This issue deserves a post in a personal blog (which I don't have) and time for research and documentation (which I don't have either). But I am not willing to let it pass so easily, so hopefully you won't mind my posting some notes in this friendly forum. I will try to keep it in-topic as possible, to the extent that I consider the viability of the software we use is in-topic.

Dispatch.io/.cc timeline:

- 2012 September: Dispatch.io launched http://blog.dispatch.cc/post/32203399275/launch | Quote "We’re on a mission to help you be more productive by unlocking the power of the cloud services you already love. You can add things from Dropbox and Google Docs into “dispatches”, where you can share and discuss those things with others."

- 2013 July: The new Dispatch.cc is launched. I copy from the email I received from its representative Alex Godin "The new Dispatch aims to end the noisy reply-all email chains that clog your inbox. We now give you a dispatch.cc email address for each of your projects, along with a place on the web to easily reference your discussions later."

- 2013 October: Dispatch announces it will be closing down http://blog.dispatch.cc/post/63555606313/dispatch-is-joining-meetup The announcement is worth reading in full for the casual way it is written. "We have some news we’re excited to share. [...] As of today, we are joining Meetup to continue our mission of connecting people around things they care about. [...] As part of our move to Meetup, we’ll be closing the Dispatch product on November 15."

I never relied much on Dispatch, though I was looking into the possibility of using it extensively within my company. Believe it or not, I was discouraged by the fact that it was completely free, with no premium version or other income making approach in sight. I wrote as much to Godin in August: "As awkward as this may seem, I am reluctant to trust our work on a free tool. So, can you provide some more info on how you plan to make money to support your valuable service?"

His reply was simply: "Dispatch is entirely free at the moment and there will always be a free plan. We may add plans in the future with premium features, but for now, go ahead and link, discuss, and share as much as you can." I found this vague to say the least, and decided to use the tool no further.

In the http://dispatch.cc website there are quite a few testimonials in support of the tool by people who apparently use it extensively in their businesses. In Dispatch's shutdown announcement itself it notes "we’ve served tens of thousands of you on projects focused on writing, design, event planning, software development, classes, furniture building, even healthcare." I wonder how all those people feel now, and what they plan to do with their Dispatch data after they download it to their hard disk; will it really be of any use to them?

In brief, even though I am not personally damaged by Dispatch's shutdown, I am (a) alerted by the rates at which genuinely useful tools can be developed, launched, offered and shut down and (b) as a marketer, horrified by the kind of messages such approaches send to the market.

I seem to remember that years ago (before Windows XP), Microsoft asked its customers which 'features' of an operating system are essential to them. Top of the list was reliability. Microsoft obviously took that information well into account, judging by the stability improvements in the next version of Windows.

I am afraid that we don't have to worry about the reliability of technology anymore, but of the people and organisations that exploit them. The financial crisis led a lot of businesses to their premature end of life, but what we are seeing now is not the result of any crisis. For Dispatch's founders, the acquisition by Meetup is considered success--and maybe it is in the short term.

But in the mid- and long-term, how many users that have been disillusioned by such business behaviour are likely to invest their time and entrust their valuable data on online tools again, if they can help it?

Similarly, the very good Manymoon social project management tool was acquired in 2011 by none other than Salesforce http://www.zdnet.com/salesforce-buys-social-app-maker-manymoon-3040091645/ What better reason for users to imagine that it had a sure future?

Not really. Much of Manymoon's functionality was stripped down as it was morphed into Do.com. And now it is announced that the service will shut down on 31 January. Even the URL of the announcement could be considered as mocking its users https://do.com/done

I'll follow up as soon as I can with the story

P.S. Ignore the last phrase; I was planning to follow up with the Manymoon story separately, but in the end just wrote a brief version of what I had in mind.

"For Dispatch’s founders, the acquisition by Meetup is considered success—and maybe it is in the short term."

What you didn't grasp is the fact that THAT had been their business model from start on, to be bought.

Alexander Deliyannis wrote:

But in the mid- and long-term, how many users that have been
disillusioned by such business behaviour are likely to invest their time
and entrust their valuable data on online tools again, if they can help
it?

I don't think there are any easy solutions to this. The cloud revolution is not going away, and start-ups (or their investors) will always be tempted to exercise their exit strategy by selling out to a large corporation with deep pockets.

I would be more likely to trust a service that is a labour of love and run by two guys from their garage, than a hip start-up with huge VC support from the Valley... The former might be around longer, even if the rise is more spectacular of the latter...

But then I am not a business buyer, so the cloud services I tend to use for my professional needs (the likes of Workflowy and Gingko) are probably less attractive for large corporations to acquire (and kill off), and they are more likely to survive on subscriptions from enthusiasts (probably many of them academics and their students).

It also comes down to the question of how users can minimise the risks of service termination by demanding features from these services to back up data off-line on a regular basis, and be able to export it in a format that can be used in other software.

Dr Andus wrote:

I would be more likely to trust a service that is a labour of love and
run by two guys from their garage, than a hip start-up with huge VC
support from the Valley... The former might be around longer, even if
the rise is more spectacular of the latter...

But then I am not a business buyer, so the cloud services I tend to use
for my professional needs (the likes of Workflowy and Gingko) are
probably less attractive for large corporations to acquire (and kill
off), and they are more likely to survive on subscriptions from
enthusiasts (probably many of them academics and their students).

BTW, WorkFlowy and Gingko are each run by two guys. That of course also has its risks (it's enough for one of them to lose interest and maybe that's the end of the service). On the other hand both provide excellent export functions (plain text, for one), so you will always have your data, if you care to back-up frequently.

And I get a warm feeling from supporting such small businesses for some reason, which I don't get from supporting a venture capital fund...

This is what fuels firms such as Y Combinator and their peers. It is cheaper and offers more control for the money crowd to find small handsful of hungry (literally) young developers with product ideas and carrot-and-stick them into launching their little business, ripen them, and then sell or merge them. The buyers of these small businesses are frequently more interested in the skills that the small entrepreneurs developed with Y Combinator's money, than the products. So, Y Combinator funds the skill building of the competent, shakes the losers out of the market, and then gets a tidy profit for their efforts. In this model, many if not most of the cloud-based upstarts are really just journeymen indentured to the VC who then sell forward the indenture after the journeyman creates the masterwork that proves their skillfulness. It's not the masterwork that matters -- it is the workman. (Or woman -- no gender slights intended here.)

22111 wrote:

"For Dispatch’s founders, the acquisition by Meetup is considered
success—and maybe it is in the short term."

What you didn't grasp is the fact that THAT had been their business
model from start on, to be bought.

Dr Andus wrote:

>I would be more likely to trust a service that is a labour of love and
>run by two guys from their garage, than a hip start-up with huge VC
>support from the Valley...

[...]

>But then I am not a business buyer, so the cloud services I tend to use
>for my professional needs (the likes of Workflowy and Gingko) are
>probably less attractive for large corporations to acquire (and kill
>off), and they are more likely to survive on subscriptions from
>enthusiasts (probably many of them academics and their students).

[...]

And I get a warm feeling from supporting such small businesses for some
reason, which I don't get from supporting a venture capital fund...

My impression is that both Workflowy https://news.ycombinator.com/item?id=1870473 and Gingko https://news.ycombinator.com/item?id=6302825 are Y Combinator funded... see Paul's post for more on YC's logic.

Let's not hold any illusions here: tools like Workflowy and Gingko are not garage operations; not when they start serving tens of thousands of users who rely on these tools regularly and have very limited patience. You need serious money to support the server power and software debugging and maintenance over a reasonable period.

The 'two guys' are just the tip of the iceberg; there's surely a lot of outsourcing involved, as well as 'unsung heroes' in the backstage. Check out Hojoki's team--which appears to be self-contained--to get an idea of what is needed http://hojoki.com/hojoki-huwhat/

The benefits of developing applications for the web are soon outweighed by its complexities as things start getting serious. Think scaling, latency and browser compatibility issues, not to mention integration challenges as you try to cross-market your product with the Dropboxes, Evernotes and Googles that your prospective clientele is already dependent on.

Paul Korm wrote:

So, Y Combinator funds the skill building of the competent, shakes
the losers out of the market, and then gets a tidy profit for their efforts.
In this model, many if not most of the cloud-based upstarts are really
just journeymen indentured to the VC who then sell forward the
indenture after the journeyman creates the masterwork that proves
their skillfulness. It's not the masterwork that matters -- it is the
workman. (Or woman -- no gender slights intended here.)

Paul, thanks, I suspected that this was the logic, when reading the CVs of various 25-30 y.o. CEOs which proudly included how many startups they had founded and then closed or sold. But I had no idea of its extent, and was still hoping that Rework's "build a business, not a startup" common sense approach had gained some ground.

In any case, the investment logic behind what's happening does not change my main point: that eventually users will have startup fatigue. Most importantly, we are no longer talking about kids trying out the latest free social network, but about businesses looking for tools to help their work. And when these are recalled, the businesses lose money.

Last but not least, though I wrote more about Dispatch, the Manymoon/Do.com fiasco is probably much more noteworthy: Manymoon was a successful commercial tool. I had tested it within the context of a market research on online project management tools, and it was a serious candidate for a major 5-year project. We eventually rejected it because it didn't have a very specific feature we needed. When Salesforce bought it, it seemed as if they really wanted to popularise it more--the fact that they castrated it along the way is secondary. Take a look at some of Do.com's clients: https://blog.do.com/stories Is it possible that they will take the shutdown lightly?

Alexander Deliyannis wrote:

My impression is that both Workflowy
https://news.ycombinator.com/item?id=1870473 and Gingko
https://news.ycombinator.com/item?id=6302825 are Y Combinator funded...

Let's not hold any illusions here: tools like Workflowy and Gingko are
not garage operations; not when they start serving tens of thousands of
users who rely on these tools regularly and have very limited patience.
You need serious money to support the server power and software
debugging and maintenance over a reasonable period.

Thanks, interesting... You're right about WorkFlowy re YC funding. But as far as I understand, Gingko was merely featured on HN (as part of the "Show HN" feature), which doesn't in itself mean YC funding. At least they're not on the YC list of funded companies:
http://yclist.com/

It is my general sense though that Gingko are merely starting out (after all they were only just offering the lifetime membership to their first 500 customers), while WorkFlowy has just mentioned on their blog today that they have 600,000 users:

http://blog.workflowy.com/post/65084158466/we-dont-blog-because-were-busy-building-workflowy

They also said "WorkFlowy is a successful small business" and "there are only two of us," which is why I thought of them as a garage operation...

Thanks for starting this interesting thread, Alexander. You've raised issues I was totally unaware of, though I've had a growing suspicion about cloud services for a while now. A friend and I have (only partially) joked about creating a tee-shirt that says on the back "I use the cloud" and on the front "but I don't trust the cloud."

Though in thinking about this, I realize there are two distinct "cloud" issues here: 1. Trusting your data to the cloud for use on local devices with locally running apps. 2. Trusting cloud-based apps.

I am pretty comfortable with the first issue, especially in the case of Dropbox, where you keep a local copy of the data. Not only is the data safe, but it is safer, because you have the cloud back up (as long as you trust that it can't be hacked). But I really see no reason to trust cloud-based apps. Over and over they have been proved unreliable, as your original post demonstrates. I suppose if your goal is collaboration, especially with colleagues outside your local area network, you have no choice but to use the cloud. As your experience demonstrates, however, "unbuyer beware." (i.e. if it is free, it probably won't be around long).

Steve Z.

It was ever thus.

In entrepreneurship classes at business school, the issue of the exit strategy always looms large. Trade sale? Private equity? Your choice may affect how you structure your start-up from the very beginning. Capital structure? Tax strategy? If you bring in outside advisors at any stage or if you seek venture-capital support, they'll absolutely be taking a short-term view - and 'short-term' invariably means less than six years.

About fifteen years ago, I was involved with a number of small start-ups in a particular industry. All are now owned by very large international corporations, and many of their founders are consequently rich enough not to have to work again. I suspect that the only real difference between those companies and the internet start-ups we're talking about in this thread is that they didn't have hundreds of thousands of customers, some dependent on them.

But you can see why young entrepreneurs seek this way out. Launching and maintaining start-ups can be very hard and time-consuming work. You can do it at 25, but it's not something you really want to be doing at 50.

Btw, "Unbuyer beware". Like it!

My concern, having a small startup in this space, that these aqui-hire and quick-turn exits will ruin the field for firms like ours (xtrant.com) who intend to grow and scale carefully and be around for the long haul. Fortunately our real-world clients don't read startup news of follow our competitors, so they will likely miss this. But future potential paying users of our service may be jaded when our product gets on their radar.

At another time I may have indulged in Schadenfreude at the demise of tangential competitors, but now I'm more concerned about the industry itself.

Stephen Zeoli wrote:

Though in thinking about this, I realize there are two distinct "cloud"
issues here: 1. Trusting your data to the cloud for use on local devices
with locally running apps. 2. Trusting cloud-based apps.

I am pretty comfortable with the first issue, especially in the case of
Dropbox, where you keep a local copy of the data. Not only is the data
safe, but it is safer, because you have the cloud back up (as long as
you trust that it can't be hacked). But I really see no reason to trust
cloud-based apps. Over and over they have been proved unreliable, as
your original post demonstrates.

In principle I agree, and I personally use Dropbox, Nomadesk and Livedrive at home and work within this context. In a similar way I use Google Apps: mail is locally copied as is available offline in my email client, as is calendar information which is synced with Outlook. There are other examples of such configurations, including Evernote.

Yet the borders between 1 and 2 are not so clearly marked: the cloud is not just a syncing or backup service. The functionality of locally running apps is often limited compared to that of its web counterparts. It's not just collaboration (which is my primary reason for investing my time and money on cloud tools); in Dropbox, for example, in order to access previous versions of files--a very valuable functionality--after right clicking you are taken to the web app. Cloud tools often do not offer their own desktop apps, and one relies on third-party programs which do not necessarily replicate all functions one by one; an obvious example is Gmail.

By 2016, business financial investment on the cloud is to surpass that of local systems. Expect the functionality gap to widen rather than be bridged. Soon it will not be a question of getting a certain feature locally or through the cloud, because only the cloud will be offering it.

In theory, competition among brands should provide a wider choice to the consumer. Yet look at the incredible number of offerings in the smartphone market and try to find one which includes a physical keyboard (yes, there are a limited few, but they are the exception which confirms the rule). I expect similar "convergence" phenomenons in the application market.

Alexander Deliyannis wrote:

Let's not hold any illusions here: tools like Workflowy ... are
not garage operations; not when they start serving tens of thousands of
users who rely on these tools regularly and have very limited patience.
You need serious money to support the server power and software
debugging and maintenance over a reasonable period.

The 'two guys' are just the tip of the iceberg; there's surely a lot of
outsourcing involved, as well as 'unsung heroes' in the backstage.

I was reminded of this conversation after seeing this recent blog post:

"WorkFlowy Co-Creators, Mike Turitzin & Jesse Patel on WorkFlowy’s Early Days"

http://blog.workflowy.com/2015/11/17/interview-jesse-mike-part-1/

Stephen Zeoli wrote:

Though in thinking about this, I realize there are two distinct "cloud"
issues here: 1. Trusting your data to the cloud for use on local devices
with locally running apps. 2. Trusting cloud-based apps.

I think another distinction to be made here is between the product/service itself, and the business model. I just read a very good article this morning on the 'race to zero' for software pricing:

https://stratechery.com/2015/selling-feelings/

The following quote is about free-to-play games, but seems to apply just as well to free-to-use cloud services (with premium add-ons):

"Plus, just as is the case with free-to-play games, the economics are all in alignment: creating the market is a fixed cost which means it has no impact on the marginal cost of one more player. Why not add the maximum number of players (by making it free) and then develop a different revenue stream that pays out continuously the longer a player plays the game, ensuring the developer captures value as it is realized? Sure, said value may only be captured from some, and in relatively tiny increments, but remember we’re dealing with the Internet: you can make it up in volume."

I don't know that these sorts of models are good or bad for users, but I think they are inevitable for cloud-based startups. With no/low barriers to distribution, the price goes to near zero (depending on how well your product/service is differentiated.) So why not start at zero to maximize the user base from which you may or may not be able to create a small subscriber base? If you can attract a large free user base, you can then make the case to investors that there is a potential revenue stream to follow. If you can't attract a significant user base with a free product/service, forget about revenue- you've failed the most basic litmus test and need to go back to the lab. For a cloud-based service can mean making changes to your service on the fly, that some of your customers may not want.

Part II of the WorkFlowy interview is worth reading as well, especially as it contains something of a roadmap (or at least a wishlist of the developers themselves):

http://blog.workflowy.com/2015/11/19/interview-jesse-mike-part-2/