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In August of 2022, Heroku announced that they would discontinue free plans.
This would end an era for Heroku as I knew it: the go-to web hosting platform for getting your first app into production. Every bootcamp I knew of used Heroku to demonstrate deployment. Most Rails shops started with Heroku until their apps got too big for the platform’s per-unit prices. I never had a conversation about a Rails deployment in which Heroku was not the default. Immediately, the chatter began about migrating or letting old projects die. Since Heroku already had a reputation for being cost-prohibitive at scale, folks expected the formerly-free options to become exorbitant, or at least out of reach for educational purposes.
Why would Heroku durf themselves like this?
Let’s talk about the sustainability of internet businesses.
You will not like what I have to say.
In what I’ll call the Centralized Software as a Service Industry, it’s actually not that easy to break even.
How did we get here? Well, once upon a time, making money on the internet was much easier. The market was not as saturated, the American1 public not as jaded toward ads, and programmers not as expensive as now.
I’ve talked about this period some; why it was so easy to make something “visionary” twenty five years ago, and why it’s not like that now. The bar for making a “visionary,” market-breaking success story is much, much higher than it was in 1995, when the dot com boom created today’s tech millionaires and billionaires.
Frankly, even the founders who struck it rich in the ’90s can’t clear that bar. Plenty of their later golden child investments have tanked.
But those dudes are sitting on accumulated wealth from the ’90s, and they don’t realize they’re out of touch with tech today. So they “angel invest” in projects that excite them—that probably would have been breakout successes in 1995.
And for a little while, or sometimes a long while (hi Uber), companies can nurse that sweet, sweet 1995 money by just keeping those ’95’ers inspired and excited. This is why a lot of unicorns have kook founders. Kook founders are awesome at keeping ’95ers excited.
But it’s not 1995. You cannot make a bullshit, insecure popsicle stick fort on the internet in 6 days and turn a killing (ebay, 1995).
Operating costs have skyrocketed. Plus, programmers cost a lot of money now. The only thing more expensive than a tech team is an ex-techie turned exec who thinks they should take home the amount that whatever ’95er they’re a fanboy of took home.
Furthermore, it’s harder to make revenue for 3 reasons:
1. No one wants to pay for the product.
People will rip it, they will pirate it, they will hack it and give out codes and you-name-it, to not pay for a thing. The number of people who will use a thing is consistently 100-1000x the number of people who will pay a red cent fo
