This video is sponsored by Shopify. Patreon has become a $4 billion
company in just eight years. The crowdfunding website provides an
ongoing extra source of income for hundreds of thousands of creators,
some even earning over $200,000 a year. But the story of Patreon has come
a long way since a launch that cost only a few hundred dollars,
created by a pair of roommates. One a physics student turned
starving artist struggling to get by on Youtube ad revenue, the
other a computer sciences student working as a delivery driver. Jack Conte was born in San
Francisco, California in 1984. Four years before his future
Patreon co-founder and roommate for life, Sam Yam. Growing up, Jack was
surrounded by music. While his father was a doctor and his
mother was a nurse, both also shared a love for music, jazz in particular
and had been a jazz pianist and singer. They shared their passion with
their son, and naturally, Jack followed in their footsteps. When he was six-years-old, Jack’s
father taught him to play the blues. It was only the beginning. He would later write
arrangements for his acapella group and write his own music. Meanwhile, the other half of Patreon was
starting his life half the country away. Sam Yam was born in Iowa City,
Iowa, to Hong Kong immigrants. At a young age, his family moved
to Pittsburgh Pennsylvania, and opened their own Chinese restaurant,
where Sam worked as a waiter. Like Jack, Sam dabbled in music. He studied the piano, and even
performed at Carnegie Hall in New York. After graduating from highschool,
both Sam and Jack managed to gain acceptance into the prestigious
Stanford University, and the two just so happened to be assigned as roommates. Stanford was also where he met,
and fell in love with Nataly Dawn, who had been studying art there. At the time, Jack was
pursuing a physics degree. Sam, meanwhile, was
studying Computer Sciences. Though, the two weren’t satisfied
with just their studies. Sam wasn’t sure what he
wanted to do in life. While he’d previously considered
pursuing a career in the arts, he changed his mind. From Sam’s perspective, he
would have needed to be the best pianist to succeed. So he decided to pursue
something more conventional. Namely, Computer Science, because
he liked to play video games. But even in college, his
entrepreneurial spirit showed. Sam set up his own online
business, creating a website where students in the dorms could
order In ‘N Out burgers, which Sam would then pick up and deliver. This was in the days before apps
like Uber Eats or GrubHub, putting Sam far ahead of the curve. Meanwhile, Jack found that he
regretted studying physics. After one particular class, Jack sat
for 45 minutes and decided to change his focus from physics to music. He studied in Stanford’s
Center for Computer Research in Music and Acoustics. However, the change in fields
struck a blow to Jack’s morale. “When I made the decision to
become a music major, it was a depressing moment for me. In my mind, I was committing
to a life of poverty.” Jack’s uncle had been a jazz guitarist,
and Jack went to him with his decision. His uncle’s response was
less than encouraging. “Don’t do this, it’s
crowded at the bottom.” Enjoying the video so far? Be sure to subscribe to Hook and ring
the bell to stay up to date with new stories about today’s industry leaders! Jack felt like he was signing
up to be a starving artist for the rest of his life. But he forged ahead anyway and graduated
from Stanford with a degree in music. One year later, Jack started off
posting a new medium of music to YouTube that he called, VideoSongs. In the accompanying videos for
these songs he made sure to show the instruments he used for each sound on
screen, so that viewers saw exactly what he was playing, and learned
more about how each sound was made.. Soon after, Jack released an album
called Nightmares and Daydreams. And over time, he managed to
earn a couple hundred bucks a month from selling mp3s of
his music on e-junkie.com. Little did he know, his musical
career would soon swell to new highs, only to crash from a
change that he had no say in… What we can already learn from
Patreon’s story is that while every entrepreneur has a different
backstory, many develop these common traits over time: self-reliance,
perseverance, and versatility. And in most cases, it starts with
a desire to pursue a longtime passion or offer something
that hasn’t been done before. When entrepreneurs first start
to think about turning a desire into a growing business, they’ll
often get stuck on important factors to consider—like pricing. Pricing can be extremely difficult
since there are countless strategies to choose from. Fortunately, there are online
resources that summarize each one and their pros and cons. In fact, Shopify, the sponsor of this
video, runs a blog that offers free education, inspiration, and tips! Access their blog to learn more
about the art of pricing and other business topics if you’re interested in
launching and growing a new business. Shopify also offers an easy to use
and affordable commerce platform that allows anyone to build and manage
beautiful and professional looking online stores — regardless of technical
or design ability and experience. Plus, Shopify helps entrepreneurs
with technical support 24/7, offering built-in marketing tools such as
email campaigns and Google and Facebook ads, and analytics tools
to gain insights on sales, website traffic, and customer demographics. If you’re an aspiring entrepreneur, you
can learn more about the art of pricing by going to shopify.com/hook3 or click
the link in the description below. One year later, Jack and his
then-girlfriend and fellow musician, Nataly Dawn teamed up to create
their band Pomplamoose— named after the French word for grapefruit,
“pamplemousse” from Nataly’s early years spent living in Belgium and France. The first song the two
released was a song called Pas Encore, mostly in French. At the time, the two didn’t
call themselves Pomplamoose. Both were YouTubers performing music
on their own channels, and they posted the video on Jack’s channel
saying that it was a collaboration. The result was a song that mixed
Nataly’s softer voice with Jack’s harder music, resulting in an original
sound that people seemed to like. Then, the two decided to see if
they could make a living from music. They put their music on iTunes
for sale while putting more and more of their songs on YouTube. In 2009, Jack and Nataly served as
producers on an album released by fellow musician and YouTuber, Julia Nunes. Jack was inspired by the audience that
Julia had managed to build for herself on YouTube by covering popular songs. He realized that people use YouTube
to search for their favourite songs, and if they found covers
with a new style that they liked, they would check out the artist. Pomplamoose then decided to release
covers of songs like My Favorite Things, from The Sound of Music, but the song
that really became a hit was a cover of Beyonce’s All The Single Ladies. Record labels approached the duo
with offers to pick up the band, but Jack and Nataly turned them down. That way, the two owned the
royalties to all their masters, the original recordings of their
songs, keeping all the royalties made from sales on their music. They were able to make a living,
earning $22,000 a month, and going on tour to hundreds or
thousands of people per show. Sam, meanwhile, had gone his own path. After graduating from Stanford,
Sam worked as both a first server engineer and mobile engineer at
a startup called Loopt before it was bought out by banking
company Green Dot for $43 million. Showing his entrepreneurial spirit
once more, Sam co-founded AdWhirl, a platform that allowed mobile developers
to monetize their games through ads. Only a few months after launching,
the company was bought up by AdMob, which was later acquired by Google. Sam stayed with Google for a short
time before leaving for a startup incubator called Dogpatch Labs, sharing
a table with the creators of Instagram while looking for the next big thing… Little did he know, it would
come from his old friend Jack. At the time, music streaming became
more popular and mainstream with the introduction of services like Spotify,
a change which hit Jack Conte hard due to the loss in sales through iTunes. He had gone from earning a
comfortable living from selling music to being forced to use
his savings to pay his mortgage. "I wasn’t doing anything
differently as an artist. There is a system changing in front
of me that I am not in control of ... I know businesses have to
pivot and change and be innovative. Yet, I found myself having to
do all this gymnastics to keep up with the revenue stream." One of the pivots included
selling more merch than music. Jack was depressed at the idea
that his value to the world might only be a band logo on a hat. It seemed that if he was going to
find a way to get paid for his art, he may have to build it himself… But when he tried, he
was rejected 40 times.. One day, Jack discovered a new
crowdfunding service that had the potential to help artists
fund their projects: Kickstarter. Jack and Nataly’s roommate, Lauren
O’Connell, started a kickstarter for her new album and managed to raise $13,000
to rent a studio and hire a mixer. What amazed Jack in particular
was that Lauren’s fans stepped up to help fund her album. Inspired by Lauren’s success,
Nataly, started a kickstarter for her own album and uploaded a video
to YouTube promoting the campaign. She raised $104,000. Meanwhile, Jack was working on making
a music video for his single, Pedals. It was a song that he was especially
proud of, so he wanted to do something “crazy and creative”
and not worry about a budget. The end result was a video that
involved two robots, a replica of the Millennium Falcon’s cockpit,
and spinning compartments that Jack and the robots emerged from. While Jack considered a
Kickstarter, he decided against it. Jack viewed Kickstarter as funding
for a single project that money could go towards, whereas he would
have preferred an ongoing source of funding that would let him keep
producing art over a full career. A source of funding which
didn’t currently exist. Then, in February, it hit him. Jack had spent $10,000 on
the Pedals music video. He had maxed out two credit cards
and drained his savings account. “It felt like I was waking up
and I was suddenly terrified of what was on the other side.” Knowing that the music video would
likely only earn $100 from YouTube ads, he felt sick considering all the
money, time and work put into the video. Jack then realized that methods to pay
artists like they had been with music sales through iTunes had failed to keep
up with streaming services like Spotify. Where Jack and other musicians had
once been able to make a living through selling their own songs
through iTunes, they now made pennies through music streaming. As things were, artists were
basically working for free. Jack sat down at his kitchen
table on a Sunday afternoon. He liked Kickstarter,
but he needed income. He wanted to be paid every month
and have the freedom to pursue whatever inspiration struck him. Membership organizations like
the San Francisco Museum of Modern Art and NPR-member radio
station KQED were raising money through monthly donations online. However, there wasn’t a way for
him and other artists to do the same in exchange for their work. And so, Jack decided to
create a way himself. Jack began by sketching out a website
that took up 14 pages of paper. He didn’t have a business strategy in
mind, just a design and an idea for artists to make money for their work. Then, he reached out to friends who
might be able to help him build it. Including his old roommate, Sam. At the time, Sam was building an
online marketplace to hire amateur photographers called OurSpot. Before it had even launched,
the startup received a rave review from leading startup and
tech news website, TechCrunch .
Impressed with Sam’s success,
Jack was hellbent on getting Sam to build his idea. When Jack called Sam to pitch
his idea, he first asked if they should write up an NDA. Sam told him not to. “We don’t need an NDA. Nobody cares. Ideas are trash.” Sam’s opinion was that ideas
were a dime a dozen, and it was only the execution that mattered. Soon after, Sam and Jack sat
down at Coffee Bar on Bryant Street in San Francisco to talk. Sam was expecting to just provide
feedback, but Jack launched into a whole sales pitch. The idea immediately resonated with
Sam, and his tone instantly changed. [2013] “We’re starting this right now. Don’t tell anyone else about this idea.” Sam started working on it that night. Realizing that he was going into
business with his friend, Jack wrote out a long email to Sam. In it, he laid out the basics of a
contract for the two, and spoke about the friendship that they had, and how
communication would be important in the venture for the two to stay friends. He sent it off, and got a
one-sentence reply from Sam. “AWESOME I AGREE TO ALL
OF THIS OK LET’S GO” Throughout that year, Jack
and Sam worked on what they later called Patreon. Using cloud services to host
their servers, Patreon was projected to cost between a few
hundred to $2,000 to get going. The bigger task was finding
people to launch Patreon with. Jack reached out to 40 creators, trying
to recruit them to use his new service. Every single one of them said no. In the end, it launched with
three creators: Jack, Nataly, and their roommate, Lauren.. It had taken only six weeks for Sam
to take Jack’s sketches and launch the platform, giving creators the ability
to offer fans different membership tiers in order to support them. To announce the launch, Jack posted
his Pedals music video to YouTube, and included a vlog at the end where
he announced Patreon and told his fans they could support him there. Jack’s Patreon had four tiers. At $1, fans got access to
Patreon-only streams and first dibs on concert tickets, $5 added video
tutorials on audio productions, $10 added Google Hangouts group
sessions with Jack, and $100 added a private Skype hangout session. Within the first two weeks, Jack’s
income climbed to $5,000 a month. And within a couple of
months, over $100,000 a year. By then, it quickly became clear
that Patreon still needed to raise money to build up its team
to do everything from answering emails to building new features. Many investors turned Jack and Sam
away, not wanting to get involved in music or arts in general. Sam then decided to reach out to
one of his contacts, Josh Felser, then-head of Freestyle Ventures,
a company that invests in early stage tech companies that have
the potential to become massive. Josh was immediately taken by
Jack’s passion and agreed to invest. Patreon then managed to raise a
total of $2.1 million from Freestyle Ventures, Charles River Ventures, and
Reddit co-founder, Alexis Ohanian. As for what this meant for Sam and
Jack: they became roommates again. The two got a two-bedroom apartment in
San Francisco that they moved into and used as a home office and hired staff
who worked at desks in the kitchen.. Neither Sam nor Jack took a
salary from the company as a means to keep costs low. Not wanting to charge creators a large
fee, Patreon was taking home only $5,000 on every $100,000 they handled. Plus, for Jack, starting Patreon
felt like he was turning his back on his musical career,
and his now-wife, Nataly. He had gone from someone who couldn't
see himself working a desk job for a corporation, to owning one that
needed him at a desk — forcing him to be away from Nataly and Pomplamoose And while Patreon grew to attracting
over 25,000 creators along with their fans, it ran into more issues. The platform needed to put
together a proper content policy. Fortunately, Patreon's investors
connected Jack and Sam to someone experienced who could guide them. What followed were the “most horrific
two months” of Jack’s life as he had to explore all the worst content
that the internet had to offer. With their advisor’s guidance,
Jack and Sam made a content policy aiming to prevent anyone
from causing real world harm. “We’re facilitating art. Art should be, in some sense,
be bridging these divides and not increasing them.” While Patreon has found its way in some
regard, it still faces other challenges. One thing Jack and Sam are still working
on is finding a path to profitability that doesn’t require charging their
creators high fees to use their service. But even as they’re still
figuring out their business model, Patreon has managed to raise an
additional $155 million and is currently valued at $4 billion. And as Jack sits at the head
of a billion dollar company, he hasn’t given up music. 2020 was Pomplamoose’s biggest year
in history, and in 2021, the band sits as a profitable business on its own. What we can take away from Jack
and Sam is that sometimes, you can follow your passion and turn
it into a successful career. Although even if you’re doing
something that you love, it won’t just be a walk in the park. Sometimes, finding success is only
fleeting—keeping that success requires hard work and dedication, especially
when the entire market surrounding your craft can change around you. It might even mean building
up your own company and taking on the business side of things
just to keep running your dream. This is the story of how a physics
student turned starving artist and a computer sciences student working as
a delivery driver teamed up to change the face of the arts industry forever. For more inspiring stories
and advice from today's most successful leaders, don't forget
to subscribe to our channel!
