Pulse is raising $800,000 in venture capital. According to the New York Times, this is “the first step in moving along the path from building an app to running a profitable business.” So the first step to becoming profitable involves taking funding? Marco Arment ain’t having it.
It’s ridiculous, incorrect, and insulting to those (like me) who have chosen the traditional business model — charge money, spend less than you make — for this author suggest that giving away your product for free and paying your expenses with VC money is the “first step” to make your app development “a profitable business”.
The attitude of that Times piece is representative of a bigger problem with the business media. Reporters and magazines are in love with the sexiness of BIG NUMBERS! The more zeros, the better. Is it a round of funding or actual profit? Doesn’t matter. Is there actually a sustainable business underneath all those zeros? Doesn’t matter. By the time the reality of the situation comes to light, they’ve moved on to the next lottery winner/victim.
Case in point: “Digg makes $60,000,000 in 18 months!” is a cover story. But how much attention is paid when the company eventually lays off 37% of its staff while struggling to reach profitability? And you don’t often see a cover story with the headline “Funded Company Gets Sideways with Investors and Winds Up Going Under.” That’s just mundane, commonplace reality. Yawn.
And then you’ve got the blogs that track who got funding and what round they’re on. People follow along as if it all means something. In reality, it’s just scoreboard watching that’s more titillating than valuable.
While it’s easy to blame the media, they’re just playing this big numbers game because it works. People keep buying into the lottery winners plotline so the media keeps rolling it out. Circulation and traffic matters more than the truth. And as long as our startup culture keeps buying into the fantasy, the media will keep selling us zeros.