Original take found on another forum.

"I think we’re seeing the beginning of the tech bubble bursting again.

You’ve got the successful companies that provide a case study in tech industry profitability(Google, Amazon, Apple, etc.) which is why you’ve got all these venture capital firms plowing so much money into startups, left and right, because they expect that one of them will be the next Google or Amazon. Now that low interest rates have gone bye-bye, the VC firms are demanding that these startups start showing a profit. However, almost all of these startups have one of the following problems:

1.) They were never profitable and can never be profitable because the fundamental concept of what they do is thoroughly flawed
2.) The service or good they provide could be profitable, but due to being formed during a time of easy money, their current business model is incapable of being profitable, and they are too over leveraged to be able to restructure themselves into a more profitable setup
3.) They are perfectly sustainable/profitable, but their financiers expect far more return on investment than they are capable of providing

The result is the trend of “enshittification” as VC investors force unwanted changes onto these startups in the hopes of increasing revenue. This is stuff like locking previously free features behind a paywall, clogging everything with ads, cutting costs somewhere (payrolls, server space, etc) that negatively affects the user experience, raising prices, or needlessly bolting on something that nobody asked for because it’s one of the only things that VC firms might still blindly throwing money at(AI).

Even the actually profitable companies are doing this shit because they are just addicted to the ridiculous growth they’ve enjoyed in the past."

  • Kichae@kbin.social
    2·
    1 year ago

    ) They were never profitable and can never be profitable because the fundamental concept of what they do is thoroughly flawed

    Honestly, I know what they’re trying to say, but I kind of object to calling what they do “thoroughly flawed”. Many of these big companies are starting to twist in the wind because they don’t provide a service that provides business value, and they don’t have a product that people will ever expect to pay for.

    They provide community. And most people expect to belong to communities based on whether they can pay or not. Community isn’t a commodity. It’s just… Community.

    And this is why Facebook is a cesspit. Because they had to break community bonds in order to actually sell things. Twitter’s walking down that road, too, but they’re too late, and anyone smart enough too make it woke is long gone. And now Reddit’s having a go…

    But there’s nothing wrong with community. And there’s nothing wrong with community not being profitable. It’s not supposed to make money! That’s not what it exists for.

    But to people who make their living owning shit and, anything that isn’t profitable isn’t worthwhile.