Creator Loyalty - A Foundation for New Businesses

Creator Loyalty - A Foundation for New Businesses

We're seeing the beginnings of a new wave, where creators will build massive-scale businesses

A few weeks ago, I opened Twitter to do my usual scroll. I wasn’t looking for anything in particular, just distracting myself for a bit. But as I scrolled, I kept seeing “MrBeast Burger” come up. People I followed were celebrating its success, but I had no idea what this was, or what was going on. I clicked in, and as I read and started to figure out what was happening. My confusion quickly turned into amazement, and my jaw dropped. I felt like I was getting a look into the future of businesses and startups.

Immediate Customers

“MrBeast Burger” is a chain of burger restaurants created by YouTuber MrBeast. Yup, YouTuber 🤝 Burger chain. He’s one of the most popular YouTube creators in the world with 50M+ subscribers, and ~30–40M views on each video (his most popular video has 100M+ views).

300 “MrBeast Burger” locations popped-up around the US on Dec 19, and MrBeast announced the launch with a viral video and tweet. Customers could place orders through the major food delivery apps (e.g., DoorDash, UberEats), as well as a dedicated MrBeast Burger app. Within a few hours, the “MrBeast Burger” app became the #1 app in the iOS App Store, ahead of YouTube, Facebook, and Snapchat. If you opened the App Store sometime around Dec 19–20, you saw MrBeast Burger as the #1 app in the country (this tweet began my rabbit hole).

I’d never seen anything become this popular, this fast before. I immediately thought to myself: How did this happen? Could anyone else do this?

Yes, there’s more. Around the same time, fellow YouTuber David Dobrik, who has 15M+ subscribers, created the hundred thousand dollar puzzle. His fans could order one of ~100k $30 puzzles, where each puzzle revealed a unique QR code. Fans would scan their QR codes to see if they won a prize from 25 cents to (you guessed it) one hundred thousand dollars. The puzzles sold out in a week. Three million dollars worth of puzzles. One week. 🤷 You could look at this as a silly viral stunt, but I think it’s another example of the power that a huge loyal fan base has.

I’m also keeping an eye on Dispo, a photo-sharing app that Dobrik co-founded. The company just raised $4M of venture capital seed funding, led by Reddit co-founder Alexis Ohanian. It seems like a toy until it becomes a venture-backed startup.

Fans as Loyal Promoters

I have a theory.

From my experience working in ecommerce customer experience, “customer loyalty” is the holy grail for business success. The core idea is that the more customers you have who love your service, keep coming back, and recommend it to others, the more likely your business is to grow. Every business wants to grow, so they should try to have as many loyal customers as possible.

If you’ve ever been asked “how likely are you to recommend [something] to your friends, family, or colleagues,” this was exactly what was being measured. To walk through an example, think about a store that you shop at, rate how likely you are to recommend that store from 0 (not at all likely) — 10 (extremely likely), and think about why you gave that score. If you rated the store a 9 or a 10, the company will bucket you as a “promoter:” someone that they expect to be a loyal customer. If you rank the company lower, then they‘ll bucket you as a “detractor:” someone who isn’t a huge fan and could easily flip to a competitor. They’ll then use the provided reasons for each score to try to figure out what makes their loyal customers tick, and what they need to improve in order to turn detractors into promoters. More promoters = greater growth.

If you bring the idea of customer loyalty over to the creator world, it completely blows up. You might buy from a certain store because its your only option, but you don’t follow a creator because they’re the lesser of two evils. You follow a creator because you want to see their content. Following or subscribing to a creator should essentially signal that you’re a loyal customer for them. If that  loyalty changes, then you would likely unfollow them. If you surveyed all 50M+ of MrBeast’s followers and asked how likely they are to recommend his content to their friends from 0–10, how many do you think would rate a 9 or 10? Is it 50 percent?, 75 percent?, 90 percent? Now compare that against the store from earlier. Who wins?

My theory is that creators have stronger customer loyalty than any traditional business will ever have.

Free Distribution to Millions

Another advantage that creators have over traditional businesses is scale.

For businesses to reach potential customers, they rely on word of mouth, organic marketing, and paid advertising. We’ve seen the Instagram brands of the past (e.g., mattress companies, luggage brands) grow by dumping money into advertising. Other companies spend on TV commercials, sponsorships, promo codes and discounts, and other expensive tactics just to get people to try out their product. Creators don’t have that problem, they already have an audience.

The super popular creators not only have millions of followers. They have millions of loyal customers that they can reach at no additional cost. Even on the scale of hundreds or thousands of followers, the ability to reach a loyal fanbase for free is a huge advantage over any other startup business.

This isn’t a new idea. We’ve seen creators monetize through paid ads, brand deals, merchandise, and direct-to-consumer brands in the past. What is new, is #1 apps and venture-backed startups. We’re seeing the beginnings of a new wave, where creators will build massive-scale businesses.

Where Have We Seen This Before?

When I started thinking about creator-driven businesses, I kept drawing comparisons back to Nike.

Phil Knight walks through the founding story of Nike in his memoir Shoe Dog (10/10 recommend!). The story is filled with influential athletes who helped build the Nike brand. They started with Bowerman, who was Phil Knight’s track coach at Oregon, and the US Olympic track and field team coach. They brought in Pre as their first premiere athlete, another Oregon track star and US Olympian. They built the Jordan Brand with Michael Jordan, and gave LeBron James a near-lifetime contract. These weren’t influencer advertisements. Bowerman was a co-founder, Jordan has his own brand years after retirement, and who knows what’s in LeBron’s future. Athletes have been core to Nike’s brand from the start, and that authenticity is one of many reasons why they’ve stayed at the top.

Could a company today run the Nike playbook with creators at the core? Or might creator funds from Tik Tok, Snapchat, and Clubhouse be a modern iteration?

See my post: Community-Driven Social and Natural Discovery for a deeper-dive into social

Where Else Is This Happening?

We’re in the beginning of a transition from large corporations to independent creative businesses. Prominent writers and journalists left have publications to start their own independent newsletters. My favorite podcast and radio show, The Dan LeBatard Show with Stugotz, left ESPN to go independent. They outgrew ESPN! The show had a huge and loyal fanbase, inside jokes (“you don’t get the show!”), and their own culture that didn’t fit into the structure of ESPN. The incentives for the best of the best to become independent creators keep growing, from financial freedom to editorial freedom, and I think we’re just starting to see the first cracks.

On the other end of the spectrum, some large companies are looking to capture the value of creators’ loyal fan bases. Penn National Gaming, a casino management company, acquired a stake in Barstool Sports in Jan 2020. Barstool is known for its edgy humor and serves the millennial demographic, led by El Pres Dave Portnoy and Big Cat. As a result of the deal, Penn started rebranding their sportsbooks (sports betting locations) and online betting apps under the Barstool brand. For lack of a better measure, Penn’s stock price was up 3–4x a year after their Barstool investment. A testament to the value of attaching a creator-driven brand.

Neither business is creator-only. Le Batard is building a media startup with former ESPN President John Skipper, and Barstool is one of the hottest sports media brands in the US. But, leading with authentic content to build large-scale businesses may set a framework for creators to build their own content businesses.

I’d watch out for creators (and collectives of creators) to take equity in, and even be “acquired” by legacy businesses to help them adapt to the content-driven future.

Dan Le Batard Interviewing  John Skipper — Source: The Dan Le Batard Show with Stugotz

What to Watch For

I see two major advantages that creator businesses have over traditional companies: 1) Branding: A successful creator builds up loyalty and trust among their fan base. You can copy product features, but you can’t copy people; 2) Counter-positioning: Traditional businesses have to pay for eyeballs. Some of the early “Instagram brands” rose to prominence by dumping a whole bunch of money into ads. Creators’ don’t have to spend a dime on advertising. They can reach their potential customers completely organically, through the content that they’re already known for. As the millennial and Gen Z generations become early-mid career adults and build their purchasing power, I think that creator businesses have a chance to disrupt legacy brands and large corporations.

Creators’ followings are loyal to them, and loyal to their authenticity. So, their businesses need to be a natural extension of themselves. I’m watching out for creators to build for their 9/10 and 10/10 fans, and come up with new and innovative ways to create value.

It may only be a matter of time until we see a wave of multi-billion dollar businesses founded and built by creators.

Let me know what you think on Twitter @MSilb7!

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Michael Silberling @MSilb7
Michael Silberling
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