I went to Creatorfest🤩, and I left with a completely different perspective

Hey!

I’m sitting in the lobby of the JW Marriott in Orlando.

I am part of a throng of creators that has invaded this fine hotel and ate its sushi and swam in its olympic pool.

Tbh, most of the creators at Creatorfest didn’t really belong at this hotel. This hotel is for people who do business. And most creators think like this:

But Creatorfest had to be at this hotel. The guy who organized this said he was willing to risk losing money to put it at this hotel.

Because… this event was all about getting creators to build businesses. Now do you get why I went?

🤔 Creators make money?

That’s what most people think when they hear “creator business.” but in fact the market is maturing and there are lots of different businesses models that are working.

Look at all those possibilities…

When I started making money from digital content, no business models existed yet. I mean, Facebook didn’t know how it was going to monetize yet. Here’s how my partner Jeff and I did it in 2006:

• Equity

• Angel investor money from HUGE VCs (Howard made this happen)

• Ads we created for sponsors like LifeLock

• Selling to CBS

At CBS, we were tighter with the sales team than any other department. Why? Because we worked together to solve the business.

How the hell do you sell a daily webshow inside a huge network that primarily sells $4B worth of television ads a year? We never figured it out… so, together, we pivoted

To brand integrations. GM, AT&T, Ford, Motorola… when they struck huge television deals at the upfronts, they off-gassed a few digital-only content buys. Those were our bread and butter.

We built CBS’s first digital branded entertainment studio. And we made money from content.

By then, lots of folks were. And these business models were starting to evolve. But really just along traditional entertainment industry paths… advertising, integrations, influencer marketing, agents, managers, etc.

What is happening now is different. It’s more entrepreneurial. More like what we did back in 2006.

I find that idea super exciting. But I don’t think this shift came out of nowhere. It’s a direct result of bigger changes in the way we work.

Your 9-5 isn’t safe

I heard this over and over onstage and, let me tell you, it resonated in the crowd.

We’re used to “don’t give up your day job.”

But the feeling here is “don’t count on your day job.”

These folks are trying to build creator businesses to protect themselves and their families.

One speaker said his dream was that his mom could quit working. He was worried that she would work until she died. And now, he’s paying her a full-time salary.

Now there was definitely some seven and eight-figure energy in the room, but even those people… Eddie Malouf paused during a rundown of his various revenue streams to declare that he’s got passive income that pays for his kids private school. And if someone in the family gets sick, or their house gets destroyed, insurance doesn’t matter- he can pay for it cash. And that’s all that matters to him.

He is telling us that he’s safe.

What we’re seeing here is kind of a “Third Act” for the creator economy. Act one: ads, Act two: brands, Act Three: businesses.

COVID f*cked a lot of things up in the labor market, at least here in the US. And a lot of things about it were already f*cked.

We’re still trying to figure out what the future of work looks like and, for some, the creator economy is feeling less like a get a fantasy rich quick play, and more like a lifeline.

I talked about this stuff in more detail in a Creatorfest collaboration with my friend Lauren Gibson, a LinkedIn Creator who writes about the future of work. Stay tuned for that (assuming the mics worked 🤣).

The other thing I heard a lot onstage was…

Own your audience   

The advice went like this:

Your audience is an asset.

Do not be reliant on a platform like Youtube or Instagram for your asset.

That platform that can lock your account and take it all away at any moment with no explanation whatsoever.

Move your audience to a plaform that you control.

In other words, think like a business.

1. De-risk your revenue opportunities

2. Use data to increase your leverage

3. Diversify your revenue streams.

In practice, this means convincing your audience to join your email list, your newsletter, your product list, or your community… basically to capture their data and get them to opt-in.

I say all the time that audience is like real property. It grows in value. You can cash flow it, leverage it, and even sell it. But you can’t do any of that until you own it.

See, I tend to think about “own your audience” in terms of increasing your leverage and diversifying your revenue streams. But onstage they were focused on the de-risking part.

And that helped me realize something else…

Some of these business models are risky

I really enjoyed meeting Tyler Chao, the “Creator’s Attorney.” She makes great content with the legal lowdown on the juiciest disputes in the creator economy. She’s got a great one just out on Mr. Beast.

But most of her talk focused on the perils that a successful creator has to navigate… vulnerable IP, unfair brand deals, weak freelancer agreements, etc, etc. It struck me how much of her work centered around sticking up for creators in the face of bullying from brands and platforms… especially the platforms.

The platforms that cultivate creator businesses make their money on ad revenue. Everything else on that list of business models above is not “platform friendly.”

The creators’ incentive and the platform’s incentive aren’t aligned. And that can lead to all kinds of problems.

These folks deal with their accounts getting shut down on the regular. And when they’re gone, they’re gone. And It’s not like they are all out there inciting insurrection, or breaking the law, or doing something dangerous.

There was one instagram influencer there, Stephy Chen, who built an audience of 750k followers. She is all about making money online. She loves affiliate deals.

For example, she sells a $7 course on how to build your influencer brand. She uses this low ticket item to try and sell you into another course not run by her that costs thousands. She makes affiliate money on that course.

But if you click on her handle above, you’ll see that I was lying. She doesn’t have 750k followers. She has a few thousand.

That’s because of this…

Her account got banned. Overnight she lost her whole audience and millions of dollars in potential revenue - most likely because Instagram doesn’t like her business model. Risky. But still…

I think the affiliate model is really exciting

You know this about me, because you read all about it when I made the case that LinkedIn should build a TikTok Shop for B2B affiliate deals.

With consumer products, this model is tried and true - your audience buys the product, you get a commission. Amazon made this a business, and TikTok Shop is currently taking it to the next level.

But the affiliate model that got all the attention at Creatorfest was the B2B stuff. Big ticket items with generous affiliate commissions. Software platforms, tools, infrastructure, and coaching programs like the one that ___ was selling.

The lead sponsor of Creatorfest was High Level, an all in one Customer Relationship Management software. I like High Level. We use it. And they are an early pioneer with this kind of affiliate model.

High Level doesn’t have a sales team. Instead they have two affiliate programs. The first is how I first signed up for High Level.

1. White label - you pay High Level $297/month and you can be your own High Level. You can onboard as many clients as you want, and charge them whatever you want monthly. You get no tech support - you are the customer service for your clients. And you keep all the money.

2. Affiliate - you sell High Level to your audience using the referral link. The platform costs them $97 and you make 40% for the lifetime of the customer. So that’s 40 bucks per month per customer you sign up.

High Level had affiliates onsite that are making hundreds of thousands of dollars a month with this model.

High Level is very flexible and does a lot of different things… you can create a templatized version of High Level around, say, your “proven” system for collecting Real Estate leads and selling them million dollar homes and make the template part of your referral.

Or you can take it a step further and offer your audience a free three-day course where you teach exactly how to execute your system for selling million dollar homes, all based around your high level template.

You get 30 people to sign up for that, you walk out of that three day course with $1,200 per month in passive income for as long as those 30 are on High Level.

There are dozens, maybe hundreds of lucrative B2B affiliate opportunities for creators. There were at least four at this conference alone.

Eddie Malouf was the speaker who has built the most sophisticated operation around affiliate programs. I asked him how he vets the deals, and he told me

“I only sell something I actually use. I wouldn’t do the deal if it wasn’t a product I know works and I can offer authentically to my audience.”

That frame is what I love about the model - the creator is building value on top of the product because they have a revenue stream that supports it. And the better they optimize that value, the more money they make.

Are you starting to see how these creators can build real businesses around this model?

The dark side of affiliate deals

If you read this, you know I like aligned incentives. When creators start making money on affiliate deals where the platform gets nothing, the platform and creator incentives are misaligned.

It’s rational for the platform to use its leverage to ax these accounts and redirect the audience to other creators where the revenue models are aligned. But it still sucks.

But to me, the bigger cost of misalignment is too much risk. 

As the name suggests, High Level is above board. Most of these B2B affiliate deals come from credible sources.

But there is inherent risk in endorsing a product, and much greater risk when no company is vetting the deal for you.

Another event sponsor was offering a crazy affiliate deal that got my spidey-senses tingling…. Copecart is a payments platform for coaches and courses. It’s essentially a broker that maintains relationships with 9 different payment processors.

If you bring them a customer, they offer a commission of 5-9% of all transactions that customer pushes through their platform for the lifetime of the customer. Crazy, right? This could be millions of dollars from the right customer.

But two red flags:

Copecart’s whole thing is that “payment processors don’t like creators,” but when you dig into it, it’s really that payment processors don’t like coaches and they don’t like courses. Which is another way of saying they don’t like fraud.

Now, I’m not saying that all of these businesses are fraud, but they are completely unregulated, and they’re selling something that other, regulated, providers sell. So that means they are skirting regulation, and the potential for fraud is totally there. Intentional and unintentional.

And that tells me that selling affiliate deals like that, the way that ____ did, is just risky.

And, although the Copecart deal is super lucrative, there is a lot of potential for shadiness in the financial transaction space.

To be clear, I saw no evidence of anything problematic with that company, but those are deep waters. I just feel I’m too ignorant to evaluate the risk. And if I am, that means that most creators are too.

These deals essentially turn affiliates into the gig economy version of a sales team. And when you’re a creator, you are playing the role of both endorser and seller of the product.

That’s too much risk to take on, which is why I’m beating the drum so hard for a LInkedIn marketplace. Let’s align some incentives around these deals and make them less risky for creators.

Just to be clear, none of this means there is anything shady about the creator economy. This sort of risk is always present with emerging business models.

Remember I told you Lifelock was one of the first sponsors for Wallstrip? Well that deal was struck with CEO Todd Davis, whom we met and hung out with… and who, years later, resigned in disgrace after the company was hit with a record $100,000,000 fine from the FTC for fraud.

Which brings us back to my favorite subject…

Me, me, me

It’s been a long time since I’ve been to a conference like this. I reconnected with some old friends like Jim Louderback, who I haven’t seen since his NextNewNetworks days. And I met lots of new friends - creators, industry folks, brands.

I also learned something important about moi.

I have built a successful career and a happy life by being both a creator and an entrepreneur. Jeff and I started on this journey by making personalized marathon videos with two VCRs on the floor of our living room in LA.

Every step since then has been either about making content or building businesses. The most rewarding parts have been about both.

I inhabit the space between creator and entrepreneur, and I identify with both groups. I can teach both a lot, and I can also learn a lot from them.

So I’m leaving Creatorfest energized about helping creators become entrepreneurs and helping entrepreneurs become creators. I believe we can solve a lot of content problems with business, and I think we can solve a lot of business problems with content.

If you got this far, for godsake you deserve some key takeaways, so to summarize:

• The creator economy is entering it’s third act, the rise of the creator led business

• Opportunity is on the rise, and creators are meeting that challenge with (no surprise) really creative strategies

• This evolution is all about risk. The deals are risky, because the infrastructure isn’t there to support them, but the risk of NOT building your own business is also increasing.

That last point was really palpable at the conference. Just look at Stephy Chen’s takeaways from Creatorfest… for these creators it’s all about risk, and steeling yourself to take it on:

That’s all for now. Thanks for reading🙏

Until next time…

Be Spontaneous, ae

☯️