Contrary Research Rundown #64
The Death of the Creator Economy, plus new memos on Getir, Gem, and more
Research Rundown
In 2021, a lot of categories were popping. Crypto was reaching all-time highs, with everyone from major enterprises to top venture firms buying in to the hype. Quick delivery was touting $5.9 billion in funding in the first 9 months of 2021 alone. But one category in particular has, more than any others, seen a meteoric rise that has left very few survivors: the creator economy.
In 2021, the creator economy was valued at $104 billion. Some studies found that platforms like YouTube were paying out $30 billion to creators. The number of creators skyrocketed 48% year-over-year, to include 50 million creators. But everything changed in 2022. The funding for creator economy startups saw a precipitous drop from a high of over $2.5 billion in 2021 to ~$123 million in early 2023.
Just a few weeks ago, TikTok announced that it was shutting down its $2 billion Creator Fund that was created in 2020 to help creators monetize their content on the platform. This followed similar news from platforms like Instagram’s Reels. Increasingly, the creator economy has proven to be less of a democratization of tools to enable a generation of creators, and instead yet another power law of supporting the loudest voices.
One overview summarized the power law that most creative platforms live by:
YouTube: 90% of subscribers come from less than 5% of channels
Twitch: 90% of revenue comes from less than 10% of Twitch accounts
Patreon: 70% of revenue comes from 3% of Patreon accounts
Substack: 90% of revenue comes from less than 10% of Substack writers
In the Napkin Math piece on the Creator Economy, Evan Armstrong articulated the dynamics at play this way:
The power law is the only law of the internet: 99% of the value accrues to the top accounts and the rest is distributed over the population of the planet. From my article last year, “According to a Linktree survey, only 12% of full-time creators are making more than $50,000 per year, and 46% of the same cohort makes less than $1,000 a year. Even more brutally, 66% see this as a side hustle.”
Over and over again, its proven true that enabling small businesses, be they plumbers, freelancers, or YouTubers, is incredibly difficult. Going forward as the macroeconomic conditions force startups to focus on efficiency, the name of the game in serving the participants of what’s left of the creator economy will come down to (1) owning relationships with the largest players (often most doable by the content platforms themselves), or (2) efficiently serving the long-tail. And high-growth blitzscaling isn’t going to cut it in the world we live in today.
Getir offers ultrafast food and grocery delivery and other on-demand services.To learn more, read our full memo here and check out some open roles below:
Senior Cyber Security Engineer GetirFinance (FinTech) - Istanbul
Finance Intern - Istanbul
Gem is a talent acquisition platform that seeks to streamline the hiring process by aggregating data, automating outreach, and tracking candidate interaction. To learn more, read our full memo here and check out some open roles below:
Kalshi is a prediction market that allows users to trade directly on the outcomes of specified events. To learn more, read our full memo here and check out some open roles below:
Backend Engineer - NYC (Remote)
Product Designer - NYC (Remote)
Stripe Climate announced the launch of Climate Orders, a platform to enable customers to pre-order carbon removal tons. The program includes partnerships with companies like Watershed, Patch, and more. For more on climate tech, check out our deep dive.
CoreWeave, an AI platform building data centers on Nvidia chips, is in the process of raising funding that would value the startup at $7 billion.
Deel, last valued at $12 billion, is on track to generate $350 million of revenue in 2023. To learn more about Deel, check out our memo.
Telephony company Five9 is reportedly in talks to look for a buyer. While the company previously turned down an offer to be acquired by Zoom for $14.7 billion, it is now trading at a market cap of ~$5.8 billion.
AI-startup Runway announced a partnership with Getty Images. This is a far cry from Getty Image’s previous splash in the world of AI when they sued Stability.ai.
The CEO of Hugging Face, Clem Delangue, shared a post claiming that certain open models are starting to surpass the performance of GPT4 for specialized tasks.
SpaceX is reportedly in talks to close a tender that would value the company at $175 billion. This is in addition to rumored talks of a potential IPO for the company’s satellite network, Starlink. For more on SpaceX, check out our memo.
Potential IPO candidate Navan (fka TripActions) announced a 5% layoff of staff, impacting ~145 people. To learn more about Navan, check out our memo.
Register here for our next Tech Talk on Jan 30th, 2024, in SF - featuring founders & senior engineering leaders from Stytch, Figma, Hex, and more!
Hosted by Contrary’s tech team, it’s an evening built by engineers for engineers — each company will live demo their latest features for leading builders in the Bay.
In this week’s episode of Research Radio, we sat down with Lithic CEO Bo Jiang. You can check out the full episode here. You can also learn more about Lithic by checking out our memo on the company here, and our breakdown of the landscape for fintech infrastructure here.