pointed out by someone else, a low rate also means revenue generating assets have a much higher price. That's because they're returning revenue, not growth.
Low real interest rates are really, really, bad.
We have low inflation and moderate unemployment. Pushing up rates will cause deflation and unemployment. If we want rates to go up we have to push up consumer price and wage inflation.
You can repeat that as often as you want, but it simply isn't true. It's post hoc, ergo propter hoc reasoning: we see low rates in times of trouble, therefore low rates caused the trouble?
>My liability is your asset
Exactly. So whatever return you aren't earning on your capital, I'm saving on my use of that capital.
It simply is true, although not because of that reasoning.
It's a stupid/evil reaction to an over-leveraged economy that has come crashing down. The presumption built into the idea that lowering interest rates would help is twofold:
A) If you just started getting people into even more debt then the economic woes would fix themselves because people will start spending again. As if more debt were the solution to too much debt. Hence Japan is still terrified of raising rates 20 years later. Because ramping up debt is not a solution to too much debt.
B) If people's asset prices are now worth more (houses, etc.) then they'll feel richer and spend more. Except that only applies to a minority. The majority don't have much in the way of significant assets and are instead getting royally screwed by rentiers capitalizing on those higher asset prices.
In the wider economy, things are better with low interest rates on unsecured loans, government bonds, and especially business working capital (think traditional manufacturing inventory).
The only problem is loans being used for leverage in asset price speculation. We need to find some way of rationing leverage while keeping working capital cheap.
I didn't say they were inherently better. I said that it was the policy that led to all of these stupid investments being funded.
When debt is cheap (and right now it is absurdly cheap) it leads to yield chasing behavior by investors. That leads them to funnel money into often ridiculous investments, triggering bubbles where people get funded ridiculous amounts to mail pet food or open a social networking site for cats.
Hence : bubbles everywhere.
>I'm young and have a mortgage and car payment.
I save up for things before buying them.
Oh, the main reason I can't afford to do that and buy a house is because of low interest rates.
>Why should I pay more to subsidize the Baby Boomer's retirement funds?
It's really depressing how easy it was for elite propagandists to get millenials to blame their own grandmas for the sins of the 0.1%.
It wouldn't even be as bad if they weren't open about their intentions to divide and conquer these voting blocs.
So I disable Adblocker and get the same message again. Fuck you, I'm not diabling Ghostery and letting you get to my social media information.
The anti-adblocking movement is going too far.
I say as someone who makes his living largely from ads, if you have to force someone to view your ads, they're not going to click on them anyway! What's the point? All you've done is potentially driven away a reader.
>The anti-adblocking movement is going too far.
I don't want to look at websites with ads. If the only way to view a website is with ads, I'd rather not view the website at all.
Or small amount per view (for example $0.01 or even lower, much lower amount), but, the big but, this would considerably put peoples privacy into risk and this would contradict the use case of many ad block users.
So here is the deal Wired - you implement an anonymous payment network and you stop sending data to Google, Facebook and others, or people would just stop visiting your site. Well, this is my prediction and time will tell how much truth is there in it.
Also, I suggest using the term content blocker, guess it creates less of an attack surface for pro advertisers.
Plug: I strongly encourage disclaimers like [2] "Don't forget to turn on your content blockers, linked sites might not respect your privacy"
[1]http://blog.erratasec.com/2012/11/you-are-committing-crime-r... [2]https://anonimho.com/about.html
I'm running the latest Chrome with uBlock Origin (bunch of filters incl. privacy, social and anti-anti-adblock) and Ghostery. I don't know why you're having this problem, maybe try adding a few blocklists?
But yes, it's a very bad business practice to give the middle finger to those interested in your products, even if you can't monetize their presence yet.
I've been doing that a lot, printing to PDF, is it bad? I'm not sure I went as far to go into an "anonymous" account here.
This time.
I found out about this in a comment here on HN, so I'm passing on the knowledge.