People

Building your own website is cool again, and it's changing the whole internet

Writers, creators and businesses of all kinds are looking to set up their own space online again. To do that, companies are trying to figure out how to deal with two very different internets.

People

Stuck at home, everyone's had to figure out how to both run their business online and be part of the way the internet works now.

Photo: John Schnobrich/Unsplash

Websites are back. After years of being sucked into the vortexes of Facebook and Yelp pages, devoting their time to amassing Twitter followers and Instagram likes, creators and businesses alike have seen the benefits of hanging up their own shingle again. Legions of writers are setting up Substack newsletters. Millions of people and businesses are setting up shop for the first time online using Squarespace or WordPress. Wix reported 7.8 million new users in the last quarter alone, and more than 29% revenue growth.

The driving force behind all that growth? Thanks to a pandemic closing stores, keeping people at home and leaving a lot of people without jobs, the only way to move forward is to figure out the internet. "Everyone describes the pandemic as an accelerant," said Squarespace CEO Anthony Casalena. "For a lot of people that meant accelerating getting online, adapting their business model." He said he's seen restaurants, for example, start Squarespace sites to host their menu and contact information, then start to think about selling a cookbook through their site, or maybe mail-order cocktails.

In part, it's a digital transformation story, hurried along by the shutting down of the real world. But almost everyone I spoke to also seemed to think there was something else going on, more to do with changing opinions about the tech giants that increasingly host the internet inside their walls. "I think we're just seeing a trend towards people wanting to control their online presence," Casalena said. "It's ultimately very dangerous for anybody to only have a Twitter presence, or only have an Instagram presence, or only be on Facebook, because of the obvious lock-in and control those platforms have on you." He sees Squarespace and others as a crucial antidote to that: a space on the internet that users actually control, that's not subject to algorithmic ranking or the tyranny of one-star reviews.

John O'Nolan, the CEO at blogging platform Ghost — which has also seen huge growth thanks to the pandemic — said he sees it as a question of scale. "Five, 10 years ago, people used to say, 'Twitter's like being at a cocktail party,'" he said. "Today the scale of Twitter is like a football stadium. And that's a different dynamic. It has different expectations on behavior, it has different things you can get out of it." It's noisy, he said, and it's also unpredictable. One thing he's heard from new Ghost users is that they just want something that's not going to change, or go away, anytime soon.

This trend applies to practically everyone trying to make money through or on the internet, but the easiest way to understand it is to talk about Substack. Chris Best, Substack's CEO, told me that he co-founded the company in part to change the dynamic between writer and reader. "The theory was that the incentive structures we've created with social media are encouraging all the wrong stuff," he said. "We end up in this place where we delegate so much of our attention to our algorithmic social media feeds whose job it is to keep us maximally addicted and build the most addictive thing possible." All that, and it turned out to be a pretty bad business model for the writers themselves.

Substack doesn't see itself as a newsletter platform, or an email-based product. The company is fundamentally interested in fostering direct relationships between readers and writers, rather than let them be mediated by companies whose interests are not always aligned with either side. Best said that Substack looked into micropayments, so people could pay tiny amounts to read a story, but decided that asking people to make lots of payments, no matter how small, was asking too much. "The friction of deciding to pay for something" is problem enough, he said. They landed on subscriptions as a simple, relatively low-friction way to establish a connection.

Substack landed on email as a delivery mechanism for a couple of reasons. One, because it's a direct, intimate connection point that absolutely everybody already understands and uses. But also, because Best and his team understood that just having a website isn't enough anymore. "Everybody used to read blogs," he said, "because you'd go sit down at your computer, type in myfavoriteblog.com, and that was how you read it." That's not how people use the internet anymore. "Anything that's not a little square on your home screen, you're not going to go with it." Most of those home screen squares, Best pointed out, "are owned by one of those attention-monster things that are trying to break your brain." Everybody's phone has an email square, it's a place for communication and connection rather than constant attention, and so it felt right to Substack.

Would Best rather people go back to bookmarking their favorite blogs, reading them in RSS readers and typing in myfavoriteblog.com? Maybe. Maybe Subtack wouldn't need to exist, Google Reader would be huge and everything would be different. But that's not how the world works, and Best figures he can get at the same one-to-one relationship a different way, without asking people to add another square to their home screen. "I'm trying to make a product people like and use," he said. "You have to both know why you want the world to be better, and deal with the world as it is."

This is a core tension of the internet right now, and a question all these independent publishers, website makers and businesses are asking themselves. What does it look like to both own your own space online, without giving too much control to social platforms and tech giants, while still recognizing that the audience and business you're looking for is mostly going to find you through those social platforms and tech giants? Facebook likes to tout that small businesses essentially depend on Facebook ads for survival. Most small businesses surely wish that weren't the case. But if they simply try to pretend it isn't, they're done for. Striking that balance feels like an increasingly crucial business decision.

Ev Williams has been thinking about that balance for a long time. He built Blogger, helping power a whole generation of independent publishers. Then he built Twitter, helping suck all those Blogger sites into a single feed and service. Now he's CEO at Medium, and he's absolutely convinced it's possible to have the best of both worlds. "Part of the concept of Medium from day one," he said, "was 'how do you have the flexibility and the space to publish more substantive things than make sense on social media, but yet still be part of a network?'"

Networks make discovery easier, helping users bounce between things and people they like and centralizing all their content in a single place. Plus, the web can be a lonely place sometimes, and networking tools make it easier for them to collaborate. "What we're hearing from people is this desire for connection is very strong," said Siobhan O'Connor, Medium's VP of editorial. "Connection, community, support — we're seeing it even among bloggers on Medium." So Medium has spent years improving its commenting platform, added curation tools and trying to make the whole platform feel more connected. At the same time, though, it has rolled out custom subdomains, given writers more control over their profile page, and tried to make each Medium blog feel unique.

Williams and others said that YouTube offers some tips on how to strike that balance. "It is a massive network of its own right," Williams said, "and integrated with the whole internet. That works." (It may be impossible to embed a Medium article, he said, but everything's still just a link. And there's nothing more shareable than a link.) Medium was built with its internal network in mind, while other platforms are looking for ways to build it now. Substack's Bundles feature lets multiple authors work (and sell) together, and the company's testing a product called Substack Reader that would become a centralized place to read all of a user's newsletters. Squarespace recently launched a Member Areas feature, letting sites build their own paywalls and foster that community themselves.

None of these companies wants to build their own walled garden, though. They know that doing so only incentivizes the kind of bad algorithmic behavior that they were built to fight against. So they're also stuck grappling with what it means to help bloggers or businesses build their own homes on the internet, and then wade into the social morass to try and promote themselves.

At the very least, these companies said, they have to make sure pages are easily crawled by search engines and look good in social posts. Casalena said he's interested in going even further: He has this dream of building a data structure and format that can be shared to discovery platforms all at once. "Why are you typing your address in over and over again? Squarespace should be transforming that metadata … I think it's completely valid to think we would have your information synced to the top places where you might be discovered, because discoverability is a massive part of why you have the website in the first place."

In a lot of ways, the current move to independent publishing and people wanting to own their own websites is a move back to the old days of blogging. The mid-aughts blogging era died out in part because social platforms aggregated everyone's audience in only a few places, but also because there wasn't really a business model for being a blogger. "If I was a great blogger that was adding a ton of value," Best said, "really shaping the culture and doing the best possible job of it, it was still pretty hard to have a sustainable business." Now tools like Ghost, Squarespace, Substack and WordPress make the business part of the equation easier. Same, too, for businesses, which can use Shopify plugins and seven lines of Stripe code to become a full-fledged online shop.

The question is the audience. The social networks continue to try and monopolize users' time and attention, which means sending them to Facebook Pages instead of Squarespace sites and to Twitter profiles instead of Substack blogs. Without that audience, independent publishers and website owners don't have a chance. So they're striking out for the middle ground, to find a way for everyone to have a home online that doesn't rely on the whims of a tech giant, while reckoning with the fact that the tech giants effectively run the online world. If life in 2020 feels like living in Facebook's world, they want to build another one. A better one. But not too far away.

Image: Yuanxin

Yuanxin Technology doesn't hide its ambition. In the first line of its prospectus, the company says its mission is to be the "first choice for patients' healthcare and medication needs in China." But the road to winning the crowded China health tech race is a long one for this Tencent- and Sequoia-backed startup, even with a recent valuation of $4 billion, according to Chinese publication Lieyunwang. Here's everything you need to know about Yuanxin Technology's forthcoming IPO on the Hong Kong Stock Exchange.

What does Yuanxin do?

There are many ways startups can crack open the health care market in China, and Yuanxin has focused on one: prescription drugs. According to its prospectus, sales of prescription drugs outside hospitals account for only 23% of the total healthcare market in China, whereas that number is 70.2% in the United States.

Yuanxin started with physical stores. Since 2015, it has opened 217 pharmacies immediately outside Chinese hospitals. "A pharmacy has to be on the main road where a patient exits the hospital. It needs to be highly accessible," Yuanxin founder He Tao told Chinese media in August. Then, patients are encouraged to refill their prescriptions on Yuanxin's online platforms and to follow up with telehealth services instead of returning to a hospital.

From there, Yuanxin has built a large product portfolio that offers online doctor visits, pharmacies and private insurance plans. It also works with enterprise clients, designing office automation and prescription management systems for hospitals and selling digital ads for big pharma.

Yuanxin's Financials

Yuanxin's annual revenues have been steadily growing from $127 million in 2018 to $365 million in 2019 and $561 million in 2020. In each of those three years, over 97% of revenue came from "out-of-hospital comprehensive patient services," which include the company's physical pharmacies and telehealth services. More specifically, approximately 83% of its retail sales derived from prescription drugs.

But the company hasn't made a profit. Yuanxin's annual losses grew from $17 million in 2018 to $26 million in 2019 and $48 million in 2020. The losses are moderate considering the ever-growing revenues, but cast doubt on whether the company can become profitable any time soon. Apart from the cost of drug supplies, the biggest spend is marketing and sales.

What's next for Yuanxin

There are still abundant opportunities in the prescription drug market. In 2020, China's National Medical Products Administration started to explore lifting the ban on selling prescription drugs online. Although it's unclear when the change will take place, it looks like more purely-online platforms will be able to write prescriptions in the future. With its established market presence, Yuanxin is likely one of the players that can benefit greatly from such a policy change.

The enterprise and health insurance businesses of Yuanxin are still fairly small (accounting for less than 3% of annual revenue), but this is where the company sees an opportunity for future growth. Yuanxin is particularly hoping to power its growth with data and artificial intelligence. It boasts a database of 14 million prescriptions accumulated over years, and the company says the data can be used in many ways: designing private insurance plans, training doctors and offering chronic disease management services. The company says it currently employs 509 people on its R&D team, including 437 software engineers and 22 data engineers and scientists.

What Could Go Wrong?

The COVID-19 pandemic has helped sell the story of digital health care, but Yuanxin isn't the only company benefiting from this opportunity. 2020 has seen a slew of Chinese health tech companies rise. They either completed their IPO process before Yuanxin (like JD, Alibaba and Ping An's healthcare subsidiaries) or are close to it (WeDoctor and DXY). In this crowded sector, Yuanxin faces competition from both companies with Big Tech parent companies behind them and startups that have their own specialized advantages.

Like each of its competitors, Yuanxin needs to be careful with how it processes patient data — some of the most sensitive personal data online. Recent Chinese legislation around personal data has made it clear that it will be increasingly difficult to monetize user data. In the prospectus, Yuanxin elaborately explained how it anonymizes data and prevents data from being leaked or hacked, but it also admitted that it cannot foresee what future policies will be introduced.

Who Gets Rich

  • Yuanxin's founder and CEO He Tao and SVP He Weizhuang own 29.82% of the company's shares through a jointly controlled company. (It's unclear whether He Tao and He Weizhuang are related.)
  • Tencent owns 19.55% of the shares.
  • Sequoia owns 16.21% of the shares.
  • Other major investors include Qiming, Starquest Capital and Kunling, which respectively own 7.12%, 6.51% and 5.32% of the shares.

What People Are Saying

  • "The demands of patients, hospitals, insurance companies, pharmacies and pharmaceutical companies are all different. How to meet each individual demand and find a core profit model is the key to Yuanxin Technology's future growth." — Xu Yuchen, insurance industry analyst and member of China Association of Actuaries, in Chinese publication Lanjinger.
  • "The window of opportunity caused by the pandemic, as well as the high valuations of those companies that have gone public, brings hope to other medical services companies…[But] the window of opportunity is closing and the potential of Internet healthcare is yet to be explored with new ideas. Therefore, traditional, asset-heavy healthcare companies need to take this opportunity and go public as soon as possible." —Wang Hang, founder and CEO of online healthcare platform Haodf, in state media China.com.

Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.

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