We live in a world of unstable companies making unstable products and services. (A lot of this is down to the kinds of things I will mention in this post). I think people often either express surprise or cynicism when a critical service they rely on hikes fees or an important tool sells out to a public company, but in my experience a lot of these surprises and let-downs are avoidable by simply figuring out the ownership structure of the companies responsible for them.
This article is not here to tell you you're bad if you're using something with worse ownership structures - in many cases there isn't another choice, and even if there is, moving tools and customer bases is a lot of work. What this post is intended to do is give you a way of quickly assessing risk over the tools and services you rely on and to give you a path forward with finding better alternatives as and when they suit you.
Why only look at ownership?
Because ownership = control. A company can say whatever it likes within usually quite generous legal limits, which means their word can be very meaningless in practice. A company can also do things that seem nice as PR stunts but it doesn't tell you how the company is controlled and the fundamental motivations for its behaviour.
Understanding who owns a company cuts through the PR. It won't give you a complete picture but will give you a very solid foundation for understanding how a company actually functions.
Key types of ownership and how to find them out
These aren't all the types of ownership or investment structures, but what I've personally found to be the most noticeable archetypes in the world of software and online services.
I'm gonna go from worst to best...
4. Venture Capital (VC) funded (absolutely will shank you)
This is a company who has sold part control of the company to a pool of rich vultures who want a very specific kind of return on investment that leads to incredibly negative outcomes. Not only do the rich vultures want a return on investment, but a huge return on investment, the kind that can only be achieved by smashing the existing market, trustworthiness or profitability be damned. (see Uber - a company that has never turned a profit but has made the urban transportation landscape demonstrably worse because the investors hope it will be the only thing left standing.)
VC-backed companies often start making products with free entry or low fees, and then when they've used their millions to put others out of business with an unprofitable offering, they will ratchet up prices, fees, and make multi-tier funhouse subscriptions to strangle it's trapped audience (eg. Patreon, Etsy), sell to a shitty publicly owned company (eg. Figma) or do whats called an IPO and become one themselves.
Venture Capital treats you like a sucker and takes you for a ride. Your support of VC products is not only to your detriment, but to the detriment of everyone else. Venture Capital backed companies have to have negative external outcomes to function. If it doesn't sufficiently suck, it will collapse or close it's product and get absorbed by a bigger fish and will make a sucker out of you another way.
A common tactic of VC companies is pretending that they are underdogs fighting established business models. This is a charade - they are not actual opposition, their investors are part of the establishment, and their entire business trajectory is to be another awful entrenched corporate power.
eg. Patreon, Etsy (did an IPO), Gumroad, Kickstarter, Craft, Charm, Figma (bought out), tooo many more to count.
How to quickly identify a VC-funded company
- Find the company behind the product (usually by looking at the footer of the website)
- Do a search for "<company name> Crunchbase" and see if they have a listing on Crunchbase.
- If they have a page on Crunchbase and have had a 'round' of funding, they're VC-funded and you should avoid them like the plague if you can.
- If they haven't had a round of funding yet but have had 'seed' funding, this also counts. Seed funding is basically starter funding to get a company up to speed and presentable to get bigger wads of cash from proper rounds of VC funding.
3. Publicly traded (has probably already been shanking you)
The staple of traditional megacorps, or one of the desired outcomes of a VC-funded company. The direction of the company is ultimately not up to workers or even management - but a pit of rich vultures called shareholders. As James Stephanie Sterling likes to say, these shareholders are here to make all the money in the world.
The only real immovable legal responsibility of a public company is to make these shareholders money, and the only people they absolutely cannot lie to is these shareholders. So a public company will do or say whatever it takes to fulfill its shareholders and this means that their word is inherently bullshit - it's only there to get you to trust them enough to buy.
There are a small number occasions where there are investors in this pit that are personally motivated to wrangle for small positive change (eg. one investor group making Apple and Microsoft start becoming a bit more repair friendly) and sometimes the board of shareholders is a little less ravenous, but that doesn't mean you should trust them with anything. They will in all likelihood shank you wherever they feel like they can get away with it. Like VC companies, they almost always need negative external outcomes to make the profits shareholders want.
eg. Apple, Microsoft, Google, Adobe, Etsy, plenty of others.
How to quickly identify a publicly owned company
This doesn't always work, but it's the quickest way I've found.
- Search the company on Wikipedia and see if it has a page.
- In the sidebar, look at 'Type of business' and see if it says 'public' or see if it has a stock exchange listing (eg. NASDAQ, FTSE, etc. etc.)
- If it says public or is listed on a stock exchange, it is a public company and you should avoid it if you can.
Even if it doesn't say 'public', it still might have characteristics of one (such as a private company with shitty investors - eg. a VC-backed company is usually private initially).
2. Private company with no investors or chill investors (less likely to shank you)
This means that the company is either:
- Owned outright by some people with no requirement that the company makes them any particular amount of money
- Has investors, but those investors are ideologically motivated or just like the idea and want to put money in, with less destructive aims for return on investment, or none at all.
While the business still needs to survive, the owners in these kinds of situations usually have the freedom to pursue other objectives than simply making money. This doesn't put them in the clear though. Just because the owners can do more things than just make money, it doesn't mean they will want to. It also means the owners could change their mind or change hands.
This is one of the company types listed here where you can reasonably begin to trust the stability of their products and the authenticity of what they say - so long as they have a decent track record.
Relatively decent examples: Panic, Serif (makers of the Affinity suite), Ko-fi, itch.io
How to quickly identify a privately owned company
Like with public companies, this isn't bullet-proof and doesn't always work, but it's very quick.
- Make sure it doesn't have VC investment using the method in the VC section.
- Search the company on Wikipedia and see if it has a page.
- In the sidebar under 'Type of business', see if it says 'private'.
- If it says private, it's a private company.
Finding out whether they have any investors at all or if they do, what kind of arrangement exists will require a bit more research, if its publicly available at all.
1. Coops (least likely to shank)
The company is owned and controlled democratically in some form. This has benefits of private companies with no investors in that there are no moneymen pulling the strings, but with additional resilience - the single owner or small pool of owners can't just change hands or sell, and it's just more ethical to the people who work there because the workers get a fair cut and a fair say.
This isn't a new company structure but it's rare. Fledgling companies are starting to come up with this model, especially as a response to all the bullshit I've mentioned in this post so far. Unlike VC-backed companies, their claims to being oppositional to megacorp models is actually legit because their ownership structure actually makes it unlikely to become that kind of thing, and because the structure of the organisation usually goes hand in hand with socialist politics. Watch this space.
eg. ASSC (the people who make Cohost), Comradery
Coops are usually reasonably easy to tell - they often quite proudly tell you they are such.
Extra Q&A bit
What if the company makes something that's open source?
Open source simply means the code is there for certain uses, it does not mean you have the time, labour and resources to fork, test, maintain and develop it if the company starts to shank you, and it doesn't mean a critical mass of people will join you.
What if they have easy batch export options?
That's a positive thing, but it's still a lot of labour on your part to do that, then find an alternative and migrate to it, especially if the data structures don't work the same way. You have to factor that into your assessment.
What if it's a B Corp or PBC?
These are not stable guarantees of public good or accountability. Etsy lapsed it's B Corp status because it wanted to use its money elsewhere. Ello is still a PBC with a clause to not sell it's user's data, but instead of selling user data, it's selling it's users another way - by encouraging them to do free work and compete for creative gigs for brands.
