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A comment on VC-funded companies with products in the fediverse:

My company, StatusNet, ran identi.ca for a long time on VC funding.

It's hard to get a 10x return in markets where open standards prevail. But it's fine to try.

There are other ways to fund services in the fediverse. https://cosocial.ca/ is a cooperative, for example.

If the fediverse remains diverse and competitive, and community, coop and family servers have a place, I'm not opposed to VC-backed companies participating.
This entry was edited (1 year ago)
It’s hard to do anything without funding.

Despite this, people get pissed off when the reality is stated bluntly.

Many people get upset when I tell them that Mastodon and community admins require a way to fund their ventures. But people need to feed their families.
@atomicpoet I'm really, really excited about cooperative models. I think we're moving in the right direction there.
@atomicpoet we've successfully run a forum with a cooperative for 13 years. It's a fantastic model if you've got some folks willing to volunteer time.
@tehstu @atomicpoet fwiw, doma.dev has coop layer where we pool resources to get contractors and implement features. And #RaganaPress, a company for #TTRPG e-publishing I cofounded so far runs on people donating time to write (and draw) tabletop adventures. My biggest business, however, is very normal and not cooperative, but it's still a little wholesome, because we have a ban on redistribution of profits in the official company rules.
@tehstu @atomicpoet as you can imagine, I'm not into making businesses for sale, nor do I respect VC (unless it's #VerifiableCredentials).
That all said, I 100% support people using the power of defederation whenever and however they see fit.

Your freedom to decide who you want to associate with on this network is fundamental.
Also, I totally think @timbray makes good points. We're pretty close on this, but not quite in agreement. Which is OK!
@timbray if we couldn't respectfully disagree, it wouldn't be Open Source / Open Standards. πŸ˜…
for a company building out standards what was the appeal of venture funding compared to other funding methods? I think it's the "expectation" of massive returns that is the massive turnoff (at least to me)
@McNeely At the time, Open Source startups were getting a lot of funding, so it seemed like a good choice for us.
@McNeely it's also worth noting that crowdfunding really hadn't taken off yet. Diaspora* had the biggest Kickstarter to date when it started - $200K - a couple of years after I founded StatusNet.
@McNeely My diaspora pod runs since 2010 because some ppl paying a monthly fee, otherwise who pays the server bills?
@Evan Prodromou @McNeely In addition to finding VCs that seem to get it, what poison pills and Ulysses pacts can founders employ to protect the founding goals of the company?

Did you do any of that or did you rely on shared understanding and the integrity of the investors?
mostly I suppose I'm wondering what the benefit of VC funding vs something like a traditional business loan. I imagine there's less FINANCIAL risk in VC money at the expense of other potential influences.

This was all in the early 2010s right? I'm sure the environment has changed a lot since when too.
@McNeely I think I already answered your question, though. Is there something else you need to know?
you did just trying to add context and sort my own thoughts out loud πŸ˜…
- Venture capital is poison. VC's job is always to extract wealth rather than build value; big returns are the enemy of "making good things."

This isn't entitlement, it's observation, based on the companies I've worked for and with. As soon as VC gets involved, growth and return on investment become the only things you can talk about.

I'll not welcome it into a space I came to specifically in an attempt to flee the corrosive effects of corporate greed.
I'm fairly certain Gargron is vehemently against this idea, but I definitely think mastodon should ship a means to collect donations to keep the server running. Optionally also having this gate access to the server.

Build in the tools to the platform so we can avoid the need for VC.
we don’t need VCs ruining our shit. And does everything we do have to lead to profits? Can’t we just do shit because we want to?
@evan: I don't know how to avoid the centralization that plagues email, but I think a crucial element is for the Free Software community to develop tools to make it easy to run an instance without sysadmin experience.
We can't hope to reach the convenience of something that someone else maintains (i.e. "register and then use blissfully unaware for the next 20 years"), but we need to aim to get as close as possible.

Currently we have tolerable answers for "setup your own instance", but we need to deal with hardware failures, DoS attacks, regular upgrades, moving on to a new software when the old one is discontinued, managing quotas, new registrations, payment, ...

FreedomBox is a good step in that direction, but it still mostly focuses on setup and upgrades, with no good answers for how to deal with the nastier parts: it's easy to find some free time to get started, but you don't get to choose when hardware fails and your users will get angry quickly if doesn't get fixed *very* soon.
The reality is that a 2x return should be more than sufficient for investments in something for which you have great confidence. The requirement for 10x returns is just what VC's want in order to cover for their mistakes. In essence, they require that their successful investments subsidize their bad investments. But, if you're not using VC money, you can approach the problem differently.

In the real world, a risk-adjusted ROI as low as 10% or 15% is actually quite attractive.
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