Creator coins & the future of income

It’s a well-worn cliche in the venture world that we don’t really invest in startups, we invest in people. We place bets on founders whom we believe have the drive and determination to realize their visions and create a successful company.

But with the rapid growth of the creator economy, the idea of investing in people has become quite literal. Using blockchain tokens, creators and other individuals have started to sell shares of themselves in different incarnations.

There’s a good reason for this. One of the key challenges facing influencers and creators is income volatility. They need to constantly produce new content and/or increase their visibility in order to keep generating revenue. The same is true of professional athletes and artists. There’s usually a limited window for them to realize their maximum earning potential.

By creating investment vehicles in their own name, creators and artists can hedge against a sudden unpredictable loss of income, as well as decrease their dependence on platforms like Instagram, YouTube, or Twitch where they currently make most or all of their money.

It’s a new niche, and crypto startups like Royal, Calaxy, BitClout, and more are rushing to fill it.

The Man Who Sold Himself

Like most things in the technology world, this is not an original idea. As investor and writer Dror Poleg has pointed out, in 1997 David Bowie issued his own ‘Bowie Bonds.’ Investors could earn a percentage of royalties from his record sales. Prudential Insurance was the first investor, dropping $55 million on the bonds, which were rated AAA by Moodys at the time and offered a fixed return of just under 8 percent. Ten years later, the bonds were repaid in full. A handful of other artists (James Brown, Marvin Gaye, Iron Maiden) then followed Bowie’s lead.

In 2008, entrepreneur Mike Merrill became the first publicly traded person, offering 100K shares of himself for sale at a $1 apiece. His shareholders vote on important life decisions, such as which exercise regimes or romantic relationships he should pursue. He even had shareholders vote whether he should get a vasectomy, leading his then-girlfriend to become a shareholder as she tried to influence the vote. Today he offers his security on HumanIPO, a site that also boasts the soccer star Pelé as a security. The startup NewNew also allows their creators to monetize by “controlling their life” in much the same way.

About four years ago, Eric Lax and Charlie Olson launched Pando Pooling, which allows people in high volatility jobs (like athletes and artists) to share the risk and the rewards by pooling their income. It’s an idea similar to income share agreements, which help pay the tuition costs of students entering high-income professions in exchange for a percentage of their earnings down the road.

Today we’re seeing the minting of crypto currency as a means to trade shares in other humans. For example, NBA forward Spencer Dinwiddie is on the cusp of launching Calaxy (short for Creator Galaxy), an open social marketplace that lets creators mint social tokens and NFTs, then sell them to their fans. On BitClout you can buy and sell shares of well-known creators, who receive 10 percent of each transaction. Roll and Rally allow you to create your own coin, if you meet certain criteria. Royal’s platform will use NFTs to allow music fans to share in the royalties from their favorite bands.

What each of these has in common is that they offer a more intimate connection between creators and consumers, while at the same time enabling a more consistent revenue stream for artists, athletes, musicians, writers, video stars, and influencers in general.

Which leads to the obvious question: What happens to the value of your investment when the creator retires or dies? In some cases, it may actually go up. In 2019 Michael Jackson earned $48 million, ten years after his death. Elvis Presley, who’s been gone for more than 40 years, earned $23 million.

But there are also startups working to extend an artist’s career — and earning potential — long after they’ve joined The Thriller and The King in rock-n-roll heaven. Base Hologram and Eyelussion both aim to resurrect dead rock stars and bring them on tour, just as Snoop Dogg and Dr Dre did with Tupac at Coachella in 2012.

It’s a kind of virtual immortality, but you don’t necessarily have to be dead to take advantage of it. Imagine a holographic Cardi B performing on stage in five different cities at the same time, while the flesh and blood rapper chills at home.

Personal brands as currency

What does all of this mean for the rest of us?

If you’re already a member of the creator economy, or thinking about becoming one, creator tokens are definitely worth looking into. The potential to generate recurring long-term income can reduce the risk of pursuing a creative career, which in turn may increase the number of people entering this nascent market.

Fans looking to support their favorite artists will need new sets of metrics to gauge the value of investments. What is the human equivalent of a price-to-earnings ratio or book value?

The rising power of the individual brand also has implications for how major companies choose to market themselves. Typically the face of a company is its CEO. In a few years that may no longer be the case. I’d bet that very few people are familiar with Progressive Insurance’s CEO Tricia Griffith, but everybody knows Flo.

New ways to earn keep emerging. Personal tokens, securitized music, NFTs, and other direct-to-fan commerce will fund self growth by offering supporters a stake in your future. Goodbye long-term debt, hello creator coins.

If you enjoyed this please follow me on Twitter and LinkedIn where I’m writing about the future of income and the investifcation of everything. If you’re a founder working on something in this space, please also reach out.

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Lightspeed is a multi-stage VC firm focused on accelerating disruptive innovations and trends in the consumer, enterprise, and health sectors. In the past two decades, Lightspeed has backed 400+ companies and currently manages $10.5B across the global Lightspeed platform.

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Mercedes Bent

Mercedes Bent

Hard work is never overrated. Always curious.

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