I’m a venture capitalist. My job is to find new, undersaturated talent markets and to invest in those before they even know they are venture-scalable. Content and Creators are what I’m betting on. They are my two loves.
Over the last five years, I’ve been watching billions of dollars being thrown to what can only be described as the “creator economy” and it’s clear that most of those bills were set on fire. I don’t want to blame anyone for that - since “Creator” is something so misunderstood that we can’t even decide on its definition or who is/isn’t one.
Creator is a $200B industry. Creators are rich. Creators need this product.
All assumptions. I’ve invested 1) with, 2) for, and 3) in Creators, professionally. I guarantee that there are maybe four or five investors on the planet that can say that. My biggest takeaway is this: The Creator ecosystem is an underdeveloped ecosystem. It’s been entirely misunderstood and hasn’t matured.
I started this newsletter is to continue to find out why.
A Shift in Venture Models
Why I’ve focused 16.3 months studying early-stage holding companies and why you have one, and why you’re going to miss these deals.
Shift in Venture Models
Historically, there are two camps in the startup ecosystem:
Focus on one thing or
focus on the big thing.
The hardest pill to swallow is: Most times the biggest thing might have multiple moving parts.
Both approaches worked in an era when distribution was scarce and products were hard to build. But the world has very, very obviously changed.
Social media has made distribution accessible to anyone with a story worth hearing
AI has obliterated product-building costs (at an early-stage level) while multiplying product proliferation
Traditional venture capital, by contrast, is still structurally wired in single company investments with high-technical risk but potential exponential upside. This, as we all know, has produced high failure rates, by wasting resources on “let’s try it out” early-career founders. All while limiting innovative optionality for the most innovative founders by focusing on just one shot on goal.
Early-stage holding companies around individuals (founders or Creators) provide multi-shot optionality from day one.
Why Early-stage Holding Companies
For the “we back Founders” type, this model is no-brainer. You invest in an individual for the exposure to anything they launch, and double down on what they (and you) think will hit. Giving them the ultimate freedom and alignment to VCs they actually want on their cap table in the early-days.
For the “we back what is working” type, underwriting the holding company surfaces the true breakout opportunity faster, while spreading early-stage risk to someone else, but still stay relatively early.
Different bets demand different structures, resources, and leaders. The hiring construction can seem (for the companies that grow very fast) that each section requires a section “owner” (what I call a GM) that focuses on the distribution, ownership, product and money-flow on what the big picture is. Not only can these growing areas have different accounting and legal profiles (one area gets sued or goes under), but also can be broken down and sold to whoever the innovation-universe feels like would be the best owner of the business. Also, a founder can do a sell-off to shed (for what’s not relevant anymore), financially stay alive, and refocus) without jeopardizing the parent company.
Creators as Firms
As a startup-focused definition and on a microeconomic level, Creators form as firms from the start.
Even at a small scale, the Creator of the firm is spending more time allocating Creator resources (distribution, brand, financial, operational, etc.) to fit the higher goal (the purpose of the holding company, which can be related or unrelated to the content made.)
Content generates strong, repeatable cash flow
That cash can be reinvested into businesses with higher upside and contribute differently to the larger swing of the HoldCo
For high-growth Creator-Founders, the channel is not the business, it’s the data-core (distribution or data-intake) engine for the business.
Creators as Founders
The financial ecosystem has begun to recognize this reality: around $3B investment minimum thrown into Creator holding companies varying from venture capital, private equity, and debt on the IP or owned-businesses separate form the media.
The best creator-Founders understand two things:
Distribution-first necessity. Attention is gasoline. Without it, nothing else ignites.
Risk volatility. Creator businesses are extreme. They are like a stream of gas waiting for a match. They can be instant rocket ships or instant failures.
They also care about the following, in order:
Data: obsessively measuring audience response and retention
Product: building what the data validates
Distribution: scaling reach across both consumers (easy) and enterprise (even easier)
The two archetypes to optimize for: distributive and community-focused. I wrote about this here. How they differ:
Distributive Creators. The gift of “growth.” “Is the founder operationally gifted at distribution (can make a “viral” unit of content clean, without their channel, almost with their eyes closed)
Community-based Creators. The gift of “retention.” Can build a deeply loyal, high-retention audience whose spending power compounds over time
Accessing the next MrBeast
Community-based founders are more of a bet on the willingness and quality of their audience to purchase, rather than the tenacity and operational ability of the Creator themselves.
In the case of finding the next MrBeast, investors and Creators need to see the content itself as a business discipline.
Jimmy Donaldson was the first person to find the scalability of content worth more than just something to sell a product, but content itself can be venture-scale.
I know this business pretty well at this point. The MrBeast company, to me, is a data company and guided a lot of my thesis. The team takes data seriously.
Algorithms shift daily, but the MrBeast team relentlessly continues because they digest data, apply learnings, evaluate results, and try again. This process-driven approach is what separates a lucky hit from a scalable company.
A venture-scalable Creator knows this is how you make the content side of the business robust enough to where they can start building new sides to the business. To back the “next MrBeast,” investors must see content not as marketing, but as a core R&D function of the firm.
Content as a Product
Let’s say the inklings of an early-stage holding company is content-heavy in complexity. How do you underwrite this?
Judge Creators the way you’d judge operators (Can they make something “viral” or can they retain a sense of narrative & community?)
Evaluate the quality of an individual unit of content & the portfolio of multiple units
Measure the scalability of the (content) product production & deployment process
The question isn’t “is this video good?” but “can this founder reliably generate growth the way a great trad startup reliably ships software products?”
Examples
Why Now
AI lowers the cost of building products, but raises the premium on distribution.
Creator-firms own distribution channels (consumer or non-consumer facing)
Consumers incredibly trust individuals over corporations.
More young people have aspirations in becoming Creators than tech founders. (→ High-growing founder-TAM.)
Thank you for taking the time out to read this. REPLY to this email to let me know what you think about this piece OR feel free to find me on X.
— Em.