End of the Road for Xmarks

2m users * 1% conversion rate * $10/yr = $100k = probably not enough for a VC-backed startup.

My suspicion is that because users just used the browser's internal bookmarks they couldn't easily add affordances that would draw attention, leaving no surface on which to advertise. I guess this is one advantage that delicious had, although breaking the bookmarking paradigm to do so was very painful in other ways.

I no longer believe startups who claim their value proposition is "the data will be really valuable someday."

Yep "probably not enough for a VC-backed startup" is the key here. This would have been a nice bootstrapped business. For them taking VC put them on a road that unfortunately wasn't the right one for them and forced them to swing for a bigger outcome than was possible. Sad.