Module 2: The Economics of the Anvil

Archaeobytology 300: Institution Building & Strategic Infrastructure

Module Overview

Core Question: How do you build a sustainable business that forges sovereign digital artifacts (domains, monuments, frameworks) in an economy optimized for platform rent-seeking?

Learning Objective: Students will design a "foundry" business model—a for-profit or hybrid enterprise that creates and sells sovereign Ground, tooling, or monuments while resisting platform capture and maintaining Three Pillars integrity.

Time: Week 5-6

The Shift: From Archive to Anvil

Module 1 asked: How do we preserve what already exists?

Module 2 asks: How do we forge what doesn't yet exist—and make money doing it?

The Foundry Question

You're not a non-profit anymore. You're building a business that: - Sells sovereignty (domains, hosting, tooling) - Forges monuments (digital products, frameworks, platforms) - Charges money (without becoming a platform landlord yourself)

The Tension: - ✅ You need revenue to survive - ❌ You can't become what you're fighting against (surveillance capitalism, platform rent-seeking)

The Challenge: Design a business model that is profitable AND principled.

Core Reading

Primary Texts

Doctorow, C. (2023). The Internet Con. Chapter 5: "Interoperability" - Focus: How mandated interoperability breaks platform lock-in - Question: Can your business benefit from interoperability instead of fearing it?

Rushkoff, D. (2016). Throwing Rocks at the Google Bus. Chapters 1-3. - Focus: Extractive vs. distributive economics - Question: Can your business distribute value instead of extracting it?

Ostrom, E. (1990). Governing the Commons. Chapter 1: "Reflections on the Commons" - Focus: How communities self-govern shared resources without privatization or state control - Question: Can you sell access to a commons without enclosing it?

Case Study Readings

Basecamp Business Model - Revenue: $25-99/month SaaS subscriptions - Model: No VC funding, bootstrapped, founder-owned - Philosophy: Calm company, no growth-at-all-costs - Three Pillars Fit: ✅ Declaration (independent), ⚠️ Ground (still hosted by them)

WordPress.com vs. WordPress.org - WordPress.com: Freemium SaaS (hosting + premium features) - WordPress.org: Free/open source (self-hosted) - Model: "Open core" + managed services - Three Pillars Fit: ✅ Ground (can self-host), ✅ Connection (open ecosystem)

Ghost Foundation - Revenue: Ghost(Pro) hosting ($9-199/month) funds Ghost software development - Model: Non-profit owns for-profit subsidiary - Philosophy: "Sustainable open source" - Three Pillars Fit: ✅ All three (self-hostable, open, independent)

Automattic (WordPress parent company) - Revenue: WordPress.com hosting, WooCommerce, Tumblr, Simplenote - Model: For-profit funded by VC, but commits to GPL open source - Philosophy: "Open source with commercial services" - Three Pillars Fit: ⚠️ VC funding creates exit pressure

Lecture: The Foundry Business Matrix

There is no single "correct" model for preservation. The Matrix helps you map options:

Dimension 1: What Are You Selling?

| Product Type | Examples | Revenue Model | Three Pillars Risk | |--------------|----------|---------------|-------------------| | Sovereign Ground | Domain registration, hosting, colocation | Subscription, one-time fee | ⚠️ Can become landlord | | Tooling/Software | Static site generators, CMS, backup tools | SaaS, license, support | ✅ Empowers users | | Monuments | Themes, plugins, templates, frameworks | Marketplace, one-time sale | ✅ User owns output | | Services | Consulting, setup, migration, maintenance | Hourly, project-based | ✅ No lock-in | | Education | Courses, workshops, certification | Tuition, membership | ✅ Knowledge transfer | | Community Access | Forums, directories, job boards | Membership, sponsorship | ⚠️ Can create gatekeeping |

Key Question: Does the customer own what they buy, or are they renting access?

Dimension 2: Revenue Model

| Model | Mechanics | Advantages | Disadvantages | Three Pillars Fit | |-------|-----------|------------|---------------|-------------------| | One-Time Sale | Customer buys product once, owns forever | Customer owns, no recurring extraction | Unpredictable revenue, customer acquisition cost | ✅ Ground (ownership) | | Subscription | Monthly/annual recurring payment | Predictable revenue, ongoing relationship | Can feel like rent, churn risk | ⚠️ Depends on what's subscribed | | Freemium | Free tier + paid premium features | Low barrier to entry, large user base | Most users never pay, conversion pressure | ⚠️ Can compromise free tier | | Open Core | Free open source + paid enterprise features | Community-driven development, dual revenue | Tension between free/paid features | ✅ If core is truly open | | Marketplace | Platform takes % of transactions | Scales with ecosystem, network effects | Platform fee can be extractive | ⚠️ Depends on % and control | | Pay-What-You-Want | Customer chooses price (including $0) | Accessible, aligns with values | Revenue uncertainty, perceived as "hobby" | ✅ Declaration (sovereign pricing) | | Donation/Patronage | Voluntary ongoing support (Patreon, GitHub Sponsors) | Mission-aligned, community-funded | Unpredictable, requires audience | ✅ Connection (intentional support) |

The Hybrid Approach: Most successful foundries combine 2-3 models (e.g., open source software + paid hosting + consulting).

Dimension 3: Business Structure

| Structure | Ownership | Profit Distribution | Exit Scenario | Three Pillars Fit | |-----------|-----------|---------------------|---------------|-------------------| | Bootstrapped For-Profit | Founder(s) own 100% | Founders keep profits | Sell to acquirer or stay independent | ✅ If founders committed to mission | | VC-Funded Startup | Investors own majority | Reinvest for growth, eventual exit | IPO or acquisition (pressure to "exit") | ❌ Exit pressure violates Declaration | | Non-Profit + For-Profit Subsidiary | Non-profit owns business | Profits fund non-profit mission | Can't be sold (locked to mission) | ✅ All three (mission-locked) | | Cooperative | Workers or customers own | Profits distributed to members | Can't be sold without member vote | ✅ Connection (community-owned) | | Benefit Corporation (B-Corp) | Shareholders own, mission in charter | Profits to shareholders, mission protected | Can be sold if mission preserved | ⚠️ Better than C-corp, but sellable | | Public Institution | Government/university owned | Serves public mission | Can't be privatized | ⚠️ Subject to political changes |

Key Question: Can your business be sold to a platform? If yes, how do you prevent that?

Framework: The Foundry Business Canvas

Your assignment will design a complete "foundry" using this framework:

Section 1: Mission & Value Proposition

What problem are you solving? - Who lacks sovereignty today? - What tool/service/Ground would give it to them? - How is your solution different from platform alternatives?

Example (hypothetical):

Problem: Academics have no sovereign publishing infrastructure. They rent from Elsevier, Springer, ResearchGate—all platforms that can delete accounts, paywall knowledge, or shut down.

Solution: ScholarForge—a self-hostable academic publishing toolkit (peer review, DOI minting, archival storage) that universities can run on their own infrastructure.

Difference: Unlike platforms, scholars and institutions own the software and data. No platform can shut it down.

Section 2: Product/Service Design

What exactly are you selling?

Choose one primary offering:

Option A: Sovereign Ground as a Service

- Product: Domain registration + DNS + static hosting - Revenue: $50-200/year per customer - Example: "We sell .xyz domains and host your static site on infrastructure you can export anytime." - Three Pillars Check: - ✅ Ground (customer owns domain) - ⚠️ Hosting is still rented (but exportable) - ✅ Declaration (no platform dependency)

Option B: Tooling for Sovereignty

- Product: Software that runs on customer's infrastructure - Revenue: Open core (free self-hosted + paid managed service) or one-time license - Example: "We build a CMS you can self-host. Pay us for setup/support or host it yourself free." - Three Pillars Check: - ✅ Ground (customer hosts) - ✅ Declaration (open source, no lock-in) - ✅ Connection (community-contributed plugins)

Option C: Monuments (Digital Products)

- Product: Themes, templates, frameworks customers can buy and own - Revenue: One-time purchases ($50-500 per item) - Example: "We sell premium static site themes. Buy once, use forever, modify as you want." - Three Pillars Check: - ✅ Ground (customer owns files) - ✅ Declaration (no ongoing dependency) - ⚠️ Connection (individual purchase, not communal)

Option D: Consulting/Education

- Product: Services that teach customers to build their own sovereignty - Revenue: Hourly ($100-300/hr) or project-based ($5k-50k) - Example: "We help universities migrate from Blackboard to self-hosted Moodle." - Three Pillars Check: - ✅ All three (knowledge transfer, customer becomes sovereign)

Key Question: Does your product make customers more or less dependent on you over time?

Section 3: Revenue Model & Pricing

How do you make money?

Design a hybrid model with:

1. Primary Revenue Stream (60-80% of income) 2. Secondary Stream (20-30%) 3. Optional Tertiary Stream (5-10%)

Example (ScholarForge): - Primary: Managed hosting for universities ($5k-50k/year per institution) - Secondary: Consulting for self-hosted deployments ($150/hr) - Tertiary: Premium themes/plugins ($100-500 one-time)

Pricing Principles: - Tiered Pricing: Individuals pay less than institutions - Free Tier: Basic features free (but truly usable, not crippled) - Pay-What-You-Can: Optional sliding scale for accessibility

10-Year Revenue Projection:

| Year | Customers | Avg. Revenue/Customer | Total Revenue | Expenses | Profit/Loss | |------|-----------|----------------------|---------------|----------|-------------| | 1 | 10 | $10k | $100k | $150k | -$50k | | 3 | 50 | $12k | $600k | $450k | +$150k | | 5 | 150 | $15k | $2.25M | $1.5M | +$750k | | 10 | 500 | $20k | $10M | $6M | +$4M |

Break-Even Question: When do you become profitable? What's the minimum viable customer base?

Section 4: Customer Acquisition & Growth

How do you find customers?

Avoid surveillance advertising (violates Three Pillars). Instead:

- Content Marketing: Teach sovereignty principles (blog, podcast, talks) - Open Source Community: Free tier builds user base → some convert to paid - Word of Mouth: Excellent product + mission alignment = organic growth - Institutional Partnerships: Universities, libraries, co-ops as anchor customers - Conference Circuit: Present at academic/tech/library conferences

Growth Strategy: - Years 1-2: Proof of concept, first 10-50 customers - Years 3-5: Product-market fit, 100-200 customers - Years 6-10: Mature business, 500+ customers, self-sustaining

Key Question: Can you grow without venture capital? What's your "ramen profitability" threshold?

Section 5: Three Pillars Integrity Check

Does your business embody The Three Pillars?

Declaration (Sovereignty)

- ❓ Can you shut down and customers still function? (Exportable data, open source, etc.) - ❓ Can customers leave without penalty? - ❓ Do you control their identity/content, or do they?

Connection (Intentional Community)

- ❓ Do customers choose to be here, or are they locked in? - ❓ Is there a community of users (not just transactions)? - ❓ Can users communicate/collaborate directly (not just through you)?

Ground (Ownership)

- ❓ Do customers own their domain/data/tools? - ❓ If you get acquired, can customers fork/migrate? - ❓ Is the infrastructure transparent and exportable?

The Test: If you disappeared tomorrow, could your customers survive? If no, you're a platform landlord.

Section 6: Exit Strategy & Long-Term Governance

What happens if you want to leave?

Scenario A: Lifestyle Business

- You run it indefinitely, it funds your life, no exit planned - Risk: Burnout, life changes, loss of interest - Mitigation: Hire employees, transition to co-op ownership

Scenario B: Acquisition

- Someone offers to buy your business - Risk: Acquirer violates Three Pillars (shuts down free tier, extracts data, etc.) - Mitigation: Contractual mission lock, employee/customer purchase option

Scenario C: Non-Profit Conversion

- You donate the business to a non-profit foundation - Risk: Non-profit lacks business expertise, revenue declines - Mitigation: Hybrid model (non-profit owns, for-profit subsidiary operates)

Scenario D: Open Source Handoff

- You release all code as open source, community continues - Risk: No one maintains it, project dies - Mitigation: Establish governance foundation (e.g., Apache, Linux Foundation)

Key Question: Can you design an exit that doesn't betray your customers?

Case Study Deep-Dives

Case 1: Basecamp (The Calm Company Model)

What They Sell: Project management SaaS ($99/month flat rate for unlimited users)

Business Model: - Bootstrapped (no VC funding) - Founders (DHH & Jason Fried) own 100% - ~70 employees, ~$100M annual revenue - No growth targets, no exit plan

Three Pillars Analysis: - ✅ Declaration: Independent (no investors) - ❌ Ground: Customer data is on Basecamp servers (not exportable in usable format) - ⚠️ Connection: Intentional (customers choose it), but siloed (no cross-org communication)

What We Can Learn: - ✅ Profitability without VC is possible - ✅ "Calm" business culture (no growth-at-all-costs) - ❌ Still a platform (customers don't own their Ground)

Student Discussion: 1. Could Basecamp add a "self-hosted" option without destroying their business model? 2. Is "calm company" philosophy compatible with rapid scaling?

Case 2: Ghost (The Non-Profit Owns For-Profit Model)

What They Sell: - Ghost software (free, open source, self-hostable) - Ghost(Pro) managed hosting ($9-199/month)

Business Model: - Ghost Foundation (non-profit) owns Ghost Ltd. (for-profit) - Ghost(Pro) profits fund Ghost software development - ~50 employees, ~$10M annual revenue

Three Pillars Analysis: - ✅ Declaration: Open source (can self-host) - ✅ Ground: Customers can export and self-host anytime - ✅ Connection: Open API, community themes/plugins

What We Can Learn: - ✅ "Sustainable open source" model works - ✅ Non-profit ownership prevents acquisition - ✅ Managed hosting funds free software

Challenges: - Most users self-host free → only ~10% pay for Ghost(Pro) - Requires balancing "make hosting easy" (Pro) vs. "make self-hosting easy" (free)

Student Discussion: 1. What % of users need to pay for Ghost(Pro) to sustain development? 2. How do you market managed hosting without making self-hosting seem inferior?

Case 3: Gumroad (The Creator-Owned Platform That Almost Died)

What They Sell: E-commerce for creators (sell digital products, take 10% fee)

Business Model: - VC-funded startup → failed to "unicorn" → downsized to tiny team → now bootstrapped - Founder Sahil Lavingia gave equity to early employees, now runs as lifestyle business - ~$20M annual revenue (mostly from creator fees)

Three Pillars Analysis: - ⚠️ Declaration: Platform-dependent (if Gumroad shuts down, creators lose storefront) - ❌ Ground: Customer data is on Gumroad (not fully exportable) - ✅ Connection: Creator-centric, community-driven

What We Can Learn: - ⚠️ VC funding creates "exit or die" pressure - ✅ Sahil refused to sell/shut down, chose lifestyle business instead - ❌ But creators are still on rented land (should be self-hostable)

What It Could Be: - Open source Gumroad that creators self-host on their domains - Gumroad(Pro) managed hosting for ease - Would embody all Three Pillars

Student Discussion: 1. Why didn't Gumroad open-source after VC failure? 2. Could a "self-hosted Gumroad" compete with Shopify?

Case 4: WordPress (The Open Core Empire)

What They Sell: - WordPress.org: Free, open source, self-hostable - WordPress.com: Freemium managed hosting ($4-45/month) - WooCommerce, Jetpack, etc.: Premium plugins

Business Model: - Automattic (for-profit) owns WordPress.com, employs WordPress.org developers - VC-funded ($1B+ raised), but GPL license prevents proprietary capture - ~2,000 employees, ~$500M annual revenue

Three Pillars Analysis: - ✅ Declaration: GPL license = anyone can fork - ✅ Ground: Self-hostable, customer owns data - ✅ Connection: Massive plugin/theme ecosystem

What We Can Learn: - ✅ Open core + managed hosting can scale massively - ✅ GPL prevents proprietary capture (even with VC funding) - ⚠️ VC funding creates exit pressure (IPO rumors)

The Risk: - If Automattic goes public → shareholder pressure → enshittification - But GPL license means community can fork and continue WordPress.org

Student Discussion: 1. Is Automattic's VC funding a violation of Three Pillars, or does GPL mitigate it? 2. What would happen if Automattic tried to "close" WordPress?

Assignment: Design Your Foundry

Objective: Create a for-profit or hybrid business that forges sovereign artifacts while maintaining Three Pillars integrity.

Deliverable: Foundry Business Plan (3000-4000 words)

Required Sections:

1. Executive Summary (250 words)

- What problem are you solving? - What are you selling? (Ground, tooling, monuments, services, education) - Why is your solution better than platform alternatives? - Three Pillars alignment

2. Product/Service Design (750 words)

- Detailed description of what you're selling - Technical architecture (self-hosted? SaaS? hybrid?) - User experience (how do customers buy and use it?) - Differentiation (why choose you over alternatives?)

3. Revenue Model & Pricing (750 words)

- Primary revenue stream (with justification) - Secondary/tertiary streams - Pricing strategy (tiered? flat? pay-what-you-can?) - 10-year revenue projection (with assumptions) - Break-even analysis

4. Customer Acquisition Strategy (500 words)

- Target customers (individuals? institutions? both?) - Marketing/outreach plan (no surveillance advertising) - Growth roadmap (Years 1-2, 3-5, 6-10) - First 100 customers: Where do they come from?

5. Three Pillars Integrity Check (500 words)

- Declaration: Can customers leave? Do they control their identity/content? - Connection: Is community intentional? Can users communicate directly? - Ground: Do customers own their data/tools/domain? - The Test: If you disappeared, could customers survive?

6. Business Structure & Exit Strategy (500 words)

- Legal structure (for-profit? non-profit + subsidiary? co-op? B-corp?) - Ownership (bootstrapped? VC? community-owned?) - Exit plan (lifestyle business? acquisition safeguards? open source handoff?) - How do you prevent acquisition-based betrayal?

7. Competitive Analysis (250 words)

- Who are your competitors? (Platforms, open source alternatives, other foundries) - What do they do well? - What are their Three Pillars violations? - How are you different/better?

Evaluation Criteria:

| Criterion | Points | What We're Looking For | |-----------|--------|------------------------| | Three Pillars Integrity | 30 | Does your business embody Declaration, Connection, Ground? Or does it recreate platform landlordism? | | Financial Viability | 25 | Can this business be profitable? Is the revenue model realistic? | | Originality | 20 | Is this a genuinely new model, or copying existing businesses? | | Customer Value | 15 | Does this solve a real problem? Would customers pay for it? | | Exit Strategy | 10 | Can you leave without betraying customers? Mission-locked? |

Total: 100 points

Optional Extension: Pitch to Real Funders

Students with the strongest designs may pitch to: - Impact investors (mission-aligned capital) - Non-profit incubators (fiscal sponsorship) - Crowdfunding (Kickstarter, Patreon) - Grant programs (Mozilla, Knight Foundation)

Goal: Secure real funding to launch the foundry.

Discussion Questions for Seminar

1. The Profit Dilemma: Is making money inherently extractive, or can commerce be aligned with sovereignty principles?

2. The VC Question: Can you take venture capital without compromising Three Pillars? Does GPL/mission-lock mitigate exit pressure?

3. The Open Source Paradox: If your software is free and self-hostable, why would anyone pay for managed hosting? How much revenue is "enough"?

4. The Basecamp Problem: Basecamp is profitable and independent, but customers don't own their Ground. Is that acceptable?

5. The Platform Fee Dilemma: If you run a marketplace (like Gumroad) and take 10%, are you extracting rent or providing value?

6. The Exit Question: If someone offers $100M for your mission-driven business, do you take it? Can you contractually prevent enshittification?

Module Deliverables

By the end of Module 2, students will have:

1. ✅ Completed Reading Responses (Doctorow, Rushkoff, Ostrom on sustainable commerce) 2. ✅ Case Study Analysis (Comparative analysis of Basecamp, Ghost, Gumroad, WordPress) 3. ✅ Foundry Business Plan (3000-4000 words, complete business design) 4. ✅ 10-Year Financial Projection (revenue, expenses, break-even) 5. ✅ Three Pillars Integrity Assessment (can customers survive without you?)

Looking Ahead: Module 3

Next week, we zoom out from single organizations to collaborative infrastructure.

Module 3: Building the Seed Bank asks:

"How do we build shared preservation infrastructure that no single entity controls—a 'digital commons' that survives individual institutions?"

You'll design a federated, collectively-governed preservation network that distributes both cost and control across many stakeholders.

Instructor Notes

- Guest Speaker: Invite founder of a mission-driven tech company (Ghost, Basecamp alternative, indie SaaS) - Bring Real Financials: Share anonymized revenue/expense data so students understand what "profitable" means - Peer Review: Students present business plans, classmates role-play as skeptical investors/customers - Balance Mission and Money: Students must defend why their business needs to be for-profit (vs. non-profit or volunteer project) - The "Would You Use It?" Test: If students wouldn't pay for their own product, it's not viable

End of Module 2