Patreon: Jack Conte and Sam Yam

So how much did it cost you to make that music video? It ended up costing ten 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 you know, watching my savings account go down basically to zero.

I was like, I'm gonna upload this video. to YouTube. It's gonna get a million views. And I knew that that video would bring in Maybe.

A hundred bucks. Ramen PR? That's how I built this. Show about innovators, entrepreneurs, idealists, and the stories behind the movements. Build.

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. 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 Simenov, 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. Melissa Butler?

couldn't find bolden bright lipstick colors, so she created her own. And then turned that idea into a business called the Lip Bar. Mike Radenbaug 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 rad power bikes.

And Jack Conti's problem? It was a problem that At first glance Problematic. Back in 2009, he and his then girlfriend, now wife, Natalie.

formed a band called Pomplamous, and in September of that year, They released a cover version of Beyonce's Single Ladies, and they made a video to go with it. Just broke up This video got billions of views and their YouTube channel blew up.

They were doing media interviews and selling some of their music on iTunes. So you're probably wondering. What was the problem? Well, having lots of followers and viewers doesn't necessarily translate into a sustainable business.

Especially after all the middlemen take their cut. 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 Patreon. Patreon 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 two hundred thousand creators. Including some names that you might know, like YouTuber Jackson Bird, or the musician Beardy Man, or the podcast Chapo Trap House. 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 Conti and Sam Yam. envisioned it. For starters, both Sam and Jack had creative instincts from very early on. 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 in 2002.

Here's Jack. I think it was just one of those relationships that uh 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 it just kind of

It just kind of worked. Yeah. I I think we also sort of had A very easy going humor too. To us uh That's we found maybe some of the

The same macabre. type things funny and uh the same friend groups uh that that you eventually brought over. uh I think really resonated with me too. So what what were you guys studying in college? Um Jack, let's start with you.

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. Um grown up and um I loved physics in high school. I I thought I wanted to be a physics major when I got to college.

And then uh 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 moment of realization for me sitting in this physics class where I was like

This is not what I wanna do. And um I I just I was just thinking about songs. I was thinking about my music theory class. I was thinking about other things and that's where my brain was going. And I didn't want to do physics.

And I I remember like sitting on a bench after that physics class for probably forty five minutes. I just sat there and just Thought about it. what that meant for me'cause I was I was h it was kind of a One of those moments in college that feels pivotal, you know. Mm.

So Jack, you were studying music and Sam, what were you studying? Yeah I I came into to Stanford not really knowing, uh, to be honest. Um Ended up studying computer science. Uh honestly I played a lot of video games as a child and then

I was in the computers. Alright, so you are doing computer science and Jack you're doing music and Um I'm just curious, d d at any point in college did the two of you sit around and start to kind of Mul over the possibility of

starting a business together or anything like that. Was that 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. I I was, I was, yeah, yeah. It was awesome. You were driving In and Out Burgers for people? I created a website, I I was driving burgers around Anticampus. This is That was my senior year in particular. Pre-door dash.

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 yeah, to to individuals. It wasn't super well thought out. It's again, just you know, riffing on ideas here. Sammy, why are you ashamed of this? This was a awesome business, man. It was so cool. It was a big deal. Like everybody knew about it. It was one of those. I think he's worried he's gonna get sued by In and Out Burgers for For what he did in two thousand four or whatever, five. But I will say this, I don't think it's a great idea because a a delivered burger is just not you have to eat a burger right off the grill.

Like it once it 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. Totally hear you. Yeah. Also the the shock every time, every night that I would go to In and Out and 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. Alright, so you've got this burgeoning entrepreneurial business. Um And and Jack, were you Like

Was any part of your mind in college about business or were you really just focused on music? No, I I don't think I was thinking about business at all. I was um I was a part of the film society at school. And so and I and I was also um There was a recording studio on campus and so I was learning how to use a recording studio. And I was also you know, uh because I was part of the film study, I was making movies. So I would make f you know, a few movies a year.

And I would do sound tracks for other people and for myself, so I was You know, I I was a music major and then I you know, in the in the cracks I was doing music and film, um and and all that kind of stuff. I was not building businesses. Hm. All right. So you guys both graduate in two thousand six and and Sam, I guess you you go to work for your the like the first of of many startups. Um and it was called Looped. Um and and I guess it was like a an early way to to to share your cell phone's location. Um what what happened to that startup? Looped ended up getting acquired. Um I I was there for about three years.

Uh my Takeaway from it. Um Like early on I was really interested because of the founders, uh, particularly uh Sam Maltman, uh who was the CEO there. Later on became president of 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.

So Sam, you um kind of go off into this tech direction and Jack I guess you kind of begin to pursue music. You formed a band with your then girlfriend, uh who's now actually your wife, I think, right? Natalie. Yeah, we started a a band uh Called.

Pomplamous and and even before then I I had started using YouTube and and uploading to YouTube and Um it kinda s It like felt Like Something was working.

What were the videos of? Me in my bedroom playing instruments. And so I would Listen, people put videos up uh opening baseball card packs. So I mean. Yeah. I I would um I guess what the videos kinda became was the video version of a song. I called them video songs because there were sort of two rules. It was in inspired by the the sort of dogma filmmaking from the seventies and like the the rules were If you hear the instrument in the mix, if there's an instrument in the mix, you're going to get to see it. Ah yeah. You have to play it right. 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 f

feels like these people are geniuses just creating things and there's it at least for me it felt like there was this gap between like where they are and where I am. And and I just liked I liked the kind of transparency of YouTube, I liked that it felt like behind the scenes, and I liked the idea of um kind of sh 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, uh playing a guitar through a shitty amp that you got, you know, on sale at at Guitar Center. And what kind of music was it, by the way? It was like h hardcore um 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 you know felt like it was working. I would sell a few hundred bucks of MP3s. I used a site called E Junkie.

Um so I would put up my MP three's for sale on on this A and were people buying them? Yeah, I yeah, I was sell I was making a couple hundred bucks a month and I was I I thought like okay, this could This could turn into you know, a an income stream and I could do this full time. It was the 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. Um, like I I was committing in my mind I was committing to a life of poverty, my uncle is a guitar player, a jazz guitar player, and he you know, when I told him I was gonna 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 in your He said don't do this, it's crowded at the bottom is what he said. Wow.

But I mean you You have this band going at the time. Yeah, we got the band going when we posted a YouTube video on my channel. At first we we didn't call it a band, we just posted a video on my channel and we said, Hey, this is me and Natalie collabing And what were you what was the video?

It was it was just the two of us with a song that she wrote called Pause Encore. It was i mostly in French. And that comes from her because she grew up in France and Belgium. I got it. Okay. And what was funny was, you know, we kinda Tempered each other, like we we mitigated each each other's extremes. So like she calmed 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 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 kinda different sounding and people seemed to really like it. And so You know, the idea was Let's see if we can make a living out of this. And and right around that time iTunes came out and so we started putting our

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 and YouTube seemed like it was working, so we just started making more and more videos and putting those out. How did you get attention on YouTube? Um i eventually we Produced a record.

for this singer songwriter named Julia Noons. And I was super inspired by Julia because she just had this huge presence on YouTube. And I learned that it came from Covers originally. Um And she would put it cover covering big, like well known songs. Yeah.'Cause which which anybody can do, right? Which anybody can do. Yeah. And 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 a completely 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 and done it in three four instead of four four or whatever it is, you can kind of get introduced to a new sound. Um because you're coming from search traffic and That Single thing.

is how we ended up like growing the band so quickly. So what was the first uh cover that you put on YouTube? It was I think the first cover was My Favorite Things. We ended up doing it in uh 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. Oh yes, I remember that well. Yeah. Allison Allison Allison. We happened we we knew that it was gonna have a good shot at the VMAs because it was such a great video and a great song and When she was up for for you know best music video and so we we We covered

The the song and and kinda just in time and put it out That night. And then Kanye. Did that thing where he got up at the VMAs and Taylor Swift won. Yes, and interrupted her and it became this huge like internet meme and just got tons of traffic and the video just exploded.

People because people were searching single ladies. Yeah. Uh-huh. I think that video today has about eleven million views. It does. Yeah. And you guys and I I've seen the video, obviously, and uh it's it's you guys like in in like a bedroom, right? Like Yeah, it's my childhood bedroom. Like that's what it is. It's people in a room playing instruments synced up with the audio, and like it's funny'cause in two thousand twenty that's Really nothing special, but But at the time nobody was really

doing that kinda thing, like music videos look like music videos. They look like MTV and to see like h humans in their bedroom playing instruments and having it actually sound good. was c you know, it was a little it was different. So that video blows up and did Did you start to get contact? I mean, I I should say that you were I know you were on N PR that around that time because

I was the host of Weekend All Things Considered and and and there was a weekend when I wasn't I was like on vacation and and you guys uh sadly I would didn't wasn't able to interview but you guys were featured on the show. Did you guys get a lot of a lot of calls? We did. We we um I mean that was kind of the beginning of when Pomplum's really started to take off. And you know, we got calls from managers, we got calls uh from you know press. And you know, that when we came out with our second like big one that kinda really took off, which was Telephone by Lady Gaga, um, you know, we had a we released a record. And you know, at the end of the month we logged into our bank account and like we had sold thirty thousand songs and because we hadn't signed with a label, we owned all our own masters and therefore we owned all the royalties. So we we log in our bank account at twenty two thousand bucks in it. Wow. Which like coming out of call like after selling some iTunes. That's just people paying ninety nine cents for your song on iTunes. Just iTunes. Twenty two thousand bucks in one month. And like I that was when I was like, oh my like I I thought this we can do it. Like this

This could be A thing. And did d did you start to get record labels contacting you saying, Hey, um, you guys interested in talking to us? We did. Yeah, we didn't get like hard offers from anybody, but we started to go down to LA and talk with them and Um and we we basically decided not to do that, but we did we did talk with them and entertain it. Um we just didn't want to go that route.

I mean it you know, at that point we're making a living Um you know, when we started doing label conversations, we were making, you know, thousands and thousands of dollars per month. We were going on tour We were You know, reaching millions of people. Where were you per we were performing in front of like

Big audiences? Yeah, five hundred to a thousand 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 I thought like maybe one day I'll play for a 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 in San Francisco, which is twelve hundred people. It was magic. It was the best thing ever. Sam, m while all this was happening with Jack and Natalie, You're grinding away into some tech job and you're watching these guys become like massive YouTube stars. Was that was like everyone from your

Your year at at Stanford, like people you knew like talking about them, like Oh my God, you see Jack? Conti's like got this YouTube video that's got eleven million views? I mean yeah the w the I admired Jack, right? 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 or part of my life. And so seeing him be so successful uh down that path was was so impressive and I remember every time that we we would catch up

Uh after college, I I was just fascinated by what was going on with his life and how things were going on there. Meantime, Sam, you had left. um you would you had left your the first startup you worked for And went on to Found your own.

Start up. Um c called Adwal. What what was Adwiral? Yeah. Um I mean Thinking back on it, a a lot of this was was quite boring, but uh

Uh this was during the era uh when the iPhone was getting really popular and a lot of uh yeah developers were creating their own games and and whatnot. And in fact, uh my co-founder and mys uh self at that time were also making these iPhone games and and applications. And there was a lot of good money in advertising in that. Uh I know we created like this virtual pet game that ended up uh gathering actually millions uh of users at the time. Uh and we were seeing a few thousand dollars come through and just uh ads being clicked on. And so uh Adwir was just an effective way for these mobile developers to monetize that. So you launch from what I from what I've read, you guys Basically.

start this business in early two thousand nine. And by the end of the year you are quite. by a different company, is that I mean to me that sounds like a great deal, but I I can't even imagine you were up and running that like Really? By that point, or were you? It happened pretty quickly. Uh like just the explosion of of even interest in this space, I think. Like there was a whole flood.

of developers um who it was almost like a a gold rus in a lot of ways, uh'cause you had the iPhone and and this new app store and anyone could start making games and get it distributed to millions of users. Um and so when uh y there was this interest And what we're doing. I think we are also

caught off guard in some sense and then also immediately sold the company. That same year. Was w did you sell the company'cause it was just like an offer you couldn't refuse? Like you were just offered all this money and you you were just like, Oh my God, we gotta take this. It wasn't all this money, but I think it was more than we had uh made you know independently previously than that. So the fact that it it was a company that we knew to be very large in the space. It was a company called AdMob and then literally the the month afterwards we were acquired into Google. Um AdMob was acquired for like seven hundred and fifty 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. Uh no, we did not get seven hundred. That would be Okay if that happened, but um we were part of of AdMob uh at the time they were acquired in and so it it felt like an appealing opportunity to to be part of something that was gonna win. Alright, so your business was acquired and and you moved on and and you actually went to um to the incubator

Uh called Dog Patch Labs where I guess your goal was to presumably to to come up with with like a new idea. Yeah. I I mean I had a f a few different things, but uh at this point it I just wanted to start building again. So within those few years, I build a number of things. I think this was sort of enlightening for myself too. Uh in in a lot of ways I I view those years as like the years of struggle because I was there at the incubator, uh I was working across the table from Kevin Sistram, who's building Instagram at that time. And we would come in Um

I I remember actually having a bunch of chats with Mikey and and Kevin about what they were thinking about with their business and uh all that's really exciting I think, uh as you all feel like you're in this shared Suffering together until You know, something like Instagram skyrockets and then you realize that So you're com 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 I would code design launch And this was during the time too where TechCrunch Disrupt was a thing, 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 uh I had launched a business in that area. Uh it was a company called Chompon, but we effectively allowed people to create their own group buns, so it was a white labeling service. And it was interesting, like the whole group buying space was sort of a Uh coincidentally a flash in the pan, too, in many ways, although Groupon is still around. Um

And The takeaway for me was just how difficult and how Uh how much I should treasure. If I ever had the the the good fortune of of landing on a business that really resonated with like a community or or a group of people.

Um and so Most of that. My years during this time was Uh as I recall just full of a lot of loneliness and uh development by by myself in my bedroom.

Um I w I wanna go back to Jack for a moment. Um So j Jack just like I'm trying to understand. Well, Sam space. Yeah. And and at at your peak, I'm just curious how Like how much money were you guys making? We did about four hundred thousand dollars in a year.

Off of MP three sales, basically. Wow. And and it was I think that that year in particular, I think was two thousand ten. Most of it was singles, a lot of it was licensing and and brand deals. Um And we had a We had a lawyer that we had brought on very early on who was, you know, help helping us negotiate these deals and work with um you know, work with brands. Um

And we're very you know, we're we're both like m music nerds and and artists, but um but we 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 we built a recording studio. We used the money to build a a recording studio on the property. Um And uh and then that became kind of like the home base for Pomploues for the next few years. I mean you guys were doing really well. And and I presumably a lot of that money is was coming in from iTunes sales.

But then I guess like around uh what, two thousand ten, two thousand eleven. Uh Spotify comes along and and of course with Spotify you can stream an unlimited amount of music Uh for free. So w what did that do for Oh, for your revenue.

Yeah, the transition to streaming was really hard. On the band. was you know a A tiny tiny fraction of the iTunes.

Revenue. you know, paying a buck for a song, you know, with a stream, you get, you know, fractions of a penny for one stream. And it just it wasn't uh it wasn't one for one because the you know, the 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,'cause now at this point we had a mortgage. So around that time, like twenty eleven You know, twenty twelve, how are you making a living?

Well What was bizarre about it was you know our reach hadn't changed. to reach the of of your YouTube audience and and so on. growing. We're getting millions and millions of views and and more views. And then you know enter Spotify and suddenly

suddenly we're like up a creek in terms of revenue. And and and what was amazing to me that you know I was watching this unfold over a period of, you know, a couple 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, with with that I am not in control of. It's just these changing systems. And my artistry is yielding different results f in you know with regard to my income. And that was like um very frustrating to watch. And I look I know businesses have to kind of like pivot and change and and be innovative.

And yet I found myself like having to do all this gymnastics. you know, t to to keep up with the revenue stream. So I was you know, selling hats and and f and t shirts and we were selling dongles and on a website? Yeah. And and like and then we would, you know, play some shows and I remember like the whole time I was thinking like Is my value to the world like a hat with a logo on it? Like that's not what I'm good at. That feels It was merch. You were just selling merch at concerts and stuff. Yeah. And and that and I didn't Yeah, it it bugged me that we had to do that,'cause I I felt like that's not what makes me special. I just wanted to be paid for like I loved iTunes'cause I could like be paid for my music, which is what and and I was yeah, that so yeah, it was just one of those moments where we kinda realized that it everything was changing and that, you know, three or four years from now would be completely different.

Meantime, what is Natalie doing? I mean, are you guys you're still living together, you've got this house. um and a mortgage and are you earning enough money to at least Pay your bills. Yes, we are. Um

But we're also watching where it's coming a l a lot out of savings, right? So you're not revenue's not increasing? Uh at that point, no, revenue was not increasing. re revenue was was decreasing at that point. So so it was coming out of savings. But our um who was living at the house. Did this

Uh amazing thing. And uh she was gonna make an album. And she went onto this new website called Kickstarter. And Did a thirty day thing.

We we had never heard of it and I remember the night That she Turn her computer around at the dinner table. And showed us I think she had made

twelve thousand dollars or thirteen thousand dollars? To make the record. And that really was what Kickstarter was started out for. Yeah. 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 Like music or records or whatever it was.

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

Just That just felt right. And felt awesome. So I I know that you and Natalie did um did some solo projects in addition to to the work you did with Paplamus and And I guess at at some point she decides to do a Kickstarter too, right? To to raise money for her music. Yeah.

And that She ended up raising a hundred and four. thousand dollars. Wow, how did she reach that many people? Because w Pop Loose had hundreds of thousands of subscribers and we were getting millions of views. And so But how did you drive those viewers to the to the Kickstarter? People went bananas like it yeah. Over hundred and four thousand to make a record.

So you're thinking. Wow. Your mind's blown there. I I couldn't bel I was so happy for it. It was so awesome.

In meantime, you're working on on your own solo music too. And and I guess you got interested in in in like E D. M and that sort of genre and You I guess you eventually wrote a track that you were really proud of and you wanted to make a uh video out of it and uh i this was a this is a track called pedals. Yeah. It it was kinda daft punky like

technologic, you know, I and I and I was I was listing out all of my guitar pedals. That was the the the lyric. The only lyric in the song was just a list of all the pedals that I used to to process guitar sets. The brands or the types? The make. Uh the the models and the makes. So like the first lyric is Hog, Pog, Vox, Wah, Octave Multiplexer, Big Man Memory Muff, Boss Chromatic Tuner. It was just like a list of I like that. Yeah. Just like a list of petals. 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 gr like aggressively Playing that guitar. Yeah, I mean You look a little scary. Like if my kids saw you, they'd be a little scared of you. Ha ha

Yeah. I'm raging. Yeah, that's what music's about. I should mention to people who aren't familiar with it, there are robots in the video. There's a conveyor belt of You know guitar pedals passing by, there's other robots, there's a spider robot. It's like in this Kind of laboratory of robots. Uh, I imagine this is gonna cost you

Quite a bit of money. It ended up Costing Ten grand. Uh I didn't know that when I went into it. 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 c at the time I thought like

If I go deep on the business side, I'm not going to do it. Like I'cause I I I'll be staring at numbers that don't make sense. And so I'm gonna just leave all that behind and I'm just gonna do something crazy and creative. 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, a 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 uh on the property.

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 uh you know, I've I had to figure out how to cut wood at angles, I got a miter saw like I was just I was flailing. I mean this thing like you know, I I I was just trying to trying to go and make it, but I was enjoying like it was really fun. It was just uh you know, I was trying to do it little by little, you know? Did you decide like all right, if I'm gonna make this, I'm gonna do this Kickstarter thing, I'm gonna put up a video and and ask people to contribute to to my my project.

I I was considering it. The problem with that was I didn't want to kind 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 fit it like that. You weren't thinking of this as a one off.

You were thinking like I need to Steady. Um like money to make Projects. Yeah. So how are we gonna do it?

That was the part of me that decided to not think of Think about that. And and it it it was terrifying. It was. I w I remember being Pretty scared about that. And I also thought like look

If I start being logical about this, I'm never gonna make something that's great. It wasn't until about February. Of twenty thirteen. That I kind of

It almost felt like waking up. Uh 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, wake yeah, I felt like I was waking up and I was like suddenly very terrified about like what was on the other side. And I I the thought that I had in my mind was I'm gonna upload this video. to YouTube. It's gonna get a million views.

And I knew that that Video would bring in. Maybe, you know. A hundred bucks. From YouTube ads. Yeah.

And I actually got like sick. I got like nauseated. thinking about like All of this work and energy and time, the robots, the set, the credit cards, the draining of the savings account, like

All of that adding up and thinking like I'm gonna put this thing out and I'm gonna get paid a hundred dollars. And I c I was i i I was angry, but I was also like I couldn't believe

that that was that we were all just that humans were just okay with this. That like this is the this is the system that we've designed for artists. It's like, yeah, you put up your your thing that you sp spend your life on, and then you get paid$100 in ad revenue and then you put up your next thing. And I remember, like, thinking about What the hell Where all these people who make things and put them online.

Um Are the the the the economics of that failed to evolve with the distribution technology. So like the 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? February of twenty thirteen. And you're clearly Like gears are turning in your head. And what are 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 I and uh what I was thinking about was like I I like Kickstarter. But I want

I want to be paid um 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 I was seeing Other websites start to accept. you know, like membership organizations, not necessarily websites, but like membership organizations like S F Mo

Or um, you know, KQED would do these pledge drives. And it happened it it wasn't You know, you could you have the option in many of those cases to set up a a monthly payment. And so I was like, Great. Like I just want

Essentially. That system. A pledge drive. Like a pledge drive. Yeah. Yeah. Exactly. this like website so that my fans can do this. And then you know, of course

I I I was also looking at all these other YouTubers going through the same thing and podcasters and and news and everybody g anybody who s makes stuff and puts it online is going through the same thing I was like, Oh, we this should just be a this should be a thing like Kickstarter where anybody can set it up for themselves. And uh so yeah, I I've sketched out. You you physically sketched out like what the website would look like on paper? I d I took out fourteen pieces of printer paper for my printer. Actually probably more than that,'cause I didn't know it would be fourteen pages. But it ended up being about fourteen pages. And essentially it was a recurring payment between a A f a fan and a creator.

And yeah, there was a whole you know, there's like a content feed and like a you know, login page and a home page and and the whole thing. It was it was um I s I'm a terrible designer and so the you know, looking back these pages fondly. I mean it was the worst. It sucked. Um 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. Yeah.

I called him up. And And I was like, So Sam, I've got this idea and I'm really excited about it, but I don't I don't want to tell you like do we need to sign an NDA or something. I cannot talk to people about this. Because they're gonna steal it from me. I I remember this too. Cause 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 it was like, Oh, I get to meet this celebrity who's who's just crushing it out on YouTube. So when we had ranged for the meeting, I wasn't so much

in the uh sort of mentality that there would be this amazing idea and and this is what I would be dedicated to. I was more like I I'm curious what you're thinking about him and what you're up to, Jack. Yeah. But wait, but Sam Sam's like Jack. Nobody cares about your idea. Don't he was like, We don't need to do an NDA. Nobody cares. Ideas are trash. Ideas are worthless. Like we don't need to do that. And I was like, Oh, okay. He's saying to you what you now know, which is Ideas are a dime a dozen. I d uh it doesn't mean that it's easy to find a good idea. It's not, but they are it's execution that matters. It is only execution. Yeah.

There are so many versions of Patreon that that did not work. And they were the same idea. All right. So you go to uh San Francisco to meet and you and and 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? 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 w 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 Tech Crun article and he was uh it was it was about to come out so he said like hey I can't meet till Thursday because I'm launching this thing. What were you launching, Sam? This was the photography site that I was working on. This is like your fifth or sixth startup. Uh yeah, you I don't know if you can call Most Darus, but a a new project that I was interested in. And so I I was like, Hey Jack, I you know, I'm just busy. Maybe we can meet when this article finally comes out because uh I'll have launched it by that point. Um and that's what we set the target date for. So I had gone up there again just expecting mainly to to catch up with Jack. And I maybe you said to like yeah, get some feedback on the idea. That's how you pitched it initially,'cause I remember being surprised when The 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 uh that you and and other artists were dealing with today. Um and especially you know that resonated for me because I I had seen how successful you had been uh as an artist. I assumed you were already like you know dancing away on your yacht.

doing fine. So this is this is really interesting. uh hearing this from you. And and what what did he what do you remember him telling you about it? So you you convinced him not to sign That you didn't have to sign an NDA. No, you didn't bring in NDA, did you, Jack? I I didn't see one, I remember I was. No NDA. Yeah, I mean this is your roommate, Jack. You live with for three years. So much hubris. I'm like so ashamed of that. I know. It's so dumb. Yeah. So I the things that came together for me and and now we're looking at about almost eight years ago, but like it's kinda how Jack mentioned that Kickstarter was

Uh a thing already and and there are a lot of campaigns that were really successful on Kickstarter. But what resonated here was the idea that Uh You are helping to support

the individual versus a particular project. And for me The reason that that resonated, well, first as someone who cared a lot about art in my past, but could never make it a career. I followed a lot of these people on on YouTube. Um there were folks at this time that were relatively big. Uh one in particular, I remember that I talked to Jack about uh Kina Grandis, who sort of wrote very personal music. Um And and very simple music. 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 and give her whatever on an ongoing basis if it allowed her to keep producing her work. And I could just see this emotion. Um 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. Uh Jack Jack remembers this too. The the day of I'm like we're starting this now.

And don't tell anyone else about this idea. Don't So you're saying to him now make everybody sign an NDA. No no don't even sign an NDA. Just just keep this to ourselves. This is it. We're gonna do it. We're gonna go dark. So I'm staring at the email right now that I sent Sam on March tenth. I just pulled it up. March tenth, twenty thirteen. And it's just kind of like a summary of our agreement. And uh I think that's kind of what I thought.

It was gonna be um like here's what I'm s like I'm I'll just read one s sentence of this. You agree to be c so we're talking about the agreement. Here's what I'm agreeing to, here's what you're agreeing to. And um And one of the lines is like you agree to be co founder and CTO of Patreon, you agree to build and maintain the site as it is laid out in the wireframes. You will work on all technical and program uh and programming aspects of the company. Did you pass this by a lawyer job or was this just This was your legal ease. No, I hear saying you an email. Yeah, I'm just like And and did you guys have a conversation about how you would split it the company? Did you say was it just gonna be fifty fifty? Yeah, it's it's uh it's in this email. Uh we agree to become fifty fifty partners in Patreon. So I mean win win, right? Because um f I mean you get a technical co founder In Sam, you get this guy who has kind of a

Pretty big platform already. Absolutely, yeah. I I was I was stoked. Um I think Yeah, yeah. That email, which I did I did read through, I think I just wrote back to you, Jack. What is it uh all caps or something? So I wrote this like long email at the end. I said like I know I said this before, but I just want to stress how important it is that we communicate with each other about all aspects of the business and 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 a hundred percent okay.

with talking to me about your like the company finances, your interests in the company, your ideas, your feelings, anything you like, this will lead to a strong partnership. That's nice. I mean it's basically like hey, we're gonna we put our friendship, you know, first here. Yeah. You know, it was like this I thought it was kind of a nice And then Sam writes back all caps, Awesome, I agree to all of this, okay, let's go. When we come back in just a moment.

How Patreon launched with just Three musicians, one of them was Jack, and one was 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. N PR. Hey, welcome back to How I Built This from NPR. I'm Guy Roz. So it's March of 2013, and Jack Conti and his former college roommate Sam Yam 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 coding. I started working uh probably more passionately than ever on on any other project. Uh I for me it 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 gonna do it and we're gonna regret that. And for people who don't understand how coding works, like

What's the first step? Like I mean it's you're essentially it's like if if if it's like a bunch of Lego bricks. You start to build the The the base level of of the building.

Yeah, uh Coding is Is what you do at some point, but what you're really putting together are a whole bunch of like designs and photoshops and thinking through The psychology of

Like why a user would do this and that. And so I think The the way uh at least I approached this particular project was sort of laying out all the main journeys.

uh of users and then Painstakingly moving pixels around. uh to get it to a level where you felt, okay, this is an experience that I think is gonna work. And it wasn't gonna cost a lot of money to get it off the ground? Uh no, I I mean I I had launched uh a number of projects before. It was probably gonna be uh a few hundred to to thousand dollars and I think we were splitting. I I think it was in that email too. A few hundred dollars to a thousand a few thousand dollars, you're saying? Yeah. That was it. Yeah. Why was it so cheap? Is it because uh is it because

normally the biggest fees would go towards a software engineer and Sam, you were basically the software engineer. I think this was the case. You know, I grew up in the area with startups where where you had to uh rent hardware and setups your servers and co-locations. But by this point Several years after that.

uh you could launch an entire service off in the cloud. And that began with, you know, the Facebook yeah apps and and and iPhone apps. And so By this era. You could launch very cheaply. And then sort of scale up as needed. And for us You know, our the dreamland that I had in mind around what we were gonna do was

Uh uh Jack obviously had had a huge plan to launch to his whole audience. And on top of that. He had this whole network of artists and creators, and we're gonna be launching on day one with just millions. of uh of fans and and artists talking about how uh you could support them on Patreon. And so I wasn't even thinking about how we needed money. And that was through that would be Jack through the Pomplamous Webs um YouTube channel.

Essentially. Yeah, in other words we were gonna We were gonna n not popular this is gonna be my personal uh YouTube channel, which was you know, where I was uploading all that electronic stuff. And so I was I uh Yeah, the plan was like I'll put up a YouTube video on my YouTube channel, send my fans over to Patreon, and that's kinda how we'll start. We also you know, I I I did want to launch with a bunch of other artists, as Sam mentioned, so we

We made a list. Of like Forty. Forty or so creative. No these are not like world famous creators, right? These are just people who have like

mm pretty strong local small followings. Folks who I thought like, Hey, you're in the same boat that I'm in right now. And um let's like let's do this. Let's I like I think this could be valuable to you. And so Yeah, we made an Excel spreadsheet with all with those folks and I found their contact info and

Um reached out to all Forty of them and uh and and All forty of them said no. All forty of them said no. All forty of them said no. They were like no, I don't feel comfortable asking people to pay me money. Crickets, yeah. Were you surprised? I was surprised.

But I wasn't um I 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 okay, let's let's do it ourselves. Let's launch with me and and my roommate also wanted to launch. Lauren O'Connell was one of the first three creators on Patreon. And Natalie wanted to launch too. So the three of us yeah, my my girlfriend at the time. So we we launched with just the three of us on day one of Patreon. And and the idea was You would take this this video. for pedals, the song that you're working on. And that's where you would premiere it. You would premiere this video

on YouTube or whatever, to get people to to go to Patreon um and support this video. At the end of the pedals video, I Where I

The idea. And I said, Hey I'm Building this new thing. And I don't think it's just

gonna help me, I think it could help a lot of people. 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 on March Six. two thousand thirteen. We launch in May? I think Jack. In May. Wow.

Yeah. So really quickly. Yeah. We didn't have all the pieces there when we launched. But we had It was good. We had enough, yeah. We couldn't, for example Um We couldn't

process all the payments at that time yet? I I hadn't hook any of that up. We could accept your credit card. And so that would get uh saved, you know, very securely, by the way, because we were working at Stripe, but we hadn't built any of the logic to actually handle the the processing of the funds. And and what did you ask for, Jack, in in the video? You said hey Whatever you can do just to to to fund my work, um please contribute. I think I had four tiers. Yep. A dollar. Five dollars, ten dollars, and then

The night before. I thought Screw it, I'm gonna put up a hundred dollar tier. No one's gonna buy it, but I'll just do that. Um where you can kinda 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 dollar tier, a bunch of people signed up for the five and the ten dollar tier. The average

payment per patron was around seven bucks, um, 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 c uh yeah, I couldn't believe that. Yeah. 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 gave a hundred. What what what'd you get? 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 uh first dibs on concert tickets and video tutorials about audio production. I I just make these little extra tutorials and give folks access to them. And then uh ten dollars was

a a Google Hangout once a month with me and all ten dollar patrons and then the hundred dollars Was the Skype sessions. So how much did you did you get fans to commit to Paying you for a month. Within the first couple of weeks I passed five thousand dollars a month.

Wow. 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 a hundred thousand dollars a year for my solo career. And Jack, did you envision continuing your career as a musician and You know, continuing making music and and Building your fan base.

In addition to doing this, or we not quite Was it not quite fully thought? That through yet. It was not strategic. There wasn't a five year plan. There wasn't a strategy deck. It was just m solving a problem. Um

And uh And so I don't know that I that I had a a clear vision about how the next year was gonna go. I knew that we needed to build this thing. I knew that it was gonna be a way that that artists could make money. I did think it could scale and help a lot of folks. I didn't know how much work that was gonna be. When you had You know, you reach out to forty people to to sign up and all of a sudden 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. When we launched and and this is how Patreon ended up growing. I went onto my YouTube channel. I told all my fans about Patreon.

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 Patreon page and they saw this random middle of the road YouTuber making six figures. They had that same mind blow moment that I had had two years before when Lauren launched her Kickstarter.

And they saw a new revenue model for Profession creativity. And then those folks launched on Patreon and then they did the same thing. They went on to YouTube and they went onto their podcasts and they went on to you know th they they wrote on their websites and then that cycle just repeated. And that's actually responsible for most of Patreon's growth is that viral product cycle. And and was the business model that you had kind of set in stone from the get go,'cause initially I think it was like

you would take uh Patreon would take ten percent, so five percent uh pl platform fee and then five percent uh payment processing fee. 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. Jack, Jack, do we do the math? No

No, there's there was zero projections, there was zero No spreadsheets. No spreadsheets, no math. Th 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, FP and A and and finance teams and we're forecasting out multiple years and but that's yeah, back then, no, we didn't have any of that. We didn't think about any of that. We were just Making this thing. Just had all these emails that we had received uh from artists and and fans about how exciting the idea was. So we weren't really thinking about like the all the viability of the business jet that point still. And then I guess a month after you guys launch you decide, all right, now let's go. get some money. And and Sam, you had already been through this process. You had already

you'd been through the process of raising some money for your previous startup. Yeah, I actually was pretty optimistic and excited about uh this fundraising process. Again This came back from the emails and the feedback and and the creators and the fans uh in a way that Again, several years of me trying to build things had never seen this sort of passion uh around in a movement or an idea.

And so You know, at the time again I I I'm naive even looking back, uh it felt like in the bag. And so we we start off and we started uh pitching to investors. And h how much money were you guys able to raise for the for the first round? At the time the the um the co I think at that round the company was valued at six million. And so we ended up raising that first round ended up being uh two point one million at a six million valuation. So it was, you know

About a third. Right. And uh'cause you know, this is an important conversation to have'cause a lot of entrepreneurs listen to the show and and we've had founders on the show who've said, Biggest mistake of my life. you know, Tristan Walker will say, B I should never have raised money. Uh, other founders said who say I it was so important, so glad I did it, I got support and guidance, um and I couldn't have built this without

going to venture capitalists and and taking the money. Um W w was it absolutely necessary? Could you have done Patreon without raising money? I I don't believe so, Jack. I I think we needed that team. um uh in in the early days as as we were building it out. Uh plus I think uh the partners that that we ended up working with

Uh we're very much aligned with the spirit of our v our mission. And uh we haven't talked a lot about that, but at the time uh this idea that we were trying to get artists and creators paid That ended up filtering out a a bunch of various investors who just didn't even want to touch the space of um music or or art in particular.

Yeah, I think it was really important. Um I I don't think Patreon Not I don't think. Gotten close.

without that. I mean even from that first day. Patreon started growing a lot. And um You know, we needed to hire people to answer emails and um and help build features and scale the company and we would not have been able to

Afford that. Without raising money. Alright, so you guys raised two point one million dollars. And uh what do you do with that? Do you get an office? Do you get uh do you start hiring people? What what do you start doing with it? Oh really? Yeah, we got home office in in Noy in San Francisco. We got an office in Noe Valley. Yeah, it was a two bedroom apartment.

And We moved in together. And uh at that point we um hired uh Tyler Palmer, who was the first employee.

And he hired a couple of folks Cole and Tony who started building out uh the basically the like the artist relations and the marketing and the um and and the operations customer service side of the business. Yeah. It was just our bedrooms and then it was attached. Yeah, out into the kitchen where we set up a few desks and they would come in every day and Jack and I would wake up and walk out into the office.

So initially the first I don't know, th I mean, you're getting more and more people to sign up, but from what I understand, like Even with the ten percent fee, the processing and platform fees. Uh it wasn't covering your costs. Yeah, no, I mean we we were not profitable. Um I mean five percent of of the ten percent, by the way, w wasn't It didn't go to us, right? For you guys 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 have a low Uh

Rake. And so yeah, even you know, when the company was Processing a hundred thousand bucks, that's only five grand for the company. So I mean how I mean'cause you had a runway, two point one million dollars.

And that was gonna 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, Ja even after we fundraised, Jack didn't take any salary. Actually I I don't think I took any salary on the first s uh a round either until until after our second round. Um and we We we didn't spend much. That's why we rented a Uh home as opposed to an actual office.

So we didn't end up running out of that. uh money we we had more than I think a a year of runway left as we saw the business ramping up and then went on to raise uh I guess a much more serious uh series A round. That was in twenty fourteen. In twenty yeah, twenty fourteen we raised the

the fifteen million dollar round. Meanwhile. Check um You are the CEO of the company and I'm curious how you kind of

figured out how to do that job. Um because you were I mean, you're a musician and you've got this want to pursue. Like how did you like first of all, w at what point did you were able to say Okay, I can't I actually cannot pursue music full time. Like I can't like I

I kind of have to make this 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. In a couple of years. into the company.

It became very clear. That's it. I 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 Hur. By choosing to

To focus. on Patreon. And the moment where I basically Stopped working on

Popness and took a salary as CEO. Um That was a tough moment because I felt I was one of those kids in my twenties who's like, I am not gonna be an artist in my twenties and grow up to be a business person in my thirties. That is not the kind of person that I am. I'm gonna stay an artist in my life. Um And

And then I found myself Running a business. Yeah. Um And and

And so when you were I mean Like a year into this. Um You had no no kind of no standards, right? Like you didn't have

you know, any particular rules around who could join Um What happened? in in twenty fourteen that changed that. Um that that that kind of was like a shot in the arm.

I mean where you guys are like Wait a minute, we need to have some kind of standards here. The the thing that caused the debate. Uh was Uh a website called eight channels.

That launched on Patreon. Yeah. And they were using Patreon to fund the development of the site. And you started to look at the site and you saw crazy, crazy stuff. Yeah, I mean there there was, you know

Uh sexualized depictions of minors and things that we F just from a values perspective. It felt like uh That we should be.

There should be something in place to to stop this from from happening. So what did you do? Well I I recall this distinctly because uh Looking back, I I'm sort of on the wrong side of history of this. But I remember

Uh feeling like hey, we had not sort of d 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 uh On the call with with the I guess the founder of H N at the time. And he lives in like the Philippines or something, I think. That's right, yeah. Um

And in my mind and and through Yeah, the conversation with him too. The What was going on was Uh

He had built out a platform that was like very heavily Emphasizing free speech. And he wanted to take down uh the things that were breaking the law. At least this is how you represent it to me and that's why I was sympathetic to it at the time.

And I was concerned about R ask. of creators to Uh if they didn't have the intention. To be uploading these, you know.

I agree with like just terrible things. Um Like how we could still support them, uh, in terms of uh the business that they were building or or the art that they were trying to get shared. Yeah. I mean, this is really interesting because this is really the beginnings of

certain people Weaponizing. 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 um you know, prevent tyranny. But but posting photos of children Uh or or even You know. horrendously vicious and dangerous conspiracy theories is not

What that's about. But but it's easy to man I I imagine it would have been easy for him to manipulate somebody like you With the argument that it's about free speech. There were other things that we had to Talk to him about too, right? Um

There was There were communities that were sort of thriving there, spreading hate. And so It it started us really going down this path of like When there is real world harm.

Um And and people getting hurt. Uh what is what is our role. And responsibility. And I think that's where we started figuring out that we we wanted healthy communities and and we would have to lay out these guidelines in a very specific way.

So how did you begin to write them down? What did you do? Did you like bring in an um a lawyer or outside advisors or I mean'cause I imagine both of you guys had really good intentions. Like if I'm in the company, I'm gonna be sitting there 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 H Chan community was probably generating significant revenue for you.

So The yeah, the investors are are super helpful here besides just the money. They connect us to people who had worked on these types of problems before. Reddit had dealt with stuff like this. Um, Facebook

had to deal with stuff like this. Still does. And still does. And uh And we got connected through those investors to um uh I I wishes to to remain anonymous even to this day. He built these

very massive um content policy and and trust and safety and enforcement systems. And um He worked with us for a period of two months to draft the first version of what became Patreon's content policy, which was turned out to be about forty pages was the first version of it. And To tell you the truth, that was one of the Most horrific. Why because

The internet is a 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 okay with supporting and and what are we not? Um And then content policy is like anything else at a company. It's it's a it's a living, breathing thing that you iterate on and it changes over time. But that first version, um, you know, and the creation of that first version was a very difficult Two months. Difficult because It y you had to make Specific choices about what you would adj

Excepting what you wouldn't accept? There are two reasons. The first was Sam and I This was one of the first moments where we had fundamental disagreements about the business. And so It was

challenging our relationship in a way that we hadn't Is that fair, Sam? Like we Yeah, 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. And in particular, too, we hadn't come up with even a framework for how we would get through these decisions. We were bringing in I remember there were all these sessions where we would just bring in everyone from the company and there were all these different, like disparate uh opinions and we couldn't figure out how to put them together. uh because people were very divided even internally.

Uh and and I think all of this just became very exhausting for both of us. So how did you what did you come up with? What was the policy you came up with? The the end state of this project, working with this outside person that helped us, you know, write the

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 you can't define porn, you just kinda know it when you see it.

Um I beg to differ. You can define porn. We have spent quite a lot of time defining porn in way more detail than probably anyone wants to hear about or go into. Um, and then do that across everything. Weapons manufacturing. Hate speech. What is harassment? You know, th 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. Yeah, I I think

The perspective I always liked, I I don't remember uh 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 and not increasing them, uh like some communities Would be doing. And so

Guided with that. Uh I think, you know, we we're constantly as Jack noted, it was an evolving Document. But Uh at least we 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 he didn't support the policy. He said, you know, that that that that it violated Free speech. And and and and I you I presumably you talked to Sam uh about this when he decided to leave. Well I talked with Sam.

many times, you know, he's such an incredible thinker. I respect him so much. And You know, I was very clear about our logic and um And why

you know, why we have to have a content policy. Um And I think These things are complicated if you're not inside a company. I think look, th things have Over the last few years it's become very, very clear, I think, to m to people why companies need to have a content policy. But at the time, his reasoning was

The first amendment should do it. Um that's That should be the policy. And uh And yeah, I mean we we disagreed. So and and we weren't going to um You know, we weren't going to

Change our minds to to keep two or three creators, um, as as painful as that was But again like I am really proud. of our content policy.

I think more folks you know, should should do that. Um, especially like emerging tech companies. Um, I I wish more folks did that. Um so so look, it's a it's a bummer and and I I I wish I'd like to do it. Sam was raising money on Patreon. His pitch was awesome and straight from the heart and right on. Um

But sometimes, you know, you have values based disagreements like that and uh and that's what happens. Putting out any idea into the world, especially a a platform like this, is gonna create friction, right? Even though your intentions are good and By and large, it serves people well. There are gonna be critics. That's normal. That's part of the process. Our show gets criticized. Um and you have been criticized uh for a variety of reasons. Let me just start with one of them. Um a critique is that actually almost nobody on the platform makes

um a serious living. Uh there was a an article that came out in twenty seventeen, I think it was called No One Makes a Living on Patreon. You know, it said something like, you know, eighty percent of the creators who shared what they earn make lessen the federal minimum wage. Yeah, I'm not sure that's criticism as as much as just as like a a a statement. Uh per perhaps it was meant as criticism, but like Patreon I think is solving a very specific, clear problem. One of the problems it's not solving is Um

The demand curve. We can't solve supply and demand. Um we're we're also not solving helping everybody Uh find You know, new fans. Yeah. These are really hard problems that other companies do way better than us right now, actually. Um

And we were very narrow in our focus of what problem are we trying to solve. And the and the very specific problem that Patreon set out to solve early was Um So you're a creator? You're reaching millions of people and you're getting paid a hundred bucks a month in ad revenue. Great.

Patreon is the platform for you. Um but if you're not reaching a a a million people, or or it doesn't have to be a million, but if you don't have an audience Um, actually Patreon doesn't work so well for you at all. And so I I think it's totally fair to like 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 gonna come onto Patreon without having found a thing that that you know resonates with people, um, you know, that's that's not a problem that our product solves.

And and I actually if we were to try to solve that, it would be incredibly defocusing and I think we'd end up doing worse at at our mission. Um and at the end of the day You know, the the thing is there are now tens and tens of thousands of of creators who are you know, making a lot of money on the platform and and building media companies and l and leasing office space and hiring teams and now there are creators making, you know, millions of dollars a year on Patreon. So Um But we're not

You know, we're not gonna solve the product market fit problem for folks. So one of the challenges that that you guys have had to deal with Um over the years is how to roll out uh 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. But a few years ago uh you you you kinda ran into some trouble when you announced that you were you were gonna shift the the way that that

processing fees were were being handled. So I I guess instead of the the creators pay the processing fees, the patrons would have to pay them on top of a of the subscription fees that they were already paying. And uh and and that caused a backlash, right? There were yeah, the so the that Y you were very kind about it, thank you. Describing the backlash about patrons paying fees. That was the worst product roll out in the history of the company. And it was I mean backlash

doesn't begin to describe how it felt from the inside. I mean there was A Tweet. at me every two to three seconds for s probably seventy two hours. Um You know, equating me to

uh the devil. I mean it was it was I it was s very Uh uh anxiety inducing. No, it's it's the opposite of fun. Um But

But We learned so Much. Um About

You know Art. Community and Um product development and

Um and communication and uh and and how to talk to our creators. And so the next time we we rolled out something like that. You know, we literally talked to over a thousand creators. First.

Which we did not do. That time. Um we did A B tests. And like we got the data. And the data showed that actually it was a great thing.

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

Have you become profitable yet? Sam, are we talking about profitability? I I'll Also yeah, so no, Patreon's not profitable. It's tracking toward profitability. We're burning money every month, but uh actually the business is like very healthy. The financials are are very healthy and and to help the business, um I I guess last year you rolled out a a new payment plan um for 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 twelve percent of the income that that they get from the site, is that right? Yeah. This new plan the the the the three creator plans that we rolled out have amazing adoption. Creators um are are you know opting into those those

uh more feature rich products and um and so it's it actually has like Change. the business. So like we're gonna keep adding features to those. So I mean if we're gonna keep building out the product and building more things. Um but But I I think very you know, very clearly, like, yes, this is this worked. This allows us to like scale and be healthy and be a long term meaningful company. And how many how many um creators are on the platform now? Uh hundreds of thousands, right? It's a little over Two hundred thousand. Yeah.

We're getting paid. I mean I imagine that that this Covid Yeah. has been um a uh A blessing for I mean it's n 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 in coffee houses and you're not you know, it's not like stadium level bands are going on Patreon, but but people who Might play to a hundred people.

Now they can't do it. Have you had a massive spike in people onboarding? I mean, yes, w it's it's been it's been um 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 uh you know

it is true that it has benefited Patreon and and that dichotomy is very strange for me. Like I th I think the the way I'm I'm trying to think about it is like I'm glad something like Patreon exists to catch creative people right now in the in a moment like this. So f for example, AEG Live Nation both canceled global touring operations. So very suddenly there are these creators who were looking forward at a year or two of, you know, tour and hundreds of thousands or millions or tens of millions of dollars of touring revenue that evaporated Over Yeah. And so the 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 and in podcasting and music and things like that, but um but also patrons like stepping up and really doing their part. Um I think a lot of people are looking for a way to help right now and and patrons are too. And th there's like a really easy way that they can. W when you guys think about um you know this path and where you are today. Um, how much do you think that it has to do with the with your intelligence, skill, hard work and and and how much of it is just luck? I I mean

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

It was gonna be Someone else. And so In a lot of ways. Uh

At least personally. I I feel like very appreciative. Of Sort of the You could call it luck too, uh of the timing and and the opportunity.

Uh to to do this. I also think just to to the general point of your your question. Like we wouldn't have been able to make it. If we didn't work.

uh extremely hard from the get go. Yeah. You know I I've done a a thousand things in my life.

you know, hundred and and ninety nine of them haven't worked. Patreon was one that happened to work. Um was I Smarter or did I make better decisions with the patient like No I mean it just was like there's a lot of Happenstance and circumstance and And

You know, killed ourselves to like to to to you know do it, of course. But I I love this attitude too, because it 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? Of both creators and and the opportunity and and even our teams. um that are helping us along uh on on this mission. Uh, and I I think we take that very seriously.

And by the way, one thing um 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. I mean because I mean you've i 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. Um 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 or do you just n not care? Oh God, I I mean we would never

J like judge the quality of somebody's art and have that be an input into a decision whether to include them in in Pay Show like that, that we would of course never ever do anything like that. I actually find it so awesome too if there's something so tiny niche that only like a handful of people's passionately care about, 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 yeah, like Jack said, like why why in the world would we ever care about that? I mean we the the the beautiful thing about the internet is that P 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. Um like Great! On the internet, there are literally millions of people who will like your stuff 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 of humanity to to to be connected like that.

That's Jack Conti and Sam Yam. Co founders. of Patreon. What is the weirdest Most niche.

Patreon. Site. creator that you've seen. Like just the most odd Nee. thing that you can think of. One of my favorite examples of this was just like I don't get ASMR at all. I don't get it. Like it doesn't work for me. You don't get it.

Not at all. My brain is not tingling, right? I'm getting the tinglys guys, I don't know what you're talking about. You have ASMR people on on there? Yeah, it does really well. 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 ASMR Patreon. 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, our email address is hibt at npr.org. If you want to follow us on Twitter, we're at how I built this or I'm at guyRaz. Also on Instagram, you can follow me at guy. This episode was produced by Rachel Faulkner with music composed by Romteen Arab Lui. Thanks also to Liz Metzger, Dereth Gales, JC Howard, Julia Carney, Neva Grant, and Jeff Rogers. Our intern is Faris Afari.

I'm Guy Raz, and you've been listening to how I built this. This is NPR.

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