I will never forgive Dropbox. I spent a decade evangelizing them as the way to do cloud file storage to all the tech-illiterate people in my life and then Dropbox decided to limit free accounts to three devices. The sheer number of pissed-off and/or confused phone calls I got from all of those people was enough to make me wish eternal suffering upon the Dropbox executives.
That is basically the dictionary definition of cashing out social capital: be so good that people evangelize your brand, then start aggressively putting profit first once you reach a critical mass of public awareness.
I think they didn't cash-out on social capital. They grew, and became "enterprise first". The recipe is to limit free services and increase the price of paid service, so only big customers and serious users get attracted to you.
Trello did the same thing. They killed their single-user friendly features and moved to enterprise first, gouging serious solo users in the process.
I'm still subscribed to both, but I'm not as happy as before.
The 1:1 analogy is to investment capital: let's say someone started a successful company that got purchased and has now invested the $5mil USD they got paid (the capital) with an annual rate of return of 5% giving them $250k/year.
They could reasonably retire off just the return on investments.
However, if they start using the $5mil to buy houses and cars and whatnot, they are "cashing out the capital". As they spend more and more, the return on investment drops but everything looks great from the outside: they have lots of cash, a lot of "things", and so-on. However, look ahead a few years and they might be left with $500k invested giving them a return of $25,000/year and it's possible that they would no longer be able to retire off that putting them in to a possible tail spin of needing to spend the remaining capital just to pay the monthly bills.
I propose that this is what companies are doing with their "social capital" (which includes the public's impression of the brand and that brand's work on building up their customers). Creating a brand with integrity and values while working to solve a problem well builds social capital. All they have to do is "maintain the balance" (stay true to the values and mission that got them there) in order to keep getting the "return on investment" (continual influx of new paying customers). However, if they choose to start sacrificing values and quality for the short-term gains they can definitely do that. On a quarterly balance sheet it even looks like they are "rich": "We're spending less on dev time by ignoring bug reports and less on servicing free customers while also converting 10% of those old free customers to paying customers. The bottom line is way up!". But because they've sacrificed the values that attracted those customers in the first place new potential customers will start looking more critically, or will choose a competitor, or will even start their own competing service. It's only a matter of time before the company looks at the balance sheet and wonders why income is down. If they are really looking to ruin the company they might even point fingers like "we used to get $250k/yr, but now we're getting $25k and our competitor is getting $225. we must conclude that the market is saturated and we have to go on the offensive against that competitor.", when what they could do is simply accept that they have to start over to rebuild the social capital so they can have the same level of return again (or maybe even take the lesson and work harder to build more capital and have a bigger return in the future).
