Feb. 9, 2019 - Sargon of Akkad - Carl Benjamin
14:10
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| When I was unfairly banned from Patreon, there was something printed in the New York Times that Jack Conte, Patreon CEO, said, it really kind of resonated with my bullshit detector, and I found it bizarre that he would say such a thing, especially to a major newspaper. | |
| The piece was written in response to Sam Harris closing his Patreon account because he didn't want to be at the whims of Patreon's capricious trust and safety council, and I don't blame him one bit. | |
| But apparently Jack Conte said those quitting Patreon in solidarity with Mr. Benjamin may have had other motives behind their sudden outrage. | |
| As content creators using the site grow more famous and their income more significant, the 5% cut that Patreon takes of their donations may have begun to seem cumbersome. | |
| I found that to be a really weird thing to say because a 5% cut was A, something everyone was very happy with for the years that they'd been using Patreon, but B, market leading. | |
| I mean, I don't know of any other platforms that do what Patreon do for a lower percent of the cut. | |
| So for him to say that this is cumbersome and for some reason people would object to this service that they'd signed up to voluntarily under the condition that Patreon take 5% is obviously very disingenuous. | |
| But then it got me thinking, how can Patreon really survive only taking a 5% cut? | |
| Because a 5% cut is a very small amount of money, especially for a Silicon Valley tech giant that has a lot of money from investors that they're going to have to start paying back. | |
| Back in August 2013, it was revealed that Patreon had raised $2.1 million for their company back when it was still small enough for Jack Conte to legally abort. | |
| They'd apparently raised $2.1 million from tech investors, SV Angel, Charles River Ventures, Freestyle Capital, and a bunch of others I'd never heard of. | |
| In 2014, Patreon raised another $15 million of funding, again, through Venture Capital. | |
| In 2016, it raised another $30 million, putting the total amount of funding at $47.1 million, led by Thrive Capital and a bunch of other venture capitalists. | |
| Now, Jack Conte never struck me as the sort of guy who would get into bed with venture capitalists like Thrive Capital, but apparently this is not against his principles and it's going to help his company, so why wouldn't he do it? | |
| And in 2017, Patreon raised another $60 million from Thrive Capital. | |
| This put Patreon into the pockets of the investors for over $100 million. | |
| And the capital apparently went to hiring to expand its 80-person team and scaling up growth by recruiting more creators, including videographers, political pundits, game developers, etc., etc. etc. | |
| Well, apart from those political pundits who oppose the Nazis, those people can get off the platform because sometimes they can be rude. | |
| But again, this really got my noggin jogging. | |
| Because $100 million is a hell of a lot of money. | |
| And taking 5% of people's $5 transactions through Patreon is not. | |
| But it didn't really matter too much to Patreon because in spite of the fact that people were pulling out because of Patreon's treatment of me, Patreon has still been growing. | |
| Although this has stalled somewhat. | |
| What I was surprised to see is that Jack Conte did an interview with CNBC in which he admitted that Patreon's generous business model is not sustainable despite its rapid growth. | |
| And Patreon hasn't been slow to trumpet its success with more than half a billion dollars due to be processed and paid to creators in 2019. | |
| So it sounds like everything's going great for Patreon, doesn't it? | |
| Except when you do the maths on that, you realize that Patreon's only making $25 million a year, at least by the figures that they're giving us here. | |
| And for a Silicon Valley tech giant that's in the red for $100 million, that's a problem. | |
| When you have that large a pound of flesh to a bunch of investors, you're going to have to start thinking of ways to expand your business and make a bit more money, aren't you? | |
| Because the thing is, since Patreon was created in 2013, up until the end of 2019 and their projected forecasts, Patreon will have only paid out $1 billion in total to content creators, putting Patreon's revenue for the entire company for its entire lifespan until the very end of this year at $50 million. | |
| That is half of what they have raised in venture capital over the past five years. | |
| Patreon CEO Jack Conte said in an interview with CNPC that the platform will soon be facing the challenge of maintaining a profitable model as the company continues its growth. | |
| The reality is Patreon needs to build new businesses, new services, and new revenue lines in order to build a sustainable business. | |
| Well, yes, I imagine it would do, given the amount of venture capital that you took in order to make Patreon the success that it is. | |
| I'm amazed that you think you can afford to be kicking creators off the platform for saying naughty words that you don't like, Jack. | |
| But I mean, I'm not the one with the debt that's twice as much than my company has ever made in its entire lifespan. | |
| So hey, what would I know? | |
| I'm just a guy who likes to call Nazis the N-word. | |
| I suppose that's why Patreon is trying to acquire its competitors, such as Memberful, which just appears to be a Patreon clone that Patreon purchased last year. | |
| But as Jack Conte said in his CNBC interview, we will have to re-examine how we charge for new services as we put them out. | |
| But it's also very important that Jack maintains that Patreon is an ethical company. | |
| It has an ethical agenda, and it will do what it takes to maintain and enforce that ethical agenda. | |
| Look, we're taking a stand against hate speech. | |
| It's not for everybody. | |
| Some people don't like it. | |
| Those folks are not going to be cool with that. | |
| We're not going to allow people to use racial slurs and to spread bigotry and hatred on the platform. | |
| I think other tech companies have been slow to address some of these problems. | |
| And yeah, we're coming out and taking a clear stand on that. | |
| And a lot of creators who are against our stand on that have these big communities and are drumming up a lot of excitement and press and they have their opinions and we have ours. | |
| And if you don't like it, don't use Patreon. | |
| You sure you can afford that, Jack? | |
| But I mean, A, you're all for inclusivity, which means unpersoning the people that you want to get rid of because that's how inclusivity works. | |
| And if you don't like it, don't use Patreon. | |
| Sorry, I don't mean to sound callous, but I don't feel bad about taking a stand against hate speech and taking a stand for inclusivity and making sure that we build a safe space for all people. | |
| I think hatred and bigotry on the web is a serious problem. | |
| And I think it's something that we should respond to. | |
| And I philosophically want Patreon to be a company that's around for decades. | |
| And so I focus on like, are we cost cutting here? | |
| Are we growing margin here? | |
| Are we like, like, I really care about this company being around for a really long time and not like selling to some big tech company or not like doing all those other things. | |
| I care about the sustainability of this company at its core. | |
| And so that's sort of, at least you understand my position on that. | |
| And so when people talk shit on Twitter about whether we raise or don't raise or whether we're going to add new features that have different cost structures, I don't give a shit because I can tell you right now, we're going to do what we should do to make this a sustainable company for decades because of the mission of the company. | |
| So Jack Conte is stuck between a rock and a hard place. | |
| On one hand, he has a massive amount of money that he owes to investors. | |
| On the other hand, he wants to maintain a moral regime at Patreon. | |
| And of course, he still wants to keep the lights on. | |
| It's really weird timing that Patreon would find themselves with problems processing payments. | |
| Problem identified. | |
| We are currently running a bit behind as we resolve a processing delay. | |
| While every processing day fluctuates a bit based on many factors, payments are still on track to process within 24 to 48 hours. | |
| About four hours later, payments are processing, but at a slower rate than normal. | |
| We're investigating the root cause and we'll continue to provide updates. | |
| Payment processing is continuing and we are still investigating potential resolutions to the slow pace. | |
| Our team is on it and we'll work to provide updates. | |
| We've currently processed the majority of payments and understand that any delay is unacceptable. | |
| We've built an alternate solution where we extend a payout advance on your funds for creators who need it. | |
| An email with details has been sent. | |
| Once again, we're so sorry for this delay and thank you for your incredible patience while we continue working on making this right. | |
| And by the end of that very day, the incident was resolved. | |
| When we have a payments issue, when we're delayed or something, we take it really seriously. | |
| I know, I know some people like this is their livelihood. | |
| So what was Patreon's reason for not being able to pay out these pledges? | |
| I mean, it must have been something pretty serious, right? | |
| What happened last Friday was a database slowness issue. | |
| It wasn't like things were going to explode. | |
| Payments were always going to happen. | |
| But what did in fact happen, though, was that our database was performing slower than it normally does. | |
| A slowness in the database. | |
| Well, I imagine that's the technical term. | |
| But you know what? | |
| I bet there are loads of content creators who are absolutely panicking at the fact that when they expected their money, they didn't get it. | |
| So thank goodness for payout advance. | |
| Enabling payout advance and then withdrawing your balance will pay out your current balance plus 90% of your expected earnings from this month's unprocessed pledges. | |
| Once the payout is initiated, you will see your balance go negative, reflecting the earnings from unprocessed pledges already delivered to you. | |
| As we continue to process your patron pledges and run our retry process, you will see your balance return to normal. | |
| Now, like I said, it may be that this is just poorly worded and they should have been more clear about this because what this sounds like to me is that Patreon is turning into a payday loan company who incidentally are owned by Joshua Kushner, the brother of Jared Kushner, the husband of Ivanka Trump, and a senior White House advisor to the president. | |
| Wow, that's weird, isn't it? | |
| And it's important to know that Patreon have understood that they need to raise more money for a long time. | |
| For example, in December 2017, they faced a rebellion of furious creators and backed away from their new fee processing structure because it was screwing those people who only paid a few dollars a month to a particular content creator. | |
| These new fees were making it financially untenable to make small donations to content creators. | |
| But you know what? | |
| It'll be okay because Josh Kushner, despite his links to Donald Trump, is one of the most thoughtful, kind, long-term, patient, creator-first, and supportive people I've ever met in my life. | |
| He and his team are a huge part of the reason Patreon exists at all. | |
| So it's okay. | |
| It's okay that Jack Conte is in this guy's pocket for roughly $80 million. | |
| That's okay. | |
| It's okay that he needs to start restructuring the payment system of Patreon to pay off that debt. | |
| It's okay. | |
| He's creator first, don't you know? | |
| He's supportive, patient. | |
| He's a really nice guy. | |
| And you can feel safe and secure in using Patreon, despite the fact that the platform's owner recently said that it's unsustainable. | |
| You know, you can feel really good about using Patreon. | |
| Patreon is going just great. | |
| We got your backs. | |
| We are building the most creator first company on the planet. | |
| We are doing what's right for you. | |
| I promise. | |
| It may not always feel like that because of the way we communicate or mistakes or things that happen. | |
| And I understand that and I see why that creates fear. | |
| And as a creator, I know that fear personally. | |
| I know it in my heart. | |
| I know that it makes people scared. | |
| I'm sorry. | |
| There's nothing to be scared about. | |
| Patreon is doing amazingly well. | |
| We are going to be here for decades and we are going to be building the most amazing things for you. | |
| Our mission is to get you paid. | |
| That is why we exist. | |
| It's our purpose in life. | |
| I hope that addresses the underlying sentiment that's going on here. | |
| The people using Patreon, just so you know, these are my people. | |
| These are my friends. | |
| These are people that I, oh, sorry, folks. | |
| I didn't expect this. | |
| I'm crying on a live stream. | |
| I'm not going to let you down. | |
| Let's leave it at that. | |
| I feel very confident that you're not going to let people down, and we will leave it at that. | |
| But in the meantime, since you let me down, Jack, since you decided to single me out, I'd just like to thank all of my patrons who moved over to Subscribestar. | |
| Seriously, folks, thank you to everyone who has come over and supported me. | |
| It's made the world of difference to my ability to make these videos. | |
| Thanks again. | |
| And Jack, no hard feelings, right? | |
| We are doing what's right for you. | |
| I promise. |
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