Tweetstorm: Platforms and the modern means of production

The Hey vs. App Store dispute is a manifestation of Karl Marx’s ideas about the struggle between capital and labor, updated to a 21st century world in which a platform, rather than a factory owner, controls the means of production and distribution.

If “capital vs. labor” defined politics for the last 150 years, then we are now entering the era of “platform vs. participant.”

The parallels are striking between Marx's ideas and the battles playing out today among platforms vs. developers & platforms vs. workers.

Marx’s recommendations have obviously led to catastrophic outcomes, and I’m not endorsing abolishing private ownership (I’m a VC after all).

But history rhymes, and his work serves as a useful lens for the events and powerful actors of the present.

Das Kapital, published in 1867, remains hugely influential because it seeks to scientifically explain how capitalism works and its role in shaping modern society. It is the most cited book in the social sciences published before 1950.

In it, Marx lays forth an explanation of how capitalism works, based on what he observed from the Industrial Revolution:

The capitalist class—a select number of individuals—controls the means of production (factories, machinery, etc.), and employs workers who make goods.

The worker produces widgets, which the capitalist then sells for a profit. Meanwhile, the worker doesn’t retain any ownership of his output, and feels alienated because he’s merely a cog in the production process and has no agency over his work.

The capitalist’s profit represents the difference between the value of workers' output & their wages.

Capitalism, Marx argues, is inherently exploitative because the capitalist’s lever to extract more profit is to widen that gap: pay workers less than the value of their work.

How do these ideas from Das Kapital relate to today? As the US economy shifts away from manufacturing and to services, and from traditional employment to platform-mediated 1099 work, this struggle between capital vs. labor takes a new form, becoming platform vs. participant.

Instead of a factory owner controlling the means of production, today, platforms are gatekeepers of production and distribution, with developers & workers giving up a portion of their income, as well as some degree of control over their own product and end customer relationships.

Apple’s 30% “tax” is the prominent example currently in the headlines—but there are many more "taxes" all around us. Marketplaces commonly charge a rake: Uber charges >20%, Grubhub 5-15%.
Even SaaS fees can be seen as a limiting factor for accessing means of production.

Bill Gurley discussed platform rakes on his blog: “Most venture capitalists encourage entrepreneurs to price-maximize […] There is a big difference between what you can extract versus what you should extract.”

Today, the clearest form of "rake" in most people's lives is taxes, paid to the government. The issue of how much people should keep is an issue that splits the globe.

With a growing 1099 economy, income increasingly comes from platforms that decide how much workers get to keep. If the passion economy encompasses 100M people in the next 10 years, the question of rake is going to be the “capital vs. labor” dispute of our time.

UK's Labour Party was formed in 1900 to advocate for workers' rights. What will be the 21st century variant in a platform world?

Despite being widely vilified in modern times, Marx’s ideas have left enduring, widespread legacies that many people find welcome. Since the Industrial Revolution, the advancement of workers’ rights stems from his ideas on the struggle between capital vs. labor:

  • Anti-trust laws, first passed in 1890, curb concentrations of power that interfere with trade and reduce competition
  • The FLSA of 1938 created the 40-hour work week and prohibited child labor

These laws address the evolving limitations of the capitalist mode of production.

What is different today from Marx’s mid-1800s world is that the internet has, in many ways, democratized access to means of production, making everyone able to become a micro-capitalist.

Not everyone can own a factory, but everyone can start a blog, launch an e-comm store, etc. Learning to code is one such means of production that modern workers can wholly own. With code, workers can make products that they own and exercise creativity and imagination (an antidote to alienation).

Instead of Marx’s prescription of common ownership of means of production, with surplus value redistributed to society, another path is emerging. Everyone can now have access to means of production, own their output, do work that’s fulfilling, and accrue profits to themselves. Podcasts and email newsletters are examples of gatekeeper-less ways to produce something. Social media platforms democratize the ability to market and find audiences.

The accessibility of new passion-oriented means of production is outlined in my blog:

But just as the capital-controlled system entailed risks for workers, the platform-mediated model does, too. Individuals can get “de-platformed,” workers can be banned from marketplaces, and platforms like Apple can levy a 30% take rate on in-app purchases and subscriptions.

The Apple/Hey case has captured widespread attention due to Apple’s scale: the iPhone has an install base of 200M in the US and the App Store is tightly controlled. Apple is a major gatekeeper of the “means of production” if you want to make something that reaches 45% of the US.

Unlike the capitalists of Marx’s time, platforms’ dominance comes not from access to raw materials or machinery, but from network effects. Developers don’t have to build for Apple: they can sell their software on the internet or on other mobile OSs. But developers want to build for the platform that has the most users, and workers want to be on the platform with the most demand. That means platforms are effectively the new limited means of production.

The Austrian school of economics’ critique of Marx is that profit represents capitalists’ compensation for sacrificing present consumption for future gain—they deserve to capture the surplus value. It’s unquestionable that those who built and own platforms and marketplaces have taken on risk, created important infrastructure, and created value for society:

  • There are 2.2M apps on the App Store, and Apple paid out $35B to developers in 2019. That’s tremendous value creation for consumers AND developers
  • Uber enabled 1.7Bn trips to be taken in Q1 ’20. These are transactions that would not have occurred without the platform

There are many more examples where platforms created massive value for society. But the perennial question (which harkens back to capital vs. labor) is: how much platforms should take vs. participants? How consistently should rules be applied?

Marx’s work neglected to focus on the end consumer, and instead hones in on the capitalist and the worker. But the struggle between platforms and participants ultimately spills over into consumers’ lives, manifesting in the prices they pay and the services they can access.

Various people have conjectured that one of the invisible consequences of Apple's policies is the universe of apps that don’t exist because they can’t profitably operate under a 30% rake.

The marketplace counterpart is all of the non-producers that never sign up—that consumers can’t access—because of the platform’s take rate. More on how new means of production enable non-producers to become producers in my blog:

Given our new digital paradigm, we need to re-think platforms’ powers and responsibilities.

In a way, Apple is acting like a government—it enacts a tax. But with the power to govern, there also needs to be transparency around a set of rules and benefits for workers & consumers.

As we shift to earning more income online—mediated by platforms, SaaS tools, and marketplaces—we need to re-think what mutual protections and responsibilities look like for platforms, workers, developers, and ultimately, end users.

Not all communities are created equal

Building a community can indeed provide a moat. But–I find many companies/brands/creators profess to have community, when they really just have customers or followers.

To have a truly defensible community, I believe the following need to be present: high intentionality, P2P interactions, & UGC content.

Hallmarks of “real” community:

1) Intentionality: Members seek out the community as a destination, not just as part of a broader platform’s feed

2) P2P interactions: Strong engagement and ties between members

3) UGC content: Members contribute content vs. just engaging w/ what’s broadcasted to them

More thoughts on community:

Future of Social

I like this article by Sam Lessin on the future of social, but think there’s a big omission. Namely, one of the major opportunities in social is to first focus on helping creators monetize and own their audiences, then layering in social elements on top.

Companies here may not look like social products at first, but evolve in that direction. Take Substack, for instance: first launched as a paid newsletter tool, then added community features so that readers can engage with the writer & with each other:

Creators are the ones that possess user attention & trust, and will be the central players for the next wave of social.

Community-as-a-Service, or how to monetize access

As consumers desire greater control over how they spend their attention, an emerging biz model will be paying for ongoing access to *people*–or what I’ll call “Community-as-a-Service.”

There’s now lots of subscription services for high-quality premium content (Substack for newsletters; Knowable & Luminary for audio, etc). But for creators who lack the ability to sell something tangible, Community-as-a-Service enables monetizing *time* and *access*.

Examples of Communities-as-a-Service:

– Tools like InviteRobot & LaunchPass enable paid Slack groups

– Knowledge Planet in China allows KOLs to create paid groups & interact w/ subscribers

– Video games: people pay for status & attention in communities like Twitch, Fortnite, etc

The Community-as-a-Service model can combine paid subscriptions for access to the community itself, and tipping to express support/appreciation (including admins tipping community members for valuable contributions!).

Not every community can successfully charge for access. The paid model works best when there’s high intentionality (the community is a destination), desire for recognition within the community, peer-to-peer affinity & interactions, and potential for ongoing exchange of value.

For fans, the value prop is meaningful conversations and connection with each other and deeper engagement w/ someone they have affinity for. For creators, the benefit is being able to earn money and engage with fans, without having to produce something.

Deeper trends driving this:

– Creators have amassed audiences but lack ways to monetize it in a value-aligned way (not ads)

– Desire for creators to own user relationships directly

– Move towards curated micro-communities

– Value of experience over things

Paid Groups & The Passion Economy

In the next few years, we’ll see more large communities moving off major social platforms where they originated + setting up their own independent properties, with built-in direct monetization models.

This is a fascinating example of the Passion Economy at work.

Some notable recent examples:

– Earlier this year, the 800k+ member subreddit Change My View–which promotes discourse around opposing viewpoints–launched its own website with custom features that go beyond Reddit’s capabilities

– The Woolfer, a FB group for women over 40 with 30K members, moved to a paid app/website. The reason? “This is a volunteer-run organization that has gotten too big, and we can’t sustain it anymore unless we make money” (h/t @juliey4’s great thread…)

The themes behind these moves to a dedicated property are:
– Outgrowing existing social platforms and needing additional product features specific to their community
– Lack of monetization options/viable business model for group creators on existing ad-driven social platforms
– In addition, various models have de-risked that consumers are willing to pay for curated, high-quality content/community (e.g. Substack, The Wing, etc).

The challenge will be to leverage existing horizontal social platforms for discovery & distribution, while giving a compelling enough value proposition so that power users move to a narrower, premium community.

It’s the 1000 True Fans idea in action.

What are other examples you’ve seen of this?

The Passion Economy and the Future of Work

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The top-earning writer on the paid newsletter platform Substack earns more than $500,000 a year from reader subscriptions. The top content creator on Podia, a platform for video courses and digital memberships, makes more than $100,000 a month. And teachers across the US are bringing in thousands of dollars a month teaching live, virtual classes on Outschool and Juni Learning.

These stories are indicative of a larger trend: call it the “creator stack” or the “enterprization of consumer.” Whereas previously, the biggest online labor marketplaces flattened the individuality of workers, new platforms allow anyone to monetize unique skills. Gig work isn’t going anywhere—but there are now more ways to capitalize on creativity. Users can now build audiences at scale and turn their passions into livelihoods, whether that’s playing video games or producing video content. This has huge implications for entrepreneurship and what we’ll think of as a “job” in the future.

The Evolution of The Passion Economy

In the past decade, on-demand marketplaces in the “Uber for X” era established turnkey ways for people to make money. Workers could easily monetize their time in specific, narrow services like food delivery, parking, or transportation. These marketplaces automated the matching of supply and demand, as well as pricing, to enhance liquidity. The platforms were convenient for both the user and the provider: since they took care of traditional business hurdles like customer acquisition and pricing, they allowed the worker to focus solely on the service rendered.

But though these platforms provided a path to self-employment for millions of people, they also homogenized the variety between service workers, prioritizing consistency and efficiency. While the promise was “Be your own boss,” the work was often one-dimensional.

Monetizing Individuality

New digital platforms enable people to earn a livelihood in a way that highlights their individuality. These platforms give providers greater ability to build customer relationships, increased support in growing their businesses, and better tools for differentiating themselves from the competition. In the process, they’re fueling a new model of internet-powered entrepreneurship.

It’s akin to the dynamic between Amazon—the standardized, mass-produced monolith—and the indie-focused Shopify, which allows users to form direct relationships with customers. That shift is already evident in marketplaces for physical products; it’s now extending into services.

These new platforms share a few commonalities:

  1. They’re accessible to everyone, not only existing businesses and professionals
  2. They view individuality as a feature, not a bug
  3. They focus on digital products and virtual services
  4. They provide holistic tools to grow and operate a business
  5. They open doors to new forms of work
  1. They’re accessible to everyone, not only existing businesses and professionals

New consumer products are making it easy for anyone to become an entrepreneur. In the mid-2010s, the rise of the influencer industry allowed top-tier creators to monetize through advertising. These platforms expanded to support a broader range of money-making activities, from manufacturing physical products (e.g. Vybes, Hipdot, Genflow) to creating personalized videos (Cameo, VIPVR, Celeb VM).

Now the ability to make a living off creative skills has trickled down to individuals at scale, helping everyday people to launch and grow businesses. Previously, only established businesses could access software engineering talent to build websites or apps; now, no-code website and app builders like Webflow and Glide have democratized that ability. Startups are also building mobile-first, lightweight versions of incumbent desktop software: Kapwing, for instance, is a web and mobile editor for videos, GIFs, and images that aims to displace legacy creative software.

Companies have the opportunity to engage entrepreneurs in the early stages, then capture economic value as they grow. They might start with a very basic offering and add product capabilities as their customers earn revenue and develop new needs.

  1. They view individuality as a feature, not a bug

Whereas previous services marketplaces were rigidly built for standardized jobs, new platforms highlight variation among workers in categories that can benefit from more diversity in user choice.

Take Outschool, an online marketplace for live video classes in which teachers are predominantly former school teachers and stay-at-home parents. On the platform, instructors can develop their own curricula or browse lists of courses requested by users. Beyond the subject matter, the marketplace’s UI emphasizes each teacher’s background, experience, and self-description. Parents and students can message instructors directly.

A teacher profile on the online marketplace Outschool.

For new platforms, this model can pose a sizeable risk: once consumers are able to work directly with a preferred provider on an ongoing basis, they may take that relationship offline. Marketplaces can combat disintermediation by offering workflow tools, like scheduling and invoicing, and by building in additional incentives that make it worthwhile for providers and users to remain on-platform. Marketplaces that cultivate these direct relationships can also succeed by focusing on areas—like education and tutoring—in which consumers might have repeated matching needs with a variety of different providers over time.

  1. They focus on digital products and virtual services

Whereas past generations of entrepreneurship-enabling platforms typically focused on selling physical products (e.g. Amazon, Etsy, Ebay, Shopify) or in-person services (e.g. Taskrabbit,, Uber), new creator platforms are focused on digital products. A platform built specifically for packaging and selling digital products looks different than a platform that is built for tangible goods.


Podia, Teachable, and Thinkific (at left) are all SaaS platforms that allow creators to make and sell video courses and digital memberships. Previously, these types of “knowledge influencers” had to either conduct classes in-person (restricting them to local customers); jerry-rig platforms meant for physical products, like Shopify; or customize sites like Wix and Squarespace. New platforms capitalize on the idea that expertise has economic value beyond a local, in-person audience.

On the interior design marketplace Havenly, designers work remotely and interact with clients entirely online. For designers, the benefit is a steady stream of clients without the heavy lifting—since Havenly takes care of marketing—and the flexibility to work whenever, wherever. For clients, the benefit is access to a service that would otherwise be expensive or inaccessible.

  1. They provide holistic tools to grow and operate a business

Unlike discovery-focused marketplaces, which monetize through advertising, membership fees, or cost-per-lead, new platforms in the creator stack are often monetized through SaaS fees that increase as customers grow. Others take a percentage of the creator’s earnings. This means that platforms are incentivized to help creators succeed and grow, rather than driving discrete, one-time transactions.

Some platforms offer marketing tools like custom landing pages, coupons, and affiliate programs. Others provide behind-the-scenes support: Walden, for instance, connects new entrepreneurs with coaches for strategy and accountability.

Sometimes, support may be bundled into platforms that help providers start a business. For instance, Prenda—a managed marketplace of K-8 microschools—provides teachers (called Guides) with curricula, computers, software, supplies, and assistance in navigating the necessary regulatory requirements and insurance.

  1. They open doors to new forms of work entirely

New digital platforms enable forms of work we’ve never seen before:

For a more extensive model of how human capital can give rise to new industries, look to China. On the microblogging site Weibo, for instance, users sell content such as Q&As, exclusive chat groups, and invite-only live streams through memberships or a la carte purchases. This has spawned a wave of non-traditional influencers—financial advisors, bloggers, and professors—beyond typical beauty and fashion tastemakers.

Factors to consider: Marketplaces vs. SaaS

When building a company in this space, it’s important to consider the needs of the creators you’re targeting, as well as their desired audience. There are tradeoffs between marketplaces and SaaS platforms. What’s the difference?

Marketplaces are entirely plug and play, meaning providers can sign up and start earning revenue with minimal set-up. The strength of a marketplace’s two-sided network effect is directly correlated to the value it provides as an intermediary between supply and demand. One example of this model is Medium, which charges readers a subscription fee to access stories across the entire platform. The amount of money a writer makes is proportionate to the amount of time readers spend engaging with their stories.

By contrast, SaaS platforms require creators to work independently to acquire customers. Such platforms might help with distribution—providing tools for marketing, managing customer relationships, and attribution—but users are largely responsible for growing their own businesses. On Substack, for example, features include a writer homepage, mailing list, payments, analytics, and a variety of different subscription offerings. Substack collects a portion of the creator’s subscription revenue.

In the marketplace model, writers count on Medium to drive reader traffic and subscriptions. On the SaaS platform (Substack), writers drive their own direct traffic and subscriptions; they can export their subscriber list at any time.

Marketplaces bring value for creators looking to be discovered and attract customers over time. SaaS tools often make sense for more established creators who already have a customer base. In response to this dynamic, many startups are building SaaS platforms that aim to poach large creators from existing marketplaces.

Looking Ahead

New integrated platforms empower entrepreneurs to monetize individuality and creativity. In the coming years, the passion economy will to continue to grow. We envision a future in which the value of unique skills and knowledge can be unlocked, augmented, and surfaced to consumers.

If you’re building a company in this space, I’d love to chat!

Enterprization of consumer

New tools are emerging and focusing on *consumers* first. That’s because consumers today aspire to become businesses tomorrow. I’ll dub this the “enterprization of consumer.”

It used to be the case that software tools focused foremost on business customers, because they had business needs and could spend money on such products. In that vein, Canva, Shopify, Wix, etc. built multi-billion dollar businesses based on empowering and selling to a large number of SMBs. 

Now, a new generation of tools have users that are initially just regular individuals, but who want to grow into businesses in their own right. There’s an opportunity to engage users pre-”enterprization”, enable their growth, and capture greater economic value as they professionalize.

The recipe is to start with a very basic offering — something that might even look like just a toy — and, as customers grow and start to earn revenue and develop new needs, get pulled into additional product capabilities. 

By virtue of engaging users early and enabling them to start and grow their businesses, these products build deep workflow lock-in and loyalty, and have the potential to supplant existing b2b-focused platforms.

The undercurrent here is that digital platforms have enabled people to amass an audience, and so creates an opening to help individuals turn their unique skills/knowledge into a business, whether that’s through designing and selling merch, self-publishing, starting a podcast, or other means.

Some examples of the “enterprization of consumer”:

  • Instasize started as a free app for resizing IG photos, then realized much of their user base was comprised of “aspirational influencers” who want to uplevel + differentiate their content and grow their following. So they moved into premium features to help users achieve these goals, including filters and editing tools, as well as an inspiration map that helps users find photo-worthy/Instagrammable locations around the world
  • Substack helps individuals easily launch paid email newsletters. The tool is built to be intuitive enough for normal consumers to use, who can opt to make their newsletters free. At the high end, top creators on Substack are making $500K a year! In the old world, these writers would likely have had to join an existing media publication as their livelihood.
  • Universe enables people to create websites entirely from mobile in a few taps. As a result of being mobile-native, the user base skews young and international. Lots of the websites created w/ Universe are purely personal/just for fun–sites that people likely wouldn’t have built with SMB-focused website builders. You can imagine these mobile-native consumers staying with Universe as they grow and monetize, and the platform can capture more value by building out richer functionality and features.
  • CALA is fashion house technology that makes it easy to design, produce, and deliver custom apparel. Initially, the product was used by a lot of fashion design students and influencers to create one-off projects. As these creators grow into the next generation of fashion designers and launch their own brands, CALA grows with them and can capture more value through the managed marketplace.

The “enterprization of consumer” is all about starting off as a lightweight, accessible consumer product. But as those individual consumers grow into businesses — whether as influencer brands, writers, podcasters, streamers, etc. (jobs that don’t even exist now) — these tools can evolve to meet their needs. 

See my thread on the influencer stack here for related thoughts:

What else have you seen like this?

Tweetstorm: The “influencer stack” and China’s influence incubators