Startup investing and content creation are converging
Packy McCormick rose from 0 to 80K subscribers and buzzy venture capitalist (VC) with an $8M fund in less than two years. We reviewed his story a few weeks ago. In any generation but this one, his story would be insane. That is because Packy’s story is not an isolated one.
Across the creator economy, an increasing number of participants are getting into the startup investing game. At the same time, across the venture capital ecosystem, an increasing number of participants are getting into the content creation game. I call this the convergence of startup investing and content creation.
My prediction: In a few decades, every startup investor will be a content creator.
Read on for the story:
- History of content creation & startup investing
- Why content creation provides an edge to investors
- Why the future will see increased convergence
History of content creation & startup investing
Medium 1 – Blogs
It all starts with blogs, and they are probably still the dominant medium for startup investors today. In 2003, the first major VC began blogging, Fred Wilson. He started the trend of blogging in VC, gaining a wide and positive reputation from his blogs. Among many other benefits, Fred cited deal flow as a motivating factor. Fast forward to today, and Fred has published at least once every few days since he started 18 years ago. He and his firm, Union Square Ventures, invested in some of the most consequential companies of all time, including Coinbase, Etsy, MongoDB, and Twitter.
Since 2003, numerous additional startup investors have taken up the mantle of content creation. In 2005, Paul Graham founded Y Combinator. He had already been blogging since 2001, a couple of years before Fred Wilson. His blog posts are regularly shared amongst famous startup personalities; Stripe CEO Patrick Collison, for instance. Graham, like Wilson, has an all star portfolio that has consistently generated returns for years.
Numerous venture capitalists have followed in Wilson and Graham’s public footsteps. Just to name four of the largest: Tomasz Tunguz, Hunter Walk, Benedict Evans, and Matthew Ball. Buzzy large VC firms, like A16Z and First Round, are doubling down on investments in the game as well.
The causality has gone the other way for numerous examples, as well; content creation opens doors for startup investing. As Fred Wilson began blogging in 2003, 2003 was also the year the first major creator turned investor hit the scene. Jason Calacanis co-founded the blog network Weblogs. Jason had a background in the media industry, having published the paper-only Silicon Alley Reporter since 1996. After Weblogs, Jason joined Sequoia and led their investment in Uber. He would go on to start his own angel fund. Calacanis is now one of the most well known angels in the industry, having invested in names like Robinhood, Wealthfront, and Calm.
In the same year as Jason started Weblogs, 2006, Tim Ferriss started blogging. The two led the first wave of content creators turned investors. By 2013, Ferriss was a famous angel. Now, his portfolio is a “who’s who” of this generation’s most consequential startups: Twitter, Facebook, Duolingo, Shopify, TaskRabbit, Tradesy, Evernote, and Wealthfront 🤯.
Since the first wave of Calacanis and Ferriss, numerous content creators have followed in their footsteps. Creators like Lenny Rachistsky have since invested in over 30 startups in the intervening years. Most recently, we have seen a wave of new bloggers / newsletter writers turned investors, like Packy McCormick, Josh Constine, and Olivia Moore.
Nowadays, about 10% of the US population blogs. Blogging is not growing spectacularly fast – but has been growing steadily at 2.5% per year. There are not statistics on venture capitalists blogging habits, but we could expect both the absolute number and growth rate to be higher, I’d reckon. Venture capitalists tend to be at the bleeding forefront of innovation.
Blogging is not the only content creation medium, of course. There is short form writing in the form of Twitter, there is audio, and also video. In each, we have seen investors become creators and creators become investors.
Medium 2 – Twitter
Twitter has seen both investors create and creators invest. Startup investors have been amongst Twitter’s most famous users. For two years from 2014 to 2016, Marc Andreesen, the founder of Netscape I mentioned earlier, started using Twitter regularly. His firm, at the time known as Andreesen Horowitz, now A16Z, dominated the headlines. His tweets regularly crossed into mainstream tech reporting.
Other VCs have been using Twitter longer and still use it to this day. Bill Gurley is one such prominent voice. With prominent role models like Andreesen and Gurley on Twitter, over the years more and more startup investors have joined the platform. These days, the bigger surprise is to see an investor who is not on Twitter, than vice versa. VCs like Eric Paley, Leo Polovets, and Matt Turck have tens of thousands of followers.
Popular Twitter creators have also leveraged their audience to become investors. Perhaps the most prominent example of this is Turner Novak. He turned his Twitter content into Banana Capital. He actually started tweeting with the end goal of ending up in VC. He developed a niche tweeting about topics like Snapchat and TikTok. Then, in the summer of 2018, he created a fantasy VC portfolio. Eventually, he parlayed that into a recently announced $10M fund of his own. Sriram Krishnan is another example of a popular Twitter creator who has parlayed that presence into a general partner role at A16Z.
Medium 3 – Audio
The trends that have played out in blogging and Twitter are also playing out in audio. In fact, on Clubhouse, they may have been exaggerated. VCs pepper the lists of the most followed users of Clubhouse. VCs rushed quickly to the platform, especially those who invested in it. A16Z partner Nait Jones is an example who really made a name for themselves on the platform. He has racked up over 4 million followers on Clubhouse. That is more Twitter followers than Marc Andreesen or Bill Gurley.
Just like blogging and Twitter, in the audio space we see the flow from content creator to investor. The most prominent example is Harry Stebbings, who, at merely 24-years-old, runs a $140M fund. He has gotten to that place at such a young age on the back of his superb podcasting, content creation, and community building with 20VC. Nick Moran of The Full Ratchet Podcast is another example. He turned his angel investing and podcasting career into proprietary deal flow. Now, he runs New Stack Ventures, with $25M under management.
Medium 4 – Video
Everyone seems to agree the future will involve video. Each convergence trend is playing out in video as well, already. Kevin Rose, the founder of Digg and long-time VC, has been steadily producing content on YouTube. His Google Ventures interview with Coinbase founder Brian Armstrong is from all the way back in 2013. Recently, Garry Tan of Initialized Capital has stepped up his YouTube presence, and is going to crack 200K subscribers soon.
Again it goes both directions, with prominent video creators like MrBeast and Casey Neistat entering the investment game. Creators can be a golden goose for companies. Companies sometimes clamor to give popular creators equity as a form of compensation.
Whatever the content medium, venture capitalists have consistently become creators, and successful creators have become investors.
Content creation provides an edge to investors
Investors are in the business of getting in the hottest startups by seducing great founders. Access to the best startup’s investment rounds, “quality deal flow,” is tough to generate. Quality content can generate quality deal flow.
Startup executive teams seek investors who are specialists that can help their business. Writing is one of the clearest ways for investors to demonstrate expertise. From a founder’s point of view, writing is a clear way to evaluate how an investor is likely to think and behave. What better way to evaluate someone than their own words? Writing is work on the page.
We might think of Venture Capital somewhat like Game of Thrones. Except, instead of the throne, everyone wants in on certain deals. The battle, especially for emerging managers, is to get in on those deals, the next Coinbase or Airbnb. One successful investment can yield the required returns for a whole fund. Content creation gives investors a leg up in this game.
Covid has forever made it harder to meet founders at a Bay Area bar or coffee shop. Content creation allows investors to find great founders. Nowadays, the name of the game is to be in the digital fora where the hot founders are. Entrepreneurs, especially CEOs, often feel they have to be on Twitter – so Twitter content creation is an opportunity to meet the hot targets in the fora where they are. Packy is as good an example as any for quality deal flow. Three of the first five companies to advertise in his newsletter are now all unicorns: Ramp, Pipe, and Masterworks.
This quality deal flow point is certainly the strongest reason content creation provides an edge to investors now. But there are at least two other important reasons.
Content scales. Investors are increasingly pressed to take on bigger amounts of money in the search for never ending growth. This means they have to be more selective than ever on where they take board seats and active involvement with companies. Writing allows investors to subtly influence those stakeholders within companies whose antennae are attuned to the investor’s messages, while not being actively involved with every portfolio company.
Content creation benefits the author. Writing, and other content creation, forces the writer to articulate his or her thoughts. It makes a thinker actually clarify what they believe. Then, once on the page, the thinker can actually respond. These thinking benefits of writing should help investors crystallize their perspective. The portion of VCs that write will benefit from the impact of that writing on their thinking.
This constellation of factors – deal flow, scale, and thinking – and more, come together to make the case for startup investor content creation too strong for most to ignore.
The future will see increased convergence
Across industries – entertainment, learning, gaming – we are seeing an increasing prominence of user generated content. In entertainment, YouTube and TikTok are taking watchtime at the expense of cable TV. In learning, students are turning to blogs, videos, cohort based courses, and bootcamps, instead of traditional institutions. In gaming, user-generated experiences like Minecraft, Roblox, and Fortnite creative dominate the majority of playtime, at the expense of large AAA studio developed experiences.
There is a major trend pushing forward creation. Everyone is becoming a university professor, acquiring niche fame. Venture capitalists tend to have to be ahead of the innovation curve, so, as an industry, they are going to see this convergence sooner. As a result, I think that we will see most startup investors creating content. Not doing so will be a disadvantage. Each investor will choose their medium – Twitter, Blog, Clubhouse, Podcast – but few will choose none.
The old argument against venture capital content creation is citing the many counterexamples of venture capitalists without much of an online presence. But are they truly absent offline? They may simply have another type of presence, like a reputation from prior investments, or the reputation of their firm. That is a historical presence they are leveraging. As the covid era has taught us, the future will be digital and therefore digital presences are the ones that will dominate in the future. As digital presences become the dominant presences, I think every startup investor will become a content creator.
In addition, successful content creators will continue to become investors. In the new internet economy, writers monetize in many ways. Many give the content away for free, and then monetize with brand deals and investing deals later down the line. As more creators see the benefits from investing, more will join in.
These two forces – investors becoming content creators, and content creators becoming investors – come together to form the basis of my prediction that within a few decades, likely by 2050, most startup investors will be creating content.
As Natasha Mascarehnas of TechCrunch put it:
At the end of the day, media is venture and venture is media
What do you think?
Next Time
We will dive into part 3 of the series. I will make the argument that all tech careers are headed the same way as startup investing. They will converge with content creation. Subscribe to get the scoop.
🙏Thank you to Maile Pedersen and Tommy Lee for their feedback.
