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Apologize in advance that I'm doing a thread on what is bugging me about @a16z and its recent positioning in the “tech vs. media” debate (a false, and dumb, equivalency imho) -- a story best illustrated by @substackinc in two stages: pre-a16z investment and post-a16z investment
Have been vocal about the first thing that bothers me: that a16z illustrates media’s fear of tech eating their lunch, when the concern should be: “What sort of products am I getting, if the most technologically innovative ones are born out of a narrow, shared set of world views?”
Before a16z invested millions into Substack, co-founder Hamish was hopping on x-country flights to sign up writers across niches. People like @niubi, @nicolecliffe, @richardrushfield -- covering China, Hollywood, internet ephemera, rspctvly -- all from A listers in their fields.
The benefit of that strategy is pretty obvious: you get more writers willing to come onboard despite higher commission, and theoretically, more followers to boot. @a16z’s Andrew Chen said as much when a16z invested in 2019, that Substack is about “passionate online communities”
When @substackinc started doing its first grants a similar philosophy followed: fund writers across interests to build a larger community of Substack writers AND readers --that money went to big and small newsletters, from topics ultra niche to very broad https://blog.substack.com/p/substacks-grant-program-recipients
Which is why the whole strategy now of investing more than a million dollars in writers who all share very similar world views (Greenwald, Yglesias, SSC) is so concerning to me.
Most of these writers are very in line with each other, share and retweet each other, and by and large, quite clearly share audiences and ideologies
That level of investment in a singular POV wasn’t something @substackinc did before it had a16z signing quarter of a million dollar checks to individual writers like Scott Alexander, the author of Astral Codex (the now-Substack blog at the center of this https://www.nytimes.com/2021/02/13/technology/slate-star-codex-rationalists.html)
All of which is to say when you factor in the overlap between Greenwald/Yglesias --> Yglesias's self-professed love of SSC --> SSC and a16z (remember, Balaji from the SSC story was a former a16z partner), it feels at least somewhat correlated.
But okay, fine, correlation does not imply causation, Balaji left a16z, Andrew Chen is a savvier media investor, and moral arguments are a slippery slope since there’s no right answer. That’s cool! Here’s what makes NO SENSE TO ME from a financial POV for @substackinc or @a16z
Stick w/ me with shitty logic for a second. Since we don’t have behavior analysis for every Substack reader, we know there are 2 types, ideologically. People who
a) subscribe to publications that ONLY mirror their world views, or
b) they subscribe to pubs w/ various views.
a) subscribe to publications that ONLY mirror their world views, or
b) they subscribe to pubs w/ various views.
We also know that there are 2 types of spenders:
1) People with limitless $ for subscriptions
2) People who have an upper limit for subscriptions
1) People with limitless $ for subscriptions
2) People who have an upper limit for subscriptions
Given that category 2 is *prob* more likely, we have to guess whether people with budgets are a) more likely to subscribe to a monolithic POV, or b) want a plurality of views.
Since most news orgs are centrist by nature, the odds are *most* subscribers are people with a budget, who read publications with various views. (Sorry I swear the shitty geometric proof all has a point, and the point is to get Rationalists off my ass for not showing my work.)
Which is what Substack’s founders said when a16z invested: that there’s a finite limit of subscriptions people can hold. https://techcrunch.com/2019/07/16/substack-series-a/ So it stands to reason that w/ said budget, they’re *unlikely* for all those dollars to go to pubs that espouse identical views
Which is why the strategy of investing the bulk of writer acquisition money on people who are ideologically similar is so odd -- there’s a fairly clear upper limit on ROI when you do that. It’s why Chernin Group (the investors behind media co’s like Barstool) diversified.
Rather than accumulating properties with similar POVs, they used their media expertise to go after businesses with different audiences -- Barstool + MeatEater + HelloSunshine + Substack (!!!) -- bc their investment thesis was helping those business grow their network effects.
And I guess if you’re @substackinc and you think about writers the way other companies think about acquisitions (as you should), what are the network effects of paying the lion’s share of your acquisition budget on four companies that do the same thing for the same audience?
Is there a long term portfolio benefit to that strat, instead of going after niche interests, local audiences, etc. -- all of which also exposes you to even more readers who might decide to then monetize their own subcommunities that they don’t see represented on Substack?
Anyways those are my moral and financial arguments for why paying $1 million plus dollars to four dudes who are definitely on the same group chat is Big Dumb. I regret doing a thread, as always.
And as always, @espiers said this much better in her must-read blog, when she wrote "media fragmentation is good, and ideological bubbles [are] the product of flaws in distribution"
Which I know Yglesias etc would argue...so how did @a16z and @substackinc end up here lol
Which I know Yglesias etc would argue...so how did @a16z and @substackinc end up here lol
Whoops link to aforementioned must-read blog here: https://mynewbandis.substack.com/p/slate-star-clusterfuck
