I’ve been in the creator economy for 20 years now, so I’ve seen the market both deified and demonized 100 times over.

Depending on the moment, when I tell people I’m in the creator economy, they either assume I drive a Lambo or, with concerned eyes, offer to pick up the check.

And both have been true, and heavily driven by a handful of Forbes articles that broke the brains of money dudes (mostly dudes) in one direction or the other.

The market’s always been growing, but the vibes keep changing.

And the market, no matter what the experts tell you, is heavily, heavily vibes-based.

But with M&A markets as hot as we’ve seen since MCN 1.0 (my sponsor, Rockwater Industries, can attest!), we have to ask: bubble or breakthrough?

I’ll argue against myself playing out both scenarios.

Also in this edition:

🤔 Massively Funded Companies Can’t Be ‘Creator-First’ (Thoughts Are My Own)

🧵 Threads Posts Can Now Send to Instagram Stories

🤓 Zuck Takes the Stand and it Gets Weird

🫰🏼 Snap Launches Subscriptions

🍔 Food Creators Get Their Own LTK

💪🏼 Jobs from Tinder, E.L.F. Beauty, and Apple

🎭 …and a dank meme from yours truly!

Let’s get into it.

TLDR:

During the first ‘high time’ of the MCN 1.0 bubble, I was the VP of Network at Fullscreen.

I vividly remember when Maker Studios sold for $1 billion to Disney.

Within one hour, I had most of the 30 members of my team come into my office asking, “If we sell for $1 billion, how much will they make?”

Then our CEO, George Strompolos, announced, “We think we’re worth more than that.”

Stunned.

I had deep knowledge of all sides of the operation, which was going very, very well, but I still mentally lived in a world where our valuation was closer to $100 million.

Turns out they were right. But also, turns out I was right.

The media companies that bought MCNs at that time had no clue what they were buying.

When Disney realized what PewDiePie’s content actually was, they flipped out.

And now we’re starting to see some of the same kinds of money being thrown around with Fixated (my former team) raising another $50 million for M&A and Night following up with $70 million (whose team also includes Ezra Cooperstein and Michael Gordon from my Fullscreen days).

So is this doomed for the same fate? Let me argue both sides:

THIS IS A BUBBLE

Just like MCN 1.0, these investors are being sold that they’re buying the future of entertainment, but they’re actually buying relationships that don’t have a huge moat.

Creators leave representation companies all of the time.

I’m currently working with a talent (who shall not be named) who has been a client of every major agency in the past decade, and now they’re with me. Transparency note: I do not have the budget of a CAA, UTA, WME, or even a mid-sized Jamba Juice outlet, and yet I’m clearly giving the client something they weren’t getting elsewhere.

These companies have systems, tech, and ownership stakes with value in all of these companies, but certainly not to this level.

The M&A will consist mostly of these companies buying the revenue of more boutique companies, hoping they’ll take more equity than cash by selling them the unicorn dream (shades of the Defy debacle), and tell their investors they’ll be able to grow these companies at least 30% year-over-year while secretly hoping they’ll just do it by themselves.

Most won’t, and the hold co strategy will fall apart within a few massively missed projections, and these companies that were funded as $500 million companies will be revealed as the $50 million companies they really are.

No one makes money, they go away quietly, the execs all go on to play the game at other companies (I’m addicted to checking the histories of execs who raise big money and a lot of them are amazing at losing money for investors and blaming other forces!).

THIS IS A BREAKTHROUGH

Unlike MCN 1.0, we’re at a time when a creator’s pathway to success is clearer and requires more knowledge, tools, and hands-on work.

These well-funded orgs will buy a bunch of companies that have the best pathways to profitably get this work done.

Win for the creator. Win for the company. Win for the investors.

With the expansion of AI, new forms of massive monetization (digital courses, fan communities, you name it), the desire for creators to be part of the biggest, best organization, these companies become a magnet for the biggest stars.

These investments actually grow the companies 30% year-over-year that they buy, or more, as well as riding the creator market which, depending on the report you’re reading, is growing as much as 50% year over year.

The market continues to be top heavy, so a few large creators on the roster who are run well will build billion dollar companies and allow these organizations to participate.

In this scenario, these hold cos are no longer just creator representation. They are company builders on the scale of Y-Combinator and own the influence to make companies grow twice as big at half the price.

Boutique representation gets acquired or the big fish in the market beat them up with value.

THE REALITY OF THE SITUATION

I’m guessing you read the two above scenarios and fuly believed neither. And you’d be right!

Here’s the top three flaws I see with both:

So bubble or breakthrough? The market is having a breakthrough, but this strategy reeks of bubble.

That being said, if you want to buy my company for $20 million dollars because we’re repping over a billion monthly views worth of creators, please reach out so I can send you my bank account info.

Every talent representation firm I’ve ever worked for, competed against, or anything in between has claimed to be ‘talent first’.

When pressed on what that means, they’ll generally say something like, “We design our organization to make our decisions to always benefit our creators, even if that means a platform, a brand, or our own profit margins are challenged.”

But I’m also someone who has worked for a lot of companies with a lot of shareholders (I spent time at Facebook so, you know, you may be one of those shareholders), and when I see a talent org that raised a ton of money claim to be talent first, I call foul.

Once you’ve raised huge checks, you are not talent first.

You can’t be.

It is your fiduciary responsibility to be ‘investor first’.

And every investor will push the same old strategies: expand margins, scale faster, find ways to extract more from your customers, cut services, grow, grow, grow, grow, grow.

And they should! That’s their job! They give you money so they can make their investors more money.

That’s the game!

But I have worked with companies that have large funding and those that are bootstrapped so I can say with authority: the bootstrapped ones have more freedom to be talent-first.

“But Phil,” the person who just raised a bunch of money may say, “why would we not want to do what’s best for our creators? We need them! Without them, there would be no us!”

Cool! I just heard Adam Mosseri say that about why they can’t possibly be designing algorithms to depress teens!

And big tobacco when they couldn’t believe the accusations that they were giving their customers cancer!

Yes, you need your talent to believe you’re working as hard as you can to make them money. That’s how you continue making money.

But there will always be a competing and, frankly, more powerful voices within the org saying, “Can you take 30% instead of 20% from that deal?”

And this is why these organizations have to participate in AdSense revenue. It’s where the big money is.

MCN 2.0

So let’s be honest: the mega orgs can be great. Maybe even best in class. But they can’t be ‘creator first’.

At best, they can be ‘creator second’.

What creators, brands, governments, and platforms are making waves this week in the name of fortune, fame, and fun?

🧵 Instagram fans who left Twitter behind rejoice! Threads, Meta’s Twitter competitor that surpassed it in daily active users, can now easily share its posts in Instagram Stories. Our early tests have shown this is a huge win for reach and a massive blow to X’s value proposition.

🤓 On Wednesday, Mark Zuckerberg took the stand in LA to explain why Meta platforms aren’t hurting teens. It was strange, but mostly because Zuck stuck to Meta talking points, which often meant quoting studies from Meta that were mischaracterized, even when they were direct quotes from Meta studies. Also, he threw Apple under the bus, saying age verification is difficult and that Apple should be doing more on that front. Cool.

🫰🏼 Snap has launched Creator Subscriptions, joining the rest of their competitive set, offering a paid subscription on the creator level for super fans to unlock more content. As Snap has recently become a creator monetization powerhouse and Snapchat+ has seen success, this feels like the right move at the right time.

🍔 LTK unlocked billions of dollars for ‘outfit of the day’ and ‘get ready with me’ creators looking to sell apparel. Now, Sundae Foods is doing the same for recipe creators, allowing viewers to easily add a recipe's ingredients to a cart that can be delivered directly to their home. If you want an intro, let me know. If you reach out, tell them Phil Ranta sent you!

Director, Social Media, Tinder

Tinder is a cultural phenomenon (who doesn’t know what ‘swipe left’ means?!) but their Instagram is…hurting. This is the kind of role where the right person can give Tinder a unique voice on social media, help them get some virality, and give them a Dr Squatch-level ride!

Coordinator, Social Media, Well People, E.L.F. Beauty

Love make up and want to keep your face vegan? Well People is the clean beauty, vegan-designed side of E.L.F., and they need someone on the front lines of their social media to reflect that mission.

Creator Social Content Strategist - Apple Creator Studio, Apple

Making social content for the creator side of Apple? A dream job for creators that like to create content about creators! This will likely requires an even deeper knowledge of content creation since, you know, you’ll be targeting creators. But if you’re obsessed with this stuff, this is an incredible mid-career opportunity.