Creators are the New Founders
The next generation of the creator economy isn’t in brand deals. It’s in owning the whole brand.
It's been just over one year since I left my full-time job at Outside. As much as I loved my colleagues, a variety of trends — the decentralization of media power, the growth of the creator economy, chaos in search, evolving user behavior — were all pointing in the same direction. It was time to step outside the comfort of a big publishing house and work on these challenges from a different vantage point.
It’s scary leaving the security of a paycheck, but as our friend Chase Jarvis says, is playing it safe ever actually safe? Plenty of friends I’ve talked to this year have found out just how fragile the “safe” path can be. No one’s insulated anymore. We’re all trying to navigate this epochal shift together.
A year in, I’m more convinced than ever that we’re closer to the beginning of this revolution than the end. The emerging media landscape is exhilarating, empowering — and honestly, pretty damn confusing. I’m not sure where year two leads for me, but I never wake up wishing I’d made a different call.
And a little self-promotion, If you’re looking for a partner to help your company think through how you create, distribute, measure and scale content strategy, call me.
Advertising Still Sucks
All of this change has me thinking about something fundamental: Traditional media was built on a mindset of aggregating big audiences, controlling the means of distribution, and then selling that access to brands. The first generation of creator-brand relationships basically largely replicated that model.
But over time, social platforms have broken up distribution monopolies, broad monocultures have splintered into passion communities and individuals who once might have worked at media companies have built their personal brands. Now hints of a new media economy to reflect this are sprouting everywhere.
Two recent stories brought this into focus.
The first was Carla Lalli’s article, The True Costs of Being on YouTube. Go read it. The article provides a deep, and discouraging, breakdown of the economics of YouTube advertising. Long story short, in a little over 3 years, she made 177 cooking videos, built an audience of over 230,000 subscribers with 18 million video views, netted $187,997, and was losing about $10,000 a month on content production.
The article spurred a hearty discussion on Second Nature’s Slack community (which you should join if you haven’t already), with debate about how she could have cut production costs and changed her goals. The general take is 1) She could have run this far leaner, and maybe because she was coming out of Bon Appétit, she was producing higher-cost content than she actually needed; 2) YouTube ads are rarely an end in themselves; and 3) She needed to better position YouTube within her larger strategy. Still, the story reveals that an ad-based model is just as grim for creators as media brands.
An Alternative Vision
Four days later, Jack Raines published this article about Slow Venture’s new $60M creator fund.
Creator funds have been around for a while, but many of them are offered by the social channels themselves, essentially subsidizing content creation to juice production volume.
But Slow Ventures is doing something different. This is how Raines frames it:
We’ll invest between $1m - $3m into the creator’s holding company, which encompasses their businesses, ventures, media platforms, etc.
In exchange, we receive an equity stake (usually ~10%) and the right to follow on with capital into ventures that decide to pursue additional financing.
We invest holistically. We don’t invest in the creator’s specific projects or companies. We want to be maximally aligned with the creator in all that they do for their community.
What they’re not doing is encouraging creators to produce content to grow audiences or connecting creators with brands. Instead, this paradigm frames a creator as the public face of a holding company, which could spin up any variety of original products based on their community’s interests.
Slow Ventures is betting that the value of creators lies in their ability to invert the business model — to build an audience first then figure out what opportunities lie on the other side. It’s the opposite of most businesses, which create a business plan, launch some minimal viable product, then build a go-to-market strategy that grows a customer base for their product.
Slow Ventures is betting that the value of creators lies in their ability to invert the business model — to build an audience first then figure out what opportunities lie on the other side.
We’ve already experienced some of this pivot to creators as business incubators. On the biggest channels, it could range from Feastables to Skims, from Chamberlain coffee to Jocko Fuel to creative agencies like Gymnasium.
This is hardly foreign to the outdoor world, where athletes have launched branded pro models, owned streetwear lines and a variety of start-ups.
But Slow Ventures apparently isn’t looking to monetize just the biggest names. They’re surely hoping to discover creators at an earlier stage, then help them grow and incubate business spin-offs in the process.
Aaron Lutze, an outdoor creator and entrepreneur himself, summed it up well, “Slow Ventures is there to help the creators become successful businesspeople on their own, where I think that the athlete version from a brand perspective has always been related to extraction of value. So I think you have value extraction versus value creation.”
The transition from micro-media to micro-entrepreneur reminds me of Kevin Kelly’s 1,000 true fans theory. Build a community that will engage with whatever you have to offer, and you have a business.
Today over 90% of creators get their biggest share of money from brand deals, but moves like this may open up significant new avenues.
“A lot of creators don't give their audience enough surface area to monetize,” Lutze says. “You've got people who can pay for memberships or subscriptions to your Substack or your YouTube channel. You could potentially spin up merch, but there's not a lot of readily available first-tier things for you to actually get that $100 from each person. I think that creators at large have not solved for this.”
We are seeing traditional media brands try this as well, pivoting to events, affiliate marketing, anything to reduce dependence on advertising. This is the same phenomenon, writ small. And because of the depth of community connection, I think it has a real chance to be more successful. As Raines said, “(Trust x reach) is a potent formula for customer acquisition.”
There will be a clear limit to how far this can go. Creators will oversell and lose trust, and most creators won’t be good as entrepreneurs.
But if I’m looking for the next great outdoor startup, I’m probably starting on YouTube.
Around the Interwebs
If you are a Spotify subscriber, Chris Hayes’s new book, “The Siren’s Call” is available as a free audiobook. I’ll need several more dog walks before I’m finished, but add it to your queue. It’s a really interesting examination of how attention works, how it’s being controlled and monetized by the platforms I discuss here constantly and more.