Venture capitalist Li Jin coined the phrase “passion economy” to describe a growing segment of businesses whose offerings highlight the individuality of their creators.
- Atelier Ventures managing partner Li Jin coined the phrase ‘the passion economy’ last October, in an article identifying an emerging trend in the entrepreneurial landscape.
- According to Jin, the passion economy describes a business ecosystem in which entrepreneurs create products and offer services whose value is largely based on the expertise of their maker.
- According to Jin, a handful of companies –– including Substack, Patreon, OnlyFans, Etsy, Twitch, Cameo, and Shopify –– embody the passion economy.
- To thrive in the passion economy, Jin recommends founders determine what unique skill sets they have that can also fill a market need and use social media as a discovery mechanism.
- While the passion economy refers to businesses selling either physical goods or digital services, the ‘creator economy’ refers specifically to entrepreneurs who exclusively produce digital content.
- Visit Business Insider’s homepage for more stories.
Leagues from corporate conformity, an economy of creators are using new platforms to cash in on their individuality and unique skill sets. They make money writing newsletters on Substack; selling exclusive, often NSFW content on OnlyFans; setting up paywalls on Patreon to charge for content; and building ecommerce sites on Shopify.
These entrepreneurs are all part of the “passion economy,” a phrase coined in an article by Li Jin, then a partner at the venture capital firm Andreessen Horowitz. Jin identified this shift in the business landscape a year before the pandemic forced everyone to work from home, creating a corresponding boom in online businesses. But the practice is older than that — a study of nine passion-economy platforms found that 17 million Americans made almost $7 billion from their independent creations in 2017, a number that has likely seen significant growth since then.
“The passion economy allows individuals to monetize their uniqueness and lean into their individuality in order to make an income,” Jin told Business Insider.
Below are key takeaways from a conversation with Jin, including advice for entrepreneurs looking to capitalize on this next iteration in the world of work.
The passion economy treats idiosyncrasy as a feature, not a bug, and counts on personality to produce value.
All founders should aim to create something they care about, for which there is also a market demand.
Jin says that passion economy creators, in particular, should focus on something they do well and unlike anyone else. Starting there, she says, builds a moat of individuality around your offering. After all, the passion economy describes entrepreneurs who create products and offer services based on their area of expertise. Cameo‘s appeal, for instance, rests on giving consumers the opportunity to receive a bespoke video recorded by celebrities whom they admire.
“Creators have to identify what they’re uniquely good at. Not just what people would want to purchase and pay for,” said Jin.
Economic journalist and “Planet Money” cofounder Adam Davidson wrote in his book on the topic that the concept of the passion economy marries the critical innovations of the 19th and 20th centuries — artisanry and commoditization, respectively — and adds the reach afforded by the internet. In effect, the term refers to entrepreneurs offering individualized products or services, at scale.
Jin left the venture capital firm Andreessen Horowitz in June 2020 to start Atelier Ventures.
This is different from the gig economy, which turns workers into turnkey laborers for companies like Uber. Unlike in the gig economy, where services are performed by interchangeable workers, passion-economy companies like Cameo predicate their appeal on the individuality of its creators. The who is as important as the what.
The passion economy also houses within it the creator economy, a term that refers to entrepreneurs whose products or services are exclusively digital. Whereas passion-economy players, like Etsy, can deal in physical goods, creator-economy companies, like Substack, only produce digital content, such as writing, videos, music, podcasts, etc.
The passion economy presents specific challenges and opportunities, and is embodied by a handful of digital businesses.
Jin is optimistic about the possibilities the passion economy holds for the larger economic landscape. Passion-economy platforms give more people the ability to monetize their skill sets, says Jin, a democratizing function that benefits laborers.
“I have to believe that the universe of people who are able to unlock the economic value that is tied up in their skill sets expands as these new platforms become more accessible,” said Jin.
However, exchanging structural supports like health care and legal protection for freedom and opportunity has long been a part of the entrepreneurial bargain, and these creators are no different.
Of the companies like Substack, Patreon, OnlyFans, Etsy, Twitch, Cameo, and Shopify that embody the passion-economy ethos, some have begun taking steps to mitigate the disadvantages that come with “solopreneurship.” The newsletter platform Substack has begun experimenting with offering some of its writers a degree of legal protection, something lone journalists would have traditionally forfeited when going solo. Efforts like these reduce the barrier to entry for the “entreprecurious,” making the leap of entrepreneurship feel more like a hop.
To succeed in the passion economy, entrepreneurs must make savvy use of digital platforms.
In the creator economy, social media acts as the top of the marketing funnel for creators. Content-based entrepreneurs routinely use the most mainstream platforms like Instagram and YouTube to attract fans, then entice their most dedicated followers to sites like Patreon or Substack, where they can charge them money in exchange for additional content.
The creator economy would struggle to survive in the absence of social media, as major social sites provide the critical function of discovery. As a result, says Jin, the creator economy and social media platforms have an interconnected relationship.
“There’s like a symbiotic relationship between social media platforms and many of these ‘solopreneurs,’ who are trying to build out their customer base,” said Jin.
The future of the passion economy lies in finding new ways for solopreneurs to collaborate and discovering new purposes for existing technologies.
Because the creator economy makes solopreneurship simpler, Jin is interested in the implications that will stem from a growing number of individual entrepreneurs: Where will they work, how will they collaborate, what software will they use?
“In a post-company world, when more people are self-employed, there is still going to be a need for social structures that facilitate interaction,” said Jin.
Likewise, she is interested in how creators will repurpose existing technologies to better suit their needs. Even an old technology like email, says Jin, which has experienced a renaissance of interest thanks to the rise of the newsletter economy, can play a critical new role in the creator economy.
Jin is ready for the next, she says, “What comes next?”
She has one idea. Stir is a service that lets creators on new online platforms manage their businesses, and Jin is an investor. The company caters to creator-economy players who want a one-stop platform for communicating, collaborating, and working with each other. According to reporting from Axios, Stir has raised $4 million in seed funding.
“I’m interested in finding out what, besides newsletters, is a format that people can use to monetize their knowledge and expertise,” said Jin.
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