That Was The Week 2021, #14
Should you quit your day job and turn to newsletters, videos, podcasts and Clubhouse? Or, like Leonardo do you need your very own patron?
- Creators and Work
- Governments and Innovation. Friends or Enemies?
- Bubble or Bust? Are Markets Rational?
- Startup of the Week
- Tweet of the Week
Suddenly the prospect of making real money from individual effort appears in reach. Or at least that is what we are told. Newsletter writers have joined podcasters and Youtube video jocks in promoting that they are making far more than they have ever made before and with no boss, other than their subscribers, to please.
This week’s That Was The Week features several contributions to the discussion of the “Creator Economy”. And the real question is, is it real or is it fake?
Sahil Lavingia, former Pinterest executive, left and founded Gumroad.
Gumroad is a company that rejects the typical venture-backed metrics of success and instead chooses to operate on loose schedules and flexible hours. The pitch Gumroad makes to its creators is that they can quit their job, work at their leisure, and get paid for their craft — so why shouldn’t Gumroad hold itself to the same standard?
And Packy McCormack celebrates the one year anniversary of his “Not Boring” newsletter by looking back over the year. The newsletter is excellent. And Packy makes clear he rejected both advertising and subscription in favor of sponsorships as his model. He shows it is working for him quite well. And now he is moving into investing in the startups he talks about, via a syndicate he helps manage.
Not Boring is for the optimists, and for the people trying to make crazy things happen. I’m definitely going to be biased. I’m going to have the backs of the companies in which we invest, and the companies that support Not Boring.
So what’s next for Not Boring? The answer is, just like a year ago, I have no idea. Unlike a year ago, though, I have 365 days of not knowing, growing, and figuring it out under my belt, and I’m ecstatic to see where serendipity leads us over the next 365.
What I do know is that I unapologetically want Not Boring to be a big business. I want to blur the lines between analyzing, experimenting with, investing in, and promoting the companies and products that I can’t stop thinking about. I want to help companies tell their stories.
Patronage, whether from subscribers, or sponsors, or people who will gift you cash seems to be a dominant theme. Our front cover hero, Leonardo DaVinci knew quite a bit about patronage.
In the early 1480s, many years before he painted the world-famous pieces for which he is now best known—the Mona Lisa being just one—Italian polymath Leonardo da Vinci sought a job at the court of Ludovico Sforza, the then de facto ruler of Milan. A decade later, it was Sforza who commissioned him to paint The Last Supper.
Fully aware that Sforza was looking to employ military engineers, Leonardo drafted an application letter that put his seemingly endless engineering talents front and centre, by way of a 10-point list of his abilities; interestingly, his artistic genius is merely hinted at towards the very end. It is believed that the final document … was penned not in Leonardo’s hand, but by a professional writer. The effort paid off, and he was eventually employed.https://buffaloah.com/a/virtual/italy/milan/sforza/leo.html
Patreon raised $150m and is now valued at over $4 billion. It is the modern-day “patron meets artist” platform. This is the same 2 weeks that Substack achieved its lofty valuation, as did Clubhouse, announcing payments and a new $4 billion valued round, alongside rumors that Twitter and Facebook wish to buy it.
So, something is happening. The lines between work and fun are being broken down, and that is a wonderful thing. Of course, most creators will not be able to make a living this way until we move to a universal basic income world, which will come. But until then we have a small number of highly motivated people showing us what the post-work world may look like.
We also look at Government and innovation this week, as it pertains to artificial intelligence and also encryption. Clearly autonomous software, and encrypted communications are both liberating and, from the point of view of governments, scary. Discuss :-). As we will in this week’s video.
Creators and Work.
When you visit Gumroad’s website, one of the first things you see is a simple promise.
“Gumroad makes it possible for you to: Escape your 9–5 desk job. Take off your suit and tie. End your commute. Get paid for your craft.”
Today, that promise might not seem that unusual. Multiple companies like Patreon, Substack, Ko-Fi, Teachable, Cameo and others have all carved out space for themselves in the growing creator economy and promise their users similar things. But Gumroad’s story, and the beliefs that define its strategy, break from the norm.
Sahil Lavingia founded Gumroad in 2011 after leaving his job at Pinterest, forfeiting his one-year cliff and going all-in on what he saw as a burgeoning market for people to sell their work. The next 10 years were not an easy road. Despite the creator economy’s growing presence today, Lavingia wrote a blog titled “Reflecting on my Failure to Build a Billion-Dollar Company” which chronicled the startup’s rocky history of layoffs, growth spurts, pressure to fold and how those experiences informed the way he runs the company today. As a result, Gumroad is a company that rejects the typical venture-backed metrics of success and instead chooses to operates on loose schedules and flexible hours. The pitch Gumroad makes to its creators is that they can quit their job, work at their leisure and get paid for their craft — so why shouldn’t Gumroad hold itself to the same standard?
That philosophical approach hasn’t made Gumroad the most popular company in the space. Patreon, Substack and others are all growing rapidly despite being formed years later. But Lavingia is convinced that the ever-growing creator economy and Gumroad’s philosophical approach will pay off in the end.
By Maria Armental
Patreon Inc., an online platform that connects musicians and other creators with fans, was valued at $4 billion in its latest investment round, more than tripling its value since September as venture capitalists bet on startups that serve content creators.
Patreon said it raised $155 million in the latest round, led by new investor Tiger Global Management, with participation from Woodline Partners and several earlier investors, including Wellington Management, Lone Pine Capital and New Enterprise Associates.
Tiger Global, the New York-based investment firm, has been among the more active tech investors of late. Recent investments include online sneaker reseller StockX LLC, automation software company UiPath Inc., Brazilian real-estate company Loft Holdings Ltd. and U.K. financial-technology startup Checkout Ltd.
This has been the wildest and most rewarding year of my life, both personally and professionally: our son, Dev, turned 6 months old yesterday, and Not Boring turned one on Friday.
A year ago, we knew that Dev was coming, but I had no idea what I was going to do. I had quit my job, launched an in-person company that got crushed by lockdowns (and was probably a bad idea anyway), and to top it off, I caught COVID the week I decided to start writing Not Boring. I was lost.
Somehow, since then, with all of your help, I’ve built my dream job. Over the past 365 days, I’ve:
- Written and sent 417k words. That’s more than all seven Chronicles of Narnia.
- Grown from under 500 subscribers to over 42,000.
- Run a syndicate which has invested nearly $2 million in fourteen companies.
- Generated more revenue than I’ve ever made in a full-time job.
I legitimately didn’t believe this was possible. I would see people with big followings on Twitter or big subscriber lists and think that they had some special je ne sais quoi. I still think that it could end at any moment.
A Pew Research Center study out today reported that 81% of Americans surveyed said they watched YouTube, making it not only the most popular video service of any kind but the most widely used digital service, well ahead even of Facebook. YouTube was also one of only two services — the other being Reddit — to become more popular since Pew’s last study in 2019. All in all, the figures are a stunning reminder of how ubiquitous YouTube is in people’s everyday lives.
At the same time, the Pew study highlights just what a poor business YouTube is from the point of view of its owner, Google. Consider that last year, YouTube’s ad revenue totaled $19.8 billion. That’s about a quarter of Facebook’s ad revenue and less than Netflix makes from subscriptions. Even worse, Google probably keeps little more than half of that amount, as it has to split ad revenue with creators.
Government and Innovation: Friends or Enemies?
The mandate of the National Security Commission on Artificial Intelligence (NSCAI) is to make recommendations to the President and Congress to “advance the development of artificial intelligence, machine learning, and associated technologies to comprehensively address the national security and defense needs of the United States.”
This Final Report presents the NSCAI’s strategy for winning the artificial intelligence era. The 16 chapters in the Main Report provide topline conclusions and recommendations. The accompanying Blueprints for Action outline more detailed steps that the U.S. Government should take to implement the recommendations.
For a long time, artificial intelligence seemed like one of those inventions that would always be 50 years away. The scientists who developed the first computers in the 1950s speculated about the possibility of machines with greater-than-human capacities. But enthusiasm didn’t necessarily translate into a commercially viable product, let alone a superintelligent one.
And for a while — in the ’60s, ’70s, and ’80s — it seemed like such speculation would remain just that. The sluggishness of AI development actually gave rise to a term: “AI winters,” periods when investors and researchers got bored with lack of progress in the field and devoted their attention elsewhere.
No one is bored now.
Limited AI systems have taken on an ever-bigger role in our lives, wrangling our news feeds, trading stocks, translating and transcribing text, scanning digital pictures, taking restaurant orders, and writing fake product reviews and news articles. And while there’s always the possibility that AI development will hit another wall, there’s reason to think it won’t: All of the above applications have the potential to be hugely profitable, which means there will be sustained investment from some of the biggest companies in the world. AI capabilities are reasonably likely to keep growing until they’re a transformative force.
A new report from the National Security Commission on Artificial Intelligence (NSCAI), a committee Congress established in 2018, grapples with some of the large-scale implications of that trajectory. In 270 pages and hundreds of appendices, the report tries to size up where AI is going, what challenges it presents to national security, and what can be done to set the USon a better path.
It is by far the best writing from the US government on the enormous implications of this emerging technology. But the report isn’t without flaws, and its shortcomings underscore how hard it will be for humanity to get a handle on the warp-speed development of a technology that’s at once promising and perilous.
AI plays an important role across Facebook’s apps — from enabling stunning AR effects, to helping keep bad content off our platforms
, to directly improving the lives of people in our communities through our COVID-19 Community Help hub
. As AI-powered services become ubiquitous in everyday life, it’s becoming even more important to understand how systems might affect people around the world and how to help ensure the best possible outcomes for them.
Facebook and the AI systems we use have a broad set of potential impacts on and responsibilities related to important social issues from data privacy and ethics, to security, the spread of misinformation, polarization, financial scams, and beyond. As an industry, we are working to understand those impacts, and as a research community, we have only just begun the journey of developing the qualitative and quantitative engineering, research, and ethical toolkits for grappling with and addressing them.
Fairness in AI — a broad concern across the industry — is one such area of social responsibility that can have an enormous impact on the people who use our products and services. One aspect of fairness in AI relates to how AI-driven systems may affect people in diverse groups, or groups that have been historically marginalized in society. This has been a long-standing focus for Facebook’s engineers and researchers.
The UK is planning a new attack on end-to-end encryption, with the Home Office set to spearhead efforts designed to discourage Facebook from further rolling out the technology to its messaging apps.
Home Secretary Priti Patel is planning to deliver a keynote speech at a child protection charity’s event focused on exposing the perceived ills of end-to-end encryption and asking for stricter regulation of the technology. At the same time a new report will say that technology companies need to do more to protect children online.
Patel will headline an April 19 roundtable organised by the National Society for the Prevention of Cruelty to Children (NSPCC), according to a draft invitation seen by WIRED. The event is set to be deeply critical of the encryption standard, which makes it harder for investigators and technology companies to monitor communications between people and detect child grooming or illicit content, including terror or child abuse imagery.
The software industry dodges an API tax in Oracle decision
A generation of software developers sighed in relief Monday morning after the U.S. Supreme Court ruled that APIs can be considered a fair use of copyrighted material, preserving decades of common practice in software development.
The 6–2 ruling was a sweeping victory for Google, which was sued by Oraclenearly 11 years ago over its use of portions of the Java application programming interface in Android. “We reach the conclusion that in this case, where Google reimplemented a user interface, taking only what was needed to allow users to put their accrued talents to work in a new and transformative program, Google’s copying of the Sun Java API was a fair use of that material as a matter of law,” wrote Justice Stephen Breyer, author of the majority opinion.
Bubble or Bust? Are Markets Rational?
Goldman Sachs and JP Morgan were the lead book runners on the deal, while Bank of America, Citigroup, Numis, and Jefferies worked as junior partners on the float. With such a roster of talent, how did the most anticipated IPO of the year turn into the worst float of the decade?
In the first quarter of 2021, global venture investments reached $125 billion, a 50 percent increase quarter over quarter and a whopping 94 percent increase year over year, Crunchbase data shows.
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Global funding last quarter hit an all-time high, marking the first single quarter to reach above $100 billion, according to Crunchbase data.
Alongside the investment boom, new unicorn startups — those private companies valued at $1 billion or more — were created at a rapid pace in the first quarter, with an average of close to two new unicorns per working day, well above all previous quarter counts.
After more than a year of a global pandemic, the S&P 500 is also at an all-time high. Private companies have more avenues to go public, including via special purpose acquisition companies, or SPACs, which took off in 2020. And following a year of pandemic-led growth for many technology startups, the acquisition markets are stronger than ever.
The past three months mark a quarterly record for global VC investment. To find the next-highest global funding quarter, one has to go back to the fourth quarter of 2018, when global funding reached $92 billion. The second quarter in 2018 was not far behind at $91 billion. The fourth-highest funding quarter was the third quarter of 2020, when funding reached $87 billion. news.crunchbase.com +
The first quarter of 2021 was one of those rare periods in startup funding and exiting in which it seemed everyone was bullish about everything.
There were enormous late-stage funding rounds. Major public market debuts. Big M&A deals. Even early-stage was way up over the prior quarter and year-ago levels.
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Overall, investors put $72.7 billion into seed through technology growth-stage rounds for North American startups in the first quarter of this year, according to Crunchbase reported data. The total is the highest in the history of the dataset.
Startup of the Week
- Plaid announced a $425 million funding round led by Altimeter Capital with participation from new investors, Silver Lake and Ribbit Capital.
- The financing boosts Plaid’s valuation to $13.4 billion, according to a person familiar with the matter.
- Plaid became a free agent again in January after a deal to be bought by Visa was called off.