Venture Capital also imports theories of scarcity and under-production that our entire open-source ecosystem have shown don't apply in the same way to the digital world. The funding of end-user friendly software development clearly isn't a solved problem but the history of the internet clearly demonstrates that our existing models aren't sufficient. VC is ripe for disruption.
I believe that the next leap forward to "make the world a better place" isn't new digital products but a new framework for how we build technology companies in the first place. We needn't accept this as a fundamental foundation that can't change - creative destruction is the name of the game after all.
VCs are not the root cause. You're not looking hard enough for counterexamples.
Examples of software companies that didn't take VC money that many consider to be "user hostile" are:
- Intuit -- see 1-star reviews on Amazon of annual Quicken releases and forced upgrades of buggy software that nobody wants
- Autodesk -- expensive licensing and stagnant features and bug fixes in Revit, 3ds Max, etc
- Microsoft -- list of various user complaints over decades are well known [pedantic alert: MS took a little bit of VC money from David F. Marquardt but they didn't need it because they were already profitable with cash in the bank; they just wanted DFM as an advisor for their upcoming IPO]
The real root cause of "user hostility" is that companies are run by humans and humans are self-serving and want to make more money. E.g. Look at COVID causing some colleges/universities cancelling in-person classes and refuse to refund tuition fees claiming that "video instruction" is same quality of education. The money came from students and not VCs. You can't blame VCs for that.
>VC is ripe for disruption.
The issue is the company founders, not the VCs.
The primary advantage of venture capital is access to capital for growth, which isn't a great fit for purely digital companies with low capital requirements and the ability to bootstrap. The ability to rapidly grow is handy, but primarily addresses the needs of investors, who make their money off of growth. Getting investors to satisfy the needs of investors is awfully circular.
The big reason we don't see tech co-ops is simply tradition. Most big tech companies were VC funded. Most good startup advice comes out of VC companies like YC that naturally push people towards venture capital. On the flip side, worker owned co-ops are most common in the food industry of all things, even though that is quite capital intensive, because of the same sort of tradition-inertia.
What's scarce isn't software, it's time. For certain classes of products (specifically, those with network effects), getting earlier to a larger market can be the difference between a company worth billions and a company that goes bankrupt. What 2005-2015 VC tries to do is to inject funding into companies specifically so that they can go on massive hiring sprees and try to capture the market before any of their competitors.
> The VC model for funding technology...
This is the root of your misconception. VC doesn't fund technology, it funds growth. It's not the same thing. Sometimes it correlates, where technology is what permits previously-impossible growth to happen, but it's not the same thing.
> VC is ripe for disruption.
No, what you're seeing is a classic bubble. The success of early Silicon Valley VC funds like Sequoia and A18Z came from understanding that VC funds growth, not technology. Today you look at the funding landscape and you see thousands of sources for "VC" funding by people who think that any technology will lend itself to massive scale and growth, and most of those efforts fail miserably, particularly the ones where there are no network effects or other barriers to entry and the businesses eventually commoditize. At which point, it's very clear - if you sell a commodity, and you're not yet a Fortune 500-sized enterprise, then from a VC expectations point of view, you failed.
If you want to fund technology - really fund technology - then advocate for better public funding of research. Only state-level governments can afford to put funding into research projects that will have a 20+-year horizon from idea to commercially-ready product. There are well-established pipelines for taking academic research with commercial applications and turning them into profitable companies.
That said, disrupting the "VC model" seems like an interesting question. The implication for me would be many more bets that are lower risk / more marginal returns. An IPO or buying stock would fit that profile, but that's small amount of opportunities overall and there's nothing disruptive about that. For me, an example of something different might be community-focused investing. Pick a region or town as a locus of investing, and invest in a number of existing business and infrastructure all across the broad, with the idea of moving that local instance of an economic system from a static phase to a growth phase. That has nothing to do with tech, per se. Maybe that's the disruption ...
Centralization of economic (as well as political) power is the true killer of consumer freedom. It occurs so regularly that it's difficult to imagine any possibility of escape.
Let's say you, a hopeful founder, could get $0.5M/yr at a BigCo. Instead you're going to start a company where you'll earn maybe $0.15M/yr for a decade then either get a payout (10%) or fail (90%). To make them even in expectation after that decade, you need $5M = $1.5M + 10% * payout, so payout = $35M. Maybe you and your cofounder each have 25% (?) of the company at that point , so the valuation needs to be 4x that $35M, so $140M.
To take a paycut from a really good alternative, you need a giant incentive. Maybe that just means that if you would start a business that'll "only" make you $0.5-1M/year if you succeed, then in solely a financial perspective, you should just join a BigCo.
This is basically localized forms of market monopolization. The internet is always pro-producer because the user has very little influence in the relationship.
The great thing about the free market is anybody can create a company in whatever framework they like.
For example, the D Language Foundation. We don't make money, it's pretty much all volunteers and support from industry. We don't "extract" any value from our users.
This is hardly the only example.
As long as software development and user acquisition requires capital, software doesn’t seem all that different from other capital intensive activities.
IMO this will change when
1. Regulations and/or cultural norms inhibit user-hostile behavior.
Or
2. capitalism itself changes
It's not the root cause but it's along the right path and very close to the root. The root is the monetary system with banks being able to print trillions of dollars and decide who can get that money and who can't... And VCs get a lot of that newly printed money, so do corporations (who provide exits for VCs).
Blogging took off because half the worlds population started having access to the internet in the early 2000s. That seems incredibly myopic and US centric.
According to Wikipedia LiveJournal had to implement an invite-only system for new users because they were growing faster than the server architecture could handle. This was all started pre-9/11.
That being said, I didn't hear the word "blog" until the year 2003.
Beyond that I don't recall the Iraq War being a major blogging topic. Sure, everyone has an opinion on the Iraq War, but how many blog posts can the average person actually write about their feelings on the Iraq War? Can't be more than a few, not a topic that's going to keep the masses activity blogging.
To say blogging was a "shared response" to the invasion of Iraq is just... bizarre.
And when you use other's services, like, say, reading an article hosted at 'thenation.com', a site which attempts to block you from reading unless you run their javascript and CSS, use a browser with tools that allow you to toggle things like JS and CSS to read it anyway. Then re-share the article as plain text, https://write.as/tg3o7a6dfa5ck.md
And always remember: Lurking is good, https://i.imgur.com/7NYQ17y.mp4
It is and it isn't. Sure, you can run a website, forum, blog, whatever and host it yourself much easier than in the 90s. But people look for you and connect on the popular platforms they frequent: Facebook, Twitter, Instagram, TikTok, etc.
Back in the day even normies would pick up some tech and talk to you on IRC or USENET. Nowadays, it's the opposite, the bias is in the other direction. Even hackers are on Slack and Twitter.
Dont you see the bars on the windows and doors?
This is a much more serious problems in other fields, where you can only reach your crowd through YouTube or Instagram.
That being said, having a crowd wasn't even a thing back then. Platforms have given immensely talented people a free soapbox to show the world all sorts of things. Anyone can share something nowadays, not only people who know HTML and a few other things.
The snappy aphorism off the top of my head is that "only drug dealers and IT call their customers 'users.'"
One day perhaps we will indeed look at the apps of today as massive social engineering experiments gone haywire. But the author's categorization of Facebook as an "ant farm of humanity" and a "digital cesspool" is juuuust a bit too misanthropic and bitter for my tastes. The internet has connected humanity to an extent that is literally hard to grasp, and yes, that does come with very human problems, so it's silly imo to pin all of our woes on Facebook et al. I'd love to hear what kinds of creative derogatory phrases the author would come up with to describe the period of dominating telephone networks, or mass media television, or even before we had any wires at all and just had to rely on the post and grapevine in the horrific dark ages before the invention of the telegraph in the 19th century.
Plus, for nostalgia's sake, the indie web's still out there if you know where to look (e.g. https://wiby.me/)
Is this really the dominant narrative? Are there lots of thinkpieces going around about how fair and kind Silicon Valley is, if only it weren't for all those mean people using their services? Maybe it is so obvious that it doesn't need to be said, but when comparing the early internet to the current internet, we cannot let the users off the hook!
The further back you go, the harder it was to get on the internet, both as a user and a publisher. That meant the early internet was full of people who worked at universities, or were so motivated to discuss weird hobbies and interests with others that they struggled through the expense and technical difficulties, maybe even self-hosted, learned weird new languages from scratch. These were interesting, educated, intelligent, thoughtful and passionate people.
It's like air travel. If you were flying in the 1970s you probably had an interesting or important job or story. Getting on a plane meant meeting a bunch of interesting people. Now it doesn't. That is not a bad thing and it's not Southwest's fault. And when people complain about it, even though they might target Southwest (or Facebook), there is really an underlying snobbery about it. I can't believe I have to sit next to all these commoners on my internet!
I get it, advertising sucks. Still, save the military terminology for things that are related to the fucking military.
I mean, I wonder what a 57-year-old from Cambodia would think when he reads about how much the author suffered under the "carpet-bombing campaign" of AOL and the likes.
This is not much better than old media really, which was always mostly ad supported. Media has always been a deflationary race to the bottom. When one player offers something cheap or free everyone else must follow suit and the economic model collapses. The cheapest crap and/or content with ulterior motives funded by someone else wins.
The article misses the point. The problem has its root in monetary policy. The problem is supply-side economics.
Money printing and giving control of the money supply to banks has made consumers redundant appendages of the financial system.
Imagine that you're the CEO of a unicorn startup or a big corporation and you constantly deal with investors, banks and customers. Which of these 3 groups do you derive most of your wealth from? Banks and investors.
Banks print money and loan it out to your investors and your investors use that money to buy your company stock and drive up its price - Also, banks loan your company money directly to buy back its own stock... As an executive, if you want to maximize your bonus, banks and investors are the only two entities you really care about... Your actual customers are merely appendages; they're merely a useful metric which allows you to get more money from investors and banks.
So long as all the new fiat money enters the economy through big institutions and big investors via bank loans, the consumer will always be an afterthought in the decision-making process. You're the product because you're not the source of money. Consumers don't have any money. Only institutions have money because they're printing it for free and distributing it among themselves by the trillions.
That's why we need UBI (Universal Basic Income) urgently - That's the only safe way to switch to sane demand-side economics.
Now, most people are on Facebook, Twitter, YouTube, and a few other massively high-traffic websites, while a minority of people are on the rest of the internet, often with their own blogs.
It's not as different as it looks, it's just that the TV networks got displaced by the few high-traffic websites. It's apocalyptic for for-profit TV, radio, and newspaper companies, who have been mostly circling the drain as FAANG gobbles up their ad revenue. But the impact on "the internet" is not as different as it looks, it's just that "the internet" now needs a new name, like maybe "the low-traffic-website internet" but shorter (tltwi, pronounced "tilt-we"), because the Old Media are now co-hosted on the same infrastructure.
Most people didn't get on the internet prior to AOL. Most people don't leave the high-traffic-sites internet now. It's not like there aren't any blogs left. It's not as different as it looks.
We all have many roles, in which it may be appropriate to consider us as “user”, “customer”, “consumer”, “driver”, “parent”, “friend”...* preferring the term “person” might remind us that at the end of the day that the user’s interest is not necessarily aligned with ours (usually joystick in face) and that we need them more than they need us.
* I had a colleague who refers to parents of teens as “protectors of terrorists”. Yes, he had four teens himself. While the term was unwieldy and the joke rapidly wore thin, it reminded me of the various roles played by parents...and kids, and made me more tolerant of the foibles of teens. When we bundle a person into “user” it’s easy to lose perspective on the actual objective.
For those if us not obsessed with twitter and Facebook the golden age is now, the amount and quality of information available to an engineer is incredible and the online communities are mostly positive.
I feel like the "correct" model is users hosting their data with apps operating on it in a decentralized (or multi-layer federation ) way. But the economics are just really, really hard without certain restrictions, like always on connections for a primary 'home' device.
I guess it all translates to "The small guy always loses".
And VCs piling up money doesn't work in favor of the small guy.
Part of my last-lecture pep talk to every 300-student CS class I taught.
I was listening to Richard Wolff describing to Patrick Bet-David how capitalism creates monopolies and in the end the consumers always lose [1]. As companies get bigger, they become worse actors. I can't think of a counter example.
Patrick thinks everything has gotten cheaper and the consumer is winning, at least today (since history only backs the thesis). Richard couldn't come up with immediate counter examples regarding how Amazon is abusing their monopoly priviledges but FBA pricing and seller fees came to mind. Someone in the comments mentioned prescription drugs.
[1] Heated Debate On Capitalism with America’s Most Prominent Marxist Economist - Richard Wolff https://www.youtube.com/watch?v=wj-zFgxCUnY