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Unlimited is a Ponzi Scheme
Recently Google Photos ended their unlimited storage. You shouldn’t have been shocked, because unlimited is more often than not an unsustainable Ponzi Scheme.
Good at Business
When a software company gives you unlimited storage for anything, the only way for them to maintain that business in the long run is for them to make (amortized or not) incremental and recurring money from each thing they store. This is true, because storage is a recurring and forever cost.
Most B2C companies don’t make recurring money off of the data they store for you. They make money inversely proportional to how recent you stored the thing. Sometimes they don’t make any money at all. So it’s no surprise that unlimited is a Ponzi scheme, because that’s the only way to make the ledger look right.
The Unlimited Ponzi Scheme
Businesses will often follow a Ponzi Scheme-esque model with storage for their product. As they go through growth, newer customers are instantly delivering new revenue while their cost is very little - they haven’t started accruing much data. These customers offset older customers, who are getting more expensive as data retention continues forever.
Then, one day, the growth stops. You’ve gained most of the market you’re going to gain. All of the sudden margin starts to slip. Fewer new users exist to offset the old users People look into and realize the unlimited scheme is up. Then they implement a retention policy and customers freak out.
Handling Unlimited as a Business
Businesses often fail at unlimited in a few ways.
First, companies should offer a way to pay more to get more storage. I can’t be mad that you won’t run a ridiculous business for me. I will get mad if you sink me into your product and don’t give me the option to pay a fair value to continue service.
Second, companies should be mindful of data retention policies from day 1. The unlimited Ponzhi scheme is in many products not something that companies even know is happening. Things look good until they don’t.
If you keep data around without retention policies, you will face a long road of performance, stability, and customer issues as you scale. Especially as your growth numbers slow, you should be mindful of the upcoming business realities sooner rather than later if you have anything that is unlimited in your product.
There’s no free lunch in this world unless you’re willing to run around to different dumpsters to get it.