In 2004, a blogger named Ev Williams sold his company Blogger to Google for an undisclosed sum (reportedly millions). Blogger had pioneered user-friendly blogging, giving millions of people their own publishing platforms. But it never found a sustainable business model. Google acquired it, integrated it with their ad network, and kept it alive—but blogger.com users became Google users, subject to Google's terms, surveillance, and whims.
In 2013, Williams tried again with Medium. This time, he'd learned: start with a business model. Medium launched with subscriptions, then experimented with advertising, then memberships, then partnerships. Each pivot changed what Medium was—from open platform to paywalled publication network to algorithmic recommendation engine. Writers never knew if their URLs would persist, if their audiences belonged to them, or if Medium would exist in five years.
In 2023, Medium still exists—but so many writers have left (fed up with pivots and VC pressure) that it's become a shadow of its early promise. The writers who stayed are tenants, not sovereigns.
The Anvil faces a brutal question: How do you build a business that embodies digital sovereignty—one that gives users Declaration, Connection, and Ground—while also generating enough revenue to survive?
This isn't just a technical problem. It's an economic design problem. And it's perhaps the hardest challenge Archaeobytology faces: forging sustainable alternatives to platform capitalism.
This chapter explores:
Why traditional business models fail sovereignty (VC funding, advertising, data extraction)
Alternative revenue models (subscriptions, cooperatives, open core, public funding)
Case studies of businesses that got it right (and wrong)
How to design a Foundry that can survive 50 years without betraying its users
By the end, you'll understand the economics of the Anvil—and be able to design business models that align profit with sovereignty.
How VC Funding Works:
Startup raises money (seed round: $500k-$2M)
Investors buy equity (ownership stake in company)
Expectation: 10x return in 5-10 years
Startup grows fast (prioritizes user growth over revenue)
Burns investor money to acquire users
"Growth at all costs" mentality
More funding rounds (Series A, B, C: $5M, $20M, $100M+)
Each round dilutes founders' ownership
Investors gain board seats, influence company direction
Exit pressure (IPO or acquisition)
Investors want return on investment
Company must either go public (stock market) or get acquired (sold to bigger company)
Monetization acceleration (squeeze users for revenue)
Ads, data sales, subscription paywalls
"Enshittification" (Cory Doctorow's term): Platform degrades user experience to extract value
Why This Kills Sovereignty:
Declaration Dies:
To maximize ad revenue, platforms need "real names" (advertisers want demographic data)
Content moderation favors advertiser-friendly material (censorship of controversial but legitimate speech)
Platform owns user identities (can ban, suspend, or sell data without consent)
Connection Dies:
Algorithmic feeds prioritize "engagement" (rage-bait, controversy) over chronological connection
Network effects become lock-in (can't leave because everyone's here)
Platforms surveil conversations for ad targeting
Ground Dies:
Users don't own their content (licensed to platform)
No data portability (can't easily migrate to competitors)
Platform can change terms, raise prices, or shut down features without consent
Case Study: Instagram's Enshittification
Phase 1 (2010-2012): Growth
Beautiful, simple photo-sharing app
Chronological feed
No ads
Users loved it
Phase 2 (2012): Acquisition
Facebook buys Instagram for $1 billion
Promises to keep it independent
Still no ads (yet)
Phase 3 (2013-2015): Monetization Begins
Ads introduced (2013)
Algorithmic feed replaces chronological (2016)
Users see fewer posts from friends, more from brands/influencers
Phase 4 (2016-2020): Enshittification Accelerates
Stories (copied from Snapchat) to keep users on platform longer
Reels (copied from TikTok) to compete with short video
Shopping features (turn platform into e-commerce)
Feed becomes 50% ads and recommended content, not people you follow
Phase 5 (2020-present): Users Rebel
Photographers and artists leave (algorithms favor video over photos)
"Make Instagram Instagram Again" campaign
But network effects trap users (can't leave; audience is there)
Sovereignty Analysis:
Declaration: Users don't own @usernames (can be suspended, handles seized)
Connection: Algorithm decides who sees your posts (not chronological, not transparent)
Ground: Content hosted on Instagram servers, no export of full quality images + metadata + social graph
Lesson: VC funding forced Facebook to extract maximum value from Instagram, degrading user experience and sovereignty.
Why Advertising Kills Sovereignty:
1. Surveillance Becomes Necessary
Targeted ads require user data (behavior tracking, demographics, interests)
Privacy becomes impossible (every action monitored)
2. Engagement Optimization Dominates
Platforms optimize for "time on site" (more ads served)
Addictive design patterns (infinite scroll, autoplay, notifications)
Content moderation favors controversial material (drives engagement)
3. Algorithmic Control
Users can't see chronological feeds (ads would be skipped)
Platforms control what you see (paid content prioritized over friends)
4. Real Name Policies
Advertisers want demographic certainty
Pseudonymity becomes impossible (violates ad targeting needs)
Case Study: Twitter/X Under Musk
Pre-Musk (2006-2022):
Twitter struggled with profitability (ad revenue insufficient)
But maintained relatively open API, chronological feed option, pseudonymity
Post-Musk (2022-present):
Musk buys Twitter for $44 billion (mostly debt-financed)
Needs to generate massive revenue to service debt
Results:
Blue checkmarks become paid ($8/month for verification)
API access restricted (kills third-party clients, forces users to official app with more ads)
Algorithmic feed becomes mandatory (can't disable)
"Freedom of speech" rhetoric, but actually more censorship (of competitors, critics)
Sovereignty Impact:
Declaration: Verification becomes paid feature, pseudonymous users harassed
Connection: Third-party clients killed, API access limited, algorithmic manipulation
Ground: No meaningful data portability, platform instability
Lesson: Even "ideological" ownership (Musk claimed to champion free speech) gets crushed by economic pressure. Debt + ad dependence = sovereignty impossible.
If VC funding and advertising kill sovereignty, what's left? Several models exist—none perfect, all involve trade-offs.
How It Works:
Users pay monthly/annual fee ($5-50/month typical)
Revenue funds development, infrastructure, support
No ads, no data sales
Sovereignty Potential: ★★★★☆
Pros:
No surveillance needed (users are customers, not products)
Incentives align (make users happy so they renew)
Can remain small and profitable (don't need billions of users)
Cons:
Excludes people who can't pay (equity issue)
Harder to grow (free platforms have network effect advantage)
Requires continuous value delivery (users will cancel if not worth it)
Case Study: Hey.com (Basecamp's Email Service)
Launch (2020):
$99/year for email service
Privacy-focused (no tracking, no ads)
Opinionated design (built-in features for email triage)
Business Model:
Subscription revenue funds small team (~10 people)
No investors, no ads, no data sales
Profitable from day one (break-even at ~20,000 users)
Sovereignty Assessment:
Declaration: Users can use custom domains (you@yourdomain.com via Hey)
Connection: Email is federated (Hey users can email anyone)
Ground: Partial (emails stored on Hey servers, but IMAP export available)
Limitations:
$99/year excludes low-income users
Small market share (Gmail is free, Hey is not)
Dependent on Basecamp's continued interest (what if they shut it down?)
Lesson: Subscriptions enable sovereignty but limit reach.
How It Works:
Core software is open source (free to use, modify, self-host)
Company offers paid hosting, support, enterprise features
Example: WordPress (open source) + WordPress.com (paid hosting)
Sovereignty Potential: ★★★★★
Pros:
Users can self-host (full sovereignty) or pay for convenience
Can't be captured (if company sells out, community forks)
Scales (free tier grows community, paid tier funds development)
Cons:
Hard to compete with cloud giants (who can offer hosting cheaper)
Risk of "tragedy of the commons" (many users, few contributors/payers)
Pressure to create artificial limitations (cripple free version to upsell paid)
Case Study: Ghost (Publishing Platform)
History:
Founded 2013 as Kickstarter project ($300k raised)
Open-source blogging platform (alternative to WordPress)
Business model: Ghost(Pro) managed hosting + Ghost Foundation (non-profit)
Revenue Streams:
Ghost(Pro): $9-199/month for managed hosting
Self-hosting: Free (download and run yourself)
Foundation: Grants and donations fund open-source development
Hybrid Structure:
Ghost Foundation (non-profit): Owns open-source code
Ghost(Pro) (for-profit): Provides managed hosting, funds foundation
Sovereignty Assessment:
Declaration: Custom domains standard (even on free self-hosted)
Connection: Open API, can integrate with any service, full RSS support
Ground: Full ownership (self-hosted) or excellent portability (Ghost(Pro) export is complete)
Success Metrics:
3,000+ paying Ghost(Pro) customers
Tens of thousands self-hosting
Profitable and sustainable (10+ years running)
Lesson: Open core + hybrid structure (non-profit + for-profit) can work.
How It Works:
Platform is owned by members (users, workers, or both)
Governance is democratic (one member, one vote)
Profits distributed to members or reinvested in platform
Legal structure: Co-op, worker-owned, multi-stakeholder
Sovereignty Potential: ★★★★★
Pros:
Structural alignment (owners are users, incentives match)
Can't be sold to VCs or acquired by megacorp
Democratic governance (users decide platform direction)
Cons:
Hard to fund initial development (co-ops struggle to raise capital)
Governance is slow (democracy takes time)
Risk of capture by vocal minority (co-op politics can be messy)
Case Study: Resonate (Music Streaming Co-op)
Model:
Musician-owned streaming platform
Artists get fair pay (#stream2own: listeners "buy" songs after 9 plays)
Multi-stakeholder co-op (musicians, listeners, workers all have governance stake)
Funding:
Initial crowdfunding
Ongoing membership fees
Investment from cooperative-friendly funds
Challenges:
Slow growth (competing with Spotify's billions in VC funding)
Technical debt (limited resources for development)
Governance complexity (balancing stakeholder interests is hard)
Status (2025):
Still operating, but small (not mainstream success)
Proof of concept: co-op model can work for digital platforms
Sovereignty Assessment:
Declaration: Artists control their profiles, own their presence
Connection: Direct artist-listener relationship (no algorithmic intermediation)
Ground: Artists own their music files, can leave platform with all data
Lesson: Co-ops align sovereignty with structure, but struggle to compete with VC-funded giants.
How It Works:
Platform funded by grants, donations, government funding
Non-profit legal structure (mission over profit)
Revenue sources: Philanthropic foundations (Mellon, Knight, Ford), government (NEH, NSF), individual donations
Sovereignty Potential: ★★★★☆
Pros:
No profit motive (mission is preservation/access, not extraction)
Can serve public good (not just paying customers)
Long time horizons (not driven by quarterly earnings)
Cons:
Grant dependency (what if funders change priorities?)
Mission drift risk (chasing grants can distort mission)
Slow to adapt (bureaucracy, consensus decision-making)
Case Study: Internet Archive
Funding:
Donations (50% of revenue): Individual donors + corporate sponsors
Grants (30%): Mellon Foundation, Knight Foundation, NEH
Services (20%): Scanning books for libraries, archival consulting
Governance:
Non-profit corporation (501(c)(3))
Board of directors (includes Brewster Kahle, founder)
Mission: "Universal access to all knowledge"
Sustainability:
Operating since 1996 (nearly 30 years)
Annual budget: ~$40 million
Endowment: Building toward long-term stability
Sovereignty Assessment:
Declaration: Free access, no user accounts required (can browse anonymously)
Connection: Open APIs, anyone can build on top of Archive data
Ground: Massive redundancy (multiple data centers, partner libraries), but centralized control
Challenges:
Legal vulnerability (2023: sued by publishers over book lending)
Funding concentration risk (what if major donors withdraw?)
Founder dependency (Brewster Kahle is central to organization)
Lesson: Non-profit model can sustain long-term preservation, but vulnerable to legal and funding risks.
When designing a sovereignty business (we call these "Foundries"), use this canvas:
What sovereignty problem do you solve?
For whom? (target users)
Why would they switch from incumbent platform?
How do you make money?
Subscriptions? Hosting? Donations? Sales?
How much revenue per user? (unit economics)
What are your main expenses?
Infrastructure (servers, bandwidth, storage)
Labor (developers, support, operations)
Legal/compliance
Declaration: Do users own identities?
Connection: Can they communicate without surveillance?
Ground: Do they control their data?
Who makes decisions? (founders, board, users, workers?)
How democratic? (autocratic, representative, fully participatory?)
Exit strategy: What happens if founders leave/die?
For-profit, non-profit, co-op, hybrid?
What protects mission from capture?
Why can't megacorps copy you?
Is it technology, community, mission, legal structure?
How do you get first 100 users? 1,000? 10,000?
Network effects? (do you need them, or can you thrive small?)
Break-even: When do revenues exceed costs?
Maturity: When is the business self-sustaining?
Succession: How does it survive founders?
1. Value Proposition:
Federated social network (like Mastodon) with managed hosting
Target: Non-technical users who want sovereignty but not self-hosting burden
Switch incentive: "Own your social media—no ads, no algorithm, no ban risk"
2. Revenue Model:
$10/month subscription per user
Includes: Custom domain (@you@yourdomain.social), 10GB storage, priority support
3. Cost Structure:
Infrastructure: $2/user/month (servers, bandwidth, storage)
Labor: $200k/year (2 developers, 1 support person)
Legal/admin: $20k/year
Break-even: 2,000 paying users ($240k/year revenue - $220k costs)
4. Three Pillars:
Declaration: Custom domains included, users control identity
Connection: ActivityPub federation (can follow/be followed from any compatible platform)
Ground: Full data export, can migrate to different host with all followers
5. Governance:
For-profit LLC initially (founders control)
Long-term: Convert to steward-ownership (founder gets salary, not equity) or co-op
User advisory board (elected representatives consult on policy)
6. Legal Structure:
Start: For-profit (easier to fund early development)
Mature: Steward-ownership (Purpose Foundation model) or B-Corp
Protection: Bylaws mandate Three Pillars compliance, can't be removed
7. Competitive Advantage:
Can't compete on features (Mastodon, Bluesky are free and feature-rich)
Advantage: Trust (users know they won't be enshittified, locked in)
Niche: "We're the managed Mastodon host for people who value sovereignty"
8. Growth Strategy:
Phase 1: 100 beta users (friends, early adopters) — $1k/month revenue
Phase 2: 1,000 users (content creators tired of platform instability) — $10k/month
Phase 3: 10,000 users (mainstream adoption) — $100k/month (profitable)
No VC needed (bootstrapped or small crowdfunding)
9. Sustainability Timeline:
Break-even: 2 years (2,000 users)
Maturity: 5 years (10,000 users, $1.2M/year revenue, stable team)
Succession: Founders create transition plan (documentation, steward-ownership transfer)
Viability Assessment:
Market: Small (most people don't care about sovereignty)
But defensible: Those who do care are loyal, pay premium
Sustainable: Modest scale ($1-2M/year) is enough
Business:
Project management software
Founded 1999 (as 37signals)
Never took VC funding
Revenue Model:
$99/month flat rate (unlimited users)
Simple pricing (no complex tiers)
Annual revenue: ~$50 million (estimated)
Economic Design:
Bootstrapped (profitable from early on)
Small team (~70 people) despite massive user base (thousands of companies)
No growth-at-all-costs (slow, steady, sustainable)
Sovereignty:
Declaration: Companies own their Basecamp data, own their URLs (custom domains available)
Connection: Not social, so less relevant (but API for integrations)
Ground: Good data export, can migrate to self-hosted alternatives if needed
Key Lesson: Profitability at small scale (relative to VC-funded competitors) enables sovereignty.
Why It Works:
Founders (Jason Fried, DHH) ideologically opposed to VC
Company structure allows them to say no to growth pressure
Loyal user base willing to pay premium for stability
Premise (2014):
Social network promising "no ads, no data mining"
Launched as alternative to Facebook
Tagline: "You are not a product"
Business Model:
Initially free
Plan: Freemium (paid features: analytics, custom domains, themes)
Funding:
Raised $5.5 million VC funding (Series A)
Converted to Public Benefit Corporation (B-Corp) to enshrine ad-free mission
What Went Wrong:
VC pressure to grow fast (needed massive user base to justify valuation)
Network effects didn't materialize (no one on Ello = no reason to join Ello)
Pivot to niche (2016): Became platform for artists/creators only
Acquired 2021 by holding company; original mission abandoned
Sovereignty Failure:
Despite B-Corp status, VC funding created growth pressure
Users who joined believing in mission felt betrayed by pivot
Platform never achieved critical mass for sustainability
Key Lesson: VC funding is incompatible with sovereignty, even with legal protections.
Business Model:
Mastodon is open-source software (free)
Creator (Eugen Rochko) funded by Patreon donations
Instance hosting is decentralized (thousands of admins, each with own funding model)
Rochko's Income:
Patreon: $30k/month from ~6,000 patrons
Grants: Occasional from Mozilla, NGI
Annual: ~$400k (modest for software developer in US, but sustainable)
Instance Funding (Varied):
Some free (admin pays out of pocket)
Some donation-supported (Patreon, Ko-fi)
Some subscription ($5-10/month per user)
Some institutionally backed (universities, non-profits)
Sustainability Assessment:
Core software: Sustainable (Rochko funded, plus volunteer contributors)
Instances: Fragile (many admins burn out, shut down)
Overall: Network survives because federated (if one instance dies, users migrate)
Sovereignty:
Excellent (federated, open protocol, self-hostable)
Key Lesson: Donation-funded + decentralized can work, but creates admin burnout risk.
Symptom:
Organization depends on one person (founder/maintainer)
If they burn out, die, or leave, project collapses
Examples:
Small open-source projects (single maintainer)
Volunteer-run archives (when admin quits, archive vanishes)
Prevention:
Build team, not solo operation
Document everything (so others can take over)
Succession planning (who's next in charge?)
Institutional structure (legal entity that outlives founder)
Symptom:
Project relies on unpaid labor
Initial enthusiasm fades
No one has time/energy to maintain
Examples:
Mastodon instances (many shut down after 1-2 years)
Open-source projects (maintainers quit from exhaustion)
Prevention:
Pay people (even modest stipends help)
Limit scope (don't promise more than you can sustain)
Rotate responsibilities (avoid single points of failure)
Symptom:
Company/protocol gets bought by VCs, megacorps, or speculators
New owners prioritize profit over mission
Enshittification follows
Examples:
Instagram (acquired by Facebook)
Tumblr (Yahoo, then Verizon, then Automattic)
Many blockchain projects (early idealism → speculative frenzy)
Prevention:
Legal structure that prevents sale (non-profit, co-op, steward-ownership)
Open source (so community can fork if captured)
Mission codification (bylaws that can't be changed)
Symptom:
System becomes too complex to maintain
Technical debt accumulates
Eventually, no one understands how it works
Examples:
Legacy software (COBOL banking systems)
Over-engineered platforms (added features until bloated)
Prevention:
Simplicity as core value (resist feature creep)
Regular refactoring (pay down technical debt)
Documentation (explain how things work)
If you're building a Foundry, plan for the long haul:
Build MVP (minimum viable product)
Get 10-50 early users
Validate that people will pay
Revenue: $0-5k/year
Iterate based on user feedback
Grow to 100-500 users
Break even or close to it
Revenue: $10k-50k/year
1,000-5,000 users
Profitable (revenue exceeds costs)
Hire small team (2-5 people)
Revenue: $100k-500k/year
5,000-50,000 users
Diversify revenue (not dependent on single income stream)
Succession planning (ensure survival past founders)
Revenue: $500k-5M/year
Convert to permanent structure (co-op, foundation, steward-ownership)
Ensure mission persists even if founders leave
Document everything for future maintainers
Key Insight: You don't need billions of users or unicorn valuation. Small, sustainable, and sovereign is success.
Building a Foundry is hard. You're competing against platforms with billions in VC funding, network effects, and zero regard for user sovereignty.
But you have advantages they don't:
Trust: Users know you won't betray them
Longevity: You're building for 50 years, not next quarter
Mission: You care about sovereignty, not extraction
The economics of the Anvil require patience:
Growth will be slow
You'll never be "unicorn" rich
You'll always be outspent by megacorps
But you'll build something that lasts. Something that users own. Something that can't be murdered by a quarterly earnings call.
The Anvil endures not because it grows fastest, but because it's built to survive.
In the next chapter, we explore distributed commons governance—how to build infrastructure that many organizations share, using Elinor Ostrom's principles for managing common-pool resources.
For now, sketch your Foundry. What would you build? How would you fund it? And how would you ensure it embodies the Three Pillars while remaining economically viable?
The Anvil awaits the forging.
VC Dilemma: If you had a great idea for a sovereign platform but needed $1M to build it, would you take VC funding? Why or why not? What alternatives exist?
Subscription Exclusion: User-pays models exclude people who can't afford subscriptions. Is this an acceptable trade-off for sovereignty? How could you address it?
Co-op Governance: Would you want to run a platform democratically (co-op model)? What are the benefits and frustrations of democratic governance?
Small vs. Big: Is it better to be small and sovereign (10,000 loyal users) or big and compromised (100 million users but VC-funded)? Does scale matter?
Competition: How do you compete with "free" platforms (Gmail, Facebook, Instagram) when you charge money? What's your value proposition?
Your Own Business: If you built a Foundry, what would your revenue model be? Walk through the Business Canvas for your hypothetical platform.
Task: Design a complete business plan for a sovereignty-respecting platform.
Part 1: The Problem (300 words)
What platform are you replacing/competing with?
What sovereignty violations does it commit?
Who's your target user? (specific niche, not "everyone")
Part 2: The Business Canvas (1000 words)
Complete all 9 sections:
Value Proposition
Revenue Model (with unit economics)
Cost Structure
Three Pillars Integrity Check
Governance Model
Legal Structure
Competitive Advantage
Growth Strategy (with realistic numbers)
Sustainability Timeline
Part 3: 5-Year Financial Projection (500 words)
Create a simple table:
| Year | Users | Revenue/User | Total Revenue | Total Costs | Profit/Loss |
|---|---|---|---|---|---|
| 1 | 50 | $120/year | $6k | $50k | -$44k |
| 2 | 500 | $120/year | $60k | $100k | -$40k |
| 3 | 2,000 | $120/year | $240k | $200k | +$40k |
| 4 | 5,000 | $120/year | $600k | $400k | +$200k |
| 5 | 10,000 | $120/year | $1.2M | $700k | +$500k |
Explain assumptions. When do you break even? Is this realistic?
Part 4: Failure Mode Analysis (500 words)
What's your biggest risk? (heroic founder, burnout, capture, complexity?)
How do you mitigate it?
What's your "if this fails" exit strategy? (can users take their data elsewhere?)
Part 5: Reflection (300 words)
Would you actually want to run this business?
What's the hardest part?
What did you learn about the tensions between sovereignty and economics?
Doctorow, Cory. "Competitive Compatibility: Let's Fix the Internet, Not the Tech Giants." Electronic Frontier Foundation (2019).
Srnicek, Nick. Platform Capitalism. Polity, 2017.
Zuboff, Shoshana. The Age of Surveillance Capitalism. PublicAffairs, 2019.
Schneider, Nathan. "An Internet of Ownership." Sociological Review 68, no. 2 (2020).
Scholz, Trebor. Platform Cooperativism. Rosa Luxemburg Stiftung, 2016.
Muldoon, James. Platform Socialism. Pluto Press, 2022.
Eghbal, Nadia. Working in Public: The Making and Maintenance of Open Source Software. Stripe Press, 2020.
On how open source projects fund themselves
Benkler, Yochai. The Wealth of Networks. Yale University Press, 2006.
On peer production and non-market economics
Fried, Jason, and DHH. Rework. Crown Business, 2010.
Basecamp's philosophy (bootstrapped, profitable, sovereign)
Rochko, Eugen. "Mastodon Blog." https://blog.joinmastodon.org
Founder's posts on building/funding decentralized platform
Osterwalder, Alexander, and Yves Pigneur. Business Model Generation. Wiley, 2010.
Business canvas methodology
Purpose Foundation. "Steward-Ownership." https://purpose-economy.org/en/
Alternative ownership structures
End of Chapter 12
Next: Chapter 13 — Distributed Commons Governance (The Seed Bank)