Code Reds

Today’s conversation is with Defector COO Jasper Wang on the heels of Defector’s recent annual report, which showed the worker cooperative’s business as both healthy and stagnant. Jasper and I discuss why slow growth is a feature, not a bug, of the model. Plus: Code Reds. 

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Defector was born in opposition. It was formed as a worker collective after its journalists left Deadspin over management interference in editorial decisions. In the five years since, it is both a success case and a cautionary tale of the realities of post-scale media.

On the plus side: Defector has 40,000 paying subscribers, all staff has remained with the publication and it now has 27 employee-owners, multiple revenue streams in addition to subscriptions, and a loyal readership with strong retention. On the realities side: subscription growth has stalled, advertising hasn’t grown much, and its stability can sometimes seem like stagnation.

“We just might be a company that is 40,000 paid subscribers,” Defector COO Jasper Wang told me on The Rebooting Show. “ I don’t really think there’s a version of this company run the way we want to run it that is shooting for 100,000 subscribers. This is sort of what it is in the near term.”

One of the things that struck me in our conversation is how comfortable Defector is with these tradeoffs. A collective is attractive in theory, although when Jasper discusses “restorative justice” processes and company-wide votes on policies, I wonder how much that slows them down. 

Listen to the full conversation, where we cover the tradeoffs of collective ownership, why Defector has likely reached its subscriber ceiling, and how shared services could support the next wave of independent media.

Sam Altman declared a Code Red moment this week as the “rough vibes” gathered steam. Altman might want to put a Code Red on Dan, the OpenAI employee who convinced Sergey Brin at a party to rollerblade back to the Googleplex. 

Code Reds are handy narrative devices. They communicate urgency, action and drama. OpenAI has been all about the drama. Narratives matter greatly in AI — Anthropic is even hiring a “GTM Narratives Lead” — as the numbers do not (yet?) make sense.

The panic for OpenAI is the AI narrative is shifting to look like a sequel to the Netscape-Internet Explorer battle, when Netscape played the role of plucky innovator only to be swamped by Microsoft’s entrenched position. The analogy is different now, because the early Internet was just emerging from its toddler phase when Marc Andreessen still had hair and outré tech bro behavior was showing your feet on a magazine cover. Altman’s Code Red is designed to allay investor fears that the massive compute spending he has planned can be squared with the massive amounts of money the company is losing.

Tech has positioned itself upstream of much of the economy and society. The decision of many tech leaders to cast their lots with the Trump administration has solidified their position of dominance. But old habits and stories die hard. In their telling, the tech leaders are perpetually the underdog. Palantir stands on the side of the forgotten working man, apparently. 

It’s a narrative device they cannot abandon, even David Sacks, who put on a Grade A sissy fit this week over a fairly anodyne New York Times investigation into the in-built conflicts of interests of having Sacks craft AI and crypto policy. 

The Times story was mostly a dud, raising obvious questions and finding a funny anecdote of an All-In seller trying to hawk a White House sponsorship for $1 million. Give this seller credit for being aggressive. Sacks rallied the troops, possibly in one of those Andreessen group chats, and tech leaders lined up to pay fealty to the great man with X posts of support.

The Times piece was hardly a “hit piece.” Sacks occupies an important place in government. The journalism profession is going through a rough time – young people hating it isn’t great – but its government accountability role is intact at places like the Times. This is not character assassination; it’s the basic blocking and tackling of journalism. The real beef is typical of subjects: the headline editors put on a story that’s hard to sum up. “Silicon Valley’s Man in the White House is Benefiting Himself and His Friends.” This is entirely defensible, although also obvious; there’s no way for him and his friends not to benefit if he succeeds. The real question is whether this “no conflict, no interest” model of governing is preferable to having, say, a far less conflicted policy wonk in the role. These stories can help spur that conversation.

The hysterical reaction – I still don’t understand what facts are wrong – is yet another sign of how Silicon Valley loves to declare East Coast media dead but hates when it’s mean. If you’re going to be a Man in the Arena, learn to take scrutiny and be thankful it was the NYT and not Candace Owens. As always, be careful what you wish for. And besides Sacks and the tech industry have their own media ecosystem they’ve created to avoid East Coast meanies. Sacks has one of the most popular podcasts and a reliable megaphone in X, owned by one of his friends. 

The Code Red moment arrived for journalism long ago. First, there are the business realities. Webpage publishers are in a bind. Google is moving to integrate AI Overviews into AI Mode. Google’s recovery in AI sets up for it to consolidate its disparate AI tools into one – it is shifting AI Overviews over to AI Mode. 

But the bigger worry might be irrelevance. Olivia Nuzzi’s book tour started fun but has gone off the rails. She had a profoundly weird interview with The Bulwark’s Tim Miller. She is likely losing her job before it really started at Vanity Fair, which is mired in a kind of permanent Code Red. 

The Nuzzi scandal is a media story. She is a Media Person. Most of the fun is gone from media, but American journalists need to learn to enjoy a proper scandal. It’s mostly played out mostly in New Media. Nuzzi did a Q&A with FeedMe subscribers on Substack, where she described writing on her phone as “an extension of the cloud of my consciousness.” Perhaps, although judging from the reviews and what I’ve seen of the prose, she might want to reconsider.

Lizza’s using his dirt on Nuzzi to hustle subscriptions to his insider DC Substack. He’s threatening more installments. His rollout is very modern, reminiscent of how Pablo Torre dribbles out information from his investigations. Serialized narratives are one reliable way to maintain attention in the Information Space. This is one reason why the Epstein story goes on and on and on. This week, we got photos of the island – and of a very odd dentist chair.

Even on a serious topic like affordability, the center of the conversation shifted to a post on Substack by investor Michael Green. Sure, he got the math wrong on his calculation that the new poverty level is $140,000, but it spawned an important conversation because it rang true

Some publishers have reacted to this by dabbling with Substack, setting up shop on the platform in hopes of benefiting from the network effects, even if those recommendations email subscriptions are low quality, and perhaps chasing the action. This is the fever dream of audience development strategists, not a Code Red.

These moves hit on a bigger issue: These publishers haven’t yet arrived on a coherent strategy. They’re still throwing lots of stuff against the wall to see what sticks. The good news is that the AI chatbots rely on institutional media, and niche media, for their answers. And these publishers still confer credibility even if it’s diminished. 

Karp is a reliable critic of the media, since Silicon Valley’s brash heterodox thinkers are all weirdly uniform on many issues, yet he still brings his manic act to the NYT’s Dealbook Summit. Same for Coinbase CEO Brian Armstrong, who was promoting his Dealbook appearance at the Times Center a mere two days after calling the NYT a "propaganda machine.” 

Karp needs to keep up a narrative for investors that he’s a brash outsider rather than an updated version of the same government contractors who have gotten fat off federal spending that Silicon Valley panics over, at least when it isn’t directed at tech companies.

Maybe this is the actual Code Red: the people with the most leverage in society behaving as if they have none. 

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