19/4/2023
Substack is to newsletters what Spotify is to podcasts, Medium was to blogs, and what Google Reader was to RSS: an aggressive player that dominates an entire segment with artificial and unsustainable advantages in a risky bet. It’s a kind of corporate time bomb that, when it explodes, will destroy countless small businesses based on newsletters.
Notes, the Twitter clone that got a huge advertising campaign from Elon Musk for free, is already a symptom of the threat Substack represents.
Newsletters alone are not a business capable of the growing levels that could satisfy Silicon Valley investors’ appetite for stratospheric profit. It takes much more than a healthy business — which Substack isn’t yet — to achieve that.
Between 2018 and 2021, Substack raised USD 82.4 million from VCs such as Andresseen Horowitz (a16z) to grow and deploy its business model, which consists of charging 10% of paid subscriptions that writers collect from their readers. (If a writer doesn’t charge for their newsletter, Substack earns nothing.)
In 2022, the company tried to raise more money, without success. Faced with failure, it went to retail and raised another USD 8.5 million from ordinary people.
In deciding to go this way, Substack had to open up some numbers to convince people to invest. In 2021, the company made $12 million and had a loss of $22 million. The 2022 figures were not disclosed only because the founders didn’t want to, a move that doesn’t inspire confidence.
The launch of Notes, its chat feature, and the release of an app are building blocks to create value for users, yes, but also to wall off the platform leveraging its newsletter thing.
In several interviews, Substack founders make the point that people who have newsletters on the service can leave whenever they want. And it’s true. The point of Substack, however, is to become synonymous for newsletter, to become a first irresistible, then inevitable destination for anyone who wants to have one.
Only this path is not a smooth one. As it gains prominence in the relationship between writers and readers, Substack will have to deal with new challenges. For example, with Notes, which has an algorithmic timeline, it will need to moderate content.
In an interview with Nilay Patel on Decoder podcast, Chris Best, co-founder and CEO of Substack, refused to answer whether his company would remove explicitly racist content from Notes. (This excerpt is embarrassing.)
The founders’ thesis, of Substack being a “economic engine of culture,” is pretty weird: Substack would function as a kind of ideal destination for those who want to own, promote, and make a living from newsletter, i.e., a platform, but without the headaches that running a platform usually brings, and somehow, even though it’s a closed and private platform, people can trust that the management will always do what’s best for writers and will never go full Elon Musk-ish in the future, even though that’s always a possibility.
I listened to the entire Decoder interview, the CEO’s explanations and promises and, like Nilay, I was not convinced what the big deal is about Substack except for it being a free newsletter service funded by venture capital and run by tech bros.
Nevertheless, the clash with Twitter and the Notes launch has resonated well. Ernie Smith of Tedium is also skeptical about the future of Substack, but has been moved to the point of launching a “lite” version of his newsletter there, in what he calls a “defensive measure.” If Substack really does become synonymous for newsletters, not using it could be the end for small businesses like his.
Ernie advises others to follow his example. I advise against it, for the sake of newsletters.
I understand the appeal of Substack. Sending emails isn’t expensive, but it’s not free, and a completely free service like Substack is tempting. I would even say it’s the single reason so many newsletters have sprung up in recent years. On other newsletter platforms there is a big gap between a limited free tier and the first paid ones, which can be expensive for amateurs writers.
The fact that Substack is the only one that is totally free is no accident. Someone is footing that bill; they are not philanthropists and these people are going to demand to get paid pretty soon.
Discuss @ Hacker News.
4/4/2023
More than a thousand personalities, from Elon Musk to Steve Wozniack to Yuval Harari and Tristan Harris, have published an open letter calling for a pause of generative AI systems development.
The prominent presence on the list of figures such as Harari, who has been spreading incomprehensible alarmism in mainstream newspapers, and Musk, who needs no comment, would already be a warning sign.
The fact that it was published by the Future of Life Institute, a think tank whose mission is to “reduce global catastrophe and existential risk from powerful technologies,” an assiduous promoter of “longtermism” and funded by the likes of Musk (who sits on its board), is another.
The letter buys at face value the promises of the industry, of the companies that produce and sell this technology. It is a paradoxical situation in which the call for restraint validates the problem brought up.
Or, as University of Washington professor Emily Bender puts it, the letter accepts and potentiates #AIhype, the frenzy that accompanies technologies sold as something beyond what they are capable of — see web3 and metaverse for similar cases.
The signers’ main request is directed at AI labs: a voluntary pause of at least six months in “training AI systems more powerful than GPT-4.”
The request itself is weird. What would happen in those six months? It’s unlikely that Microsoft, after injecting USD 10 billion into OpenAI, laying off its ethics experts for AIs (followed by Google and others), and cramming AI into all its major products, would have a crisis of conscience that culminated in a change of course.
On the other hand, no kind of regulatory consensus is reached in such a short time. It took the European Union years to pass two laws that put reins on US big techs, both of which are about to go into effect.
The bigger issue, however, is the narrative that the letter and its signatories promote, that AI would be “very powerful” and that the biggest risk we run is that it will acquire consciousness and turn against humanity.
The letter transcribes the excerpt from a piece of nonsense written by Sam Altman on OpenAI’s website in which he lays out fears about general artificial intelligence (AGI) that, obviously, only people like him and companies like OpenAI are in a position to deal with. “We agree,” say the signatories.
There is no indication that we are close or that it is possible to create AGIs.
Emily’s article is great at rebutting the bogus arguments of these folks. She co-authored a landmark paper, written alongside Timnit Gebru and published in 2021, which warned of the dangers of large language models, the fundamental technology of AIs like ChatGPT.
At the time, Timnit, who worked for Google, was fired for publishing the paper. Disappointing, but not surprising.
Two Princeton University researchers, Sayash Kapoor and Arvind Narayanan, share Emily’s skepticism. They summarize the problems of the letter in one paragraph:
We agree that misinformation, impact on labor, and safety are three of the main risks of AI. Unfortunately, in each case, the letter presents a speculative, futuristic risk, ignoring the version of the problem that is already harming people. […] It plays right into the hands of the companies it seeks to regulate.
Instead of this “super-powerful AI” nonsense, we should be concerned about the super-powerful companies and VCs who use any available technology — including AI — to concentrate and exert unbridled power. If there is any existential threat to humanity, this seems a far greater one than that of AIs.
Discuss @ Hacker News.
29/3/2023
In 2022, we downloaded just over 140 billion apps onto our phones. In financial terms, we spent USD 129 billion tapping virtual buttons on the screen of devices that fit in our pockets.
Not even the most optimistic Apple executive could have predicted in 2008, at the launch of the iOS App Store, that this mobile app business could be so profitable. And so useful. From the trivial activities of the early days, like reading e-mail and opening websites, we have gone on to do almost everything on the phone, from paying for things and investing to “summoning” cars and food.
Every now and then I come across stories like that of Hiroyuki Ueda, a retired Japanese designer who imagined an app that, according to him, did not exist: one that would display two calculators at the same time on the phone screen and allowed you to throw the results from one to another.
His unpretentious Twin-Calc became a minor success, to the point of getting covered at The Mainichi, a Japanese newspaper, where I learned this story.
In the early years of Apple’s App Store (and Play Store, the Android equivalent app store), stories like this seemed more common. The consolidation of the app store model was a kind of El Dorado in technology, a huge new market opened overnight, with a more leveled playing field, and that since then has had small periodic boosts, such as the arrival of 4G and the major migration from one-time purchases to recurring revenue (subscriptions).
Coming across the Twin-Calc story has me intrigued. Where are the other such stories? Today, the rankings of the most downloaded and most profitable apps in the stores are dominated by large companies. Other than those that have long established themselves, it seems that it has gotten harder to create sustainable small businesses around apps. The feeling is that the window of opportunity for independent app developers has closed.
Or has it? Another hypothesis that occurred to me was that the sheer size of the industry might be diluting its “middle class,” made up of developers who, while they may not get rich or end up creating empires, manage to make a living from it and lead comfortable lives.
Without intending to come up with conclusive answers, I went to talk to some of them to try to find out the state of this kind of small enterprise.
I spoke with Christian Selig, creator of Apollo, an alternative Reddit app for iOS; Yi Lin, creator of GreenBooks, financial control for iOS and macOS; Andrei Popleteev, creator of KeePassium, a password manager for iOS; and Daniel Marques, creator of Leio, an app for iOS that helps you read books.
Disclaimer: I use or have used all the above mentioned apps. In the case of KeePassium, I pay the annual subscription.
A Spectrum of Situations
The first aspect that caught my attention in these brief conversations with a few prominent solo developers, was the diversity of their situations, almost as if it were a large spectrum.
There are those who live off their apps, those who use them as a hobby that earns a few bucks, and those who, despite years of dedication, have yet to get off the ground.
Christian Selig.
Christian Selig had not turned 30 when he was interviewed by me in late 2022, but he could already boast a successful small business.
Apollo, his app that presents Reddit in a better interface on the iPhone, had amassed about 8 million downloads and was making enough money for the developer, based in Halifax, Nova Scotia, Canada, to dedicate himself fully to it.
The Apollo story began eight years ago, but Christian’s experience developing apps for iOS goes back even further — he has been doing it since 2011. And even back then, he recalls, there was a chorus of those who said there was no more room for independent developers.
For Christian, the situation today is better than in the old days. “It’s like any business, there’s a spectrum of income and stages of business,” he explains.
Luxembourg-based Andrei Popleteev’s KeePassium was launched around the same time as Christian’s Apollo, in 2014, only it started on a different platform — on BlackBerry, under the name KeePassB.
“I made it mainly for myself, because I needed a way to use my KeePass database when mobile,” he explains.
Migrating to the iPhone in 2018, combined with the free time he devoted to his hobby — developing apps — culminated in the app’s migration to Apple’s platform, a project started just two months after Andrei learned the intricacies of programming on iOS. (“The early mistakes cost me a lot of time later on, but I eventually I managed to refactor them out.”)
Andrei Popleteev.
Like Christian, Andrei’s main source of income is his app. KeePassium is used daily on about 4,000 devices. In 2020, it earned USD 50k (already discounted Apple’s fees, before local taxes).
“I don’t know about making millions, but making a healthy living is absolutely possible. In a niche market, being small is an advantage,” he says.
He continues his reasoning:
Imagine an app that solves a small, but non-trivial problem. Generates bingo cards for elementary school teachers (hat tip to @patio11); plays weather forecast in Morse code; generates animated QR codes that rotate; edits an obscure file format, after all. In the whole world, there are maybe 10000 people who would happily pay $10/year for a solution. So that’s a $100k/year source of revenue for anyone who creates that solution.
KeePassium’s recurring revenue, good enough for most people in most parts of the world, may not pay off for a large company. “For them, making such an app would involve a developer, a designer, a manager, a tech support person — each one with a salary, benefits, office space, etc. This would cost more than the app can possibly return.”
For an independent developer, who concentrates all these roles without having to leave home, it’s a different story.
Only there is no guarantee that things will work out, even if the app is good. Andrei himself acknowledges that while it is possible, coming up with a successful app, the kind that will sustain a person or a family, is a combination of skill, luck, and persistence (“like digging a well”), and that such endeavors “can fail in so many ways.”
Near ground zero of the digital revolution, in Orange County, California, Yi Lin created and has been single-handedly maintaining a personal finance app called GreenBooks since 2011.
Since that time, Yi alternates periods of full-time dedication to the app with outside consulting work in web and application development and ERP systems.
A common trait among most independent developers, GreenBooks was created to ease a pain Yi himself had.
“As an avid Mac user, I found Quicken to be very poorly designed and complex. I wanted to create a personal finance app that has the simplicity and ease of use of the Mac, not to mention beauty. That is why I created GreenBooks,” he says.
Today, GreenBooks is available on iOS as well. With about 1,500 monthly active users, the app earns close to USD 1,500 per month, a mark reached not long ago. “Most months, [GreenBooks] was making less than USD 500/month,” he says.
Yi Lin.
To this day, GreenBooks does not earn enough for Yi to devote himself to it. In 2022, he decided to take six months away from his other jobs to focus on the app, especially the part he has the most difficulty with: marketing. “As a software engineer, marketing is an unnatural task for me. It took me many years just to realize that marketing is necessary, that the ‘if you build it they will come’ mentality is flawed.”
Realizing this weakness motivated him to take action, but at that point he found himself at a loss. “I had a hard time knowing what to do.” Solution? Think less and do more. “I am focusing on App Store Optimization by using keyword research tools like Appfigures. I am also continuing my effort to produce written and video content to document my app, as well as writing newsletters to engage my audience.”
The most important move, however, was to open up, to talk about GreenBooks with users, friends, family, “anyone willing to give me feedback.” Good ideas have already emerged from these exchanges.
Leio, by Daniel Marques, a developer and psychology professor in São Paulo, Brazil, is a companionship app for reading physical and digital books. The app records reading sessions and gives back a lot of statistics of the books read, such as time spent, number of pages per session and other data. The user can also make notes and save quotes that are tied to the book record.
“Today, honestly, I have used it very little,” Daniel confesses, “but my plans are to, as soon as I have time, turn it into something I enjoy using again.”
Even for those who live off their app, like Christian, there always seems to be a lack of time: “It’s a precious resource and I wish I had more of it to do all I wanted,” he says.
The lack of time has a direct link to the concentration of assignments inherent in the solo work of these developers.
Andrei comments that “keeping the rhythm” is the biggest challenge in his routine:
It is too easy to postpone a feature when you don’t feel like making it. It is too easy to dive into coding instead of making a strategic decision. You don’t have a boss to keep you moving. Instead, you have to do it yourself. There is something deeply philosophical in having to become the very thing you tried to escape from.
Daniel Marques.
Launched in 2015 (or 2016; Daniel couldn’t say), Leio makes about USD 2,000 per month. The app has, cumulatively, about 100,000 downloads, with a current average of 1,000 downloads per month.
By the nature of Leio, active users are quite few: “A lot of people open [the app], but those who actually spend time on the app average about 30-something,” says the developer.
One of the most intense debates going on in the tech world is that of app store monopolies, in particular Apple’s App Store.
Companies like Spotify and Epic Games (from Fortnite) complain about the tax that Apple charges on transactions made on iOS and the mandatory app distribution through the App Store.
Complaints also exist on Android/Google, although less intense because on this system it is possible to sideload apps, cutting Google’s official store entirely (although it’s not an easy or full-proof route).
Following the legal disputes and the insults packed into large advertising campaigns from those huge companies can give the impression that Apple and Google are absolutely negative forces in the app economy.
Whether they are right or wrong, the fact is that independent developers believe that the official stores from Apple and Google are more advantageous than problematic to them and their peers.
“I think overall they’re great,” says Christian. “They handle so much for indie devs and make it easy for us to get our apps out there, and the 15% we pay them is more than worth that.”
KeePassium’s Andrei agrees, and lists other advantages of the model:
- “They handle payments and international taxation so I don’t have to think about it.”
- “They give users a familiar way to pay for apps (easier payments = more purchases).”
- “They provide a “single point of entry” for users searching for apps; this way I don’t have to submit updates to dozens of platforms.”
In 2020, sales in Apple’s App Store totaled USD 643 billion, according to an Analysis Group study commissioned by Apple. Also according to the company, since 2008 the App Store has paid out more than USD 320 billion to developers who sell digital items and services in its store.
Yi, speaking only about Apple’s App Store (his app is not available for Android and he has no experience on other platforms), disagrees with the group, saying that working with Apple is “an extremely frustrating process”.
His main criticisms are directed at the App Store’s app review process, which can reject an update without specifying what the problem is, and with the App Store’s search algorithm, which no one seems able to understand and, he says, often singles out inferior apps with fewer downloads than his. “I think you can’t depend on the App Store as the only marketing mechanism.”
Daniel thinks the platforms help, but could help more. “When Apple features an app in the App Store, that makes the downloads multiply by a hundred, it’s a crazy thing. Only, of course, I wish they would feature me more often,” he comments.
He reminds that apps that are updated frequently and that showcase new iOS features are more likely to be featured. The problem is time to dedicate to it.
“Big companies are much more likely to do an update as soon [a new version of] iOS is released, while I, who have another job, end up not being able to. I think if you dedicate yourself and do a good job, Apple ends up helping you.”
David Smith’s Widgetsmith is a fine example of this dynamic at play. Launched in 2020 on the heels of iOS 14, which brought widgets as its flagship feature, David’s little app hit 100 million downloads just the other day.
In the post celebrating the milestone, David commented that:
The success of Widgetsmith was made possible by the amazing platform Apple has made and the amazing users it has attracted. While my work is the middle conduit between Apple’s engineering on one side and the end user’s creativity on the other, my work could not exist without either side of that equation.
The trajectory of this developer encapsulates many aspects commented on in the interviews I conducted with others. For example, the mix of luck, insight and persistence: Widgetsmith, David’s most successful app, was the 59th he released in over 12 years of working with apps.
Advices
Patience and persistence are the elements that Daniel advises as paramount to launching into this world of independent apps.
“In my case,” he says, “I think it was only time that brought some relative success. But I only persisted for so long because it was precisely something I wanted for myself and I was always the first user, so that’s another thing: make something you like and want to use.”
Andrei and Christian say something similar. Andrei:
Remember that even an overnight success takes years of work, so take your time.
Christian:
Most apps don’t explode right out of the gate, or at all. Having an app is like any other business, it can take time to find your market, improve your product, grow your userbase, and create a sustainable income for your business. Having the expectation that that will all fall into place Day 1 is just a recipe for disaster. Plan for a great 1.0 product to entice people with, and iterate from there if you think you’re onto something. And don’t forget marketing.
“Truth be told, marketing is at least as important as development, if not more,” says GreenBooks’ Yi Lin. And marketing, for him, goes far beyond posting on Instagram or buying ads on Google:
Marketing is an understanding of your product’s position in its market, the message you want to deliver to your audience, the entire user journey through discovering and using your product, and lots of hustling to get the word out about your product.
Discuss @ Hacker News.
17/3/2023
South by Southwest (SXSW) is back with a regular edition in 2023, all in-person in Austin, Texas, after a cancellation, an online and a hybrid edition due to the covid-19 pandemic.
With a record number of Brazilians, the event has the inglorious mission of talking about innovation and anticipating trends in a world that changes rapidly, all the time. Is it still possible?
From here in Brazil, I tried to follow the news from there to understand what took so many fellow Brazilians to the land of Uncle Sam. I had a strange “déjà vu” with Gowalla being reintroduced in the same place, 14 years later; I read the repercussion of the anticipated, albeit protocol talks by C-levels from companies such as Patagonia and OpenAI; and I felt the repercussion of the always acclaimed predictions of futurist Amy Webb.
This time around, Amy called attention to generative artificial intelligences, such as ChatGPT, a trend that already reached the public.
In 2022, web3, cryptocurrencies, and metaverse set the tone for the hybrid edition of SXSW. Mark Zuckerberg made an appearance to announce NFTs on Instagram and Vice called the event an effort to create a “pathetic tech future” propelled by marketing.
The effort, as anyone can note, was thwarted. This week Meta buried NFTs, and terms like web3, metaverse and other underlying nonsense were run over by OpenAI’s chatbot, a technology that distinguishes itself from previous trends by trivial details such as being somewhat useful.
What trends are being talked about at SXSW? And for whom?
Outside, not far from that bubble of optimism filled with “futurists”, market speakers and brand “activations”, the world that provides the kind of innovation that has a guaranteed stage at SXSW kind of imploded, with the bankruptcy of the Silicon Valley Bank and the announcement of another mass layoff at Meta.
The fact that the most intense coverage of SXSW, at least here in Brazil, has appeared in outlets specialized in advertising are symptoms of a problem that has not been lingering for a long time, and became clear in this year’s return to normality: much more than “technology, music, and movies”, SXSW is an event for advertising, or for advertisers.
SXSW seems to have become an excuse for advertising executives to go to the US, blow off some steam and come back with extravagant ideas in their luggage. Ideas that, in many cases, don’t even make sense in Global South. (This may be news to some, but Brazil is located in the Global South.)
An executive from Itaú bank, the first Brazilian master sponsor of SXSW, justified the investment with the cliché that one must be tuned into the future. “Everything is so fast-paced, and technology has advanced so much, that it is no longer enough to look at the now.” Where were these people last week?
The discomfort and incomprehension are not only mine. People there felt it too. From here, Aori Sauthon perhaps summed up the feeling better than anyone else: “Folks look for trends in Texas, but they’ve never been to Madureira [a Rio de Janeiro neighborhood].”
Discuss @ Hacker News.
8/3/2023
On Monday (6), Meta reached an agreement with the European Union (EU) about WhatsApp’s privacy policy.
The mess began in January 2021, when WhatsApp updated its privacy policy to open a loophole on its end-to-end encryption in conversations between individual and business users.
In Europe, Meta pledged to allow WhatsApp users to decline the new policy (and future updates) without being harassed “ad infinitum” by popups. (To this day, more than two years later, I have to dismiss the popup asking me to accept that privacy policy. Every. Single. Day.)
Meta has also assured the EU that it does not share personal data of European citizens who use WhatsApp with outside companies nor with its own (Facebook and Instagram) for advertising purposes.
All very nice, albeit overdue, but what about the rest of the world?
I sent two questions to WhatsApp in Brazil:
- Will the terms of the agreement [with the EU], such as requiring WhatsApp after changing their privacy policy to show a “no” button to the user and stop showing the popup asking for acceptance, apply to other regions of the world, specifically Brazil?
- Is the statement that “personal data [from WhatsApp] is not shared with third parties or other Meta companies, including Facebook, for advertising purposes” valid for Brazil?
To the first, WhatsApp’s spokesperson responded that they will not comment.
To the second, a binary question, the kind you answer with “yes” or “no”, they sent a link to the WhatsApp documentation. When I insisted for a direct answer, I got back two more links.
I have read the documentation contained in all three links — which together add up to ~5,800 words, which took half an hour to read — and based on them I can conclude that outside Europe Meta uses WhatsApp user data for Facebook advertising purposes, with one subtle exception.
In the longest link, an endless table that explains the different ways WhatsApp handles user data, the last line details the sharing of information “with the Meta Companies to operate, provide, improve, understand, customize, support, develop and market the Meta Companies products, features and services,” including:
Improving Meta Companies services and your experiences using them, such as personalizing features and content, helping you complete purchases and transactions, and showing relevant offers and ads across the Meta Company Products in accordance with their own specific terms and privacy policies (for example, for integrations like WhatsApp Shops), remembering that users have to opt-in to chat with businesses.
In the next column, WhatsApp explains what data is shared. Among them, “your account information”. This same item provides an exception: users who already had a WhatsApp account in 2016 and opted-out of sharing app data with Facebook and other Meta companies. This “opportunity” was given after another privacy policy update back then.
At the time, Meta (then called Facebook) broke a promise made at the time of WhatsApp purchase, that it would not cross data from the app with Facebook’s. The statement for the acceptance of the then new terms and privacy policy explicitly stated the intent of the change, as the image above shows. I only have it in Portuguese; the text next to the acceptance toggle reads:
Share my WhatsApp account data with Facebook to improve my experiences with ads and products on Facebook. Your conversations and phone number will not be shared with Facebook, regardless of this setting.
It follows, therefore, that Meta treats its users unequally, depending on where they live. In Europe, WhatsApp data is not used for advertising purposes by Facebook and Instagram. In the rest of the world, yes — unless you signaled otherwise in a narrow 30-day window in 2016.