Werd I/O

As part of my roundup of Giving Tuesday suggestions the other day, I mentioned a few non-profit media organizations that I’ve recently donated to. Of course, as soon as I hit publish, I realized there were more that I wanted to highlight.

In particular, I think it’s worth talking about smaller ecosystem organizations rather than newsrooms. These are non-profits that help newsrooms to improve the way they work, their technology, experiment on revenue, or other activities that help make a stronger news ecosystem overall. If you’re not in the space, you probably haven’t heard of them — and they’re all doing notable work.

When I embarked upon building this list, I assumed there would be more entries. It turns out, there were: it’s just that many of them have disappeared. I’ve also chosen not to include for-profit ventures, large organizations like the Knight Foundation or the Press Forward coalition, or organizations that are initiatives of colleges and universities like the Brown Institute for Media Innovation’s Local News Lab.

Each of the following is a small US non-profit that helps makes a difference for journalism. If you think I missed an important organization, let me know and I’ll try to correct in a future post.

OpenNews creates spaces and communities for journalists who are changing the way their newsrooms operate (something that is a prerequisite for newsrooms to be successful in the internet era). Its SRCCON event is a legendary space for journalists to share more about how they work with each other. Its other programs include the DEI Coalition For Anti-Racist, Equitable, And Just Newsrooms.

News Revenue Hub helps news organizations to make their journalism freely available while raising funds through patronage. Its News Revenue Engine software simplifies revenue operations by integrating with other widely-used software, but perhaps its biggest contribution is consulting and sharing best practices for fundraising.

‌The Open Notebook helps science journalists improve their skills through training, mentorship, and community-building. At a time when most of our most consequential stories — the climate crisis, AI — are rooted in science and technology, conveying details accurately and accessibly is more important than ever before. The Open Notebook helps get us there.

‌Tiny News Collective helps underrepresented founders and journalists to build newsrooms that reflect and serve their communities. They provide resources, training, support, and technology to further that goal.

It’s Giving Tuesday: a reaction to the consumer excess of Black Friday, Cyber Monday, and the whole winter holiday period. Here, you give to causes you believe in, and encourage others to do the same.

I’ve used Daffy to donate to non-profits for the last few years. It lets anyone create a donor-advised fund that they can then donate to. It’ll actually invest that money, so theoretically your fund size can be higher than the money you donated. But for me the killer app is that it allows me to keep track of all my non-profit donations in one place.

Here’s a partial list of non-profits I’ve given to recently. If you have the means, I’d love it if you would consider joining me, and I’d love for you to share your favorite non-profit organizations, too.

One note: because I’m based in the US, these are American organizations. If you have links to great international organizations, please share them in the comments.

Health

UNICEF COVAX: ensuring global, equitable access to Covid-19 vaccines.

Sandy Hook Promise: preventing gun violence across the United States.

The Brigid Alliance: a referral-based service that provides people seeking abortions with travel, food, lodging, child care and other logistical support.

The Pink House Fund: a national non-profit organization dedicated to supporting women with abortion access and abortion care.

Equality

MADRE: builds solidarity-based partnerships with grassroots movements in more than 40 countries, working side-by-side with local leaders on policy solutions, grant-making, capacity bridging, and legal advocacy to achieve a shared vision for justice.

Rainbow Railroad: a global not-for-profit organization that helps at-risk LGTBQI+ people get to safety worldwide.

Trans Lifeline: connecting trans people to the community support and resources they need to survive and thrive.

Montgomery Pride: provides a safe space for LGBTQIA+ people and advocates for their rights in the Deep South.

Equality Texas: works to secure full equality for lesbian, gay, bisexual, transgender, and queer Texans through political action, education, community organizing, and collaboration.

Media

The 19th: a women-led newsroom reporting on gender, politics, and policy.

ProPublica: Pulitzer-prize winning investigative journalism that is having a profound impact on national politics.

KALW: local public media in the San Francisco area.

First Look Institute: publisher of The Intercept, among others. Vital investigative journalism.

Technology

Fight for the Future: a group of artists, engineers, activists, and technologists who have been behind the largest online protests in human history, for free expression, net neutrality, and other goods.

Thomas Stringer on compensation in open source:

And then finally, there’s my uninteresting (to me) OSS project. What once resembled passion project is now unrecognizable from a motivation perspective. But the demand is high. There are lots of users, many in a corporate sense using my software to further progress their organization. And the bad news is, I get no money at all from it. So motivation is essentially nonexistent at this point. Where passion is falling short, money could motivate me to routinely work on this product.

I’ve spent over a decade of my life working on open source software as a full-time profession. Like a lot of people who get into open source, it was originally an ideological decision: I wanted the work I was doing to be available to the widest number of people.

(An aside: I use the terms interchangeably, but open source and free software are not the same thing. Open source software is made available in such a way that anyone can use, which often includes as part of a commercial application. Free or libre software is explicitly licensed in such a way to promote software freedom, which is more of an ideological stance that centers on the freedom to use, modify, and re-distribute software while resisting licensing terms that might lock users in to a particular vendor. The open source term was originally coined because some folks thought the free software movement was a little too socialist for their tastes. I have no such qualms, but open source has become the more widely-understood term, so that’s what I use.)

Elgg, my first open source product, was founded for entirely ideological reasons. I’d found myself working in a learning technology department, shoehorned into a converted broom closet with a window that didn’t shut properly in the Edinburgh winter, with an angry PhD candidate who was upset he now had to share the space. I’d been blogging for years at that point, and he was working on learning technology.

What I learned about the learning technology ecosystem shocked me. Predatory companies like Blackboard were charging institutions six or seven-figure sums to run learning management software that everybody hated, from the administrators and educators down to the learners. Lock-in was rife: once an institution had been sold on a product, there was almost no momentum to move. There were open source equivalents for learning management — in particular, something called Moodle — but while they solved the financial problem, they didn’t solve the core usability issues with learning management systems.

And at the same time, people were connecting and learning from each other freely on the web. Inevitably, that angry PhD candidate and I started talking as we did our respective work, and I showed him how powerful blogging could be (at the time, there were no really powerful social networks; blogging wassocial media). We both built prototypes, but mine was the one we decided to go with; more of a social networking stack than a learning management system. I stuck it on a spare domain I didn’t have a website provisioned for (part of my family comes from Elgg, a town in Switzerland outside of Zurich), and we decided to build it out.

We could have run it as a fully software-as-a-service business, and I sometimes still wonder if we should have. Instead, after a year of development, we released it under the GNU Public License v3. We were incensed that taxpayer money was being spent in vast numbers for learning software that didn’t even help people learn. Anyone would be able to pick Elgg up to build a learning network with — we called it a learning landscape, which in retrospect was an ambiguous, near-meaningless term — and they would only have to pay if they wanted us to help them do it.

And it took off. Elgg changed some minds about how software should work in higher education, although it didn’t exactly dent Blackboard’s business. It was translated into a few languages, starting with the Northern European ones. But because it was open source, other organizations began to pick it up. Non-profits in South America started to use it to share resources internally; then global non-profits like Oxfam started using it to train their aid workers. People used it to build social networks for their businesses, their hobbies, their communities. And it continued to take off in education, too.

But it didn’t make us any money. I ended up taking a job as the web administrator at the Saïd Business School in Oxford to keep a roof over my head. I’d walk home from work, make dinner, and then sometimes work on Elgg until 1am. There were people here, and they were doing good work, so it felt like something to keep going with.

Of course, if it had been a SaaS platform, I would have been able to dedicate my full-time self to it far earlier. Thousands of miles away, in Palo Alto, Marc Andreessen and Gina Bianchini founded Ning — another social network builder — with millions of dollars in their war chest. In those early days, far more networks were built with Elgg than Ning: they had Silicon Valley money, while we had two developer-founders and a packet of crisps, but we were “winning”.

We weren’t winning. While we’d built an open source community, the continued development of the platform depended on our time and effort — and there was no way to be paid for our work. We did it for the love of it, and traded in huge chunks of our free time to do that. If we’d had children, or less tolerant partners, it wouldn’t have been possible.

A K-12 school district in upstate New York and MIT called us in the same month about helping them with their various projects, which was when I felt able to quit my job and get to work. We consulted with the school district and helped MIT to develop the platform behind OpenCourseWare, although we parted ways with the latter before launch because the work would have radically changed our platform in ways we weren’t comfortable with. The University of Brighton got in touch wanting to build the world’s first social network to roll out at a university campus, and we got to work with them. We were bankrolled.

But we were also working contract to contract and were often weeks or days away from being broke. The open source software had been picked up and used by huge names — Fortune 500 companies, Ivy League universities, global NGOs, even national governments, years later Jimmy Wales told me he’d picked it up and used it — but because it was open source, its own existence was under threat. We communicated as openly as we could in order to spread our message, through blogging, videos, podcasts; whatever we could. But it didn’t always work.

Around this time, Matt Mullenweg was having similar trouble with WordPress. For a while he even sold embedded links — essentially SEO spam — on his website in order to support his work. He was called out for it and the practice stopped. He went back to the drawing board.

One Friday afternoon we were fed up, felt stuck, and didn’t know where to go. There weren’t any contracts coming in. So we decided to go to the gym, run it out, and work on something else for the rest of the day. I had a weird idea that I wanted to play with: a social network where a profile could be anywebsite. (We’d implemented OpenID and FOAF and all of these up-and-coming decentralized social networking protocols, but none were enough to make this a reality.) Because the Elgg framework was flexible and designed for all kinds of social networks, I spent about two hours turning its components into JavaScript widgets you could post anywhere. I drew a stupid logo in MS Paint and called it Explode. A genuinely centralized, non-open-source social network, rough as hell, but in a form factor that nobody hadn’t really seen at that point.

It was on TechCrunch by the following Tuesday.

There had been an article or two in the Guardian, but by and large, nobody really cared about the open source social networking platform being used by organizations around the world. They did care about the centralized network. We were approached by investors very quickly, and ultimately took around half a million dollars from Thematic Capital, run by a pair of ex-HSBC executives in London.

They were well-connected, and found us consulting gigs with surprising people. We built a rugby social network with Will Carling (who got us all into carrot juice); I found myself explaining APIs to the English rock star Mike Rutherford from Genesis and Mike and the Mechanics.

The trick was this: while we’d founded the platform using open source as an ideology for good reasons (no lock-in, no abusive pricing), those same things affected our ability to build value into the company. We’d given away the thing that held our core value for free, and were trying to make money on tertiary services that didn’t scale. Every consulting gig involved writing new work-for-hire code — which we were usually then allowed to open source, meaning there were fewer opportunities to make money over time as the open source codebase grew. The more human value the open source codebase had, the lower its financial value was. While most companies become more valuable as more people use their product — as it should be — our company did the opposite. Ultimately, the product wildly succeeded (the platform continues to exist today), but the company behind it did not. We would have made a lot more money if we’d doubled down on Explode instead of continuing to build the open source product.

Make no mistake: there are ways to make open source development pay. Joseph Jacks’ OSS Capital invests in “open core” startups: ones that make their engines open source but then sell the features and services that make these technologies particularly useful to businesses. This usually but not always means developer-centric components that can be used as part of the software development process for other, commercial products. Open Core Ventures is a startup studio for the same idea: whereas OSS Capital funds existing startups, Open Core Ventures finds promising open source projects and founds companies around them.

Matt Mullenweg bounced back from his link ad days by creating a centralized service around catching spammy comments on blogs. Akismet was the first commercial service from his company Automattic, which is now worth billions of dollars. The client library is open source but the engine that makes it work is proprietary; for anything more than personal use, you have to pay.

The idea that people will pay to support a free product is very nice, but largely unrealistic. Most simply won’t. Even if someone in a company is like, “we’re relying on this and if someone doesn’t pay for them to do it, it might go away”, they’re one bloody-minded financial audit away from having to shut it down. There needs to be a defined return on investment that you can only get for paying the money: hosting, extra resources, or more capabilities that the company would otherwise have to spend more money to build themselves. Technical support is frequently cited but also unrealistic: it’s a nice-to-have service, not a painkiller. Even creating new software licenses that are free for personal use but paid for corporations is dicey: who does the enforcement for that licensing?

Not everything has to be a business. It’s obviously totally fine for anyone to create something as a hobby project and give it away. The disconnect comes from wanting to be paid for something you’re giving away without tying in any inherent commercial value.

These days, another open source social networking platform has captured much of the internet’s imagination. Mastodon is deployed across many thousands of communities and has formed the basis of a formidable social media network. It has a very small team that makes its money through crowdfunding: some users choose to support the project for a monthly fee, while other businesses pay to place their logos on its front page like a NASCAR car. It also sells mugs and T-shirts. This allows them to book mostly-recurring revenue, but at rates that are far lower than you’d expect from software with its prominence. It’s a non-profit based in Germany, with a much lower cost of living than Silicon Valley, so hopefully these economics work out. In the US, organizations that build software are often refused non-profit status, so it’s not clear that this would even be possible here anymore. (The Mozilla Foundation pre-dates this rule.) Regardless of non-profit status, crowdfunding enough money to pay for the time taken to build a software library would require it to be wildly popular.

My take is this: if you want to make money building something, sell it. If you want to release your software as open source, release the bit (or a bit) that doesn’t have intrinsic business value. Use that value to pay for the rest. If you need money to eat and put a roof over your head, do what you need to get money. And then if you want to be altruistic, be altruistic with what you can afford to distribute.

I love the indieweb carnival. Every month, a new blogger hosts a topic on their website, and everyone else is invited to post about it on theirs. Webmentions link it all together, allowing anyone to browse through all the different points of view and modes of expression. It’s lovely.

This month’s IndieWeb Carnival topic is about community and belonging, so here are some thoughts about that.

I’ve been working with a new therapist who specializes in trauma, after realizing that I wasn’t doing well at processing my mother’s death and the decade leading up to it. My parents had moved to California a decade prior to that in order to look after my Oma (grandmother). When my mother’s condition progressed to the point that she needed oxygen, my sister and I both moved continents to be closer to her. She had a double lung transplant that gave us all lots of extra time — in fact, more time than these sorts of transplant recipients get on average — but this is one of the most invasive surgeries you can do, and there were complications from the drugs, the surgery itself, the underlying condition. It was incredibly hard on her. In turn, it was hard on all of us in a way that’s been difficult to process. I realized lately, for example, that I’ve been having auditory flashbacks. I’m really hoping a specialized therapist will help.

Part of therapy is intake: giving your therapist the lowdown on who you are as a person and your general context. We’ve been going through my childhood; she asked for me to discuss any particular life events of themes that stuck in my mind.

A subset of the things that came to mind for me included:

• An entire factory floor of Albanian seamstresses lining up to pinch my cheeks while my parents looked on helplessly, unwilling to cause an international incident (this really happened)
• Living in Vienna as a seven-year-old and almost becoming fluent in German until the Chernobyl nuclear reactor melted down in Ukraine and we moved back to Britain because my parents were worried about the fallout
• Being a borderline third culture kid: growing up in Britain to American and Dutch / Indonesian / Swiss parents with extended stays in Austria and North Carolina
• Living with the generational aftermath of concentration camp survival (my dad is one of the youngest survivors of Japanese-run camps in Indonesia)

A few of these things made it difficult to connect to people when I was growing up. The thing about third culture kids is that they often don’t get the implicit cultural references that everyone else seems to just know: the result is that I often felt like there must be some kind of hidden password that everyone else was in on that had never been shared with me. At the same time, I’d picked up on a generational anxiety that I didn’t even know existed, which made it hard for people to connect with me. Even now, as an adult, it’s hard for anyone who hasn’t helped care for a terminally ill loved one to really understand where I’m at as a person. Quite often, I don’t even know myself.

I sometimes wonder if religion would have provided me with a stronger through-line of community, but I always remind myself that then I would have needed to believe in one. I’m pleased for people who do have a sense of belief that adds to their life. Even after a childhood of Church of England schooling (and perhaps a little bit because of it) I can’t bring myself to believe in any kind of higher power.

I don’t have the same questions about nationalism (or its cousin patriotism, which I believe sits on the same spectrum). I think putting so much identity into a place that you carry a sense of superiority over other places is so archaic, so unbelievably stupid, that I can’t bring myself to entertain it. There is no greatest country in the world, or greatest state, or greatest town. We’re all just people, and these borders are artificial divisions that serve to separate us.

Case in point: one of the biggest rug pulls of my adult life was Brexit. When I moved to the US to help care for my mother, my intention was always to move back to the UK. Five years into this journey, Britain reminded me that I didn’t really belong there: I was a European citizen, not a real British person, and I no longer had the legal right to return as anything more than a tourist. I already felt like I ripped my life apart (albeit for good reasons), and this came as a huge blow. I was born with American citizenship and can live here forever, but it’s not like I feel like I belong here. There’s a cognitive overhead to living in a country you didn’t grow up in; an ongoing tension, and a sense of loss that never really goes away. Not anything close to the palpable loss that would come a few years later, but enough to tug at your soul.

If there isn’t a place where I feel belonging, there are, at least, people. One of the important facets of family (or at least, a close one, which I’m grateful to have) is that you have shared cultural touchpoints, and shared context. I’ve said before that family is my nationality and my religion, having no use for the traditional versions of either of those things. It’s my primary community, too.

But there are others. When I first connected to the internet, back in the mid-nineties, newsgroups occupied the space that social media and web forums take up now. Not long before, someone had created one specifically for British teenagers; I logged on with my dial-up Demon Internet account, started lurking, and then eventually dove in.

There was something freeing about only being able to express myself in text, not least because I’ve always had a very hard relationship with my own physicality. I’m big, and was big early; I felt like the Incredible Hulk. There were hardly any mirrors in our house, and I’d catch myself in the full-length ones in department stores and recoil. (I still do.) On the newsgroup, I didn’t have to worry about any of that. I could just be me, without being bogged down by my pesky corporeal presence. Everyone else who posted there was kind of awkward in similar ways to me, too; the missed cultural understanding that I felt so profoundly in real life didn’t seem to matter there at all.

Eventually, we all met up in real life, and these people who I’d met through words became lifelong friends. I hosted parties at my house and traveled around the country to visit other peoples’. It was an experience I still strive to recreate; it’s what informed the communities I created later on, although I later learned it wasn’t as completely safe as I thought at the time.

As an adult, my communities have been practice-based: indieweb, for example, or the community of Matter alumni. I’m pleased to say I’ve made lifelong friends from these places: people who mean the world to me. These are people who I do have a sense of belonging with, and I’m grateful for it. And, of course, I have a new family of my own, which carries its own sense of belonging. (I’m writing this as my sick child sleeps his way through a long nap; when he wakes up, I will hug him tight.)

These days, I see my lack of geographic rootedness as a superpower. Sure, I don’t really feel like I belong anywhere, but that also means I can be anywhere. There’s no real tether to one particular place; no need to be in one location forever. And the benefit of being a permanent outsider is that I always have an outsider’s perspective: I tend to see things in a different way to the people around me. Sometimes that turns out to be valuable; sometimes it brings a little scorn. At least it’s something different.

In the Washington Post, Taylor Lorenz writes about how influencers creating news content directly on modern social networks are outstripping traditional news sites in popularity:

News consumption hit a tipping point around the globe during the early days of the coronavirus pandemic, with more people turning to social media platforms such as TikTok, YouTube and Instagram than to websites maintained by traditional news outlets.

[…] “There are no reasonable grounds for expecting that those born in the 2000s will suddenly come to prefer old-fashioned websites, let alone broadcast and print, simply because they grow older,” Reuters Institute Director Rasmus Kleis Nielsen said in the report, which is based on an online survey of roughly 94,000 adults in 46 national markets, including the United States.

The trouble is, of course, that creators and publications who publish directly on social media platforms are putting themselves at the mercy of the business decisions and policy whims of those companies. The history of the internet is packed with stories of publications that fell afoul of algorithmic or business changes at tech companies which earned their trust. The phrase “pivot to video” — an artifact of when Facebook enticed publishers to create more video on its platforms using falsified metrics — will still elicit a wince from newsroom product teams. Even more recently, Twitter’s journey over the last year serves as a potent warning about how platforms can devolve, potentially bringing dependent publications down with them.

But that’s doesn’t mean Taylor or the Reuters Institute report she cites are wrong. There are two key factors at play here: a loss of trust in journalistic institutions in favor of individuals, and a change in expectations around where to find content on the internet.

The loss of trust in institutions has been ongoing for decades, and in some cases is well-earned. It’s also part of a shift in trust from brands to individuals overall. That’s been accelerated by social media in part, but really comes down to human dynamics. Influencers tend to be more representative of audience demographics than news institutions, which still skew older, richer, whiter, and male. They’re more likely to more closely represent the views of younger people. It’s fundamentally easier to trust a real person who is representative of your communities than some faceless organization that represents the more traditional values of the older audience members who are more likely to pay for subscriptions or make a donation.

Fixing the trust gap is not about technology. It means hiring (far) more diverse journalists and managers, surfacing the faces of journalists, and more closely representing the concerns of younger and more diverse communities.

Currently, the website represents the faceless institution while social media represents the human individual. Consider the logo on the masthead, the walls of text, the lack of human presence. That’s not to say that’s what a website has to look like — the web is a blank canvas with infinite possibilities — but that’s what most news websites have chosen to look like today, as holdovers from the newspaper front page as designed in the 1600s. It’s due an overhaul that takes our trust in the individuals behind news into account and puts journalists front and center. News websites have not evolved much, while social media has transformed itself completely over the last decade. There’s a lot of ground to be gained by actually innovating on the website itself.

But then you still have to reach people.

Bloggers, who were widely maligned by journalistic institutions when they surged to brief popularity a few decades ago, spearheaded the flip from institutions to influencers. There has been a minor but influential blogging resurgence, enabled by WordPress, Substack, and Medium; regardless, the form of the blog itself has hardly remained a mainstream force. It’s great for niche news and commentary (consider Stratechery’s hold on the tech industry, for example, or Molly White’s excellent reporting work on crypto) but not necessarily for news designed for a mainstream audience.

Publications tend to try and own their relationships with their audiences by setting up email newsletters: a way to measure engagement and understand who their readers are without having to enter a payment relationship. The trouble is, Gen Z sees email as some archaic technology that they don’t really want to use, preferring social media and instant messaging.

There’s no getting away from the fact that, today, a majority of internet users discover their news through social platforms. They’re hearing about it on TikTok, YouTube, and Instagram, where they’re consuming it natively, and a minority is clicking through to publisher websites from the other social networks.

This isn’t a given or a force of nature. It depends on the kind of news (and therefore the characteristics of its target community), and where publishers overall are choosing to post content. I’m aware of one major newsroom that has actually increased social media clickthroughs to its own website over the last year, bucking the trend by at least experimenting with every network from TikTok to Mastodon. Call this strategy “meeting people where they’re at” — and where they’re at is a more fractious social media landscape than it was a year ago. If newsrooms are sticking to the same networks they were publishing to a few years ago, no wonder their clickthroughs are down. The changes in the social media landscape do not, in themselves, need to be a reason to post directly to social media instead of an environment controlled by the publisher: there is no need to cede full control of a publisher’s online presence to another company. A website will outlive every social media platform.

Which isn’t to say that changes to digital strategy don’t need to be made. The article is still the basic unit of journalism, which is a holdover from newspapers: there’s no platform reason why it can’t be more interactive experiences instead (although this clearly would require staffing newsrooms with different skillsets). Those experiences need to be easily shareable on social media, because news sites tend not to be destinations in themselves. SEO, still a big cost center for many newsrooms, is not anywhere near as important as having a thriving social media team that posts, shares, and replies wherever community members can be found. (We’re a quarter century out from The Cluetrain Manifesto and the core message of markets are conversations doesn’t seem to have quite landed yet.)

In other words:

• Technology changes are not as important as ensuring the newsroom reflects your community editorially and demographically.
• People are always more trustworthy than brands.
• Nothing absolves publishers from building community (not “audience”, which implies a one-way relationship), across the social media landscape and beyond.
• Publishers (through their individual journalists and personalities) should be everywhere their community is.
• Social media platforms are therefore unavoidable but also not to be trusted.
• The central importance of the website doesn’t mean that the form and content of the website doesn’t need to evolve.
• Newsrooms should build their product (their website, apps, direct messaging, social media presences) to directly meet their community’s needs, based on (1) being representative of that community and (2) making active listening and learning a core part of how they work.

Should publishers build community on platforms owned by third parties or publish to a space fully under their control? The answer is an emphatic “yes”: you have to do both. Social media platforms are ephemeral — they are hugely popular but will appear and disappear — while your website is forever. Your digital strategy has to encompass both the near term and the long term.

The internet in 2024 will not work like the internet did in 2019 (and certainly not like the web in 2009 or news publishing in 1969). You can’t keep doing the same stuff and expect it to keep working — particularly if you’re not interrogating why those tactics used to work in the first place. Every publisher needs to think for themselves and find a set of core principles to adhere to instead of a set of core tactics.

“When you are finished changing, you are finished.” ~ Benjamin Franklin

So let’s change.

I’ve been thinking about Sam Lessin’s latest deck about the future of venture capital and its implications about the future of how technology is funded and built. Sam is General Partner at Slow Ventures and partner to Jessica Lessin, founder of tech industry publication The Information.

It’s certainly worth reading if you’re in the industry (although be aware that it’s a DocSend link that requires that you provide your email address to proceed). I don’t always agree with Sam — in particular, he recently wrote a piece about banning TikTok because of pro-Palestinian content that I vehemently disagree with. But there are some claims in this deck that, if true, will be seismic.

He first sets the stage for how VC has turned into a kind of assembly line over the last twenty years:

With clarity and manufactured consistency of what late-stage VCs had to 'roll off the line' to sell to the public market, it became possible for the whole ecosystem to reverse-engineer and standardize the metrics companies needed to be worth at different stages and 'peg' valuations to those stages for intermediate products.

This trend towards startup standardization, measurement, and 'legibility' at all stages allowed the VC factory run way more efficiently and dramatically scale up. It allowed different funds to specialize in different stages of startup production - doing just one step - and passing the goods along for markups.

This is a clear description of the venture capital funding ladder: from pre-seed to seed, then through early equity funding rounds, then to growth rounds, and out into acquisition and the public markets. As Lessin says, individual funds and ecosystems developed around each of these stages. It was like a factory line in a way, but also a bit like a Ponzi scheme: the way early stage investors made money was by later stage investors putting money in.

At each stage, Limited Partners — high net-worth individuals, pension funds, and so on — put a certain amount of their money into a venture capital fund with the expectation that they would see a return within a pre-determined timeframe (often ten years). VCs typically made a 2% management fee and then took 20% of the profit once the fund reached maturity.

The trouble was, most of the companies constructed this way didn’t succeed in the public markets. The model described above worked fairly well for the inward-facing market of investors, and sometimes created services that people used, but it didn’t actually create the value necessary to justify those valuations. This — together with a reformed market landscape in the wake of the pandemic — means that the formulae investors used to calculate valuations are meaningless. There’s no factory-ready set of calculations to use. Every company is different.

Every company was always different, and valuations could never be paint-by-number, but it’s become harder to maintain the appearance of set standards.

Lessin also points out that the factory model also allowed absolutely unscalable non-tech companies to get the tech treatment: direct to consumer products, electric scooters, networks of doctor’s offices, and so on were all VC-funded using the same metrics designed for software, despite not being software at all. These companies didn’t do well at all and trust was eroded.

There are lots of reasons why this happened, which Lessin doesn’t touch on: once limited partners have put money into a fund, the investor needs to deploy capital from that fund on investments within the timing of the fund. These investments have to come from somewhere, and it becomes harder and harder to find the right kind of software deals the more competition there is. In a 0% interest (“ZIRP”) environment that hosted an explosion of VC funds that were all competing for founders, investors often hustled hard to get any deals at all. There were simply more funds than viable software companies to support.

All this and a renewed government interest in enforcing anti-trust rules means that acquisitions (which were how many funds really made their money) have slowed. And because LPs didn’t get their money back from previous funds, they’re not re-investing in new ones. And potential founders aren’t leaving big tech companies, because layoffs and a more uncertain economic environment means they might not get their jobs back if their startups fail.

What Lessin does say — in, for me, the most interesting part of the deck — is that this dynamic is still going on, and is behind the current AI boom. He characterizes investor interest in AI as a somewhat desperate attempt to maintain the venture investing status quo:

But what of generative Al you say! Well, this is what you call wishful thinking... a clear example of a narrative generated out of desperation in the VC community vs. good sense. The Al startup opportunity is largely a mirage of thirsty investors trying to cling to an old way of doing things after similar spun up stories on Metaverse (and yes in its peak froth moment Crypto) didn't play out, and the last narrative around ‘on demand services' mostly crumbled.

It’s an extending / sustaining innovation, Lessin argues: one that allows incumbents (Microsoft, for example) to make higher profits rather than providing opportunities to new players in the marketplace. There are no moats: no way for startups to maintain a lead because there are no network effects and everything is open source. On top of this, the startups are so overpriced because of the concentration in investor activity that they would need to be phenomenally successful to provide a reasonable return. If any of these turn out to be the case, investors in AI startups will not see the returns they’re hoping for.

Remember, this doesn’t mean AI isn’t necessarily useful in itself: it’s simply an argument that it might not be a good fit for new startups or for venture capital investment. Whether a venture is suitable for VC funding is not a value judgment on it in overall. Nonetheless, it’s an enormous statement.

Instead of pursuing the “factory” model of startups that require lots of rounds of funding, Lessin suggests that small investors should put their money into more capital-efficient businesses: small business platforms, communities, and business-to-business platforms with low expenditures. In other words, communities that are built slowly and can be revenue-driven without having to grow to monopoly size. The world where investors can aggressively fund a tech company until its competitors are dead, regardless of its own profitability, is gone.

I see this as largely positive: this is a world where people are more aligned with the services they use, and where revenue rather than exploitation is central. It remains to be seen how accurate it will be for the market at large, but I consider it notable and exciting that investors like Lessin are coming around to thinking along these lines.

I kind of miss having something like a LiveJournal.

If you missed its heyday about twenty years ago, LiveJournal was a private blogging community that led to much of what we know as social media. You could follow your friends, and they could follow you back if they wanted; your posts could be shared with the whole world, just with your friends, or with a subset. Every post could host thriving, threaded discussions. You could theme your journal extensively, making it your own. And while you could post photos and other media, it was unapologetically optimized for long-form text. The fact that the whole codebase was also open sourced, paving the way for Dreamwidth and other downstream communities, didn’t hurt at all. Brad Fitzpatrick, its founder, went on to build a stunning number of important web building blocks.

There’s no other service I’ve found that allows you to write in long-form in a private space that you share with your friends. Instagram might be the closest in some ways: it’s turned into a more interesting, introspective social network than most. But I’m better with words than with pictures, and I miss that quiet, shared reflection.

Public social networks force us to use a different facet of our identities. In a private space with your friends, nobody really cares about your job, and nobody’s hustling to promote whatever it is they’re working on. Twitter nudged social networking into becoming a space for marketing and brands, which is a ball the new Twitter-a-likes have picked up and carried. Much like the characters from The Breakfast Club, each of the new Twitters has its own stereotypical niche: the nerds, the brands, the rich people, the journalists. But they all feel a little bit like people are trying to sell ideas to you all of the time.

Like many people on social media, I’m constantly sharing links to things I’m worried about, or things I’ve written, or things I’m working on. The underlying numbers are important. Is what I’m writing resonating with people? Are people subscribing? There’s an underlying neurosis to it that isn’t very healthy — and it’s this neurosis that also leads to blogging FOMO, where you feel like you have to keep pushing out content otherwise you’ll lose people. I know that influencers (the modern internet’s far better-looking answer to bloggers) also feel this acutely.

Not everything has to be about building a brand or a following. It can just be about reflecting, or sharing something with your friends. Private spaces allow us to be weird, unvarnished, and vulnerable in a way that’s harder for most people if they think the world could be watching. On the public web, everyone is their own little media publisher. In private, we’re just us. The former creates an enforced distance — almost a mask — between writer and reader. The latter is intimacy.

How can we reclaim some of that humanity from our social spaces? Should that even be a goal? I can’t decide, but I do know I miss it. I think what that really means is that I miss when the web felt like it was about making a genuine, reflective connection with other people — and it most often doesn’t anymore.

It’s impossibly hard to watch coverage of the Israel-Hamas war. Thousands of people on both sides of the border have been killed (1,300 in Israel, 2,000 in Gaza at the time of writing); the stories that have emerged are brutal. What is known to be true seems to be different day by day.

What’s been notable for me has been the level of bloodthirst I’ve seen across social media. One Instagram account on my feed that has traditionally covered social justice topics openly cheered on Hamas’s attacks, declaring that decolonization always required violence. I unfollowed. In turn, I saw lots of discussion on Threads in particular by people who wanted to see Gaza — one of the most densely-populated areas on the planet — bombed to the ground such that there would be nobody left.

In the midst of this armchair warmongering, people are missing their loved ones. It’s a real conflict, in the context of decades of history, in which real people are being killed in terrible ways as I write this. But social media has reduced it to video game dimensions; online discussions rip it of context and turn it into performative posturing that has been largely devoid of the underlying human tragedy. Missing family members; footage of bodies in ice cream freezers; wounded children. All of these have become atoms of content to be shared and reshared in order to build social media clout.

Over on X, this dehumanization of the conflict has become particularly pronounced because of the platform’s endeavor to pay users based on social engagement. The incentive is to post shocking content that will be commented on and reshared virally, because it will lead directly to revenue for the poster. Inevitably, a lot of this content takes footage that isn’t even from this conflict and relabels it. A patchwork of pictures and video drawn from across recent history that evoke feelings about this conflict, all thrown together so someone can make a buck (or, in some cases, tens of thousands of bucks). Whereas a blue checkmark used to indicate that a user is notable in their field, you can now buy one for $8 a month. It can be next to impossible to determine what is real.

But it would be a mistake to say that this is happening on X in isolation. Even when social media posts don’t lead directly to revenue, everyone is in the clout game. More followers can lead to more cumulative engagement which can lead to more opportunities to sell in the future. Very few real brands — McDonald’s or Starbucks, say — would post so recklessly about the conflict (which is not to say they are ethical actors in other ways; it’s also worth saying that McDonald’s has donated to both sides of the conflict, and that Starbucks denounced a message of solidarity with Palestine that was published by its union). But everyone’s a personal brand now. Social media has become a literal marketplace of ideas, where peoples’ attention is drawn and monetized. And in this environment of clout and virality, no extra value is placed on truth.

None of this is exactly new. Media management has been a part of every conflict since at least the Second World War. Some disinformation from that period — carrots helping you see in the dark, for example — was absorbed so readily that it has simply become a part of our culture. In this conflict, both sides were surely aware of how footage would be played in the media. What’s different now to 80 years ago is that everyone is the media. We all have spheres of influence, and it’s not unheard of for a middle manager with an axe to bear to have more of an audience than a national newspaper with a complete set of reporters and fact-checkers. Most of our news is consumed in stackable, decontextualized pieces through our connections to individuals who we perceive to share similar opinions to us, delivered in such a way as to maximize engagement with advertisements and keep us on the platform.

None of which connects us to the underlying humanity of the people who suffer in this, or any, conflict. It disconnects us from the fact that civilians have been targeted, which is a war crime. It disconnects us from the need for the killing to stop.

This isn’t a game. It’s not like supporting a sports team. It’s not blue and black / white and gold dress. Regardless of the particulars of the war, the side we should all be on is that of preserving lives and creating a safe, inclusive, democratic environment for future generations. In a world where attention is money, it doesn’t feel like that’s where the incentives lie today.