About a month after we started Y Combinator we came up with the phrase that became our motto: Make something people want. (...) Another thing we tell founders is not to worry too much about the business model, at least at first. (...) A couple weeks ago I realized that if you put those two ideas together, you get something surprising. Make something people want. Don’t worry too much about making money. What you’ve got is a description of a charity.
Frank Hecker (Mozilla Foundation), has a written a great response. Here is an excerpt:
First, I’m surprised Graham didn’t mention Mozilla in this context; it seems a textbook case of succeeding by focusing on what users want, starting from a nonprofit orientation and then evolving into a hybrid organization combining a public benefit purpose and a revenue-producing business model. Netscape spent a lot of time focusing on how the browser could drive server software sales and create new lines of business, and Netscape Communicator was the result. AOL spent a lot of time focusing on how the browser could drive AOL subscription and ad sales, and, well, not much was the result. Once revenue and profit were de-emphasized the Mozilla Foundation spent its time focusing on making a great browser people would want to use, and Firefox was the result.