Plugged-In Entrepreneurs Think The Entire $400 Million Premise Of Path Is Flawed

Path is a mobile social network that's still alive in part because its founder, Dave Morin, wants it to be.

The Facebook millionaire and other investors have poured more than $50 million into Path. When it re-launched in November 2011, the premise was promising:

If you could create your Facebook friend list again from scratch, what would it look like?

For many people, the answer would be a smaller, tighter-knit friend group. The word "friend" is used liberally on Facebook and as a result, News Feeds are full of stories about people who aren't truly close to users. Path tries to solve that problem by limiting its users to 250 connections.

That idea is good in theory, but it's actually problematic from a psychological perspective. And if Path fails, the limited number of friends may be the reason why.

Last night, at a Web Summit dinner in Dublin, a group of entrepreneurs were talking about the future of Path and why the social network hasn't gone mainstream yet.

One person said it was because there were too many other social networks to use and no reason to switch to Path. Another founder stated a bigger issue:

When you limit the number of connections a user is allowed to make, it can lead to them make no connections at all.

Responding to a friend request on Facebook doesn't require much thought. There's no real consequence if you accept an invitation. But on Path, you have to constantly weigh if a person is close enough to you to take one of your coveted 250 slots. If the answer is no, you reject them. You certainly don't reach out to them with a friend request.

This to-friend-or-not-to-friend dilemma inhibits the app's growth. If a user doesn't friend anyone, and none of the user's true friends join Path, then there's no reason to use the app.

Path says it has 20 million users, but it's not clear how many of those users are still active. It recently laid off 20% of its staff and was hunting for a lead investor for its new round of financing at a $400 to $500 million valuation. Its last round of financing valued the company at $250 million.

Disclosure: Enterprise Ireland kindly sponsored Business Insider's trip to Dublin to cover Web Summit and F.ounders.