This is well said and reflects my experience. These days I look for services that a) take money, b) probably won't get acquired soon. (a) is easier than (b), but if you look around you'll eventually find something.
Good examples are:
* Instapaper — Marco's one-man-shop, stable and profitable,
* Smugmug — family owned, users pay them money, stable and profitable,
* Dropbox — which I also pay for — but is still unlikely to find an acquirer.
I recently decided not to sign on several new services because I couldn't see a business model.
I'd like pg to address this in one of his essays, given that YC is all about building stuff people want without paying too much attention to the business side of things (e.g. actual cash flow), and with the explicit goal of reaching an exit for the founders.
You need to add a c) data liberation and this is/was Posterous' long time problem, and tellingly so.
Would raganwald be writing his essay if he owned his data and could easily export it from Posterous?
Or would he have just exported his data and imported it into another blogging service?
People have been asking Posterous for a data export solution FOR YEARS, and Posterous NEVER supplied one.
There is backuperous, but that's some guy's project and doesn't save media.
I wanted to learn more, so I wrote my own data export tool in elisp -- it took me a couple of weeks to do so, with the main task being learning elisp and how the url package works, and now I feel confident I can get the data in several client's blogs back from Posterous and import it into another blogging service. But it will surely be a pain in the butt.
So while you are looking for a) and b), also look for c) companies that allow you to own your own data and export it and back it up.
On that scale, Posterous is/was always just absolutely terrible for their customers, and at the risk of alienating people here, I absolutely condemn Posterous and their behavior in this manner.
Posterous had years to supply a backup/export solution and consistently, and clearly intentionally, failed to do so. In contrast, I wrote my own backup solution in a very short time. There was no technical reason why Posterous could not supply a backup solution. And the resources required were minimal, almost trival. That they did no do so indicates this was part of a strategy of customer lock-in, and was a value-subtract to customers, not a value-add, and just abusive of the customer in general.
Here at HN, we love to laud the founders and act all clubby with them, but ya know, what Posterous did to its users by failing to provide a backup was just terrible and shame on Posterous' founders for using the user's data as an element of their lock-in strategy.
YC seems (I obviously don't speak for them) to like companies like Smugmug and Instapaper --- see what Graham writes about Wufoo --- and over the long term, companies with established niches can obtain valuations that outstrip that niche. Black swans happen, and it's good to maximize your exposure to the good ones.
But fundamentally YC is about shooting companies out of a cannon. Charging users a fee puts user acquisition and retention at risk. For Instapaper and Pinboard that risk is well worth the reward. But most YC companies have acclimated themselves to the idea of working for a VC-funded board of directors; if you're going to take VC, the risk is very often not worth it in the first year or two of your company, because traction trumps revenue in most VC-funded companies.
The overwhelming majority of YC's returns come from exits from VC-funded companies.
So the interests of free users and YC don't really so much line up here.
Actually, YC's real returns will come from IPOs of big profitable companies like Airbnb and Dropbox, not exits any smaller than them.
And I think there's room for more Dropboxes. What I find strange is that so few startups (YC-funded or not) even try the freemium model seriously. It took Dropbox a long time and a lot of experimentation to find a scalable business model, and they wouldn't have found it had they not been persistent.
Building something great is harder than making money, but even YC's success depends on startups that can do both.
It reinforces jwr's point, not your argument that YC's interests are not aligned with free users.
It's only companies with a good business model that can support free users as a marketing cost in the long run. All others die once they run out of funding cycles.
Why do you think dropbox is unlikely to find an acquirer? Because they're too proud to get absorbed into Apple?
I can easily see them being a massive acqui-hire, as they've solved the problems Apple, Google, and Microsoft (lexicographical order) have been trying to solve for years, and I mean the technical problems and also the marketing problems.
I don't pay for dropbox. I love it, but I could replace the utility it affords me with a couple of shell scripts and an S3 instance in a heartbeat.
Good examples are:
* Instapaper — Marco's one-man-shop, stable and profitable,
* Smugmug — family owned, users pay them money, stable and profitable,
* Dropbox — which I also pay for — but is still unlikely to find an acquirer.
I recently decided not to sign on several new services because I couldn't see a business model.
I'd like pg to address this in one of his essays, given that YC is all about building stuff people want without paying too much attention to the business side of things (e.g. actual cash flow), and with the explicit goal of reaching an exit for the founders.