Is this how you want to sell your company?

May 8th, 2010  |  Tags: , ,  |  Leave a comment

Apparently the company that runs the Stack Overflow web site recently secured some funding, and the founders have been characteristically glib about the possibilities enabled by their extra capital.

There’s a good post at the 37signals blog that details why it’s probably a bad idea for Stack Overflow to take VC (or, at least, why their stated reasons for taking VC don’t make sense), but it seems that the founders must already know that this is the case. In their blog post announcing the funding, the Stack Overflow gang describe it as follows:

So we created Stack Exchange to bring the technology behind Stack Overflow to a much wider variety of sites. We tried charging for Stack Exchange, and that didn’t work so well. So we asked ourselves, “How would the people of 1999 solve this problem?”

And the best answer we could come up with was, let’s make the damn thing free, and get some VC somewhere to pay for it.

Indeed, this business model sort of made sense to me in 1999. Except then, “make the damn thing free” was called “release your core product as open source and run a consulting business,” and “Stack Exchange” was called “The ArsDigita Community System.” Of course, there are important differences: for example, ArsDigita was profitable. But for a lot of the 1999-vintage businesses that took funding without a plan for profitability, “get some VC somewhere to pay for it” didn’t end so well for anyone involved: founders, investors, or engineers.

(I’m not suggesting that Atwood and Spolsky’s actual business model is “coast on external funding until we can magically discern some way to become profitable.” But if you’re making flippant comparisons to the business climate of 1999, then serious comparisons to the business climate of 1999 should at least have occurred to you.)

The rumored Apple tablet and Amazon

July 27th, 2009  |  Tags: , , ,  |  3 Comments

According to the Financial Times, Apple will release a tablet computer this Fall and has been in talks with book publishers to provide content for the device. Jason Kottke glosses this report, speculating about the implications for Amazon:

[I]f it runs apps from the App Store (“yes” seems to be the general consensus), you’ll be able to read books in the Apple tablet format *and* in Amazon’s Kindle format (with the Kindle app), which can’t be happy news for Amazon, hardware-wise.

Kottke’s take assumes that Amazon is more interested in selling Kindles than they are in selling content for Kindles. I don’t believe that could possibly be the case.

Consider that Amazon makes far more money on Kindle content than it ever could on Kindle hardware. (Recall that “Kindle content” means “sets of DRM-enfeebled bits that are free to manufacture, cannot be resold, and list for roughly 80% of the purchase price of physical books that contain the same information.”) Nothing prevents Amazon from releasing a Kindle app optimized for any hypothetical future Apple device. If the Apple book-purchasing workflow is smooth enough to threaten Amazon’s dominance in the retail chain (and it may well be), Amazon need merely add a “search for and purchase books” option to their Kindle app.