Federated, standard and decentralized network just live by themselves :)
VC money really seems like the beginning of the end.
People forget (or mostly never knew) that Ello was a Vermont thing.
I once spitballed with a certain VC at FreshTracks Capital about an idea I had, which lead to him running off with it and burning millions of dollars making it into BRIDJ, which shut down a few years ago.
I'm curious to know if anyone has evidence of a post similar to this but for a company with a (so far) happy ending.
[1]: https://havenweb.org
One of the first ~5 questions I ask is whether they want to bootstrap or go down the VC route. Because they are very different paths, with different levels of pressure and mostly importantly, expectation.
You _have_ to know that from the outset, else it's just trouble.
True, but a little misleading. The majority of the co-founders of Ello, plus nearly all of its staff, were based in Colorado.
Source: I worked for Ello.
The network never really caught on, but there was some good work being done there.
I think everyone should understand (and, honestly, repeat daily) that in our modern capitalist system where never-ending growth is an expected requirement of any company that has ever taken outside funding, it is simply an impossibility for a company to have any kind of durable values that conflict with that growth-at-all-costs requirement. It's as much of an impossibility as the sun rising in the west, and we should stop any pretense that it's not. Enshittification is inevitable.
Nearly every tech company starts out similarly: an absolute laser focus on users and their needs, because that is how you first grow. At some point, though, all of that fruit is picked, and you then start going into features that are "user neutral" but that make money, until finally you chip away at features that look like they can be user neutral in the short term ("We A/B tested and nobody minded one more ad!"), but the long term effect is that you've completely destroyed your founding ethos.
For example, it's easy to pick on Google these days because it's, well, so easy. Their total about face from a company that was nearly universally loved by engineers to one that, if not loathed, is at best seen as the "next IBM" is so obvious. E.g. Google got huge originally with a world-first search engine by not "selling out", by not masquerading ads as organic search results. Now when I search for any remotely commercial term the entire first page is ads that are nearly indistinguishable from organic results.
It's not just Google, though. Apple loves to crow about user privacy, but it's hard to square this "value" with their insistence that anyone on iOS who uses iMessage to talk to anyone on Android gets 0 encryption (oh, and if even a single Android user is in a group chat, nobody gets encryption).
I don't think that makes any company "evil", but it does make it somewhat sociopathic in the sense that there can ever only be a single goal: growth at all costs. The sooner we all recognize it means we can treat all companies with an appropriate level of caution. One final note related to this, is that this is one reason I'm not really a fan of PBCs as mentioned in the article. PBCs are a smoke-screen. As the saying goes, "Follow the money". When push-comes-to-shove you'll also see PBCs compromise their "values" the second growth starts to be at risk.
If I invested a bunch of time, effort, and vision into something and had nothing to show for it while nearing failure... I'd be very tempted to sell just so I don't have to go straight from failure to job hunt. This situation seems outrageously stressful to me... I literally don't even know what I'd do if I broke my arm or came down with some serious illness while in the inbetween state.
A pretty good portion of my social network moved, myself included. But it fizzled out really quickly and we all ended up back on Twitter.
Every once in a while I'd still get a notification from Ello that someone had followed me. It was always a porn bot, but the email notification was still nostalgic. A part of me is sad the site died.
If you are not paying for the product, you are the product.
The internet culture birthed from the early days of the internet "Everything is free", seems to have captured a whole generation who simply have no concept of cost and value.
Vid.me is another start-up that comes to mind: Youtube sucks, has too many ads, and sells your data. We won't have ads, won't sell your data, and will host all your content.
It made it four years before investor cash dried up and they said goodbye.
And to Mastodon before that.
Remember when tech Reddit tried to migrate to Lemmy?
A hardcore handful of people migrate await from the Death Star and stay migrated (maybe a couple hundred medium accounts, and 1 or 2 bigger ones), but everybody else trickles back onto the Death Star eventually.
The only thing that works to get people permanently migrated away is complete enshitification of the existing platform (i.e. Digg effect). Partial enshitification isn't enough.
https://ello.threadless.com/designs/white-ello-shirt/mens/t-...
And plumbing is such a constitutionally important thing: having hot, running water and not having feces in your house is so much important than seeing what that guy from high school is up to.
I think the issue lays with how high-variance tech is due to the scale: either it is marginally profitable at a massive scale and is worth billions of dollars, or you have something that is unprofitable at any scale and is worthless. It's like there's all of the sudden (in the last 15 years) become an appetite for throwing fortunes onto a roulette table (which may be giving better odds than a lot of VCs).
Without an explicitly capped profit, I can't see how this doesn't eventually lead to exploitation of the users.
I would like to see a donation/optional subscription model with tiered features as is seen in Patreon/Kickstarter etc. with the distinction that the tiers are community wide instead of being bound to the individuals donating.
Display an income bar. If it drops to zero the servers turn off. If it drops below 1 nobody can post. If it is above 1 you have Direct messaging, above 2 you have more features, etc. Keep the communication clear as to what is being provided and how it is being paid for.
Most people won't pay, but if nobody pays there is no service. Its survival would depend upon providing a service that satisfies enough people to sustain the support. This certainly wouldn't be as lucrative as a exploit the users model, but the idea is not to make a fortune, but to simply run a sustainable enterprise.
I guess the flipside is, if I die tomorrow and then there's a PHP error on my website, no one's ever going to know how to fix it. So my memories and diary entries die as well. My "fix" for that is to export the ~2400 diary entires every few months into one massive PDF file.
Edit: I understand why this is being downvoted, I just want to clarify that I didn't mean the opening sentence to read as if people who trust 3rd party websites to their hosting were silly/dumb, though I realise now that's how it scans. What I should have said was "It's very unfortunate and a sad state of the current Internet that people trust websites like this..."
The flip side is I instead love what I do and I’m very proud of my work, which I don’t think someone could really say if they’re shilling crap like plastic toys and NFTs. Or maybe they could say that, but I never could. Grifting is just not for me.
VC funding has a lot of problems. Funding via advertising is similarly fraught with peril, maybe worse, especially the most lucrative stuff. You can fund things by selling premium content or features, but this too is rather tenuous: if you are say, SoundCloud, one of your primary customers is inevitably going to be artists, who themselves are by and large not rich.
Not to mention, no matter who you focus your monetization on, $1 is infinitely more than $0, and monetizing useful features or access to content will inevitably lower the overall value of your platform. This is presumably part of why advertising is so enticing: end users don't have to "pay" anything. Sure, advertising isn't literally free, but users do not have to set up a payment method and take money from their account and send it to yours, which is a massive difference, and massively increases accessibility.
Then there's stuff like crowdfunding. Platforms that let you do one-off funding campaigns like Kickstarter or Gofundme, or platforms that let you do monthly subscriptions in exchange for "rewards" like Patreon or FANBOX. There even is a platform that is partly funded by monthly subscription payments (Misskey.io) and although I'm sure it is a relatively small part of the funding (at least I would certainly assume so) it still seems to have been successful nonetheless.
And that's just funding. What about structure? Becoming a non-profit or public benefit corporation is seemingly not any kind of sure-fire way to avoid trouble, as can be seen here. While I don't know exactly how the legalese works around a lot of these topics, it feels like these measures simply don't do enough to prevent corruption or at the very least, undesired future changes in direction. You want a company to have autonomy to carry out its vision and try to survive in the process, but you don't want it to compromise its core values in the process. Is there anything you can do legally and/or socially to provide better assurances?
This is very frustrating because I think a lot of us see the sad state of the Internet and want to do something, but it's hard to work towards it because you can also see a graveyard of good intentions gone horribly awry. There's all kinds of attempts to work around it, but as a wise man once said, "Mo Money Mo Problems". It seems that the temptation to exploit things always manages to find a way around your safeguards to prevent things from being exploited. Just to beat a dead horse even more, remember the last time you were excited for a Google product announcement, like say, GMail? I'm not saying they were ever a charity or intending to be... but it's hard to not see the painful way in which values that were once hard-fought slowly fade away. Somehow, eventually, everything becomes rent-seeking, a game to see how much money you can get back from an investment. One would hope there is a way out that doesn't involve a very painful upheaval of society, but over time it's getting harder and harder to believe it.
But it is, XYZ is their business platform, their social media network, their journals, their photo hoster, their "lifetime membership", etc. I ran into this all the time with clients. They would worry about what happens to their consultant, but never to their infrastructure.
So for businesses: have a plan B, and have usable archives / backups. And for individuals, have a plan B, and have usable archives / backups.
Being an idealist is fine, but being a dick is not. This article took on some personal schadenfreude after I read this line.
Specifically the massive level of pornbot traffic, and algorithm changes that seem to be intentionally surfacing posts to adversarial users who will then go on the attack.
Even "winding down" doesn't necessarily need to be a problem. It's all in the "how" it's done.
That's a fun quip (and often correct) but the world needs a way to run this kind of project. Community? free? transparent? etc, etc.
And I think this issue is not just about "free systems", culture changes and day to day corruption creeps and destroys everything. Even die-hard for-profit institutions (where entire branches might go rogue on their own objectives.)
And I have the exact same thought about providing software for government and other large organisations.
The number of "solutions" my public service employers paid millions for, that didn't fucking work properly or reliably is mental.
I'm really not sure how contracts keep getting signed by big organisations that don't impose massive penalties on providers for failure, but it they do. Or the sister org that finally had enough and wanted to switch providers, and had to go to court in order to be even be able to pay a large amount for the IP rights to the source code of their system, because they'd signed a contract that let the provider retain IP, and the provider really liked that sweet sweet taxpayer money for buggy bollocks. So naturally, when they contracted HP to maintain the system they ensured that the contract retained IP ownership for their org.
Haha, no, I'm kidding, they let HP keep IP rights on changes HP made, and later on had to fight HP in the courts so they could pay HP for the source to switch providers again after getting sick of being charged $2K (USD) by HP to update the text of a single link on a website.
And I keep thinking that I'd very much like to be in the market of earning millions by providing broken software to people making big decisions who aren't competent enough to jump to private sector, broken software is easy.
But then the guilt of stealing taxpayer money kicks in (it's not legally stealing, but morally, it's stealing. As the saying kinda goes, any great criminal needs a great lawyer, a great accountant, and a corporation), as well as the guilt of professional ethics.
(What's the old joke about software ethics? An ethical programmer would never write a function called destroyBaghdad, they'd write a function called destroyCity and pass Baghdad as a parameter.)
But look at Birmingham Council in the UK, bankrupted by shit software and Oracle's fearsome legal team. The entire fucking disgrace that is Horizon (although being fair to Fujitsu, nearly all of the evil was on their customer's side, it was only aided and abetted by Fujitsu employees lying in court).
In my country, IBM sued our government (and won) because IBM wanted to be paid even more for not delivering a massively expensive and broken project to the Police (INCIS), more recently our Education dept spent $180 million on a payroll system called Novopay (they also paid the provider Talent2 to administer payroll with it) that was terribly broken and underpaid some teachers (and perhaps more egregiously, slightly overpaid some teachers, then the provider would eventually realise and demand the teacher repay the overpayment be returned in full in a short timeframe or debt collectors would be brought in, and threats of civil litigation or criminal complaints were used to pressure them) to the extent that teachers had to go on strike to get the government to take it seriously.
Eventually the government took back the admin side of it, and then gave Talent2 another $45 million to get the system working, and are still paying them to maintain it today.
The idea of being in a market where delivering badly broken software leads to you getting paid another 25% of the upfront cost to get it actually working, and you don't get fired, is wild.
I suppose there's a reason that Oracle and similar are described as law firms that incidentally write software, but damn, they make crypto grifters look like complete amateurs.
And I'll begrudgingly admit that Oracle et al are selling a product with actual utility at least, as opposed to NFTs which I'd call digital tulip bulbs, but that is mean to tulip bulbs because they can at least be used to grow flowers.
I've seen 0 use cases for NFTs / ICOs that aren't gambling/unhinged speculation (usually with some fraud involved to make Number Go up to suck in the rubes), or just good old fashioned direct to the consumer fraud dressed up in complicated jargon.
That they persist must mean that X wants them to persist.
The quotes further down from users who suddenly lost all of their content were sad to read. It sucks how often regular people get burned for taking tech companies at their word.
A sandwich costs $5 everywhere, and a car costs $30k everywhere, because that's just what those things cost to make.
It's relatively difficult to look at a web service and determine whether its running costs are normal guy hobby money, rich guy hobby money, or no seriously this won't last six months without VC money.
Decentralised and P2P systems run themselves, but it's hard for them to maintain a centre of gravity without offering something specific, and given that the network itself can't produce value out of thin air, it's probably not coincidental that the ones best able to maintain gravity are offering stuff stolen from elsewhere.
They are providing a foundation that gets built upon with every migration wave, and I think it’s plausible that they will eventually break into the mainstream.
Put another way, the fediverse is the first alternative that doesn’t need to “succeed” in order for development to continue. It’s a bootstrapped model. And so it can grow quietly, work out the usability kinks over time, and be ready to absorb users whenever they get fed up with the centralized platforms.
One is that the marginal cost of software(1) drives this pattern of winners and losers. The first user of any software costs an enormous amount of money to actually write the software and deliver it to customers. The 100th user costs basically nothing once you have 99 others. And the millionth user (or billionth) user costs basically nothing as well(2). That in turn means that having a billion users is a lot more profitable than having a million users, which means that if you have a billion users you can afford to do things that the million user system can't- e.g. free webmail and a really good free internet browser, just to name two things picked completely at random and not having any particular company in mind.
The other point is explaining your comment about the "last 15 years": tech's dominance (really, growth's dominance) is really an artifact of zero-lower-bounds interest rates from the 2008 financial crisis. If interest rates are zero (for discounted future cash flow computations) then I am indifferent about a dollar today versus a dollar in 2075. So someone who can argue that they have a 5% chance of being worth a trillion dollars in 2075 is worth a lot (0.05 * 1T=50 billion) when interest rates are zero, but if interest rates are high (or even, honestly, normal- like 2-3%) then that money is discounted heavily and the growth story doesn't matter as much because dollars today are worth a lot more than dollars in 2075. So if interest rates are zero, future growth will dominate the stock market (which was why 'tech' did well) but when interest rates are more normal, different companies can dominate the stock market (where the fundamental valuation of a company is, roughly, the expected value of future cash-flows discounted to the present).
1: Delivered by the internet- physical media distorts this a bit and behaves more like normal retail goods.
2: Exceptions for certain points in the growth curve where some key system falls over and needs to be rapidly replaced, e.g. storage or compute or whatever, but outside of those it's very cheap growth. Plumber company growth is limited by the number of trained plumbers you can hire- you can only have 1 plumber make so many house calls in one day- but software just replicates at zero out to infinity (again modulo some key systems which can't handle the load).
The reason for that, is to avoid having influence from outside. Even "angel" investment can be problematic, as the "angel" has the ear of the leadership.
I have found that even well-meaning outsiders can have highly destructive influence, because they don't understand the culture and they aren't the ones on the hook, if things go pear-shaped, as opposed to the ones that have a real, personal, stake (like all those Ello users, who lost so much).
The part that's hard is the people, not the technology. Centralization and federation have nothing to do with it.
Capped profit is interesting since it doesn't limit the business model, just the likelihood of enshitification.
We would all like to have a model where users don't get charged money, and yet are not the product. But I haven't seen a model that works to date. In some cases, I don't mind my personal date getting sold; in other cases I pay money because the service is valuable. But I certainly make backups since I don't assume that even when I pay $$$, that the company might not go poof in the night....
I wonder if Fediverse, Blue Sky, etc will catch, or if it'll end up in the same boat. Threads too (yes it's backed by Meta, but G+ had Google behind it ...)
I'm just thankful that mobile phone networks haven't switched to a "free with ads interspersed into your texts" model yet.
(Of course there are still ads in my texts, but at least those are officially spam rather than network endorsed.)
(YouTube, Uber, Airbnb, etc…)
There would be pain if mastodon.social failed with zero notice. People would lose access to their accounts and would need to find a new server where they'd be starting over. Some may have backed up their contacts, but most wouldn't. If mastodon.social gave a couple months notice, people could migrate to other servers. given that mastodon.social is the largest server, there would be some growing pains as other servers worked to accommodate new users, but it's possible for the Fediverse to continue.
Note, I'm not saying that the Fediverse will be incredibly popular. I'm simply noting that there's an amount of resilience. Once Ello's owners ran out of interest or money, that was the end of Ello. Even if others had a huge interest in seeing it continue, there was nothing they could do. Even if the Fediverse doesn't "catch" by your definition of catching on, it has caught on for enough people who have moved there and will remain there.
That's why I feel happier in the Fediverse. It feels like something the community controls. Sure, I don't run my own server, but I possibly could in the future and there are enough people running servers that I don't feel beholden to any one entity. It just feels like something that can stick around - even if the cool kids aren't interested. Enough of us like it and we'll keep it going even if some of us become disinterested in it.
Everyone says they are on board with supporting the little guys, until they hit bugs and start complaining.
1. Meta's entire business is social apps, and Google's is not. There are strategic differences in approach as a result. 2. Google+ was an attempt to disrupt Facebook's rise at the height of Facebook's popularity. People _liked_ FB then - so trying to get them to switch to another product was harder. Threads shipped during a time of volatility with Xitter and is poised to capture more of that audience as Xitter continues to decay.
In terms of how things will change in the space over time, Threads choice to support ActivityPub will probably mean good things for the Fediverse in general, at least in the short term (3E notwithstanding), and could ultimately serve to be the arbiter that kills BlueSky and the AT Protocol.
Market timing is hard.
The truth is that a profit-maximising business will seek revenue opportunities where it can, and if that means selling both services, on a single-instance or subscription basis, and advertising, it will do both.
Advertising-only or advertising-dominated businesses have a strong tendency to degrade faster and far more prolifically than those with mixed-model funding (I still find The Economist's three-legged revenues stool fascinating: subscriptions, advertising, and Economist Intelligence Unit bespoke consulting and research services, each roughly 1/3 of total revenues).
Paying alone, however, is a far-from-sufficient condition.
I agree. He was responding to perfectly justified -- and accurate -- criticism by saying how sad it is to be a person with such views of the world.
In my understanding, a PBC is effectively the same as a for-profit company with regards to these sorts of things. Unlike a non-profit, a PBC has stock, which it can sell, so that's how it would get acquired. I believe that there were even some PBC SPACs back when that was fashionable.
> If they violate their charter as Ello may have, who exactly enforces it or file a lawsuit, and what is their compensation?
The only real thing a PBC does is change "shall maximize shareholder value" to "shall be managed in a manner that balances the stockholders’ pecuniary interests, the best interests of those materially affected by the corporation’s conduct, and the public benefit or public benefits identified in its certificate of incorporation." See here for Delaware: https://delcode.delaware.gov/title8/c001/sc15/
So it would look like any other shareholder grievance against management in form.
https://en.wikipedia.org/wiki/List_of_defunct_social_network...
I'd say most of the negative stress I felt was from knowing that the user base was growing faster than we could fill in feature gaps that would keep folks engaged. I felt like we couldn't quite catch up, and by the time the money started running out and interest started to wane, it was too late.
A few learnings:
- 7 founders is a lot. I don't want that to sound like a criticism, it just means the company is going to feel a bit different vs a more classic 2 or 3 founder setup.
- Positive feedback loops within a tight team of highly skilled people has a huge impact on getting more stuff done. That's how I would characterize the engineering team, and it was one of the highest-performing teams I've ever been a part of.
- Don't build a startup on a custom, in-house UI framework ;)
You need to think about the killer article or feature.
> ...
> 2. Tolerate hate. Ello has many tools, some visible and others not, that help keep this network positive.
Geez, it's hard to take anything said as authentic with a statement like that. How can you talk about things without "hate"?
"I hate shoveling snow." "I hate terrorists." "I hate this political candidate." "I hate Taylor Swift music."
Anyway, the code test part of the interview involved pairing with another engineer on a small portion of the ello User model (their application was built with Ruby on Rails at the time), and I remember being rather underwhelmed by what they asked me to do, at least in terms of whether it provided a decent test of my abilities. I ended up sending a follow-up email expressing that, along with numerous polished samples of other project work.
They ended up passing on me, but I stayed a member of ello for a while longer because I thought the idea might have promise. Maybe I left too early, but I eventually ditched it because... there was no "there", there.
I liked their general idea, but... they could have done so much more with it, even with a small team. As it was, I left before ello ever got out of its "tumblr clone with way too much empty space" phase - if it ever did.
RIP
It was an X.400-based nightmare, and never took off.
(Even if that's not the case...)
> Benefit corporations are neither nonprofits nor hybrid nonprofits. Benefit corporations are for-profit corporations that need to consider stakeholders, morals, or missions in addition to making a profit for their shareholders. Nonprofits can't be benefit corporations, but they may create one. Due to the public benefit purpose provisions, expanded fiduciary duties of administrators, and extra shareholder rights created within the model benefit corporation laws, this structure may be helpful to operate and scale the earned-income activities of a nonprofit.
In other words, being directly abusive toward others was obviously destructive and discouraged, but disagreement, even when quite strong, was great, as long as everyone involved maintained a level of basic respect when interacting with each other.
There's also a big difference between vehement dislike of a distant thing, concept or person, especially if one can express their reasons well, and using slurs or advocating violence or harm. I imagine here they used 'hate' to stand in for 'hate speech', but not being in their minds - I really don't know.
Let artists show off work, let them seem their art/products, take a percentage of the sale as profit.
Maybe that's a bad business model for a social-media-first platform.
Most people won't pay, but if nobody pays there is no service
The CEO he was quoting is the subject of my schadenfreude.
So they've set themselves up from the beginning to spend more money than they make, and everything downstream flowed from that choice.
If they had to be cash-flow breakeven from the get, they would have to have charged users. ie built a completely different product, with a different audience.
Whereas threads has the obvious benefit of attempting to grow while Twitter is self destructing.
In contrast Meta isn't trying to Threadify everything. The addition of ActivityPub is an experiment that should be run in Threads.
The community was small (I'd estimated total accounts at perhaps 10--15 million, and actives at roughly 1% of that, generally confirmed during my visit), but vibrant in its own way, and as with numerous other social networks, I miss numerous connections I'd made there, though a small handful have resumed at the Fediverse. There really were some notable gems among the group I connected with, including Paul Mason (journalist, briefly), poet Trenton Lee Tiemeyer, authors Ksenia Anske and Bruce Sterling, SVG guru David Dailey, and others.
Most disquieting was how Ello died with neither notice to its members or commentary elsewhere. TFA here is among the very few accounts I've seen of its demise. (I've written a few times about it at the Fediverse myself.)
The other concern, going far beyond Ello, is how little protection or guarantee either its manifesto or SBC status ended up providing. Going forward, I'm going to give similar attestations vanishingly slight weight.
Having participated in online communities since the late 1980s (Usenet, mailing lists, Slashdot, Google+, Diaspora*, Reddit, Ello, the quite short-lived Imzy, amongst others), I'm reminded of the song "dumb ways to die": there are many ways for a social network to die, most of them depressingly uncreative.
The flip side is that it's also difficult for a social network to survive, let alone thrive, and survival. Commercial pressures from every thing I've seen worsen this, though even noncommercial / non-ad-supported sites may see failure modes.
Of the best communities I've encountered:
- Early Usenet, when access was strongly predicated on academic affiliation.
- 1990s-era mailing lists, most especially those focused around Unix / Linux and Free Software topics. (Broader-appeal mailing lists ... tended to function poorly.)
- Google+, in patches. The fact that the social network wasn't ad-dependent, and had strong representation from the tech community were strengths, and some of the best engaging online conversations I've had were from there. Diaspora*, though vastly smaller, saw a substantial portion of my G+ community engage there and had similar dynamics which also made for some good discussions, though not quite as often.
- The Fediverse. Not quite as rewarding as G+, but I strongly suspect it will prove far more enduring.
- Hacker News. As with G+, not directly intended as a revenue-generating platform. Not as good as it could be, but far better many other options, and astonishingly consistent over a very long lifetime (approaching 20 years), which would beat out Usenet by quite a margin.[2] I'd chalk up HN's durability to a few factors: unsexy tech and appearance, stellar moderation, solid design principles, and a viable founding cohort and active community. There are of course criticisms of the site and I've made a few myself, but relative to much the rest of the Net, still running strong.
________________________________
Notes:
1. The Internet Archive has some captures: <https://web.archive.org/web/*/https://ello.co/dredmorbius>
2. Usenet's birth date was ~1979. By 1999 it was well past its sell-by date, though not completely dead.
- possibly Theodor Reik [1]
I expect Bluesky to make their own mistakes.
[1] https://quoteinvestigator.com/2014/01/12/history-rhymes/
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.
Slurs is a very specific behavior.
---
So...that's a very permissive approach FWIW.
This is an extreme position. More likely, we are seeing repricing occur. There are still worthy, venture backable ideas. Probably less of them than in the past.
Well you can... just that there's no guarantee that the 'people who want' will also want to pay enough, on average, for it to be sustainable.
There are only two fiduciary duties in this context: the duty of loyalty and the duty of care. A director of a corporation owes no fiduciary duty to maximize shareholder value.
Rather: the founders are lying and deceiving if they talk about their great vision and its importance for mankind, if in reality they are just looking for popularity, and are eschewing the slog.
Start with and focus on an audience that has different expectations than the general population.
I know some very privacy-focused person (a friend of mine) who will stop being willing to be in contact with you (or being your friend) if you use an email address at one of these big spying email providers to write him an email.
So, it is just a matter of being consequential.
There are other models. Lots of them. We've seen a ton of them work to various degrees.
Now, Mastodon is probably the right model for social media. I wish folks here could get their collective heads out of VC-money-land and realize this (presuming one thinks that there is utility in social media, which I do.)
And much like the internet itself, there's even money here as well.
Ask Eli Lilly. If they had signed on to something like Mastodon, where they could be their OWN source of truth, perhaps they wouldn't have had their "Insulin is free" moment.
Twitter could. MuskX can not.
That, and the fact that the lifespans of new social networks appear to be getting shorter and shorter with each new generation. If Bluesky were to disappear in a few months, the general reaction might be "Oh no! Anyway, what's next?"
Well, no. I think the point is kind of that they don’t.
Those of us running the site had a _lot_ of long philosophical discussions about what to do, but we ultimately realized that posting disturbing content with intent only to provoke wasn't constructive, and we had the right to define what type of community we wanted to foster.
So we booted the shock-jockeys out, and then went to an application-only process that lasted from 10,000 until about 100,000 users (that's a lot of hand-reviewed applications!) - and you know... I could still sleep at night after that, because it wasn't about stopping any specific cause or idea or viewpoint. (Indeed, a few came back, reapplied, and rejoined as constructive members of the community after that)
IMHO, there's a place for provocation, but only if there's a point to it - a message to be communicated. Random photos of animal heads in a jar with no commentary or explanation? Not so much.
I guess I thought of us as rather selective due to the application process, but as I think back, the application process actually allowed us to accept a much broader array of viewpoints, because our goal was always aimed at intentionality and constructive interaction.
He destroyed the advertising business, and is trying to make subscriptions work.
For a lot of businesses, raising VC money is a mistake because rapid growth just isn't the right strategy. VC is expensive - you give up a lot of equity every round and are betting that your ever shrinking slice will be bigger because the whole pie grew faster. That is a very tough target to hit.
> 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.
I don't know. X showed that you can fire ~80% of your employees and the product could still exist. Not only exist but push product at a faster pace. In the last year you got editable comments, subscriptions, revenue sharing, blue checkmark for sale, alternative check marks for govts and org, culling of old accounts, API restrictions, forcing people to put parody identify themselves, longer videos, just to name a few off the top of my head. I noticed more large changes in the last year than the last 5. You don't need a lot of people to run a SaaS company and you can cut a lot of bullshit. And all tech companies are coming around to that conclusion.
Maybe if Ello had raised only a few million and kept around a dozen employees or so, it could have succeeded.
Discord has a bit of this. Each 'server' can be 'boosted'. Boosted servers have access to more emoji slots, better audio/video quality for calls, and larger file upload limits.
Because taking VC money let's you defer the revenue question. And by deferring it, you then have to bait-and-switch the users.
Let me be clear. It's OK to get startup money. Businesses need capital to get going. But revenue should be the original business plan.
In other words, who is paying for this site, and how? Ello ruled out advertising and data sale - that's fine, but that leaves subscriptions, donations, premium features, whatever.
For a "regular" business, each wants to become sustainable, its important to become profitable ASAP. The team is focused on revenue, keeping costs down and so on. Once it can pay expenses and salaries it can run forever.
The obvious revenue here is subscriptions. Income rises with expenses. But of course if you charge you'll grow slowly. So you start free, which means customers will rebel later.
(Anyone see parallels to Open Source companies here?)
VC money allows you to kick this can down the road. Small angel investment? Sure, no problem. You still have majority control. But if you are using that money to pay salaries, then it'll quickly run out. If you don't have enough revenue, you could just close up, but you dont, you go get a series A. Then B. Then C and so on.
The implication is you are selling equity. One day that investor equity exceeds 25%. A round or two later it's over 50%. You've lost control. (And I'm assuming all the founders are in agreement all the time - in reality one wants to cash out, and joins the investors camp well before the 50% is reached.)
So, you can grow slowly, and sustainably. Or you can take money, grow fast, and "hope".
But make no mistake, when you sell -equity- you are selling control. You are selling your right to dictate "principles". That is -what- you are selling-.
Since you are selling to people who are in it for the financial return, the end result is like night following day; inescapable.
If you want to build a business on principles, not profit, you HAVE to answer the revenue question first.
Sure you have. Amazon grew without giving stuff away for free. Customers paid (just below market rate) from day 1. This demonstrated the -convenience- of ecommerce. It had revenues from the first sale. Yes, it spent mountains of VC money on marketing and development, but -not- on just buying stuff for you so you think it'll be free forever.
Uber is the same, although it's less clear that users will pay gor what a ride really costs. (And their margin makes it attractive for competition)
In both cases though there us revenue from customers from day 1. You can wind prices up. It's really hard to "go from free to paid".
Can you rephrase this as;
"I'd like to see a model where I can pay a lot, and thus allow 10 other users for free" ?
How about something along the lines of "it costs $10 per useful per month to make the platform sustainable. A subscription is $100. When you subscribe you pay to keep 9 other users on a free account."
In other words, my question is, are upu in the 10% paying for everyone, or are you in the 90% getting it for free?
For those that do, it's huge. For those that don't, it's quite small.
And for the small ones, Wordpress or similar powers their laundromat. A good small business. As you say, one that takes effort to run. Stripes the banks POS, perhaps someone has some mid scale in Tide sales in the middleware SaaS, there can be a franchise that doesn't fully adapt to how many socks Vs fur local customers have.
But think laundromat. Local restaurant. Which are fine businesses.
This post is focusing solely on the VC funding aspect and proclaiming it as the cause for failure but ignoring the fact that Ello was dead in the water regardless of it. The company had no users and no business model. Heck a reasonable amount of ethical advertising may actually have done some good for the community and helped the product survive.
This is a fairly normal way to run old-style forum hosting - I remember forums that would display a bar for "this month's hosting costs" or a "hosting costs are paid until [date], donate now!"
> Without an explicitly capped profit, I can't see how this doesn't eventually lead to exploitation of the users.
I don't see what difference capped profit would make. Exploitation of users doesn't usually happen during the starry-eyed "this is going to be a billion-dollar company" stage, it happens in the "is there anything we can do to keep the lights on for another few months and maybe turn it around" stage.
IMO the problem isn't investment per se, it's debt, in a broad sense: spending money now that you're expected to repay in the future, and then struggling to repay it. There are bootstraped, sustainable organisations operating in this area similar to what you're asking for, e.g. Dreamwidth. But those are never going to be able to "blitzscale" or market themselves to the same extent; marketing almost by definition involves spending money now that you hope to recoup in the future, at which point you've already sown the seeds of your ruin if that future revenue doesn't materialize.
You’re a budding social network. You need corporations to pump money in and you need user growth. Who is running your sales and marketing teams for free?
Twitter hasn’t launched features of note since the Elon takeover that weren’t visibly in development before the takeover. Unless you count an $8 Boolean flag as a meaningful feature.
I guess it depends on whether you're looking to achieve something unique and truly new, or just "get rich fast".
>But if it had, I doubt it would have ended like this.
If it had I doubt it would have lasted as much.
I wonder how you can grow a company without outside investors? Either you are a very rich founder or you can try to grow it organically but very slowly. If you attempt to do the later you'll find yourself in a position where is very hard to succeed, moreso if your company doesn't do anything new and the competition has lots of cash to succeed.
If you are in a internet business, you either charge users for the service or sell ads. Until now there's no better proven way to monetize.
If you intend to charge users for the service without selling ads, then you can do it regardless of how the money came to finance the business.
In retrospect, it seems like a bad business prospective from the start, with low potential. Had the potential been better, VC wouldn't force them to sell ads and wouldn't have tried to exit the business so fast.
Why did Talenthouse buy Elo, and more important why did some investors buy Talenthouse?
Have no one saw any sign of a very bad investment?
Once subscription revenue is enough, scare and shame won't work and politics won't have anything to do with the future of the business.
I pretty much doubt it is the same amount of time. And I doubt the same percent of businesses survive nevermind win.
Most successful founders, from Edison to Gates and Bezos went in the business to make money, not to change the world. Changing the world for better or for worse is mostly a side effect.
The goal of a business is profit, not ideology.
Hard is fine. The point is, taking VC money makes building the company (you wanted to build) straight up impossible.
Turns out building companies is very difficult. If the first thing you do is sell out, perhaps you don’t have what it takes.
How were they going to do it without outside funding if the creators subscribing weren't paying at least that amount? Ask for donations on Patreon?
Most fired employees weren't producing profit. Most were censoring, making politics or concerned themselves with corporate bureaucracy, drawing charts and making presentations.
You can disagree with that assertion, and indeed have on another thread, but within the context of the assertion the poster is correct.
I think you’re wrong to even think this is about “ideology”, which is presumably a set of beliefs you are against. It applies as much to _variance_, which 100% is something a founder should care about.
I doubt it. It seems like a poor product market fit. I think there aren't a lot of creators willing to pay to have a small social network just for them. They won't probably be active users even if the small social network was completely free.
From Wikipedia:
"Business is the practice of making one's living or making money by producing or buying and selling products (such as goods and services)."
What if you and the venture capitalists are on the same page and have the same goals?
Or what if you keep control, have a good money making plan and you don't ask for funding just to pay expenses and acquire unpaying users but use those funds for growth?
Ditto. Retrospectively it seems a fiasco from the start. I wonder why investors bought it and Talenthouse.
Maybe investors in the first round were hoping to find some suckers in the future and offload the "business" to them.
But what about the final buyers? Didn't they smell anything wrong? You got to ask how did they make the money they lost on Elo / Talenthouse in the first place.
Also, the founders of Elo were creatives, not programmers. So they couldn't throw a microSaaS on a VM, forget it and go write the next microSaaS, rinse and repeat.
That idiot, how you call him, bought the user base and the market position of Twitter. Either he has a plan to make it profitable or he doesn't care, as long as he doesn't loose too much money.
That's how I read it and you have the right to disagree. That's why we are on a discussion forum. To share ideas and speak our minds freely, regardless if we agree or not.
I hope you have fun tracking and counting my posts and it represents a good spending of your time.
But equally “politics” doesn’t explain the drip in brand value, either. The FIFA World Cup has _dreadful_ politics, advertisers don’t care because it’s still a great brand with a huge reach.
Musk is rich and connected enough to be able to ignore commercial reality for a basically unlimited amount of time, but I seem to recall you were arguing elsewhere on this thread that company owners should only care about the money a company makes.
Maybe some of the activities you decry as censorship and corporate bureaucracy have more to do with the bottom line than you think?
I think, though, the people who can and do bootstrap small businesses like that don’t necessarily hang out here. The site is literally VC-owned, after all.
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.
It depends on what your aim is. Had Ello followed a proper nonprofit structure from the start, they could have continued indefinitely with a small staff and volunteers maintaining an open source code base and handling moderation. It would not necessarily be easy, but it would be doable.
They didn't though, and the fact that the original CEO later got into into NFTs and now something-AI maybe shows he was something of a bandwagon-jumper. Back then everyone wanted to be the next Facebook, so that was what he jumped into.
Yes, this has ever been my wet dream growing in a country that didn't have the notion of personal default and until only recent years. Where mobs were chasing oneself if he had any debts to like... anyone. I really envy you guys burning VC capital on "dreams", while others have to solve the complex "differential equation" of markets and competition and planning, and you know managing things properly to be sustainable without external injections.
Our story is very sad, your story is a dream indeed.
Politics has been a significant part of Twitter's success, driving relevance & audience size. Politics was fuel for growth and Twitter was influential partially because of it's openness. The moderation was there because being a relatively balanced & hate free spare without too much controversy was essential for the majority of advertisers.
To reverse those parameters and turn it into a walled garden of Musk-like right wing edge lords that increasingly promotes right wing edge lord content that significantly reduces its safety for advertisers and then complaining that it's purely down to other people making the advertisers flee requires some major cognitive dissonance or a very blinkered world view.
Musk's aim for X.com is to make it an everything app, which is obviously impossible if it does not appeal to almost everyone. As an owner he has every right to make it into a smaller, politically homogeneous message board but he shouldn't simultaneously complain about the very obvious & easily predicted effects of that.
I think reach was falling because of political pressure.
> I seem to recall you were arguing elsewhere on this thread that company owners should only care about the money a company makes.
I was arguing that the goal of a company is to generate profit. That should be the goal. If business owners do that or don't, it's up to them. And I am not arguing that Musk does a good thing if he doesn't have the profit as the objective.
https://finance.yahoo.com/news/patreons-valuation-dropped-70...
You say a company should have the goal of generating profit. According to what moral imperative?
IRC. NNTP. SMTP. XMPP. HTTP.
It's just that nobody wants to work on protocols anymore. Ever since the world's richest was suddently a computer guy, no one wants to work on anything without a business model that includes taking complete control over what is built. A product, if you will.
In the background, there's always some geeks slaving away with new protocols and federated models. That will not become mainstream, not in our current society. But societies change over time. There is always hope.
Protocols, not products, people!
There are tons of them out there.
You can do a lot with a small VPS and a fixed amount of bandwidth.
Find something that 100 people will use for 5 bucks a month. IF your bills are paid and you have a day job, that's some nice pocket money.
You may not be able to find investments as easily though.
Or you may have folk throwing money at you. What do I know...
The Digg effect only worked because the majority of users were tech savvy and hated advertisements. The average user just accepts ads for the most part.
Most people don't care about the freedom of the platform, who's running the platform, or the technology behind it. They only care about: Can I easily create an account? Are all my friends, family, people I want to talk to there?
Most startups die out of either running out of money or running out of will to continue (due to founder fallout).
Money may be made up numbers, but what you can exchange it for is very real.
People buy things they value.
So if Ello dies, did they build something valuable? Valuable enough that it could sustain itself long term.
So if you understand the mechanics behind it and have a reasonable path to return, say at least 5x the capital in 5 years (they want more obviously) then VC may not get in the way of your mission. But you have to ask yourself the hard question and be honest in answering it: "Can I return this investment five fold in five years without harming my customers/users/business/etc.?"..
Ethical obligations go in multiple directions.
[edit to add] Obviously there is also a fair amount of dihonesty and ill-intentioned greed out there as well, but that isn't the driver.
Literally in a span of months SMS usage went the way of the dinosaur.
>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.
People will also want to invest their money into what they think/believe will be the future. My guess is that internet/IT is complex enough that most people don't understand it and see it as “magic” and because it's “magic” who knows what's possible, might as well pour in millions.
But as you've said, the reality always catches up to the truth.
According to market economy, not to a moral imperative.
Your definition of reasonable is not the same as mine.
https://m.youtube.com/watch?v=06yy88tLWlg
I’ll appreciate his politics are way to the left of yours and he’s making this point for a left wing audience, but the TL;DR is: a lot of what you’re perceiving as politics here is literally the market economy acting to maximise profit.
His perspective is that _left-wing_ people shouldn’t be conned into thinking this is about anything other than profit maximisation.
There are a lot more ads between my memes now though. It hit a critical density where we dont use it anymore. 40% ads
What is more sad is that this exact story has played out hundreds, thousands of times with slight variation.
I don't understand how the people involved cannot see those patterns. Cannot see the history. Cannot see beyond the current moment.
I'm really not sure if it's greed or self-deception or ambition or something else entirely.
For a similar, but different story:
Some time back, a game development studio called Harebrained Schemes was created from passionate individuals in the Shadowrun and Battletech community - founders who had been involved since the early tabletop days. They rebooted Shadowrun with 3 new games, and in 2018 used Kickstarter to create Battletech, which is loved by the community and has an active modding scene.
Then, immediately following the success of BT, they sold out to Paradox. Paradox is not a terrible publisher in the grand scheme of things. But that sale did change HS's priorities. They were prevented from making another Battletech game, because frankly it's a more niche product with older fans. It does not have 'mass market appeal'. They instead made Lamplighter's league, something that clearly they did not have their hearts in.
In the end, it flopped, HS had massive layoffs and now was let go by Paradox. We will likely never get another game from them. There will never be a Battletech 2.
It's so frustrating. They had passionate individuals and a loving fan base and GREAT games, and they threw it away.
They might, if you pitched it as a professional network - LinkedIn for Creators.
I have built many of them to good effect.
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.
funny how people that say this are often the ones bombing the interview.
usually the ones who score well, are the ones that see how the simplicity of the given problem gives them room to show how well they understand the domain, and they appreciate it.
Don't judge a company by its tests, if they're easy for you to do it's not a slight on the company or the skills required.
That does differ from what people are saying which is that somehow elon lost all the ad companies support and so is unable to serve ads, or that twitter is an alt right cesspool.
The only political tweets we ever saw were elons, and hes 52 and we are from texas, so it just seemed like normal old people stuff.
At the time, I didn't realize _that_ was likely what they were evaluating, but in my experience interviewing engineers since then helped me realize what I'd overlooked.
I mentioned they passed on me mostly for transparency given the rest of my comment, but I can understand how it might have sounded otherwise. I liked their concept and stayed connected for a while after, not something I normally tend to do if there's bad blood.
Having said that - over the years, I now much prefer conducting interviews where interviewer and candidate walk through a problem, figuring out a solution together; they provide much more insight into a candidate compared to rote memorization/whiteboard tasks like "Implement a linked list". So, in the end, I've learned to appreciate their approach.
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.
It's over a week since this article hit the HN front page so you may never see this comment, but thank you for this.