The Information’s Creator Economy Summit on Wednesday took place against the backdrop of a looming downturn and rising inflation. Reduced consumer spending would cut to the core of the creator economy. Sponsorships with brands are the top way many creators make money. If advertisers reduce spending this year, that could impact creator earnings—and the startups serving them.
It was a topic that came up throughout the day, and I heard a range of views on what this means for the creator economy. For Dominique Broadway, a personal finance creator who sells online courses, brand partnerships are not her main income source. But there are still reasons she is bracing for tougher times. “People will be holding onto their purses a little bit tighter,” she said. “People aren’t buying things that are considered luxuries.”
It’s hard to jump into the creator economy topics we love to discuss when we’re grieving over the lives lost in Tuesday’s Texas elementary school shooting. That’s what several of our speakers also told us when we kicked off our second Creator Economy Summit on Wednesday. Their comments felt particularly somber given last week’s mass shooting in a grocery store in Buffalo and a shooting at California church.
“As a dad of three boys and as a citizen, I’m saddened, I’m angered and I think that we as a society and a country need to get to a point of making change immediately with common sense laws and background checks and a lot of things that can help are on the table already," said Malik Ducard, chief content officer at Pinterest.
“I truly hope and pray that this is a turning point,” he said. “My heart and sadness is with the families. It’s unimaginable.”
Last week, we caught up with Faraz Fatemi, who joined Lightspeed Venture Partners last month as a partner focused on consumer investments. Fatemi previously led monetization, growth and corporate development initiatives at Clubhouse, where he worked from June 2021 to earlier this year, and before that invested in startups at Bain Capital Ventures as an associate. He got to know the Lightspeed partners when he worked on Bain’s investment in celebrity shoutout app Cameo’s Series B round in 2019. Lightspeed had led its Series A the previous year.
We talked about what tough market conditions means for founders and investors—and how seed-stage companies have been buffered from a retreat by investors from late-stage deals.
The Information’s second Creator Economy Summit is happening this Wednesday. For the past two months, I’ve been preparing for our interviews with creators, startup leaders and executives at major tech companies including Instagram, YouTube and Pinterest. (You can still register here.)
This prep work has come at a pivotal time for the industry. When we held our first summit in late October, venture capital investments in the sector were on fire: by year-end, investors had pumped $5 billion into creator economy startups, according according to data from The Information’s Creator Economy Database. But the pace has started to slow down. During the first quarter, U.S. creator economy startups raised about $1 billion, which slid 30% from the fourth quarter.
Our story earlier today detailing cooling demand and a slowdown in sales at celebrity-video shoutout app Cameo holds some warning signs for other creator economy startups and companies buoyed by the pandemic.
Cameo’s operating expenses soared to nearly $79 million last year, from $30 million in 2020. That contributed to deeper losses: adjusted EBITDA, an earnings metric that typically strips out a lot of expenses—including stock compensation—widened to a nearly $49 million loss in 2021 from just under a $10 million loss the year prior, documents showed. The startup’s sales also fell far short of the company’s own forecasts.