Patreon Pulled a TaskRabbit From their Hat

I love what CEO Jack Conte is trying to do at Patreon. I am also absolutely bonkers for anything Pomplamoose creates. I’ve also hosted Jack’s wife Nataly Dawn on the Break It Down Show. Suffice to say, I am a fan of all of it---BUT…

As CEO of Patreon, his recent decision to change pricing and the impact of that decision on creators was clearly a mistake. To his credit, Jack has not only acknowledged the mistake but openly apologized for it and canceled these changes.

Despite this mistake, I do salute Mr. Conte’s character and resolve, I do believe in him, but his company fell into a common trap.

The Patreon decision story has been covered by a variety of sources. Here Here and Here. So, instead of rehashing old news, let’s examine the causes that precipitated Patreon’s misstep.

1. Investors want to make money. 

When Patreon had its most recent injection of capital, there’s a reasonable expectation that they are going to work on creating profit for the investors. From Tech Crunch --

With 50,000 creators and 1 million subscribers on board paying an average of $12 per month for early and exclusive looks at their content, Patreon is on track to pay out $150 million in 2017. That means Patreon will only earn about $7.5 million this year despite doubling in size.

Instead of framing their growth problem as “How do we help our creators find and build bigger audiences?” Patreon instead landed on, “How do we collect more revenue from the Patrons?” 

2. Gig-economy companies suffer from a narrow-minded view of their “task performers” and what they mean to the company.

At one point I was the #1 TaskRabbit in the SF Bay Area. As a leader in the field, they called me and a few other top rabbits into their office to pump us for market information--with no intention of compensating us fairly for our insight into their market.

By working hard, and focusing on reducing my customer’s problems, I built a book of clients that treated and fed me well. Among these clients were, CEO David Rusenko of Weebly, where they have their own chef, Nat Friedman CEO Xamarin and his crew were fabulous and generous hosts, Jenny at Crittercism was wonderful. The point is, the folks I helped, cared about me and treated me like it. I ate what they ate…that wasn’t true at TaskRabbit.

When I arrived for the market info session at TaskRabbit, they ordered a few cheese pizzas and one salad. Any other start-up in the Bay Area they would have fed us well. Despite being the top revenue generator for TaskRabbit, I was fed the cheapest pizza and Diet Coke at their HQ.

Finally, in early 2015, my partner Jon and I asked for a meeting with Leah Busque, CEO of TaskRabbit. We wanted to talk to her about partnering with Ikea. By working in the field doing tasks, we’d noticed a vastly underserved market.

In less than a year, we had conducted over 100k worth of transactions helping clients with their Ikea purchases. Tens of millions of dollars of revenue was available by organizing rabbits to consult, shop, purchase, deliver and assemble Ikea products. Jon and I were first, we brought the idea where it made the most sense.

TaskRabbit’s arrogance was such that, we could deliver a foosball table to TaskRabbit HQ, but we were denied access to the office to discuss the Ikea opportunity. We were physically blocked from the door and encouraged to not return. Ikea purchased TaskRabbit in 2017

By not engaging with its creators, Patreon and Task Rabbit made ignorant decisions that didn’t acknowledge the ”Ground Truth”—and that is always expensive.

3. Patrons want to support the artist not the broker.

Companies like Patreon, TaskRabbit, even PodcastOne all want to capitalize on the creator’s audience; hopefully in a mutually beneficial way. Being able to establish, grow and monetize and audience remains the central challenge to creators and those that service them.

Patreon hasn’t licked this problem for the masses…however, Jack has developed his own means of building an active audience with money ready to spend. The concept is brilliant. He created a marketplace where Patreon gathers both patrons and creators.

When Jack talks to investors he’s not talking about the money Sakimichan’s (a Canadian digital painter on Patreon) emergence and Patreon’s ability to help artists grow. He’s for sure not talking about Nathan Ivey and his being stuck at 22 patrons...Instead he has selling the platform’s ability to gather creators that have audiences—and that’s different. Again from Tech Crunch--

“...investors are betting that if enough artists sign on and bring their fans, Patreon could grow into a pillar of the new creator economy. TechCrunch has learned that Patreon has closed a big Series C round of funding, three sources confirm. Two say it values the startup at around $450 million and that Index Ventures participated in the round but didn’t lead it. Patreon declined to comment for this story.”

The ability to establish, grow and monetize an audience remains critical problem for Patreon; really for all of us in the creative world. The point isn’t to monetize what exists…it’s to multiply the amount of people that love someone’s work. PodcastOne faces the same thing with its emerging venture into the small podcast market.

If Patreon can break out artists, if they can repeatedly get the Nathan Ivey’s of the world over the hump, money will never be a problem. However, if they simply remain a place where people who already have audiences get paid, well, that’s nice, but we don’t need Patreon for that.