Why Selling to Creators is Hard: The Unholy Trinity
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Across the thousands of blog posts, Twitter threads and podcasts about the creator economy, there is one topic rarely broached. And it’s arguably the most important topic in the space: why is the creator economy so hard?
Given our history (Caspar my cofounder is a creator, and our venture fund began as an investment club for creators) we have thought about this a lot.
So here goes. This is that article.
The Creator Economy’s Unholy Trinity
Call me a boomer, but businesses need customers. And the quality of those customers is one of the most important determinants of a startup’s success.
So what makes a good customer? In general, three elements: (i) high purchasing power, (ii) low churn, and (iii) low acquisition cost.
Different customer profiles (SMB, consumer, enterprise) are better optimised for different elements of the three. An enterprise, for example, has high purchasing power and low churn, but a high acquisition cost (and a long sales cycle).
Now here’s the rub: creators are terrible customers on all three fronts. They have:
Limited purchasing power of a micro-SME
High churn profile of a consumer
Expensive acquisition cost of an enterprise
I call this the Unholy Trinity. I tweeted about this yesterday:
Selling to creators is HARD.
Creators have the:
1. Limited purchasing power of an SMB
2. High churn profile of a consumer
3. Inaccessibility of an enterprise
This is the Unholy Trinity of the creator economy.
To defeat the Unholy Trinity you need something truly exceptional.
— Sasha Kaletsky (@SashaKaletsky)
Mar 2, 2023
The acquisition cost element is the hardest for new entrants to the space to understand. “Creators are online all day looking at products”, they say, “it should be really easy to acquire them.” Unfortunately: wrong.
The problem is that every marketing manager on earth with a TikTok account and a pulse is trying to advertise to the same creators. Everyone wants creators using their products, because brands are hoping creators will tell their users about it. Their inboxes are overflowing with inbounds from brands (many of which are offering them free stuff).
Defeating the Unholy Trinity: Holy Water
But there is one way to defeat the Unholy Trinity of selling to creators: building something that creators love so much that they tell their audience about it.
I wrote about this at some length in our blog post about investing in beehiiv, but in short, if you can build something that elicits genuine joy for creators, they will talk about it publicly and this can create a viral growth engine with no additional marketing spend.
We can call these products “Holy Water”: they are the only way to banish the demons of the Unholy Trinity. When it works, this can create hyper-exponential growth (Canva, Descript, Figma, now beehiiv have all benefitted from this).
As a consumer internet fund with a history of investing with creators, we see a lot of talented founders building tools for creators. We are still deeply engaged in the space but we will always ask creator economy founders: “can you defeat the Unholy Trinity? Will your product be Holy Water?”