Patreon surpasses $1B valuation amid coronavirus

Patreon CEO Jack Conte joins Yahoo Finance's Zack Guzman to discuss the rise in new creators and members amid the COVID-19 pandemic.

Video Transcript

ZACK GUZMAN: Interesting news on the content creation side here highlighting Patreon, a company out there, startup. I don't know if counts as start up after seven years. But the company raising $90 million in its series E, bringing the seven-year-old company's valuation to $1.2 billion out there as an option, as content creators can get paid from some of their hardest core-- most hardcore fans. I think that's the right way to phrase it.

Here to discuss that with us is Jack Conte, Patreon's CEO. And Jack, I appreciate you taking the time to chat. Obviously congratulations on the raise here. And seeing the valuation go past $1 billion-- that's news. So what are you looking to do with the money here, as you, again, try and differentiate yourself from some of these other content platforms out there mainly at YouTube in helping fans connect with those creators themselves?

JACK CONTE: Yeah, well, you know, at this point, we've-- Patreon's now-- creators have earned over $2 billion in the platform from their patrons. It's now over 6 million patrons that are paying those creators. And in a couple months, we're going to pass about $1 billion a year that creators are earning on the platform.

And so there's a few key priorities moving forward. The first is internationalization. 3/4 of the creator market is outside of the United States. 3/4 of the creators in the world are not in the US. And only until a few months ago, the platform was only in English and only in dollars. And so we've launched pounds. We've launched euros.

Last week, we launched in German. So you now can-- you can use Patreon in German. And there's more languages coming-- French, Spanish, Italian. And more currencies and more payment methods coming as well. So that's first. Second is improved patient experiences. When we talk to creators and we talk to patrons, everybody wants patients to have a better experience.

They want to make content consumption easier and community. Folks want to join Patreon and feel like they're joining something that's bigger than themselves. And they're reporting that that's not yet happening. So we've got to step up our community game on Patreon.

And then the third thing is, you know, there's now, again, over 6 million patrons on Patreon who love supporting creators and 200,000 creators that are making money. And we want to do a better job of helping those folks find each other. So that means, you know, improve certain discovery and explore experiences.

ZACK GUZMAN: And to be clear for those out there who may not know, patrons are what you call those fans out there that do pay these content creators for whatever it may be. And it's such an interesting concept because, you know, it could be behind-the-scenes footage. These could be influencers that might be coming from YouTube who have a large following.

It might be upselling their fans out there for more exclusive content. But on that front, I mean, is that really what Patreon is all about? Are you creating new content creators out there rather than just be upselling their most hardcore fans? What are you seeing on the platform now that you guys have grown so much?

JACK CONTE: You know, it's funny. As a creator myself, I've been making videos and putting them on the internet for a decade and a half at this point. And one of the things that I saw from a very, very early time is I put out a video. I put a bunch of work in on the video. And fan comments would say things like, I'm throwing money at the screen, and nothing's happening.

People want to engage on a deeper level. They want to participate in the things that they really love. They want to vote with their dollars. They want to-- they want to join the journey of creation with folks that are filling the web with all the things that we love to see and hear and read and watch and listen to.

And so Patreon in a way is allowing folks to do that. And that's that kind of like, altruistic component of it. But the other component of it, which is a huge motivator for patrons, is the exclusive content. It's the behind-the-scenes access to the extra video. It's their early access released to the blog post. It's those sorts of things.

And in term, the creators that are doing it, to date, we found that the creators who do best on the platform are the creators who have those established fan bases and are bringing them onto the platform. That's the one thing that we're looking to change by leveraging better discovery and search tools.

ZACK GUZMAN: Well, it is very interesting too, though, just because we think about that. And obviously the idea of a patron hearkens back to the Renaissance. And wealthier people may be paying. But when you look into it, maybe it could be middle class, lower middle class paying money for the content, which is obviously a shift from what you might expect from Instagram where all you do is throw them a like or a follow.

It's a very different model. But when you think about the long-term prospects here, is your idea of maybe fully challenging a YouTube? What are your IPO plans here? What are you looking to do as you guys move past this Series E?

JACK CONTE: You know, at the core of it is this rise of the creative class. You know, the internet has given people free distribution around the world. And now everybody's got one of these in their pocket-- not everybody. But billions of people have a 4K camera in their pocket and a better microphone than the audio gear that was used to record albums just a couple of decades ago.

And that is creating an explosion in the number of creative people around the world that are making work and want to make money from their work. It's literally in the tens of millions in terms of the number of people that are making money and wanting to be professional creators. And no one's building for those people.

All the distribution platforms are building for advertisers. You know, their customer, the person who pays them is the advertiser. But creators are small business owners. They need all the infrastructure. They need the HR tools. They need the access to capital. They need team building things. They need CRM. They need CMS.

They need everything that a small business needs. And so that's what Patreon wants to do for these folks. We want to help these folks legitimize their businesses and have scaled impact. And we want to grow with them as they become real legitimate creative business owners.

ZACK GUZMAN: Yeah, very interesting to see. As you said, shifting the business model here for those fans to be paying those creators directly. And I guess with you guys in the middle. But Jack Conte, Patreon CEO-- appreciate you joining us to chat all [? about it. ?]

JACK CONTE: Thanks for having me.