Will Joe Rogan ever IPO?

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MTV almost got Joe Rogan for $500.

It's 1994, and the former martial arts teacher and limousine driver has just had his first break. Initially performing at bachelor parties and strip clips, squeezing in sets at some NYC clubs, the comedian scores a TV spot: the Half Hour Comedy Hour in LA.

It's a typically gregarious, macho performance. Rogan strolls onto the stage in a dark t-shirt, cap backward, and within a few seconds, he's into his schtick.

"I gotta stop dating bimbos," he says, before rolling into a punchline about low-maintenance romantic relationships. The crowd, however coached they may be, is rapturous, hooting at his impression of a cockatoo, interrupting with exuberant applause.

Whatever the reaction in room that night, Rogan made an impression upstairs. Off the back of his set, MTV offered him a deal: host the pilot of a new game-show on the network for $500 and stay exclusive to the Viacom property for three years.

In hindsight, the proposal looks ridiculous. But to a young comedian, just beginning to make his mark, a regular audience in the millions and the chance to helm a new property must have been enticing.

As Rogan tells it, his manager was the one to recognize more value could be found elsewhere.

My manager is a slick motherfucker and he had an idea, he sent my tape out to all these network folks and said that MTV was gonna sign an exclusive deal with me, and if they wanted to do something with me they had to move right now! Well, network folks, being the sheep that they are, immediately reacted and started a bidding war for me. I got a pile of cash and wound up on a Fox sitcom that Disney produced.

Though sitcom Hardball wasn't the making of the Rogan we see today, it was an illustration of the sense he and his steerers had for his worth, an echo of the titanic deal the king of podcasting would strike with Spotify this year.

And yet, as Andrew Wilkinson unpacked, there's the feeling that even at $100MM, Rogan's licensing arrangement with the streaming firm represents a knock-off signing. With somewhere between $30MM and $64MM in annual revenue, and the opportunity to segue towards a recurring model that would justify a premium multiple, Joe Rogan, or the business-embodiment of him, could be a unicorn. A billion-dollar company, wrapped around a singular talent.

When Rogan's "multiyear" deal expires, he may have more options to cash out. Instead of selling their talents to the highest bidder, the next generation of "personality businesses" may be traded on the public markets.

The strengths and weaknesses of personality businesses

“What businesses under $10m in earnings have the widest moats?”

When Erik Jorgensen, a product strategist, posed that question on Twitter this week, I had a quick answer.

"Personality businesses. Podcasters, writers, and so on. Trust, reputation are non-copyable."

In a post-scarcity world in which information can be sent and modified at zero cost, other characteristics begin to take on outsize value. In his essay, "Better than Free," Wired founder Kevin Kelly describes the internet as a copy machine, noting that to build something valuable, "you need to sell things which can not be copied."

He goes on to list eight "generatives" that are better than free, thanks to their non-copyability: immediacy, personalization, interpretation, authenticity, embodiment, patronage, and findability.

Interpretation. Authenticity. Trust.

These are the traits that define the best personality businesses, creating deep defensibility, making them impossible to copy.

Historically, the problem for these businesses has not been one of defensibility, but scale. Humans may be unreplicable, but they are also unscalable. Or, at least, are limited by scale. Though there might be demand for 1,000 Marios (there isn't), no amount of money can produce more.

There are workarounds, of course, on which all of these businesses rely. Work product — writing, audio, video — serve as a representation of personality in a scalable form. Any of these formats can be consumed millions of times, with little to no added cost. However, the transference of personality to product, identity to page, creates a form of attenuation. Though scale is increased, intimacy is reduced. The consequence is tension between the goals of the business and the desires of the user.

There are other issues. By their very nature, personality businesses have a single point of failure and an undesired but nonetheless planned, obsolescence. If Joe Rogan were to be hit by a bus tomorrow (I do not have a voodoo doll, I promise) or contract Covid (wear your masks), the value of the Spotify licensing deal would evaporate. Value is concentrated in a single, mortal coil. (I would presume there is some clause protecting against key man risk.)

This concoction of uncommon strengths (non-copyability) and vulnerabilities (intimacy v. scale, concentrated value) have allowed many good businesses to be created, with few breakouts.

Karen Kilgariff and Georgia Hardstark, hosts of the My Favorite Murder podcast, make $15MM a year, YouTube's top earner, Ryan Kaji, pulled in $26MM. Ninja, the Fortnite streamer earned $17MM in 2019. Guessing the revenue of Stratechery, the newsletter created by Ben Thompson has become almost a venture parlor game, though there’s little doubt it is in the millions. These are impressive businesses, though none are likely to prompt envy in the offices of Silicon Valley's financiers.

The closest we may have seen to personality businesses with venture returns is Kylie Jenner's make-up line, valued at ~$1.2B per Coty's purchase of 51%. However, that business bears more of a resemblance to ateliers named after their creators (Chanel, Dior, YSL) than a true personality business. Televangelists are a closer fit, selling themselves as much as the scripture. Minister Kenneth Copeland has amassed a net worth of $300MM.

Again, though impressive companies, what we may see within the next decade is something rather different: the emergence of massive, publicly-traded unicorns predicated on the value of a single person's magnetism. Getting there will require the acceleration of existing trends and the deployment of new technology. In particular, the acceleration of media consumption, the proliferation and maturation of platforms and tools, the creation of new mediums that allow for low-effort-high audience-high-intimacy relationships, and digital succession planning.

Growing consumption

Coronavirus had proved a case-in-point. Whenever we earn time, we will spend it consuming. As we gain back hours from commuting, traveling, visiting physical establishments, and socializing in real life, we spent it streaming video, playing games, and using social media.

Though a post-vaccine world is likely to reduce figures in the short-term, the trend of the last decade is of increased consumption. In 2011, US consumers spent 11 hours per day with media. By 2020, that figure had risen to 13.5 hours.

Much of that is due to the advent of new platforms that are both more addictive and compete for different minutes of a user's day. Though podcasts may have stolen a few minutes from music streaming, they have grown the total amount of audio consumption. Part of that success is in targeting time that might otherwise have been nonconsumptive. Users might have once cooked or commuted in silence — now they listen to podcasts.

Products like AR glasses and other wearables may aid the trend. If we spend waking hours with an ambient screen in front of us or have a more powerful computer strapped to our wrist, we may find we increase passive consumption or further fill interstitial moments.

If this trend holds, personality businesses should benefit, both reaching new users and extracting more value from each individual. This will be particularly true if new mediums and platforms continue to provide access to large user bases with low barriers to production.

Platforms and infrastructure

As alluded to above, much will depend on the platforms and infrastructure. In particular, personality businesses need solutions that enable creation, distribution, monetization, and administration. While Ryan Kaji is charismatic, he would not be a multi-millionaire without YouTube. Though Bill Bishop is an extraordinarily astute commentator, he would have struggled to pull in the $500K - $1MM a year without Substack.

The past few years have seen platforms arise that make some aspect of creation, distribution, monetization, and administration easier. Yet, there is still much that can be streamlined. In this week's RFS 100, Dave Ambrose and Matt Ziskie, proposed the need for a "Stripe Atlas for Individuals" — essentially a packaged service that helps new creators get off the ground. Basic business needs like banking, accounting, marketing, tracking analytics, and other necessities are only partially served by existing solutions.

This, in and of itself, presents a deeply attractive opportunity for investors, as do products that directly address the problem of scale for personality businesses. A wave of community software companies has emerged over the past couple years, including Geneva, Comradery, Commsor, and Circle, all which help personalities scale by giving consumers a way to generate and receive value under the aegis of the creator. Beneficial conversations can be had without the personality creating additional content.

Beyond the four categories defined above, the creation of new platforms provides other, less tangible value. For example, these platforms enable digital economies of agglomeration. Consumers that search for one podcast may find another they like, while creators may more easily collaborate and share lessons when building with similar blocks.

The movement to build for the creator economy will naturally benefit personality businesses, allowing them to achieve new scale and efficiency with the help of robust tooling.

New mediums

Just as TikTok has created a new class of influencer, emergent mediums will mint new personality businesses. These are likely to be especially valuable when they provide low effort access to a large audience. This is especially true if coupled with a high intimacy product.

It is worth clarifying that by low effort, I mean that a comparatively low amount of time is required from the key personality to create the product. For Ben Thompson, a newsletter is a high effort product. Even if he relies on others to research, the act of writing takes multiple hours, and just minutes to consume. Given that writing is the embodiment of his personality, it difficult to outsource, and as such, is a bottleneck in scaling. If Thompson truly wants to write each article he creates, production is capped.

That said, newsletters provide access to a large audience. Assuming a piece is not pay-gated, it can be accessed and shared by anyone with an email address. In many cases, an online blog means that even that is not necessary.

Podcasting has a different dynamic. Though wide distribution is common, though podcasting shines most when assessing the platform on the dimensions of effort and intimacy. Compared to writing, podcasts are low effort, requiring less time from the key personality to create the product. Booking guests and conducting research can all be done by other team members, allowing the key personality to create a completed product in the time it takes to record. Though still capped (there are only so many hours in the day), Rogan can produce considerably more than Thompson.

That may be part of the reason that podcasting is such an intimate product. Businesses built on the personality of a creator benefit from the proximity perceived by an audience. If you like Joe Rogan, you would presumably pay more to have a one-on-one conversation with him, than you would to receive his tweets. The comparatively low effort required for podcasting allows for a higher production frequency, which gives users more opportunities to develop rapport. The casual tone and experience of hearing a key personality in one's head also breed closeness.

Over time, we should expect personality businesses to migrate towards mediums that best meet these criteria. While there is the question of aptitude (not every great writer will be a great podcaster), ceteris paribus, these businesses will move towards mediums that maximize the time and value of talent.

To that end, we may see new forms of media emerge that allow personality businesses to scale production while growing audience size and deepening intimacy. Might we see more creators marry audio with photos or graphs? Will writers embrace text messaging, altering their work to fit the channel? Could a version of Twitch work without the stream of the actual game? When will virtual or augmented reality content become trivial to produce?

As technology changes, new forms of expression will follow.

Digital succession planning

None of the points addressed thus far get at the core vulnerability of personality business: talent expires. That is true metaphorically and physically — every celebrity has their day, and fandoms wither. And we will all die, at least for the foreseeable future.

Artificial intelligence may offer a workaround. Earlier this week, Learn From Anyone circulated on Twitter. Leveraging OpenAI's GPT-3 technology, the product allows users to ask a question of a famous person, dead or alive. The system's AI then generates a probable response.

As it is today, Learn From Anyone is a fun toy, but it's not hard to imagine how it could have meaningful consequences. AI has the potential to extend personality, allowing personality businesses to hack low effort intimacy at scale (Joe Rogan's AI could host one-on-one conversations non-stop, ad infinitum) and solve the tricky matter of death.

If operating at sufficient fidelity, how much would product managers pay for access to a synthetic Steve Jobs? How much would investors pay for the ghost of Benjamin Graham? Whenever temperament is technologically fakeable, even within a limited scope, personality businesses will cease to have an inevitable terminus, even if the humans around which they center do.

Financing

If personality businesses are able to increase scale and eliminate the concentration of value in a single body, there is no reason why we couldn't see these projects attract traditional financing. With a low-cost structure — resulting in favorable margins — and recurring revenue, Ben Thompson starts to look like a SaaS business.

Experiments in human financing exist. Lambda School and other organizations that leverage ISAs are, in effect, purchasing shares in individuals, albeit limited to earnings within a specified timeframe.

More radical attempts have been made. Mike Merrill, an entrepreneur and customer service representative, made headlines when he offered an "IPO" of himself, selling 100K shares to friends at a PPS of $1. In exchange for their shares, investors got the chance to influence Merrill's decisions, including whether he should get a vasectomy and who he dated. A website was built in order to facilitate buying and selling with various investor shenanigans allowing some to profit quickly.

Today, Merrill is sold on Human IPO. Founded by a former Google employee and a Goldman Sachs VP, the platform allows anyone to buy and sell someone's time. One hour is equivalent to a single share. Merrill's price has appreciated significantly with a share now worth $72. Assuming some consistency between instruments, buyers in the 2008 Merrill IPO would see an IRR of 42.82% on their investment.

Others listed on the platform include Tristan Pollock from 500 Startups and YC-backed founders. An article in June noted that over 600 people had applied to "go public" with thousands of investors ready to invest. You can buy shares in Anatoly, a 19-year-old engineer, or Jessica, a biochemist, in the hopes that as they become more successful, their time increases in value.

While an interesting (and unsettling) thought experiment, personality businesses are unlikely to turn to Human IPO to raise growth capital. Instead, I expect traditional private market financing firms to increase their interest in the coming years. Specialist firms may emerge, focused on different creators. Podfund currently invests $25K - 50K in podcast hosts in exchange for a share of future revenue — will we see equivalent vehicles for gamers? Writers? OnlyFans personalities? Personality remains defensible and will become more scalable than ever before — whatever risks exist can be successfully underwritten.

Depending on when Rogan's deal with Spotify ends, the landscape may be radically different. Increased media consumption, robust infrastructure, and new mediums should increase the value personality business can extract, while developments in artificial intelligence may give such companies life beyond their creators. When that time comes, Rogan and his successors will not need to turn to MTV or Spotify or Disney. Instead, they'll prepare to go public.