Brainstorms Issue #3

Brainstorms Issue #3

November 12, 2020

Brainstorms Issue #3

What's this newsletter all about?

My name is Keevin and business ideas are my thing. Each week, I scour the web (and use a few secret tactics) to find unmet needs and the business opportunities behind them. Here's what you can expect:

  • ​One well-researched, hand-selected business idea each week - I'm all about quality over quantity. 

  • All of the data I find synthesized so you have context for why I believe it's worth building.

  • A short game plan for how to turn the idea into a company quickly and efficiently.

Pretty straight forward, right? Last thing - as your host, it's my job to make sure your time spent here is valuable. So please, let me knowif you have any questions or suggestions! 

Alright, let's dig into it!​

Influencer Monetization Opportunities

“I’m a small influencer, roughly 100k subs on YouTube. Contrary to popular belief, I’m not rich. I am always looking for interesting ways to monetize my audience that don’t make me feel like a sell-out. I think Cameo and Onlyfans are cool, but they aren’t right for me. I wish there were more companies creating unique ways for me to engage with fans.”

- YouTube Influencer

Market Background/Opportunity Size

Over the last decade, the number of bloggers, social media stars, and internet influencers has exploded - but you already knew this. What you might not know is that there’s a whole industry helping these social media personalities monetize their audience so they can continue to create the content. Recently, there are more opportunities than ever to help these social media stars make a profit.

First, let’s get clear on what it means to be an “influencer”. There’s a lot of differing opinions on this, but for the sake of simplicity, once someone crosses about 10,000 followers, subscribers, or fans on a given platform they’ve now reached some sort of “influencer” status.

Rough estimate number of influencers on each platform:

  • TikTok: 8M

  • Instagram: 5M

  • Youtube: 310K

  • Twitter: 293K

  • Twitch: 38K

  • Podcasts: 15K

At the 10k fan milestone, most influencers are starting to monetize the audience they’ve built - here are some of the most common ways: merch, affiliate links, private content, or sponsors. Unfortunately, managing those monetization opportunities can be difficult, so companies that make this process easier for influencers are set up to take a piece of the pie.

There have been a number of both bootstrapped and VC funded companies that have made booming businesses helping solve this problem. Let’s look at who’s playing in this space.

Note: Finding the “Rough estimate number of influencers on each platform” was somewhat difficult - so those are truly rough estimates.

Major Players

  • Founded in 2013

  • Roughly 200 employees

  • $255.9M Raised

  • Founded in 2017

  • Roughly 700 employees

  • $65.2M Raised

  • 2016

  • Roughly 300 employees

  • Acquired by a private company

Note: There are dozens of big influencer marketing agencies, which I didn’t include here. I’m specifically looking at interesting tools/software that help influencers monetize their audience.

The Opportunity

Recently, companies like Cameo and OnlyFans have blown up giving more validation to the idea that influencers can make serious cash by offering unique or premium content to their fans - even if it’s explicit.

There are a lot of ways to help influencers monetize their audience, but there are two specific ideas that I really like -

  1. Influencer subscriptions boxes - Each month (or quarter) you help influencers curate and send out a box to their fans of the influencer's favorite things. Could be makeup, books, food, clothing, gadgets, or anything that aligns with that influencer’s brand. This would normally be a shit ton of work for an influencer to manage on their own, but with a company helping them, it becomes much more feasible. Albeit, the logistics of this could be quite tricky.

  2. The Drop for influencers - Create a platform where Influencers can sell first editions/limited editions of merch or pre-releases of their content to a select number of fans for a premium. For example, Drake is about to release his new album in a month, but for $200 you get early access and can listen to it before everyone else. Patreon does this to an extent, but separating this out to a standalone service could prove fruitful.

What I love about these ideas is that by landing a few influencers your product is immediately marketed to their audience (which can be millions of people) - there’s a built-in marketing engine that eliminates the channel risk on the fan side.

Note: The second idea came from the My First Million Podcast - I can’t find the exact episode, but I want to give credit where credit is due. Also, I personally worked on the first idea a few years ago, so if you want to build it, shoot me a message for some tips!

Current Solutions

Here are some other solutions that have created a meaningful business by solving this problem -

  • Fan Joy

    • Fan Joy makes selling merch to fans super easy for influencers. They aren’t a huge company (roughly 20 employees), but I’m estimating they do about $300,000 in sales each month.

  • Kit (Acquired)

    • Kit was a website for influencers to advertise the products they use, and create “kits” for people who wanted to buy the products their favorite influencers used. Here’s a snapshot of their site from Wayback Machine. It looks like the company has pivoted post-acquisition to a health-tech company.

  • Quarterly (shut down)

    • I’d definitely look into Quarterly if you want to run with the subscription box idea. While they did shut down in Aug. 2018, their business model was quite literally building subscription boxes for influencers to sell to their audience. Here’s a snapshot of their site from Wayback Machine. It’s unclear why they shut down, but they did raise over $6M and had Tim Farris and Alexis Ohanian as influencers onboard.

How to Execute

I’ll start by saying I don’t think this is a super easy business to get off the ground. I’ll talk more about that in a minute, but for now, here’s how I would start this business. -

  • Define Your Early Adopter: This is critical. For many reasons, you won’t be able to go after the big dogs right away. I’d look for influencers who are already using platforms to help them make more money. A lot of people are using Patreon and other solutions in unique ways to monetize their audience. Also, you need to target influencers who are accessible enough for you to start a conversation - likely people who are in the 10 -100k size.

  • Cold Reach Out: Your best bet is to cold email a list of 100 influencers that match your early adopter profile. I’d hire someone on Fiverr to do this for $5 an hour. Next, I’d use a tool like Lemlist to both personalize and automate your email outreach.

  • Test it With 1-3 Influencers: I’d run a super test to find out if your value proposition works for the influencer’s fans. At the end of the day, if fans don’t purchase the product, it’s unlikely that the influencer will keep promoting it and working with you. I would keep working with one or two influencers in cohorts until you nail it - then scale from there.

  • Scale With Referrals: The world of influencers isn’t that big. It’s likely that most influencers know other influencers - or they are only two degrees of separation away. If you’re able to make influencers money, they will want to share it with their colleagues as well.

Challenges

  • Influencers are Hard to Reach: Having worked on a number of projects dealing with influencers, I can tell you first hand that selling to them isn’t an easy process. They get hit up constantly with the latest products and tools, so it won’t be easy converting them on your offer - it’s not impossible though.

  • Two-sided Market: While most of this post focused on influencers, you still need to create a product that is appealing to their fans and has an offer that they’ll give up their hard-earned cash for. Inherently, with a two-sided market, you have two times the challenges and customers you need to keep happy.

  • High Management: Unlike software, this isn’t a set and forget it business. If you deal with physical goods, there will be logistics that need to be worked out. And, Influencers need managing - they have a lot on their plate. If your company lives or dies based on an influencer working on content for your business, you’ll likely need to do it for them (or make it as easy as possible).

Thanks for reading - now get out there and build it! 

Catch ya next week, 

Keevin ✌