Substack and the Future of Content

Substack and the Future of Content


Substack has a new video service in beta. It released the Substack Reader last week on iOS. With a growing number of creators using its platform, the question of what Substack is, and whether it is good has started to arise. Let’s dive in.

Contents

Editorial

Nathan Baschez, CEO of Every, a collection of 13 newsletters, and a former Substack team member, wrote about Substack this week. He said:

The thing I didn’t understand going into it was that Substack wasn’t just about an economic trend of power flowing to individual writers thanks to the leverage technology gives them — it was about creating a morally superior playing field that could help heal our minds from the damage done by social networks. The Substack model wasn’t just a business strategy, it was a political philosophy, and I loved it.

His point? That Substack’s founders are interested in more than building a startup. They want to change the world. They want the world of content to be separate from and independent of social media and advertising.

Nathan quotes from one of the founding essays of Substack, written by the founders:

We believe that journalistic content has intrinsic value and that it doesn’t have to be given away for free. We believe that what you read matters. And we believe that there has never been a better time to bolster and protect those ideals. Now, more than ever, publishers of news and similar content can be profitable through direct payments from readers. In fact, we are so convinced by this notion that we have started a company to accelerate the advent of what we are convinced will be a new golden age for publishing. The company is called Substack.”

Nathan’s article — linked below — is a contribution to the discussion about Substack from a critic. It makes great reading. I don’t agree with its premise, however. The premise is that Substack will be forced to compromise on its core ideology in order to satisfy its growth-focused investors.

The assumption is that investors are simply aligned with the shortest path to value growth and that this will involve decisions not aligned with the founder’s vision.

There is a good article this week (again below) by Hunter Walk, explaining why he only invests in mission-driven founders. He explains:

We’ve sent hundreds of millions of dollars to startup bank accounts but none of those have gone to teams which don’t have at least one founder we consider to be ‘mission-driven.’ How do I define that term? Loosely, someone who has a personal connection to the problem they’re trying to solve. The tie is sometimes very intimate (as an individual, familial, and so on). Or linked to what they’ve studied (academic) or worked on previously (vocational). They’ve often been thinking about it deeply ahead of even understanding whether it could be a startup or would be an attractive, valuable issue to address. Not everyone on the founding team needs to fit this criteria but we do try to understand the different motivations at an individual level.

This approach is close to the heart of almost every seed investor, and especially good ones. The Substack founding team is mission-driven. the reason investors like this type of founder is that the energy, enthusiasm, optimism required to build a startup and attract others is only found in such founders. Success is not an abstract concept. It is the success of an idea, executed by a team. The idea lives in the hearts and minds of the founder or founders. The outcome is not a function of the shortest path to money. It is the shortest path to a world-changing idea. Money will flow to success. And patience and a long-term view are pre-conditions for that.

That said Substack is so early in executing, there is no obvious need to compromise anyway. The end game for creators is to be able to build experiences for an audience made up of words, images, video — both live and on-demand — audio and then distribute it through a subscriber base and beyond. Nathan shows that there are challenges doing so when the platform does not have any natural network effects. He is right about that. But the launch of the Substack reader and the soon-to-be-launched video add-on both show that Substack wants to give creators the tools needed to produce while also giving the audience a way to engage with and discover creators they will love. I think we are far away from seeing anything other than a startup executing a vision. And the vision seems compelling.

No Andrew Keen this week due to a hot date with Bob Dylan on the East Coast. So no video.


The Substack Platform

Substack’s Ideology — Divinations

The point isn’t just to make money — it’s to change the systems that human attention flows through. You can’t understand Substack without understanding this.

every.to • Share


Seed Funds in the Spotlight

Everyone is going to launch a fund that backs other funds

Investors have long invested in other investors as a way to get exposure to ambitious, speedy smaller funds (and access to hot deals before their neighbors notice). Andreessen Horowitz has been doing it for years, most recently putting money into a fund for NFT art, and Lightspeed and Sequoia now have well-known scout programs that give starter capital to ambitious emerging investors.

While fund of funds isn’t a new strategy, it’s one that is gaining significant steam in a softening late-stage market and a rush to back the best pre-seed companies out there. Recent efforts from Tiger Global Management and Seven Seven Six — Alexis Ohanian and Katelin Holloway’s venture capital firm — show just how much attention is going toward emerging fund managers.

TechCrunch

techcrunch.com • Share

What is Pre-Seed Funding?

Launching a startup requires one thing: capital. Without capital, the chances are a startup will fail before it ever gets a product to market. There are several funding stages, and […]

The post What is Pre-Seed Funding? appeared first on Crunchbase.

about.crunchbase.com • Share

I Love Backing ‘Mission-Driven’ Founders But Here’s Where They Struggle as Startup CEOs

Learnings From a Decade Investing In These Types of Leaders

We’ve sent hundreds of millions of dollars to startup bank accounts but none of those have gone to teams which don’t have at least one founder we consider to be ‘mission-driven.’ How do I define that term? Loosely, someone who has a personal connection to the problem they’re trying to solve. The tie is sometimes very intimate (as an individual, familial, and so on). Or linked to what they’ve studied (academic) or worked on previously (vocational). They’ve often been thinking about it deeply ahead of even understanding whether it could be a startup or would be an attractive, valuable issue to address. Not everyone on the founding team needs to fit this criteria but we do try to understand the different motivations at an individual level.

Continue reading on Medium »

hunterwalk.medium.com • Share

Hoxton Ventures Closes $215 Million Fund

London, UK; March 17, 2022 — Hoxton Ventures announced today that it has closed a $215 million new fund, Hoxton III, which will be used to build and scale Europe’s most promising early-stage startups. The fund was significantly oversubscribed and exceeded its target of $150 million by 43 percent. The company also announced that Charles […]

www.hoxtonventures.com • Share

VC “innovator” Alumni Ventures raised almost $1 billion in 5 years — but did it mislead investors on fees?

Michael Collins undoubtedly had an appealing idea when he founded his investment firm in 2016: make professional venture capital accessible to millions of people who otherwise are shut out of potentially lucrative early-stage investment opportunities.

He would do it by recruiting “individual accredited investors,” rather than sophisticated institutional financiers, offer lower investment minimums, and target alumni of top, mostly Ivy League, universities who would network with fellow graduates and pool their money to build portfolios of competitive VC deals.

It seemed to work. His firm, Alumni Ventures Group, headquartered in New Hampshire, raised nearly $1 billion in five years, and grew to more than 175 employees, and 1,000 portfolio companies that raised more than $25 billion from investors in 2021. The firm’s investments include startups like telemedicine-based birth control provider Nurx, media brand Mic, direct-to-consumer mattress seller Casper, and lending platform Better.com.

The Business of Business

www.businessofbusiness.com • Share

VC Firm Foresight Ventures to Plow Up to $200M in Web3 Startups Over 3 Years

  • The Shanghai-based company told Blockworks it would invest in projects focused on building out Web3, NFT and blockchain infrastructure
  • The budding firm invests in the primary and secondary markets through equity as well as digital tokens

Crypto venture capital firm Foresight Ventures said it will invest hundreds of millions of dollars in Web3 startups and projects over a three-year horizon in a bid to capture a portion of the budding sector’s growth.

In a statement shared with Blockworks on Wednesday, Foresight said it will set aside between $100-$200 million in venture capital for a range of crypto assets, NFTs, blockchains and metaverses. The firm’s investment portfolio includes financial services platform Matrixport and metaverse developer Everyrealm, among a host of other budding Web3-focused businesses.

Venture capital continues to pour into the crypto industry’s Web3 and metaverse sector having already garnered billions in dollars over a relatively short period beginning in 2020.

That’s despite frothy market conditions having cooled from a hype cycle that has seen an explosion of investment in everything from providers of NFTs (non-fungible tokens) to virtual worlds seeking to leverage the new medium in an effort to reach new audiences.

Blockworks

blockworks.co • Share

Coatue Taps Ex-Index VC Sarah Cannon To Lead European Startup Investing Push

Investment giant Coatue has established its anticipated foothold into Europe’s startup scene — and it’s tapped veteran venture capital Sarah Cannon to lead the charge.

Cannon has joined Coatue as a general partner, the company says, as the first investor to work out of the firm’s new office in London. Cannon, who until recently worked at venture firm Index Ventures, has already moved from the U.S. and will start in the next several months, with a mandate to invest in local startups at both the early and growth stages.

An investor known for involvement with companies such as work collaboration software businesses Notion and Slack, Cannon’s surprise departure from Index was first reported in January by Insider. Her plan at the time was to start something new, potentially her own fund. Instead, Coatue pounced in recent weeks.

“I realized that I could do something quite entrepreneurial and help [Coatue] expand into Europe,” Cannon tells Forbes. Coatue, she says, is approaching its European expansion with a similar spirit: “So it’s the best of all worlds.” Forbes

www.forbes.com • Share


Web3 Investing

Web 2.0 Investors Aren’t Cut Out for the Web3 World

Getting ready for the decentralized web will require more than a change in mindset.

By Edith Yeung

Yeung is a general partner at Race Capital.

March 16, 2022 9:00 AM PDT , Illustration by Jesus Escudero

Solana was my very first token investment, and it was not an easy one to make.

Back in 2018 when I first met Solana co-founder Anatoly Yakovenko, my fund at the time, 500 Mobile Collective, was legally not allowed to invest in digital assets. To back Yakovenko’s company, then known as Loom, I had to get two-thirds of my limited partners to agree to amend my fund’s LP agreement. I wondered, am I just too far down the rabbit hole? Am I taking on too much risk for the fund? Or is Web 2.0 so different from Web3 that my LPs just don’t get it?

Fast-forward four years — all the hassle was certainly worth it. Solana has turned out to be one of my most successful investments, generating a 4,000X return. And yet things I now find normal — dealing with pseudonyms, betting on founders halfway across the world who don’t want to give investors any control — are still baffling to my colleagues who came up during the Web 2.0 boom.

With $1.7 trillion in combined market cap and more than $30 billion in venture funding pouring into the space in 2021, crypto is an industry no investor can afford to ignore. And yet even as some of the big firms, such as Sequoia, Andreessen Horowitz and most recently Bain Capital, are building up their crypto operations, many smaller players remain hopelessly unprepared to enter the Web3 world.

A bunch of big firms can’t sustain an industry on their own. More high-quality investors to support founders equals a more robust crypto ecosystem. So this felt like the right time to take a step back and reflect on what I’ve learned from my experiences — and more important, to open the door for new investors in the Web3 world.

THE TAKEAWAY

Investing in Web3 companies requires a top-to-bottom rethink of the investing model, from how you’ll make distributions to your LPs all the way down to how you set up your fund.

www.theinformation.com • Share

Tim O’Reilly’s comment on the original

Tech China

What Chinese tech CEOs are telling Beijing

The CEOs of China’s largest tech companies have a wishlist for their government — at least, a version of their wishlist they can say publicly — for this year: Watch out for metaverse risks! The more electric vehicles, the merrier! Make AI greener!

Every year around March, Beijing holds the most important national political meetings: the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC), usually referred to as the “two sessions.” Thousands of members — government officials, entrepreneurs, workers and academics — gather in Beijing for legislative discussions and to submit their “suggestions” (for NPC) and “proposals” (for CPPCC) to the national government.

These proposals are supposed to be expert advice on what the Chinese government should do next. But they can often basically double as open lobbying efforts. While lobbying is not officially allowed in China, business leaders who moonlight as two sessions members are free to make suggestions that benefit their own businesses. An electric vehicle company CEO, for example, could propose to advance the electrification of transportation, and it would not be seen as a conflict of interest.

www.protocol.com • Share


Social Media and Nations

Facebook and Instagram users not allowed to call for death of Putin

Update from parent company Meta says ‘calls for the death of a head of state’ are banned

Facebook and Instagram users are not allowed to call for the death of Vladimir Putin, according to an update issued by their parent company.

Meta had issued new guidance on Friday allowing content that condoned the harm of Russian soldiers, with media reporting at the time that it also permitted content urging violence against the Russian president.

Continue reading…

www.theguardian.com • Share


Essay of the Week

The fight over anonymity is about the future of the internet

Jeff Kosseff’s last book turned out to be pretty prescient. He published “The Twenty-Six Words That Created The Internet,” a deep look at the history and future of Section 230, right as those 26 words became central to the regulatory fight over the future of the internet.

With his next book, Kosseff, a professor at the Naval Academy, may have done the same thing. The book is titled “The United States of Anonymous,” and it deals with the centuries-old argument about whether people should be allowed to say things without having to identify themselves. In the U.S., courts have given a lot of leeway and protection to anonymous speakers, but the internet has changed the equation, and companies and governments alike are still figuring out what to do.

www.protocol.com • Share

The Metaverse and NFT Boom Is About to Go Bust

Alongside the NFT boom was its counterpart, the Metaverse, which many believed (read: prayed) would be the digital playground to use these NFTs, whether through avatar skins, items, or interacting in exclusive online communities. Beeple’s extraordinary sale was the ultimate test case — people would pay, and pay lots, for purely digital items — and it opened the floodgates to a whole new market, sparking an NFT frenzy.

onezero.medium.com • Share


Rising Africa

3 Dozen Tech Firm Founders Launch VC Fund To Grow Africa’s Next Unicorns — PYMNTS.com

From Nigeria’s Interswitch, Andela and Flutterwave to Senegal-based mobile money provider Wave, Africa’s technology landscape has seen the emergence of several unicorns — private companies with a valuation of over $1 billion — in recent years, buoyed by increasing venture capital (VC) being poured into disruptive firms operating in the region.

It’s this gap that the Norrsken22 African Tech Growth Fund is looking to fill, Waithaka said, launching a $200 million VC fund backed by 30+ unicorn founders and CEOs of companies like Flutterwave, DeliveryHero, Klarna and Skype. PYMNTS.com

www.pymnts.com • Share

VC fundraising is for African CEOs who studied abroad — Quartz Africa

By Alexander Onukwue

Published March 10, 2022

Besides being the chief executives of multibillion-dollar African startups, Olugbenga Agboola of Flutterwave, and Ham Serunjogi of Chipper Cash have one other thing in common: credentials from US universities. A lot of African tech leaders that raise venture capital funding are like them.

In 2021, 73% of the over $4 billion raised by African startups was by CEOs whose latest degree was a Masters or MBA obtained from a university outside of Africa, according to analysis by Africa: The Big Deal, a substack newsletter that covers startup deals in Africa. The analysis relied on educational history as displayed on the CEOs’ LinkedIn profiles.

Quartz Africa

qz.com • Share

Venture capital investments in Egypt expected to cross $1bn in 2022 — The National

Nada El SawyCairo

Mar 14, 2022

Besides being the chief executives of multibillion-dollar African startups, Olugbenga Agboola of Flutterwave, and Ham Serunjogi of Chipper Cash have one other thing in common: credentials from US universities. A lot of African tech leaders that raise venture capital funding are like them.

In 2021, 73% of the over $4 billion raised by African startups was by CEOs whose latest degree was a Masters or MBA obtained from a university outside of Africa, according to analysis by Africa: The Big Deal, a substack newsletter that covers startup deals in Africa. The analysis relied on educational history as displayed on the CEOs’ LinkedIn profiles.

The National

www.thenationalnews.com • Share


Startup of the Week

The World’s Billionaires, by Generation

From Warren Buffett to Elon Musk, this graphic shows the world’s billionaires based on their top sectors, residence, and net worth.

The post The World’s Billionaires, by Generation appeared first on Visual Capitalist.

www.visualcapitalist.com • Share


Tweet of the Week


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