(Today’s post is a bit different, as it is more of a long-form blog with an idea tacked to the end. I hope you enjoy: it’s a new form factor that I am experimenting with.)
On March 27, 2021, three legends of venture capital met on Clubhouse to discuss the Creator Economy: Sahil Lavingia, Naval Ravikant, and Ben Thompson. Collectively, the three of them have invested in companies that have created nearly $1 trillion dollars of value (including Facebook, Uber, Google, and more). During this two hour call, these three butted heads about the future of online creation and the benefits (if any) of the "Creator Economy".
There were quite a few "wows" and "wonders" in this talk. I'll mention one for each. But, first, let's start by discussing what the Creator Economy is. I'll end by proposing a start-up idea for the future of the creator economy: community-as-a-service.
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Create Once, Sell a Thousand Times.
Currently, one of the leading "authorities" on the Creator Economy is Li Jin, a Harvard grad and Wharton MBA dropout who in July 2020 launched Atelier Ventures, a venture fund to invest in the passion economy. With investments in companies like Patreon, Substack, Dumpling, and more. As she reflected right after she launched her fund in a December 2020 Harvard Business Review Article;
"On most content platforms today, the ethos of the American Dream is alive and well — a recent study of kids ages eight to 12 found that nearly 30% aspire to become YouTubers. With countless examples of normal people achieving massive success on the platform, this should come as no surprise. Just last year, YouTube creator David Dobrik’s monthly AdSense checks from the platform were $275,000 for an average of 60 million views. On Substack, the top 10 creators are collectively bringing in more than $7 million annually. Charli D’Amelio — who recently became the first TikTok creator to surpass 100 million followers — is estimated to be worth $4 million at age 16. She started on TikTok just a year and a half ago.
But while some have been propelled to massive stardom, examples of a wide swath of the population achieving financial security from these platforms are few and far between. The current creator landscape more closely resembles an economy in which wealth is concentrated at the top. On Patreon, only 2% of creators made the federal minimum wage of $1,160 per month in 2017. On Spotify, artists need 3.5 million streams per year to achieve the annual earnings for a full-time minimum-wage worker of $15,080, a fact that drives most musicians to supplement their earnings with touring and merchandise. In contrast, in America in 2016, 52% of adults lived in middle income households, with incomes ranging from $48,500 to $145,500." - Li Jin, December 2020
While many argue that the creator economy is the future (and use the legendary blog example of 1,000 True Fans from Kevin Kelly, a former Wired magazine editor to prove the point), is it really feasible to imagine that content creators can find 1,000 passionate fans each willing to pay them $100 a month to earn $100,000 per year? Is it even possible to make a living wage off creativity?
Perhaps our wow and wonder from Sahil, Naval, and Ben's Clubhouse discussion will shed some light...
Wow.
"As we were saying earlier you can escape competition through authenticity. If you are authentic there's no competition for you. We really are in a golden age of creativity where if you are a good enough creator and you focus on your creations other people will spread it for you." - 1:08:47 of the Clubhouse Room
I've been thinking quite a bit about the natural "net promoter score" that every piece of content has. The argument that surfaces among these three is that the natural NPS (or propensity of being shared) that a piece of content has is dependent on creating unique content that escapes competition through its uniqueness. If content is unique, then people will share it and creators will develop a moat.
I've seen this in my own life. A few days ago, I received a text from an old college friend. "Michael!" she exclaimed, "My co-worker shared one of your blog posts from Billion Dollar Startup Ideas on Slack!" I beamed as I processed her message: it was a post I had written almost 2 years earlier, and yet it was still getting traction. I had never even met or talked to the person who shared it. As I sat, groggily, in bed I reflected on how some of the best creators are those who create once and find an infinite number of ways to redistribute, remix, and republish their existing work. Their authenticity is timeless and, as such, can be re-cut in unique methods.
However, even then, one must have a lucky break in order to redistribute effectively and create enough traction, attention, or wages to make a significant financial impact. How does one even attract the number of fans required to create a fan base willing to consume re-packaged content? How can one create inspiring content to reduce the barrier to luck and increase virality (meaning, the propensity to share) of an idea?
Wonder.
"400 followers is like an insane amount of people. Depending on how engaged they are. Like if you spoke at an event with 400 people, that's a lot. That's a big event. That's something that you would get in a plane and fly to another city and you know sleep in a hotel for. I think people underestimate that it's so easy to get caught up in these millions, but 400 people subscribing to your newsletter for 10 bucks a month is a living for almost anybody in the world." - 1:12:10 of the Clubhouse Room.
The Internet has a numbing effect. Having 2,000 friends on Facebook or 600 followers on Instagram doesn't seem like much: the test just a few dozen pixels arranged on a screen. On average, we don't consciously conceptualize how posting to our "digital audience" reflects the very real counter-positive of speaking to an audience of real people.
Personally, I fall into this trap. In posting every day on my blog and on TikTok, I reach over 2,500 people per day to share startup ideas with subscribers globally. That's 912,500 unique impressions per year. 912,500! That's right around the population of Delaware. Every year, I'm speaking to an audience the size of Delaware. Crazy right? What's crazier is that everyday this audience is growing and compounding.
I call it "The dissonance of digital audiences" (DoDA). My thought is that it's true of many content creators regardless of how many followers they have. What if we shattered this dissonance? What would happen if the human-scale was more apparent? How would the quality and content of creative posts change? Would people admire or despise the disruption of DoDA? I wonder...
An Idea for the future: community-as-a-service
Towards the end of this Clubhouse talk, Ben (the founder and blogger behind Stratechery, a newsletter about the business, strategy, and impact of technology) had an anti-claim about his approach to building community. While most everyone argues that community is a necessary component of content creation, Ben is unconvinced.
"I'm not sure about the community. By not sure, I mean I don't know what to do. I know there's definitely a Stratechery community, [but] I'm not quite sure how that materializes and how I personally leverage it. But I think that part of that is more of a personal choice. This is where you were talking before: people have different perspectives. I just personally don't want to put in the work to manage the community." 1:13:32 of the Clubhouse Room.
Ben hits the nail on the head of one of the most commonly asked questions for any creator (whether they are a novice creator, middle-tier creator, or experienced creator). How does one actually build a community? I believe there is an opportunity in a business to solve this problem.
In theory this business would actually solve many of the problems I mentioned above: it would improve a piece of content's net promoter score, it would take the awesome (though digitally numbing through DoDA) number of people who follow content and provide them a forum to connect, while also creating a way to monetize to the ever-desired '1,000-true-fans.'
In his short comment, however, Ben only analyzes one side of the equation: that of the creator. If you were wanna-be creator (or an avid consumer), how can you monetize or become more actively involved with the content you consume? My hunch is that in the future we will begin to see platforms that provide ways to build communities-as-a-service. They will create frameworks that are scalable and re-saleable to take existing creators and give them an authentic way to bond in a community with content creators. Organized newsletter tours? Bidding for private dinners? Managed community spaces? In isolation, these are a headache to run, but when outsourced properly it could make for amazing content and ways of learning. Moreover, it could make for an amazing, potentially billion-dollar business.
Contributed by: Michael Bervell (Billion Dollar Startup Ideas)