Paul Graham, the founder of tech accelerator Y Combinator, famously advises aspiring entrepreneurs to “Live in the future, then build what’s missing.” To him, the most successful founders don’t come up with startup ideas by solving the problems of today. They notice something that’s missing in the current landscape and they envision how their business will fill that gap in five, ten, twenty years. He describes the Founder & CEO of Dropbox as an example: “Drew Houston realizes he’s forgotten his USB stick and thinks “I really need to make my files live online.”… Lots [of people] forgot USB sticks. The reason those stimuli caused those founders to start companies was that their experiences had prepared them to notice the opportunities they represented.”
This is where entrepreneurship is more of an art than a repeatable formula. Graham is asking founders to develop an intuition for how to identify startup ideas, but the ability to “notice” these opportunities is far from intuitive. If we apply Graham’s advice to the local news industry, it becomes apparent how founders are relentlessly rebuilding the past. The New York Times became the “newspaper of record” in 1913, but more than a century later we’re still developing digital news products that “expect to be the news source of record” for local communities.
In a conversation about local news entrepreneurship, Jim VandeHei, the co-founder and CEO of Axios, is quick to acknowledge how local news is “the single hardest problem to solve in journalism.” The business model is tough to crack in a digital world. Yet, he describes news founders as being “too damn romantic about media.” We have to be ruthlessly practical about building a business, says VandeHei. I couldn’t agree more.
So if every startup is seeded with a founder’s unique insight, their vision for the future, then what opportunities lie ahead for local journalism? My hope, which I hinted at in my last post, is for local news startups to operate more like software platforms rather than traditional publishers.
Unlike a product, which is a single tool or set of solutions, a software platform is an ecosystem where different internal and external products connect. A platform’s value is based on its ability to connect tools, people, data, and processes. Slack, for instance, is a product and a platform. You can use its proprietary messaging service, but you can also access Google Docs, take Zoom calls, and use dozens of other services within the Slack ecosystem. Developers are actively encouraged to build and integrate their apps onto Slack’s platform because the more people who use Slack, the more valuable the company becomes.
Content has become a commodity online, but the Internet would be nothing without content. Stories will always matter, and local journalism remains important, but we need to pursue bold, new solutions, rather than default to decades-old formulas. To me, platforms are a unique marriage between our increasingly commodified world of content and the recognition that content still reigns. But don’t take my word for it. Here are three platform businesses that are transforming how media, which includes journalism, will be produced, consumed, and distributed in the years to come.
1. Patreon: Connecting creators with their greatest fans
In 2013, Jack Conte, the CEO & co-founder of Patreon, was an independent musician. He was creating content and publishing videos on YouTube, similar to what many local news organizations might do today, but he was frustrated by how little money he was earning despite reaching millions of views. Instead of doubling down on producing more content, he and his co-founder built Patreon, a platform that powers membership businesses for thousands of indie creators, including freelance writers and podcasters. They’ve since raised $255.5 million dollars in total funding, and their business is valued at $1.2 billion dollars.
2. Substack: Democratizing the tools writers need to create independent businesses
Founded in 2017, Substack is an all-in-one newsletter service that helps “writers, bloggers, and thinkers” reach their audiences. More established newsletter companies, like Mailchimp, existed long before Substack, but the reason the startup is thriving is because it’s hyper focused on managing the unique relationship between writers and readers. Substack offers subscription payment solutions, newsletter templates, and story sharing features that were designed for writers in mind. They’ve even given $20,000 advances to journalists like Emily Watkins, a former reporter at the New Republic, to publish stories on their platform full-time. The company has raised a total of $17.4 million dollars from venture capital to continue realizing its mission.
3. Epic Games: The makers of Fortnite, Unreal Engine, Epic Games Store, Epic Online Services, and the Metaverse
Tim Sweeney founded Epic Games in 1991. For years,the company designed and developed video games, but in 1999 it built Unreal Engine. Matthew Ball, a VC investor who wrote an extensive six-part primer on Epic Games’ business (which I highly recommend reading) describes Unreal as “an extensive suite of tools and technology that allows third parties to produce virtual experiences without needing to engineer the code that’s needed to make them ‘work’.” It, coupled with Fortnite’s monumental success, has enabled Epic Games to influence the tech and media industry in transformative ways. Sweeney’s ultimate vision, however, is the formation of the Metaverse. The Metaverse isn’t a video game, Ball explains, but rather “a quasi-successor Internet where everyone and every company can exist, work, socialize, trade, and create.” It’s a concept that’s still decades away from being fully realized, but that’s Sweeney’s vision for the future:
“Just as every company a few decades ago created a webpage, and then at some point every company created a Facebook page, I think we’re approaching the point where every company will have a real-time live 3D presence, through partnerships with game companies or through games like Fortnite and Minecraft and Roblox…”
The gaming industry feels disparate from journalism today, but Epic’s Unreal Engine is pioneering technologies that have not only been used to develop video games, but also TV shows like Disney’s The Mandalorian and rendering models for architects and urban planners. According to Ball, Epic Games has more than 350 million users and is one of the Internet’s largest and fastest growing social networks. The company has raised a total of $3.4 billion dollars and is valued to be worth $17.3 billion dollars. If gaming becomes the next social network, then it’s not a question of how the journalism industry will intersect with companies like Epic, but a matter of when.
When we discuss the future of local news, buzzwords like “nonprofit”, “reader revenue”, and “collaboration” come to mind. These existing ideas, however, fall short of a vision.
If Walt Disney created Disneyland from Mickey Mouse cartoons, and Tim Sweeney is building the foundation for the Metaverse from the minor success of his early video games, then what would local journalism be if we set aside our preconceived notions and values, and allowed ourselves to live in the future? Successful founders don’t create companies by inheriting a legacy, they begin their journey by daring to dream.
Editor’s note: Leow’s next column will explore the current state of funding in local journalism and digital media.