[akulkarni]

This is a classic "bottoms-up" model that is quite viable (eg Dropbox, Slack, Zoom, Elastic, MongoDB). Not sure why anyone would call it a scam. In fact, I would be wary of software companies without a base of free users, as that means the company needs to keep spending a lot of its revenue on sales and marketing.

[papito]

Not necessarily. You don't need marketing and sales people if you have a free-tier product that markets itself. Michael Stonebraker, the guy who took Postgres from academia and into the real world, talks about how he applies this with VoltDB

https://www.se-radio.net/2013/12/episode-199-michael-stonebr...

Only on a tangent - it's an otherwise fascinating episode from a database wizard.

[akulkarni]

It seems like you are agreeing with me? :)

[papito]

Oh.. I guess I do! Waiter, more coffee...

[ethbro]

HN: Violent, informed agreement

[john_moscow]

>This is a classic "bottoms-up" model that is quite viable (eg Dropbox, Slack, Zoom, Elastic, MongoDB). None of which are profitable.

>In fact, I would be wary of software companies without a base of free users, as that means the company needs to keep spending a lot of its revenue on sales and marketing. I am much more wary of companies that keep or burning cash for years and years with the only excuse that "Amazon did that as well".

[akulkarni]

> I am much more wary of companies that keep or burning cash for years and years with the only excuse that "Amazon did that as well".

I think about this a little differently. Spending money on free users is actually a much more efficient "marketing expense" than classic outbound strategies (e.g., online advertising).

[john_moscow]

Yes, but if your marketing expenses systematically exceed the revenue from the paid customers, your business isn't viable.

[ac29]

> Dropbox, slack

Are these good examples, though? Dropbox is down ~35% since IPOing, and Slack is down almost 50%. This certainly suggests the market thinks they were both overvalued when they IPO'd.

[notyourday]

I think you are confusing the opening price with an IPO price.

Slack went public at $26, it is at $23.50 today. It is less than 10% less than the IPO price.

[jazzyk]

Yes, but this is at a time when the overall market is close to an all-time high.

What happens when the inevitable correction comes? The Fed will run out of monetary tricks, eventually.

[sarah180]

This is arguably a "things might go wrong in the future" argument, which has no real substance as it can be made about literally anything. To really say something, you'd need to provide some more substance about why you think the current investors in Dropbox and Slack are less informed about economic conditions than investors in the rest of the market.

[dragonwriter]

> The Fed will run out of monetary tricks, eventually.

No, it won't.

It might run into a monetary-policy resistant situation (e.g., stagflation), but the Fed has infinite range of monetary policy tricks available (literally, there's no floor to rates now that the Fed has taken notice of the use of negative rates elsewhere.)