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[00:00:02]

So how much did it cost you to make that music video? It ended up costing 10 grand. If I had known that, I wouldn't have done it. And it wasn't until about February that I kind of it almost felt like waking up after a dream and watching my savings account go down basically to Cyro. And I was like, I'm going to upload this video to YouTube. It's going to get a million views. And I knew that that video would bring in maybe a hundred bucks.

[00:00:40]

From NPR, it's how I built this show about innovators, entrepreneurs, idealists and the stories behind the movements they built. I'm Guy Raz and on the show today, how Jack Conti's frustration with the music business led him to launch Patreon, a crowdfunding platform where fans can support and connect with creators for just a few dollars a month. At some point, you might get tired of hearing me say that every great business idea often starts as a problem in need of a solution.

[00:01:19]

But one reason I keep coming back to this is the sheer, almost stupid simplicity of it. Like it's an equation you could explain to a six year old. Frustration equals idea, equals action equals solution. Think about Jamie Siminoff, who worked out of his garage. He needed to see who was at the front door when the doorbell rang to decide whether to get up and open the door or stay put. So he built a video doorbell for himself and then he turned it into a business called Ring.

[00:01:54]

Melissa Butler couldn't find bold and bright lipstick color, so she created her own and then turned that idea into a business called the Lip Balm. My grandma had to bike 17 miles to high school, so to make that journey easier, he turned his bike into an electric bike. And that idea eventually became Red Power bikes and Jack Contis problem. It was a problem that at first glance doesn't seem that problematic. Back in 2009, he and his then girlfriend, now wife Natalie, formed a band called Pomplamoose.

[00:02:33]

And in September of that year, they released a cover version of Beyonce's single Ladies. And they made a video to go with that.

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This video got millions of views and their YouTube channel blew up, they were doing media interviews and selling some of their music on iTunes.

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So you're probably wondering what was the problem?

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Well, having lots of followers and viewers doesn't necessarily translate into a sustainable business, especially after all the middlemen take their cut.

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So Jack set out to solve this problem and he wondered, is there a way for artists to make their art in a sustainable way without a big record label or publisher or studio backing them? And the answer he came up with is Patriarch. Patron is a platform that connects artists with their most passionate fans, fans who willingly pay a monthly subscription to support their favorite artists. Since its launch in 2013, Patreon has attracted about 200000 creators, including some names that you might know, like YouTuber Jackson Bird or the Musician Beardy Man, or the podcast Chapo Trap House.

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But mostly Patreon helps support people you've never heard of ukulele teachers, graphic artists, film reviewers, science fiction writers, fantasy footballers. And that's sort of how its creators, Jack Contee and Sam Yelm envisioned it. For starters, both Sam and Jack had creative instincts from very early on.

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Jack grew up in the Bay Area, where he was fascinated with puppetry and loved making his own animations. Sam grew up in Pittsburgh, where he worked as a waiter at his parents Chinese restaurant and actually really loved programming his calculator. And from a young age, both of them were also really into music. Sam played classical piano and Jack started out playing jazz. In fact, their mutual love of music might be why they were paired up as roommates when they started their freshman year at Stanford.

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In 2002, here's Jack.

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I think it was just one of those relationships that that was relatively I mean, at least, Sam, my recollection, it was like easy. Like, it doesn't it didn't take a lot of work. We just kind of it just kind of worked. Yeah.

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I think we also sort of had a very easygoing humor to tell us that we found maybe some of the same Aqab type things funny and the same friend groups that you eventually brought over, I think really resonated with me, too.

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So what were you guys studying in college? Jack, let's start with you.

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I studied music. You know, my whole life, I'd been on the. Arts had kind of been like the side thing, but I was on the, you know, the science and math kind of track growing up and I loved physics in high school. I thought I wanted to be a physics major when I got to college.

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And then I remember getting to this like the next level of physics. And I was sitting in a class. And I think movies often show you like one moment of realization. And life is rarely like that. Life is usually like a slow burn. But this was really one formative realization for me sitting in this physics class where I was like, this is not what I want to do. And I just I was just thinking about songs. I was thinking about my music theory class.

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I was thinking about other things. And that's where my brain was going. And I didn't want to do physics.

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And I remember like sitting on a bench after that physics class for probably 45 minutes. I just sat there and just thought about what that meant for me, because I was I was it was kind of a one of those moments in college that feels pivotal, you know. So, Jack, you were studying music. And Sam, what were you studying? Yeah, I came into Stanford not really knowing, to be honest. I ended up studying computer science.

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Honestly, I played a lot of video games as a child and then I was into computers. All right. So you are doing computer science and Jack, you're doing music.

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And I'm just curious, at any point in college to the two of you sit around and start to kind of mull over the possibility of starting a business together or anything like that. Was it ever a conversation you ever had? Never. Never. And Sam did start businesses. Sam, you were doing that in and out delivery thing in and out burgers.

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I was. I was. Yeah. I was also driving down and out burgers for people. I created a website. I was driving burgers around and to campus. This is does my senior year in particular preorder. Sure. Yeah. That I would love to take that credit. You would take orders for burgers, drive to the burger place and then deliver them to dorm rooms, to the individuals. It wasn't super well thought out. Again, just, you know, riffing on ideas here.

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Me.

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Why are you ashamed of this? This was an awesome business, man. It was so cool. It was a big deal. Like everybody knew about it. It was one of the easiest markup.

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The burgers. I think he's worried he's going to get sued by in. Not good for for what he did in 2004 for whatever five. But I will say this.

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I don't think it's a great idea because A, he delivered a burger is just not you have to get a burger right off the grill. Like, once he gets it's in a car, it's in a box, it gets soggy. You get it to your house. It's not the same thing.

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I totally hear you. Yeah. Also the shock every time, every night that I would go to it and in order like a hundred burgers or something and then how they would have to hold up for everyone else in line. Not a good feeling. So not a good feeling.

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All right. So you've got this burgeoning entrepreneurial business. And and Jack, were you like any part of your mind in college about business or were you really just focused on music? No, I don't think I was thinking about business at all. I was I was a part of the film society at school. And so and I was also there was a recording studio on campus. And so I was learning how to use a recording studio. And I was also, you know, because I was part of the film society, I was making movies so I would make, you know, a few movies a year and I would do soundtracks for other people and for myself.

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So I was you know, I was a music major.

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And then, you know, in the in the cracks, I was doing music and film and all that kind of stuff. I was not building businesses.

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Hmm. All right. So you guys both graduate in 2006.

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And and Sam, I guess you go to work for your, like, the first of many startups, and it's called Loopt. And and I guess it was like an early way to to to share your cell phone's location. What happened to that startup?

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Loopt ended up getting acquired. I was there for about three years. My take away from it, like early on, I was really interested because of the founders, particularly Sam Altman, who was the CEO either. Later he became president of Y Combinator. And we had a whole bunch of other impressive folks there. And I think just being around that talent felt very energizing.

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So, Sam, you kind of go off into this tech direction. And Jack, I guess you kind of begin to pursue music. You've formed a band with your then girlfriend who's now actually your wife, I think, right, Natalie? Yeah, we started a band called Pomplamoose. And even before that, I had started using YouTube and uploaded to YouTube. And it kind of it like felt like something was working. So I'd put up a video and get a few thousand views and all the videos of me in my bedroom playing instruments.

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And so I would listen.

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People put videos up. Opening baseball card packs, so I mean, yeah, yeah, I would I guess what the videos kind of became was the video version of a song. I called them video songs because there was sort of two rules. I was inspired by the sort of Dogma filmmaking from the 70s and like the the rules where if you hear the instrument in the mix, if there's an instrument that you're going to get to see it, I have to play it right.

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Yeah. It's like all direct sound and. Yeah. That kind of thing. And I just I really liked the idea of taking some of the mystery out of audio production because it really feels like magic when you listen to a record, you know, you there's all these sounds. You have no idea how they're made. It just you know, it feels like these people are geniuses just creating things. And there's at least for me, it felt like there is this gap between like where they are and where I am.

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And and I just liked I liked the kind of transparency of YouTube. I like that I felt like behind the scenes and I liked the idea of kind of showing people like, hey, this is how sounds are made and here's what it looks like. And it doesn't have to be super glamorous, like you can be in your pajama pants on the floor of your bedroom playing a guitar through a shitty amp that you got, you know, on sale at Guitar Center.

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And what kind of music was it, by the way?

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It was like hardcore rock, like aggressive, intense, like electric rock. Yeah. And people. Yeah, there's a market for that. Yeah. And so I graduated and started working on music and it felt like it was working. I would sell a few hundred bucks of empathy's.

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I used a site called Ajunkie so I would put up my empathy's for sale on on this platform. And were people buying them. Yeah.

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Yeah I was, I was making a couple hundred bucks a month and I was, I thought like, OK, this could, this could turn into, you know, an income stream. And I could do this full time as a first time in my life that I felt like that would be possible. I remember like going back to that moment in college, you know, when I made the decision to become a music major, it was actually like a very depressing moment for me, like I was committing in my mind, I was committing to a life of poverty.

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My uncle is a guitar player, a jazz guitar player. And he you know, when I told him I was going to do this, he was like, Jack, the thing he said to me was like, don't do it. He was like, you can do anything else in your life. You're a smart guy and and you can do anything else. He said, don't do this. It's crowded at the bottom, is what he said.

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Wow. But I mean, you you have this band going at the time.

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Yeah, we got the band going when we posted a YouTube video on my channel. First, we didn't call it a band. We just posted a video on my channel. We said, hey, this is me and Natalie clapping. And what were you what was the video?

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It was it was just the two of us with a song that she wrote called Passan Core. It was mostly in French because Pomplamoose, of course, is. And that comes from her because she grew up in France and Belgium. I got it. Okay.

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And what was funny was, you know, we kind of tempered each other like we mitigated each other's extremes. So, like, she calm down my kind of industrial screamo side and I kind of upped up some of the softness of it. And the the combo was just it was cool and different and like it had some of my aggressive production. But then she has this very soft voice. And I think it was just kind of different sounding and people seemed to really like it.

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And so, you know, the idea was, let's see if we can make a living out of this. And right around that time, iTunes came out and so we started putting our our music on on iTunes. This is original music. Original music. Yep. You know, we knew that that was kind of what we wanted to do. And so we we just and YouTube seemed like it was working. So we just started making more and more videos and putting those out.

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How did you get attention on YouTube?

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Eventually we produced a record for this singer songwriter named Julia Nunes. And I was super inspired by Julia because she just had this huge presence on YouTube.

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And I learned that it came from covers originally.

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Oh, and she would put Overcovering big like well-known song. Yeah.

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Because Witchey, which anybody can do. Right. Which anybody can do. Yeah. Yeah. And that's kind of when I learned that YouTube is a search engine and so people are searching for songs that they know. And if they then see a cool band who is singing that song, but maybe in a completely different way with complete different sound, and they've ripped out the harmony and put in their own harmony and ripped out the beat and put in their own beat, done it in three, four instead of four for whatever it is, you can kind of get introduced to a new sound because you're coming from search traffic.

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And that single thing is how we ended up like growing the band so quickly.

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So what was the first cover that you put on YouTube?

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It was I think the first cover was my favorite things. We ended up doing it in in five four and did a cool arrangement of it. And and but that wasn't the one that hit. The one that hit was when we covered Beyonce's single Ladies.

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Oh, yes, I remember that.

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Well, yes, I'll sing, ladies, as I say, if we happened, we knew that it was going to have a good shot at the VMAs because it was such a great video and a great song. And when she was up for four, you know, best music. Video, and so we we covered the the song and kind of just in time and put it out that night, and then Kanye did that thing where he got up at the VMAs and when Taylor Swift won.

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Yes. And interrupted her and it became this huge, like Internet meme and just got tons of traffic.

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And the video just exploded because people were searching single ladies.

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Yeah. I think that video today has about 11 million views. It does, yeah. And you guys and I've seen the video, obviously, and it's you guys like in like a bedroom, right?

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Like, yes, my childhood bedroom. Like, that's what it is. It's people in a room playing instruments, synched up with the audio and like, it's funny because in 2020, that's really nothing special. But but at the time, nobody was really doing that kind of thing. Like music videos, looked like music videos, they looked like MTV. And to see, like, humans in their bedroom playing instruments and having it actually sound good was, you know, it was a little it was different.

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So that video blows up. And did did you start to get contact? I mean, I should say that you were I know you were on NPR around that time because I was the host of Weekend All Things Considered. And there was a weekend when I wasn't I was like on vacation. And and you guys, sadly, I would wasn't able to interview. But you guys were featured on the show.

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So did you guys get a lot of a lot of calls?

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We did. We I mean, that was kind of the beginning of when Pomplamoose really started to take off. And, you know, we got calls from managers, we got calls from, you know, press.

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And you know that when we came out with our second, like big one, that kind of really took off, which was telephoned by Lady Gaga. You know, we had we released a record and, you know, at the end of the month, we logged into our bank account and like we had sold 30000 songs. And because we had signed with a label, we owned all our own masters and therefore we owned all the royalties. So we we logged in our backyard at 22000 bucks in it.

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Wow. Which like coming out of court, like after selling iTunes, as if people paying 99 cents for your song on iTunes, just iTunes, 22000 in one month. And like that was when I was like, oh my. Like, I thought this we can do it like this. This could be a thing. And did did you start to get record labels contacting you saying, hey, you guys interested in talking to us? We did, yeah.

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We didn't get like hard offers from anybody, but we started to go down to L.A. and talk with them. And and we we basically decided not to do that. But we did we did talk with them and entertain it. We just didn't want to go that route. I mean, you know, at that point we're making a living. You know, when we started doing label conversations, we were making, you know, thousands and thousands of dollars per month.

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We were going on tour. We were, you know, reaching millions of people. Where were you?

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We were performing in front of, like, big audiences.

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Yeah, 500000 people. Wow. So, I mean, not like, you know, we're not playing Staples Center, but like, that's still pretty great. Yeah. I mean, when I grew up, like, I thought like maybe one day I'll play for one hundred people, you know, like that was like that would have been the coolest thing. And then here we are playing these clubs, you know, for like we played Fillmore, you know, in San Francisco, which is twelve hundred people was magic.

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It was the best thing ever. Sam, while all this is happening with Jack and Natalie, you're grinding away and some tech job and you're watching these guys become like massive YouTube stars was that was like everyone from your your year at Stanford, like people you knew, like talking about them like, oh, my God, you see, Jack Contis look at this. YouTube videos got 11 million views.

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I mean, yeah, I admired Jack. Right.

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Like the from my own personal experience, I loved art, too. But I could never take on both that risk or even bridge the connection of how I could make that like a livelihood or part of my life. And so seeing him be so successful down that path was was so impressive. And I remember every time that we would catch up after college, I was just fascinated by what was going on with his life and how things are going on there.

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Meantime, Sam, you had left you had left your the first startup he worked for and went on to found your own startup called Adderall. What was Adderall? Yeah.

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I mean, thinking back on it, a lot of this was was quite boring, but this was during the area when the iPhone was getting really popular and a lot of. Yeah. Developers were creating their own games and whatnot. And in fact, my co-founder and myself at that time were also making these iPhone games and applications. And there was a lot of good money in advertising in that I know we created like this virtual pet game that ended up gathering actually millions of users at the time.

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And we were seeing a few thousand dollars come through in just ads being clicked on. And so ADM was just an effective way for these mobile developers to monetize that.

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So you launched from what from what I've read, you guys basically start this business in early 2009 and by the end of the year you're acquired by a different company. Is that I mean, to me, that sounds like a great deal, but I can't even imagine you were up and running that, like, really by that point or were you?

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It happened pretty quickly, like just the explosion of of even interest in this space.

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I think, like there was a whole flood of developers who. It was almost like a gold rush and a lot of ways because you had the iPhone and this new app store and anyone could start making games and get it distributed to millions of users.

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And so when there was this interest in what we were doing, I think we were also caught off guard in some sense and then also immediately sold the company.

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That same year was did you sell the company because it was just like an offer you couldn't refuse, like you were just offered all this money and you were just like, oh, my God, we've got to take this.

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It wasn't all this money, but I think it was more than we had made, you know, independently previously than that. So the fact that it was a company that we knew to be very large in the space of this company called AdMob, and then literally the month afterwards we were acquired into Google.

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AdMob was acquired for like 750 million dollars by Google. Right, exactly. And to be clear, that was not your money. You did not get seven or fifty million dollars from Google.

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No, we did not get something that would be OK if that happened.

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But we were part of AdMob at the time they were acquired. And and so it felt like an appealing opportunity to be part of something that was going to win. All right. So your business was acquired and you moved on and you actually went to to the incubator called Dogpatch Labs, where I guess your goal was to presumably to come up with with, like, a new idea. Yeah, I mean, I had a few different things, but at this point I just want to start building again.

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So within those few years, I built a number of things. I think this was sort of enlightening for myself, too. In a lot of ways. I view those years as like the years of struggle because I was there at the incubator. I was working across the table from Kevin System, who was building Instagram at that time. And we would come in. I remember actually having a bunch of chats with Mikey and Kevin about what they were thinking about with their business and all.

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That's really exciting. I think as you all feel like you're in this shared suffering together until, you know, something like Instagram skyrockets and then you realize that that's a separate space. Yeah, no one suffering. So, all right. So you're trying to come up with a bunch of different ideas. And when you say building things like just you have an idea and you start to try and build it like code it. Yeah, I would code design launch and this was during the time to where TechCrunch Disrupt was the thing.

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So you had this idea that if you got a business through and you could launch on stage, that would be making it. And so I would launch a business in that area. It was a company called Chambon, but we effectively allowed people to create their own Groupon. So there was a white labeling service and it was interesting, like the whole group buying space was sort of coincidentally a flash in the pan, too, in many ways, although Groupon is still around.

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And the take away from me was just how difficult and how how much I should treasure if I ever had the good fortune of landing on a business that really resonated with like a community or a group of people. And so most of that, my years during this time was, as I recall, just full of a lot of loneliness and development, but by myself in my bedroom.

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I want to go back to Jack for a moment, Jack, just like I'm sure I understand, while Sam is working on the startup space, you I mean, you're making music with Pomplamoose, right?

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Yeah.

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And and at your peak, I'm just curious how like how much money where are you guys making?

[00:24:30]

We did about four hundred thousand dollars in a year off of three sales basically. Wow. And it was I think that that year in particular, I think it was 2010, most of it was singles, a lot of it was licensing and brand deals. And we had a we had a lawyer that we had brought on very early on who was, you know, helping us negotiate these deals and work with, you know, work with brands. And we're very you know, we're both like music nerds and artists.

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But but we absolutely were thinking about, like, turning this into a, you know, a sustainable thing. And so we ended up buying a house and we built a recording studio. We use the money to to build a recording studio on the property. And and then that became kind of like the home base for Pomplamoose for the next few years.

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I mean, you guys were doing really well and presumably a lot of that money was coming in from iTunes sales. But then I guess, like around, what, 2010, 2011 Spotify comes along and and of course, with Spotify, you can stream an unlimited amount of music for free. So what did that do for free revenue?

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Yeah, the transition to streaming was really hard on the band.

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Our streaming revenue was, you know, a a tiny, tiny fraction of the iTunes revenue where people are, you know, paying a buck for a song.

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With a stream, you get, you know, fractions of a penny for one stream and it just it wasn't it wasn't one for one because, you know, the user base wasn't there on Spotify yet. So we just it wasn't the volume wasn't making up for it. And so, you know, the the the income started to evaporate, which was very scary because now at this point we had a mortgage.

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So around that time, like 2011, you know, 2012. How are you making a living?

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Well, what was bizarre about it was, you know, our reach hadn't changed the reach of your YouTube audience and so on. Yeah.

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Like, we were growing we were getting millions and millions of views and more views and then, you know, enter Spotify and suddenly, suddenly we're like up a creek in terms of revenue. And what was amazing to me that, you know, I was watching this unfold over a period of, you know, a couple of years, what blew my mind was like, wait a minute, I'm not doing anything differently as an artist. There is a system changing in front of me that I'm not in control of.

[00:27:00]

It's just these changing systems. And my artistry is yielding different results, you know, with regard to my income.

[00:27:08]

And that was like very frustrating to watch. And I look, I know businesses have to kind of like pivot and change and be innovative. And yet I found myself like having to do all this gymnastics, you know, to to keep up with the revenue streams. I was, you know, selling hats and and and T-shirts and we were selling dongles on a website. Yeah. And like and then we would, you know, play some shows. And I'm like the whole time is thinking like it's my value to the world, like a hat with a logo on it.

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Like that's not what I'm good at. That feels merch. You were just selling merch at concerts and stuff. Yeah. And that and I didn't. Yeah. It bugged me that we had to do that because I felt like that's not what makes me special. I just wanted to be paid like I loved iTunes because I could be paid for my music which is what.

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And I was Yeah. That so yeah it was just one of those moments where we kind of realized that everything was changing and that, you know, three or four years from now would be completely different.

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Meantime, what is Natalie doing? I mean, are you guys used to living together? You've got this house and a mortgage and are you earning enough money to at least pay your bills?

[00:28:12]

Yes, we are. But we're also watching. It's coming a lot out of savings. Right? So you're not revenue's not increasing at that point.

[00:28:20]

Now, revenue is not increasing. Revenue is decreasing at that point. So so it was coming out of savings.

[00:28:25]

But our our roommate, who is living at the house, did this amazing thing. And she was going to make an album and she went on to this new website called Kickstarter and did 30 day thing. We had never heard of it. And I remember the night that she turned her computer around at the dinner table and showed us I think she had made 12000 or 13000 dollars to make the record, to make the record.

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And that really was what Kickstarter was started out for. Yeah, I started for artists. I mean, we had Perry on the show a couple of years ago, Perry Chen. That was the point of Kickstarter. It was to help artists make music or records or whatever it was. Yep.

[00:29:10]

And she did that and she got thirteen thousand bucks and got a studio and got a mixing engineer and made a record.

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And what was so cool about it to me was it was her fans. Her fans stepped up and wanted the record and paid her to make the record. And I just that just felt right and felt awesome.

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So I know that you and Natalie did did some solo projects in addition to to the work you did with Pomplamoose.

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And and I guess at some point she decides to do a Kickstarter to write to to raise money for her music. Yeah.

[00:29:47]

And that she ended up raising one hundred and four thousand dollars. Wow.

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How did she reach that many people? Because Pop Blues had hundreds of thousands of subscribers and we were getting millions of views. And so how did you drive those viewers to the to the Kickstarter you just uploaded to YouTube video?

[00:30:06]

Hey, everybody, I'm doing a Kickstarter.

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People went bananas like, yeah, over 100000.

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And to make a record to make it so. So you're thinking, wow, your mind's blown there.

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I, I couldn't I was so happy for it was so awesome.

[00:30:21]

And meantime, you're working on, on your own solo music too. And and I guess you got interested in, in like EDM and that sort of Jinro and you I guess you eventually wrote a track that you were really proud of and you want to make a video out of it. And this was a satirical pedal's.

[00:30:38]

Yeah, it was kind of daft punky like technologic, you know. And I was I was listing out all of my guitar pedals. That was the lyric. The only lyric in the song was just a list of all the pedals that I used to to process guitar. So it's a. Brands or the types, the make the models in the mix, so like the first lyric is Hogge Pog Vox Wah Octave Multiplex multiplexing big man memory, MUF Bass, chromatic tuner.

[00:31:07]

It was just like, oh I like that. Yeah. Just like a list of pedals. Yeah. I'm I'm watching this video right now, and you're like you're like aggressive in this video, you're like really aggressively playing that guitar. Yeah, I mean, you look a little scary looking like you would be a little scared of you, Jack. Yeah, I'm raging. Yeah.

[00:31:35]

So music's about, I should mention to people who are familiar with it, they're robots. In the video, there's a conveyor belt of, you know, guitar pedals passing by. There's other robots as a spider robot. It's like in this kind of laboratory of robots, I imagine this is going to cost you quite a bit of money. It ended up costing ten grand.

[00:31:56]

I didn't know that when I went into if I had known that, I wouldn't have done it. But I didn't have a budget. I wasn't being strategic. I, I at the time, I thought, like, if I go deep on the business side, I'm not going to do it, like because I'll be staring at numbers that don't make sense. And so I'm going to just leave all that behind and I'm just going to do something crazy and creative.

[00:32:17]

And so I decided not to budget, not to think about that and not to deal with any of the kind of constraints there. And so I ended up just spending like, you know, one hundred bucks a day at Home Depot, you know, building the set and building rotating elevators. And where did you build the set? In the studio that Natalie and I had built on the property.

[00:32:36]

And like, I had to like I was not a carpenter. So I was like trying to learn how to frame a wall. And like, you know, I was I had to figure out how to cut wood it angles. I got a miter sort, like I was just I was flailing. I mean, this thing like that, you know, I was just trying to trying to go and make it. But I was like it was really fun.

[00:32:54]

It was just, you know, I was trying to do it little by little, you know.

[00:32:58]

Did you decide, like, all right, I'm going to make this I'm going to do this Kickstarter thing. I'm going to put up a video and ask people to contribute to to my my project.

[00:33:07]

I was considering it.

[00:33:09]

The problem with that was I didn't want to kind of, you know, the sort of the Kickstarter conceit was like, I'm going to do this big one thing and I need a bunch of money to pay for it. And that's not I didn't want to do that. And I, I didn't I didn't want to really force it like that.

[00:33:25]

You weren't thinking of this as a one off. You were thinking like, I need to study like money to make projects. To do projects. Yeah. So how are you going to do it? That was the part of me that decided to not think of think about that.

[00:33:42]

And and it was terrifying.

[00:33:44]

It was I remember being pretty scared about that. And I also thought, like, look, if I start being logical about this, I'm never going to make something that's great.

[00:33:55]

It wasn't until about February of 2013 of 2013 that I kind of it almost felt like waking up after a dream and and, you know, watching my savings account go down basically to zero and then maxing out a couple credit cards and then feeling like I was almost like coming out of a dream or something. Yeah. I felt like I was waking up and was like suddenly very terrified about, like what was on the other side. And I thought that I had in my mind was I'm going to upload this video to YouTube.

[00:34:30]

It's going to get a million views. And I knew that that video would bring in maybe, you know, a hundred bucks from YouTube. And yeah. And I actually got, like, sick. I got, like, nauseated, thinking about, like, all of this work and energy and time, you know, the robots, the set, the credit cards, the draining of the savings account, like all of that adding up and thinking like, I'm going to put this thing out and I'm going to get paid one hundred dollars.

[00:35:01]

And I was I was angry, but I was also like I couldn't believe that that was that we were all just that humans were just OK with this. That like this is the this is the system that we've designed for artists like. Yeah, you put up your your thing that you spend your life on and then you get paid one hundred dollars in ad revenue and then you put up your next thing. And I remember like thinking about what the hell was going on, where all these people who make things and put them online are the economics of that failed to evolve with the distribution technology.

[00:35:40]

So like the distribution happened first and the economic systems to support that didn't keep up. And so we were in this horrible phase where essentially artists are working for free. So what did you start to think about? I mean, this is February of 2013 and you're clearly like gears are turning in your head. And what do you I mean, is there an idea starting to form in your mind about how to solve this? Yeah, I sat down at my kitchen table on a Sunday afternoon, and what I was thinking about was like.

[00:36:16]

I like Kickstarter, but I want I want to be paid every month because I need income, because I make stuff every month that's valuable to other people. And at the same time, you know, I was seeing other websites start to accept, you know, like membership organizations, not necessarily websites, but like membership organizations like SFMOMA or, you know, KQED would do these pledge drives.

[00:36:42]

And it happened. It wasn't you know, you had the option in many of those cases to set up a monthly payment. And so I was like, great. Like, I just want essentially that system a pledge.

[00:36:55]

Like a pledge drive. Yeah. Yeah, exactly. And so I sketched out this like websites that my fans can do this.

[00:37:01]

And then, you know, of course, I was also looking at all these other YouTube was going through the same thing and podcasters and and news and everybody anybody who makes stuff and puts it online is going through the same thing. I was like, oh, this should just be a there should be a thing like Kickstarter where anybody can set it up for themselves.

[00:37:19]

And so, yeah, I sketched out you physically sketched out like what the website would look like on paper. I took out 14 pieces of paper from my printer, actually, probably more than that, because I didn't know it be 40 pages, but it ended up being about 14 pages. And essentially it was a recurring payment between a a fan and a creator. And, yeah, there was a whole you know, there's like a content feed and like, you know, login page and a home page and and the whole thing, it was it was I am a terrible designer.

[00:37:49]

And so, you know, looking back, remember these these pages fondly. I mean, it was the worst. It sucked. Yeah. There's no way I could have done that by myself. And so that's when I started, like, calling various people to see if they could build this for me, including your former roommate, Sam.

[00:38:05]

Yeah, I call them up. And and I was like, so, Sam, I've got this idea and I'm really excited about it, but I don't want to tell you, like, do we need to sign an NDA or something?

[00:38:14]

Because you thought, my idea is so good.

[00:38:16]

You know, I cannot talk to people about this because they're going to steal it from me. I remember this, too, because this was like over the phone. Right. And you didn't tell me the idea over the phone. So from my perspective, I was again, as I know before, I was just excited to catch up with you, Jack. Like, every time I was like, oh, I get to meet this celebrity who's who's just crushing it out on YouTube.

[00:38:36]

So when we had arranged for the meeting, I wasn't so much in the sort of mentality that there would be this amazing idea. And this is what I would be dedicated to. I was more like, I'm curious what you're thinking about and what you're up to.

[00:38:48]

Yeah, but wait. But Sam, Sam is like Jack. Nobody cares about your idea. Don't. He's like, we don't need to do an NDA. Nobody cares.

[00:38:57]

Ideas are trash, ideas are worthless. Like we don't need to do that.

[00:39:01]

And I was like, OK, he's saying to you what you now know, which is ideas are a dime a dozen. It doesn't mean it's easy to find a good idea. It's not. But they are. It's execution that matters.

[00:39:12]

It is only execution. Yeah. There are so many versions of around that that did not work and they were the same idea. All right.

[00:39:19]

So you go to San Francisco to meet and you and the idea that you had Jack, was it to convince Sam to help you with this or was it just to kind of bounce the idea off of him?

[00:39:31]

Oh, I wanted Sam to build it. I was in, like, hardcore pitch mode because other people had told me no or just didn't seem interested. Yeah, yeah. I wanted Sam to do it. And he would he had just he was right about to launch this new project and he had gotten a TechCrunch article and he was it was it was about to come out. So he said like, hey, I can't meet till Thursday because I'm launching this.

[00:39:51]

Well. So what were you launching, Sam? This was a photography site that I was working. This is like your fifth or sixth startup. Yeah. I don't know if you can call my starters, but a new project that I was interested in. And so I was like, hey, Jack, you know, I'm just busy. Maybe we can meet when this article finally comes out because I'll have launched it by that point. And that's what we set the target date for.

[00:40:12]

So I had gone up there again, just expecting Melinda to catch up with Jack and maybe you said to like, yeah, get some feedback on the idea. That's how you pitched it initially, because I remember being surprised when the switch went off and you started selling me on this and you were you were really good. Jack, um, I do recall, like you just talking about the both the problem that you and other artists were dealing with today and especially, you know, that resonated for me because I had seen how successful you had been as an artist.

[00:40:44]

I assumed you were already like, you know, dancing away on your yacht, doing fine.

[00:40:48]

So this is this is really interesting hearing this from you.

[00:40:52]

And what did he what do you remember him telling you about it? So you convinced him not to sign that you need to sign an NDA now.

[00:40:58]

You didn't bring it and I didn't see what I remember. I was getting into it. All right. Yeah.

[00:41:03]

I mean, this is your roommate, Jack. Yes. Thank you. Thank you so much. Hubris like so ashamed of that from you. I know. It's so dumb. All right.

[00:41:13]

So you are sitting there in this coffee house at. What does he say to you, Sam? What is how does he describe it? Yeah, so the things that came together for me and now we're looking about almost eight years ago, but like it's kind of how Jack mentioned that Kickstarter was a thing already. And there are a lot of campaigns that were really successful on Kickstarter. But what resonated here was the idea that you were helping to support the individual versus a particular project.

[00:41:41]

And for me, the reason that that resonated well, first, as someone who cared a lot about art in my past, we could never make it a career. I followed a lot of these people on on YouTube. There are folks at this time that were relatively big, one in particular. I remember that I talked to Jack about Cheena grannies who sort of wrote very personal music and very simple music.

[00:42:03]

And I remember thinking my head as Jack was pitching this, I would totally just give her money. I would just open my wallet and give her whatever on an ongoing basis if it allowed her to keep producing her work. And I could just see this emotion being shared by all these other YouTube audience members. And so that's the idea clicked for me as soon as Jack pitched this to me. Jack, Jack remembers this to the day of I'm like, we're starting this now and don't tell anyone else about this idea.

[00:42:31]

Don't you're saying to him now, make everybody sign an NDA? No, no. Don't even sign an NDA. Just keep this to ourselves. This is it. We're going to we're going to go dark, going dark.

[00:42:41]

So I'm staring at the email right now that I sent Sam on March 10th. I just pulled it out March 10th, 2013. And it's just kind of like a summary of our agreement. And I think that's kind of what I thought it was going to be like. Here's what I'm like. I'll just read one sentence of this. You agreed to be. So we're talking about the agreement. Here's what I'm agreeing to. Here's what you're agreeing to.

[00:43:05]

And I'm one of the lines like you agree to be co-founder and CEO of Patreon. You agree to build and maintain the site as it is laid out in the wireframe.

[00:43:13]

It's you will work on all the technical and programming and programming oriented aspects of the company that you PASSERS-BY lawyers like. It's just this was your legalese. No, I here say for you an email. Yeah.

[00:43:25]

I just like and and you guys have a conversation about how you would split the company, as you say. Was it going to be 50/50?

[00:43:31]

Yeah, it's, it's, it's in this email we agreed to become 50/50 partners and Patreon.

[00:43:36]

So I mean, win win. Right. Because I mean, you get a technical co-founder and Sam, you get this guy who has kind of a pretty big platform already.

[00:43:47]

Absolutely. Yeah, I was I was stoked and I think, yeah, that email, which I did I did read through.

[00:43:54]

I think I just wrote back to you, Jack, was it all caps or something?

[00:43:58]

So I wrote this like long email at the end. I said, like, I know I said this before of I just want to stress how important is that we communicate with each other about all aspects of the business in our relationship. As long as we're not hiding anything from each other, as long as we're telling each other something's wrong, we are greatly reducing the chance of hurting our friendship. I want you to feel one hundred percent OK with talking to me about your like the company finances, your interest in the company, your ideas, your feelings, anything you like.

[00:44:20]

This will lead to a strong partnership. That's nice. I mean, it's basically like, hey, we're going to we put our friendship, you know, first here. Yeah. You know, it was like this. I thought it was kind of a nice thing. And then Sam writes back all caps. Awesome. I agree to all of this. OK, let's go.

[00:44:38]

When we come back in just a moment, how Patreon launched with just three musicians, one of them with Jack and one with Natalie. And then why slowly other artists started to get on board, first by the dozens and then by the thousands. Stay with us. I'm Guy Raz. And you're listening to how I built this from NPR. Hey, everyone, just a quick thanks to our sponsor, Salesforce. Small businesses need a steady partner in today's changing world.

[00:45:20]

Salesforce gives you sales, service and marketing all on one secure platform accessible from anywhere so you can connect your team's share information and automate processes. And best of all, they're here to help at any time with service, support or proactive tips to help you grow, form deeper connections with your customers. Starting now, try it for free at Salesforce.com SMB. Thanks also to click up, you don't need to exist on four hours of sleep to be productive.

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[00:46:31]

That's why Workday delivers quick insights to help your finance team plan for what's next workday. The finance and planning system. More at Workday Dotcom. With civil unrest, the pandemic and the economic crisis, you want to know what's happening right when you wake up, and that's why there is up first, the news you need in about 10 minutes from NPR News. Listen. Every day. Hey, welcome back to how I built this from NPR. I'm Guy Raz.

[00:47:08]

So it's March of 2013 and Jack Contee and his former college roommate, Sam. Yeah. Have decided to launch a new crowdfunding site that will let fans pay a few dollars a month to sustain their favorite budding musicians, podcasters, writers and artists. And Sam is so excited about Jack's idea that literally the very day they have that first meeting in San Francisco, Sam goes home to work on the Cotting. I started working probably more passionately than ever on any other project.

[00:47:44]

For me, it felt like a race. And I was just I even had this fear. I remember that if we didn't move fast on this, someone else was going to do it. And we will regret that. And for people who don't understand how coding works, like what's the first step like? I mean, it's essentially it's like if it's like a bunch of Lego bricks, you start to build the the base level of of the building.

[00:48:07]

Yeah. Coding is is what you do at some point.

[00:48:11]

But what you're really putting together are a whole bunch of like designs and photoshop and thinking through the psychology of like why a user would do this and that.

[00:48:20]

And so I think the the way at least I approach this particular project was sort of laying out all the main journeys of users and then painstakingly moving pixels around to get it to a level where you felt, OK, this is an experience that I think is going to work and it wasn't going to cost a lot of money to get it off the ground.

[00:48:42]

No, I mean, I had launched a number of projects before it was going to be a few hundred thousand dollars. And I think we were splitting I think it was in that email to a few hundred dollars.

[00:48:53]

To a few thousand dollars, you're saying? Yeah, that was it. Yeah. Why was it so cheap?

[00:48:57]

Is it because is it because normally the biggest fees would go towards a software engineer. And Sam, you were basically the software engineer.

[00:49:06]

I think this was the case. You know, I grew up in the area with startups where you had to rent hardware and set up your servers and collocations. But by this point, several years after that, you could launch an entire service off in the cloud. And that began with, you know, the Facebook. Yeah, yeah. Apps and iPhone apps.

[00:49:25]

And so by this era, you could launch very cheaply and then sort of scale up as needed. And for us, you know, the dreamland that I had in mind around what we were going to do was Jack obviously had had a huge plan to launch to his whole audience.

[00:49:40]

And on top of that, he had this whole network of artists and creators.

[00:49:44]

And we were going to be launching on day one with just millions of fans and artists talking about how you could support them on Patreon.

[00:49:54]

And so I wasn't even thinking about how we needed money.

[00:49:57]

And that was through. That would be Jack through the Pomplamoose website. YouTube channel, essentially.

[00:50:04]

Yeah. In other words, we were going to we were going to not publish is going to be my personal YouTube channel, which was, you know, where I was uploading all that electronic stuff. And so I was I yeah.

[00:50:15]

The plan was like put up a YouTube video on the YouTube channel, send my fans over to Patreon, and that's kind of how we'll start. We also you know, I did want to launch with a bunch of other artists, as Sam mentioned.

[00:50:26]

So we we made a list of like forty, forty or so creative you knew to call up.

[00:50:34]

These are not like world famous creators, right? These are just. Yeah.

[00:50:37]

Who have like pretty strong local small followings folks who I thought like, hey, you're in the same boat that I'm in right now and let's like let's do this. Let's like I think this could be valuable to you. And so, yeah, we made an Excel spreadsheet with with those folks and I found their contact info and reached out to all 40 of them and and all 40 of them said no. Now 40 of them said no. All 40 of them said no.

[00:51:04]

They were like, no, I don't feel comfortable asking people to pay me money. Crickets.

[00:51:07]

Yeah. Were you surprised? I was surprised, but I wasn't I didn't think it mattered. I thought, like, well, let's do it anyway. And people will come around, they'll they'll come around to this. So I wasn't I wasn't, like, bummed about it. I just I thought, OK, let's let's do it ourselves. Let's launch with me. And my roommate also wanted to launch. Lauren O'Connell was one of the first three creators on Patreon and Natalie wanted to launch two.

[00:51:35]

So the three of us. Yeah, my girlfriend at the time. So we launched with just the three of us on day one of Patreon.

[00:51:41]

And and the idea was you would take this this video for Pedal's, a song you're working on, and that's where you would premiere it. You would premiere this video on YouTube or whatever and get people to to go to Patreon and support this video. Yeah, I at the end of the pedals video, I put a vlog where. I told people about the idea and I said, hey, I'm building this new thing, and I don't think it's just going to help me, I think it could help a lot of people.

[00:52:13]

And check it out and let me know what you think. And if you're if you're up for it, join me on this on this journey here. So from the time that you guys met or March six, 2013, to the time you launched, how long was that? We launched in May. I think Jack in May. Wow. So really quickly. Yeah. We didn't have all the pieces there when we launched, but we had it was good.

[00:52:37]

We had enough. Yeah. We couldn't for example, we couldn't process all the payments at that time yet I hadn't looked any of that up. We could accept your credit card and so that would get saved, you know, very securely by the way, because we were going to strike, but we hadn't built any of the logic to actually handle the processing of the funds. And what did you ask for, Jack? In the video, you said, hey, whatever you can do just to to fund my work, please contribute.

[00:53:05]

I think I had four tiers. Yeah, a dollar. Five dollars, ten dollars. And then the night before I thought, screw it, I'm going to put up a hundred dollar tier. No one's going to buy it. But I'll just do that where you can kind of do a one on one Skype session with me and I'll hang out with you and a bunch of people signed up for the hundred dollars here. A bunch of people signed up for the five and the ten dollar tier.

[00:53:29]

The average payment per patron was around seven bucks, which that really blew my mind. I was thinking maybe people will give me a dollar for YouTube videos. But the fact that on average people would give me seven bucks, I yeah, couldn't believe that.

[00:53:44]

And what was the like what did you offer people? If you gave a dollar a month you would have access to what if you gave five dollars. If you gave ten, if you give 100, what would you get?

[00:53:54]

So at one dollar you got access to my patron only stream. You got first dibs on concert tickets at three dollars. You got access to my patron only stream first concert, first dibs on concert tickets and video tutorials about audio production. I just make these little extra tutorials and give folks access to them. And then ten dollars was a Google Hangout once a month with me and all ten dollar patrons. And then the hundred dollars was the Skype sessions.

[00:54:22]

So how much did did you get fans to commit to paying you per month? Within the first couple of weeks, I passed 5000 dollars a month and then soon after that it was yeah, it was even more. And at the time I was making maybe two videos a month. So, you know, suddenly, like very suddenly within two months, I went from draining my savings account to making over one hundred thousand dollars a year for my solo career.

[00:54:45]

And Jack, did you envision continuing your career as a musician and, you know, continuing making music and building your fan base in addition to doing this, or were you? Not quite.

[00:54:57]

Was it not quite fully thought thought through yet?

[00:55:00]

It was not strategic. There wasn't a five year plan. There wasn't a strategy deck. It was just solving a problem. And and so I don't know that I that I had a clear vision about how the next year was going to go.

[00:55:18]

I knew that we needed to build this thing. I knew that it was going to be a way that that artists could make money. I did think it could scale and help a lot of folks.

[00:55:27]

I didn't know how much work that was going to be when you had, you know, you reach out to forty people to to sign up and all of us said no. And it's just you, your roommate and your girlfriend who are the only people on the site. How did you attract other people?

[00:55:41]

When we launched and this is how Patreon ended up growing when we launched, I went onto my YouTube channel. I told all my fans about Patrón and I said, hey, go to this website. And of course, creators follow creators. So some of the people who watched my video were creators themselves. And when they landed on my page rampage and they saw this random middle of the road YouTube making six figures, they had that same mind blowing moment that I had had two years before when Lauren launched her Kickstarter and they saw a new revenue model for professional creativity.

[00:56:16]

And then those folks launched on Patrón and then they did the same thing. They went on to YouTube and they went on to their podcasts and they went on to, you know, they wrote on their websites and then that cycle just repeated. And that's actually responsible for most of patriots growth is that viral product cycle.

[00:56:31]

And was the business model that you had kind of set in stone from the get go? Because initially I think it was like you would take Patrón would take 10 percent, so five percent a platform fee and then five percent payment processing fee.

[00:56:46]

And did you kind of do the math and and the financial projections and kind of come to the conclusion that that was the best way for you guys to reach profitability?

[00:56:55]

Jack, the check, did we do the math?

[00:56:57]

You know, there's there was zero project. There was zero no spreadsheets, no spreadsheets, no math, there was yeah, there was there was none of that. I mean, again, it's just very different than it is now. Now, it's a you know, now we have, you know, FEMA and finance teams and we're forecasting out multiple years and. Right. But that's yet back then. No, we didn't have any of that. We didn't think about any of that.

[00:57:23]

We were just making this thing our first pitch deck, which I don't even believe we had anymore, because I remember building it on a webpage, just had all these emails that we had received from artists and fans about how exciting the idea was. So we weren't really thinking about, like the all the viability of the business at that point. So and then I guess a month after you guys launch, you decide, all right, now let's go get some money.

[00:57:49]

And Sam, you had already been through this process. You were already you'd been through the process of raising some money for your previous startup.

[00:57:57]

Yeah, I actually was pretty optimistic and excited about this fundraising process. Again, this came back from the emails and the feedback and the creators and the fans in a way that, again, several years of me trying to build things, I had never seen the sort of passion around in a movement or an idea. And so, you know, at the time, again, I'm naive, even looking back, it felt like in the bag. And so we start off and we started pitching to investors.

[00:58:24]

And how much money would you guys able to raise for for the first round at the time?

[00:58:28]

The the I think at that round the company was valued at six million. And so we ended up raising that first round, ended up being two point one million at a six million valuation. So, you know, about a third. Right. And Cassiel, this is an important conversation to have because a lot of entrepreneurs listen to the show. And we've had founders on a show who've said, biggest mistake of my life. You know, Tristan Walker will say I should never have raised money.

[00:58:54]

Other founders said who say I was so important, so glad I did it. I got support and guidance and I couldn't have built this without going to venture capitalists and taking the money, or was it absolutely necessary?

[00:59:07]

Could you have done Patrón without raising money? I don't believe so.

[00:59:11]

I think we need that team, um, in the early days as we were building it out. Plus I think the partners that that we ended up working with were very much aligned with the spirit of our our mission. And we haven't talked a lot about that. But at the time, this idea that we were trying to get artists and creators paid, that ended up filtering out a bunch of various investors who just didn't even want to touch the space of music or art in particular.

[00:59:39]

Yeah, I think it was really important. I don't think Pichon not I don't think Patron would not have gotten close to where it is today without that. I mean, even from that first day, patrons started growing a lot. And, you know, we needed to hire people to answer emails and and help build features and scale the company. And we would not have been able to afford that without raising money. All right.

[01:00:08]

So you guys raised two point one million dollars. And what do you do with that? Do you get in office? Do you get do you start hiring people? What do you start doing with it? The first became roommates again.

[01:00:18]

Yeah. Oh, really? Yeah. We got a home office and in San Francisco we got an office in Napa Valley.

[01:00:25]

Yeah, it was a two bedroom apartment and we moved in together. And at that point we hired Tyler Palmer, who was the first employee, and he hired a couple folks, Cole and Tony, who started building out the basically the like, the artist relations and the marketing and the and the operations customer service side of the business.

[01:00:48]

Yeah, it was just our bedrooms and then it was attached. Yeah. Out into the kitchen where we set up a few doors and they would come in every day and Jack and I would wake up and walk out into the office.

[01:00:58]

So initially the first I don't know, I mean, you're getting more and more people to sign up. But from what I understand, like even with the 10 percent fee, the processing and platform fees, it wasn't covering your costs.

[01:01:12]

Yeah, no. I mean, we were not profitable. I mean, five percent of of the ten percent, by the way, wasn't didn't go to us. Right.

[01:01:20]

For you guys. Yeah. It was for the pay stripe and whoever was. Yeah exactly. So the five percent going to you guys wasn't much. Not a lot. Yeah. Which is again we because we had that business model with a really low percentage which, which came from this idea of not wanting to be another wedge between creators and their fans. Right. So we wanted to to have a low rake. And so yeah, even you know, when the company was processing 100000 bucks, that's only five grand for the company.

[01:01:53]

So I mean, how I mean, because you had to runway two point one million dollars and that was going to run out eventually. How long? Did that last you before you had to go back out and raise more money? We were cheap. I mean, again, even after we fundraised, Jack didn't take any salary. I don't think I took any salary on the first round either until until after our second round. And we we didn't spend much.

[01:02:19]

That's why we rented a home as opposed to an actual office. So we didn't end up running out of that money. We had more than, I think, a year of runway left as we saw the business ramping up and then went on to raise, I guess, a much more serious series around. That was in 2014. In 2010, yeah. 2014, we raised that the 15 million dollar around MEANWELL check.

[01:02:45]

You are the CEO of the company, and I'm curious how you kind of figured out how to do that job because you were I mean, you're a musician and you've got this part of you that I'm assuming you really want to pursue. Like, how did you first of all, at what point did you were able to say, OK, I can't I actually cannot pursue music full time? Like, I can't like, I, I kind of have to make this a side gig.

[01:03:13]

So first of all, it was a slow process. I think the desire to not take salary really came from a place of wanting to be a creator and wanting to continue to make art and videos and music.

[01:03:28]

And a couple years into the company, it became very clear that.

[01:03:36]

I needed it to be my full time focus, which was a really, really painful, tough thing, because not only was this for me, not only did this decision affect me, but my wife, you know, we were partners in crime on this rock band that was kicking ass and getting millions of views and touring around the United States for big rooms. And like we were living the dream as creators. And not only was I abandoning my career, I was abandoning her by choosing to to to focus on Patreon and the moment where I basically stopped working on Pomplamoose and took a salary as CEO.

[01:04:23]

That was a tough moment because I felt I was one of those kids in my 20s who was like, I am not going to be an artist in my 20s and grew up to be a business person in my 30s. That is not the kind of person that I am. I'm going to stay an artist in my life. And and then I found myself running a business.

[01:04:41]

Yeah. And and and so when you were I mean, like a year into this, you had no no kind of no standards.

[01:04:53]

Right.

[01:04:53]

Like you didn't have, you know, any particular rules around who could join what happened in in 2014 that changed that, that that kind of was like a shot in the arm. I mean, where you guys were like, wait a minute, we need to have some kind of standards here. The the thing that caused the debate was a website called HCN that launched on Patrón. Yeah. And they were using Patrón to fund the development of the site.

[01:05:27]

And you started to look at the site and you saw crazy, crazy stuff.

[01:05:31]

Yeah.

[01:05:32]

I mean, there was, you know. Sexualized depictions of minors and things that we just from a values perspective, it felt like that we should there should be something in place to to stop this from from happening.

[01:05:51]

So what did you do?

[01:05:52]

Well, I recall this distinctly because looking back, I'm sort of on the wrong side of history of this. But I remember feeling like, hey, we had not sort of this would be our first outright ban, which we had never done before. And it was a line that I was very concerned about. I even ended up on the call with with the I guess, the founder of AJAN at the time.

[01:06:14]

And it wasn't like the Philippines or something. That's right. Yeah. Yeah.

[01:06:17]

And in my mind and through, you know, the conversation with him to the what was going on was he had built out a platform that was like very heavily emphasizing free speech.

[01:06:32]

And he wanted to take down the things that were breaking the law. At least this is how he represented to me. And that's why I was sympathetic to it at the time. And I was concerned about, ah, ask of creators to if they didn't have the intention to be uploading these. You know, I agree with like just terrible things, like how we could still support them in terms of the business that they were building or the art that they were trying to get.

[01:06:59]

Sherd Yeah.

[01:06:59]

I mean, this is really interesting because this is really the beginnings of certain people weaponize in the First Amendment and this idea of free speech really turning it into a weapon and turning it against what it's designed to do, which is to, you know, prevent tyranny. But but posting photos of children or even. You know. Horrendously vicious and dangerous conspiracy theories is not what that's about, but but it's easy to imagine it would have been easy for him to manipulate somebody like you with the argument that it's about free speech.

[01:07:38]

Yes, that's how the argument began. And then there were other things that we have to talk to him about, too, right? There was there are communities that were sort of thriving there, spreading hate.

[01:07:48]

And so it started us really going down this path of like when there is real world harm and people getting hurt, what is what is our role and responsibility.

[01:07:59]

And I think that's where we started figuring out that we wanted healthy communities and and we would have to lay out these guidelines in a very specific way.

[01:08:06]

So how did you begin to write them down? What did you do? Did you, like, bring in a lawyer or outside advisers or I mean, because I imagine both of you guys had really good intentions, like, if I'm in the company, I'm going to be going, guys, we cannot do this. This is wrong. At the same time, you've got investors. You've got to make money. I'm sure the Asian community was probably generating significant revenue for you.

[01:08:30]

So, yeah, the investors are are super helpful here. Besides just the money.

[01:08:36]

They connected us to people who had worked on these types of problems before Reddit had dealt with stuff like this. Facebook had to deal with stuff like this. Still does and still does. And and we got connected through those investors to to a fellow who had wishes to to remain anonymous. Even to this day, he had built these very massive content policy and trust and safety and enforcement systems. And he worked with us for a period of two months to draft the first version of what became Patriots content policy, which was turned out to be about 40 pages, was the first version of it.

[01:09:18]

And to tell the truth, that was one of the most horrific two months of of my life was well, because the Internet is it can be a dark place and there are really horrific things out there. And in that two months, we had to explore all of those cases real in the world on Patreon, and we had to have some very deep philosophical conversations about what are we OK with supporting and and what are we not. And then content policy is like anything else that a company it's it's a it's a living, breathing thing that you iterate on and it changes over time.

[01:09:56]

But that first version, you know, in the creation of that first version was a very difficult two months. Difficult because it you had to make specific choices about what you would accept and what you wouldn't accept. There are two reasons.

[01:10:12]

The first was Samini. This was one of the first moments where we had fundamental disagreements about the business.

[01:10:18]

And so it was challenging our relationship in a way that we hadn't dealt with before. Is that fair? Samp like we? I think that's right, yeah. Like we we had to like have really intense values discussions where we weren't on the same page and that was that was really hard.

[01:10:39]

And in particular to we hadn't come up with even a framework for how we would get through these decisions we were bringing in.

[01:10:46]

I remember there were all these sessions. We were just bringing everyone from the company. And there are all these different, like disparate opinions. And we couldn't figure out how to put them together because people were very divided, even internally. And I think all of this just became very exhausting for both of us.

[01:11:03]

So how did you what did you come up with? What was the policy?

[01:11:07]

You came up with the the end state of this project, working with this outside person that helped us, you know, write the first version of it was was this content policy, which was a rules based framework that gets to a level of specificity that I think most people are probably unaware of. Like, for example, people say, you know, I've heard people say you can't define porn. You just kind of know it when you see it.

[01:11:31]

I beg to differ. You can define porn. We have spent quite a lot of time defining porn and way more detail than probably anyone wants to hear about or go into and then do that across everything. Weapons manufacturing, hate speech, what is harassment? You know, the output of this content policy was rigorous definition around what we meant by each of those things and as many edge cases as we could think of. That's how much detail you want to go into.

[01:12:01]

Yeah, I think the perspective I always liked I don't remember how we landed on this was that, you know, we're facilitating art. Art should in some sense be bridging a lot of these divides and not increasing them like some communities would be doing. And so guided with that, I think, you know, we're constantly, as Jack noted, it was an evolving document. But at least we sort of knew directionally where we want to be, but I mean, you guys, because of this policy, did alienate some of your better known podcasters, like Sam Harris, who was on Patreon, and he decided to stop using it because he didn't support the policy.

[01:12:42]

He said, you know, that that that it violated free speech. And presumably you talked to Sam about this when he decided to leave. Well, I talked with Sam many times.

[01:12:55]

You know, he's such an incredible thinker. I respect him so much. And, you know, I was very clear about our logic and and why, you know, why we have to have a content policy.

[01:13:08]

And I think these things are complicated. If you're not inside a company, I think, look, that things have over the last few years, it's become very, very clear, I think, to say to people why companies need to have a content policy.

[01:13:21]

But at the time, his reasoning was the First Amendment should do it. That's that should be the policy. And and, yeah, I mean, we we disagreed. So and we weren't going to you know, we weren't going to change our minds to to keep two or three creators as as painful as that was.

[01:13:42]

But again, like, I am really proud of our content policy. And I think I think more folks, you know, should should do that, especially like emerging tech companies. I wish more folks did that. So so, look, it's a it's a bummer. And I wish Sam was raising money on out. His pitch was awesome and straight from the heart and right on. But sometimes, you know, you have values based disagreements like that.

[01:14:12]

And and that's what happens. Putting out any idea into the world, especially a platform like this, is going to create friction. Right. Even though your intentions are good and by and large, it serves people well, there are going to be critics. That's normal. It's part of the process. Our show gets criticized and you have been criticized for a variety of reasons. Let me just start with one of them. A critique is that actually almost nobody on the platform makes a serious living.

[01:14:39]

There was an article that came on 2017, I think was called No One Makes a Living on Patriots. You know, it said something like, you know, 80 percent of the creators who shared what they earn make less than the federal minimum wage.

[01:14:51]

Yeah, I'm not sure that's a criticism is as much as just as like a statement. Perhaps it was meant as criticism. But like Patrón, I think is solving a very specific, clear problem. One of the problems it's not solving is the demand curve. We can't solve supply and demand. We're also not solving helping everybody find, you know, new fans. Yeah, these are really hard problems that other companies do way better than us right now, actually.

[01:15:22]

And we were very narrow in our focus of what problem are we trying to solve. And the very specific problem that Patriots set out to solve early was, so you're a creator, you're reaching millions of people and you're getting paid 100 bucks a month in ad revenue.

[01:15:38]

Great patron is the platform for you. But if you're not reaching a million people or it doesn't have to be a million, but if you don't have an audience, actually, Pichon doesn't work so well for you at all. And so I think it's totally fair to point that out. And I actually think it's important to be honest about that. Like, we want to be honest that if somebody expects that they're going to come on to Patreon without having found a thing that that, you know, resonates with people, you know, that's that's not a problem that our product solves.

[01:16:07]

And and actually, if we were to try to solve that, it would be incredibly deep focusing. And I think we'd end up doing worse at our mission. And at the end of the day, you know, the thing is there are now tens and tens of thousands of creators who are, you know, making a lot of money on the platform and building media companies and then leasing office space and hiring teams. And now there are creators making, you know, millions of dollars a year on Patrón.

[01:16:31]

So but we're not you know, we're not going to solve the product market fit problem for folks.

[01:16:37]

So one of the challenges that you guys have had to deal with over the years is how to roll out changes to your revenue model, because inevitably users, you know, they don't like it when they get used to a certain system and it changes.

[01:16:52]

But a few years ago, you kind of ran into some trouble when you announced that you were you were going to shift the the way that that processing fees were were being handled. So I guess instead of the creators paying the processing fees, the patrons would have to pay them on top of a of the subscription fees that they were already paying. And and that caused a backlash, right.

[01:17:15]

There were. Yeah. That so that you were very kind about it.

[01:17:19]

Thank you. In describing the backlash about patrons paying fees. That was the worst product rollout in the history of the company, and it was I mean, backlash doesn't begin to describe how it felt from the inside.

[01:17:33]

I mean, there was a tweet at me every two to three seconds, first probably 72 hours, you know, equating me to the devil.

[01:17:45]

I mean, it was it was it was very anxiety inducing.

[01:17:55]

Cannot be fun. It's not it's no, it's it's the opposite of fun. But but we learned so much about, you know, our community and product development and and communication and and how to talk to our creators. And so the next time we we rolled out something like that, you know, we literally talk to over a thousand creators first, which we did not do that time. We did a B tests. And like we got the data and the data showed that actually it was a great thing.

[01:18:33]

But that's different than talking to a person and hearing them react to it and hearing their feelings about it. Like, you know, you can't just disassociate that from the product experience.

[01:18:47]

Have you become profitable yet?

[01:18:49]

Sam, are we talking about profitability? Also, yeah. So, no, it's not profitable. It's tracking toward profitability. We're burning money every month.

[01:19:00]

But actually, the business is like very healthy. The financials are are very healthy. And and to help the business, I guess.

[01:19:08]

Last year, you rolled out a new payment plan for the creators, which is a tiered plan. So they depending on like the level of service they get, they they pay either like five or eight or 12 percent of the income that that they get from the site. Is that right? Yeah. This new plan, the three creator plans that we rolled out have amazing adoption creators are are, you know, opting into those those more feature rich products.

[01:19:37]

And and so it actually has, like, changed the business. So, like, we're going to keep adding features to those. So, I mean, we're going to keep building out the product and building more things. But but I think very, very clearly like, yes, this is this worked.

[01:19:54]

This allows us to, like, scale and be healthy and be a long term, meaningful company. And how many how many creators are on the platform now? Hundreds of thousands. Right now it's a little over two hundred thousand.

[01:20:04]

Yeah, we're getting paid.

[01:20:06]

I mean, I imagine that that this covid era has been a blessing for I mean, it's a horrible situation, of course. But all of a sudden you've got people at home, creators who cannot tour, who can't play coffeehouses. And you're not you know, it's not like stadium level bands are going on, Patrón, but people who might play it, 100 people now, they can't do it. Have you had a massive spike in people onboarding?

[01:20:34]

I mean, yes, it's it's been it's been wild to see. I mean, the pandemic has been such a brutal thing in the world. And it's it is so weird to think about, you know, it is true that it has benefited Patreon. And that dichotomy is very strange for me. Like I I think the way I'm trying to think about is like I'm glad something like Percheron exists to catch creative people right now in a moment like this.

[01:21:02]

So, for example, AEG Live Nation both canceled global touring operations. So very suddenly there are these creators who are looking forward at a year or two of, you know, touring and hundreds of thousands or millions or tens of millions of dollars of touring revenue that evaporated over the period of a week. Yeah.

[01:21:23]

And so the you know, the level of launches on Patreon are what you could expect in a situation like that. Not only creators, you know, launching on the platform, you know, triple digit growth month over month in podcasting and music and things like that. But, um, but also patrons like stepping up and really doing their part. I think a lot of people are looking for a way to help right now.

[01:21:46]

And and patrons are to and there's like a really easy way that they can when you guys think about, you know, this path and where you are today, how much do you think that it has to do with your intelligence skill, hard work, and how much of it is just luck?

[01:22:03]

I mean, my opinion on this is largely like if you're fortunate enough to to be to fall in in order to build as part of a community that is this excited about an idea. I felt like it wasn't us.

[01:22:18]

It was going to be someone else. And so in a lot of ways. At least personally, I feel like very appreciative of sort of the you could call it luck two of the timing and the opportunity to to do this.

[01:22:36]

I also think just to to the general point of your question, like we wouldn't have been able to make it if we didn't work extremely hard from the get go.

[01:22:45]

Yeah. You know, I've done a thousand things in my life. Nine, you know, hundred and ninety nine of them haven't worked. Patron was one that happened to work. Was I smarter or did I make better decisions?

[01:23:02]

Like, no.

[01:23:03]

I mean, it just was like there's a lot of happenstance and circumstance and and, you know, like killed ourselves to look to to to, you know, do it.

[01:23:15]

Of course, I love this attitude, too, because it puts us in a place where I think both of us feel an immense sense of responsibility and that we have to be great stewards. Right.

[01:23:24]

Of both creators and the opportunity and even our teams that are helping us along on this mission.

[01:23:32]

And I think we take that very seriously.

[01:23:35]

And by the way, one thing that we haven't talked about, which is like quality, like how serious are you guys about the quality of of the stuff that's on Patreon?

[01:23:47]

I mean, because I mean, you've been on YouTube, right. And there's obviously there's there's great stuff on YouTube. There's a lot of really awful mediocre stuff on YouTube as well.

[01:23:57]

I mean, does it does it bother you if someone uses Patreon to put, like, I don't know, like terrible music or terrible art or whatever out into the world like or do you just not care? Oh, God.

[01:24:08]

I mean, we would never judge, like, judge the quality of somebody's art and have that be an input into a decision whether to include them in a shot like that, that we would, of course, never, ever do anything like that.

[01:24:23]

I actually find it so awesome to if there is something so tiny niche that only like a handful of people is passionately care about.

[01:24:31]

Right. I feel like that, in effect is sort of how we've piggybacked off this whole movement on the Internet that allows any community to find within an interest group some set of folks who care so deeply about that.

[01:24:45]

So, yeah, like Jack said, like, why in the world would we ever care about that?

[01:24:48]

I mean, we the beautiful thing about the Internet is that suppose you're a total weirdo. Like suppose you make stuff that like in your life, in your town. Nobody in your town likes your music. Nobody likes it. Like only one in a thousand people. Like what you have to make like great. On the Internet, there are literally millions of people who will like your stuff.

[01:25:16]

If your ratio is one in a thousand, you can get millions of fans and make hundreds of thousands of dollars a month like that is. I love that about the Internet. I think that's such a special, weird, wonderful time in in the development of humanity to to to be connected like that. That's Jack Contee and Sam Yelm, co-founders of Patriot. What is the weirdest, most neach patriot on site creator that you've seen it like just the most odd Nesh thing that you can think of.

[01:25:51]

One of my favorite examples of this was just like, I don't get Asmar at all. I don't get it. Like, it doesn't work for me. You don't get it? Not not at all. It doesn't work. My brain is not tingling right now. I'm getting the tingling guys. I don't know what you're talking about. You have a smart people on on there. Yeah, it does really well.

[01:26:10]

And people pay for it monthly. Oh yeah. Maybe I should get on it. This gig doesn't work out for me. I'm doing Asmar Adriaan. Don't quit your day job. Hey, thanks so much for listening to the show this week. You can subscribe wherever you get your podcasts if you want to write to us or email addresses H ibt at UNPEG, if you want to follow us on Twitter, were at how I built this or I'm that Guy Raz also on Instagram.

[01:26:42]

You can follow me at Guy Raz. This episode was produced by Rachel Falkner with music composed by REM teen Arab Louis. Thanks also to Liz Metzgar, Darris Gael's, Tracy Howard, Julia Kani, Neva Grant and Jeff Rogers. Our intern is Paris Safari. I'm Guy Raz. And you've been listening to how I built this. This is NPR. The world was shocked when pro Trump extremists stormed and seized the U.S. Capitol throughout this tumultuous era. The NPR Politics podcast has been there every day explaining and making sense of the news.

[01:27:21]

We'll be doing that through the final days of the Trump administration as we all try to understand how this moment happened and what will come next.