Bubble 2.0

I feel that the real stars are usually operating fairly quietly, building on a primarily-open model rather than a walled garden, and creating strong businesses in a highly traditional fashion: by being the best around. (cue the Joe Esposio song)

You can still build a stable foundation on an open model if your company holds the expertise in the technology; your immediate competition is likely to be arrogant and compete in the sprint for the walled garden, rather than the marathon for the open model. (other companies working towards an open model are collaborators toward a standard, but competitors in services. Hardly an unusual situation.)

If the competition gets a lot of momentum in an inelastic product(for example, operating systems or instant messaging), that can kill you early on, but over the long term the most-open player usually becomes disruptive and causes the marketplace to expand with a new set of services. That is my observation of most such situations in technology.

Whether or not that would go over in a bar would depend on the kind of bar it is, but you'll get a pretty obvious answer if you ask the people at a church how it could be possible that there’s an organization that’s better than a corporation for many purposes, and that it’s made largely by volunteers who donate their time largely for nothing more than the pleasure of doing so.

Many startups that appear to have no revenue model make money in ways that aren't obvious to consumers. How does del.icio.us make money? By selling marketing data compiled from tagged urls. Flickr didn't start with a clear revenue model, but they can pay most of their bills from the ~5% of users who have a paid premium account. Even craigslist, the paragon of free services, makes a significant amount of money by charging for job listings in a few select markets.

Matt makes some excellent points, and I believe him that the future is probably going to be dominated by smaller companies with low profit margins as opposed to venture backed behemoths. But it doesn't change the fact that it's difficult to NOT make money with a "wildly popular" product.

If you have a growing website with hundreds of thousands of happy users, you will find a way to make money. I run a website that is mildly popular on occasion and believe me, we get emails. Every few weeks someone will come to us and suggest ways that we can make more money. The more popular the website, the more opportunities you'll find to make money on it. I don't think that Mint or YouTube will close their doors any time soon. There are just too many ways in which they could build significant revenue. Right now their biggest problem is choosing and implementing the right one.

If so, I might want in. You know, to hedge my bets...

Hosting is pretty darn cheap these days... If you keep your expenses tight, the chances of having to shut down are pretty much 0, and the chances of turning a profit are pretty high.

I also think the chances of youtube not being around are pretty amazingly slim. Even if it costs a ton to run, it's a strategic long term thing.

There are also countless bands who make music and never see a dime, as well as countless bloggers who blog for free. Not everything is going to die without money.

The problem is doing something that people want, and not about temporary traction to a site, that can be converted into eyeballs for ads.

By the way linux is coded largely by unitesity students or people who work at large corporatins like nokia so your argument that its coded by people who code for free is actually based on an illusion many others have too.