By Keith Teare • Issue #265 • View online
This week Facebook announced a one billion dollar budget for enticing creators to use its platforms. The New York Times said Venture Capitalists are looking to invest in creators. Cash for creators is finally here it seems
Contents
- Want a share of $Billions?
- Venture Disruptors
- Is Time the Real Win for Humans?
- End of the Middle Man?
- Big Changes Afoot in World Trade
- Spying on Citizens
- Anti-FTC Probe
- SPACs, IPOs, and Fundings
- San Francisco Beats Miami for Tech?
- Startup of the Week
- Tweet of the Week
Editorial
First a shout out to @mariamatloub. She is a subscriber and clearly a design-aware person. She noticed how appalling my front page designs were and sent me fonts and a template to improve the look. You can find Maria on Telegram for all your design needs. Thank you, Maria.
There is more content than normal this week, hence a longer contents list. But the story of the week is driven by Facebook’s decision to throw up to $1 billion at the creator economy. This in the same week that Twitter closed down its “Fleets” feature due to poor use. Fleets were its copy of the “stories” feature on other social media.
Of course, money talks, and no doubt Facebook will gain some traction for its platform from creators it can buy. But the key to the creator economy is individualism, independence, and authenticity. Allowing Facebook to buy your work would seem to fly in the face of those most basic tenets of the creator economy. Those who agree to take the money are almost certainly going to be the ones who cannot make it on their own, or with independent investment. The product thinking at Facebook surely failed to grasp this most essential of truths. If Facebook wants to help creators while also serving its own purposes then a better path would be to help creators, using any platform, to reach their natural audience on Facebook. Now that is something all creators would do, and possibly even pay for. Owning the tools and the creation seems the least important thing Facebook could attempt to do and is doomed to fail.
Clubhouse on the other hand really showed its understanding of creators and their audience by introducing DMs between participants in an event. The “backchannel” is and has always been a most important real-world feature and is now available in Clubhouse.
But speaking for myself, I do not believe that the creator economy lends itself to investment. TechCrunch, you should remember, never raised venture capital. Why? It could never become venture scale in the 2005–2010 window it lived in. Without giving away any confidence, TechCrunch revenue was very far away from the meme of $100m by the fifth year of revenue. Most creators are not fundable, and most do not create in order to be funded. The purpose of the text, audio, and video tools we all use is to enable thoughtful engagement with the world in order to develop who we all are. Mostly creators get paid for other stuff, not creating. This is true of bloggers, influencers, video streamers, and more. So the interest in investing in the creator economy is a fool’s errand, except perhaps for the companies able to innovate in the tools available, and even then the revenue likely is possibly too small to expect large outcomes. I might be wrong, but I don’t think so. The creator boom is wonderful, and the proliferation of inexpensive tools also. Just don’t do it to make serious money, unless you are one of a handful of already influential celebrities in your space.
More in this week’s video
Want a Share of $Billions?
Facebook is luring creators with $1 billion in payouts
Facebook plans to dish out over $1 billion to creators across its platforms through the end of 2022, CEO Mark Zuckerberg said. “We want to build the best platforms for millions of creators to make a living,” he wrote in a Facebook post. “Investing in creators isn’t new for us, but I’m excited to expand this work over time.” The aim is to “reward creators for great content they create on Facebook and Instagram.”
The company will pay all kinds of creators, including those who are just starting to share their own content and build an audience. Facebook will offer creators more ways to earn payouts when they hit certain milestones and provide “seed funding” for some of them to make content.
Facebook will add Bonus sections to the Instagram app later this summer and the Facebook app in the fall where creators can learn about various programs, including details on eligibility and how to apply. Some of those programs are already available to invited creators, such as bonuses for running ads on Facebook live streams, and for video and gaming creators who reach certain earnings milestones with Stars (Facebook’s Twitch Bits-style tipping currency) over the next few months.
As for Instagram, invited creators can receive bonuses when they sign up to run IGTV ads (they’ll also get a cut of ad revenue), sell a certain number of badges on live streams and make great Reels that perform well. Facebook will roll out more incentive programs in the coming months. The payouts build on Facebook’s other monetization options, including fan subscriptions, paid online events and creator shops.
Clubhouse unveils its new ‘Backchannel’ DM feature
Clubhouse, the oftcloned invite-only audio chat platform that recently expanded to Android, has since its inception lacked a seemingly fundamental feature present on virtually every other social media app: the ability to directly message other users. But no longer! On Wednesday, the company announced that the Clubhouse app will now support DMs in the form of the new Backchannel messaging feature.
Backchannel will function as both a private messaging system for both 1:1 interactions and group chats. With it, Clubhouse envisions users employing it to coordinate privately among a channel’s co-hosts, take sensitive questions or privately thank participants outside of the general group discussion, or just audibly shoot the breeze with your buddies.
Twitter is killing Fleets
Twitter is killing Fleets less than a year after launching the Stories-like feature to all its users. All Fleets will disappear for the final time on August 3rd.
The short lived feature was at times controversial. Soon after it rolled out to all Twitter users last November, many raised questions about how the feature could be used to target others for harassment. Others questioned whether Twitter really needed a “Stories” feature of its own.
In a blog post, Twitter VP of Product Ilya Brown said the company hadn’t “seen an increase in the number of new people joining the conversation with Fleets like we hoped.” Brown added that Spaces will continue to get placement at the top of users’ timelines and that the company is still analyzing the full-screen ads it started testing in Fleets last month (Twitter hinted at the time that the new ad format could eventually make its way to other places in the service, too).
Both Brown and Twitter Product Lead Kayvon Beykpour pointed out that “winding down features every once in awhile” is something the company fully anticipates as it tries to reinvent itself. Twitter has been working on a number of new features that could dramatically change its service — including subscriptions and paid features for creators — and has publicly previewed several newideas it’s considering in recent months.
Hello, Content Creators. Silicon Valley’s Investors Want to Meet You.
The online influencer culture is starting to draw serious interest from big venture capital firms. But the real money could be in digital tools, not the personalities.
By Taylor Lorenz and Erin Woo
July 12, 2021
Last summer, Tucker Schreiber, a 28-year-old co-founder of a start-up called Combo that was building a video editing platform, noticed a lot more emails in his inbox. Though his company had no employees and no products, and hadn’t even said it was looking for money, investors were sending him a stream of messages.
“I started getting five to 10 inbound emails daily for a couple weeks straight from investors,” he said.
Mr. Schreiber’s start-up was riding a boom in investors targeting the so-called creator or influencer economy. The boom in the creator economy itself has renewed interest in social media among venture capitalists, who for years thought there was little point to looking for social upstarts with the likes of Facebook and Snap (which owns Snapchat) sucking all the air out of the market.
Creators are people who build audiences online and find a way to make money from those audiences. They are usually young, digital natives who are trying to make a living from their social media work. And big Silicon Valley investors increasingly see them as the next financial vein to be tapped on the internet.
Venture Disruptors
Tiger vs. SoftBank: Inside the investing playbooks that upended Silicon Valley
Nylas CEO Gleb Polyakov had been following the Silicon Valley playbook for raising money: meet with firms; deal with associates, then partners; and try to clinch funding for his developer-tools startup.
Then Tiger Global handed over a term sheet.
When Polyakov alerted other firms interested in investing in his hot API maker to Tiger’s offer, one of the more traditional firms he had been talking to abandoned the deal. There’s an “old boys’ club” and a “process” Silicon Valley VC firms like to follow, said Polyakov. “And if you don’t follow the process they get very upset and very insulted, which seems a little silly.”
Tiger Global shines with 1.3 venture capital deals per day — InfotechLead.com
Leading venture capital firm Tiger Global has averaged 1.3 deals a day in the second quarter, according to a report from CB Insights.
Tiger Global has increased its investments in the latest period by eight-fold from the same quarter a year earlier to 81. Andreessen Horowitz was the second-most-active investor in the quarter at 64 deals, followed by Sequoia at 62 and Accel at 60.
Venture investments surged 157 percent globally from the prior year to $156 billion.
Tiger Global participated in the third-biggest cybersecurity investment (Forter) and the fifth-largest artificial intelligence deal (Scale AI).
Founded in 2001 by Chase Coleman, Tiger established itself as a force in pre-IPO tech investing well over a decade ago after winning bets on companies like Facebook and LinkedIn. With the explosion of billion-dollar-plus tech start-ups and the trend toward staying private longer, Tiger’s name has since become more prominent by the year, CNBC reported.
Earlier this year, Tiger Global raised a $6.65 billion fund, about a year after its previous fund pulled in $3.75 billion. Lee Fixel, a 13-year veteran of the firm and one of its primary tech investors, left in 2019 to start his own firm, Addition.
New Money in Venture Capital | Points and Figures
Venture capital is having a bit of a moment. Companies that are venture-backed are going public and weekly we seem to hear about another “unicorn”, which is a venture-backed company that is worth $1B dollars or more. Of course, they don’t tell you about all the failures.
I saw two interesting pieces on VC in the last two days. The Financial Times had an opinion piece by Richard Waters on VC. It’s behind a paywall, but essentially it says new entrants are remaking the VC space. In the “old” days, venture capital was a tight-knit club. The new entrants like Softbank and Tiger Global have huge sums of cash and aren’t afraid to spend it. I have seen Softbank try to buy a market when it came to co-working and WeWork. It didn’t work out so well but other companies they have invested in have done very very well.
Well enough so they are still investing.
One thing I postulated years ago is that as long as international central bankers keep creating money and holding interest rates at close to 0%, or even negative rates in many cases, there will be a marked change in the risk appetites of investors. Initially, money went into the stock market and continues to be there. However, I am seeing big companies and pools of capital start to reach for yield in bond markets, buying riskier higher-yielding bonds instead of safer government securities. They need the return to cover their liabilities.
The returns have attracted new entrants that don’t subscribe to the rules of the club and the club isn’t exactly happy about it.
Is Time the Real Win for Humans?
The Four-Day Work Week Is a Keynesian Prophecy Finally Taken Seriously — Bloomberg
One of the great mysteries of our time and our species is why we still work so much when we really don’t have to.
Japan, the country that gave us the word “karoshi” for “death from overwork,” is thinking about introducing an optional four-day workweek. The idea has also come up in Iceland, New Zealand, Spain and other places. It’s in fact so obvious, some wise people in the past would be gobsmacked to learn that we’re only just starting to talk about it now.
One such sage was the economist John Maynard Keynes. In 1930, just as the Great Depression was threatening his and the world’s prosperity, he penned a classic essay on the “Economic Possibilities for our Grandchildren.” The longer-term economic and technological trends, he argued counterintuitively, in fact suggested that within a century — that is, right about now — we could meet all our needs so efficiently, we’d only work out of habit or for fun, and even then probably no more than 15 hours a week.
A cursory glance around will convince you how right he was in some ways, and how perplexingly wrong in others. Yes, Homo sapiens has, despite persistent pockets of poverty, largely overcome the traditional problem of economics, which was scarcity. Most people in rich countries today can easily feed, clothe and house themselves and their families.
End of the Middle Man?
Could a digital pound mean the end of banking as we know it?
Mon 12th July 2021 With everything which has been going on in the world recently, from a terrifying heat dome emerging in North America to England making it to their first Euros final, it can be forgiven that speeches from key economic figures exploring the potential end of the monetary system as we currently know […]
The post Could a digital pound mean the end of banking as we know it?appeared first on Positive Money.
Big Changes Afoot in World Trade
China Overtakes the U.S. as EU’s Largest Trade Partner
China has spearheaded its economy towards a global superpower, and as a result, has overtaken the U.S. as the EUs top trade partner
How China Became the Largest EU Trade Partner
Historically, America has long been the EU’s top country to trade with, but in 2020, that trend came to a screeching halt.
A $26.7 billion boost for Chinese imports, in addition to a $5.3 billion increase in EU exports, has resulted in China officially becoming the EU’s largest trade partner.
Playing Catch Up
Displacing the U.S. as a trade partner serves as yet another reminder that China is playing catch up to America’s economy. In 2020, there was an approximate $5.6 trillion gap in nominal GDP between the two nations. A decade ago, the gap was larger at $9 trillion.
The gap continues to shrink due to the differing growth rates in GDP. Between 2010–2020, U.S. nominal GDP growth was in the 1–2% range. During the same time, China’s GDP growth ranged from a high of 10.6% to a low of 6.1%.
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Spying on Citizens
UK’s Draft Online Safety Bill Raises Serious Concerns Around Freedom of Expression | Electronic Frontier Foundation
On May 12, the UK government published a draft of its Online Safety Bill, which attempts to tackle illegal and otherwise harmful content online by placing a duty of care on online platforms to protect their users from such content. The move came as no surprise: over the past several years, UK…
Anti-FTC Probe
FTC Opens Probe of Amazon’s MGM Purchase, Signaling a Lengthy Inquiry — The Information
Any hopes that Amazon had of completing its $8.5 billion purchase of movie and TV studio MGM anytime soon may have just gone out the window. The Federal Trade Commission on Friday opened an in-depth investigation into the deal, according to people familiar with the matter, setting the stage for …
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Why FTC’s Amazon-MGM Probe Is Based on Flawed Logic — The Information
The Federal Trade Commission’s decision today to formally open an in-depth probe into Amazon’s $8.5 billion purchase of MGM signals just how much the Biden administration is changing the course of antitrust inquiries into tech. It’s not just about the obvious targets — Google’s self-evident …
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SPACs, IPOs and, Fundings
SPACs keep rolling as autonomous vehicle startup Aurora targets blank-check debut with $13B valuation — TechCrunch
Aurora Innovation, the autonomous vehicle startup that acquired Uber’s self-driving unit in December, is going public via a merger with special purpose acquisition company Reinvent Technology Partners Y. The deal announced Thursday confirms TechCrunch’s reporting in June that the startup was in final talks with the SPAC launched by LinkedIn co-founder and investor Reid Hoffman, […]
Cryptocurrency firm Circle to float in US in $4.5bn merger deal
Operator behind USD Coin will merge with company chaired by former Barclays chief executive Bob Diamond
Circle, the company behind digital currency USD Coin, is to float in the US in a $4.5bn (£3.27bn) merger deal with a company chaired by former Barclays chief executive Bob Diamond.
It will merge with Concord Acquisition Corp, which is chaired by Diamond, with the combined business to be taken over by a newly formed Irish holding company that will then list on the New York Stock Exchange.
How Silicon Valley Bank became a pre-IPO play — then became a top-performing stock itself — Fortune
The 100K MRR is dead. Why progress metrics are harder than ever to rely upon for visibility on your next round. : Seedcamp
Europe’s seed fund
London FinTechs Raise Record Level Of VC Funding In First Half Of 2021 — pymnts.com
London FinTechs Raise Record Level Of VC Funding In First Half Of 2021 pymnts.com
European Startups Got A Bigger Share Of Record Global VC Invested In H1 2021 — Crunchbase News
European startups got a bigger slice of a bigger venture funding pie in the first half of 2021. Venture funding to startups in Europe totaled an unprecedented $59 billion, Crunchbase data shows, up from $18.5 billion for the first half of 2020.
Phil Libin’s No-Pitch Deck $100 Million VC Round: ‘It’s a Pretty Good Time to Fund Raise’ | Inc.com — Inc.
San Francisco Beats Miami for Tech?
Tech Workers Swore Off the Bay Area. Now They’re Coming Back. — The New York Times
Critics said the pandemic would make the industry flee San Francisco and its southern neighbor, Silicon Valley. But tech can’t seem to quit its gravitational center.
Startup of the Week
Revolut gets Tiger and SoftBank | Fortune
Revolut’s raise points to an uncommon alliance
Revolut’s 2020 financial performance explains its big new $33B valuation — TechCrunch
It’s not super stupid to value Revolut far more richly with massively improved gross margins, profitability and more proven revenue growth.
Tweet of the Week
Opinion | Innovation Moves to Middle America
Migration of entrepreneurs may yield fewer photo-sharing apps and more practical solutions.
Steve Case
Zionsville, Ind., a town of about 30,000, is a few hours south of Flint, Mich., by car. So when evidence emerged in 2014 that Flint’s water supply was dangerously contaminated, a Zionsville business executive, Megan Glover, began looking into ways to test the water coming from her own family’s tap. What she uncovered surprised her — not that the local supply was contaminated, but that a testing kit typically cost $3,000, an exorbitant amount most families in her neighborhood would never consider. So Ms. Glover did the most American thing possible: She researched the issue, developed a more affordable alternative, founded a company, sought out investors (my venture firm among them) and emerged as CEO of 120Water, a successful enterprise that now helps monitor the quality of the nation’s water supply. (Zionsville’s water turned out to be clean.)
The basic arc of Ms. Glover’s story — identifying a pain point, then creating a venture to provide a solution — is common in the nation’s premier tech hubs. That is largely because the talent and capital required to build a successful venture are widely available to entrepreneurs in Silicon Valley, New York and Boston.
What makes Ms. Glover’s story remarkable is that she, like a burgeoning community of other tech entrepreneurs around the country, managed to build a successful venture without those ready-made advantages. In ways few of us predicted, the pandemic is poised to make Ms. Glover’s story much more common in the farthest-flung corners of the American economy.