Photo credit: Olivier Douliery, AFP Via Getty Images
Social media started as an online space to congregate and socialize. It has evolved to much more. The evolution includes a high-value entertainment marketplace. This marketplace is quickly attracting large advertising budgets.
This article steps through content creation -- we start by describing how content creators work in the Social Media ecosystem. We discuss how creators should prepare for a potential TikTok ban and related disruption.
We make the case for a significant content creation growth opportunity - including a supporting content creator investment thesis. We conclude with a call for content creation and investor social responsibility.
Jeff Hulett is an executive business consultant and investor. His team incubates and provides consulting services for content creators and related digital media companies.
In my role, I often get asked:
"Aren't you worried about the U.S. Government banning TikTok!?"
My short answer is:
"If handled well, banning TikTok will at most be a mild speed bump for content creators. On balance, content creators have a massive opportunity that transcends a single platform."
Feedback request:
Hulett Brothers seeks feedback on this "Seed and Scale Content Creator Investment Fund" investment thesis. After a round of feedback, we will provide a pitch deck to qualified investors. Please see this link for contact information and feedback prompts.
Table of contents:
What is content creation?
A changing advertising world
Content creators and getting a bigger slice of a growing pie
A content creator investment thesis
Appendix and Notes
1. What is content creation?
Content creators are mostly individuals providing “short-form content” to social media platforms. The platforms include TikTok, YouTube, Instagram, Facebook, Twitter, Snapchat, and others. The content is usually presented in compelling, 10-30 second long videos. It is designed to be consumed sequentially with other similar content. The magic is found in the platform algorithms that learn user content preferences. (The algos use a form of artificial intelligence called unsupervised machine learning) The platforms will serve content based on the algorithm’s predicted next "most likely to be watched" video. So, if you like watching “fancy-dancing poodles,” the algorithm will learn this and then show a series of similar poodle content. This way, the user is not tied to a particular creator, the social media users are served content from many poodle-focused creators.
The Anatomy of Social Media
Interactions of social media users, platforms, algorithms, and content creators
Interpreting the Algo path: The user is demanding n ordered entertainment topics. There is a supply of v videos for each of the n topics as provided by c creators. By anticipating the user's video preferences, the AI orders the supply of v videos provided by c creators for the n user's demanded ordered topics. Thus:
AI = f(Tn,Vv, Cc)
AI overcomes diminishing marginal utility: High-performing algorithms integrate our very unique human behavior called diminishing marginal utility. That is, even the most ardent dancing poodle aficionado can only take but so many dancing poodle videos! The algorithm sophistication includes interleaving the next video topic as a means to maintain the social media user's attention. The AI learns how and when to alternate topics as part of its objective to hold your attention. If the social media user becomes satiated with poodle videos, no worries, the algorithm is already interleaving other high-probability video topics to maintain the user's attention.
The dopamine trade: Yea - I know - it is a little scary as to how well algorithms have become tuned to human neurobiology and psychology. In a very real way, the AI knows us better than many people know themselves! Another finance-like name for this social media marketplace is "The dopamine trade." The trade looks like this -- content creator-based entertainment value is provided, which naturally produces a small dose of dopamine for the social media user. For that benefit, the social media user agrees to furnish their data and their exposure to the advertising. Social media users consider this a high-value trade. [i]
Dopamine is the relevant reward neurotransmitter at work creating neural pathways in your brain. Dopamine is what keeps social media users coming back for more! While a typical human brain requires the dopamine reward as part of its function, the AI brain does not. The AI brain requires data, which the person provides as part of their social media interaction. At a fundamental life level, the AI brain and the human brain both desire to reduce entropy. Reducing entropy requires energy. The human brain channels its energy, in part, via neurotransmitter-enabled synaptic growth. The AI brain channels it energy, in part, by ingesting data. Thus, there is a powerful and natural symbiosis between the person and the AI.
The neural impact of social media is similar to other addictive, dopamine-attracting consumer products -- like gambling, drinking, drugs, and smoking. In the context of a diminishing marginal utility mitigation strategy, the AI understands how to manage the content so as to optimize dopamine delivery to the social media user's brain. This is why a social media user may scroll for extended periods of time and still feel energized.
A Viral Sensation
Triggering a viral video: Another high-value question is "What makes a video go viral?" There is a direct relationship between a content creator's success, the number of followers, and the positive impact of viral videos. The more the better. A viral video helps a creator achieve success faster.
Certainly, the dopamine trade is the starting point for a viral video. But viral-ness taps into another neurotransmitter (and neurohormone) called oxytocin. Oxytocin is the tribal neurotransmitter often associated with childbirth. Oxytocin is central to a conformity-enabled community. Oxytocin is not particular about "what" is being conformed to. Conformity may include a family bond, societal laws, social norms, or social media content. Thus, for content creators, viral-ness is an expression of a community of people acting together to interact with a video. Viral-ness is a tribal reaction enabled by a collective interaction with oxytocin. Our oxytocin levels get tuned across people for something shared - like a commonly viewed creator or commonly shared interest in "fancy dancing poodles." Here is the thing about A.I., most people can still discern A.I.-generated video content from people-generated video content. The oxytocin effect leading to viral-ness is more difficult to achieve with non-human creators or non-humanistic videos.
The creativity to design the video and then the execution and adaptation of the video remain a human activity. Is it possible there will be a 'ChatGPT-like' AI that can replace human-made video content? Possibly. However, it is more likely that AI tools will augment and accelerate the video creation process long before the A.I. replaces it. A.I. creator augmentation already happens today. It is the uniquely human aspects of the videos that are essential - such as creative planning, unique ability to connect with other people, personality, enthusiasm, charisma, a compelling look (physical appearance), etc. Our unique human video content may create some distance between humans and the A.I. Later, we discuss the implications of an A.I. creating videos that users cannot discern from human-created videos - also known as passing the Turing Test. The Turing Test is discussed in the social responsibility subsection.
Oxytocin and Viral-ness explained
Do you know that feeling when you are in sync with someone? You feel connected - a bond - a kind of kinship. This is oxytocin in action. Earlier, it was said that oxytocin is our conformity-enabling tribal neurotransmitter. Next, explored is how oxytocin operates to enable viral-ness.
Our brains, in the synaptic cleft between neurons, have receptors. The receptors themselves are tuned toward a certain kind of neurotransmitter. At its core, the receptor is like a lock and the neurotransmitter is like a key. The key must fit the lock for the viral-enabling biochemical information to be passed to the next neuron. The synapse is a gateway for the neurotransmitter-generated biochemical signal. Also, our keys and locks evolve throughout our lives and impact how we learn. This is essential for how we think - and feel. Since the receptor is like a lock, if the neurotransmitter key does not fit the lock, it will fall away, unused. This is where the tuning occurs - the tuning enabling viral-ness is when multiple people have their neurotransmitter receptor locks similarly tuned to fit a cocktail of neurotransmitter keys led by oxytocin.
As an aside, our brains typically create more neurotransmitters than needed. It is the neurotransmitter receptors - the locks - that act as a thinking filter. As is typical in human evolutionary biology, it is the subtracting of what is already there, more so than the creation of what is not there, that guides our biological presentation and physiology.
Just like your neurotransmitter receptors may be tuned for that in-sync feeling with a friend, millions or billions of people may, even if ever so briefly, have their oxytocin-led receptors tuned together to cause a video to go viral. Viral-ness starts with the dopamine-enabled like. Oxytocin and the neurotransmitter receptors are part of an always-on biological mechanism to reinforce likes across populations - these are the same neurotransmitters and processes causing family bonding. This is how a community of people can all feel love, at about the same time, for a really cool video. VIral-ness also tends to cascade - like a wave. This is the incremental receptor tuning occurring as people access the platform and signal their dopamine-initiated "likes."
The specific triggering catalyst for video virality is well-studied but not fully understood. This is sometimes referred to as a dynamic "secret sauce." The content creator and investor's hunt should be to host an environment that maximizes the viral potential. Successful creators will possess a combination of criteria enabling this viral catalyst environment - along with a healthy dose of luck. This luck is where really great content meets with the right people (users), at the right place (platform), at the right time. Since this is a probabilistic game, the idea is to maximize the denominator to achieve enough viral videos to enable economic success. Social network mechanisms are where individual dopamenic responses - or "likes" - get aggregated via oxytocin-based tribal mechanisms. Social media is the social network voting platform. This social network voting platform is similar to how memes become popular or even how the English language evolves. [ii]
The investment thesis we discuss in section 4 helps identify high-potential creators and improves the chance of a creator's video going viral. Luck, or the creator's success probability, is optimized via a creator portfolio diversification and the investment optimization process. In the words of Seneca, the great stoic philosopher - "Luck is where preparation and opportunity meet." A good investment platform will help improve the creator's luck.
Admittedly, dopamine, oxytocin, and related human behavior are an unavoidable part of the investment thesis. As such, in the last part of this article, the content creator and investor's social responsibility is explored and emphasized.
Content Creators and Social Media Users
A virtuous cycle
Social Media voting and the virtuous cycle: Social media users impact the algorithms and future content by how they interact with the platform. Think of it like a form of voting. Social media users vote with view time, sharing content, liking content, or following creators. The AI learns from the social users' users voting behavior. As creators gain more followers, their content is more likely to be served to other users. It is a virtuous cycle for both the users and the content creators. The users get more and better-tailored content. The content creators receive feedback and engagement to help them adapt and build their follower base. For content creators, their most important asset is their follower base. In the investment thesis found in section 4, we discuss the challenge of properly valuing the content creators' intangible assets. [iii]
Savvy Content Creators: Content creation is a tough business. It often takes years of grinding and experimental work to build a monetizable follower base asset. Creators receive direct feedback via the platform's algorithm-enhanced voting process. Creators must be adaptable, creative, hard-working, savvy, technically proficient, disciplined, self-sacrificing, and have stamina. These criteria are necessary to navigate the platform's voting feedback content creation environment. These criteria are the necessary features of a content creator and increase the likelihood of a viral video. There is no guarantee an aspiring content creator will reach a follower base critical mass. Those that survive and thrive have an opportunity to drive significant revenue. In the investment thesis, we discuss how investors improve a content creator's chance of success.
While most creators are individuals, a small number of digital-savvy companies are starting to arise. These are teams of dedicated people working together to provide content.
A savvy content creator company example: Hulett Brothers
The Hulett Brothers is a fast-growing, global, content creation business. They started at the beginning of the pandemic. They have "crossed the chasm" to a monetizable follower base. According to their website, they have several million followers. They regularly work with well-known global brands. They have already diversified beyond TikTok.
Check out their story: A pandemic silver lining success story - the making of a global content creation business
2. A changing advertising world
This approach to entertainment has exploded in recent years, especially since the pandemic sent people home and to their smartphones. Algorithms have improved and consumer entertainment preferences have turned to demand smartphone-formatted short-form content. The next Raconteur graphic shows these trends. Social Media advertising spending is growing quickly along with smartphone usage. Social media will likely overtake search, as search ad spending plateaus. Social media may also overtake Television. TV may continue its ad spending freefall.
More important, ad spending represents a $300 BILLION pie that appears to be increasingly moving to social platforms. So the opportunity for content creators is massive. Content creators make money in a few ways:
Platform revenue: The platforms provide content creator revenue via creator funds and other means to share platform revenue. Platforms like YouTube have a well-developed revenue share model with their creators. All platforms are aggressively trying to figure out revenue-sharing models for their creators. YouTube appears to have the upper hand.
Ad revenue: Advertisers want to directly access followers and related viewers watching the creator's short-form videos. This is where creators may make substantial revenue. This occurs when a creator develops a short-form video ad on behalf of a mass-market client. In this case, the platform serves more of a content broadcast role. While there are not many statistics on the link between creator follower size and creator ad revenue, it is my experience that my creator clients increase their negotiation power as their follower base increases.
Collab revenue: Leveraging their follower base to other creators. Larger creators may create a franchise-like model to expand related content. This is a collaborative sharing model. Smaller or other affiliated creators receive connection and collaborative guidance from the collaboration creator community. Sometimes the collaboration is more of a mentorship collaboration - an established creator provides mentorship to a high-potential upstart. Sometimes, the collaboration is more among creator equals - as a way to 'mix it up' and work off each other's creative energy. Regardless of the collaboration motivation, the participating creators will get a share of the revenue generated from the collaboration. A win-win!
The overall social media short-form content ad revenue model is still relatively immature. For larger creators, this provides some advantage for them to “write the rules” as the industry matures. Thus, content creators are well-positioned to get a healthy slice of the $300 BILLION pie. The size of the pie slice is still evolving.
As mentioned earlier, TikTok is but one of many short-form social media platforms. To some degree, they are the new kid on the block. Companies like YouTube (owned by Google) and Instagram (owned by Facebook / Meta) have longer histories of monetizing digital content.
So the revenue pie is large and there are 6 or so large platform firm competitors, including TikTok. These social media platform firms are competing for a slice of a big ad revenue pie.
3. Content creators and getting a bigger slice of a growing pie
For well-positioned content creators, a platform disruption such as a U.S. TikTok ban should be no worse than a minor speed bump. Therseveralber of avenues to expand the content creator's follower base in a "growing pie" social media advertising environment. More likely, a particular social media platform disruption creates more opportunities for established creators to grow with other platforms, new platform entrants, and expand the creator's market power. Diversifying the creator's social media platforms and planning to publish content from non-U.S. domains should be at the top of the "If TikTok is banned" scenario planning risk list.
Here are the Top 6 reasons why content creators have a tremendous opportunity, even if TikTok is banned:
Social media platform users are not so concerned with the U.S. Government's stated reasons for wanting to ban TikTok – Data Privacy and National Security.
Data privacy: Most social media users understand "the dopamine trade" – some of my data and attention in return for entertainment and a dollop of dopamine. The users consider the trade as a high-value choice, not an invasion of privacy.
National Security concerns do not pass most social media users' BS test. That is, how could my interest in fancy-dancing poodles ever create a national security threat!?
From a social justice standpoint, the U.S. Government is rubbing these users the wrong way. U.S. Government actions may come across as McCarthy-era xenophobia, with racist overtones, and as a tax revenue grab for U.S.-based companies. In other words, these social media users are smart and can see through the thinly veiled, race-baiting political theater. As social media users increase, we can expect them to be more politically motivated to support social media platforms, regardless of nationality.
Even if TikTok got banned, many users would likely find a way around it. Americans have a “don’t tread on me” cultural history as codified in the U.S. Constitution and Bill of Rights. There are significant technical and legal challenges to banning social media in a free society. This will likely include first amendment challenges.
There are plenty of other platforms, so content creators will just diversify their platform usage. This is already happening. New platform entrants will seek to fill a TikTok void. All platforms need to attract content creators. Without the content, social media users have no reason to try a new platform.
The biggest U.S. Government miscalculation is the degree of U.S. consumer market power. There are over 7 billion people on the planet. There are only about 330 million people in the U.S. The global population is growing. The U.S. population is not keeping up. That means the U.S. only represents a declining 5% of the global consumer market. Most content creators I work with are global. Even those based in the U.S. will often have less than 20% of followers located in the U.S. Thus, most creators are better served by focusing on friendlier global markets. Even if the U.S. banned TikTok, it would only make a small dent in the total global followers of many content creators. The U.S. Government appears content with encouraging a declining U.S. global consumer market share. Content creators should respond accordingly. Watch and learn from the political theater... then vote with your feet.
It is relatively straightforward to broadcast social media content from anywhere in the world. So a U.S. ban on TikTok would not hinder U.S.-based content creators from distributing content. It would just happen outside a U.S. internet domain.
Will banning TikTok have a short-term impact on content creators? It may, especially for creators that have not diversified to other platforms or publish U.S. market-dependent content. More sophisticated content creators have already diversified or are quickly working on this.
An interesting unintended consequence is that the U.S. Government is calling attention to TikTok and likely enhancing overall social media platform awareness. That is - people that did not have an interest in TikTok before and were considering giving them a try, may now be more willing to do so! In effect, the U.S. Government is a marketing agent for this fast-growing social media advertising segment. The U.S. Government's actions provide an unintended gravity assist for content creators.
There is an old saying in entertainment:
“There is no bad publicity, the real enemy is apathy.”
So the U.S. Government seems to be playing into TikTok's and the broader social media community's publicity playbook. This gives TikTok lots of free publicity and time to plan its next move. TikTok and all the social media platforms are busy figuring out how to divide up a $300 BILLION pie. Savvy content creators will certainly get a healthy slice.
4. A content creator investment thesis
Content creators are already getting a slice of this growing $300 BILLION pie. Compelling content is at the heart of why a social media user would want to use a social media platform. The creator's slice could be bigger. The platforms do have a flywheel upper hand. That is, they control the content flow. However, platforms need to compete. More and better platforms will enter the marketplace over time. Content creators and related investors have a significant opportunity, especially given the decentralized nature of the current content creator community. The operative questions are:
How can an investor identify and provide value add to the creator by improving their chance of success?
How does an investor turn this value add into a mutually profitable venture for both the creator and the investor?
Next, we discuss an investment thesis to help nurture, consolidate, and scale content creation in the service of a mutually profitable venture.
The investment thesis is provided in the following sections:
Understand The Intangible Assets False Signal
Determine the Content Creator's Follower Revenue Multiple
Search For Profitable Growth – In search of Lambda
Follow a "Nurture → Consolidate → Scale" Investment Model
Construct a Content Creator Portfolio
Invest in the Proper Business Funding Stage
Scale Ignition - Provide Data Capture and Insights as a Shared Service
Advocate For Social Responsibility
Understand The Intangible Assets False Signal: Intangible assets, such as a content creator's follower base, are true stores of business value that are often not found on a business balance sheet. As the world has become more virtual and less physical, this reality makes it more challenging to understand a business via its financial statements. This is an ongoing and significant concern for accounting governing bodies and standards (like the Financial Accounting Standards Board - FASB or the Generally Accepted Accounting Principles - GAAP). In general, today's accounting rules and habits are geared toward the industrial age - when physical things dominated - like:
inventory - such as physical widgets;
raw materials - such as oil, gas, or production supplies;
hard costs - such as payroll or amortizing hard assets.
In the information age, intangible assets - these are ideas, insights, content design, and related intellectual property - are more necessary to drive business success. However, accounting rules do not generally handle intangible assets as anything more than their cost of acquisition. In the old world - it was easy to amortize a vehicle investment with an expected life of 10 years. But in today's world - ask an accountant to book the expected value of an idea or insight as anything more than a current period acquisition expense - and they will think you are crazy! The inability to properly account for intangible assets creates an undervalued false signal for the content creator's most valuable resource - followers and other engagement measures.
The value of a content creator's followers is likely significant, yet, only found as an expense item in their P&L. Expenses are for those that created the intangible asset, but the intangible asset is not booked on the balance sheet as the long-term, revenue-producing asset that it is. Following our industrial age physical asset example --
not accounting for an intangible asset as anything more than the payroll cost of the person creating the asset
-- is like --
accounting for the expense of the person that bought a vehicle, but then not booking the vehicle as an asset on the balance sheet.
Determine the Content Creator's Follower Revenue Multiple:
Not properly valuing followers would dramatically underestimate the true value and future revenue generation ability of the creator. The investor's opportunity is to accurately estimate the revenue multiple and the timing of that multiple. The investor also needs to estimate the content creator's multiple acceleration potential from an investment. (The acceleration potential comes from the investor's value add or Lambda, to be discussed next) A creator's followers and other content engagement metrics have a predictable revenue multiple. Also, followers tend to be sticky. That is, it is significantly more challenging to build a follower base than to maintain followers. The creators' multiple does require some due diligence. The creator's sophistication and content type will impact the multiple. The creator's multiple will be impacted by seed and scale investment to help them build a sustainable follower base.
Search for Profitable Growth – In search of Lambda: Investors are looking for significant growth opportunities with manageable risks. Lambda describes the key driver set to achieve the investor’s goal.
Expected Value (EV) – We use a standard EV model to describe the content creator investment opportunity. Lambda (λ) describes how the investor may drive profitable growth beyond that achievable by individual content creators. Think of λ as the investor’s value add. It will be the value basis for sharing the benefit with the content creator community.
The transformation function [iv] is:
It is called a transformation function because Lambda act as a lever to transform a group of otherwise separate creators into a high-performing portfolio of nurtured and scale-ready content creators. The expected value of a portfolio of content creators is a function of the revenue capacity of all the content creators (Ri) times the probability (P) they will hit those revenue expectations. λ is the multiplier describing the value of the investor above that which could be achieved if the creator goes it alone. Notice the lambda set is 2 different lambda parameters. λcc drives the probability of success and λr drives the estimated revenue.
Compare the next 2 pictures, by contrasting content creator portfolios constructed as "Going it Alone" (with no investor help) to "Investor value add" including expertise and funding. The Lambda is represented by the relative number of “On Track” content creators and the revenue size as represented by the size of each content creator box. Thus, investor expertise and funding encourage both:
The success probability of a portfolio of content creators (P λcc) to increase - in the diagram - more boxes in the green "on track" area than in the red "not on track" area for the "Investor expertise and funding" figure compared to the "Going it alone" figure; and,
The amount of revenue from each content creator (Ri λr) to increase - in the diagram - each creator earns more revenue so the total amount of "on track" revenue is larger in the "Investor expertise and funding" figure compared to the "Going it alone" figure.
The other sections of this investment thesis describe how the investor adds value to drive higher λ. The math for this P λcc example is:
Going it Alone baseline probability: 16 on-track creators / 64 total portfolio creators = probability of 25%.
Investor expertise and funding: 32 on-track creators / 64 total portfolio creators = probability of 50%.
P λcc: Probability with investor expertise and funding minus the creator going it alone or 50% - 25% = 25%
Could this math be more sophisticated? Absolutely! Parameterizing lambda is a straightforward way to describe 2 important economic drivers. No doubt, there are a number of non-linear relationships that could be specified. Also, the simple "On Track / Not On Track" segments could be fine-tuned and increased. I usually follow Occam's razor when it comes to models like this. False precision should be avoided.
Follow a "Nurture → Consolidate → Scale" Investment Model: For Venture Capitalists, Private Equity, and other capital providers with a more progressive view of business value, content creators may be an interesting investment play. The public markets will likely struggle to understand content creators via the typical accounting standards lens. Also, content creators tend to be very small companies or sole proprietors. The strongest content creators tend to be long on creativity, discipline, social media user market knowledge, the tools of the content creator trade, and possess high energy levels. They also tend to be inexperienced in business operations -- both scaling and maintaining, deal negotiation, tax, legal, and compliance. Basically, all the back-office operations and strategies necessary to help a business scale. The investment thesis is a "nurture → consolidate → scale" model typical of many decentralized industries. The investment thesis should include business strategy consulting and access to back-office infrastructure.
Construct a Content Creator Portfolio: A disciplined investment thesis also includes investing in a portfolio of content creators. Critical to that selection is choosing the creators most likely to succeed. This includes weighting selection criteria and applying them to candidate content creators. In Section 1, we discussed several success criteria. The investor will want a disciplined selection process.
Please see Appendix 1 for a decision platform provided for related portfolio investment decisions.
Seed and scale funding for a portfolio of creators will help diversify investment risk. The upside is massive, so presumably only a small proportion of seeded creators will need to reach a monetizable follower base for the investor to make a multiple on their investment. Also, the portfolio content creator should be making clear progress with growing their followers. The investor should set specific timing goals. Missing a goal may necessitate diverting investment to other, more promising creators. An added benefit to the creator portfolio approach is the natural opportunities the portfolio creators will have to collaborate (please see the third dot point in section 2). The investor should host "Creator Collab" sessions for its creator portfolio.
Getting started: The Hulett Brothers will start with a content creator ID camp. This is where aspiring content creators from all over will be invited for a multiday intensive camp. The goal is to both provide information and inspiration to aspiring creators AND identify high-potential creators. There will be an application process and a small fee paid by aspiring content creators. They will be mentored by the Hulett Brothers on:
Creative development
Content production
Tools of the trade
Managing the consumer platforms
Collecting data and testing
Sales and marketing
Developing business assets like a website and Linkedin presence.
Managing your business back office
The camp participants will be evaluated for potential inclusion in the investment fund.
Invest in the Proper Business Funding Stage: Another investment thesis consideration is the stage at which the content creator accepts investment funding. Keep in mind, content creation is a high-margin business, but only once the creator has established a monetizable follower base. As such, the investor should seek earlier-stage funding opportunities existing before the content creator has become self-sustaining and less motivated to seek external funding. However, there may be some investment needed to help more established content creators to scale further.
Scale Ignition - Provide Data Capture and Insights as a Shared Service: Insights gleaned from structured data often lead to scale advantages. Typically, platforms have an asymmetric advantage concerning their data. The content creator has limited access to the platform's data. But, with a little work and understanding, there is significant data that can be gleaned by the creator. This may be particularly helpful for A/B content testing and deconstructing algorithms to better understand social media user preferences. With a portfolio of creators, the cost of collecting, storing, and analyzing high-value data will drive down costs per creator and increase revenue-enhancing insights. Insights at one creator will be easily ported to others.
Please see Appendix 2 for an approach to scaling. Data and insight are foundational to the investment thesis and the content creator investment firm's ability to scale. The approach to organizing for data and insight success is essential.
Advocate For Social Responsibility: Finally, content creation investment comes with social responsibility. I encourage all investors to start with a mission and values commitment to the social media user community. The closer our AI is to passing the Turing Test [v], the greater our responsibility to ensure a safe and transparent neurotransmitter-responsible approach to content creation. Another concerning reality is that our governments have not yet figured out how to properly regulate Artificial Intelligence. This makes individual and company social responsibility even more critical. There is an appropriate, socially responsible way for investors and content creators to interact with the AI-enhanced market. It is incumbent upon us all to keep the golden rule as an anchoring business criterion.
Artificial Intelligence can serve as a wonderful tool to deliver entertainment, happiness, operating efficiency, and in a way that provides business value and social value. But just like any powerful tool, it can be misused. We identify challenges and advocate for socially responsible solutions in the following articles:
The great power of artificial intelligence comes with great responsibility.
5. Appendix 1
A resource for content creator portfolio and other M&A-related acquisition decisions:
Definitive Pro: - This is an enterprise-level, cloud-based group decision-making platform. Confidence is certainly important in corporate or other professional environments. Most major decisions are done in teams. Group dynamics play a critical role in driving confidence-enabled outcomes for those making the decisions and those responsible for implementing the decisions.
Definitive Pro provides a well-structured and configurable choice architecture. This includes integrating and weighing key criteria, overlaying judgment, integrating objective business case and risk information, then providing a means to prioritize and optimize decision recommendations. There are virtually an endless number of uses, just like there are almost an endless number of important decisions. The most popular use cases include M&A, Supplier Risk Management, Technology and strategy portfolio management, and Capital planning.
Next are a few whitepapers and examples of how to make the best organizational decisions:
Appendix 2
Many industries encourage scale. Scale is growth. Scale drives profitability by leveraging costs. Scale requires structure to support that growth. The question becomes:
"How do you add the necessary structure to support scale-related growth, but still enable the adaptability and creativity to change as the market environment requires?"
A central organizational capability is called the "The scale unit." It is the answer to this "How to scale" question for a portfolio of content creators. Please see:
Notes
[i] How our brains operate specifically to our neurobiology, neurotransmitters, and in the age of social media is a significant and evolving scientific pursuit. Dopamine and oxytocin are called out in this article, but there are many neurotransmitters and their interactions are very dynamic. Admittedly, I am simplifying a neurobiological explanation for explanatory reasons. The truth is that our neurobiology is certainly not this simple. I believe this article is contextually correct but does not fully capture the incredible complexity of our neurobiology and resulting behavior. For the curious and those looking to explore deeper, next are related resources:
Hulett, Beyond content moderation - implementing algorithm standards and maintaining free speech, The Curiosity Vine, 2021
Hulett, Our Brain Model, The Curiosity Vine, 2020
Hulett, Curiosity is the most powerful thing you own, The Curiosity Vine, 2022
Hulett, Origins of our tribal nature, The Curiosity Vine, 2022
Hulett, Dreams are a window to our memories and healthy thinking, The Curiosity Vine, 2022
Hulett, Genetic Engineering: The promise, power, and challenges, The Curiosity Vine, 2022
Hulett, Changing Our Mind, The Curiosity Vine, 2020
[ii] Neuroanatomist Jill Bolte Taylor ("JBT") describes our "character 4" as "the Right Thinking part of our brain which exists as our most peaceful, open, and loving self." From a neuroanatomical standpoint, the is referring to the right hemisphere, primarily located in our neocortex. This is a physical, and logical, location where we naturally connect with our environment and those around us. As always, keep in mind that the brain is incredibly complex, dynamic, and interactive. A logical or physical location for certain functions is admittedly reductive. However, it provides a helpful description of the impact of neurotransmitters and the causes of certain outcomes, like viral-ness. As per Dr. Taylor, our character 4 does not understand the self. From character 4's perspective, we are part of a larger, connected universe. JBT tested this understanding in an unintended natural experiment, where her own brain suffered a traumatic stroke, localized in her left hemisphere. This experience helped her fully understand how the brain seeks to connect with the rest of the world. Oxytocin is the neurotransmitter central to connecting with the rest of the world. It is known as the "love" or "tribal" neurotransmitter that seeks to connect people. For example, oxytocin is essential during childbirth. Oxytocin as a neurotransmitter, encourages tribal bonding between the mother and the newborn in order to protect the newborn. Oxytocin as a neurohormone, encourages milk production in the mother to nourish the newborn. It is the physical mechanics of the brain, enhanced by oxytocin, that leads to a viral event between people.
Jung, Four Archetypes, 1970
Hulett, The anatomy of choice - learning from a brain explorer, The Curiosity Vine, 2021
[iii] For more information on intangible assets, please see:
Haskel, Westlake, Capitalism Without Capital, 2017
[iv] The portfolio or grouping of content creators is CCi where i is the number of individual creators. The expected value is the estimated average revenue of each CC times the probability (P) of achieving the revenue. R λr is the expected average revenue of each content creator (R) * the benefit of the investor to enhancing the revenue (λr). The probability (P λcc) of the content creator contributing to average revenue is critical. For this calculation, we make the simplifying assumption that there are two groups. A group that is contributing (or clearly on track to contributing to revenue) and those that are not. The baseline (P) is the probability expected without help from an investor. λcc is a multiplier enhancing the probability. The higher the better.
[v] The Turing Test - "The idea was that a computer could be said to "think" if a human interrogator could not tell it apart, through conversation, from a human being." If an AI has figured out how to defeat Diminishing Marginal Utility, then perhaps they have at least narrowly passed the Turing Test.
Epstein, Peters (eds.), Parsing the Turing Test: Philosophical and Methodological Issues in the Quest for the Thinking Computer. 2008