The Creator MBA
Creators are businesses. Over time, they will start to act like it.
There’s a clear line that separates users and businesses on social media: users socialize, businesses sell. In other words, users spend time on these platforms to have conversations and connect. Businesses use these platforms to hawk their wares.
But creators are increasingly blurring that line. Though they retain some of the trappings of regular users—posting under their own names and sharing frequent updates on their day-to-day lives—they are not run-of-the-mill users. Creators are there to sell a product—themselves.
So what are best practices in the business of creators? There are many places to draw inspiration from, but we believe that creators can—and should—look to the startup world for guidance to create great products, find bigger audiences, and build financially sustainable businesses.
Typically, the object of a startup is to make something that people want. Founders do this by testing different versions of their value proposition, as well as stripped down versions of their product to figure out what resonates most with prospective customers. Tight feedback loops help founders move quickly in order to find product-market fit, a tried-and-true formula that creators can learn a lot from.
Enter: Creator-market fit. Not every creator is a fit for TikTok—but every creator is a fit for some platform. Rather than becoming attached to one specific persona, platform, or content-type, creators should cycle through different experiments to find a content and business model combination that resonates with their specific audience.
Creator-market fit is the union between content creation, audience, and business model.
- Content: "Do I enjoy making this?"
- Audience: "Do people want this?"
- Business model: "Can I sustain myself?"
Creator economy companies: which part(s) of this are you indispensable for?
We are working towards creator-market fit ourselves with Means of Creation. It started out as a live talk show, which then moved to Clubhouse, and then we decided to publish pre-recorded podcasts that allowed for a bit more nuance and depth. The Means of Creation newsletter also went through a similar molding process—it started out as a news roundup and then moved towards more in-depth essays (the current format).
Aspiring creators should iterate in a similar way—whether that’s objective data or subjective intuition. Yes, successful creators proactively dissect KPIs such as retention, engagement, and so on. But while numbers are important, intuition is important too—the best creators are like artists with an intuitive sense of what people might enjoy. The data just helps them make well-informed artistic decisions.
OpEx and CapEx for Creators
When creators spend money on renting a luxurious mansion, hiring a personal trainer, or wearing Invisalign, it is often seen as irrational and excessive. But really, it’s just an investment in their product. Creators spending money to display an aspirational lifestyle is not unlike startup founders spending money to design products to fit a market need. MrBeast, one of YouTube’s most famous and highest paid creators often ends up spending more money than he makes to keep up with his personal brand of creating outrageous content, which usually involves high budget stunts and pranks.
In some cases, this kind of investment literally entails physical modifications—we previously spoke to Aella, a top creator on OnlyFans, who underwent plastic surgery to become more appealing to her fans. For Aella, the surgery was a CapEx investment to have higher financial returns in the future. Of course, investments like these are not new or exclusive to internet creators—Hollywood stars have worked with plastic surgeons, personal trainers, and expensive stylists for decades. But what is new is the market for this type of investment—more people than ever want to pay to portray an aspirational lifestyle.
Of course, this kind of spending is risky. Aspiring creators often spend too much and with little to show for it. Research in 2019 indicated that Gen Zers and millennials in the UK were spending £400 every month to showcase an Instagram-friendly life, with seven out of ten ending up in debt.
Creators take on many potential risks when they invest in themselves. But if we begin to look at them as businesses, these kinds of investments start to make strategic sense.
The Paid Marketing Challenge
Traditional businesses do not hesitate to pay for promotion. Paid acquisition is the backbone of many successful venture-backed and bootstrapped startups—from MasterClass to Morning Brew. But many creators today are locked out of paying to market themselves, primarily due to two reasons:
First, most social platforms do not allow personal accounts to pay for advertising. Facebook only allows paid promotion through Facebook Pages, and not through individual user accounts (a feature they got rid of in 2014 due to declining use). Instagram only allows users to boost posts if they set up a business account. LinkedIn will only let users promote posts through a company page. Twitter is the lone social network that allows users to promote themselves.
Second, there is still a significant stigma when individuals pay to promote themselves. Just think about the last promoted tweet you saw on your Twitter feed. Cringe. While paying to promote products or services is acceptable, paying to promote individuals is often perceived as desperate and attention seeking.
This is starting to change. TikTok has recently been testing a new feature that will let creators pay to promote their content on its For You Page (FYP). This could be a massive move; it signals that platforms are starting to look at creators as businesses, making it easier for creators to spend money to reach an audience. Paid promotion is already popping up on other platforms as well. Creators are cross-promoting their content via podcasts and newsletters, spending money on products to organize fan giveaways, and using platforms like Pearpop where they can pay (or get paid) to collaborate with other creators.
Of course, creators cannot pay for promotion if they don’t have money. This is why financing is so important.
There is an entire spectrum of options available for startup founders to raise money: equity, debt, crowdfunding, etc. Financing helps businesses grow more rapidly, and reach bigger outcomes than wouldn’t be possible without it.
For the most part, creators don’t leverage the advantage that financing provides. Crowdfunding, for example, could help pay for the costs associated with video production such as camera equipment, editing software, etc. But only a small percentage of creators actually take advantage of it—the risk of failure feels too high.
Historically, there also haven’t been many options available to creators looking to raise capital. But as people start to recognize the value of creators as businesses, this is starting to change.
Investors like Sam Lessin have been promoting the benefits of investing directly in creators, and the rise of NFTs as a form of having quasi-equity in creators is gaining steam. The author and writer Kyle Chayka recently launched an NFT-driven newsletter, and platforms like BitClout are letting fans speculate on the social relevance of creators through issuing tokens in their name.
As individuals are directly investing more in creators, questions around what a creator-as-a-business exit might actually look like will come up. Sam Lessin suggests that there might be IPOs for creators, as one of the potential forms of exit for investors.
Regardless, if creators are businesses that can generate financial returns like traditional businesses, it is only a matter of time before a full spectrum of financing opportunities opens up for creators. This means creators will need to navigate the ins and outs of investor relationship management just like any other business founder.
The competitive frontier never stands still
It may seem like product experimentation, capital investment, paid acquisition, and financing are too aggressive for a market that’s traditionally blurred the line between passion and commerce. Some might argue that it undermines the authenticity and integrity that makes creators an attractive alternative to traditional entertainment. But if history is any guide, every competitive market is a frontier that doesn't stand still for long.
What seems absurdly aggressive today becomes table stakes tomorrow, and in some places, it already is. China seems to have stretched the creator-as-a-business analogy to its absolute end—they set up influencer bootcamps where individuals are incubated to become influential, almost like a Y-Combinator for influencers.
Thread: Looking at China illuminates just how nascent the US “influencer stack” is. While the US continues to debate whether influencer marketing is even effective, China has an entire industry of influencer incubators who work end-to-end to turn individuals into big businesses.
Whether we see the same thing in the U.S. is unclear, but it does not seem unlikely. Ultimately, what we know for sure about making it as a creator is this: while great content is the most important thing, it isn’t everything.
Passion Economy News Roundup
Spotify Launched Spotify Greenroom, a Rebranded Version of Acquired Locker Room
- Spotify Greenroom completes Spotify’s foray into the hotly contested social audio sphere, adding to the list of Clubhouse competitors. Greenroom is a rebranded version of Locker Room, which Spotify acquired for a rumoured $50 million in March of this year.
- Specific details have not been revealed, but Spotify is also rumoured to launch a Creator Fund for audio creators using Greenroom, with payouts based on room attendance and engagement.
Twitter Steps Up Integration With Recently Acquired Revue
- Twitter announced that it will be adding a dedicated subscribe button to profile pages—letting users directly subscribe to newsletters published through Revue, a newsletter publishing service that Twitter acquired in January 2021.
- This is a significant move, considering how Twitter acts as the de facto top-of-funnel discovery channel for most newsletters.
TikTok Wins Sponsorship Bid for VidCon
- TikTok will sponsor the next edition of VidCon, the largest event for online video content creators. The company outbid YouTube, which has been sponsoring VidCon since 2013.
Spotify Makes Another Podcast Acquisition for $20 Million
- Spotify signed an exclusive multi-year deal with Alexandra Cooper, the creator of popular podcast Call Her Daddy. The licensing deal was valued at $20 million and gives Spotify an exclusive right over future episodes as well as the show’s back catalog.
Creators Josh Richards and Griffin Johnson Launch Gen-Z Focussed Marketing Agency
- Josh Richards and Griffin Johnson, celebrity creators with 50 million followers across all platforms, launched HawkeZ, a marketing agency for brands looking to target Gen Z.
- Their first client will be footwear brand Crocs, who wants to focus on building a presence among a younger demographic.
Netflix Launches Online Apparel Store
- Netflix launched a Shopify-powered online retail store where viewers can buy apparel, toys, games and other products based on their favorite shows and movies.
- Currently available products are centered around two anime shows, Eden and Yasuke, while upcoming products will be based on popular shows such as The Witcher and Stranger Things.
Passion Economy Financings
- IRL, a social network centered around group messaging and event discovery, recently raised a $170 million Series C funding round led by SoftBank, at a $1.17 billion valuation. Currently, the platform has 12 million MAUs.
- Fanhouse, an OnlyFans-like platform that helps creators build and monetize communities, raised a $1.3 million seed funding round led by Chapter One and Mantis VC, an early stage fund formed by The Chainsmokers. The platform has 650 creators and 5,600 MAUs currently.
Many of our current social issues, as well as our issues with platforms stem from the fact that they are unilateral decision makers. Protocols might enable a more vibrant ecosystem of services that are tailor made for specific creator communities.