[tptacek]

Or he'd be in a much worse position, because his cost of customer acquisition was high and the money he'd earn from charging wouldn't come close to covering his operating expenses, and charging would slash his new user signups, which were probably the only realistic lead gen he had to work with. Which is, you know, the situation that gets most people to consider venture capital.

[jpatokal]

Sure, if the "genius business model" was "charge everybody money for it", but the way that was phrased implied they had something more devious in mind. By going the VC route and asking for $7 million straight up, they bet big and lost big.