Many startup companies run mostly on VC money instead of actually making enough revenue.
Due to the way investor money works, you can keep your company running on VC money for many years. Making the company profitable in the early stages isn’t entirely necessary as long as the investors get their money back within a reasonable time period.
The idea is, that if you’re able to make your shiny new service very popular, that will be the valuable product you can eventually sell in a merger, IPO or whatever. In some cases like Skype, the intellectual property was also an important part of the deal; not just the userbase. After that, the new owners are free to enshitify the service as much as they like. It’s their problem to make the service actually profitable in the long run while the founders get to drive their Lamorghinis in Dubai.
That’s when the new owners really have to crank up the data leeching and ads, which will kick out a decent percentage of the previous users, but that’s ok as long as enough of them remain.
Reddit is built on venture capital. It has raised over 1.3 billion dollars this way. You can find out how Reddit is financed over here.
Reddit is absolutely a startup, and that’s their problem. They never managed to turn their startup into a real business.
IMO this loss-leader venture capital bullshit undercutting real businesses should he illegal. Sadly for most internet users, banning that shit would make most internet services more expensive.
We never got anything for free. That’s not how capitalism works my dude. We paid, and are still paying, with our data. Only now they want more
Many startup companies run mostly on VC money instead of actually making enough revenue.
Due to the way investor money works, you can keep your company running on VC money for many years. Making the company profitable in the early stages isn’t entirely necessary as long as the investors get their money back within a reasonable time period.
The idea is, that if you’re able to make your shiny new service very popular, that will be the valuable product you can eventually sell in a merger, IPO or whatever. In some cases like Skype, the intellectual property was also an important part of the deal; not just the userbase. After that, the new owners are free to enshitify the service as much as they like. It’s their problem to make the service actually profitable in the long run while the founders get to drive their Lamorghinis in Dubai.
That’s when the new owners really have to crank up the data leeching and ads, which will kick out a decent percentage of the previous users, but that’s ok as long as enough of them remain.
Reddit isn’t a start-up. The whole rest of your point is just worthless skree.
Fuck capitalism.
Reddit is built on venture capital. It has raised over 1.3 billion dollars this way. You can find out how Reddit is financed over here.
Reddit is absolutely a startup, and that’s their problem. They never managed to turn their startup into a real business.
IMO this loss-leader venture capital bullshit undercutting real businesses should he illegal. Sadly for most internet users, banning that shit would make most internet services more expensive.
The downvotes in our comments tell an interesting story. It seems that people don’t want to hear about the strange world of VC money.
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Please tell me how it really is.
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Wasn’t surprised, but I am disappointed.