Not necessarily. Cost of users isn't linear with count of users and while it might go down as your userbase grows, you might not have the finances yet to handle that growth.

You can't just "be ready to host a 100 million users, tomorrow" in the early stages of your business.

If you don't have a contingency plan for how you will handle - operationally, financially, infrastructure-perspective, monetization - user scaling at speed, then not only is your business a charity, it's a hobby, too.

If there are credible signs you will acquire 100m users tomorrow, and you can't walk in to a VC and walk out with a big chunk of money for a small amount of equity, it means you don't have a real business plan.

Additionally, I would be interested in any examples you have of companies acquiring 100m users overnight, or anything within two orders of magnitude of that.

Accidents happen. Partners cheat. Here is a simple example from Shift Jelly about Amazon App store and their free app of the day.

http://blog.shiftyjelly.com/2011/08/02/amazon-app-store-rott...

> All we got was about 300 emails a day to answer over the space of a few weeks, that left us tired and burnt out. For all we know most of the people who wanted our application, now have it. To add insult to injury Pocket Casts relies on a server to parse podcast feeds (allowing instant updates on your phone), and all these new users forced us to buy more hardware just to meet demand. Hardware that we are going to have to support indefinitely at our own cost.

Can you fault Shift Jelly for not being able to see through this?

Amazon offered them a deal. Amazon made the terms of that deal super clear by putting it in bold type. Shifty Jelly accepted that deal. Calling that cheating is beyond comprehension.

That's the thing about "exposure" though. You have no control over it. You can't plan for it. You are missing the point. 100 million was just a number. The corpses of businesses that scaled past their ability to serve their customers are real.

But part of your argument has merit: it's the same reason that "exposure" doesn't create album sales. There's no real chance (really, there isn't) that you have a product that will reach 100m people tomorrow, so you shouldn't be producing music as if you would.

    > You can't plan for it.

Sounds like a good way to get sued by your investors.

    > The corpses of businesses that scaled past their ability 
    > to serve their customers are real.

Turns out that a Rails App + someone calling themselves a "Serial Startup CEO" on LinkedIn don't necessarily equate to a business.

> Sounds like a good way to get sued by your investors. You can try and anticipate it and you can model the risk and try to mitigate downside risk. You cannot "plan" for it though - it's a factor outside of your direct control. It's not a target you can hit or not hit, you just are prepared and lucky either way.

> Turns out that a Rails App + someone calling themselves a "Serial Startup CEO" on LinkedIn don't necessarily equate to a business.

Rails, like any other tool/framework, works perfectly well for certain kinds of problems. I would say this is very true for the kinds of businesses that most "serial startup CEOs" are solving. Twitter gave Rails a bad reputation because Twitter's problem was exceptionally bad for Rails at Twitter's scale. In most other cases it's just poor engineering discipline, whether it's in choice of tool or how it is used. It turns out that ActiveRecord isn't really a great tool for dealing with 450M+ write transactions per day. Wasn't designed to be.

Rails is powerful and ubiquitous for very good reasons. The tools that often get the most hate end up quietly doing their jobs or, worse, growing up and becoming better and everywhere. JavaScript, PHP, Lisp, C, Java? And that's just a few programming langauges...There's a holy war over Text Editors that aren't ever going away.

It's not a "web 2.0 startup" specific problem we're talking about. Rapid growth is notoriously one of _the most common_ reasons that companies fail (regardless of if that failure puts them out of business or not).

It's a marketing channel. You pay real costs to provision and support free users so that some of them will become paid users.

It only works if there is a high enough proportion of conversions to paid.

    > It only works if there is a high enough proportion of
    > conversions to paid.

That is additionally what makes it a viable business. Loss-leaders are nothing new, in any industry, despite the cute name of "freemium".