The Cost of Enshitification: Why Short-Term Gains Can Damage Long-Term Growth

At Dixon & Axelsson, we’ve seen it time and again: businesses chasing short-term gains at the expense of their users. It’s an easy trap to fall into, especially in fast-moving markets where growth pressures and revenue targets dominate decision-making. But this practice - commonly referred to as “enshitification” - comes at a cost. Prioritising profit over user experience might boost revenue in the short term, but the long-term consequences can be devastating to brand loyalty and sustainability.

Here’s why enshitification is a slippery slope and how founders can avoid it.

What Is Enshitification?

Enshitification happens when a business, often a digital platform, shifts its priorities away from users and towards extracting maximum revenue. In the early days, these platforms typically focus on creating value for users to build trust and scale quickly. However, as they grow, profit becomes the sole driver, leading to exploitative practices like excessive ads, over-monetisation, or diluted product quality.

The Long-Term Consequences of Enshitification

While the short-term benefits of prioritising revenue over experience may look appealing, the damage to trust, loyalty, and brand perception is often irreversible.

1. Loss of User Trust

• Example: Social media platforms like Facebook have faced backlash for prioritising ad revenue over user privacy. The result? A steady decline in user trust and public perception.

• Impact: Users are quick to leave platforms that make them feel exploited or undervalued. Without trust, even the most innovative products lose their competitive edge.

2. Reduced User Engagement

• Example: Streaming services that increase prices while offering less value (e.g., reduced libraries or intrusive ads) often see a drop in user engagement.

• Impact: Users may remain subscribed in the short term, but they are more likely to churn once better alternatives appear.

3. Negative Word-of-Mouth

• Example: Gaming companies that aggressively push microtransactions often face backlash from loyal players.

• Impact: Dissatisfied users can quickly turn into vocal critics, tarnishing the brand’s reputation and discouraging new customers.

Cautionary Tales of Enshitification

1. MySpace: A Platform That Lost Its Core Focus

Once the dominant social network, MySpace shifted its focus from user experience to aggressive ad placements. As the platform became cluttered and less user-friendly, audiences migrated to Facebook, which offered a cleaner, more personalised experience.

2. Peloton: From Premium to Overstretched

Peloton’s push to expand its revenue streams—through subscription fees and product diversification—alienated its core user base. Coupled with quality control issues, the brand saw a decline in loyalty, highlighting the risks of stretching too far, too fast.

3. Uber’s Pricing Tactics

Uber initially revolutionised ride-sharing with a focus on affordability and convenience. However, practices like surge pricing and driver dissatisfaction led to declining trust among users and drivers alike, creating opportunities for competitors.

Uber - a cautionary tale of enshitification

How Founders Can Avoid Enshitification

1. Stay Aligned with User Needs

Your users are the foundation of your business. Continuously listen to their feedback and adapt without compromising their experience.

• At Dixon & Axelsson: We encourage founders to embed feedback loops and user-first principles into their strategies to stay aligned with evolving customer expectations.

  
  

2. Prioritise Sustainable Revenue Models

Quick wins often come at the cost of long-term growth. Choose revenue models that enhance, rather than exploit, user experience.

• Example: Freemium models that offer genuine value to free-tier users while providing clear incentives for premium upgrades.

3. Measure What Matters

Instead of focusing solely on immediate revenue metrics, track engagement, retention, and user satisfaction. These metrics often predict sustainable growth.

• At Dixon & Axelsson: We work with clients to build balanced scorecards that prioritise long-term value over short-term profits.

4. Keep the Brand Promise Intact

Consistency builds trust. Deliver on what you promise, and avoid drastic pivots that undermine your original value proposition.

• Example: Brands like Patagonia remain successful because they stay true to their commitment to sustainability, even when it limits revenue opportunities.

Our Hands-On Approach to Sustainable Growth

At Dixon & Axelsson, we specialise in helping founders navigate the balance between growth and user value. Here’s how we can help:

• Collaborative Strategy: We work with your team to ensure alignment between business goals and user needs.

• Execution Roadmaps: From pricing models to customer engagement strategies, we ensure every decision supports long-term success.

• Performance Tracking: We help you identify meaningful metrics to guide sustainable growth.

  
  

Conclusion: Build for the Future, Not Just for Today

Enshitification may yield short-term gains, but the long-term costs can undermine your business’s potential. By prioritising user trust, sustainable practices, and strategic growth, founders can scale their businesses while maintaining loyalty and integrity.

At Dixon & Axelsson, we’re committed to helping businesses grow without losing sight of what matters most. Ready to future-proof your strategy? Let’s start the conversation.