This notes thing looks like an attempt to pivot to an advertising based business model and I'm guessing they think they have "influencers" on their platform to bring in a decent audience.
If I spent 30% of my net worth I could buy a condo in the bay, possibly. Although odds are it would be worth close to that if I needed to sell it.
But many people spend 30% of their net worth trying to start businesses with almost no traction. Musk spent 30% to buy something known internationally.
That doesn’t make it a good idea.
I actually find it perverse.
Further he was misled by someone feeding him incorrect information and promptly apologized for the confusion. https://twitter.com/elonmusk/status/1633253950198624257
Given he continues to talk with the man at times (he replied to one of his tweets the a few days ago) and there's no evidence to support the idea that he did it for monetary reasons, other explanations are much more reasonable. Namely that it was a simple mistake.
I like Musk because he doesn't appear to be a woke tool. Is he a tool of a different kind? Probably. But I don't like woke, so I stick up for the non-woke. Is he perfect? No. None of us are.
Here [0] is an interview with the African-American Marxist Adolph L Reed Jr (professor emeritus of political science at the University of Pennsylvania). He starts out saying he can't define "woke" because it is too diffuse, but if you read on he effectively does define it – despite his initial insistence that he can't – in these terms: faced with a society of immense inequality in wealth and power, in which the 1% lord it over the 99%, the traditional left (to which Reed as an old-school Marxist belongs) is primarily concerned with reducing that disparity, and less over the makeup of that 1% in terms of race/gender/sexuality/gender identity; by contrast, the new "woke" left is more concerned about making sure that the 1% is 50% female, and contains racial/ethnic/sexual/gender minorities in the same proportion to which they exist in the 99%, than about the disparity between the 1% and the 99% in itself.
As the on-and-off richest man in the world, Musk is as 1% as it gets, so I'm not sure he'd like professor Reed's definition – but I do. And I think it is a good response to that tired talking point that "nobody can define woke"
1. I care pretty strongly about the truth. When I see people actively spreading incorrect information whether through malice or their own misunderstanding I think it’s important to correct it to prevent the deception of others, especially when it’s happened on such a wide scale. He himself doesn’t seem to understand that it’s important to correct this type of thing early so there’s no other option.
2. I care because a lot of the future depends on the success of Elon’s companies and people use tearing down Elon as an excuse to attack his companies. They’re doing amazing things for the future while being constantly attacked for it.
So it’s a double-whammy of self interest and my own internal mental obsessions.
Musk spent 30% of his net worth on it then immediatly burned 90% of the already questionable value it had.
What Musk did was just bad business.
citation needed
[0]: https://www.bbc.com/news/business-65084254
[1]: https://twitter.com/ZoeSchiffer/status/1639737042828673024
That sounds like one of the least interesting things I could do with $44bn.
With that sort of money I could fund 1000 Twitter rivals, and after a couple of years combine the successful and interesting ones into a single rival that would actually do something better than Twitter.
You could fund The Manhattan Project ($21Bn).
And the Panama Canal ($13Bn).
And the Concorde project ($2.5Bn).
And the Hoover Dam ($0.8Bn).
And an Eiffel Tower, a Statue of Liberty, and a statue of Christ the Redeemer. ($100s of M)
Buy yourself a B52 Stealth Bomber (~$2Bn).
And a Hindenburg ($100M), and a Titanic ($400M).
And still have a couple of billion left over.
The announcement for the feature on twitter[1] literally emphasizes the lack of ads, pointing out subs are their revenue source, so that would be some 4D enshittification chess.
[1] https://twitter.com/hamishmckenzie/status/164362995302659686...
Guessing that’s now how they’ll pitch it to an acquirer once it takes off.
(I don’t think you’re wrong by a factor of 10, just curious where you got your number from.)
- Infinite scrolling feed w/ ads
- Video Substacks
- Infinite scrolling video Substacks w/ ads
Sorry to get off-topic, but is there a read/book to understand funding, VCs, etc., from a holistic POV. I totally didn't expect that consequence of having to raise a crowd sourced round due to initial high valuation.
- If you raise more money at a lower valuation than your last fundraise, it's highly dilutive. Investors paid $10 for 10% of a $100 valued company last round during the bubble. Vs. given current market conditions, new investors would only pay $10 for 20% of a $50 valued company this round. This second round would dilute existing investors, except...
- If you crowd source the funding, now you can raise at a $100 valuation again (less dilution), because these crowdsourcing investors don't know what they're doing
You can be a stable, profitable, money-making machine with 90+% margins and amazing reviews, but unless you're doubling something (users, engagement, profits, etc) every single year, you go to the back of the potential-investment line.
A high initial valuation might be great for performance relative to other companies (or whatever reasonable metric you want to insert here), but it also makes it way more difficult to show "growth" YOY compared to a lower initial valuation.
Was recommended to read this by VC friends to prep for Investment Associate interviews a couple years ago
The game works like this: the VCs want 100% of your company, and you want to give away 0% of your company. (Of course, 90%+ of companies will fail, so it doesn't really matter. But let's pretend we're all in that special 10%.)
If you do end up choosing to play that particular game, then you'll find some common numerical rules of thumb. They usually go like this: Each round should raise 12-18 months of runway, and each round's investors usually get about 20-30% of your company.
On one side of the game, you have the VCs, who basically play this negotiation full-time — and whose comp structure depends on extracting as much equity from you as possible. This is why we get the constant stream of "thought leadership" from VC bloggers, because they're trying to distinguish themselves as offering something more than capital. (And, having distinguished themselves, they can extract more % from you for less $.)
After decades of practice, VCs have plenty of hustles they can run. Some of the classics are the old "participating preferred" play, as well as the usual sound bite about how "it doesn't matter what the exact numbers are."
On the other side of the game, you have the founders, who basically want the maximum amount of money in exchange for the least amount of equity — but also for the least amount of time. Fundraising is a massive distraction, and VCs know it — which is why time always gets used against the founder, with long and drawn-out "fundraising processes" that (by total coincidence, of course) also happen to exhaust the founder and push them towards signing.
The twist is that this game isn't only for 1 round. Once you take your company into this game, you're stuck in it — you'll have to keep fundraising to keep fueling the growth that you've kickstarted using external capital. With the average IPO timeline being 7-10 years, combined with fundraising every 12-18 months, you can expect to play this game 5+ times on the way to IPO.
Sometimes, for a variety of reasons, the founder raises too much $ for too little %. You'd think this is a good move — but, since this is an iterated game, it's not all upside. Decisions in this round set the stage for the next round. If you can't live up to the growth expectations implied by the high valuation, then you're in for a "down round."
VCs have a standard "down round" playbook, too. They'll have their way with the cap table, of course — and it's also not uncommon to see some/all of the founding team shown the door. The press piles on as soon as they hear of it, which drags on employee morale as well as the talent pipeline, both of which then destroy product velocity and market positioning... it's very easy to have a single "down round" be the kiss of death for a company.
So that brings us all the way back around to your question. For this particular company — as well as for many others that raised during the "cheap money" era of the pandemic and pre-pandemic years — it sounds like they're facing this conundrum. Crowdsourcing the next round is a somewhat new way to tackle this situation — new regulations came out a few years ago, and founders sometimes go this route instead of risking the "down round" game with VCs.
You usually only see B2C companies making the crowd-funding play in the first place, since you need the name recognition and customer base to even try to raise money in this way. Because founders can essentially "divide and conquer" their investor base in a scenario where everyone's investing only four or five figures, the common scenario here is that the founder sets the terms to avoid the down round — and then they begin the fundraising. Since they're fundraising from hundreds/thousands of people instead of 5-10 people, it ends up being more of a marketing campaign rather than high-touch sales, which can also play to some founders' strengths.
Anyway, I could keep riffing for a while (and I'm sure others here could do even better). I'll let the other commenters chime in with book recommendations — I'm sure someone's written about these market dynamics in much more detail.
Why? What stops you from raising a $15m series A and only burning it conservatively until you hit neutral profitability. Investors only have 15-25% of your cap table and can't strong-arm you.
- VCs don’t want founders to own 0% of their company because founders need to be motivated to work hard to make it a success
- % of dilution usually goes down very significantly over funding rounds
- there is significant competition between VCs to fund good startups these days, which can translate to founder leverage
- there are early-stage VCs these days, which don’t pressure founders for quick growth
- founders talk to each other and a large portion of founders are serial entrepreneurs. Reputation among founders matters to VCs
- looking over the longer term of decades, typical funding terms are getting much more founder-friendly
That's really interesting. Do you know how they make that work, exactly?
I feel like that's naturally opposed to the standard incentive structures that VCs have with their LPs. They need to show results in O(years) so they can raise their next fund and keep the overall VC firm going over O(decades). That maps down straightforwardly to the day-to-day pressure VCs put on all their portfolio companies to grow as fast as possible.
Unless early-stage VCs are doing something new with the terms they give their LPs, how could they prioritize anything other than growth?
If the startup is showing good growth metrics, they'd point them to friends at later stage funds. If they aren't, they'd give intros and help get the startup aquihired.
“The Power Law: Venture Capital And The Making Of The New Future” is also good. It tells the story of the evolution of VC over the last 70 years. It is interesting that funding terms seem to be becoming more and more founder-friendly over decades.
It's not. Substack is very clear about that. https://on.substack.com/p/notes-faq
"The ultimate goal on Substack is to convert casual readers into paying subscribers. Because the Substack network runs on paid subscriptions, writers are rewarded for respecting the trust and attention of their audiences, not exploiting it like with ad-based social media."
"While Notes may look similar to social media feeds, the key difference is in what you don’t see. The Substack network runs on paid subscriptions, not ads. It’s social media with a heart transplant."
Would they?
Furthermore, "only signed-in users will be able to post notes, see the feed of Notes, and engage with notes." The inability to read feeds while not logged in makes Substack Notes much more hostile to casual browsers compared to Twitter. That's not a very eyeball friendly policy. I don't see how they can even be intending to replace Twitter that way. I'd personally want to see what Notes are like before signing up for Substack, but I can't do that.
Occam's razor suggests that the purpose of Substack Notes is straightforward: to create more engagement between Substack writers and Substack subscribers. It seems like a good idea for that purpose. But a Twitter replacement? If that's the intention, it's designed totally wrong.
No business would pivot to a dying monetization model unless it was their last option.
Advertising is not a solution for Substack; but rather a Trojan Horse.
Source:
https://www.sec.gov/Archives/edgar/data/1783191/000167025423...
I’d edit the post but it’s too late to do so.
When will we realise that blogging websites (not personal blogs) are not sustainable in long run.
Substack is already far, far more paywalled than Medium ever was. Subscriptions are the business model.
Advertising works there because of the numbers. People will quickly consume enough bite sized content to drive traditional numbers.
Medium broke the things that made them appealing in an attempt to sweeten the advertising sell, but this made the platform unappealing. It was a self inflicted wound.
To be more specific, advertising works there because of the feed algorithms. The platforms gather data about user interests and use that to tune what they choose to show the users, favoring things the algorithms suggest will get more "engagement". In turn, they sell ads on those favored items. On top of that, they charge both users and advertisers a premium to be featured on the favored topics.
Take away the algorithms that determine what content and ads to feature, and you get back to the basics of blogging websites. You get happier users, but no advertising money.
This is a classic case of VCs corrupting an industry with money that’s really not needed at valuations that really can’t be supported.
Seems like the people doing the most things in my field have no time for drama and are busy doing stuff, while the ones that actually accomplish little have the time and energy for this.
> Seems like the people doing the most things in my field have no time for drama and are busy doing stuff,
Standing up for ethics isn't performative drama. I made my exit very quietly because I didn't have time for the drama of a petulant tyrant. I care that the tech I consume is open source or at the very least is guided by some principal of any good kind.
People spent months and a tremendous amount of energy discussing the state of a site that is a glorified animated wall of text, but it's not drama.
Sometimes I wish I could teleport this community to were I lived in Mali and force you to stay there for 6 months to re-calibrate your sense of what's important.
Exactly. Exactly.
Good luck to Substack, though. I'm rooting for them in this scenario.
So here's to them being a more pretentious rumble/truth/parler/etc...
And there will be many moments in the future, when Elon musk will have upset more of its users. And substock will be there to benefit just like Mastodon is benefiting every day.
Disclaimer - I'm not on Twitter, but my impression is that a few folks made a large amount of noise for leaving but most people shrugged. Other networks mat have seen a temporary large percentage Increase, but a) how much of that stuck and b) a large percentage increase of tiny absolute. Umber can be misleading.
Basically, every 4 years, half of America threatens to move to Canada, but here I am in Toronto and I ain't seeing it :->
Who?
I have to say, that doesn't sound remotely convincing to the 220M+ daily users of Twitter who continue to use the platform since there was no 'mass exodus'.
It was more like a leaf falling out of a tree.
200k new users per week is... what, 0.05% - 0.1% of Twitter active user base?
Not saying one day it might not snowball, but it's been 6 months and I wouldn't call Mastodon an existential threat to Twitter just yet. I am tremendously enjoying and schadenfreuding the twitter melodrama, but even most people making fun of twitter/musk/socialnetworks, seem to be doing it on twitter.
It looks like neil does quite a bit of boosting (retweeting) on masto: https://mastodon.social/@neilhimself
However, anecdotally, my relatively static "following" count dropped from ~1k to ~600 over the course of the back-to-back Elon/Mastodon/Trump/etc events that were supposed to prompt mass exoduses. That could be 40% of the accounts I follow blocking me or getting banned, but deleting their accounts seems more likely in this instance.
Honestly I feel like Twitter is better than it ever has been. The “For You” feed is actually really good now. There’s also a greater diversity of views now it seems like.
Why would anyone in any illegal content space want to have their content federated outside of it?
Totally illegal explicit content in the majority of countries, only found on Mastodon.
https://www.nytimes.com/2023/02/06/technology/twitter-child-...
On Mastodon, each instance is able to restrict other instances based on their own policies. Unless you specifically choose to join a Mastodon instance that does not restrict pornography, your instance will not synchronize content from the porn-focused instances.
The one instance I have any prior awareness of, the mastodon creator saying search is not desired due to negative social dynamics, everywhere else it was presented as a privacy and anonymity behaviour - crucially, both from those who agreed and disagreed (which makes intuitive sense; on one hand I dislike e.g. Facebook not being publicly searchable some of the time, at the same time I don't want my content crawled by randos all the time either). This is the first place I've seen that frames it as explicitly CSAM related.
The author is only speculating about Mastodon's search feature, and I see no actual evidence that the search feature is intentionally limited due to child sexual abuse material.
That's all I want out of these platforms. I don't care about decentralization or who owns it. I just want to read interesting stuff and not get pissed off in the process.
Twitter has been completely worthless anyway for promoting my Substack channel. In their Dashboard, it doesn't even show up in the top five referers.
Actually, this site is usually the best, and Facebook (the latter might reflect my audience).
Reddit subs tend to censor any attempt at self-promotion, which you can't blame them for, I guess. And StackExchange is the absolute worst. The level of asshole-ness there has to be seen to be believed.
YC/Reddit/SE being good/bad/worse for self-promotion seems to be 100% in line with the intended use of these sites.
Most of my readers come from HN, reddit or substack itself. Now it's mostly Python so it makes sense a tech oriented medias will be reading more about it.
Still, the ban on substack by twitter means that, while a #python tweet gets some view, the same with an article to substack tanks bit time.
So when I post it, it's congruent.
Basically, either you find a way to cheat, or you climb the ladder. I'm terrible at cheating.
It's always been very difficult to get people to leave Twitter. This is why their ad business is worth so little. Advertisers pay for clicks, and Twitter just doesn't deliver them very well.
However, if I link to an external article or something, the percentage of people who actually click on it is relatively tiny.
One can post a note without having a newletter, and you can "see notes" from a user without subscribing.
Sure, I won’t subscribe to hundreds of newsletters, but a few dozen might create a good feed.
If Substack sees the above as an existential risk - which it might be if Twitter executes well, then Substack is replying by trying to do the reverse to Twitter.
Because they wouldn’t have the followers’ email addresses, which is a big advantage to Substack.
There's an option to do that on desktop, apparently, under the three-dots menu:
https://substack.com/profile/34072171-katie-substack/note/c-...
That UX is awful, but I'm sure they'll work it out in the coming weeks.
But Substack Notes allows for greater potential monetization (ick): TikTok style content, algorithmic recommendations, and ads. Especially ads.
I think it does add some confusion to the product if notes become more popular than articles / comment sections on articles.
Substack has a perfectly good mechanism for publishing (paid and unpaid) to support people, but that conversation is missing. It's a pretty obvious move if you are engaged with the overlapping users of Twitter and Substack, and has potential to peel a lot of people out of Twitter if they're primarily there to follow their favorite authors, showrunners, etc.
it certainly seemed to me like there was a good portion of twitter that was just people promoting their substack newsletters, and most of the people they interact with are doing the same. it makes perfect sense for substack to try to bring that under their roof.
The phrasing is weird though: “You’ll then start seeing more of their notes in the Home tab.”
More? Not all? Odd.
Notes linking to Substack Newsletters should convert better. Notes are networked "post summaries" that represent an improvement over the traditional blog homepage format. I see a play that could improve what they're cloning while also benefiting their core offering.
It has potential but the likeness of the clone is a bit off-putting for me.
That said, Substack showing writers adjacent to your subscriptions in Notes makes if feel more Twitter-like in a way that I'm not sure I like.
Substack will need to decide if they view Notes as a search engine with an RSS feed or a standalone social network.
Edit: I don't think their positioning is obvious yet.
https://substack.com/profile/241262-casey-newton/note/c-1446... I’d a good summary. I don’t want to subscribe to hundreds of newsletters to see tweet (sorry, notes). But if you change that setup, it really is a Twitter clone with no upside to writers.