I would have brought this up in the topic about a mobile template converter that Fergal showed me, but I'll just make a new topic to avoid dragging that off-topic.
Many startups these days intend to NEVER profit and instead be bought out by another company. A remarkably popular example is Tumblr. They "tried" charging one dollar to have a little image applied to the top right corner of a post to profit.
How do you think that went? It's not advertising, notably. It's just a dollar for an image.
Tumblr took until a stockholder revolt in May to announce that they will accept sponsorships in limited advertising spots with mixed free and paid advertisements to begin using anything meaningful to revenue.
Numerous startups share this attitude. Honestly, I see it as a stupid "get rich quick" scheme mentality.
Sorry if this sounds like a rant. It's just...well, annoying.
Instagram which got bought by Facebook for 1 billion dollars, and I'm not sure Instagram have revenue now can be another example.
I agree most of these zero revenue startup seem like get rich quick schemes.
There are ways to make money from affiliate links from Amazon and skimlinks, paid memberships or selling digital or physical items and services without adding images and banner links to a site.
A site will also be worth more if it has some income instead of none.
It's just because of my tendency to think about how businesses make money.
It does annoy me, however. I was told by a person who thinks that he knows better than me about business management despite never running a business that advertising is an "illegitimate and annoying" source of revenue.
He suggested charging for premium membership.
While I would love to get millions, of course, some of these guys actually quit the company (John Maloney of Tumblr) when they feel that they can't be acquired anymore.
But it's not always where you get acquired. Youtube is that case. Instagram is another. Facebook, Tumblr, and Twitter are independent companies.
Plus, the business will usually experience a drastic drop in users eventually. For example, I knew a lot of users of Tumblr said that they would leave if advertising ever came there.
They, of course, probably never noticed the extremely unprofitable ad spot.
My theory regarding this business model is the "Acclerating Growth Paradigm". In this paradigm, the business continues to not only grow in popularity consistently, but the rate gets higher every month, often doubling the size of the company every month. Awhile back, someone I know calculated the deficit of one of these companies, and it ended up having a larger deficit-to-revenue ratio than the United States Government.
The thing is that they'll hopefully never meet a megacorporation large and stupid enough to acquire more debts than revenues.
