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November 20, 2023

Creators are the new startups

Inside Everbloom

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Inside Everbloom: Creators are the new startups

In this episode, we talk to Brendan Alper. He is the co-founder of Everbloom, an investment platform that allows anyone to invest in creators. Since Everbloom was founded in 2020, they have helped some of the world's most talented creators grow their communities.

Brendan's journey from finance at Goldman Sachs to comedy writing, and eventually to entrepreneurship, positions him to understand the creative and business sides of the creator economy. He shares his transition from creating the dating app, Hater, to his appearance on Shark Tank, and finally his move to Stockholm to incubate Everbloom.

Subscribe to Zypsy Spotlight wherever you listen to podcasts to learn more useful insights on what the future of venture capital looks like.

Show notes

Timestamp

00:00 Introduction

00:57 Brendan’s journey

03:26 Story of Everbloom

06:00 Re-imagining creator funding

09:33 A creator’s financial challenges

10:28 The accelerator program

12:37 Capital needs of creators

14:55 Partnering with big creators

17:24 Everbloom’s future

resources

Links

Brendan’s LinkedIn and Twitter

Everbloom’s website, LinkedIn, and Twitter

Show notes

Transcript

[00:00:00] Brendan: With startups, you're investing and hoping that one day they get an exit. We think about it like Y Combinator for creators. We would make an investment in a creator and then we would do whatever we could, leveraging our connections in the space and our partners to help them, whether it was shorts, editing and syndication onto other platforms.

[00:00:19] Kaz: Welcome to Zypsy Spotlight. I'm Kaz, co founder of Zypsy, a design and investment firm that supports startup founders with brand building expertise.

[00:00:26] Kevin: In this episode, we discuss the creator economy. Creators have become the new startups. They are fully capable of reaching unicorn status. Today, we're excited to have Brendan, co-founder of Everbloom. The next generation funding for creators that supports them through upfront cash, guidance, and mentorship. Since Everbloom was founded in 2020, they have helped some of the world's most talented creators grow their communities while allowing anyone to invest in them. Let's deep dive in. We're your cohosts, I'm Kevin.

[00:00:55] Kaz: I'm Kaz.

[00:00:57] Kevin: Brendan has a background in both finance and comedy writing but how does that translate to his approach to entrepreneurship and investing? We'll discuss his philosophy on creator goals and support.

[00:01:06] Brendan: I originally started my career in finance. I was working at Goldman in New York for a number of years and eventually just decided that it wasn't for me. And like many other I think finance folks quit to move on to something more creative.

Originally from that, for me was comedy writing. I started writing comedy sketches and complete opposite end of the spectrum from finance, but there's a point to that. It, even though it was short lived, one of the comedy sketches that I was working on was the idea of a dating app that matched people based on the things they hated instead of the things that they liked.

Eventually, I started talking to one of my friends about it and I got so much feedback on it that man, that's actually a good idea. It's funny but you know that should be a real thing. And I just started playing around with moving the ball down the field starting to actually be like, okay what if I hired a developer, what if I hired a designer, what if I bootstrap this together and little by little built an actual dating app called Hater that did just that match people based on the things they hated. So that's how I fell into entrepreneurship almost as a joke, but yeah, for that, startups was like the perfect middle between the creativity that I was maybe searching for on on the writing side and trying to become a creator and then, but also maybe the analytical thinking side from finance.

And then, flash forward many years later, a lot of stuff happened in between. I ended up going on Shark Tank for Hater, which was quite an experience on its own and probably could fill a whole podcast talking about that. But the investors that I had mentioned who had invested in Hater were the ones who brought me over to Stockholm to join their studio. I moved from New York to Stockholm, and that was where we incubated Everbloom. And, Everbloom was also this mix of, finance, and also creativity or creators in terms of funding them and helping them accomplish their goals. Coming full circle there.

To just expand on what Everbloom is, really, Everbloom is a company that helps creators grow, and we do that through providing them with both investment, but then also services and expertise in order to, one, be able to utilize that capital effectively, but also to teach them things and help them with problems and roadblocks that they have on their journey to being able to grow even further.

[00:03:26] Kevin: The journey of a creator can be a lonely one, but it doesn't have to be. Everbloom wanted to provide a support system for creators beyond just funding. We'll hear that up next and what it means for the future of creativity.

[00:03:37] Brendan: Everbloom was born in a startup studio based in Stockholm. Our previous investors were the founders of King, the gaming company, and they started this studio with the objective to create different types of consumer products, digital products all focused on, creators, but also other things as well.

We originally started Everbloom with the purpose of helping creators to start their own businesses. We worked with one creator in particular, this guy Bryant, and we helped him sell a bunch of filters that he created like Instagram filters. Previously there was no way to monetize those and we basically built a product in which he could sell filters to his fans and other people who wanted to use them.

So that was, where we got our start working with creators and it was a really eye opening experience. But what we quickly discovered was, every creator had different needs. Like we tried to adjust the product to fit other creators that we met through his network. And ultimately we just started having to build a full new product.

Every single time we met a new creator, everyone was completely different. And it was hard to scale like that. We were turning almost into an agency, not to say anything bad about agencies, but we're trying to build like a platform or a product. And. What we eventually realized was after talking to hundreds if not thousands of creators was there was certain things that were similar across the needs of different creators despite them being focused on entirely different verticals and they tended to be around two things.

One was capital helping get additional funding in order to expand their operations and scale. And then also expertise and help in order to help them utilize that capital best. So ultimately at the end of the day, not too different from startups. If you think about what startups need as well often it's money funding that they can get from venture capital or otherwise.

Even though there's a million different services out there that entrepreneurs utilize and obviously there's networks of people and mentors but with creators, it's almost a little bit more focused because you have these, if you're a YouTuber, you have other YouTubers who are super successful, and there's certain tricks and tips and that you can benefit tremendously from.

And what we wanted to do was provide both the capital, but also help creators get the things that they needed in order to grow.

[00:06:00] Kevin: Shifting focus, Brendan answers how Everbloom is re-imagining creator funding.

[00:06:05] Brendan: There's two pieces to unpack here. One is the way that you get paid back as an investor into a creator. With startups you're investing in a startup and hoping that one day they get an exit and you might invest in a startup that becomes super successful and they just don't exit and you're out of luck there.

But with creators, I mean there's many different ways to invest in creators as well, but the way that we do it is we're actually receiving a future portion of their earnings. Being a creator and especially being a YouTuber is like a business on rails. Everybody earns money the same way as you're making money from ads that are being played on YouTube that are then shared with you. YouTube shares 55 percent of the revenue that they receive from the advertisers. What we do is we then take a percentage of that ad revenue that the creator is earning. And if we have other investors come into the deal with us, we also distribute the earnings to them as well.

But that means that every month, we're receiving a fraction of the payments that the creator is receiving as opposed to having to wait for some sort of liquidity event. That's like the first piece in terms of like how we actually get paid. And even within that, there are a million different permutations of how you structure that.

And we've had to experiment over time to figure out what makes sense for the creator. What does the creator want and what makes sense for us as well? On that spectrum of sharing revenue with the creator. You have some investors who are taking very long term bets on a creator.

And so you see that with slow ventures, that with there's a humanism. These two brothers the Lieberman's who are doing also really interesting stuff where they're investing in an entire person and any output that they have even beyond their YouTube revenue.

And we were doing some of that as well, like longer duration, three to five year deals where, hey, creator gets some money and then we're taking a percentage over time. And hopefully, the creator is going to 10X and we're going to see a big return. And that tends to look more like startup investing where you're looking for the outliers, you're looking for the unicorns, and even though you might lose a bit of money on some of the other investments that you make, that one is going to make up for it. We still do a bit of that, but now we've shifted down the scale, I guess you have equity on one side of the scale and then loans, on the other side of the sale where it's just hey, I'm going to give you money and then you owe me debt and interest is going to accumulate.

We found a comfortable medium in between where we're advancing the creator funds. We're still making an investment in them. We're still taking a percentage from them, but we basically continue to collect that percentage until the creators paid us back plus some fee.

So it's in between. It's not like they're accumulating interest if they haven't paid us back by a certain period. We still. Make better returns if they can pay us back earlier, meaning they have outperformed their projection. If they don't, if they start to do poorly, then we're going to maybe experience a little bit of downside.

But it's limited because we have that set fee that we're trying to recoup. There's a whole different ways that you can structure these things. And there's different investors doing different things, but that's where we fall. And the reason why we actually did that was because creators asked for it. Creators weren't really comfortable having this kind of uncapped return where, we could invest $10,000 in a creator, but then if they blew up, they would have to pay us back $100,000 that to them didn't sit well, and, rightfully and so we came up with this cap structure as a comfortable medium in order to, limit the exposure that they would have back to us.

[00:09:33] Kevin: Now, let's consider the financial side of things. What are creators biggest financial challenges and how can Everbloom solve them?

[00:09:40] Brendan: It's both the finance instrument, but also I would say equally as important is the kind of services and expertise package that they get. That almost, to a lot of creators, matters more. And we're finding, a lot of the creators that we talk to, might not need financing, but they really need help.

And so we try to fill that gap ourselves and also through our partners and, in general, the most needed things from creators tend to be hiring editors and also just getting strategy on YouTube to help them grow. And I can talk about more about that later in terms of the accelerator program that we started.

There is a little bit of negotiating on the type of instrument, but generally I think we've started to figure that out and find a model that works best for most creators.

[00:10:28] Kevin: The accelerator program is not just limited to creators who received investments from Everbloom. Brendan explains how it can benefit other creators who may not need investment, but want to grow their channels.

[00:10:38] Brendan: We like to think about it like Y Combinator for creators, basically. So the way that it would work was we would make an investment in a creator and then we would do whatever we could, leveraging our connections in the space and our partners to help them, whether it was shorts, editing and syndication onto other platforms, like getting their content published on Snapchat, Facebook, whatever, sometimes translated into other languages.

The big one was always, how can you help me grow ? What kind of knowledge can you share with me? And we partnered with this guy, Mario. Who was a former strategist for Mr. Beast, actually. So he worked for Jimmy's company for two years, maybe longer, as his kind of retention director. And originally we were working with Mario in the capacity of okay, we were going to invest in a creator now.

Mario, we're gonna hire you to meet with this creator and teach them everything that you taught Mr. Beast and all your other big clients in order to help them grow. And we did that for a while and it went great and it went so great that we started saying, maybe we should formalize this a little bit more and not only limit it to creators who we're investing in, but also maybe open it up as a funnel to.

To bring in other creators who maybe you know, we could eventually invest in or maybe don't need investment at all But would find value from this program. And so just a few weeks ago. We launched our first cohort of a formal accelerator program which runs 12 weeks. It's one class every week and it's like an intensive two hour class where Mario is teaching all the secrets and tips and tricks and, that you need to know in order to grow on YouTube, specifically around your attention, which is probably the most important piece in terms of growing your audience on YouTube.

We're four sessions in tomorrow's the fifth session and it's going great. It's been really exciting for us to help us build a brand as in terms of helping creators, but also offer it to our existing investments and also use it as a funnel to get more business.

[00:12:37] Kevin: The more content a creator produces, the more money they can make. But how do they fund your growth? We'll explore the capital needs of creators.

[00:12:44] Brendan: There's definitely a wide spectrum there. You certainly have a lot of creators in particular short form creators, I would say that have very low budgets. Maybe they're an influencer and they're just going around and documenting their day. Or they're, making food videos or going to restaurants and they're, very low budget, but generally, YouTube tends to be a little bit of a different beast, and of course there's exceptions. There are certain YouTube channels that just don't require a big budget, but once you hit a certain scale, in order to increase that scale, it really takes serious dollars. You can make it a very good business for yourself as a solo creator and some people have but most of the time you're gonna need to start to hire editors.

You might need to hire script writers You might need better camera equipment. You might need higher production value. You might need to hire actors. You might need to pay for all sorts of different things like gaming servers. Once you start to hit a business scale, we see this need that creators need some additional capital.

Also, a lot of times you have creators who are doing really well and they see hey, look, this YouTube thing is making me some money, but I don't know if I'm ready to quit my cushy job in finance to, to do this full time. Maybe I'm making 10k a month, but I don't feel comfortable enough quitting my job and having a little bit more capital cushion.

Just to live would really help. You also have the case where it's like, hey, look, I have enough money that I need to handle my production and my finances for everything YouTube related, but, most banks don't recognize YouTuber as a real job and I'm trying to get a mortgage.

How do I buy a house? And while we focus more on providing capital for operational things, there are also cases where just in order to facilitate their lifestyle, they also need a bit of extra cash. And we try to help with that as well. But generally you do see that there's a very clear correlation between the amount of content that you create and the amount of money that you're earning. If you can create twice as much content, you're maybe you're not going to make twice as much money, but you'll make more money, definitely. And so the name of the game is just, how do you increase that content? And that just takes money because creator burnout is real. And if you try to do everything at once you'll overwhelm yourself.

[00:14:55] Kevin: From Lego movies to football content, they're helping these creators grow their audiences in unique and exciting ways. Up next, hear about their partnerships and the challenges they're facing.

[00:15:04] Brendan: There's a few different creators that we work with on the investment side, and then there's creators that we work with on the accelerator side. We recently signed an investment deal with Jubilee, which is a huge channel. They create studio based content. So they have different types of shows that they run on their channel. They also have another channel called Nectar, which is based specifically around dating content. But, they might have, content where it's okay, we're gonna have this girl and she's gonna date guys based on their clothing.

It's that kind of, slightly edgy content, but they've done really well for themselves over the years. They're very well known and we've done kind of a custom deal with them where we're fun, helping them fund new pilots that they are launching on their channels with other creators.

So they'll bring in another creator who has a good concept via their creator launch pad, and then they run a pilot, and if the pilot does well, they'll expand it into like a full show, and so we're funding these individual pilots which is pretty cool. It's like a whole new type of, model, almost like television and that's a really cool one that we're excited about, and hopefully, I think one of the first pilots will be launching soon.

Then we work with all sorts of other creators there's this one creator, Brickverse, who creates the Lego movie, basically, but he makes his own story, he writes them, and it's these fantastical tales about, Mr. Beast, and Ryan Trahan, and all the big, famous YouTubers, but acted out in Legos. He used to do it all with actual Legos. Now he's doing with 3D animation, but, he has to hire animators in order to produce more content. And so that's a really cool creator that we're working with. There's also like the accelerator side.

There's Mark Manson, the famous American author is one of the attendees in the accelerator. And so he's obviously built a huge fortune and success selling, all of his books . But now it's translating all of that knowledge that he's built up in these books onto YouTube, which is like the perfect next step for him. And with Mario, we've been helping him master, how to grow on YouTube. Also foot crunch. We work very closely with, they started making FIFA videos, like the video game videos, but now we're expanding to just football content in general. And they've been absolutely exploding. They go to the world cup and get, go to the different stadiums and go behind the scenes. And appeals to a lot of different countries and languages as well.

[00:17:24] Kevin: One of the things that sets Everbloom apart is its commitment to providing holistic support to creators from funding to mentorship and beyond. Brendan shared his thoughts on what's next for Everbloom and its creators.

[00:17:35] Brendan: We really want to keep pushing on the accelerator. This first cohort is going well and people are getting a lot of value from it. We want to keep expanding it to really become the Y Combinator of creators and bring in maybe other strategists and other people who can help creators learn other types of tricks that Mario doesn't necessarily have, other types of knowledge that Mario doesn't necessarily have. We're going to keep pushing on that. There's some talk as well about doing a live conference.

We also have this is on the accelerator, specifically on this cohort, the last day of the accelerator is like our demo day and it's a little bit different from other demo days, but we're going to run our own Shark Tank basically and have a creator up on stage and then we'll have some investors participating and potentially investing in that creator.

I think continuing to, figure out other ways we can help creators. That's the key here. There are other people investing in creators. I think that's not fully new, it's relatively new compared to startup investing, but I wouldn't say that we're unique in providing capital to creators.

Where we can continue to differentiate ourselves is by really providing other types of values to those creators as well. We're going to keep pushing there.

[00:18:41] Kevin: If you liked this Spotlight episode, please leave us a review. We're just starting out, so every review really helps. Follow us on Twitter at zypsycom if you don't want to miss an episode. That way, you'll be able to see every time a new show goes live. That's all from us today. Thank you for listening to this episode of Zypsy Spotlight.