Backing Bluesky: Building a World Without Caesars

Was it a subtle jab at Zuck on the part of Graber, the CEO of Bluesky and a longtime advocate for decentralized social media? Maybe — but what’s not subtle is the idea that Elon Musk’s X and Zuckerberg’s Threads were bleeding users, and the battle lines had become unmistakable. Bluesky — the decentralized social media platform Graber is building — has become a magnet for the “Twitter quitters” who have abandoned mainstream platforms over frustrations with utility, politics, or principle. Could this be a David vs. Goliath story in the making? Time will tell. But for now, the winds are shifting, and they’re blowing toward Bluesky.

The company first came to my attention in August 2024. During a regular catch-up call with a friend from another VC firm, she mentioned that she was excited about Bluesky: “This is a really cool new social media company that competes with X; it’s had some crazy growth recently — and it’s led by two women. You should take a look!”

A competitor to X and Threads? I was skeptical. Anyone taking a swing at the big incumbents gets applause from me, but also my raised eyebrow. I decided to look into the tech, and here’s what I found.

A Calmer, Customized Social Web

Internet protocols are like the wiring behind a city’s power grid — essential, invisible, and connecting everything. When you send an email, you’re using a system called SMTP (Simple Mail Transfer Protocol) that enables you to send an email from your Gmail to someone using Outlook. Just as a power grid delivers electricity to any home, no matter the appliance brand plugged in, protocols like SMTP deliver data seamlessly across platforms — ensuring everything works, even between different systems.

Bluesky is trying to bring that same openness to social media with its own system: the Authenticated Transfer Protocol (AT Protocol). That’s a fundamental shift from how today’s major social platforms operate. Incumbents like Facebook, TikTok, and Instagram operate like gated communities where you can’t follow someone on TikTok from your Facebook account, and where everything you’ve posted on Instagram stays with Meta if you leave. These platforms are designed to be closed, locking users in.

The AT Protocol flips that model on its head. It’s built for openness and interoperability, making it hard for any one company to monopolize the network. It’s a throwback to the early ideals of the internet — where anyone could build, connect, and share freely.

Bluesky is the proof of concept for that decentralized, open future. It gives users more control over both content moderation and feed customization. Unlike mainstream platforms, Bluesky allows users to tailor their experience by deciding what content they see and how it’s moderated, intended to create a more positive, personalized environment. Many Bluesky users say they appreciate its calmer, more civil atmosphere, comparing it to the early days of X — before widespread negativity took over.

I was intrigued. For someone in my role as a Partner on both the Blockchain Fund and the Women’s Fund at Alumni Ventures, this deal checked every box: decentralized tech and women-led startups. I slacked my Managing Partner, Ray Wu: “Let’s talk to them!”

A week or so later, the intro from my VC friend came through, and we huddled over Zoom with the Bluesky team. Both Jay Graber, Bluesky’s CEO, and Rose Wang, its COO, joined the call.

Jay, a former software engineer in the blockchain space (Zcash), was handpicked in 2021 by Twitter co-founder Jack Dorsey — who originally launched Bluesky — to head the initiative. She’s proven her ability to lead and execute effectively, with Bluesky gaining traction as a serious new contender in the social media space. Rose, a seasoned founder and operator, is known for scaling community-driven products. A Harvard grad and Forbes 30 Under 30 honoree, she previously co-founded Chirps and led customer experience at Forethought AI. Together, this dynamic duo walked us through what they’re building — and the impressive momentum behind it.

One of the most critical questions we VCs ask when evaluating an early-stage startup is this: How quickly is the company expanding? And what is the underlying why — is this growth a result of relentless marketing pushes, or is it being organically pulled by customer demand?

Product–market fit (PMF) indicates the pivotal moment when a startup transitions from trying to convince people to use its product to struggling to keep up with demand. It’s the difference between pushing a boulder uphill and having it start rolling on its own. When PMF clicks into place, we see a fundamental shift: customer acquisition becomes easier, retention improves, and users start evangelizing the product. It’s a sign the startup has moved beyond a hypothesis into validation.

Typically, this shift is reflected in the data — spikes in adoption, surging user engagement, low churn, increased referral activity, and even signs of virality. These metrics are the electric surges that suggest the grid is not only working, but also being tapped at scale. Just as protocols silently power the internet and the grid powers our homes, PMF powers sustainable startup growth — often invisibly, but undeniably.

Strong signals that Bluesky was onto something hit me when Jay walked us through this slide of the deck during our Zoom chat. Both Ray and I burst out: “Wow!”

From Zero to 35 Million: Bluesky’s Breakout Year

While Bluesky may still be the new kid on the block, it’s already hitting all the right quantitative signals. Since launching as an invite-only platform in early 2023, it has grown from just 30,000 users in April 2023 to over 10 million by September 2024 — around the time of our initial conversation with the team. Then came the breakout moment: in the weeks following the U.S. election, user numbers soared past 24.7 million accounts by early December 2024. As of this writing, Bluesky has surpassed 35 million accounts.

During our September conversation, the numbers were already hinting at virality as monthly active users (MAU) crossed the 10 million mark, and daily active users (DAU) topped ~5M — a remarkable 10x surge in active engagement within a short window.

Rose highlighted a key inflection point in Bluesky’s user growth: when Brazil’s high court temporarily banned X, over 2 million new users flooded into Bluesky in a single month. The momentum was further amplified when President Lula publicly named Bluesky as his top social app, catapulting it into the national spotlight.

In turn, I shared with Jay and Rose what sets AV apart. We bring not just capital but a powerful network that can drive tangible outcomes. Our community includes over 800,000 highly engaged members — a good portion from top-tier universities and Ivy League institutions — alongside 10,000+ accredited investors and a portfolio of more than 1,500 companies.

This ecosystem isn’t just a vanity metric. It’s a living, active network that consistently delivers value across customer adoption, talent acquisition, strategic partnerships, and growth acceleration.

I closed with: “We see our community as a growth engine that can help accelerate Bluesky’s trajectory. And our CEO Services team is here to help you plug into exactly the right node — whether that’s early users, potential hires, or distribution partners.” Jay and Rose nodded in agreement.

After our first meeting with Bluesky, we dug in deeper. We looked at the opportunity size. We found that the total addressable market (TAM) for global social media is projected to reach over $1 trillion by 2025 and $3.3 trillion by 2029. Huge stakes.

We also compared Bluesky to competitors.

While incumbents like X and Threads still dominate, they represent the old guard of the centralized web — where control over content, algorithms, and user data lies firmly in the hands of a single company. In that model, users are essentially renters, not owners, of their digital identities and networks.

In contrast, Bluesky is pioneering a fundamentally different path. With its decentralized architecture and open protocol, Bluesky isn’t just building another social network. It’s laying a new foundation for social interaction online where users have more control, developers aren’t beholden to gatekeepers, and data sovereignty is a feature, not a bug.

For instance, instead of being fed content by a black box algorithm optimized for platform engagement, Bluesky users can select from a marketplace of moderation tools and feeds — opting in or out of specific content streams. Want to filter out political noise and prioritize cat memes? That’s not only possible, it’s built into the model.

Because the platform is open and decentralized, anyone can build on top of the AT Protocol — apps, tools, moderation layers, new feeds, and more. This fosters a permissionless innovation environment, reminiscent of the early open web that many still pine for. Centralized platforms, by contrast, tend to be extractive: they limit API access via restrictions or behind a paywall, cutting out community-driven innovation.

Bluesky also introduces a major shift in ownership. With decentralized Identifiers (DIDs), users can actually own their online identity — and take their social graphs (followers, posts, relationships) with them across any client built on the AT Protocol. Leave the Bluesky app, keep your community. On X or Threads, leaving means starting over.

When we analyzed the differentiations, it was clear. Bluesky is building a competitive moat that sets it apart — another key consideration in deal evaluation.

So far in the diligence process, so very good.

From Signal to Commitment

A few days following our Zoom call, Rose dropped by our Menlo Park office. We shared our premonition of Bluesky’s future as not just an alternative to X or Threads, but as decentralized foundation on which entirely new applications and ecosystems could be built.

Later, Ray slacked me: “I think we passed the vibe test.”

Others agreed with our take on the company. Kinjal Shah, General Partner at Blockchain Capital — the lead investor in Bluesky’s Series A — put it this way: “We see Bluesky building a social media ecosystem that empowers the people who use it.”

Blockchain Capital is one of the earliest and most respected venture firms in the Web3 space, with a track record of backing foundational companies in decentralized technology — including Coinbase, Kraken and OpenSea. Given their deep domain expertise, network, and history of helping build breakout Web3 platforms, they struck us a highly strategic lead investor.

At Alumni Ventures, our co-investor model is designed precisely for this type of opportunity. We invest alongside established lead VCs and a strong cohort of co-investors. This plugs us into high-quality deal flow. As a core part of our due diligence process, we always make it a priority to connect directly with the lead investor. Hearing their perspective helps us triangulate conviction, gain insights from their underwriting process, and round out our own view of the opportunity.

Following our conversation with Kinjal, we completed our process and closed our investment into Bluesky’s Series A round in October 2024.

A Shift in the Wind

As we approached the November U.S. election, public sentiment around traditional social media platforms began to shift dramatically. Headlines painted a picture of growing user dissatisfaction toward platforms like X and Threads, driven by concerns such as algorithmic manipulation, content moderation bias, concern for data privacy, and the centralization of control.

At X, Elon Musk’s increasingly polarizing decisions — including erratic content policy changes, high-profile account reinstatements, and a perceived erosion of platform neutrality — sparked widespread frustration. While positioned as a calmer alternative, Threads was also being criticized for its opaque algorithms and deep integration into Meta’s centralized data stack.

Following the election, these tensions culminated in a mass exodus of users from both platforms, with people searching for a more transparent, user-centric alternative. And they found it on Bluesky.

Today, the current user number is 35.4M and continues to grow (you can see the live tracking here).

When I asked Jay if she has a call to action to the AV community, she responded:

We are excited to have the support of the Alumni Ventures community. We worked with Sophia from the AV team to create a starter pack* to help you onboard to Bluesky and find each other immediately. Your support is bringing us one step closer to an open social web that distributes control and power from centralized platforms to users and their communities.”

She’s right. We’re at a real inflection point where the old, closed systems are starting to crack open and something more transparent and human is taking root. Users are moving toward a future defined by choice, ownership, and community governance.

It’s not just a platform shift. It’s a cultural one.

And if we get it right, we won’t just be building a new network. We’ll be building a world without Caesars.

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