The more general lesson I take from Pocket (as I have taken from so many such acquisitions-and-eventual-shutdown stories before it) is this: Not all businesses need to be large, with paths to continual growth. Quite the contrary. The expectations of scale, continual growth, or especially both together, become perverse and destructive when they become defaults and norms. Some few businesses will grow very large and will experience continued growth for long periods of time. Most, however, will not, and the attempt to do so will lead them away from serving their existing customers along the way, and just as importantly will usually fail.
— Chris Krycho, writing about the failure of Pocket.
I don’t think anyone is surprised by the idea that “not all businesses need to be large” (nor is Chris— I’m using his post and point as a jumping off point). I think the corrosive problem of the zero interest rate internet world was the destruction of all non-scale business models.
It’s still hard to build any form of consumer software and charge for it. And the only way to be a business that reaches an end to its growth is to make enough money all along the way. But we’ve taught consumers to expect to spend nothing, leaving only mass advertising or charging businesses as the only option to build a business. And, at least at in the past, the initial costs of building software are high enough that many companies have taken on forms of debt that cannot be satisfied with mere profitability.
The end of living on the lower bounds of interest rates and the reduction in costs associated with building software will hopefully change all of this, but I’m not holding my breath. Consumers have been taught software should be free. We’re bombarded with people online who think that the marginal costs for delivering goods and services should fully determine the price (see all leftist pharmaceutical discussions). I remember telling somone I paid $10 for a calendaring app (this is pre-SaaS/subscription mania) and they were shocked. When I replied, “I use that app dozens of times a day, every single day, and every time I use it I have a better experience than with the alternative,” it only kind of sort of made sense to them.
Everyone thinks everything should be free because Google and Facebook found their way into a magical business model with winner take-all dynamics. But we already have the winners, so we need to do something else now.