Why Elon Musk can't buy Bluesky

Twitter was once the place to get realtime news and interact with experts, celebrities, and politicians. It was also a place where anyone could make their voices heard, including minority groups. After Elon Musk took over Twitter in 2022, turned it into X, allowed toxic trolls free reign on the platform, and throttled posts, many users have been searching for an alternative. In the wake of Donald Trump’s 2024 election win Bluesky has emerged as Twitter’s heir apparent, surging beyond 23 million users and counting, and attracting journalists and readers alike. Many users are understandably worried that history could repeat itself.

Blue Sky team, you're building something special and great here. Keep at it. Stick with it. And please don't sell it to an evil billionaire who's going to come around waving a lot of money to gobble it up. Sincerely, a Happy Blue Sky user.

— Wajahat Ali (@wajali.bsky.social) November 27, 2024 at 12:45 AM

Fortunately for all of us, that scenario isn’t possible. Bluesky started out in 2019 an an experimental project within Twitter, led by then-CEO and co-founder Jack Dorsey to explore the possibility of decentralizing Twitter using an open standard called the AT protocol. The project cut ties with Twitter after Musk’s acquisition, leaving some users asking a very legitimate question, “Who’s paying for all of this?”

Bluesky is owned by Bluesky Social, PBC, which is owned by CEO Jay Graber, members of the Bluesky team, and investors. Like any tech startup, Bluesky Social is a private corporation funded by venture capital. To date, Bluesky Social has received $23 million in venture capital. This includes $8 million in seed funding and $15 million in series A funding. However, two things make Bluesky Social different than any other social media startup: Its technology is open sourced and the company is a Public Benefit Corporation (PBC).

Bluesky’s open source technology

From the beginning, Bluesky has been designed as a decentralized platform so that no single company controls the platform. Their source code is published under open source licenses and hosted on GitHub. Anyone can copy the code, contribute to the code, or even use it to start their own social media platforms. Bluesky users who have verified their accounts using a domain name can export their data and move to a Private Data Server (PDS), without losing any posts or followers. Not everything is decentralized yet (namely, direct messages), but they are working on it. You can read more about Bluesky’s vision for the future of the platform and how it differs from other efforts like Mastodon in their academic paper.

Bluesky’s corporate structure

Blue Sky Social, PBC, is based in Seattle, Washington (UBI Number 605608574), but is incorporated in the state of Delaware (Filing Number 6282898) as a Public Benefit Corporation (PBC). Under Title 8, Chapter One, Subchapter 15 of Delaware Law, a PBC is a for-profit corporation that is intended to produce a public benefit. The stated purpose of Bluesky Social is “Developing and driving the adoption of technologies for open and decentralized public conversations.” Twitter was a standard public corporation. Its board was only required to look out for the financial interests of stockholders, so when Elon Musk Musk offered to acquire Twitter for $44 billion in cash the board members voted unanimously to approve the deal. Under Delaware Law, a PBC and its Board of Directors are required to balance the financial interests of the stockholders, the best interests of those materially affected by the corporation’s conduct [i.e., the users of Bluesky], and the specific public benefit or public benefits identified in its certificate of incorporation. So, Bluesky Social cannot legally by acquired by anyone who would shut it down, merge it with a closed platform such as X or Threads, or fundamentally restrict the openness of the Bluesky platform.

Bluesky’s board of Directors

According to Bluesky’s website, their Board of Directors currently consists of Bluesky CEO Jay Graber, Jeremie Miller, Mike Masnick, and Kinjal Shah.

Jay Graber

Lantian “Jay” Graber was brought in by Jack Dorsey so serve as Bluesky’s CEO in August 2021. She was born in 1991 and started her career as a software engineer in 2015. Her mother named her “Lantian”, meaning “blue sky” in Mandarin Chinese, as a wish for her to have “boundless freedom”. Bluesky was named before she became involved with the project, so the similarity in names is just a fun coincidence.

Jeremie Miller

Jeremie Miller in the inventor of the open source XMPP instant messaging (IM) protocol, which was introduced in 1999, so he is no stranger to open source communication platforms.

Mike Masnick

Mike Masnick joined the Bluesky board in August 2024. He is the founder and editor of the Techdirt blog and the author of the Protocols, not Platforms paper that first inspired the Bluesky initiative.

Kinjal Shah

Kinjal Shah, partner at Blockchain capital joined the Bluesky board in October 2024 as a part of Blockchain Capital’s lead Series A investment.

Bluesky’s revenue plans

In a July 2023 blog post that provided an overview of Bluesky’s business plan, the company explained that advertizing would not be a good fit for Bluesky.

Traditionally, social media companies have supported business costs through advertising. While advertising can subsidize services to make them free to the end user, it comes with negative long-term consequences like incentivizing platforms to lock their users in. In the business of advertising, where social media companies exchange user data to serve ads to specific audiences, users become the product.

Bluesky’s business model must be fundamentally different — we are a public social network and our code is all open source, so we have no “moat” when it comes to data. We set out to build a protocol where users can own their data and always have the freedom to leave, and this approach means that advertising couldn’t be our dominant business model. So, we’ve been exploring other avenues of monetization.

We believe that there must be better strategies to sustain social networks that don’t require selling user data for ads.

Jar Garber went further by stating that Bluesky will not “enshittify the network with ads”. Instead, Bluesky will soon offer subscriptions.

To grow sustainably, we’re working on a subscription model for premium features like higher-quality video uploads and profile customizations (think colors and avatar frames), but Bluesky will always be free to use. We believe information and conversation should stay accessible to everyone.

— Rose 🌹 (@rose.bsky.team) October 24, 2024 at 12:44 PM

Bluesky’s notable early investors

Neo

Neo in a venture capital firm led by Ali Partovi and Suzanne Xie that specializes in seed funding for technology startups. They were the lead investor during the seed round of funding for Bluesky.

Blockchain Capital

Blockchain Capital is a venture capital firm with a focus in blockchain-based technologies. They were the lead investor in Bluesky’s latest Series A funding.

Bluesky made a point to mention that Bluesky does not and will not use blockchain, cryptocurrencies, or NFTs.

This does not change the fact that the Bluesky app and the AT Protocol do not use blockchains or cryptocurrency, and we will not hyperfinancialize the social experience (through tokens, crypto trading, NFTs, etc.).

Joe Beda

Joe Beda is the co-creator of the Kubernetes container orchestration platform. He invested in the seed and Series A rounds of Bluesky funding.

Bob Young

Bob Young is one of founders of Red Hat. He invested in the seed round of Bluesky funding.

Amjad Masad

Amjad Masad is the founder of the Resplit coding environment. He invested in the seed round of Bluesky funding.

Amir Shevat

Amir Shevat is a founder of Darkmode Ventures and former head of Twitter’s Developer Platform. He invested in the seed and Series A rounds of Bluesky funding.

Heather Meeker

Heather Meeker in an investor specializing in the commercialization of open source software. She invested in the seed round of Bluesky funding.

Mana Industries

Mana industries invests in paramount technologies to improve the quality of human life and progress. They invested in the seed round of Bluesky funding.

Automattic

Automattic is the company that runs WordPress.com and Tumblr, among other platforms. They invested in the seed round of Bluesky funding.

Protocol Labs

Protocol Labs is an innovation network that connects over 600 tech startups, service providers, investment funds, accelerators, foundations, and other organizations developing breakthrough technologies and products in the frontiers of computing: web3, AI, AR, VR, BCI, hardware, and more. They invested in the seed round of Bluesky funding.

Katelyn Donnelly

Katelyn Donnelly is the founder and Managing Director of Avalanche VC. She invested in the seed round of Bluesky funding.

Ali Evans

Ali Evans is the CEO of Metamora Growth Partners He invested in the seed round of Bluesky funding.

Stav Erez

Stav Erez is an Israeli investor with a focus in technology sectors. She invested in the seed round of Bluesky funding.

Kris Nóva

Kris Nóva was an author, engineer, computer scientist, and alpinist best known for her work on Linux, Kubernetes, and Aurae. She invested in the seed round of Bluesky funding before she passed away on Wednesday, August, 16, 2023, while climbing.

Brad Fitzpatrick

Brad Fitzpatrick is an American programmer. He is best known as the creator of LiveJournal and is the author of a variety of free software projects such as memcached, PubSubHubbub, OpenID, and Perkeep. He invested in the seed round of Bluesky funding.

Abdul Ly

Abdul Ly is a Partner at Initialized Capital. He invested in the seed round of Bluesky funding.

Alumni Ventures

Alumni Ventures is a venture capital firm for individual investors They invested in the Series A round of Bluesky funding.

True Ventures

True Ventures is a venture capital firm focused on various technology sectors. They invested in the Series A round of Bluesky funding.

SevenX Ventures

SevenX Ventures is a venture capital firm with a focus on crypto. They invested in the Series A round of Bluesky funding.