It’s 10p.m. on a Sunday in November at California’s Burbank Airport, and Jack Conte, the typically beaming, bearded half of the husband-and-wife musical duo Pomplamoose, is leaning back in a chair, his hoodie pulled over his head, trying to get some rest. Conte, 33, spent much of the weekend in Los Angeles jamming with his funk band, Scary Pockets, and now it’s time to return to San Francisco for an entirely different type of gig: his day job running Patreon, a website and mobile app where fans pay monthly subscriptions to support their favorite creators, from painters to podcasters, singers, dancers, writers, game designers and photographers.
The moment perfectly captures what Conte lightheartedly calls his “identity crisis”: being CEO and founder of a 100-person startup (valued in September at an estimated $400 million) without completely giving up on his passion for music, which is what led him to invent Patreon in the first place. “A lot of creators depend on us being a high-performance team,” Conte says during an interview at Patreon’s San Francisco office. “That’s the most important thing in the world to me, so there’s less time for music.”
Conte’s dedication stems from a conviction that Patreon can save content creators from having to survive on digital advertising – an all but impossible task for most – or resort to one-time campaigns on sites like Kickstarter and Indiegogo. The company is built on a counter-intuitive bet that fans are willing – even eager – to pay monthly subscriptions for content that they could get for free as long as it helps support their favorite artists and it’s easy to do. There’s reason to believe he’s right. More than a million Patreon users are helping provide some 50,000 artists with a predictable monthly paycheck. “On Kickstarter and Indiegogo, creators essentially have to start over every time,” says Danny Rimer, a partner at Index Ventures who is a Patreon investor and board member. “It’s the same reason software companies went from licensed software to subscriptions: predictable revenue and better service for customers.”
Since Conte started Patreon four years ago with his Stanford University roommate Sam Yam, 33, who is CTO, the company has paid out more than $250 million to its artists – $150 million in 2017 alone. Patreon’s traction is fueled by a simple pledging system and the direct line it opens between artists and fans, or “patrons,” who get access to perks like live Q&As or exclusive chats with the artists, and more casual behind-the-scenes footage than an artist might share on Instagram or Facebook. It also doesn’t hurt that being altruistic makes people feel good. In other words, Conte didn’t need to change human nature to get Patreon to work, he simply needed to facilitate the exchange between fan and artist.
While Patreon is no longer the only player in its category (Kickstarter launched a competitor called Drip in November), it is the largest – and it’s growing faster than ever. The number of patrons and creators and the amount pledged are all doubling yearly. Now Patreon is using some of the more than $100 million it has raised from investors, which include Joshua Kushner’s Thrive Capital and Freestyle Capital, to double its head count over the next year.
By some measures Patreon’s success defies logic. The average user pledges $12 per month, more than the cost of a basic subscription to Spotify or Netfl ix, which offers access to immense catalogs of video and music. (Some users pledge per piece.) Dozens of artists make more than $30,000 per month, including video reviewer Blind Wave and a capella singer Peter Hollens, who made about $400,000 on the site last year.
From the start, Patreon has taken a 5% cut of each pledge. That’s the same cut taken by Kickstarter and Indiegogo but far less than revenue-sharing programs on YouTube and Apple iTunes, which keep 45% and 30%, respectively. “The mission is to send as much money to creators as possible,” Conte says. The commissions generated an estimated $8 million in revenue last year.
Pledgers sign up for “tiers,” generally ranging from $1 to $10 – though some pay much more – for access to the artists’ perks. Ukulele performer Cynthia Lin, who offers fans live lessons, derives about half her income from Patreon and grew her fan base from 400 to 1,400 in the past year. With video “sketchbook tours” and chats, Chilean illustrator Fran Meneses pockets more than $4,000 per month, which supplements income from her Etsy shop and Instagram presence.
Creators join Patreon for free and don’t have to promise exclusivity. The site offers them instructions on how to use it most effectively. It also provides a growing list of back-office tools such as analytics and email management to help creators run membership campaigns modeled on those of NPR stations.
For now, Patreon is designed for creators who already have established followings but aren’t household names. Long term, Conte hopes to help fund bigger names and prove that technology can help restore the financial underpinnings for content creators that the internet has largely eroded.
Patreon’s artists-first ethos may be lucrative for some, but it comes with pitfalls, especially in a world where digital business models change frequently. “Creators need to diversify their incomes as much as possible so the rug can’t be pulled out from under them,” says Laura Chernikoff , executive director of the Internet Creators Guild.
For Conte the mission is personal. He grew up in bohemian-chic Marin County, just north of San Francisco, and was hooked on music from the age of six, when his father taught him the blues scale. While studying music and composition at Stanford, he started making YouTube videos with his then girlfriend, Nataly Knutsen, in 2007. (The two married in 2016.) In 2013 he drained his savings account, maxed out two credit cards and spent three months making an electronic music video, complete with robots and a replica of the Millennium Falcon cockpit. His fans loved the video, which got more than a million YouTube views in its first year. However, Conte pocketed just $54 from ad revenue over the video’s first month. To date, it has generated about $1,000. Not including Conte’s time, it had cost more than $10,000 to make. “It was this rock-bottom moment for me as a creator,” Conte says. He knew he’d created something of value but would never be paid for it. “That discrepancy led directly to the formation of Patreon,” he adds.
Conte discussed his idea with Yam, who programmed the site in months. It went live in May 2013, and within minutes more than 100 fans were pledging upwards of $700 a month to support Conte’s work. Within months Patreon had investors.
Conte is now eyeing a number of opportunities for growth. First is overseas expansion: The site is in English and takes only U.S. dollars, yet 40% of patrons are outside the U.S. Over time, Conte imagines more immersive features, such as virtual reality concerts. Farther out are somewhat fuzzy notions of turning Patreon into a provider of small-business services, including ticketing and merchandising, to help artists turn their passions into professions. “Artists don’t have to starve anymore,” Conte says. – Written by Kathleen Chaykowski
Packing Light In School Bags
Former South African rugby star John Mametsa provides alternative energy solutions for the state. With his wife Tumi, he says their future in the business is bright.
In his prime, former Blue Bulls winger John Mametsa had rugby fans screaming in delight at his try-scoring exploits at Loftus Versfeld Stadium. Between 2001 to when he retired in 2010, he had brought smiles on people’s faces.
Hidden beneath the rugby bravura on display on a weekly basis were Mametsa’s entrepreneurial exploits, which led him to co-found Soltech, a solar technology company he started with his wife Tumi.
Soltech has bridged the gap between solar technology and user-friendly consumer products by creating school backpacks, outdoor umbrellas and lifestyle bags custom-fitted with solar power.
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The smiles are back but Mametsa has brought them in a different form.
Soltech’s main aim is to help companies achieve their corporate social investment targets and make a real difference in the lives of school children who might not have electricity at home, or whose access to electricity is limited.
“Generally, I love giving back. Just to see the kids smile brings joy to me,” Mametsa says.
“It is the best space I could have asked for. Other than when I was involved in rugby, this is the best thing I could have ever been a part of.
Putting smiles on kids’ faces is the best thing. Because we are dealing with children, we have aligned ourselves with people that want to make a difference.
“We don’t stop at just giving them the bags where they can charge phones and study at night but we also educate them about the social ills that come with roaming on the internet and social media.”
During this period of Eskom blackouts, uncertainty about South Africa’s energy and a widening chasm between the haves and have-nots, he says Soltech’s products make a difference in the lives of ordinary citizens.
In a sense, they’ve taken the might of solar technology and put it right in people’s hands. The school bags come with a solar-powered battery, which has a night lamp and cellular phone battery charger installed.
“With everything that’s going on at Eskom now, they (citizens) are using millions of liters of diesel per month, just to keep the lights on,” Mametsa says.
“Hence, it’s coming back to hit our pockets and they (Eskom – South Africa’s national energy provider) are raising the electricity prices again. Such things we have to read about so that, as we grow, we educate the people that we are selling the bags to.
“At some point, you need to convert [to reusable energy sources], you need to start using solar energy. We are still fortunate that there’s an Eskom in the first place. What about those countries that don’t even have electricity at all?
“Yes, we have power cuts but the people that really need the bags are people in the rural areas.”
Admittedly, Mametsa was the pretty face and Tumi conceptualized the idea when they started. But their partnership was perfect in more ways than one. Tumi, just like her husband, had a massive entrepreneurial drive.
While Mametsa was playing rugby, he would dabble in taxi and printing businesses – an uncommon trait among sportsmen and sportswomen who are at the peak of their powers. Tumi was no different. As a student, she would sell hair and cosmetics products, something that sharpened her business senses.
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And despite a successful 11-year career in corporate as an accountant and financial manager for companies such as Alexander Forbes and the Film and Publication Board, Tumi took a bet on herself and dedicated her time fully to building Soltech.
The result was that, in just the company’s second year, they have signed a memorandum of understanding with Finland solar technology company Tespack. Tespack founders Caritta Seppä and Yesika Robles were last year named in Forbes ’s 30 Under 30 Europe.
The joint venture will see Soltech come out, among other things, with a solar-powered, fast-charging power bank, which should totally disrupt the smartphone accessories market.
“There’s going to be skills and knowledge transfer,” Tumi says.
“The DTI (Department of Trade and Industry) is also backing us on the partnership because we need them and their funding to assist us. We will be hiring South Africans to work the machinery, which was something that was very attractive to the DTI.
“The Tespack partnership confirmed my belief that our company could grow from a small tree to a forest someday. Once we manufacture in-house we can streamline the process. And there are so many other ideas for products I have, such as ladies’ handbags and stuff.”
Here at home, Soltech has partnered in CSI projects with Liberty and Exxaro and they hope to grow their client base in the next couple of years. It is a huge endorsement of their products and should see them salve some of the hurt from the country’s electricity crisis, especially to those who need it the most.
‘Worth Millions And Billions’
Terence Terenzo, the award-winning South African hairdresser and founder of hair salon group Terenzo Suites, on his biggest investment decisions and blunders.
What is your investment philosophy?
One of my philosophies is to really analyse ‘is this an investment or is it a money pit… Are you sure you got a good investment and not a liability?’… Over the last 10 years, I’ve tried to invest in things that don’t absorb all my time and energy.
So if someone were to say to me, ‘you can work your butt off seven days a week and we will give you a million rand a month, or you can take it super easy and do the absolute minimum but you can have R400,000 ($27,700) a month’, I would rather take the R400,000 because that would free me up so much more.
I would have time to do things that are important and other projects. So, for me, it is about setting up passive income businesses instead of creating businesses that need huge amounts of management.
What are some of the big investments you have made over the years?
Most of them were in property but this, Terenzo Suites, is one of the biggest investments I have ever made. It was many many millions. And then on the stock market, I’ve played around on the Johannesburg Stock Exchange where we have invested quite heavily. I would use it, then look at the market and sometimes pull the money out and move it. I have also invested in Naspers.
Have you had any regrets?
If any entrepreneur tells you that he hasn’t had that [an investment blunder], he is lying. So, what happened was I bought a property in 2008, just before the [recession]. I was stuck with it for years and even when I sold it, I sold it many years later at the same price I bought it.
I bought it in an absolute inflated stop end, and it was really at an all-time high and I had to sell it at an all-time low… But the main thing for me about those kind of things is that you learn from them and you must not beat yourself up for too long.
Try and see what you learned from them.
Why did you invest in the hair business?
I think the hair industry is going to explode in South Africa and the whole continent, if you just think of the possibilities of wigs, hair pieces, hair colors and relaxers. Millions of women before weren’t so worried about their hair but as the world has changed so much, all of them want to look amazing and they want to look current, fresh, sexy, and that is all a part of the hair industry.
What should you consider first before you invest in your hair?
I think the one thing is to have a professional conversation with someone instead of just doing your own thing and, usually, hairdressers are quite happy to consult with you without charging you before you make a serious investment in hair pieces or wigs.
How big do you think the hair industry is in Africa?
I think it is worth millions and billions… and I think it is an undiscovered industry that is still going to explode. I don’t think we have scratched the tip of the iceberg with this.
A Germ Of An idea
The microbiologist-turned-entrepreneur Babajide Ipaye started making good-looking shoes to fit his size 48 feet but decided to create them for others as well.
Selling shoes was probably the last thing Babajide Ipaye, a microbiology graduate, envisioned doing. But when by the age of 10, he was already wearing his father’s shoes, a size 44, he knew that some day that he would step in that world.
The only child of his parents, who passed away in a car accident when he was only 11, Ipaye was raised by his grandparents and extended family members who shaped the early years of his life.
“I had a lot of people who were trying to nurture me and they had different professions. So for example, one was an artist and I was endeared to him, another one was a medical doctor, so my granddad wanted me to study medicine and another uncle was a computer scientist, so I was kind of confused growing up. I wasn’t sure what I wanted to do, so I kind of lived the life of almost everyone that influenced me,” says Ipaye.
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That confusion helped Ipaye cut his teeth in various industries early on in his career. His medical doctor uncle influenced his career as a microbiologist where he worked with Ideas International Bio Technology Services, spending his days cleaning up oil spills and bacteria.
Then followed a stint in Information Technology (IT), a move also inspired by another uncle, where he worked with Tranter IT Infrastructure Services and Computer Warehouse as an analyst deploying managed technology services for multinationals like Guinness, Total and KPMG.
“At this point in time, IT was very hip and we happened to be one of the early pioneers in the tech space which was a very exciting time and considering where I was coming from in microbiology, it was a new field for me, I was working with multinationals and the exposure was amazing, it gave me a very broad sense of how organizations function.”
But Ipaye soon became dissatisfied with being put in a silo. There was too much structure and rigor due to the size of these multinationals and he became bogged down with a lot of systems and processes, which ultimately stifled his creative juices. His solution was to start his own IT company, Torque Technologies.
The company began providing IT equipment and technology services in its early days to multinationals before quickly creating a niche for itself in the fiber optics space. In early 2003 to 2005, the Nigerian telecoms era had just started booming and Ipaye and his partner saw a first-mover advantage in fiber optics by providing training to firms in Nigeria, which they did for the next 10 years.
By 2015, Ipaye decided he wanted a new challenge outside the IT world. After parting ways with his partner, he began to ponder about his life-long struggle with footwear.
“So I said to myself ‘why don’t I make my own shoes?’ So I went on the internet, did a bit of research and came across a school in the Netherlands called SLEM. I called them up and found out about the shoe-making course and I said since I was on holiday, why don’t I take some time off the business and explore how to make my own shoes and I went to the Netherlands.”
Keexs was born. The goal was to make shoes that fit Ipaye’s size 48 feet but also looked aesthetically pleasing. But making shoes for him alone would prove to be too costly.
Ipaye decided to make shoes for others as well. He would focus on the athleisure market, which is a portmanteau of ‘athletic’ and ‘leisure’, a market that has grown to the stage where it is no longer a trend but a mainstay in Nigerian fashion.
To stand out in the competitive footwear market, Ipaye decided to add some African elements to his innovative footwear brand and focused on outsourcing the production to a factory in the Netherlands while he focused on the product and design to save on cost.
The aim in the long run was to move production to Nigeria where he could fulfill the brand’s social mission of providing employment and skills training to unemployed youth. However, to make the business viable, he had to make a minimum of 1,000 pairs of shoes to achieve economies of scale. Next came the challenge of securing startup funding.
“From my previous experience of starting my technology business in Nigeria, I came to realize that the cost of funding in Nigeria is very high and also there are a lot of businesses chasing funding and the risk level of most potential investors in Nigeria is very conservative and they don’t want to invest in stuff they are not sure about.
“So I read about crowdfunding and consulted a company in the Netherlands and I came across a site called kick-starter which is a US-based platform that offers a global crowdfunding platform to innovative ideas and projects, hence we started the first innovative and social focused brand in Africa,” says Ipaye.
In just over two years Ipaye has managed to grow the business through leading e-commerce sites like Jumia and Konga as well as via its own website which receives orders from countries around the world. The shoes sell for anywhere from $40 to $60, with over 8,000 pairs of shoes sold till date.
Keexs has about 18 outlets in Nigeria with retail partners in Kenya, South Africa and Guadeloupe and Nairobi.
The company also sells through social media channels where they boast over 15,000 followers on Instagram. The long-term goal for Ipaye is to secure enough funding to set up a factory in Nigeria, which he is looking to raise through an amalgamation of funding sources including grants and loans.
“We realized very quickly that economies of scale is critical to drive the growth of this business therefore there is a need for a lot of capital. There are four sides to this chain; production, design, distribution and retail. The problem with a lot of businesses in Africa is that they are expected to do everything from start to finish along that entire value chain and what that does is, it stifles the growth of the business,” says Ipaye.
The big-time hit when CNN profiled Keexs on its African Voices show. Since then, they have managed to establish themselves as an innovative social brand focused on empowering unemployed youth in Nigeria. Next on the to-do list for Ipaye is establishing a production line in Nigeria, and then taking his brand global.
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