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Dear subscribers,

In my last post, I shared eight lessons about how the creator economy works. Today, I want to introduce the super fan flywheel, a proven way for startups to grow in the creator economy.

What is the super fan flywheel?

A super fan is someone who:

1. Wants authentic interactions with the creator.

2. Is willing to pay a lot for these interactions.

Kevin Kelly wrote that a creator can make six-figure income by getting 1,000 super fans to pay $100 a year. Similarly, a startup can grow by helping creators make money through authentic interactions with their super fans.

As a startup, here's how you can enter the super fan flywheel:

1. Target creators with super fans.
   Most startups can't afford to target top creators who have both high engagement and high reach. The next best segment is creators who have high engagement with a small group of super fans. Engagement can be measured as average fan interactions per post (e.g., likes and comments) divided by total followers.
   
   It's also a good idea to target creators who belong to a specific niche to drive word of mouth. This niche can be an existing vertical (e.g., beauty influencers on YouTube), a horizontal (e.g., creators who have a presence on multiple platforms), or people who don't even realize that they're creators yet (e.g., tech professionals who give career advice).

2. Help creators earn more by interacting with their super fans.
   Once you identify your target creator segment, build your product with them. Talk to them to understand how you can help them make money by interacting with their super fans.

If you get these two steps right, you'll enter the super fan flywheel. Once creators realize that they can earn more from super fans on your platform, they will:

3. Promote your platform on social media to bring in more fans.

4. Spread the word to other creator segments.

Now you may be wondering…

Can incumbents use the super fan flywheel?

Platforms like YouTube, Instagram, Twitch, and TikTok have hundreds of thousands of creators and millions of fans. Due to their user base and ads model, these platforms will likely prioritize building products for the masses instead of products that:

1. Target a specific creator segment.

2. Help creators earn more from super fans at the expense of regular fans.

#2 is important to clarify. Twitch launched gifted subscriptions to let super fans pay to welcome regular fans to a creator's community (a win-win). But Twitch is unlikely to prioritize helping creators engage super fans at the expense of regular fans (e.g., let creators put most of their content and interaction channels behind a paywall).

These gaps present opportunities for startups. Let's look at three breakout examples:

Patreon

Jack Conte launched Patreon in 2013 after spending $10,000 to create a YouTube music video only to earn $166 from ads:

Ingrained in my brain is the moment I opened my earnings dashboard, and the graphs before me revealed 1M+ views and... what!? That can’t be right. Ad revenue earnings of $166.10.

- Jack Conte, Patreon CEO (Patreon blog)

Since then, Patreon has paid $2B to 200,000+ creators. Here's how Patreon used the flywheel:

1. Patreon targeted indie musicians and other YouTube creators who had highly engaged fans but barely made any money from ads.

2. Using Patreon, these creators could earn more by asking their super fans to pay a subscription to unlock exclusive content and interactions.

3. Once creators realized they could make more money on Patreon, they brought more fans by adding Patreon links to their YouTube videos and social posts.

4. Creators and fans spread the word to other creator segments.

It's interesting to compare Patreon with Gumroad. Both platforms launched in the early 2010s, but Patreon has paid $2B to 200,000 creators (or $10K per creator) while Gumroad has paid $370M to 75,000 creators (or $5K per creator). Patreon creators have earned twice as much as Gumroad's creators likely because it's easier for them to engage super fans using Patreon's subscription model vs. Gumroad's pay per transaction experience. Gumroad recently doubled down on subscriptions to help creators earn more recurring income from their super fans.

Many creators use Gumroad for one-off digital products while using platforms like Patreon to collect subscription revenue. [Gumroad] Memberships gives those creators the option to consolidate on one platform.

- Gumroad blog

Cameo

Steven Galanis launched Cameo in 2017 with his co-founders to help creators make money by giving personalized video shoutouts to super fans.

By March 2020, Cameo had 20,000 creators who have sold more than 560,000 video shout outs (I bet these numbers have now doubled). Here's how Cameo used the flywheel:

"The contrarian bet we made was that it would be way better for us to have people with small, loyal followings, often unknown to the general population, but who were willing to charge $5 to $10."

"One person’s D-List is somebody else’s favorite person in the world."

- Steven Galanick, Cameo CEO (Medium)

1. Cameo targeted Vine stars, YouTubers, and social media influencers who had loyal followings and wanted to earn extra income.

2. Using Cameo, these influencers could earn more by charging super fans for personalized video shoutouts. Shoutouts include birthday celebrations, pep talks, and more.

3. Influencers and fans shared their Cameo videos on social media, which attracted more fans.

4. Word of mouth and sales helped Cameo expand to reality TV stars and other creator segments.

Cameo has created many magic moments for fans already. But the team could accelerate growth further by helping creators build a long-term relationship with super fans. If people are willing to pay $100 for a birthday shout out, how much more will they pay for personalized pep talks every month?

OnlyFans

Tim Stokely launched OnlyFans in 2016. Since then, it has become arguably the world's fastest-growing creator platform. Tim had just one focus for OnlyFans - help creators make more money:

One of our biggest objectives when creating the platform was to ensure that we could create a business model that allows us to pay out really high commissions to the creators. That’s why we pay out 80%.

- Tim Stokely, OnlyFans CEO (The Information)

On OnlyFans, subscribing to a creator is just the beginning. Even after paying $15 or $30 a month, super fans need to pay more to unlock private messages and other content. I go into detail about how OnlyFans applied the super fan flywheel here:

Peter Yang @petergyang

2/ The OnlyFans flywheel works as follows: 1. Target a specific segment 2. Help creators make money by engaging super fans 3. Rely on creators to bring more fans from social media 4. Attract other creator segments through word of mouth Let's dive into each step.

November 29th 2020

13 Retweets238 Likes

Many people replied to my Twitter thread mentioning that OnlyFans grew so fast because it has adult content. While certainly true, OnlyFans also grew because it helped creators give personalized attention to super fans while making them pay every step of the way. A similar trend played out in China's live streaming industry.

Other examples

• Substack targets journalists and writers. It helps these creators earn more by charging super fans a subscription for access to content. Yet, like OnlyFans, subscriptions could just be the beginning. There are probably super fans who are willing to pay a writer much more than $10 a month to answer questions and get 1:1 attention.

• Superpeer targets industry experts. It helps these creators earn more by charging super fans for 1:1 video calls. I think Superpeer has a chance to activate an entirely new creator segment of working professionals who can get paid for mentoring people new to their field.

As a startup, you can use the super fan flywheel to grow by following these steps:

1. Target a creator segment with super fans.

2. Help these creators earn more by interacting with their super fans.

Once creators make money on your platform, they will bring more fans and spread the word to other creator segments. With enough creators and fans interacting with each other, you can then build discovery channels to make "come for the tool, stay for the network" come true.

Thanks to Eric Metelka for sharing insights with me about Cameo's growth.

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