BITKRAFT Summit Berlin 2021 | The Creator Economy with Ryan Wyatt

so we have the next panel sort of coming up which touches on the creator economy um this will be our dear guest carlos that you've seen already our principal based out of new york who is going to present here together with sebastian park our venture partner and the co-founder and ceo of infinite canvas so um welcome back home back on the stage carlos you want the clicker or the weather i think we have the clicker do we have a clicker there's the figure there there we go thank you jens hello everyone thank you so much it's been a long day we've had a lot of fun out here and we're going to talk about something that's near and dear to both of our hearts which is this growing billion dollar 100 billion crater economy you know something that's happened in the last bit here i would say probably public perception last 24 months but really the last 10 20 30 years is that there is an increasingly

democratized ability for more and more people to come into the crater economy to make things to build upon things and we're seeing this with the combination of the platforms out there and creator level direct to consumer monetization creating this second renaissance so what do we mean about this whole second renaissance thing let's first start with the most obvious question which is like how does this relate to the first renaissance well for us we see a period in which society hadn't really developed much artistic output and then it went through an explosion of basically private individuals greatly financing arts as status public service whatever it may be which really created a bunch of foundational works of art that we still live and love today um now it's a big order to talk about the second renaissance in those contexts right like are we really talking about a world in which mr beast is the next da vinci but really what we mean here is if in the first renaissance the explosion

in art was financed by private individual capital in the second renaissance there is a positive feedback loop between tech and creators that enables another explosion of creativity in jobs and changes how society interacts with both media and culture so let's take a look at what that loop actually looks like at the very beginning of it you have creative passions this is the early days of youtube these are all the people who made a video to the crickets and then eventually build an audience and over time had a little bit of modernization in the early days a lot of that monetization was mostly b2b um it was platforms it was some programmatic advertising there was very you know not much opportunity for people to make real money with it as a matter of fact the person who coined the second renaissance the ceo of patreon jack conte says that when he started patreon was because he spent a bunch of money making some really cool music videos and then he got like ten dollars or something like that from youtube and so monetization has always been this huge problem um this has started changing uh we have

definitely seen improvements in modernization which we'll be going into later which in turn lead more creators to enter the space because it makes sense right you can actually get paid so incentives dictate behaviors this lens leads to distribution evolving distribution evolving can mean a couple of different things it can either mean the platforms themselves like youtube or you know twitch or something like that just getting better launching super follow features launching more meaningful ways for the audience to connect with the creator or it can mean new platforms all together patreon cameo i mean we've certainly seen the rise of tick tock and other things like that another big piece of this is tools and legoization when you think about the journey of being a creator of being a solo entrepreneur the fact that there are now tools that allow you to either be faster to do better engagement to connect your sub stack billings to an api that allows uh basically your accounts receivable to be financed in real time so that you don't have to wait until you're paid to get your money all those things ultimately

decrease friction again improve monetization but all of that together we start seeing cultural change we start seeing a world in which everyone wants to be a creator in which all of us are on youtube and all of like instagram whatever it may be the profession of creator is extremely recognized which in turn leads us back to monetization now again this isn't a linear thing this is a loop and we believe that we have entered a phase of explosive growth where we will be looping faster and faster and faster so the truth is a lot of this is kind of old news to some people who were very very smart to see it back then and instead of us talking about it let us show you a brief minute or so video i think we've even seen the tip of the iceberg i think the potential of what the internet is going to do to society both good and bad is unimaginable i think we're actually on the cusp of something exhilarating and terrifying

it's just a tool though isn't it no it's not no no it's an alien life form what do you think i mean when you think then about it it's their life on mars yes it's just landed here but that's it's simply a different delivery system there you're arguing about something more profound oh yeah i'm talking about the the actual context and the state of content is going to be so different to anything that we can really envisage at the moment where the interplay between the user and the provider will be so in simpatico it's going to it's going to crush our ideas of what mediums are all about and but it's happening in every form it's happening in visual art the breakthroughs of the early part of the century with people like duchamp were so present in what they were doing and putting down the idea that the piece of work is not finished until the audience come to it and add their own interpretation and what the piece of art is about is the grey space

in the middle that gray space in the middle is what the 21st century is going to be about so ah looks like we've lost the light there but basically a lot of this comes back to this notion of a thousa a thousand true fans right so the audience the creator relationship allowing you to monetize rich cohorts basic math of this whole a thousand true fans is all you need if you imagine charging your consumer whether it's sub stack or patreon ten dollars per month times 12 120 dollars per year times a thousand 120 000 per year which is like three times the median income of the us being a creator is big business let's go back to monetization so three broad stages of monetization for us to talk about the early stage which was b2b centric meaning platforms dealing with brands some programmatic advertising to the creator basically very low monetizing and only available to those with massive

followings so if you look at the guinea coefficient tracking the real world the u.s real economy in the creator economy it's very clear that it was a deeply unequal space we then saw the next stage of it which i think kylie jenner is probably one of the best examples of it or one of the earliest examples of it which was i'm a huge creator and i will use my top of the funnel audience interaction to drive the consumption of consumer packaged goods or other types of products so first with the launch of kylie cosmetics which was ultimately acquired by a controlled interest by cody for 1.2 billion dollars then diversifying to kylie swim and kylie baby same thing for mr beast who was a youtube guy still as a youtube guy and then out of nowhere comes out with 300 burger locations across the u.s with his own delivery trucks and a cloud kitchen and all that needs a bunch of scale ultimately a low margin business now is the part that's really interesting software is eating the creator world because so much of consumption keeps shifting digital and there's ability to distribute digital goods

we're now seeing this place where creators can distribute frictionless high margin goods whether that's art and nfts where crypto punks have a combined ev of over 5 billion dollars and were made by two people gaming where seb is a true expert and he'll talk all about it but there's kids making upwards of a million dollars per year making games on roadblocks or sub stack where people are leading or leaving leading news publications in america or colleges to write to subdirect to subscribers and making upwards of two million dollars a year and it's really important that we take a step back here and think more broadly about how this affects not only venture capital but the entire investment ecosystem as a whole what we're seeing now is that because there is a plethora of options for people to be able to not only invest in but also to monetize themselves if you are a creator in the video ecosystem in the music ecosystem in the writing ecosystem and the gaming ecosystem which we'll talk a little bit more about later but and also categories we didn't know even existed prior these

are some of the biggest companies we're seeing and types of companies that they're creating entire inside of their platforms just below not only my mind but all of us those oh all of us here at bitcraft rather what's particularly interesting is that this is something we've seen before from a pattern matching standpoint this is very similar to what aws did for sas we saw that changes in platforms and changes the ability for users in the previous case companies that you know sold to people or had services that were maybe initially just legos to people now what we have is that you can do it for any bit of the space be it for writing you have sub stack for streaming you have twitch and youtube for gaming we had roblox and manticore and minecraft this type of ability to create tools and give this tool to just the masses has created far better companies and far more interesting monetizable people and monetizable companies that have grown from solo entrepreneurs one thing in particular that we like to point out on site and something that i

think feels very close to my home and to all of us over here at bitcraft is that crypto's unlocking this loop even to a further extent right so before we're talking about d2c platforms we're talking about how people are interacting with different organizations and different platforms well crypto allows people blockchain allows people to disintermediate that bit and go work directly with their fans work directly with their thousand true fans figure out ways to do in a decentralized manner and it's really allowing them to be their own internal ecosystem i love this slide because you know really when you see an equation that equal sign most people think goes left to right but it's actually goes in both directions especially when we talk about loops so today most american kids would rather be youtubers than they'd be astronauts some most absurd concept and it's because we see the combination of monetization and exposure happening real time to us we see tick tock houses really overtaking traditional celebrities we see the ability for people to monetize their nfts in a proper way and this is leading

to more creation of funds and everything else that go through it so even though all of this again seems very new except for david bowie i guess we can actually tie a lot of this to traditional sort of humanistic frameworks so to go all the way back to college 101 and borrow from maslow's hierarchy of goods at the bottom of it our most basic human necessities safety and psychological needs which as society develops especially for you know basically modern governments these are increasingly provided next comes belonging and esteem right our desire to feel like we belong somewhere our desire to feel loved i actually think a lot of this ties to a the initial explosion of web 2.0 and early social media and also a lot of what drives that engagement today if you think about why a lot of us are on social media it's because we finally found a place where every weird little habit we had that we

thought hey there's not like 10 people that will like this there's actually a million you can find millions of people who want to watch cat videos or bird videos or plant pruning videos or literally anything you want and so the notion of being able to see fragmentation of macro communities into micro hyper-engaged communities fulfilling the belonging need and esteem ultimately it's packaged likes and shares right it's never been easier for you to have although a slightly twisted version or idea of how esteemed you are but we certainly have been able to quantify it in ways that have never been possible before which then leaves self-actualization our desire to feel that we are living a true life to ourselves our desire to feel that we're fulfilling our destiny so to tie back to the previous slide on aws and sas i feel like in the early days of the startup boom the narrative of sort of like young people are quitting their traditional corporate jobs to join startups and it's certainly like a lot of what we see today and a lot of

why people do that has to do with hey i just want to be at a company that speaks to my values right um i think that there's no bigger fulfillment and self-actualization than the solopreneur journey or at least for a lot of people there won't be more than that and it's increasingly become easier to be that and so if you're a micro-influencer who again can monetize a thousand true fans or maybe a hundred true fans we can monetize a hundred dollars a month instead of ten it's never been easier for you to self-actualize and live your life and that's the pitch we see from the platform so gum road for example which is one of these early modernization platforms is very clear stop wearing a suit ditch your corporate jobs do whatever you want and monetize your passions so what does all mean for us yeah i mean for us here at big craft we're actively investing in the crater economy always with a strong focus on gaming of course but you know in the json areas as well where here's some key themes that we'd love to share with you the emergence of dowse user-generated gaming digital art and design tools and tech we're really happy and excited to

be involved in these things we have some really awesome investments have we've already done through i'm particularly partial to one of them but splash manticore infinite canvas among others are really a large part of the crater economy and sort of what we see as a future of this space in particular we're also very happy to have with us mr frizz himself we have mr ryan ryan wyatt for the broader audience yeah yeah i suppose ryan has a real name but global head of gaming last i checked of youtube and someone who we is actively we're actively loved talked to him just about the economy and the creator economy as a whole ryan how you doing my guy it's kind of doing well can you guys hear me all right yeah we can hear you awesome thanks for having me great presentation i loved it talking about the creator economy ryan is like the voice from the great beyond but he's so important to create our economy that it really is like ah creator god talks to us from about there well well ryan we're going to just jump

straight into it because you are a true historical expert at this point golf and all and so just want to start from the top like how have you seen this economy change how have you seen the evolution of people in the crater economy on youtube and what have you guys been working on that yeah it's a great question i'll try to keep it brief but uh obviously there's a lot to unearth there it's really fascinating when you go back like let's say 10 or 11 years on youtube um with the rise of the dazzle capture card you started to see between fraps and that people actually just recording gameplay content and putting it on youtube at the time youtube actually kind of kept some of that swept that stuff under the rug like did not want gaming to be at the forefront of youtube and like had a very different perspective about the space um and so they would have these categorizations this again 10 11 years ago be like pets and animals and auto and travel and all these things but never acknowledge gaming right and so you had gamers that would basically be like oh it's the halo warthog so i'll put it under automobiles because it's a car right and so you go from that and i

think you guys were right like really what you start to see is just a lot of passion of like wow i had this great moment in gaming and i want to share it with you all so when we started to flip on monetization so when youtube first flipped on monetization they only did it for really establish what we called multi-channel network so like machinima and maker in full screen where the individual creator was not able to be a part of the partner program thus they had to roll up into these bigger multi-channel networks in order to get ads running on their content but you also called out a really good point like an ad supported business is great if you're really big right you've got millions of views you have that it's like evergreen content in a big way and you start to really mount more revenue over time but that only really services a you know a small majority of creators now youtube is generating billions of dollars quarterly of ad revenue but we really recognize creators are are you know multi-dimensional both from the formats that they want to create as well as the monetization and so you know to answer your questions succinctly where we see it now is we are

so focused on what we call our alternative monetization suite so all of our non-ads products we continue to launch things that are super thanks and supervod and channel level memberships and sharing revenue that we get from youtube premium which is our subscription offering right and so we're going to do more of that um we're allowing creators to tag products and allow for you know native shopping on youtube that's a big one as well as we get more into commerce so yeah we're excited to we agree wholeheartedly that you know you need to continue to allow for more monetization options to get more content into the ecosystem and enable more creators globally as well right where some markets if you look like india it's not really supported heavily with from an advertising perspective yet because a lot of this money is still spent on linear television they haven't seen the digital age switch yet from an advertising perspective so in the absence of that while we wait for that transition a lot of these all bond products do well for creators to keep it going awesome so ryan when you think about

youtube's overall capital deployment in this you guys obviously crush video right like there was a slide that we had to cut to be brief on time but basically said you know youtube was a relatively it was a smaller percentage of how people professional creators spend their time in a much bigger percentage of how they make their money right it's very clear that people are using all these other things to stop a funnel to get a youtube sub to make money so when you think about how you grow youtube and how you deploy resources both sort of like the corporate strategic m a resource than the creator fun stuff how do you think between expanding your lead in video at sort of like the short form whether you know five to 15 minute long segment versus broadening into either shorter form or investing in the tech stack or like all that right you touch on some of this basically right but how do you think about just keep crushing it where you are and just dominating more and more of that versus being ahead of the curve and crushing other markets that tie back to the creators we definitely don't like using words dominating and crush but i like the spirit of what you're saying

versus tech uh difference but no i hear what you're saying so i think there's a couple things like we really want to make sure that we can completely differentiate ourselves particularly if i think of youtube gaming people are like oh twitch and facebook gaming right or they like naturally gravitate there and i would say we're worlds different than both of those platforms and i'll tell you why right my focus is making sure when i talk to a gaming creator that our value prop is youtube gaming is the largest platform in the world by daily logged in users consuming gaming content far and away not just video just like full stop largest gaming platform in the world second you have three really important video formats to interact with your users and fans with and grow your audience vod tried and true shorts right very much in line with what you're seeing with tic toc and you know even vine before it and then live streaming right live streaming i look at as a secondary market when you look at contribution a vast majority of watch time if you took like twitch's watch time and youtube gaming and facebook and you threw it all in a pot a vast majority of that is actually vad not live um and it's actually shorts is the

one that's kind of eating into the vadin live space i think live streaming so that's like how i look at it so when i when i think of allocation of resources from a tech perspective is how do you make those things better those three things how do you make it easier to create how do you make it more monetizable how do you make like anything that reduces the opportunity cost which in short form there's a decent amount you know you've got this long video that you recorded and you just want 12 seconds of it and you want to kind of put that out in shorts like how do we reduce the friction there to get output higher um on the capital investment side it's really in shorts and live it's where we're behind right like if you look at where there's a lot of competitive pressure you've got tick tock in there and you've got twitch and facebook coming here so like big companies and that's like where we have a biggest absence of content so we had a short spawn that we launched that's that's obviously broadly deployed 100 million dollar fun across all of creators then you'll obviously see in the news we're signing live streamers and we're acquiring live content we're particularly behind in english speaking live streaming so we're really bolstering the line up there like we're

really good international with live streaming we have not done well with western english and so why is that and there's like two things one we need to get a better product of live monetization right so you think about all those product suite that we need there's room to improve all of that two we have to evaluate the barrier to entry to be a creator right to be a partner in youtube it is actually hard it's ten thousand hours of watch time it's a pretty big step so when you see like twitch or facebook you look as a new creator you're like i can actually get going there easier so we want the velocity to get going as a creator much higher on the live streaming side and there's work there and so we think of these like tentpole creators where we're gonna deploy capital as a great way to say we'll do this stuff in product parity and then we'll show you what a great creator looks like on youtube hey if you guys want to hear more about from fuzz himself this is the type of stuff that you find him on twitter whiz thank you so much for joining us it's been an absolute pleasure yeah good luck great rest of the summit thank you cheers and i think with that we should toss over to mr yen's pastor dance thank you

everyone