We studied 50+ startups on TikTok and here’s what we found

By Li Jin and Lila Shroff

Illustration by Brandon Handoko

One morning a few weeks ago, we woke up to excited messages from friends telling us that our website, Side Hustle Stack, had appeared on their TikTok For You Page. That video led to hundreds of thousands of pageviews per minute, crashing our site in the middle of the night.

The surprise? We hadn’t actually created any content on TikTok. The flood of traffic was driven by a video created by @alexcazam, a 19 year-old college student that none of us knew, who had stumbled across the site. In the weeks afterwards, her TikTok has surpassed 5 million views.

Before this, we had tried other strategies for driving distribution—press outreach and launching on Product Hunt where we got over 600 upvotes—but none of these tactics came close to approaching the success of a single viral TikTok video.

We quickly realized: businesses that figure out how to leverage TikTok will have an advantage in building brand awareness, cultivating user trust, and efficiently acquiring customers.

Since that day, our initial viral boost has led to a stable, high level of traffic to the site, and in parallel, we’ve gone down a rabbit hole to better understand how startups can best leverage TikTok. That includes surveying the Twitterverse, diving deep and interviewing creators and brands, and creating an account of our own (@sidehustlestack, which has grown to 14K followers in <2 weeks).

The following is a summary of what we’ve learned so far. Note that while we this piece can help guide your TikTok strategy, it should be taken with a grain of salt: the platform is ever-evolving and requires constant experimentation. Our plan is to update these learnings on a continual basis.

What are the best uses of TikTok for startups?

Despite being best known for viral dances, lip sync videos, and other challenges popular among Gen Z, TikTok has exploded in mass appeal, and now counts a broad swath of the population in its exponentially growing user base. As of June 2020, TikTok had around 50 million daily active users and 92 million monthly active users in the US, up nearly 800% from January 2018. The average US user opens the app 8 times a day and spends 46 minutes per day on the app.

For startups, TikTok can be a goldmine for growth. The app is designed with a level playing field that enables newcomers to quickly grow and go viral. Unlike more established social networks that reward users with already-accrued status, TikTok’s For You Page and personalization algorithm purposefully surfaces videos from even little-known accounts. 

Businesses of all sizes have seen success on TikTok. On one hand, there’s Netflix, which amassed 12 million followers in a little over a year by leaning into trends and creating entertaining highlights. Then there are small businesses like Pounce Cat Cafe which has made viral videos and cultivated a community on the platform, leading to over 1,700 cat adoptions.

There is no one-size-fits-all strategy for businesses looking to succeed on TikTok: anything from a low-effort iPhone clip to a fully staged and edited promotion can go viral. That makes it great for startups who are strapped for cash but can bring a lot of fun and passion.

There are a few areas where TikTok really excels for startups:

  1. Building user trust and buy-in
  2. Driving awareness of new products and services
  3. Creating buzz around a category
  4. Getting user feedback and creating a two-way dialogue

Let’s dive in to each:

1. Building user trust and buy-in 

Because TikTok is video-based, it’s naturally conducive to storytelling and showcasing a more multifaceted narrative instead of simply shilling products. Brands can show off their authenticity in a more raw, unpolished way and promote trust with the audience.

Creators have told us that the less commercial-like and more word-of-mouth-like, the better. The best content feels like something your best friend might share with you.

For startups, there’s a built-in advantage for generating trust and buy-in on TikTok: most founders are truly passionate about what they’re building. Showing that authenticity, excitement, and passion can help make users feel bought into your success and want to support your journey.

Pre-launch, startups can create anticipation by talking about the context and story behind an idea. Companies can direct those fans to sign up for a mailing list or be added to a waitlist. When companies launch, there’s a built-in set of fans ready to evangelize a product.

New dating app Monet’s beta launch on TikTok is a perfect example of generating user trust and creating hype. The launch video introduces users to the team behind the app and explains their journey, from first identifying the problem to building out a solution. There are fun, personal anecdotes: the team living together, going on hikes, and making dinner. Gen Z viewers come away excited by the product and rooting for the team’s success. 


blow this up tiktok 😭😎🎨😌🎉 sign up to use Monet at monetdating.com and come draw some dope stuff w us !!!!!!! #tiktok #fyp #date #drawing #love

♬ Back Pocket – Vulfpeck
Monet’s beta launch video on co-founder Joanna Shan’s personal account (@joanna.shan).

Subscription-splitting startup TabTab (@victordanielcarde) and friend-finding app Flox (@jamietylerlee) have both found success by employing similar TikTok strategies as Monet.


Blow this up tiktok 😭😎💸🎉 download TabTab using the link in my IG bio and start saving money on subscriptions !!! #foryou #fyp #netflix #savemoney

♬ Buttercup – Jack Stauber
TabTab’s launch video on founder Victor Daniel Carden’s personal account.
Flox’s waitlist launch video on founder Jamie Lee’s personal account.

2. Driving awareness of new products and services

From our own survey of 100+ Gen Zers, over half of TikTok users have downloaded an app or visited a website they discovered through the app, and more than one-third have purchased a product.

Companies can use TikTok to show off their products in a way that doesn’t feel overly commercial or transactional. Think: cool demo videos, product walk-throughs, tutorials, and other information that can be conveyed visually.

Consumer research suggests that more than 51% of consumers trust other posts by real people than those created by brands. TikTok benefits from built-in social proof, through comments, dueting, stitching, and other users creating videos about products. If other users are raving about how cool something is, users are more likely to trust it.

Ephemeral messaging app Honk (@usehonk) shows off their product in a way that speaks to the absurdity of Gen Z humor: full of non-sequiturs, Monke memes, and astrology.

Our takeaway? The more ridiculous and Gen Z the humor, the better. 

Honk’s Launch Video on TikTok received 1.2M views.

Breathing app Breathwrk (@Breathwrk) makes their visual breathing exercises a part of the TikTok experience. The account, which has amassed over 1.5M followers and 18.6M likes, consistently interacts with users and creates content in response to comments.


Reply to @clarasbestfriend hope this helps <3 - our pain relief breath from the app

♬ if u use this ur c00hie stinks – Stfu Bye
Breathwrk breathing exercise for migraines received 374K likes.

For an example of a brand leveraging TikTok to drive product purchases, take a look at Aavia‘s (@aavia.io) account. By combining a trending sound and demos that show off the coolest features, their videos get consistently high viewership.


Aavia Smart #birthcontrolpill Case + App tracks your pills for ya! Repost since TikTok won’t allow us to share orig 😣 #fyp #birthcontrolcheck #HowTo

♬ Lottery – K CAMP
Aavia’s product demo received 1.3M views.

Though virality on TikTok may be short-lived, it’s often accompanied by significant follower growth, which, over time, translates to more viral videos. And while consistently posting new content is key, the best TikToks are evergreen and can continue to attract viewers long after they were initially posted.

Remember: the people you’re reaching on TikTok will reflect the demographics of the app. That means consumer-friendly products are more well-suited to TikTok than, say, something related to enterprise apps (except for Notion, which seems to be having a moment).

3. Creating buzz around a category

TikTok’s algorithm surfaces content — however niche — that users may find interesting. That means it’s a great place to create buzz around an entire category or educate users regarding a certain topic. Once users are interested in your category, companies can suggest related products/services that users are likely to be interested in.

Users often refer to these niches as which “side” of TikTok they are on — Alt TikTok, NostalgiaTok, FoodieTok, straight TikTok, BookTok, FrogTok, you name it. Scroll through the “How to Go Viral on TikTok” side (yes, it’s a category of its own!) and you’ll see countless mentions of the importance of finding your niche. Owning a niche and continuing to create content for it over time will translate into a base of educated users who are actively invested in that particular topic.

Some great creator-led business examples are @smallbusinesstips_ and @pricelesstay, both of whom have cultivated and grown their audiences by refining their content to focus on niches like small business advice and Gen Z financial literacy, respectively.

Sneakerhead app Plugd’s (@get.plugd) audience growth reflects their success in carving out a following among sneakerheads. By creating content around this category (like how to spot fake sneakers), they’ve used TikTok to drive top-of-funnel awareness before pushing users to the app itself.

Plugd’s video helping users identify fake sneakers received 500K+ views.

CopyAI (@copy.ai) has carved out a niche in the in the small business vertical, with consistent content about starting side hustles and ways that its product can make entrepreneurs’ lives easier.

A recent CopyAI TikTok exploring e-commerce trends for 2021.

4. Getting user feedback and creating a two-way dialogue

Because discovery on TikTok is primarily driven through the For You Page, a video that gains traction is a clear indication that users have excitement for its content. That means creating content on TikTok is a great, lightweight way to test ideas: before even building out a product, startups can gauge reception to a concept via TikTok.

TikTok is also a treasure trove of user insights. The comments section resembles no other: it’s collaborative, full of humor, and brutally honest. Comments, even those not on a company’s own account, are chock-full of insights: what users find confusing, what they’d like to see more of, what’s on their minds, etc. Rather than running a formal survey and recruiting respondents, TikTok helps get products in front of many users, who are usually eager to share their thoughts.

A new pre-launch social media app, Herd (@herd.app) is already hard at work creating dialogue on TikTok. The benefits are two-fold: firstly, when Herd launches their beta version, there’s already a base of excited users. Secondly, common questions and reactions in the comments guides Herd in tweaking their approach and product.


I can’t talk right now, I’m trying to fix social media for the betterment of society. #socialmedia #socialdilemma #womeninstem

♬ original sound – Herd | Social Media App
One of the Herd App’s first videos (500K+ views) outlining the problems with traditional social media and inviting users to join them as they build their solution.

John Hu (@jayhoovy ) is a founder documenting the process of building his startup on TikTok, with videos about ideation, design thinking, and customer validation. This approach works especially well since his focus is on the creator economy, and his content has opened doors to conversations with big creators about their pain points.

John Hu is building his startup in public on TikTok.

@sabbilyon, who first went viral for seeing how much money he could make driving Uber Eats for a month (net profit $7709 pre-tax), is currently chronicling the process of building a business from scratch. His content has encompassed choosing which product to sell (car air fresheners), finding suppliers, negotiations, branding, etc. Throughout the journey, he’s deliberately inclusive of his viewers (“let’s create this together”) and gets audience input on various decisions, generating buy-in, support, and purchases.

@sabbilyon’s first video in his “Starting a Business on TikTok” series.

Strategies for success on TikTok

Ready to get started on Tiktok? Here are some tips:


  • The basics: Use popular sounds, add visual teasers to the first frame, test out new features, and jump on trends before they become mainstream.
  • Establish your style: Successful creators and brands find and stick to different styles of content.
  • Cater to Gen Z humor (see Honk, above): absurd, seemingly incoherent and out of left-field content tends to do well.


  • Keep up the momentum and post consistently: Create 4-5 content pillars that align with your brand and goals, and post consistently throughout the week.
  • Time your posts: The consensus is that the best times to post are from 6 to 10am and 7 to 11pm ET. If your account is upgraded to a Pro account, you’ll be able to access analytics around when your followers are most active.
  • Invest in high engagement among early audiences: What’s important is getting views early on — TikTok tests content with a small group, and, if the users like it, the platform continues to surface it to larger and larger groups.

Understand Your Audience

  • Track your growth: Change your account to a business or creator account to better track analytics (more on that here).
  • Own and diversify your audience: While TikTok can be a great source of growth, the algorithm is unpredictable, so it’s best to funnel users to your website, newsletter, or other social channels (e.g. through a link-in-bio tool). Recycle TikTok content to Instagram Reels, Snapchat Spotlight, etc. to diversify across platforms.
  • Go live: Live streaming on TikTok allows for direct engagement with users, providing companies the opportunity to showcase their products and answer questions in real-time. Going live is especially recommended when you have a video that’s gaining traction on the For You Page.

Join Our Network

If you’re intimidated by TikTok or have a lot on your plate, work with the creative experts!

For example, John Moon’s (@blondgoblin) legendary cranberry sauce video was so catchy that Ocean Spray posted it on their own channel, where it has over 900K views. It’s unlikely that Ocean Spray itself would have ever thought to compose a song about the superiority of canned vs. homemade cranberry sauce. Working with creators enables brands to tap into a much bigger pool of creativity and reach new audiences.

👉 If you’re a brand/startup, fill out this form to get matched to creators.

👉 If you’re a creator looking to collaborate with brands/startups, fill out this form so brands can find you.

We’ll share these directories with both sides afterwards!

Tweetstorm: Platforms and the modern means of production

The Hey vs. App Store dispute is a manifestation of Karl Marx’s ideas about the struggle between capital and labor, updated to a 21st century world in which a platform, rather than a factory owner, controls the means of production and distribution.

If “capital vs. labor” defined politics for the last 150 years, then we are now entering the era of “platform vs. participant.”

The parallels are striking between Marx's ideas and the battles playing out today among platforms vs. developers & platforms vs. workers.

Marx’s recommendations have obviously led to catastrophic outcomes, and I’m not endorsing abolishing private ownership (I’m a VC after all).

But history rhymes, and his work serves as a useful lens for the events and powerful actors of the present.

Das Kapital, published in 1867, remains hugely influential because it seeks to scientifically explain how capitalism works and its role in shaping modern society. It is the most cited book in the social sciences published before 1950.

In it, Marx lays forth an explanation of how capitalism works, based on what he observed from the Industrial Revolution:

The capitalist class—a select number of individuals—controls the means of production (factories, machinery, etc.), and employs workers who make goods.

The worker produces widgets, which the capitalist then sells for a profit. Meanwhile, the worker doesn’t retain any ownership of his output, and feels alienated because he’s merely a cog in the production process and has no agency over his work.

The capitalist’s profit represents the difference between the value of workers' output & their wages.

Capitalism, Marx argues, is inherently exploitative because the capitalist’s lever to extract more profit is to widen that gap: pay workers less than the value of their work.

How do these ideas from Das Kapital relate to today? As the US economy shifts away from manufacturing and to services, and from traditional employment to platform-mediated 1099 work, this struggle between capital vs. labor takes a new form, becoming platform vs. participant.

Instead of a factory owner controlling the means of production, today, platforms are gatekeepers of production and distribution, with developers & workers giving up a portion of their income, as well as some degree of control over their own product and end customer relationships.

Apple’s 30% “tax” is the prominent example currently in the headlines—but there are many more "taxes" all around us. Marketplaces commonly charge a rake: Uber charges >20%, Grubhub 5-15%.
Even SaaS fees can be seen as a limiting factor for accessing means of production.

Bill Gurley discussed platform rakes on his blog: “Most venture capitalists encourage entrepreneurs to price-maximize […] There is a big difference between what you can extract versus what you should extract.” http://abovethecrowd.com/2013/04/18/a-rake-too-far-optimal-platformpricing-strategy/

Today, the clearest form of "rake" in most people's lives is taxes, paid to the government. The issue of how much people should keep is an issue that splits the globe.

With a growing 1099 economy, income increasingly comes from platforms that decide how much workers get to keep. If the passion economy encompasses 100M people in the next 10 years, the question of rake is going to be the “capital vs. labor” dispute of our time.

UK's Labour Party was formed in 1900 to advocate for workers' rights. What will be the 21st century variant in a platform world?

Despite being widely vilified in modern times, Marx’s ideas have left enduring, widespread legacies that many people find welcome. Since the Industrial Revolution, the advancement of workers’ rights stems from his ideas on the struggle between capital vs. labor:

  • Anti-trust laws, first passed in 1890, curb concentrations of power that interfere with trade and reduce competition
  • The FLSA of 1938 created the 40-hour work week and prohibited child labor

These laws address the evolving limitations of the capitalist mode of production.

What is different today from Marx’s mid-1800s world is that the internet has, in many ways, democratized access to means of production, making everyone able to become a micro-capitalist.

Not everyone can own a factory, but everyone can start a blog, launch an e-comm store, etc. Learning to code is one such means of production that modern workers can wholly own. With code, workers can make products that they own and exercise creativity and imagination (an antidote to alienation).

Instead of Marx’s prescription of common ownership of means of production, with surplus value redistributed to society, another path is emerging. Everyone can now have access to means of production, own their output, do work that’s fulfilling, and accrue profits to themselves. Podcasts and email newsletters are examples of gatekeeper-less ways to produce something. Social media platforms democratize the ability to market and find audiences.

The accessibility of new passion-oriented means of production is outlined in my blog:

But just as the capital-controlled system entailed risks for workers, the platform-mediated model does, too. Individuals can get “de-platformed,” workers can be banned from marketplaces, and platforms like Apple can levy a 30% take rate on in-app purchases and subscriptions.

The Apple/Hey case has captured widespread attention due to Apple’s scale: the iPhone has an install base of 200M in the US and the App Store is tightly controlled. Apple is a major gatekeeper of the “means of production” if you want to make something that reaches 45% of the US.

Unlike the capitalists of Marx’s time, platforms’ dominance comes not from access to raw materials or machinery, but from network effects. Developers don’t have to build for Apple: they can sell their software on the internet or on other mobile OSs. But developers want to build for the platform that has the most users, and workers want to be on the platform with the most demand. That means platforms are effectively the new limited means of production.

The Austrian school of economics’ critique of Marx is that profit represents capitalists’ compensation for sacrificing present consumption for future gain—they deserve to capture the surplus value. It’s unquestionable that those who built and own platforms and marketplaces have taken on risk, created important infrastructure, and created value for society:

  • There are 2.2M apps on the App Store, and Apple paid out $35B to developers in 2019. That’s tremendous value creation for consumers AND developers
  • Uber enabled 1.7Bn trips to be taken in Q1 ’20. These are transactions that would not have occurred without the platform

There are many more examples where platforms created massive value for society. But the perennial question (which harkens back to capital vs. labor) is: how much platforms should take vs. participants? How consistently should rules be applied?

Marx’s work neglected to focus on the end consumer, and instead hones in on the capitalist and the worker. But the struggle between platforms and participants ultimately spills over into consumers’ lives, manifesting in the prices they pay and the services they can access.

Various people have conjectured that one of the invisible consequences of Apple's policies is the universe of apps that don’t exist because they can’t profitably operate under a 30% rake.

The marketplace counterpart is all of the non-producers that never sign up—that consumers can’t access—because of the platform’s take rate. More on how new means of production enable non-producers to become producers in my blog: https://li.substack.com/p/how-the-passion-economy-will-disrupt

Given our new digital paradigm, we need to re-think platforms’ powers and responsibilities.

In a way, Apple is acting like a government—it enacts a tax. But with the power to govern, there also needs to be transparency around a set of rules and benefits for workers & consumers.

As we shift to earning more income online—mediated by platforms, SaaS tools, and marketplaces—we need to re-think what mutual protections and responsibilities look like for platforms, workers, developers, and ultimately, end users.

100 True Fans

More than a decade ago, Wired editor Kevin Kelly wrote an essay called “1,000 True Fans,” predicting that the internet would allow large swaths of people to make a living off their creations, whether an artist, musician, author, or entrepreneur. Rather than pursuing widespread celebrity, he argued, creators only needed to engage a modest base of “true fans”—those who will “buy anything you produce”—to the tune of $100 per fan, per year (for a total annual income of $100,000). By embracing online networks, he believed creators could bypass traditional gatekeepers and middlemen, get paid directly by a smaller base of fans, and live comfortably off the spoils.

Today, that idea is as salient as ever—but I propose taking it a step further. As the Passion Economy grows, more people are monetizing what they love. The global adoption of social platforms like Facebook and YouTube, the mainstreaming of the influencer model, and the rise of new creator tools has shifted the threshold for success. I believe that creators need to amass only 100 True Fans—not 1,000—paying them $1,000 a year, not $100. Today, creators can effectively make more money off fewer fans.

Sound unlikely? We’re already seeing this shift, according to creator platforms. On Patreon, the average initial pledge amount has increased 22 percent over the past two years. Since 2017, the share of new patrons paying more than $100 per month—or $1,200 per year—has grown 21 percent. On the online course platform Podia, the number of creators earning more than $1,000 in a month is growing 20 percent each month, while the average number of customers per creator is growing at a rate of 10 percent. Likewise, on Teachable, the average price point per class offering has risen roughly 20 percent, year over year. In 2019, nearly 500 Teachable course creators made more than $100,000; of those, 25 averaged more than $1,000 per sale. 

Now, 100 True Fans and 1,000 True Fans aren’t mutually exclusive, and the revenue benchmark of $1,000 per fan per year isn’t intended to be an exact prescription. Instead, this thinking provides a framework for the future of the Passion Economy: creators can segment their audiences and offer tailored products and services at varying price points.

Here’s how it works: A creator can cultivate a large, free audience on horizontal social platforms or through an email list. He or she can then convert some of those users to patrons and subscribers. The creator can then leverage some of those buyers to higher-value purchases, such as extra content, exclusive access, or direct interaction with the creator.

This strategy is closely related to the concept of “whales” in gaming, in which 1 to 2 percent of users drive 80 percent of gaming companies’ revenue (though that model is evolving). Put simply, if you can convince a small number of super-engaged people to pay more, you can also have a general audience that pays less. By segmenting the customer base and offering greater value to top fans—at a higher price point—creators can earn a living with a smaller total audience.

Again, returning to the examples above, this isn’t purely hypothetical. One creator on Teachable who advises artists on how to sell their art made $110,000 last year with only 76 students, at an average of $1,437 per course. Another creator who teaches physiotherapy made $141,000 with only 61 students, at an average price point of $2,314 per course. On Podia, the average revenue per user is increasing, as well. Creators who started out solely selling courses on the platform can now further monetize their audience by expanding into downloads and membership subscriptions. While making a living off the 100 True Fan model is far from commonplace, it’s increasingly possible.

How to earn these high-paying super-fans? 

There is a substantive difference between monetizing through 1,000 True Fans (at $100 a year) and 100 True Fans (at $1,000 a year). Whereas a creator can earn $100 a year from a fan via patronage or donations, collecting $1,000 a year per fan requires a wholly different product. These fans expect to derive meaningful value and purpose from the product.

This represents a move away from the traditional donation model—in which users pay to benefit the creator—to a value model, in which users are willing to pay more for something that benefits themselves. What was traditionally dubbed “self-help” now exists under the umbrella of “wellness.” People are willing to pay more for exclusive, ROI-positive services that are constructive in their lives, whether it’s related to health, finances, education, or work. In the offline world, people are accustomed to hiring experts across verticals (think interior designers, organizational consultants, public speaking coaches, executive coaches, and SAT tutors) and are willing to pay premium prices for the promise of measurable improvement and results. Now that mindset is filtering into our digital lives, as well.

This relates to Daniel Pink’s concept of intrinsic motivation: we’re driven by Autonomy (the urge to direct one’s life), Mastery (the desire to get better at something that matters), and Purpose (the yearning to do work in the service of something larger than one’s self). 

Regardless of the terminology, products and services in this category solve high-priority problems for consumers. Creators pursuing the 100 True Fans model recognize and monetize the desire for improvement and transformation. And better technology, such as video course platforms and improved real-time video streaming, allows for richer, higher-quality content than was possible a decade ago.

There are many examples of existing premium subscription services that have already conditioned consumers to pay high prices for services, whether $200 per month Equinox memberships, $159 per month subscriptions to Rent the Runway Unlimited, or $250+ per month subscriptions to Purple Carrot.

This trend is paralleled in the SaaS world, where paid versions of free software cater to power users or prosumers. Though free versions of these products exist, power users chose the paid version for the efficiency and heightened user experience. Compare, for example, YouTube’s wealth of free video tutorials versus a paid education platform like MasterClass ($90 per class) or Juni Learning ($250/month for private kids coding classes). While YouTube offers a massive amount of high-quality free content, it can be difficult to navigate and personalize. New paid creator platforms are less about mere entertainment or delight, and more about providing a full solution for the user’s desired outcome, including curriculum, accountability, and community.

The recipe for earning $1,000 per fan

The monetization strategy for 100 True Fans also differs from the 1,000 True Fans convention. Easy perks like offering users ad-free content and access to back-catalogs can help creators monetize at a lower dollar amount. But to gain fans who are willing to pay $1,000 a year—no small sum—creators need to offer a step-function increase in value. The recipe, then, is to go niche and to tap into users’ desire for results. Practically, what does that look like? It means providing differentiated content, community, accountability, and access. 

  1. Premium content and community that has no close substitutes
  2. Delivering tangible value and results
  3. Accountability
  4. Access, recognition and status

Let’s unpack each:

Premium content and community with no close substitutes

People are willing to pay high prices for exclusive, differentiated content and access to a network of like-minded individuals. In late 2019, two financial advisors-turned-podcasters launched a private, paid community called Advisor Growth Community (powered by the platform Mighty Networks). The online hub charges financial advisors $2,000 per year to collaborate with colleagues and learn how to grow their practices. It currently has nearly 100 members in its ranks. The career development program Reforge, a masterclass for growth and marketing strategies, charges upwards of $3,000 per seat to hundreds of participants each year.

Frequently, premium content and community are bundled together to enhance the student experience by providing valuable social reinforcement and support. 

Delivering tangible value and results

In China, the unicorn audio course platform Dedao sells paid audio courses that appeal to users’ desire for self-improvement and lifelong learning. The best selling topics include management, study skills, and public speaking. These classes can reach up to 199 RMB (approximately $28 USD)—a meaningful sum in a country where the average income is 21,600 RMB (~$3,100 USD). The most popular course is taught by former Peking University professor Xue Zhaofeng and has over 470,000 subscribers.

While the US podcasting industry is still modestly monetized through advertising, the flourishing ecosystem of paid meditation and audio wellness apps like Headspace, Calm, and Aaptiv—all of which charge subscribers directly—indicate that users are willing to pay for content that tangibly affects their well-being.


The more a student pays up front, the more invested he or she is in achieving the desired outcome. Higher-priced creators don’t only offer more or better content, they also motivate and incentivize students to get what they paid for. For instance, the premium version ($699 vs. $499) of productivity expert Tiago Forte’s Teachable class on digital note-taking and productivity includes eight expert interviews, 16 note templates, six advanced tutorials, and access to a members-only blog. Tiago also shares his numbers publicly, reinforcing the perception of accountability.

Access, recognition, and status

On Patreon, the comedy podcast This Might Get Weird has $5 per month and $15 per month tiers, both of which afford access to a Discord community and extra content. The creator also offers a limited number of $69 per month ($828 per year) subscriptions, which provides a monthly, 30-minute livestream, among other benefits. But the highest-priced offering is a $500 per month ($6,000 per year) tier, which grants users personal coaching sessions with the podcast hosts, via video chat, every 3 months. The top tier offers a level of exclusivity and access that matches the price—100 times more expensive than the base tier.

There are also big, growing businesses in China, such as Bixin, Taobao, and Heizhu Esports (from Netease), in which people pay creators to play video games with them. Some of these users are earning tens of thousands of dollars per month as paid game companions. Beyond purchasing personal recognition from the creator, there’s also the potential recognition of other fans. In the gaming world, whales often lord their big spending habits over non-spenders, thus providing an aspirational target for everyone else. More broadly, products can be designed in such a way that super-fans receive social affirmation from “normal” fans, triggering a positively reinforcing network effect that increases the value of super-fans, beyond the monetary spend.

Twitch streamers can rake in hundreds of thousands of dollars a year from donations and tips—in one recent case, a streamer received a $75,000 tip. The personalized shoutouts from the streamer, recognition, and elevated social status that such donations afford lead to higher levels of spending. It’s worth noting that limited access and recognition are unscalable, to some extent: people are, by definition, paying high amounts to gain exclusive access or to elevate their status above other users.

From 1,000 to 100: Fewer, truer fans

The creator economy is in the midst of a decisive shift—from a “bigger is better,” ad-driven revenue model to one of niche communities and direct user-to-creator payment.An emerging category of digital platforms is helping people to translate their skills and talents into businesses. But as the creator landscape evolves, the playbook needs updating.

Rather than viewing one’s fans as a uniform group, the 100 True Fans model calls on creators to distinguish between various subsegments based on affinity and willingness to pay. The relationship super-fans have with creators is different from regular fans: they become disciples, protégés, co-learners, and co-creators. As such, they require a whole new set of tools and platforms.

The key to monetizing at $1,000 per fan, per year is tailored offerings priced at tiered levels. A creator might have a broad follower base on free social platforms, convert some of those followers to one-time purchasers or patrons, then uplevel some of those users to high-paying super-fans. For founders and operators, that means building products that align monetization with the end user value.

The 100 True Fans concept isn’t for everyone, nor is 1,000 True Fans. Creators that have larger, more diffuse audiences with weaker allegiance or engagement are likely better off monetizing through sponsorships or branded products. For many, that path will be more lucrative—and require less heavy lifting—than designing the sort of high-value, personalized program 100 True Fans demand.

As the tech analyst and blogger Ben Thompson once said, “The internet enables niche in a massively powerful way.” For creators who earn the trust of a niche audience and who deliver what those users crave—whether self-improvement, connection, recognition, or belonging—100 True Fans provides an updated monetization model for the fast-growing Passion Economy.

Originally published at a16z.com

The biggest risk for Passion Economy startups

Creators want a direct relationship with their own users, which is against the platforms’ DNA. E.g. FB restricts ability for large group admins to message members. Agree that platforms adding in direct monetization features is a big risk though to new startups in the Passion Economy. Here’s some tactics for startups to hedge against incumbents:

  • Offer more depth of value for creators. Not just payments but the entire value chain of creating content, merch, etc.
  • Start w/ creators who have a pre-existing audience on large platforms, but quickly expand to fostering to new creators
  • Let creators own their own audience
  • Foster new social graphs that aren’t easily duplicated or subsumed by FB/LI/etc
  • Enable community among members, i.e. the “Come for the creator, stay for the network” approach: https://twitter.com/ljin18/status/1195412859733168128

What else?

Not all communities are created equal

Building a community can indeed provide a moat. But–I find many companies/brands/creators profess to have community, when they really just have customers or followers.

To have a truly defensible community, I believe the following need to be present: high intentionality, P2P interactions, & UGC content.

Hallmarks of “real” community:

1) Intentionality: Members seek out the community as a destination, not just as part of a broader platform’s feed

2) P2P interactions: Strong engagement and ties between members

3) UGC content: Members contribute content vs. just engaging w/ what’s broadcasted to them

More thoughts on community:

My path to VC

Many people ask me about my path to VC. The truth is – I actually *COLD* applied to @a16z.

I didn’t network my way in or know anyone who worked here. I literally just dropped my resume in on a16z’s jobs website, expecting it to go into an abyss. 

To my surprise, @withfries2 emailed me a few days later and invited me to meet him at the office! 

I am eternally grateful for this, because 6 months later (+many more convos, market maps & deep dives), I joined the investment team.

This story totally flies in the face of the referral regimen in the VC industry. The common wisdom is that you need to network in, because warm intros are such an effective filter that many VCs discount cold messages entirely.

But not everyone has access to connections. There’s always someone who first takes a chance on you. I had 0 connections growing up — my mom is an art teacher who, to this day, thinks I work at a mutual fund. (I find this adorable and refreshing)

There were so many times in college that I reached out to people cold — professors I admired to invite them to faculty dinner, senior folks in various industries for career advice, etc. — and was surprised at how often they were beyond generous with access and time.

I keep my DMs open for this reason–because you never know! I don’t respond to most of them, but I read every single one. 

Sometimes there are gems: recently, a PM at a startup sent me a heartfelt video introducing himself, showed his marked-up printout of my blog post about the Passion Economy, and asked if I would give him feedback on an idea in this space. My answer: emphatically yes!

The moral of the story: warm intros are helpful, but shouldn’t be necessary. Talent is universal, but opportunities to connect to people aren’t. To quote Ratatouille: “Not everyone can become a great artist, but a great artist can come from anywhere.”

Future of Social

I like this article by Sam Lessin on the future of social, but think there’s a big omission. Namely, one of the major opportunities in social is to first focus on helping creators monetize and own their audiences, then layering in social elements on top.

Companies here may not look like social products at first, but evolve in that direction. Take Substack, for instance: first launched as a paid newsletter tool, then added community features so that readers can engage with the writer & with each other: https://on.substack.com/p/new-on-substack-build-your-community

Creators are the ones that possess user attention & trust, and will be the central players for the next wave of social.

What is the definition of a “creator”? (as in, creator tools, creator economy, etc)

My learning from this very interesting discussion is that there’s no single, consistent definition of “creator.” Which goes to show how nascent this entire ecosystem is!

Some recurring themes emerged from everyone’s comments:

  • ASPIRATION – creators want to grow an audience, even if they don’t have one today
  • VALUE/IMPACT – creators make something valuable for others
  • INTENTIONALITY – they treat their work as a craft and want to improve upon it
  • INCLINATION – creators are those who want to create more if they had time & money
  • LITERAL CREATION – (the broadest def.) creators as anyone who creates anything, including communities, art, etc. Some even said ‘creators’ encompass those who never share that creation with others.

Community-as-a-Service, or how to monetize access

As consumers desire greater control over how they spend their attention, an emerging biz model will be paying for ongoing access to *people*–or what I’ll call “Community-as-a-Service.”

There’s now lots of subscription services for high-quality premium content (Substack for newsletters; Knowable & Luminary for audio, etc). But for creators who lack the ability to sell something tangible, Community-as-a-Service enables monetizing *time* and *access*.

Examples of Communities-as-a-Service:

– Tools like InviteRobot & LaunchPass enable paid Slack groups

– Knowledge Planet in China allows KOLs to create paid groups & interact w/ subscribers

– Video games: people pay for status & attention in communities like Twitch, Fortnite, etc

The Community-as-a-Service model can combine paid subscriptions for access to the community itself, and tipping to express support/appreciation (including admins tipping community members for valuable contributions!).

Not every community can successfully charge for access. The paid model works best when there’s high intentionality (the community is a destination), desire for recognition within the community, peer-to-peer affinity & interactions, and potential for ongoing exchange of value.

For fans, the value prop is meaningful conversations and connection with each other and deeper engagement w/ someone they have affinity for. For creators, the benefit is being able to earn money and engage with fans, without having to produce something.

Deeper trends driving this:

– Creators have amassed audiences but lack ways to monetize it in a value-aligned way (not ads)

– Desire for creators to own user relationships directly

– Move towards curated micro-communities

– Value of experience over things