Creator Markets in Everything

Influencers, Financial Markets and Fad Culture

A few weeks ago I wrote about how the market for creators was bigger than you think in part because market dynamics are allowing creators to drive not just media markets but capital markets. I didn’t expect that statement to be trivially underwhelming within two weeks. And yet, despite all the recognition and think pieces, all the memes, and all the money being traded in Gamestop, AMC, GoGo and other meme stonks, I still think we are only in the bottom half of the first inning when it comes to creators impacting financial markets. The changes we are seeing in public markets and in venture investing will come for private equity and everything else in between. The audience is now king. Audience, not creators. Yes, creators and others will leverage audience interests to suit their interests, but at the end of the day it is the audience that is in charge, not gatekeepers, and not even the creators themselves.

I previously wrote that Tesla was less a car company than a vehicle to invest in Elon’s influence and audience. And that’s true. But from a more macro perspective, I think it’s really more just a cultural Schelling point, a focal point that people default to in the absence of communication, except in this case it’s for social financial coordination. Just like our platformized culture drives ever-growing fads in content consumption, just like it pushed Queen’s Gambit to the top of the Netflix charts dragging chess gameplay along with it, it too now drives fad culture in financial markets. Elon is really just a manifestation of the financial populist mob, a memefied rallying cry behind which we can all gather. So it shouldn’t be surprising that he tweeted about Gamestop, further driving the stock up. Nor that he then moved on to Dogecoin or any other of the hot meme stonks. Just like social platforms surf user behavior and need to serve the content that we all most want to see, so too do the biggest and best influencers. Elon is as trapped by the demands of the market as anyone else. The market demands a coordination point and Elon, if he wants to retain his position, has to abide. 

Of course, he gets rewarded handsomely for the trouble. And it is true that he can help shape the narrative more than most. Feedback loops are real and creators have a responsibility for their platform. But truthfully, Elon, just like any other influencer is constrained by the demands of his audience. Being a creator may seem like it is about broadcasting to the world, but it’s perhaps more akin to serving as a cultural and social locus. Hence, why creators’ fans often think of them as friends and leaders of a friend group rather than an untouchable celebrity. And why creators often talk about their content being funneled into a few formats that work with steep decline if they step outside the audience’s guardrails for them.

Of course, this has implications for content but it also has implications for financial markets and specifically for the financial opportunities for creators in capital allocation. Chiefly, it suggests that creators’ biggest advantage with respect to moving financial markets centers around moments of coordination and amplifying existing cultural and financial trends. In other words, creators are best positioned to serve as the Schelling points for coordination problems.

So what may those opportunities look like? I think the biggest opportunities tend to fall into a few buckets: 1) Intractable problems that require cult-like belief to solve 2) roll-up opportunities 3) social fads. Tesla is of course the best example of bucket 1. Solving our climate crisis is certainly an intractable problem requiring immense coordination, capital expenditure and risk-taking. Specifically, building out an electric car company, especially at the time that Tesla scaled, seemed like an insane proposition requiring immense capital, an almost messianic vision for the future, and a means of overcoming the cold start problem as well as economy of scale issues. In other words, a perfect example of a problem that a charismatic leader serving as a locus for almost cult-like belief is needed to solve. Looked at from this perspective, Elon’s twitter personality and mania is not just a feature, instead of a bug, but in fact the defining driver for the entire enterprise. The ability to coordinate and focus attention, not to mention access immense capital pools thanks to messianic belief is the scarce resource. As such, with the growth of the creator ecosystem, I suspect we will see more founder/personality driven businesses emerge for other similarly scoped societal problems that require mass coordination, the kind increasingly solved by personality. I’d be surprised if we didn’t see this approach work in healthcare for example. 

Roll-up opportunities and private equity in general may seem a bit odd as a choice for a lucrative creator financial model based on coordination but in many respects I think this is the most scalable and replicable model. Venture capital has been taken over by thought leadership and brand-name solo capitalists or branded firms because deal flow is increasingly mediated by audience and brand. It is only a matter of time until this is true of private equity. Imagine a creator in a particular vertical with a large audience and known brand, say education. This creator could likely have preferential access to deals on the one hand, easy access to capital on the other and an ability to turbocharge any acquired assets. The creator could build a business empire based on their audience and brand in the education space. Doing so would likely only increase their visibility and in turn make their assets more valuable. Positive feedback cycles abound. To some extent, roll-ups themselves are a means of applying coordinated action to transform assets that are better together than they are apart. Adding a creator’s ability to coordinate both capital and audience to the mix should in theory only benefit the model. Of course real operational skill is necessary. But the scarce resources are increasingly not capital nor human capital but rather the ability to coordinate and marshal both those resources and people, and creators have that in spades. We’ve seen creators launch businesses. I’m betting we will increasingly see creators acquire them and grow them, seeing value not just from their ability to acquire stakes in companies but from LPs eager to invest alongside them. 

With respect to social fads, we’ve already seen a movement toward “founding creators/influencers” or creators launching their own businesses. This is only going to continue to gain traction as creators become the best answer to many businesses' go-to-market question (more on this in a coming article). But I think the model works best when paired with an emerging new behavior or social fad, not as a standalone cold start. Creators more than any other group can provide the cultural coordination to move a new behavior or fad from the fringe to the mainstream. To some extent, they are most valuable not at creating emergent behavior but at legitimizing it, at providing the coordination for us to all accept and agree that this new trend is acceptable and mainstream. I suspect this will further amplify feedback loops and we will see trends and companies rise faster and farther both in public consciousness and with respect to valuation and investment as creators grow more powerful and aware of their ability to amplify financial market behavior.

It’s still early, and it will take time for the impact of creators on financial markets to be fully realized but we should be prepared for the Gamestop saga to seem quaint. Creators and influencers will increasingly have value not just with respect to coordinating social conversation but at coordinating financial decision-making. Creators and influencers will help us coordinate to invest in and solve massive challenges, they will help transform good businesses into amazing conglomerates and they will likely legitimize fads and create manias. This will have many positive impacts, as well as many negative consequences. But there is no turning back now. 

Credit to Edmund Lee for the image

Update: Tesla treasury announced today that it bought $1.5bn of Bitcoin because of course, it did. Elon and Tesla have to deliver the content that their audience demands. As Elon himself tweeted, “The most entertaining outcome is the most likely ” It’s also the most lucrative when you are less a company or a creator and more a coordination point for social-financial behavior.

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