We’re at the end of a grand experiment of “you can take VC money and deliver a tech with new values, one that people want.”
The only people still claiming you can just haven’t run out of their last funding round… yet.
We have 20 years of evidence on what tech businesses can be built on the Internet that make money. It’s narrow and mostly can’t solve the problems that remain.
The escape hatch is always subscription revenue.
It’s true you can build a unique business on unique values for a unique community.
But it’s a long slog in the MicroSaaS world where anyone can & many will straight up copy you - forever.
X.com is probably the only & last experiment on whether switching to subscription rev is achievable at scale. Looks pretty clear so far that it’s not.
This might seem a negative outlook, but it could be quite positive if founders know & accept it.
The secret is out now that, mostly, founders make the same amount of money in the same amount of time whether they go the VC or bootstrapped route (when it’s a winning business).
There will always be opportunities for finance-backed cartel-busting mega runs.
But if you are a founder that cares about anything - anything - the route that gets you there is founder control, patience, and a customer base that pays.
I wouldn't discount YouTube Premium and Twitter subscriptions. They don't cover the majority of users, but are a viable option if you (like me) can't tolerate ads.
Hell, at least at first, Ello even tried this same technique. It was meant to be an online gathering place for pre-existing communities of artists who already knew each other from elsewhere. Even Facebook did this at first, too, automatically placing people into networks for their universities, assuming they would already know many of the other users from class. Ello required personal invitations whereas Facebook required a .edu e-mail address to register.
The fundamental problem here is all the value is in the network itself, not the platform. The fact that the network is largely on Facebook is as much a matter of chance and historical inertia as it is anything Facebook did well as a company or a technology. Likewise, I don't know that Substack did anything particularly repeatable to snag people like Andrew Sullivan and Glenn Greenwald right as traditional publishers tanked. They just happened to be in the right place at the right time.
It's not like there is no precedent. Film studios and record companies have more or less always operated this way. All of the value of their products is created by the artists, not by the company. The only way for them to moat any of it is signing artists to exclusive contracts before they get big enough to have real negotiating power. But web platforms don't want to think of themselves as another MGM studios. They want to be 1950s Ford but with near-zero marginal cost of goods sold.
The value is always in the content and authors, not in the platform, so in that sense Substack or Pateron are not unique. The question is how exactly are you going to monetize this content.