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.
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.
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.
Twitter could. MuskX can not.
He destroyed the advertising business, and is trying to make subscriptions work.
> 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.
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.
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.
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.
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.
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)."
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 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.
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?
You may not be able to find investments as easily though.
Or you may have folk throwing money at you. What do I know...
>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.
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
They might, if you pitched it as a professional network - LinkedIn for Creators.
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.
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.
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.