Turning the Page

The next 10 years in the creator economy is going to look very different than the previous decade.

What is the next chapter going to look like? 📖 

Hey friends,

Welcome to our first official Going Direct newsletter! We hope you enjoy.

The mind-boggling growth of the creator economy over the last 10 years can be summed up in a couple statistics:

📈 From 2013 - 2022, the amount of content uploaded per minute to YouTube grew more than 40%, from ~100 hours per minute to 500+ hours per minute.

During that same time, YouTube’s user base increased from 1 billion to 2.49 billion.

YouTube is just one of 15 social media platforms in 2024 that have 400+ million users (Source: Datareportal.com). 🥹 

👉 The numbers are eye-watering. But, if you focus on the last few years it is clear that in the case of YouTube (and most other social platforms) growth rates are slowing and the platforms are maturing. I guess that’s what happens when 60%+ of the global population is already on social media 🤷 (Source: Statistica).

We are entering a new chapter. One where creators will become:

• The primary way we discover and purchase products

• Our primary source of entertainment

• Our educators

• Our advisors

• Our therapists

• Our fitness trainers

• Our spiritual leaders

We see the next chapter being shaped by the following market trends and dynamics (in no specific order):

7 Emerging Trends

#1 - Data darkness

It used to be really easy for businesses to find audiences, but with increased privacy laws and regulations around access to user data, users can no longer be easily tracked.

Consequence - it is much harder to find an audience if you do not have one. 

🟰 people with audiences will become more valuable.

#2 - Frictionless content creation

Nearly all of the friction related to creating and editing content has been removed. With a phone and a few hundred bucks of equipment, just about anyone, including your grandma, can have a professional set up.

#3 - Quality over quantity

The amount of daily content creation will continue to increase and competition for eyeballs will continue to intensify. Just like any new market that starts to mature and competition increases, the cream will rise to the top (ie quality over quantity).

#4 - It’s all about the long tail

The long tail of the creator economy is much longer than people realize. It is estimated that less than 4% of all creators earn $100,000 or more. In speaking with numerous people and companies active in the creator space we have found a common thread - over the past 2-3 years the number of micro-creators (less than 100,000 followers) producing specialized content in their categories have increased in a substantial way. The unique insight about these smaller creators - they tend to produce high quality content and have very active audiences. Unlocking the long tail is about providing on ramps for these creators to turn their hobbies into careers.

#5 - The rise of AI

👍️ The good: AI-based tools will accelerate the ability for creators to write scripts, edit videos, and do much more with less. This will usher in a new era of creativity.

👎️ The bad: Deep fakes and other AI-generated content will make it more difficult for users to know what and who to trust.

🟰 New forms of digital trust must be established and the role of creators as a source of truth will become even more valuable.

#6 - Building products and businesses

Creators will start to create more products and entire businesses around what their audiences want. New types of ownership, licensing agreements, and other models have started to emerge and will continue to develop.

#7 - Consumer preferences

As consumers continue to gain access to more information, people want to know what is in their products, where they come from, and who is involved in making them.

Consequence - consumers are losing their trust in corporations and institutions. This is not because they are bad or evil, they have just built systems and incentive structures that have made it difficult to deliver the types of products people want with the level of transparency they are seeking.

🟰 Consumer preferences will gear towards products that map to societal needs. Products that:

🙂 Make peoples’ lives easier

❤️ Are better for human health

🌎️ Are better for the planet’s health

👨‍🌾 Respect everyone along the entire value chain

Businesses follow consumer demand and trends. We will see all of this start with the consumer market and work itself up to the B2B and B2B2C markets.

We are currently at the bottom of a VC-hype cycle in the creator economy. Investment poured into software and other creator tools post-COVID (2020 and 2021). The vast majority of these bets did not work out. The VC-playbook around hyper growth and scale blitzing does not seem to fit where the market is heading. Establishing trust and building valuable communities takes time. We will need to build differently during the next chapter.

Now, some insights from around the creator economy.

Unsuccessful Creator-Led Businesses 💔

The Internet’s King of Ice Cream, Dylan Lemay, shuttered his ice cream shop just two years after opening.

 🍿 Synopsis: Dylan Lemay, the world’s largest ice cream-centric content creator with more than 17 million followers across social platforms raised $1.5M in funding in 2021 to start his own ice cream shop in NYC. Just two years after opening, Catch’N Ice Cream announced they were closing. During the last year of operations, Lemay and his team got creative to try and make it work. They opened a back-of-house ice cream-making experience, started an events business, and experimented with ghost kitchens. All of those endeavors made money, but not enough to keep the brick-and-mortar business open.

📚 Learnings: Just like any business, creator-founded brands also have to find product-market fit to become successful and are not immune to outside factors they cannot control. Follower count is not a guarantee for product-market fit. Dylan was honest that being a full-time content creator + managing an ice cream shop 60+ hours a week was simply not sustainable.

👀 Learn More: Check out this behind-the-scenes video from Dylan about his vision and where it went wrong:

Choosing Equity Over Cash 💰

Roger Federer wanted to do something more meaningful than a brand partnership with ON, the Swiss-based athletic footwear company. Boy, did that work out…

🍿 Synopsis: Roger Federer, one of the greatest tennis players of all time, earned $130 million in prize money during his 25-year professional tennis career. However, the bulk of his wealth comes from brand endorsements. The most notable has been his partnership with the Swiss footwear brand On. Instead of taking cash in a traditional endorsement deal, Roger chose to play the long game and take equity in the company. At the time of this publication, his ownership stake grew close to $300 million in less than three years. It all started when Roger contacted the CEO of ON and told them he loved their shoes. They started talking and Roger spent the next 20 days in the lab helping hem design a pro tennis shoe. The rest is history.

📚 Learnings: Although Federer is an A-list athlete, he chose to take equity in a brand that he truly believed in vs being paid cash upfront. This resulted in him earning 2x more than his lifetime tennis earnings in less than four years🔥. Equity, if structured correctly, can create so much more value for both the company and talent over the long term. But, it is important that there is strong talent-product fit where the talent both believes in the company and can add value in a concrete way. When done correctly, creator equity deals align incentives in a very powerful way💪.

👀 Learn More: Check out the Q&A with Federer on his relationship with ON and why he wanted to something more meaningful than an ambassador collaboration or endorsement deal.

Creator-led Brand Spotlight 🌟

Mindy McKnight, a mother of six, launched Hairitage in 2020. In less than two years, her mass-market beauty brand reportedly did more than $70 million in sales.

🍿 Synopsis: Mindy McKnight launched her YouTube channel CuteGirlsHairstyles in early 2009. On the channel, she does hairstyle tutorials and talks about products she uses for hair care. What started off as a hobby quickly became a worldwide sensation. The channel has gained 5.6M subscribers, and her videos have been viewed more than 2.5 billion times. In 2020, Mindy saw an opportunity to start her own hair care brand and launched Hairitage. She partnered with Maesa, a beauty-brand incubator to build the company. Within two years of launching, the brand was reportedly earning $70 million in annual revenue and was the first digitally native creator beauty line sold at Walmart. Hairitage now has more than 70 hair care and beauty products and recently added CVS, HEB, and Kroger to its wholesale roster.

📚 Learnings: Mindy is a great example of a creator building a multi-faceted business after spending years developing a dedicated audience and community. Mindy’s direct line with her audience allowed her the build the brand without traditional advertising or marketing spend. What we find the most unique about Haritage is they started with a lower-price point product line targeting the mass market right out of the gate (they launched across 4,400 Walmart stores). This type of launch would have been damn near impossible before the creator economy enabled individuals and their small teams to go direct at scale.

👀 Learn more: Mindy McKnight sat down with Happi's Lianna Albrizio to discuss the hair care brand's roots, vegan product offerings and the Walmart partnership. Listen to the podcast here - Listen here.

We hope you enjoyed our first piece. Have a great week and remember to Go Direct!

Build with love,

Jordan & Scott