Why Products Need a Sustainable Business Model from Day One Now

Let's take a step back first and look at why so many products in the past could "lose money" and still take off.

If we look at the evolution of the internet, we've actually gone through two really clear tech booms, and these two booms basically gave rise to most of the tech giants we see today.

The first big boom was: personal tech going from zero to widespread adoption, like the spread of PCs and smartphones. The second big boom was: internet connectivity evolving from dial-up to 5G, bringing massive connectivity and shifts in content consumption.

Whether you were making hardware (like IBM, Apple), building platforms (Google, Facebook, TikTok), or even companies using these foundational shifts to transform traditional industries (like various SaaS companies, new energy vehicles, etc.) – they all grew super fast during these boom times.

These booms had one thing in common: growth was a sure thing.

For example, smartphone penetration jumping from 10% to 80%, or internet bandwidth going from 56K to fiber optic and 5G – that's some serious certainty. This certainty gave new entrants a strong sense of security. Even if you only captured 1% of the market share, it could still be a multi-billion dollar opportunity.

So, back then, a lot of companies dared to invest heavily upfront, not rushing to monetize. As long as they moved fast enough and grabbed market share, there was a good chance they'd make big money later.

But now, things are different.

The phone, as our primary personal device, is pretty much irreplaceable at this point. VR, smart glasses, smartwatches – these devices have been around for years but haven't really become mainstream gateways. On the flip side, faster internet isn't really "felt" by the average user anymore; everyone's already streaming videos and playing games super fast.

The underlying growth has become uncertain, which makes it harder to estimate opportunities.

You can't really use "I'll grab 1% of the future market" to justify your valuation, attract investment, or convince your team to go all in. Without that guaranteed growth, early-stage investments become super cautious. Everyone's thinking, "Can I sustain myself from day one? Can I build a positive feedback loop?"

That's why we're seeing more and more startup teams and products thinking about the sustainable business model right from the get-go.

So, what's different about the AI era? Is it the third wave? Where's its growth certainty? And how does it compare to devices and networks?

I'll dive into that topic in a separate post later.