The usual cycle with startups is to:
- Start being very open, as this brings people developing over the platforms and generates growth
- As long as they are growing, VC money will come to pay for everything. This is the scale up phase
- Then comes the VC exit, IPO or whatever
- Now the new owners don't want user growth, they want margin growth. This is the company phase
- Companies then have monetize their users (why not ads?), close up free, or high-maintenance stuff that do not bring margin
- and report that sweet $$$ growth quarter after quarter
...until a new startup comes in and starts the cycle over again, destroying all the value the old company had.
A mix of Enshittification and Innovators Dilemma theories
The usual cycle with startups is to:
- Start being very open, as this brings people developing over the platforms and generates growth
- As long as they are growing, VC money will come to pay for everything. This is the scale up phase
- Then comes the VC exit, IPO or whatever
- Now the new owners don't want user growth, they want margin growth. This is the company phase
- Companies then have monetize their users (why not ads?), close up free, or high-maintenance stuff that do not bring margin
- and report that sweet $$$ growth quarter after quarter
...until a new startup comes in and starts the cycle over again, destroying all the value the old company had.
A mix of Enshittification and Innovators Dilemma theories