The resource barrier

Such a setup leads to a twisted world. To effectively gain advertising revenue, or gain capital investment, one needs to demonstrate a large user base. To get the large user base, one needs a flashy, expensive launch with lots of media hype, and pretty graphics. Valuable resources go towards the effort to push the business over this barrier, instead of going towards the development of a solid application. Businesses need to spend their limited startup resources on this push, rather than application development.