Part 3: Rethinking the Industry
The strong state collapse
Bitcoin is a digital currency, which many people are very excited about. Why is it exciting and is it, really?
The technology behind Bitcoin and especially other cryptocurrencies is seriously impressive.
The—now—legendary Satoshi Nakamoto figured out how we can build digital currencies without trusted third parties in 2007. This was considered a fundamental challenge for a while. Nobody could figure out a design in which no one needs to trust anyone while still having transactions and money online. But Satoshi did it! What a legend.
I. Bitcoin is a store of value
Many proponents of Bitcoin claim that it is a store of value. When I first read that I thought “well, everything is a store of value; EUR, USD, my car, all of them, in a way, store value”.
That’s not what they mean, though. They mean store as in permanent store. What’s the point of money if one is not spending it but permanently storing it? Good question.
There is a problem that comes up if one has more than a few months’ worth of money. Their location. In the bank, someone with less money would say. In the pocket as cash, someone with even less money would say.
That, with which both poor and rich people agree, is: fuck banks.
Banks can decide that they don’t allow you access to your funds just because. Governments can make banks do that. What if we had a way to store money and 100% control it?
Gold is valuable, tradable, and can be 100% owned—I can just store it in my basement. If the banks don’t like me (or if they collapse, or if someone attempts a coup, or if civilisation collapses), one thing is for sure: I own my money and I’m still free and independent to buy stuff.
Now we’re getting somewhere. There is only one problem with gold. It’s heavy to move around. What if we had gold, but digital? Enter Bitcoin.
Bitcoin is virtual gold; it’s supposed to be hard to move around—in a way. For instance, Bitcoin has high transfer fees1, so if you want to send Bitcoin (not matter how much!) to someone, you have to pay an extra amount for the transaction itself.
The universal hate for banks is partly because they make consumers pay fees, but unfortunately Bitcoin has the same problem.
However: Bitcoin is for value storage, not transfer. Maybe billionaires don’t care, they can hide around the whole globe. But what about a millionaire, or a thousandaire? They could hide, but they may also be hunted by tax offices. Maybe one day said tax offices will find their hidden funds and eradicate them. It would be nice to actually control them.
The cost of Bitcoin’s transfer fees has historically been very volatile. It depends on if a lot of people want to transfer money, which makes the Bitcoin network crowded (and thus slow). It also depends on whether the sender wants to verify a transaction faster (higher fees mean higher speed as miners choose to verify high-value transactions first). In 2022, the average Bitcoin transfer cost was between $1 and $2, however, it has reached prices higher than $50 at certain periods across the years.
II. Bitcoin will not help people who need help
In addition to banks, the rich and the poor might actually agree to “fuck governments” too.
Let’s imagine a future potential Bitcoin-enabled socioeconomic landscape. The price of Bitcoin is now $2.6 million. Governments ask tax residents to declare all their wallet addresses. Bitcoin mixers are not legal. Power may now mean having access to the illegal ones. There are now two outcomes. Either we give up on taxes or we find a way to at least monitor (if not control) the Bitcoin network.
In the first case, the concept of the strong state dies. At least I can’t see how it couldn’t. No taxes means no public schools, no free universal healthcare, no furlough when the next pandemic comes, and generally no control of the economy whatsoever. Some claim this is when we’ll finally be free.
In the second case, Bitcoin is just another currency, just like USD and EUR. Central banks control it, ministries decide what to do with it, and the market can be as free as the government allows. Essentially, the same thing we have now.
Is there a third case? Maybe people decide they want strong states and declare all their income themselves. Or maybe BTC remains a non-mainstream thing. Or maybe something more radical happens, which I cannot predict.
I see mostly the following potential outcomes. Those who are super rich remain super rich. Those who are generally well off may become super rich. Those who are poor or really poor will remain as such—if not worse.
III. Bitcoin does not help people who need help now
To make the present case of Bitcoin worse:
- One cannot pay either online or the supermarket with Bitcoin
- It is much slower than the current financial systems
- It is much less secure and does not forgive mistakes
- It has very high fees for consumer-scoped transactions
- It significantly contributes to global warming
We have to put up with all of the above in order to benefit from 100% controlling our money—which we cannot spend directly but only store it.
Bitcoin becoming more expensive over time may be a reason to buy. “Investing” in the idea that more people will be convinced to be bank-independent. However, any short term (or even long term) gains not backed by value in essence (either social or even purely material) are not interesting to me. Until we can figure out how Bitcoin can actually contribute to world society, I denounce it.
Industry and context
I love technology as essence, as the way of making things that on the surface seem magical. I hate it as an industry, of what “big tech” has come to mean the last decade and how technology companies affect the world.
I considered these two as separate concepts in my mind, yet as time passes, they have converged. How can one love technology if the only way they can interact with it is through companies that not only do not care for societal betterment but also actively contribute to its detriment?
Google invades our privacy to sell ads. Amazon exploits warehouse workers for next day deliveries. Facebook sells ads to anyone—however malicious—that buys them. The examples are many.
The majority of my friends in the domain agree. They are sad about their work and our industry. Many are worried that maybe they are actively making the world worse, after all. Most of the time, it’s hard to know; things can spiral out of control even if in the beginning everything seems to have the right moral compass.
But I think the problem is not the industry nor technology as essence. It’s the context it exists within. And this context is the same for all industries: our societal and economic system.
Ask anyone; how do they feel about their industry? The responses I got were almost always negative. Technology? Silicon Valley thinks it’s saving the world. Healthcare? Nurses (and/or doctors) being paid meagre wages while doing an extremely hard and valuable job. Art? Millions of artists unappreciated and unable to live off their work and a small elite controlling the industry. Hospitality? Low wages for tiring and intellectually non-stimulating work. Transportation? Delivery? E-commerce? Energy? I think the reader can fill in the answers from their own experience.
All of these problems have one holy mantra as a common denominator: we have to maximise our profits.
Everything else trickles down from there. Google and Amazon—and every other company—have to increase their profits quarter to quarter, however ludicrous they already are. They have to find that 0.001% optimisation that will save them millions. This could mean shortening a worker’s 23-minute break to 21 minutes, or tracking users in this new, slightly more creepy way.
These companies did not necessarily start evil. They began fresh as the underdogs on a mission to make the world a better place. Google’s mission was to organize the world’s information and make it universally accessible and useful. Their contribution was definitely beneficial in many ways.
Amazon’s mission was to offer customers the lowest possible prices, the best available selection, and the utmost convenience. Good outcome for customers. Ordering anything and having it tomorrow on my doorstep is certainly utopian for the customer. But what about the workers?
This doesn’t mean—of course—that this is an argument against progress. I’m only against that which exploits others to achieve its end. In this case, we exploit many to have next-day delivery and we even exploit ourselves2 to have a web search engine and free email. We can progress without exploiting others and we should do that even if it takes more time and effort to do so.
All this, in the end, seems like an instance of instrumental convergence. Nick Bostrom’s paperclip maximiser is the thought experiment that comes to mind:
Suppose we have an AI whose only goal is to make as many paper clips as possible. The AI will realize quickly that it would be much better if there were no humans because humans might decide to switch it off. Because if humans do so, there would be fewer paper clips. Also, human bodies contain a lot of atoms that could be made into paper clips. The future that the AI would be trying to gear towards would be one in which there were a lot of paper clips but no humans.
— Nick Bostrom, 2003 (paraphrased)
For our socio-economic system, the paperclip is the GDP or a company’s quarterly revenue. Everything at the altar of maximising profits—whatever it is, it’s less important than profit, anyway. It doesn’t have to be this way, though. We can all agree to designate human wellbeing as the paperclip, rather than GDP or quarterly revenue. Hopefully, such a policy change seems more easily achievable than next-day delivery of all items humanity produces.
We exploit ourselves by allowing ourselves to be spied upon while relinquishing control of our own data.
On startup acquisitions
One of my favourite companies got acquired recently3. I’m always trying to figure out if I want to be happy when a company gets acquired.
It’s usually acquired by a much bigger company. Founders and investors make a lot of money. Everyone looks ecstatic and everyone congratulates everyone else. But why?
Why should we be happy they got acquired? Presumably, because of the money they made.
Silicon Valley’s imaginary is based on the fact that we improve the world with software and technology. Money is irrelevant. What matters is to advance as society.
It’s been a while since I started viewing the process of building a company as providing a service. Not as in system service, but as in community service. Someone who creates a company is someone going out of their way to help people. In return for the product/service provided, these people pay money. Both to keep providing it and as a thank you.
So, when this model ends, I think it’s a sad day. People who really cared about something and dedicated themselves to it, stopped. Maybe they got tired. It’s ok to get tired. But probably not a cause for celebration.
I'm referring to ActiveCampaign’s acquisition of Postmark in 2023.
A new startup lifecycle
I. Posthaven’s philosophy
Posthaven4 is pretty awesome. From their pledge5 section:
We’ll never get acquired. [...]
We’ll never raise money. [...]
Posthaven is a long-term project that aims to create the world’s simplest, most usable, most long-lasting blogging platform.
Posthaven has been around for a while and I would always appreciate its simplicity when coming across a blog built with it—it’s not a very popular blogging platform, so that wouldn’t be too often.
In the quote above, not getting acquired and not raising money are presented as arguments for inspiring confidence. Confidence, in that this project can indeed last for a long time and remain sustainable.
Posthaven hadn’t changed its landing page for many years — until a few months ago, that is. When I would visit their website, I would question whether they are still committed to the project, or they have given up. This latest renewal of their online presence made me stop worrying, though. They certainly haven’t given up.
I never knew who was behind it but this time I read its story. Two SV founders had made a blogging startup6 which was sold to Twitter in 2012. Twitter shut it down after acquiring it and this made them sad. They then decided to do it again, only this time: no VC money, no big teams, no acquisitions; just a product with paying customers, not destined to capture the market or make a lot of money.
If they don’t have to own the universe, they can just be a red ocean7 shop which achieves long-term sustainability with significantly less effort.
Their blogging startup was called Posterous.
In the book Blue Ocean Strategy, authors W. Chan Kim and Renée Mauborgne talk about red oceans, i.e. all industries in existence today, the known market space in contrast to blue oceans, the industries and markets which are yet to be discovered. Startups usually aim to explore blue oceans by creating new markets (and needs).
II. Reasons for acquisitions
I always hate it when good companies get sold. GitHub, Bandcamp, Keybase, Postmark, Figma, SwiftKey, even Zenly; the list is endless. The story needs no repetition but I will: they either get shut down and/or absorbed.
Everybody celebrates acquisitions. The founders and early employees make a ton of money and the acquirer becomes bigger and better and more profitable. In other words, more centralisation.
What’s the point of alternative non-big-tech products and companies when eventually their success is a big-tech company acquiring them? Is the point founders becoming rich? Is the point independent innovation because big-tech corporations are slow to prototype and/or iterate?
Maybe there is no specific point. Only that people get tired of running companies. Selling is a way out. One that will make you rich and your future life more comfortable. One that will also validate your work in the industry and in society. You were bought; you were definitely doing something important. This is not only about money. It's also about reputation; and impact; and ego.
III. Posthaven’s founders
Say, we build an internet product and we keep it online for 10, 15, even 20 years. But eventually we get tired. Even if not, we die. That’s when all bets are off. Our internet product either gets sold or just dies.
Maintaining an internet product is hard. People who do it need to be pretty well motivated. The people who made it usually are. The people who use it might also be.
Just like the Posthaven founders, I have also made a blogging platform, mataroa.blog8. Just like them, I also do not want to sell it or make tons of money off it. Its whole point is to provide a quiet place for people who want to explore saying something on this incredibly loud internet where nothing is heard. Everybody shouts; let it be us who try to whisper instead.
But maybe after 20 years I get tired. Maybe at some point I don’t want to have to think about maintaining mataroa any more. What do I do? Some people really like mataroa and, in a way, depend on it. I’d rather not let them down. Everybody knows the feeling of companies shutting down people’s favourite products. I don’t want to be someone who causes this.
Selling would imply finding someone who believes in the philosophy behind it. But I seriously doubt people interested in buying internet products are people who care about a philosophy of a product. They most likely buy because they believe they can increase its profit and/or possibly flip it.
I spent many months building mataroa. Its current annual revenue is $5409, which means I would need multiple decades to break even. It also means that it would be extremely cheap, if on sale. Had it been 10x or 20x more successful, though, we might have had some interesting purchasing scenarios to discuss.
Whatever the case, the question we want to answer remains: what is an alternative solution to businesses outgrowing their founders?
IV. Alternative futures
If and when I become tired of running mataroa, I’m thinking of executing the following plan.
- Gather interest from people wanting to run and maintain the mataroa platform. People interested write a single text that explains their motivation and capability. All texts get published.
2a. If nobody is interested, that’s the end. Users are given a year or two to migrate and we shut down everything after.
2b. If people are interested, we, all together (myself, the mataroa users, and the people interested), discuss and hopefully reach consensus as to who is the best person (or people)—among those interested—to become the future owners and maintainer(s) of mataroa.
If we can’t reach consensus, we vote. If there is a clear winner, so be it. If there isn’t, we fork. 2 or 3 new versions of mataroa appear and users choose to migrate to their preferred server.
The most interesting part of this plan though is that the new maintainers and owners of mataroa will not buy mataroa from me. I will gift it to them. The code is open source, but the gift also includes the existing server instance, domain name, and all users and their paying subscriptions.
The goal here is to shift the current social imaginary from one kind of transaction to another.
The transaction I want to move away from is: we exchange ownership and control of a product and platform with a lump sum of money.
The transaction I want to arrive at is: one promises to treat something with respect to its philosophy and they receive in return control and ownership of this product and platform.
V. Founders outlived
Maybe you think that’s mad, and I don’t blame you. But I hope to convince that it’s much less mad than it might initially seem.
Posthaven, the blogging platform which goes against all SV ideals, was not founded by SV outsiders. One of its founders is Garry Tan, the current CEO and president of Y Combinator, a company that has been instrumental in developing the SV model of entrepreneurship. It is him and Brett Gibson—another VC—who chose to create Posthaven with the pledge of no VC money and no acquisitions.
They choose to run a business that is so boring and non-VC-oriented when their whole life is—at present—about the VC model, one of high growth, market capture, and exits.
We could say they are—in addition to the VC model—interested in something else. An alternative way of startup life. One which maybe promotes values that are in conflict with the VC model.
But how does this alternative way work? Can we find out how to have internet startups that outlive their founders, while at the same time they do not turn into profit maximising machines?
This is a need for space for otherwise. I think that’s quite interesting and I think it’s a glimpse into the future—rather than the past. A glimpse into a world beyond capital.