The problem with VC model
The core problem with VC funding model is that they want you to pay for the failures of their 10 other ventures.
I have been thinking about this for a while and am writing down my thoughts from my lens. Most VC-funded or run businesses are not primarily running to make the consumer's lives better in a sustainable way. It does happen, but it is a side effect rather than the core goal. Regular lending and or bootstrapping does not have this issue. This is the biggest problem for the majority of startups and companies these days. These sorts of companies have to raise a lot of money and entice people into their ecosystem with free or almost free offerings, hoping to lure in solo/team users. They also sweeten the pot with a pleasing user experience, excellent onboarding, and other little delighter features that make people stay with them.
To be honest, I see nothing wrong with this approach in principle. It's a viable strategy to building a business. However, back in the 'olden days ', which I would roughly define as the pre-VC era, most companies started with an ambition to keep it running sustainably as long as possible and weren't tainted with the VC money printing machine ideology. Or that's how I anecdotally feel the difference is.
These days, most tech businesses start with the expectation to monetize as quickly as possible. This often leads them to fall into the trap of maximizing all the usual signalling metrics for sale, such as user count, retention, and media hype. Once a critical threshold of market and hype mindshare is reached, they pivot to some exorbitant usage fee, especially concerning their added value. Once the business reaches this point, two things happen:
- Either the product is kept alive to generate more revenue till the VC overlords can then sell to another company or even different VC overlords and make the founders (and sometimes the founding team) a fuckload of money
- Or, the product plateaus and the team tries to find a way to extract as much money as possible till it changes hands to a private equity firm.
Personally, I find both of these approaches distasteful. The software and businesses I value the most are those that are value-driven, with a strong product-market fit and a desire to be in it for the long haul. They're not pressured to fail fast and fail hard, burning stacks of cash in the process to quickly build market share by adding tons of features. In my opinion, slow and steady wins the trust race and stands the test of time.