As a business, we did need to bring in revenues to cover our costs and development and to accomplish this we created a tiered pricing plan for certain types of uses. Although this was financially successful for us, the side effect of this was that our tools and their features (in their full capacity), were not truly accessible to everyone.
We have long felt that to better serve our core mission our complete feature set needed to be in the hands of everyone - not just those who could afford it. Fortunately, our recent round of funding (by Spark Capital, Bezos Expeditions & others) enables us to finally achieve this goal as we shift revenues opportunities to other exciting areas that don't limit individuals in any way. We are excited at the opportunity to stay true to our mission. Not many companies are so fortunate.
They really must have an ace up their sleeve. This seems both illogical and suicidal. They had a product people were willing to pay for, and in the name of some higher ideal they are abandoning a model that was shown to work.
If they really wanted to open up their tools to more people, they could very well have adjusted the pricing model within their current, working business model. Not throw the whole thing out in the name of persuing an un-proven model.
I have a hard time believing the VC's were all on board with this move. It's not simply risky, it's unnecessarily risky, which is the worst type of risk for a startup to incur. (They already have enough risk as it is.)
Edit: Note, I'm not trying to say that what they are doing is the wrong move -- only that since it is so apparently unnecessarily risky from the outside they must really have something big planned that has a much bigger upside for them in the long run.
I disagree. A lifestyle business is not acceptable for a VC model - they only invest in businesses that operate in large markets and can take these markets by storm. My guess is that the founders realized that they cannot create a scalable business by charging for the products - not enough people would be willing to pay for them. However, they could take the market by storm if their products were free. From a VC's point of view this makes perfect sense because a lifestyle business (despite how great it is) does not justify a VC investment.
I can see that viewpoint, although it does sort of play into the old stereotypes of VCs. Ditch a proven revenue stream and give the product away for free? Sure, we'll make it up on volume!
Well, I hear what you're saying, but I think more often than not people are simplifying it. The way VCs operate is really a consequence of liquid financial markets. If I have a large amount of capital, I can invest it into treasuries and get a small return at zero risk (zero in a sense that if the U.S. government defaults the entire world economy will go to hell anyway). So, it just doesn't make any sense for people to invest into high risk low return businesses, and lifestyle startups tend to fall into this category. It seems that the decision has been made implicitly by the way modern financial markets are structured, and hasn't really been made by the VCs themselves.
This is why I'm a bit skeptical of the "new breed" VCs that have a different business model (invest less money into companies that potentially target smaller markets). It just doesn't make any sense from the financial perspective.
How risky it is depends on how many people are paying for it. I'm guessing they're simply finding that that number is incredibly low. Anecdotal: I've never heard of it, and I use non-web-based products it competes with quite frequently, and also read this site and tons of blogs that cover this sort of stuff.
It's entirely possible they're transitioning to a freemium model and will make much more that way.
Sounds to me that the VC funders think that they're not going to get an exit via IPO so the only exit where they can possibly get a 10 fold ROI is to sell it. And the only way to demand a higher price at sale is users. Lots of locked in users.
marketplace for people to sell the art they create with aviary tools; this model is potentially inclusive of consumer products like cafepress, business logos like 99designs and virtual goods like imvu developer community.
I don't think the web-based graphic editor time has come yet. The user experience is not great. I have to wait for over a minute to start editing an image.
For simple stuff that I once might've done in MS Paint I've already switched almost exclusively to using http://www.canvaspaint.org/, both because it's really quick, and because File->Save saves to a URL, so you don't even have the extra uploading step before sharing your quick sketch/diagram.
I agree that Aviary's tools, being much more full-featured, are pushing what can be reasonably done on the web currently without it being painful for the user. But I think the model is a pretty good one, and a matter of time plus perhaps optimization: something as responsive as canvaspaint.org that was more like a modern image editor would be a winner.
In their 2 minute pitch video (on the homepage) they say over and over again how people shouldn't use photoshop. Even the first line is "do you want to be a photoshop guru but...". And how does it end? "so don't burn cash and harddrive space on photoshop". Really, that's the best they can come up with?
If complaining about their competition is their best strategy... well then they deserve to fail.
