February 8, 2024

Andy Baio has a really, really great post on the long, slow failure of a social media site called Ello. That word — post — doesn’t really seem to do it justice, to be honest, but it’s bloggy in all the best ways so let’s just go with it. I won’t rehash its contents here (just read it, already!), but one of the amazing things about it is simply its subject and scope. Ello was one of many, many decently capitalized startups that sprung up in the mid-2010s as an idealistic counter to one or more large, successful tech companies/platforms. As those big players became successful, plenty of people started to feel they had lost site of their original purpose, or in some other way lost whatever magic they originally had.

I get it. I remember how this felt, and I remember the second or third wave of a lot of companies that popped up with explicitly idealistic alternative approaches to the rapidly entrenching big players in things like social networking, search, and productivity tools.

Even at the time, though, it seemed odd that so many of these companies were getting started with funding from venture capitalists. As Baio explains quite eloquently in the piece, there are sources of funding that are okay with building a public benefit corporation, or simply making decisions that aren’t necessarily based on some transactional end state for the business, but venture capital is absolutely not one of them. It’s not a failing of venture capital, that’s just… not what it’s for.

But people did it anyways, often convinced (as in Ello’s case) that their large ownership stakes in these companies gave them control, except it wasn’t actual control. You can be the captain of a sinking ship, but if someone offers you a way to save the ship if you do what they say, you’re effectively the captain in name only. Some people (like Baio) saw this at the time, wrote about it the logical issues, and even hurt some feelings along the way. But those people were absolutely right, not just because of the particular instances (like Ello), but fundamentally. You are not going to build alternatives to aggressive growth and profit seeking with venture capital — that capital is going to require you to go big, spend big, and then raise even more capital to keep operating like that, which will require more concessions both in operating structure and most likely operating strategy. As soon as you get on the treadmill, that’s where this is headed, and almost no principle outside of revenue maximization can survive it.

There are two really good reasons to supercharge a business (or support an unprofitable one) with venture capital. One, you can be happy building something that in the end, makes sense as an acquisition by someone else. Basically, you can use your idea to try to become rich (or at least richer), and then do something cool with the money. I don’t begrudge anybody this path — I know people who did it and it seems fun in a lot of ways — but you’re obviously unlikely to make any sort of lasting change to how things work by operating this way. You’re building to be absorbed, and when you are absorbed, by definition whatever you built will either be put to work to accomplish the goals of whoever bought you, or it will be deprecated and disappear. I can’t think of any exceptions to this off the top of my head; some wonderful web service that got purchased by a large company and then, despite being a troublesome thorn in the side of their status quo, was simply left alone because people liked it, or it was popular, or whatever. It’ll change, or it’ll die. That’s why big companies with lots of money buy things — just look at how Tumblr’s been passed around, first as a prize, eventually as an albatross.

Two, you can build a business that is designed to make money. You figure out that magical alignment between what you want to accomplish, and why people pay you as much money as possible, and you’re off to the races. This is the platonic ideal of capitalism, so if you get it working for you, congratulations — it’s just a lot harder than it sounds. The fastest way to make as much money as possible doing anything is usually pretty gross and, at best, in an ethical gray area. Maybe Facebook does bad stuff because Mark Zuckerberg is a sociopath and he enjoys doing those things or doesn’t think they are bad, but I actually don’t think that’s the case at all. I think Zuckerberg, like many rich people, is in complete and utter denial about what his company actually does, and what its actual effect on the world is. He certainly wouldn’t be the first.

Selling Out 101

Many of the people who built a lot of these 2010s, reactionary, “principled” startups are my age, so I can assume they have some understanding of the cultural context of “selling out”. If you’re not familiar with it, basically the idea is that you start off making something idealistic and purposeful in relative obscurity — but once it’s successful, opportunities to dump some or all of your idealism in exchange for money start to pop up. The idea of exchanging your principles for money is “selling out”.

Pretty good explanation of the times, plus a dope bass part.

In the mid-late 1990s, we accused people of selling out all the time, but there were limitations of the era that made the whole thing hard to assess. Green Day is a punk band that famously “sold out” according to lots of people when they moved from an independent label to one operated by a large, for-profit corporation in the early 1990s. There are much better, clearer examples of actually selling out than Green Day, but the discussion of whether they sold out or not is one of the best examples of the debate, and how much people cared about it. Once on a major label with national distribution and promotional capabilities (and with an awesome, generation-defining album in hand), Green Day got extremely popular, and yes, made a lot of money. But… did Green Day really change what they were doing in exchange for money? Looking back with the benefit of hindsight, you can make a pretty reasonable argument that they didn’t. You can accuse them of, I dunno, maybe tacitly endorsing an exploitative industry, or leaving behind the independent infrastructure that helped them get off the ground (although Green Day was far more financially supportive of that infrastructure over the years than they had any obligation to be), but you can’t really say “Green Day made a band to do _____, and they traded that away to become rich celebrities”. Really, they just figured out how to do exactly what it seems they always wanted to do while becoming rich celebrities, so… kudos to them, I guess. Green Day has made some of my absolute favorite albums of all time and a whole bunch of stuff I’ve barely listened to or simply l don’t care for, but I don’t think any of that has much to do with how much money they’ve gotten from Warner Music Group.

At any rate, the nuances of what is and isn’t selling out in each little cultural niche isn’t that interesting of a subject these days. Honestly, it wasn’t all that interesting in 1996. But I do think it’s kind of crazy that the idea of selling out seems to have disappeared from the discourse altogether. Whether you agreed with someone’s specific decision or not, there was certainly some value in considering the ethics of taking large amounts of money from someone, because obviously whoever is giving you the money wants something in return for it, and maybe that something is bad.

But… we don’t really talk about it anymore!

Selling Out is a Default Setting Now

It might seem weird to anyone under 35 or so, but LOTS things that were very important to people used to happen completely outside of commercial channels. Before the internet — or more accurately, before the internet became where everyone was all of the time — you could promote an event, hold it, and let people experience recorded versions of it later without ever using a “platform” or any sort of distribution device whatsoever. In fact, not only could you do that, you actually had to do it. You couldn’t just add your music to the music store. You couldn’t livestream your show over… television, I guess? All of those things had limited shelf space, or bandwidth, or whatever, and those limited resources were both valuable and owned by large commercial entities.

Even crazier, when the internet first took off, for a while it actually freed us from the few commercial constraints that existed, because it eliminated certain bandwidth constraints AND there were no dominant platforms (mostly just protocols, if that). You just sort of poked around looking for stuff, and most of it languished in obscurity just like the pile of demo tapes in your room. But it certainly was exciting that technology made it possible for people to get them in theory, and occasionally, in reality! Actual people in Japan bought Glenn’s Army CDs!

For better or for worse, commercial platforms eventually started to spring up. Many of them didn’t start up as especially commercial (YouTube made zero business sense at first), but were eventually acquired or matured sufficiently that they felt obligated to start making money. Either way, these platforms didn’t have supply limits, and didn’t try to bring them back. Instead, they took advantage of unlimited supply by letting anyone put their “record” on the “shelf”, so to speak, and simply took a cut of the sale (be that a purchase, or an ad, or whatever).

I’m actually pretty neutral on whether that business model is a good thing or not (I don’t really know), but one kind of insane impact it had was the immediate ability to passively commercialize what you’re doing, from literally the minute you come up with something. Successful commercialization isn’t easy — just like discovery on the 2004 internet wasn’t easy — but it’s possible, and it’s possible from day one. And on top of that, the commercial, centralized platforms have taken over the whole discovery process. They’ve taken out record stores. They’ve taken out magazines. They’ve even taken out the popularity of the open web, message boards, and stuff like that. If you want to be seen at all, you need to be on YouTube, Instagram, TikTok, and Spotify, and those are all platforms that can almost immediately pay you money (even very small amounts) if you get enough eyeballs.

Where’s the Green Day moment, then? When does someone make the decision to trade their principles for the chance to become wealthy? If you’re an optimist, maybe it feels like the answer is “never, because you don’t have to do that anymore”. Anyone can turn even small amounts of popularity into real money, and there are basically no gatekeepers to that. The whole thing scales as you go, so Green Day never would have faced the problems they faced back in 1992 or whatever that drove them to consider and eventually sign with a major label.

But the other answer is… “immediately, without even thinking about it”. Baking commercialization, a theoretically infinite audience, and tons of quantitative data into the process from the absolute, very beginning means selling out is no longer something you do at a critical juncture in the development of whatever you’re working on. Other than the absence of big-dollar promotional muscle (no small thing, but not as important as it was when radio and CD sales dominated) you’re already operating the way you would operate as a commercial juggernaut the minute you start sharing your work with the world. It’s just a matter of degrees — a boiling frog analogy for every band, artist, and creative from the jump.

And yes, you still have agency. You can ignore many commercial opportunities (although not all of them — people are going to see ads if YouTube wants them to see ads), not worry about data, and just sort of punk rock your way along as long as you’d like. But you’re still living and dying on somebody’s profit-minded platform, in a way that you didn’t have to when people made each other cassette tapes and found out about shows by looking at fliers on telephone poles. But more importantly, the next generation doesn’t automatically retain the knowledge of the last one. The experience of starting a band, of playing your first show, of making your first record, it’s something you learn by doing. Today, the way to do those things is largely on big, commercial internet platforms with incentives that aren’t compatible with not thinking about monetization.

Kids adapt. The centralized internet gave them options I never had; options that would have been very tempting to leverage given the limitations of our era. But they were also limitations that caused us to have really honest conversations with ourselves about why we were doing what we were doing, and whether that meant anything to us. I played in my high school era band for six years, through most of college, because I loved doing it and I loved what we represented. We stopped largely because we didn’t really want to half-ass our band — we never had before, why start — but because at the same time, we wanted to do things in life that weren’t going to be possible going all out on niche, non-famous punk band. In fact, even in our small, largely irrelevant state we still grew big enough to face the idea of “selling out” as we simultaneously started attracting younger fans and starting to worry about how we were going to make enough money to live. Our success did not scale gradually, and in fact, when I even considered the possibility that we might be able to make it do that (in 2003), the idea was still new and kind of radical. But regardless, we didn’t hang it up because we were a low performing commercial entity — we hung it up because we thought about life in our band as a commercial entity and decided that wasn’t something we wanted to do. I don’t know that kids today truly have the luxury to think about things the same way.

All this brings me back to Ello, and the idea of solving problems caused by money with more money. The internet itself is a lot more punk rock and non-commercial than you’d probably expect. It’s powered by protocols and ideas that a bunch of really smart people felt passionate about, and was worked on by contributed to by lots of people who not only didn’t get rich, but don’t feel like failures for not getting rich because that’s not why they put in the work. Those are the bones. What we have now is the world on top of it, that we live in — a world almost entirely built by people looking to use their ideas to become as rich as possible, either because that’s what they want, or that’s what the people who are paying for it want (unlike the random universities, government agencies, DARPA, etc. who funded a lot of the aforementioned infrastructure work). Capitalism is fine, and appropriate in a lot of circumstances, but it’s alcohol. You have to cut it with something else; straight capitalism will make you throw up.

Ello thought they were cutting capitalism with principle, but in reality, that wasn’t happening at all. That only works when the people leaning on principle are willing to work for free — as many people in bands are, and many people working on certain technology projects have been and will be in the future. If you take the money, it’s over. I’d argue that for many kids, it’s over before they even get any money, because today society forces you into the money machine right away, and co-ops your sense of what’s possible in your earliest years. You don’t have to take my word for it, either. I’m not exactly burning down the establishment with my little punk rock software company right now, but this is why I never even considered raising money. Sure, I probably would have failed, but success would have felt like a delayed death sentence for what I actually wanted to build anyways.

The thing is, a lot of conversations about selling out were substantively dumb. I know, I was there. But I’m still glad we had them, I don’t think we have them anymore, and I think the world is a worse place without them.