Re:Goodreads plans to retire API access, disables existing A...
by wpietri on Monday December 14, 2020 @07:21PM
(#25425335)
I agree that VC wasn't a great choice. But I don't see much evidence that they were reliant on investor money; per Crunchbase they only took $2.8m over 6 years of operation. And I don't think Amazon was their only potential source of revenue. Book publishers clearly still spend money on marketing, and Goodreads would be able to do very precise targeting. I also suspect they could have sold well-targeted ads to others, as some book categories strongly indicate monetizable non-book interest.
Had they instead chosen not to take VC: they had 35 headcount at the time of acquisition. That load probably requires $7m to $10m/year of revenue, particularly when they have to start doing data deals for all that book data / cover photos. I suspect they couldn't make the business work w/o VC given they ran two years on that $750k angel round. And even if they could, having a near-monopsony relationship with their affiliate fees partner makes them not a real business because they are highly vulnerable to Amazon predation. The same as Mozilla -- when there's just one buyer, that buyer names the price.
edit: put more succinctly: a business that either ran and grew on earned dollars (ie no vc), or a VC-backed business that didn't rely on the company you were attempting to cannibalize to play nice with you.