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gregdrm
Interesting. "Customer acquisition is irrationally expensive" is true, but partly driven up by the Ubers and Paypals of the world buying customers
pjlegato
Exactly. They have a huge VC war chest, and they deliberately set out to lose money on every sale for years, just to gain market share, in the hopes that their competitors will go out of business before they run out of money.

Of course, the competitors also mostly have huge VC war chests, so an arms race develops..

jondubois
Yes, I think we're in an advertising bubble. All these companies that would never have existed under normal conditions managed to raise tons of funding and acquire millions of users through advertising.

The intense competition between tech startups (who are all desperately racing to secure a monopoly in their respective industries) has increased the demand for advertising space and therefore driven up cost per click.

mamurphy
I didn't learn anything of note from the article after the three summary bullet point paragraphs (Users are mostly price insensitive, User acquisition costs are high, Good tech support costs a lot of money).

I would tend to think that the first reason - the demand side factor of ("users don't care much about price") is the best reason for keeping a higher price - the market will bear a higher price.

Supply side factors ("costs are high, therefore lets raise prices") do not seem sustainable in the long term. They're a good reason to try raising prices, since without them the business would be unsustainable. But if the market won't bear a price above your costs, then it's an indication that you must lower costs (e.g., reducing support) or close down, not that you've gotten the pricing wrong.

pjlegato
The part about costs was not in the article... the old, lower prices, were already well above our costs. Now they're even higher than our costs.