"How Startups Can Survive the Creator Economy Winter: The Janusian Process in Creativity"

"How Startups Can Survive the Creator Economy Winter: The Janusian Process in Creativity"

In the world of the creator economy, startups face numerous challenges in order to survive and thrive. One of the biggest challenges is the concentration of revenue among the top 0.01% of creators, leaving the remaining 99% struggling to generate meaningful income. This stark disparity raises the question for startups: what can they offer to earn a share of the creator's revenue?

According to reports, there are approximately 200 million creators in the world. However, the definition of a "creator" can vary, leading to different estimates. Regardless, the vast majority of creators, around 90%, struggle to make a substantial income. As a creator myself and through conversations with over 100 creators, I've found that the common desire among creators is to gain more fans. The pursuit of new fans is often the most challenging and draining aspect of their work.

To address this challenge, startups must find ways to aggregate demand. Currently, only the social media giants like YouTube, Twitter, and Facebook have robust consumer demand aggregation efforts. Their recommendation algorithms and trending topics algorithms play a vital role in driving traffic and attention to creators. Startups in the creator economy must develop proprietary technology that is at least 10 times better than existing alternatives to gain a monopolistic advantage. Anything less will likely be perceived as marginal improvement and struggle to compete in an already crowded market.

Another challenge for startups in the creator economy is the low earnings of the creator middle class. A survey found that only 12% of full-time creators make more than $50,000 per year, while a staggering 46% make less than $1,000 a year. Additionally, 66% of creators see their work as a side-hustle. This means that startups serving creators cannot rely solely on subscription fees to build a sustainable business. They must explore alternative revenue streams.

Ads and gated access are the primary methods through which creators make money. Ads are a crucial tool as they enable creators to offer their content for free and reach a wider audience. However, ads can also incentivize creators to prioritize growing their audience at all costs, even if it has negative externalities. On the subscription side, conversion rates are typically low, ranging from 5-10%. Startups need to be aware that their customer base will not be as large as they would like, and subscription fees alone may not be enough to build a traditional SaaS startup.

One successful example of revenue sharing is YouTube, which takes a 45% cut of ad revenue and gives the remaining 55% to the creator. While some creators may feel that this take rate is too high, it works because YouTube excels at both demand and advertiser supply aggregation. Startups can learn from this model and strive to gain significant revenue share from creators to sustain their businesses.

If startups struggle to gain significant revenue share from creators, they can pivot their vertical software serving creators exclusively towards a more horizontal platform serving businesses in general. This can open up new opportunities and revenue streams outside of the creator economy.

In the world of creativity, there is a concept called the "janusian process." This process involves actively conceiving and using multiple opposites or antitheses simultaneously. It disrupts pre-existing contexts and conceptions, allowing for the construction of new theories, discoveries, experiments, works of art, or business practices. The simultaneous opposition or antithesis is a cardinal feature of the janusian process.

In the context of startups in the creator economy, the janusian process can be applied to generate unique ideas and insights. Startups can challenge preconceived notions and traditional approaches by conceiving multiple opposites as true or operative at the same time. This mindset can lead to innovative solutions and strategies that set them apart from their competitors.

In conclusion, startups in the creator economy face numerous challenges, from the concentration of revenue among the top creators to the low earnings of the middle class. To survive and thrive, startups must find ways to earn a share of the creator's revenue by aggregating demand and offering unique value. They should also consider alternative revenue streams and be open to pivoting their business models if necessary. Additionally, adopting the janusian process of conceiving multiple opposites can spark creativity and lead to innovative solutions. By combining these actionable insights, startups can navigate the creator economy winter and build successful businesses in this rapidly evolving industry.