Spend enough time online, and you'll start noticing the website life cycle. A site grows and becomes an essential part of everyday browsing, only to run into problems and spiral into oblivion. Digg, Xanga, Delicious, Friendster, our once-ubiquitous and loathed rival Broked -- countless sites have flared up only to fade away. And there's nothing stopping any of today's juggernauts from doing the same (except Cracked, which is an eternal flame).
The good news is that we've now seen this happen enough times to understand why big sites eventually fall. The bad news? The Internet's still fucked, probably. And that's because ...
It Begins By Offering An Amazing Service For Way Below The True Cost
Facebook launched in 2004, but it was only in 2009 that it became "free cash flow positive," which is business for "our budget no longer makes us look like we're headquartered in a neighborhood where Sergei will break our kneecaps if we don't pay protection money." Facebook perfected the idea of staying in touch with old friends for free, but "free" doesn't pay for your servers. That's why Facebook has ads on the side, and not adorable pictures of kittens.
It's also why you now know which of your friends "like" every fucking product they've ever consumed.
But that's not enough. Take Uber, which is losing millions each year despite being valued at $50 billion. They even introduced a carpool service that's only costing them more money, probably because wanted to snatch the name "UberPool" before Marvel used it for a Nietzsche / Ryan Reynolds mashup.
It's the same all over. We've told you before of how Spotify and Shazam are deeper in the red than the Egyptian Navy. Airbnb, whose business model is "save money on hotels by putting up with the smell of cat piss," is losing $150 million a year, and isn't expected to turn a profit until 2020. YouTube brought in a staggering four billion dollars in 2014, which was good enough to, uh, break even. Even Reddit, which it's easy to forget is even a business, can't get in the black by monetizing its 70 million users. Hell, if we had 70 million users, we'd ask each one for 50 cents and then buy a spaceship.
The janitor took our old one when we fired him.
As countless abandoned Xanga and Myspace pages taught us, a good idea means nothing if you can't dominate the market. Someone else will take your idea, improve it, and leave you in the dust. You have to monopolize the market at all costs, and then you can worry about the trivial little detail of making money.