this post was submitted on 17 Sep 2024
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All the ones where the idea was to "just start something, grow grow grow, then figure out monetization later" is wild to me.
E.g. reddit. It worked. CEO is rich, site is still online. Somehow they got investors probably, presumably.
I get not having profit. I get not having income, if it's in some prototype phase. But having no plan or idea whatsoever for how to monetize and still getting VC? Wild.
It's called "growth-first" or "growth-at-all-costs" strategy. I don't recall what video I was watching when I learned it, but it's a dying strategy for business now (IIRC). It had its rise in popularity in the late 2000s to about 2018. Think Netflix, WeWork, Uber, etc. These are huge businesses to prop up, so they (literally) bank on the idea that with a huge user base, they can sooner or later, make a profit to make it worth all of the risk.
https://pluralistic.net/2023/01/21/potemkin-ai/
Enshittification. Once you learn it, you see it everywhere. Itβs depressing.
Although to be fair these days that gig is over. Unless you have path towards profitability itβs very hard to unlock investment beyond seed.
Do chatgpt and the like have a plan for profitability?
ChatGPT absolutely has a path towards profitability.
Just curious about what does VC stand for, don't know anything about business
venture capital. a group of investors with money who will put that money into promising companies so when it's successful you make more money back.
Getting one of these sounds like the dream
Eh. it's start up culture. They give the C suite 50 million dollars and want 100 million dollars in 10 years and they aren't shy about going full Gordon Ramsay on anyone not 100% dedicated to that, even if you just get paid hourly to manage social media
The Gordon Ramsay anecdote is actually really good, in that in my experience VC's get a LOT of say in what your business ultimately becomes.
I worked with someone that was, in all fairness, absolutely clueless about what they wanted, and wanted some VC alongside their rich parents money. The VC took a huge chunk of the business, and ultimately their business launched as something that was completely different to what they thought it would be - because that's what the VC believed would give them some return. The business went bust in less than a year and launched for maybe 2 months?
Much like how Ramsay says "your Jamaican restaurant is shit, I've remade it into an Italian restaurant because there aren't any nearby", taking a lot of VC money almost certainly means they'll want an equivalent say in your business. It's not free money, and it absolutely fucks a lot of people up when they take that money and realise that their dream isn't theirs any more.
Viet Cong. Bad news. Never get out of the boat.
venture capital / investor cash cannons