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Betaworks Trilogy, Part I: A Builders' Network
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Today, I’m excited to share something I’ve been working on for a while: a deep dive into the origins, business, and ethos of betaworks.
Betaworks is a company I’ve long admired for its thesis-driven approach to building and investing, and for pioneering some of the most exciting technology paradigms in consumer media. While researching for this series, I was fortunate to get the insights of some of the firm's OGs, which informed the piece you’re reading today.
This is Part I, where we go all the way back to the company’s building roots.
“A platform for incubation and investments.” “A network, platform, laboratory, and set of concentric circles.” “A coder-artist incubator.” “An umbrella corporation.” “A contemporary media conglomerate.”
What, exactly, is betaworks?
The company itself, unlike the many articles written about it over the years, is reluctant to assign labels. Not to preserve optionality, for fear of undermining its scope, but because betaworks's versatility can indeed make it somewhat hard to define.
To put it simply, betaworks is a startup studio, early-stage VC firm, and innovation hub with offices in New York City and San Francisco. It was founded in 2007 by John Borthwick and Andy Weissman, who moved on in 2011 to become a partner at Union Square Ventures.
From day 1, betaworks was built on a clear set of assumptions:
Each platform shift introduces fundamentally novel ways for consumers to interact with technology;
Social was fundamentally changing the way people found, navigated, and shared content online;
A loosely coupled network of companies, connected at the data level, could hope to compete with tech giants and their accumulated advantages;
A growing technological infrastructure was making it increasingly faster and cheaper to create and iterate on companies.
These principles proved prescient. Social has long moved beyond the confines of the "consumer social" landscape to apply to all categories. Savvy upstarts continue to hack their way to success by making use of third-party APIs and overlooked data. And the rise of cloud infrastructure and no-code tools is now enabling people everywhere to launch, scale, and operate businesses with little to no friction or overhead.
The founders' thesis also applied to the company itself. The time Borthwick and Weissman spent at AOL had shown them that even a well-entrenched technology giant could lose its footing in the marketplace when it stopped, or failed, to innovate. With betaworks, they looked to build a nimble, adaptable company that would be able to sustain innovation as it continued to grow.
Opinionated yet adaptable, focused yet curious, data-driven yet immensely creative, betaworks has long fascinated me. My goal with this piece is to shed light on its history, its thesis, and its ethos.
In its fifteen years of existence, the company has lived through, and helped shape, successive paradigm shifts that irrevocably changed how people experienced and interacted with technology. In face of change, with its founders’ original vision as a North star, it has consistently built toward a more open internet, one where data, ideas, talent, and everything in between would all flow freely and build off each other. Now, as technologies like Web3 make that ideal more palpable than ever, betaworks looks aptly positioned to make the most of the opportunity.
Learning from Borthwick
Borthwick once suggested that startup studios "are grounded in the individuals that created them." Let's take his word for it and see what this can teach us about his company, its thesis, and its ethos.
Borthwick's career before betaworks was a mix of consulting work, entrepreneurial ventures, and corporate work at large internet companies. Back in 1994, Borthwick co-founded WP Studio, a first pass at a venture studio. Out of it came, among others, Total NY, a local scene guide, and äda 'web, a laboratory for contemporary digital art. In 1997, WP Studio sold to Digital City — a joint venture of AOL and The Tribune Company — where Borthwick became Director of Product Development. When both Total NY and ada'web folded one year later, Borthwick went on to head AOL's product development studio. In 2003, two years after the group's merger with AOL, he became Time Warner's SVP of Alliances and Technology Strategy. He made his comeback to the startup world in 2006 as the CEO of Fotolog, one of the first social photo sharing sites, which he operated until it was acquired in August 2007. Up next was betaworks.
From this short biographical detour, a few important elements stand out that I think have shaped betaworks in more ways than one.
Collaboration: Whether as a co-founder or a curator, Borthwick favored collective endeavors as the best way to surface, in his own words, “the value of the adjacent possible in creation.”
Interdisciplinarity: Borthwick's involvement in technology was always intertwined with other creative fields. For example, WP Studio's äda 'web brought together artists, designers, and developers. After Digital City cut its funding, the property was notably acquired by the Walker Art Center, a contemporary art center.
Big tech, small tech: Having operated at both startups and large corporations, and through multiple acquisitions, Borthwick had a good understanding of innovation cycles and what enables or hinders them. He was always aware of the value of speed and agility in conquering new markets, and the challenges that scale could pose to innovation.
Ecosystems: Whether that's building a guide to the local New York scene or fighting against Microsoft's control over the OS layer, Borthwick valued local and technological ecosystems and was keen to reflect on the bigger legal and cultural issues surrounding specific products or companies.
All four of these principles are still going strong in betaworks’s core activities today. Let’s work through them in turn.
Building off new paradigms: betaworks (Studio)
However hard it may be to pinpoint what betaworks is and does, one thing has been clear since the early days: betaworks is a builders’ company. It originated as a startup studio with the goal of building and growing internet businesses. This is evidenced by the firm’s original SEC form, where it’s referred to as betaworks Studio — not to be confused with betaworks Studios, which I’ll cover later on in this piece.
The reasoning for a startup studio was manyfold. Part of it was a conviction that the next era of the internet needed a new type of company, one agile enough to iterate and diversify without succumbing to corporate inertia. Part of it stemmed from Borthwick’s own knack for building: “Innately, I'm a tinkerer,” he articulated in one interview, “I love taking things apart and trying to solve problems.” The model had also been widely, and successfully, adopted in the creative industries, from Miramax to Pixar.
But there was one last reason, informed by the team’s singular view of technology. This we can decipher from multiple interviews in which Borthwick described the web in strikingly materialistic terms:
If you could pick up the web and look at it from underneath, what you'd see is just these clusters of data. Just data moving around in servers. Mostly the clusterings would be around these things we call corporations. The corporate structure is something we impose upon the world, but the technology isn't bounded by that. If you look at how people use that data, they want it unconstricted and portable.
The internet is like a rainforest: it's split between a fertile undergrowth and very tall trees that reach the canopee. It's important to have that middle layer of businesses that bring value to the whole ecosystem.
The studio model was the best way to tap that data, to have it flow and feed into that middle layer of the internet rainforest: “a loosely coupled network of companies, connected at the data level,” was what the firm was building toward.
That’s for the origin story. As for the studio’s inner workings, here, too, years of media coverage provide some insights.
At first, output is all that matters. “To come up with a product,” one article explains, “the team starts with a running list of about 80 things they feel should just be better, from weather apps to business cards. Things were kept voluntarily informal: Billy Chasen, the founder of Chartbeat and the founder and CEO of Turntable.fm, told me ideation often took place during “brown bag lunches.” Every four to six months, the team will go through the list and pick up to a dozen things that they want to prototype.” “Small, very focused teams” will then take on one of these problems and try to come up with a working beta, keeping design minimal.
These products are not yet companies at this stage, but they could be. The ultimate goal is to create “habit-forming things,” products with proven engagement and stickiness. Betaworks supports teams throughout the development process, helping them refine their product, find their first users, and connect with potential partners.
As the umbrella company, it’s also intent on pooling resources — data being chief among them. This helps “grow things faster, better, cheaper, and give them an advantage that they wouldn't have if they were out there on their own.” Teams often share the same engineering and design talent, and can draw on betaworks’s years of accumulated data and UX templates.
Selection is rigorous, and most products are killed early. “We try to fail fast and small," Borthwick said — with one article specifying that he himself would “[weigh] each startup’s growth (or lack thereof) on a quarterly and yearly basis.” Should traction be lacking, the developers and designers can “just move on to the next betaworks idea.”
For some, the journey goes on. Once a product is ready, the firm can help its founding team raise funding from a network of early-stage investors to take things to the next level. Each project is then incorporated as a separate entity, with equity split between betaworks and the founders.
Overall, the model has been bountiful. Many of betaworks’ internal products went on to be acquired, including Bitly (by Spectrum); Giphy (by Meta); Dots (by Take Two Interactive); Poncho (by Dirty Lemon); and Chartbeat (by Cuadrilla Capital). In some cases, this came after reaching massive traction: in 2016, one year before selling a majority stake, Bitly was creating 400 million links and generating about 12 billion clicks a month. That same year, Giphy passed 100 million daily users and was serving 1 billion, or 2 million hours of viewing time, per day.
Beside building from scratch, betaworks also has a track record of buying and reworking second-hand internet businesses that it thinks is undervalued. One example of this is Digg, a once flamboyant news aggregator that ended up being sold in parts in 2012, with betaworks acquiring the Digg brand, website, and technology for an estimated $500,000. Others include Instapaper, which betaworks acquired from Marco Ament in 2013, and Vibe, “an optionally-anonymous,” geo-fenced messaging app. (Digg was ultimately sold to BuySellAds, while Instapaper went to Pinterest.) But judging solely from public information (or, rather, the lack thereof), this side of the business seems to have become more of a secondary concern.
Though these products may be very different in nature, they all plugged into successive paradigm shifts that were transforming how people experienced and interacted with technology.
Bitly’s URL shortener came into existence as a native solution to Twitter’s original 140-character limit. From there, meteoric online penetration and marketers’ demand for URL analytics made it de facto online infrastructure.
Giphy epitomized “thin media,” a type of media meant to be “transportable and conversational,” born with and for the social messaging era.
Having made the rounds during the Occupy Wall Street protests, Vibe showed the appeal of live location-based content sharing — and of pseudonymity as a potential response to digital surveillance.
Poncho upended the boring but oh-so-sticky weather app category with a singular editorial voice, while also exploiting the potential of the notification layer and chatbots.
In each case, a new consumer habit rose on the back of a particular technology. By operating at the application layer of the stack, betaworks was able to build off multiple platforms and interfaces as they grew in prominence. As we’ll see with Camp, the company’s ongoing series of thematic programs, betaworks’s sense of timeliness has remained one of its more enduring advantages.
At the end of the day, it’s hard to assess exactly how successful the studio strategy has been. Giphy’s purchase by Meta for a reported $400M was an undeniable feat, yet came at a serious discount to its 2016 valuation of $600M. Poncho’s acquisition by Dirty Lemon should be celebrated, but can be considered in part as an acquihire. At the time of the sale to BuySellAds, Digg was certainly in better shape than when betaworks acquired it, but still far removed from its heyday.
By and large, however, these bets have more than paid off — “The most successful stuff we've done at betaworks, financially, has been the stuff that we've played a role in building and developing,” shared Borthwick. Substantial ownership at the time of exit means betaworks can generate solid returns even from seemingly modest price tags, which funds further experimentation. No matter the multiples, the model as a whole has played out as intended, evolving from what was once “a hit-driven start-up factory” into “a data-driven media company capable of building and compounding value over time.”
That’s it for Part I! In Part II next week, we’ll take a closer look at how betaworks has steadily expanded on its original vision to become the multifaceted firm its founders always envisioned.
Thanks for reading. If you’ve enjoyed this essay, please take a minute to share it with others.
As always, I’d love to hear your thoughts! You can find me on Twitter, or just reply to this email.
Many thanks to John Borthwick, Matt Hartman, Billy Chasen, and Andy Weissman for reviewing early drafts of this piece and sharing their insights with me.
Thanks also to Devon, Fawzi, Neer, Pénélope, and Morgan for their thoughtful feedback.