Item — HN Reader

One thing I've definitely learned is it's easier than you imagine to scale a good business into a bad business. To over-invest in something that can't or shouldn't scale as quickly as the new investment pressures now dictate.

In business there's the subtle art of keeping expectations and results in healthy alignment. I think there's more pressure to avoid having too little investment than too much, but both can kill you. And it's SO brutal on morale when doubling revenue feels like a failure because 5x was the wildly-unrealistic demand of your pretend valuation.

1 comments

This is true for a significant percentage of VC backed businesses. Many could be great small businesses, but they get inflated beyond what is practical by investors seeking a return.

The founders $5m turnover business success is then relatively a failure at $30m and they are unceremoniously booted out.

Twitter and reddit would be phenomenal companies if they never took VC funding.

They would have been outscaled by other microblogging and link-sharing sites who did take VC money.

For that reason I would never go b2c; in a bootstrapped b2b, if you make 10m-50m/y and some unicorn comes, you can still exist for a long time and this unicorn can buy you even. In an ad based b2c, there is no way.

There are a lot of b2c business models aside from ads (e.g. actually selling/charging money from customers)

Sure, but the example here was social media sites with millions of visitors and no monetisation plan besides ‘being the biggest’ & ‘something with ads … later’.

I'd love to know what their marketing spend was/is like. because it seems that they were purely word of mouth.

Once you have users, it can be very hard for a competitor to dislodge them. There used to be a ton of social media startups, and large company efforts like Google+. They mostly just flopped.