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We’ve Raised $60M in New Funding

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Re: We’ve Raised $60M in New Funding

#51

Post by countdownnet »

replicatorblog wrote: post #41
countdownnet wrote: post #18

For those wondering why Patreon went for more funding even though they should make about $7.5 million this year from the 5% fee they charge: They are growing faster than their current cash flow can handle and need to increase their staff beyond the 70+ they already employ. They are still a "young startup" where they can get this sort of funding where a standard growing business would get a loan.

There are a lot of unsatisfying answers to this question on the thread. Put another way, why does Patreon need $60M when Kickstarter grew to 134 FTEs on $10M investment? + Is it that Patreon is managed worse? + That the ecosystem has changed in the last few years? + Are they trying to do something substantively more intensive than Kickstarter?

On the surface Kickstarter and Patreon may look the same, but they are quite different. Maybe a Google Trends graph will help: https://trends.google.com/trends/explore?date=all&q=kickstar...

Patreon has a slow and steady growth rate, while Kickstarter grew quite rapidly gaining a lot of press from big campaigns brining in huge amounts of money all at once(where Kickstarter got a huge influx of cash each time a 30-day campaign completed). For Patreon, people are more hesitant to sign-up for a subscription type expense. After a popular creator starts a Patreon and gets that initial boost, the growth rate for them is quite linear.

A large Patreon campaign of $60K/month nets Patreon $3,000 while a large Kickstarter campaign of $3M nets Kickstarter $150,000.

Re: We’ve Raised $60M in New Funding

#52

Post by rdiddly »

probably_wrong wrote: post #4

Could someone explain why Patreon needs to raise funding? I thought a service built with the express concept of collecting money (and a very popular service at that) wouldn't need external funding. Also, in an unrelated point, > I had been making YouTube videos with my band, Pomplamoose Finally! I thought I was crazy for thinking it was the same guy. If you haven't listened to his band, you definitely should.

They want to hire more people and do things even faster!!!!!!!! The breathless hyperbole in this announcement is itself a bad sign in my book, but my main worry is that just looking at the photo, the team already looks plenty big. Much bigger than that, and you run into the well-known "negative network effects," namely communication chaos. Then you have to set up a (for some people "stifling") corporate hierarchy and cease to be nimble.

Accepting outside funding is a Faustian bargain because those investors want scale, scale, S C A L E!! So now I'm worried about this company and this fairly awesome concept they've implemented. I would focus this company on slower growth with attention to continuous profitability. And if there's something you can't do with 80 friggin people (which seems hard to imagine), then put that shit in the backlog and get to it when you get to it. The core idea is sound, focus on that. But nobody asked me! :)

Re: We’ve Raised $60M in New Funding

#53

Post by kypro »

otakucode wrote: post #33

I love Patreon but am scared for them. As more and more YouTube creators find it untenable to survive on revenue from YouTube (which is something YouTube wants to happen, IMO) and they turn to Patreon... that puts Google in a difficult position, serving basically as the free-cost video host for those creators who likely won't bother putting ads on those videos either. And if Google makes a big to buy Patreon, I REALL…

I don't think that's likely. Here's why:

YouTube doesn't have to worry about major competitors because of the network effect. If it bans people from YouTube, where are they going to go? To a competitor video site no one uses? Sure, they could, but they're not going to have much success considering how unlikely it is that their entire audience will go through the hassle of signing up for the competitor's service and then remaining active on it (while likely still using YouTube) just to watch one person's content.

But with Patreon there isn't a similar network effect at play. You just log in and subscribe as a Patreon. There's no real need to log in every day, or week. There is no additional benefit you get from it being the largest service of it's kind either. So if Google did buy Patreon and they did start banning people, I don't see much reason why someone couldn't just create a successful clone. Creators would even have a reason to use the new service over Patreon given they'd be less likely to loss their revenue stream by simply linking their audience to the new competitor site instead. Sam Harris recently started pointing his audience to his own donation service instead of Patreon for this reason, there really is no real cost to either the creator or subscriber doing this, I'd guess Sam probably even takes a larger cut of the donation money.

Re: We’ve Raised $60M in New Funding

#54

Post by dkersten »

shevy wrote: post #40
dkersten wrote: post #32

Earlier quoted context omitted.

Really? I've not yet seen any software projects on patreon.

Many twitch streamers prefer patreon. I have no idea; just stating that I noticed it when watching some twitch events.

Twitch and YouTube streamers - sure. I see a lot of them. But, software projects? Or so you mean these streamers are streaming while they code or whatever?

Re: We’ve Raised $60M in New Funding

#55

Post by dkersten »

countdownnet wrote: post #35
dkersten wrote: post #32

Earlier quoted context omitted.

Really? I've not yet seen any software projects on patreon.

https://www.reddit.com/r/linux/comments/5omtvg/patreons_to_s...

Oh wow. That's a surprisingly long list. As someone who actively backs multiple people on patreon, I'm surprised that I didn't see this before now.

Re: We’ve Raised $60M in New Funding

#56

Post by replicatorblog »

countdownnet wrote: post #51
replicatorblog wrote: post #41

Earlier quoted context omitted.

There are a lot of unsatisfying answers to this question on the thread. Put another way, why does Patreon need $60M when Kickstarter grew to 134 FTEs on $10M investment? + Is it that Patreon is managed worse? + That the ecosystem has changed in the last few years? + Are they trying to do something substantively more intensive than Kickstarter?

On the surface Kickstarter and Patreon may look the same, but they are quite different. Maybe a Google Trends graph will help: https://trends.google.com/trends/explore?date=all&q=kickstar... Patreon has a slow and steady growth rate, while Kickstarter grew quite rapidly gaining a lot of press from big campaigns brining in huge amounts of money all at once(where Kickstarter got a huge influx of cash each time a 30-day…

That's a really good point. There's no million dollar Patreon yet. Assuming scale and steady-state, Patreon will have a much more impressive model with a predictable month to month revenue stream.

Re: We’ve Raised $60M in New Funding

#57

Post by wikwocket »

robotresearcher wrote: post #25
countdownnet wrote: post #18

For those wondering why Patreon went for more funding even though they should make about $7.5 million this year from the 5% fee they charge: They are growing faster than their current cash flow can handle and need to increase their staff beyond the 70+ they already employ. They are still a "young startup" where they can get this sort of funding where a standard growing business would get a loan.

Naive question: what are all those people doing?

Based on comments on HN, people are surprised that a company that "just runs a website" can employ "so many people." But this is a platform processing hundreds of millions of dollars among hundreds of thousands of users.

Here's a rough sketch of possible headcount. I'm making these numbers up, but maybe you can see how it does take a lot of work to make a business like this work.

    - Engineering
    - 5 - frontend dev/QA (web, tablet, responsive, A/B tests)
    - 5 - backend dev/QA (app logic, video/content hosting, scaling up & out)
    - 5 - payments dev/QA (payments is huge and complicated, probably a few payment processor partners)
    - 5 - app dev/QA (iOS and Android)
    - 5 - product owners (web, 2 apps, email, internal tools for agents etc)
    - 5 - management (cto, engr manager, director etc)
    - Business
    - 5 - creator experience, patron experience, outreach, community
    - 5 - marketing, advertising, lifecycle email and email campaigns
    - 5 - partnerships, relations with big creators, collaborations
    - 5 - fraud detection and remediation (fraud is huge, chargebacks are expensive, and the ability to charge $1 to test cards attracts fraudsters)
    - Operations
    - 20 - agents handling creator/patron requests/issues (more if 24/7 or multiple languages)
    - 5 - ops/systems (keep everything running, downtime means less income)
    - 5 - HR, recruiting, accounting, etc
This is probably under-representing the business side since I am from the engineering side. Also it looks like they are hiring more people for all these teams. If you want more info, you can always look up Patreon's job openings: https://angel.co/patreon/jobs https://boards.greenhouse.io/patreon#.WcFitC-6z-Y https://www.glassdoor.com/Jobs/Patreon-Jobs-E915057.htm

Re: We’ve Raised $60M in New Funding

#58

Post by rockarage »

countdownnet wrote: post #18

For those wondering why Patreon went for more funding even though they should make about $7.5 million this year from the 5% fee they charge: They are growing faster than their current cash flow can handle and need to increase their staff beyond the 70+ they already employ. They are still a "young startup" where they can get this sort of funding where a standard growing business would get a loan.

If they are growing faster than the current cash flow can handle, there is a problem with their business model. Growth for this type of service business should bring profits not losses. This is not exciting news for the creators on Patreon, if anything they should be concerned.

Re: We’ve Raised $60M in New Funding

#59

Post by rockarage »

eganist wrote: post #26
stingraycharles wrote: post #23

Earlier quoted context omitted.

This still doesn't strike me as a very satisfying answer. "growing faster than their current clash flow can handle" can also be phrased as "they are spending too much money". Big investments always raise big expectations, and can ruin a perfectly fine business (model). Why are they spending more than they earn ? At this valuation, it seems like they are going to need a unicorn exit at some point. How are they plannin…

Business loans are granted all the time on the basis that a company demonstrating profit or a plan to reach profitability (this scenario is more constrained) should theoretically be able to pay the loans back. Investment rounds are similar in this way but tend to address the "plan to reach profitability" or "plan to exit" scenarios more directly than a loan might. Patreon's making money, but Patreon needs to stay ahe…

A good software service company does not need to raise so much money to accelerate their growth. Raising more money won't prevent them from being disrupted by a competing implementation. We can argue their action can invite competition from more nimble operations who can take less money from creators. Look up DistroKid, they compete with companies much larger, with far more funding, yet DistroKid is doing very well as a business.

Re: We’ve Raised $60M in New Funding

#60

Post by stcredzero »

otakucode wrote: post #43
stcredzero wrote: post #29

And there are dozens of you making over $30k per month!! Is there any way of browsing these creators? How many creators make money at the rate of $40k per year? Also, is there a typical curve that earnings follow over time?

The biggest earners are, to the best of my knowledge, mostly adult artists. Not porn stars, but artists who create erotic artwork, often for 'niche' communities. I imagine Patreon does not want to shout too loudly about that sort of thing, but I am extremely glad they are there making the world a better place. Our culture can never be made 'advertiser friendly' overall and its disgusting to see the degree of puritani…

A plurality is marked NSFW, not a majority. Also, the population of creators that make $40k per year or more is about 350.
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