The $100b+ "Creator Economy" Revealed

Thomas Frank: The only thing that really matters at the end of the day for most brands who are doing creator sponsorships, which are gonna be DTC brands, is conversion. So the views don't matter, the subscribers don't matter. There's just a whole lot of misinformation out there, and this leads to this belief that creators need to get X views to make X dollars when it really doesn't work like that.

Katie: Welcome back to The Money with Katie Show, Rich People. A few months ago we did an episode on this show, it was number 58, called The Monetization of Self, Personal Brands, and the Business of Influencing. And this episode really explored how bizarre it is to commodify your personality and private life for money. But we didn't really explore the creator economy as a whole, and here's why we should. It's estimated that the creator economy could be worth as much as $104,000,000,000, and one in four Gen Zers say that they plan to become content creators. Now, I'm gonna try to avoid today what I would consider to be the obvious takes on this topic. And instead I wanna focus on a few major pieces of this puzzle that I personally find most interesting and the least discussed.

Today we're gonna attempt to answer four questions. Number one, who is the creator economy really good for—the brands, the platforms, the creators, or all three? And where does the audience fall in this breakdown? How is ROI measured, and are influencers more effective than traditional advertising? 

Number two, how much does the average influencer make compared to the top earners? Are 1% of the influencers earning 98% of the available ad dollars? How much survivorship bias is happening here? 

Number three, how sustainable is this path as a legitimate career, and are there ways to make it more sustainable? Who's doing it well? So for that part, we're gonna explore a handful of creators who I think are taking an exceedingly business-savvy approach. And I have to admit that in researching this episode, I was stuck on one key non-scalable aspect of the influencer industry: If everyone wants to be an influencer, who is left to influence? More importantly, who is going to be our doctors and our farmers and our baristas and our postal workers and our teachers? Though I have mostly resolved this cognitive dissonance by realizing that that is actually true of most professions…that the world would be equally screwed if everyone wanted to become, say, an attorney…no offense to my husband. But I do think it's a question we should hold in the back of our minds throughout this conversation. 

And number four, how did different platforms handle monetization, and where are the opportunities moving forward? Our guest today, Thomas Frank, is a productivity YouTuber. He has nearly 3 million subscribers on his main channel and another 160,000 on a side channel that he runs as a bit of a passion project, with niche tips for a software called Notion. So we're gonna talk to him about how he became a full-time creator and how much he makes from his various income streams. He's gonna break down the actual numbers. Thomas is, in my opinion, a very excellent example of someone who's very plugged into his craft as an art form. And I really like that he provides tangible value and tools to his subscribers. So we're gonna unpack his philosophy about that too, and we'll be right back after a message from the sponsors of today's episode. 

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Katie: So let's get into this by discussing at a high level question number one: Who does the creator economy benefit most? The advertisers, the platforms, or the creators themselves? Because while it's easy to focus wholly on the individual influencers, they exist within a larger ecosystem, a triumvirate of capitalism, if you will. And this ecosystem cannot exist without all three components: the influencer, the platforms they're using for distribution—be it Instagram, YouTube, TikTok, WordPress, et cetera—and the advertisers who pay them to promote their products.

Now, in order to answer this question, we need to look at who stands to gain the most, and I won't bury the lede: I think the real winners are the platforms. YouTube, owned by parent company Alphabet of Google fame (maybe you've heard of them) made $29 billion in 2022, which is a lot, but still peanuts compared to what Meta, the parent company of Facebook, Instagram, and WhatsApp pulled in: $116 billion in revenue. And as a small point of transparency, I briefly worked at Meta in 2021 on the WhatsApp platform. 

Now, the platforms, and maybe more specifically the founders of the platforms, are really in the catbird seat and they stand to gain the most, because they are providing the marketplace in which their users create the product itself. But these companies comprise tens of thousands of employees. So one person is not making billions of dollars, with the exception of the founders and their early investors. Zuck, for example, is worth a reported $87 billion. The top influencers, by comparison, are making somewhere in the tens of millions of dollars range each year. The largest YouTube channel by revenue belongs to a guy named Jimmy Donaldson, better known as MrBeast. His YouTube channel alone made $54 million in 2021, with 153 million subscribers as of May 2023, which is amazingly only one element of his sprawling empire that we're gonna unpack later.

So if you asked me, hey Katie, would you rather be the founder of a successful social media platform or its most successful influencer? Well, if the metric we're using to gauge success is money, the answer is probably clear. But the platforms themselves are often left out of these conversations, which is funny because the industry literally does not exist without them. Advertisers can pay influencers directly to promote products, or they can pay the platforms to surface targeted ads to their users. So how do advertisers, the true customers of both influencers and platforms, stand to benefit or lose?

Here we have to poke at ROI in order to get our answer. How does a business’s spending on traditional advertising—so think commercials, banner ads, out of home like billboards—compare to the return on influencer campaign spending and social media marketing? According to Neal Schaffer, the author of The Age of Influence and the founder of a digital marketing consultancy, one study suggests that influencer marketing provides an ROI that is roughly 11 times what a brand could expect from something like banner ads, which, have you ever clicked on a banner ad? Have you ever called the number on a billboard that you passed on the highway? I didn't think so. Per Neal, it's estimated that a brand earns $5.20 on average for every $1 invested in influencer marketing. But it's important to note that this swings wildly based on the influencer, the campaign, their audience, things like that. 

According to a study from Smart Insights, 89% of advertisers said that they found the ROI from influencer marketing to be at least as effective as other methods. And 48% said they found it to be more effective. 

Anecdotally, I think that this tracks. According to Neal's book, 80% of people report making a purchase decision based on an influencer's recommendation. And while traditional advertising is great for brand awareness and brand affinity, it seems like both the platforms and human nature itself would dictate that actual sales conversions, purchase decisions, would be more directly impacted by someone you trust online recommending it to you with a link and a discount code. 

Of course, when I worked in advertising and marketing, I remember seeing agency invoices for high-production-value commercials that we were outsourcing. These things were works of art, the creative product of dozens of brilliant minds coming together over months of laborious work, and the price reflected that. Millions of dollars were spent on single campaigns that would run in a few 30- or 60-second TV spots.

Now around the same time, I was periodically helping our influencer marketing team lead—the team was one person at the time, back in 2016—source new content creators whom we would pay thousands of dollars or tens of thousands of dollars, at the most, for content. So while it's difficult to quantify the results from either approach, since neither in our case were directly intended to drive sales, and were instead shooting for that nebulous brand awareness play, it is hard to look at the scale of the costs associated and not wonder whether the latter would be more efficient. So I asked Thomas Frank, our YouTuber guest, to weigh in on who he thinks the primary beneficiary of the creator economy is.

Thomas Frank: That's a good question. I think you could build an entire podcast episode out of that question. So I'm gonna put this in relative terms and in absolute terms. I feel like in absolute terms, the platforms win. At the end of the day, they're the ones facilitating all this communication between the creators, the viewers, the advertisers. They also have access to all that data. If we wanna get into machine learning and AI talk, they are the best positioned for training models. Being the platform holds a lot of power. Relatively, though, I feel like the creator stands to gain the most. If you think about the world 20 years ago, 30 years ago, anybody who's an artist, anybody who wants to express themselves, typically has to go through some sort of formal gatekeeper, like a record company or a publisher to get any kind of distribution.

And now we live in a world where you can grab your phone; you don't need a professional studio like the one I'm sitting in right now. And you can blow up overnight sometimes and have a media business that sustains your ability to make whatever you want. So yes, the platforms are going to have the most absolute gain, I think. But in terms of where we're starting and where you can end up, I think the creator’s in the best possible position, and I think it's still quite good for advertisers. But you know, at least with the five minutes of thought I put into this question, it seems like they're sort of bottom of the totem pole when it comes to the real value that can be gained from the creator economy. 

Katie: Overall, it doesn't appear as though anyone in the triumvirate is really losing. A talented 25-year-old has the potential to make millions with no barrier to entry. Brands can achieve higher ROI, and the platforms are obviously cleaning up. But what about the followers, the subscribers, the influencees? We're gonna come back to them, but in the meantime, let's go on to question number two, which is, MrBeast might pull in $50 million a year, but how much is the average influencer making? And answering this question is more complex than meets the eye, for a few reasons. 

The first is survivorship bias. Now, this occurs when only the strongest survive. So tales of challenges and success are necessarily skewed by the fact that you are only hearing from the winners. And content creation is a lot like any other business model at first. You are doing a lot of unpaid work and there is no promise of profitability. Number two, there's also no one standard way that influencers make money. It's not the same as asking, hey, what's the average salary for a software engineer with three years of experience? Influencers can make money by being paid by the platforms directly through affiliate relationships with brands, by selling something directly to their audience, or through a pay-for-play model wherein they are charging a rate for an ad, or any combo of the four, making matters more complicated.

Two different influencers with the same number of followers or subscribers can command wildly different rates based on things like audience engagement and conversion rates. For example, it's reported that TikToker Alix Earle charges up to $70,000 per sponsored video, which sounds obscene, until you peek under the hood and see how many sales her brand collaborations drive. Because when you think of a TikToker like a person who makes two 60-second videos per week every year and earns $7 million from doing so, it sounds ridiculous, because it is. But ultimately creators like this can charge that much because the brands know that they're gonna make way more than $70,000 from that investment. We have to think about these creators as though they're media companies or advertising agencies, not individuals. 

And finally, the least exciting reason why these numbers are complex is because there are costs that can significantly diminish the actual take-home pay or rate per hour. You have things like agents, lawyers, taxes, healthcare, publicists—these are business expenses that directly impact what people are actually taking home, as you'll see when we get into Thomas's numbers in a little bit. But regardless of these complications, let's try to get a sense for scale.

A company called Hypeauditor, which, lol, sampled 1,800 influencers and found that the average earnings are $2,970 per month on Instagram, or about $36,000 per year. So if we categorize the middle class as earning annual incomes between $50,000 and $150,000, about 22%, or one in five full-time content creators, falls into that category. 

Per some research from ConvertKit, it was surprisingly difficult to find metrics about the overall amount of money sloshing around in the creator economy, and what percentage of influencers it's concentrated within. But it is worth noting that the highest-paid influencers are still celebrities. Kylie Jenner reportedly charges a million dollars per sponsored post. Lionel Messi brings in $500,000 per post; so does Selena Gomez. And in that sense, it's hard not to reason that the bulk of the spending is still probably concentrated in a few people who are already famous for something else. I asked Thomas how much he charges, and he really schooled me on the ins and outs of pricing and what the brands actually care about. 

Thomas Frank: I'll give people the actual number right away. Historically, I've been paid between $10,000 and $15,000 per video on the main channel. I've never run a sponsor on Thomas Frank Explains and I don't plan to. This gets into a whole discussion, but when it comes to what would I charge and if that's useful at all to anybody listening to this, it kind of isn't, because the only thing that really matters at the end of the day for most brands who are doing creator sponsorships, which are gonna be DTC brands, is conversions. So the views don't matter; the subscribers don't matter. It's how many people see the ad that I did for a brand, and then actually go and convert. What is that brand's CPA target, so cost per acquisition target? What is their customer lifetime value? And so if you go to business school or you use Google for five minutes, you will probably run into the LTV/CAC ratio. So that's customer lifetime value compared to the customer acquisition cost. So that's what businesses are actually looking at on their own spreadsheets at the end of the day. 

And then a lot of them will go through agencies who love to tell YouTubers that, hey, your views are what get you sponsors, or we're not even gonna tell you what we're taking. And there's just a whole lot of misinformation out there. And this leads to this belief that creators need to get X views to make X dollars, when it really doesn't work like that. Imagine I'm running a pool cleaning channel—and my friend Matt actually does this; it's called Swim University, and he is reviewing like robot pool cleaners and pool cleaning chemicals—and then imagine someone else is running a channel that's talking about celebrity drama, like Moist Critical, for example. He just talks about anything and everything. Think about the audiences for those two different channels. People watching the swimming pool robot cleaner review channel probably own pools. So if I'm an advertiser and I have a product that I'm making for pool owners, I can almost guarantee that every single person watching, let's say a 10,000-view video over there is a pool owner. So they're already a likely customer for my product. Meanwhile, if it's Moist Critical talking about what he thought about Overwatch 2 ceasing development on PVE or some other just drama, it could be anybody, right? Everyone likes drama. So if I'm, again, a robot pool cleaner advertising company, maybe I have like 0.1% of that potential audience who owns a pool. I can't afford to pay as much per view on a topic like that.

So it really doesn't come down to views. It comes down to, what's it gonna cost me to acquire a new customer via this channel? The auction rates for a certain channel might be much higher than on another channel. So that's why if we go on…people on Twitter are always posting their CPM rates. You'll see some people being like, I got, I think I saw a $100 CPM for one of Ali Abdaal's videos, and it turned out to be his video on how to build a website versus, you know, a lot of my friends who are doing movie reviews are lucky if they're getting a dollar or two CPM, because that kind of topic just doesn't lend itself to intent to buy on profitable niches. 

Katie: All that to say, I don't wanna give the impression that it's not a lucrative career path, especially given its low barrier to entry. Sure, Kim K might get $400 grand for a post, but a lot of people in their early twenties pull in that much or more per year after just a few years of creating content. And I think that that is an asymmetric bet that's probably worth making if you think you have what it takes. But that's a question for another day. And again, I would refer you to episode 58 about the mental health downsides of commodifying your personhood. And as an aside, when I say “people,” I should probably say women, because it's reported that three in four content creators are female, to which I say, finally an industry where we are paid more. Just kidding, kind of. We'll be right back after a message from the sponsors of today's episode. 

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Katie: All, right, so now we're moving on to question number three. How sustainable is this path, really? Mental health concerns aside, is there an inherent expiration date on a 20-something NYC fashion blogger? The short answer is…yes and no. Much like pop stars go in and out of favor, audiences like novelty. If you think about the hot influencers of just a few years ago, very few of them are still top of mind, though that doesn't mean they're not still making an income from their audiences. This is partially why Taylor Swift has been and will always be a business phenom to me, because she was a huge deal when I was in middle school and now 15 years later, she is set to gross $500 million personally from her Eras tour.

I digress. I'm a born against Swifty. I think blondie is a genius. Okay, anyway, moving on. This is why it's important to think about influencing like a business, like a media company. It's not a traditional career path. There is no guarantee that your relevancy is gonna pay the bills 18 months from now. So approaching content creation like a small business is important if you're going to try to make it your lifelong gig. I wanna quickly explore five content creators in the space who I think are incredibly business-savvy and are making very smart long-term decisions. 

The first is Blogilates, founded by 36-year-old Cassey Ho. So Cassey started producing videos on YouTube in 2009, practically the Paleolithic era in influencer years. And while she began by producing fitness videos, her brand and content evolved over time. She launched her fitness line, Popflex, in 2016, and this was not your standard merch deal. Cassey has a background in love for fashion. So she's the one sketching and concepting the clothes herself. And her understanding of social media is a powerful sales tool. She makes short-form videos that show the behind-the-scenes process of coming up with the designs. And from a technical perspective, these videos are excellent. There's a lot of movement, there's great storytelling, the ability to be watched with or without sound. And in 2020 she signed a licensing agreement with Target to produce a home fitness line, also called Blogilates. And she told YouTubers Colin and Samir in a recent interview that both businesses—this is mind-blowing—Popflex and Blogilates are now pulling in eight figures each in recurring annual revenue. For those listening who are trying to frantically count zeroes in your head, that is at least $10 million per year each. Cassey made the switch from monetizing content to selling a physical product, but she continues to leverage her understanding of short-form video to drive said product sales.

Then, of course, we have to come back to Jimmy Donaldson, MrBeast. We mentioned him earlier. I would say most people know about MrBeast, but I think he's unique in that he has achieved such massive scale, and his schtick is reinvesting all of the revenue that he's making into future videos, which enables him to create extreme concepts that I think nobody else can really compete with. He spends $3m to $4 million per month on his video production, which generates concepts like “hydraulic press versus Lamborghini” and “last person to take their hand off jet keeps it.” His real-life Squid Game video costs more to produce on an hourly basis than the actual Squid Game show on Netflix.

From YouTube views alone, it's estimated that MrBeast earns $3 million per month paid by the Google AdSense, the platform, but Jimmy has also expanded into product. So his ghost kitchen concept partners with restaurants to produce the MrBeast Burger, which reportedly earns $720,000 per month. And his Feastables line of chocolate bars, which was launched in a Willy Wonka-style video, reportedly made more than $10 million in revenue in its first few months. 

Again, we see these creators who achieve massive digital scale pivoting to physical product, and it's hard to know exactly how viable these businesses would be if the creator decided not to pump out new content to support them. But in both cases, a single year of revenue is life-changing money that if you invested it properly means you're gonna be set for the rest of your life. It doesn't really have to work forever. The most interesting thing about Jimmy's approach, of course, is continuously upping the ante; reinvesting practically all of your video revenue back into future videos is something that basically nobody else is doing. 

The next content creator that I wanna highlight is Nick Huber, because his approach is something I haven't really seen at what I'll call a normal-person scale before. So rather than using the advertising pay-for-play or affiliate marketing model, Nick monetized his Twitter following of 300,000 people through equity relationships with the companies that he partners with. So in an interview that he did with My First Million, he told Sam and Shaan that he reached out to a company he was posting about a lot anyway and he was driving a lot of new business their way, and he told them he wanted to buy an equity stake in their business. His approach is a little, well, unrefined…it sounds by his own telling that he basically threatened this business owner that he was gonna stop promoting them altogether if the guy didn't allow him to become part owner, which, well, I suppose everyone has their tactics. But it worked, and now he reportedly earns around $50,000 per month in revenue from his equity in that business. The main takeaway from Nick is that if your influence is specific to a certain industry or niche, as it almost always is, you don't have to take ad dollars if you invest in the businesses you believe in and you want to talk about them anyway.

I'm not as familiar with disclaimers around being a part owner in a business you're promoting, but I'm sure there are certain disclosures that you need to make in your content that you are an investor in the business. I like this model, though, because it's far more self-sustaining than affiliate revenue or pay-for-play, because even if you stopped creating content, theoretically your ownership stake in that business would still be worth something, and if your influence is especially trustworthy, you can actually have a major impact on a small business's success. 

Next up is Melissa Wood-Tepperberg, whose business model I learned about in a Harvard Business Review case study that I paid $10 for, 'cause I'm putting the team on my back today. Melissa's strategy is reminiscent of Blogilates, but with a twist. So rather than pivoting to physical product, Melissa has a subscription-based fitness platform where her workouts are gated behind a paywall. So she posts fitness and health tips to her 1 million followers on Instagram, but has her own online platform that'll set you back $9.99 per month for access. And according to Harvard Business Review, she had 92,000 paying subscribers as of 2020. So for those doing the fast math, that's around $11 million per year in subscription revenue. As for this business model, it leverages influence and trust, but to provide a digital service, so it's less dependent on ad dollars or constantly hunting down new partnerships.

Hopefully by now you've kind of picked up on this trend. The different examples that we're covering are all far more interesting and diverse than merely posting short videos and doing brand deals, which can dry up quickly and without warning. When you have no product of your own, you're just an advertiser. 

The last creator model that we're going to explore is Thomas's…Frank, not my husband…digital product sales, fueled by what I'll call YouTube dominance. And we are going to let the creator in question speak for himself. When did you start making videos on YouTube? 

Thomas Frank: I actually started in 2006, which was one year after YouTube went live. This wasn't my official start date, but my brother and I got our YouTube channel up and running in 2006. So this was probably right after YouTube pivoted away from being a dating app; believe it or not, that's what YouTube originally was. And we were just uploading videos we were making in our backyard. We were trying to make a movie at one point, just like silly kid things. And then I sort of let my channel lay dormant for years, started blogging in 2010. I started my podcast in 2013, and 2014 I finally got the bravery to put my face on camera and upload that to the internet. So 2014 was my, what I call my official start date on YouTube. 

Katie: I know Thomas Frank Explains was not your first foray into the YouTube world. So I guess let's talk then specifically about Thomas Frank Explains into the business that you're running now. How long did it take you to hit your first thousand subscribers? 

Thomas Frank: So I looked at my analytics and I guess I should preface this with, subscribers don't matter. It's the same thing as the views question here, like subs really don't matter these days. I guess they have some social signaling value for people who still think they matter, but YouTube is a very algorithmic platform. So you'll see channels that have 10 million subscribers that can't pull 50,000 views on a video anymore, and you'll see channels that are blowing up right now getting millions of views per video, and they don't even have 500k. So the subscriber question is less impressive than it used to be.

I think on TF Explains, I had my first thousand within the first two weeks, which is interesting because I don't remember doing a whole lot of promotion for that channel in the beginning. The whole point of Thomas Frank Explains was to be like the Notion channel, and I wanted to be separate from my main channel because I wanted to talk about very nerdy technical things. One of my first videos was like if it was https://, you know, the regular URL handler, it would open a Notion page in the browser. If you replaced that with notion:// it would open it directly in the desktop, and now they fixed that and it's automatic, but back in the day you had to do it manually. So one of my first videos was like, here's how you can build an Alfred shortcut on your Mac to automatically swap the URL handler. And I'm like, that's way too nerdy for the main channel. I need to make a second channel. You know, looking at the stats, we had a thousand subscribers within the first couple of weeks, and I know we had a hundred thousand within two years. 

Katie: I kind of wanna back up a step and talk about how you became interested in your niche, because like productivity tips and these techy things with Notion hacks, I'm interested in learning more about what drove you to want to make content about something that niche, and why do you think your approach is so successful? Because you do have a massive audience, larger than I would think for how involved and how, to your point, kind of techy and specific some of it is. 

Thomas Frank: Yeah, so I guess if we're talking about Thomas Frank Explains in general, a lot of people have written essays about this, but there's this almost Lego-like effect with Notion and I think some other apps do this well, but Notion does it particularly well. I think where the user gets in, it's easy to start, but then it's so customizable that they want to go and talk about what they've built, and then they'll see somebody else try something and they'll be like, well, I wanna go do that myself, and I want to customize it and tweak it. So it's this sort of unicorn type of software where people are genuinely stoked to go talk about it because they've imbued it with their own creativity. And I've had to explain this to brands because I've had other apps, or other startups that make apps reach out to me, and they're like, hey, do you wanna make a channel for our app too? And I'm like, nah, this app has like four settings. So you can't make a channel already. I can make a video about it, I can be like, hey, this is a useful app. But there's a big difference between an app that has utility and an app that gets people excited to go talk about what they've built in it, and Notion's just kind of like this great combination of ease of use but also customizability. So you can basically make your own software without knowing how to code, which means people are like, oh, I built a CRM, I built a task manager, I built a polka deck, like all this kind of fun stuff. And I think that's what makes it such a compelling topic for an entire YouTube channel. 

But I'll also note where Thomas Frank Explains is right now is pretty small potatoes compared to, say, any of the channels that are big on Microsoft Excel or Microsoft Office tutorials. There are, I think, 2 million subscriber channels at this point teaching Microsoft Office. So we got a long way to go, I think. 

Katie: When did you launch your first digital product? What was it? How much does it cost? 

Thomas Frank: So the first digital product was actually a creator's companion, and that is a Notion template that basically gives people the exact system that we developed with my team over four years for managing all of our YouTube channels and blogs and social media channels. And I built that for myself because I was frustrated with the juggling of apps that I had to do to be a full-time content creator. Like we had scripts in Evernote, we had shot lists in I think Todoist, we had team tasks in Asana. There was all these different places, and teams would be like, where's the script? Where's the whatever? And there was a whole lot of other workflow frustrations. So I found Notion initially I think because we were trying to build a company wiki, but then I kind of found some of the features that made it really good for managing a YouTube video project. And we eventually hit upon a system where we could capture an idea in Notion, we could guide the entire project through the production process, and then we could even make it a useful piece of archival content which we could go back into for review or for referencing script parts or for like, where's a shot that we shot for that video? What folder is it on the server? We could have that in Notion. So it kinda just became like this central source of truth. 

And in 2021 I was finally starting to look at ways of monetizing Thomas Frank Explains because I had built the channel with no monetization plan in in place; I just wanted to build a really great niche channel. And my first initial idea was, well, maybe I'll do a cohort-based course because they're hot right now. I think the pandemic had a lot to do with that. It was very meta. There was a Course Creators Fellowship, for people who wanted to make courses. So it's like a course for course creators that On Deck was doing, and that was a cohort-based course. So I signed up for that. I think I paid like three grand for it. I went through half the course. It was really, really good stuff. I have tons of notes; it was very valuable. But halfway through, I realized, I don't wanna do this, I don't wanna make a cohort-based course. What I think I wanna do is make a product. 

So I got to thinking, like, well, this whole creator's companion that I had built for ourselves, this is like bespoke software that doesn't exist anywhere else. What if I just made this into a template and tried selling it? And it felt like a little bit of a risk at the time, because before I went and sold my templates, the only people who were really making a lot of money in the Notion ecosystem were people who had full-on courses with community features and the templates were almost like bonuses.

And then you had a whole lot of people in the community saying no one would ever pay for a template alone, because Notion's built for just making things. And I kind of had just a contrarian thought there, like this feels like bespoke software; we find it very valuable as a team. I think there's a niche for this. Let's try charging a bit more. So we launched it into a beta. I did very little advertising because I did not want a huge flood of customers before I knew it was battle-tested and bug-free. I think we initially priced it at $99 for the base edition and then I had a $129 version that came with my task manager built in, and with almost no advertising, it started making like a few grand a month. I had a bit more advertising, starts making like $15 grand a month.

And at that point I was like whoa, people are buying this. Number one, the assumptions were proven wrong. People will pay decent money for a Notion template alone. And what this has done is it has basically replaced one sponsored video per month on the main channel. So initially the goal was, can Thomas Frank Explains be essentially a side business that allows us to put more time and research into the main channel videos so we don't have to have as big of a release schedule or as frequent of a release schedule? And then Ultimate Brain was the next one. That's my second brain template, and that was more like kind of a passion project on my part because I had always wanted this single system for notes and tasks and projects for my whole life. It had been an app for basically notes and an app for projects and there's a calendar over here and like you kind of juggle all these apps. 

So it was something I was trying to build in my spare time with Notion since 2018. When I first started using that app, there were enough bugs and enough limitations that didn't work. But then 2021 rolls around; they had released enough updates that I thought it was ready for primetime, and I had learned enough about the platform myself that I just decided to build it. And then we launched that to a waitlist and pretty quickly we're making $90 grand a month, and then a hundred grand a month, and now it's like $140k. So it was quite a surprise. 

Katie: When I hear you talk about this, and I do wanna get into your methodology around your product development and your customer service. But what I think is so charming about your story and about you as an entrepreneur is that you really were solving your own problems. You're clearly so passionate about these things and your brain is so just fully in it. I think someone that was just like, woke up one day and was like, yeah, I wanna make a lot of money quickly, I'm gonna come up with a template, that would never work. You almost can't force it. In this case it just seems like, oh, this is something this guy would be doing this even if he wasn't making any money from it. He would be making these things for himself and working on them. So I just think that that is such a fascinating aspect of the people that really make it big and do something really impressive. Nine times out of 10 they're just things that they would be doing anyway. So let's talk customer service, let's talk product development, how they go hand in hand for you. 

Thomas Frank: I'll note this is my philosophy. I don't think that every single digital product needs to have active support, but when I was getting into this, I realized, well, this is kind of like something for nerds. We're working with very, very customizable software. We've got filters and sorts and formulas and all sorts of crazy things. And I think if I just put the product out there and my support philosophy is go figure it out and Google it, duh, I'm gonna massively limit the potential audience for the product, and I think I'm gonna have more dissatisfied customers, because there's a lot of that expert paradox, where you as the creator who are in the thing all day long are super familiar with something, it's like breathing, but then you give it to somebody who hasn't really had as much experience and they're gonna be stuck. So from day one I knew I wanted to have active support of some kind. 

My other thought on this was, there are gonna be things, like you mentioned, that other customers are going to run into in terms of workflow limitations or friction or just things that they wanna do that I wouldn't have thought of. And if I'm doing support, I'm gonna get the best way of figuring out what those things are. We ask for testimonials as well. We ask for feedback, but you're never gonna get a more honest answer from somebody about how they're trying to use your product than when they have a problem with it. Because then they're super incentivized. You know, they're driven to reach out and be like, hey I'm trying to do this and it's not working.

For one example, something that we're gonna be building into Creator’s Companion very soon is a way to actually track sponsors and brands that you have reached out to yourself, and track the relationships while you're trying to negotiate brand deals. I never put that into the original template because I've worked with an agency for six years. They completely handle all that for me; the only thing I cared about was just having a database of sponsors so I could keep talking points and brand assets in a single place. But now I have all these customers who are like, well, I don't work with an agency, I reach out to brands myself. I want a way of tracking that. So we're gonna build that. 

And the other thing is I also believe wholeheartedly in refunds. I realize that this disadvantages me because you can't return a Notion template. I have some people, and I don't even ask 'em to do this, but they're so sweet. They'll be like, I deleted the template from a Notion workspace, don't worry about it. But my philosophy with refunds is you wanna make sure your customers are satisfied 100%, and there's gonna be a certain percentage who are gonna get excited, they're gonna hit the landing page, they're gonna buy right away and they're gonna realize this wasn't for me. And there's no way to 100% eliminate that group of people before they buy without making your sales page overly wordy and overly caveated and it's gonna be way less effective. So a much better way to do this is just to provide a no questions asked refund policy. This also means that people who are getting refunds are not clogging up your support queue and if they didn't have the opportunity to get a refund, they're probably gonna ask more questions, they're gonna be more frustrated, they're gonna take more support time. So there's this great balance between having a great refund policy but also great support, which will prevent a lot of refunds from happening in the first place. 

Katie: I think sometimes people will hear that or see that and be like, oh, overnight success. But what you're not seeing is the, oh boy, I really started 2006 and then I put my face on the channel in 2014. It's like this is many, many years in the making. And so I kind of wanna dig into the relationship between your content and your digital products, because like you said, this is something where you're reliably producing over six figures in revenue from this product every month. I assume that is because the content you’re making and the people you are attracting with that content are your ideal customer for this type of product.

Thomas Frank: I didn't have a monetization plan basically at all when I started Thomas Frank Explains. I mean, it really came down to like I was spending Saturdays just dinking around the Notion building stuff and I still do. I'm able to casually build a Notion template on a Saturday. I was just having so much fun building stuff in this tool. And then I also had some inspirations in the past. I remembered this guy Brett Kelly had kind of made a name for himself way back in like 2012, 2013 as the Evernote guy. 2013, this guy Brett Kelly had Evernote Essentials. I don't remember how much he was making, but it was pretty good amount of money and I was like, well, could I do that for Notion, or could I be like those people who teach Microsoft Office and have 2 million subscribers in their channels and they've got courses and they're doing all kinds of stuff? Let's just go and try to make the ultimate niche channel for learning Notion. I'm loving this. I think it would be really fun to try to build the ultimate library of educational content for anyone who wants to learn this app. And I was thinking like covering the entire vertical of it. So from the absolute basics all the way up to the top, I wanted to have content covering it, and I just figured, if I do this, there's probably going to be monetization potential down the road somehow. It could be consulting, it could be writing the book on it someday, it could be flying out and doing workshops. I don't know what it is, but it seems like a pretty good bet. This app is growing and I like doing it. 

And sort of more generally, my philosophy has always been that you wanna be at the intersection of something you're good at, something you enjoy doing, and something that there's a growing audience for. And I perceived that that's where I was with Notion. It was blowing up, still is blowing up. I love doing it, and I'm pretty good at it. So I just wanted to start building that channel. And then with the templates, I realized, well, the channel can almost act as, number one, an educational resource, but number two, a funnel for the templates. If people are interested in learning how to build stuff, there's gonna be some percentage of those people who either don't wanna go as far as I've gone and they still wanna get their hands on a done for you template, or there's gonna be some people who don't wanna build it all. They just wanna use this tool because they think it's cool and they want someone else to set it up for them. I can serve both of those markets and use the content as a funnel for bringing them in.

Katie: And how often are you publishing new things on Thomas Frank Explains? 

Thomas Frank: Once a month, maybe?

Katie: Once a month. Okay. So that's kind of the amazing thing, though, is that it's accretive, right? Like you have this back catalog of educational content that anyone that's searching on YouTube, they look it up, doesn't matter if you put it out a year ago, six months ago, or yesterday, they're gonna find it and they enter that funnel, which is so, to me, why YouTube is so unique compared to platforms like Instagram that are a little more ephemeral where the shelf life of something is so short by comparison. So break down your revenue streams for us. How much do you make from your various efforts, and how do you think about this holistic business that you have?

Thomas Frank: So right now we make the majority from Notion templates. I think at the moment we're around $140,000 for this month raw revenue, and then there's refunds that will come in and then there's paying everyone. So that's just raw revenue. And then we have other streams, but it mostly comes down to templates being the biggest thing. Right now we're not doing any sponsorships, so pretty much zero from sponsorships. We have some coming in from affiliate revenue still. We have a decent chunk coming in from AdSense on both channels. And then I guess I sometimes get revenue from music I've put out there or book sales, but right now it's definitely templates is the lion's share. We are gearing up to get new videos on the main channel again, so that might mean new brand deals. At the very least we'll be advertising Nebula, which is the streaming service I'm a part of, and then we'll have more AdSense revenue at least from there, too. 

Katie: So let's talk costs, then. That's our raw revenue. Full-time employees, contractors, trying to get a sense for other business expenses, and what does your take here look like, and how much of this are you kind of funneling back into the business? 

Thomas Frank: So in 2022 we did $1.4 million in revenue. Yeah, and that was mostly, that was a million in Notion templates. The next biggest one was AdSense. Oh, Skillshare courses brought in about a hundred thousand, and then affiliate. Staff was about $450,000 that year. Transaction fees were $68,000. They're gonna be much higher this year because the zero interest rate environment has gone away. Studio was $48k, we had about $30 grand in SaaS subscriptions, $20 grand in travel, and then $180k in other stuff. So about $800,000 in total expenses. I took home $615k before tax. 

Katie: Love the transparency. Living for this, and really appreciate you being here, just because anytime I see someone who treats this like a craft and is just really striving for excellence and is all in, I'm like, yes. So thank you for being here and being so…bad pun…being so Frank with us about how much you're earning and how you've set up your business and kind of your philosophy.

Thomas Frank: Can I plug a small thing? 

Katie: For sure. 

Thomas Frank: So on my site, this is just like a thing that I've been brain dumping into for a long time, but if you go to creator.thomasjfrank.com, it's just like a collection of everything that I think of in terms of what I think creators should need to know. So if you are curious about building a YouTube channel or monetizing it, I just add to it whenever I get a chance. It's just a free resource. So maybe check that out. 

Katie: Well, I can't tell you how much we appreciate your candor and transparency, so thank you for taking the time. And to close out, I wanna talk about how the different platforms approach monetization and where I see the opportunity in the future and whether or not it's a net positive. I think the platform with the most potential and the most creator-first business model is…drum roll, please…YouTube, but with a caveat, if I were starting over today, I would start on YouTube. YouTube's algorithm is a very powerful search engine, and good content tends to get surfaced more regularly. Here's Thomas on why YouTube in particular is so powerful. 

Thomas Frank: I almost see YouTube as more akin to blogs and SEO than to other social media. In fact, I wouldn't even call YouTube a social media app; it has social networking functions, but is primarily a distribution platform for video content and it doesn't…I mean, it has some similarities to SEO and how Google works, but then it also has this additional recommendation algorithm on top of it that you do see in an Instagram or a TikTok or whatever. The big difference is, it's much more focused on long tail. And then it also does have that search function that people really do use. 

Katie: YouTube's approach to monetization is more lucrative than Instagram and TikTok, which means you could theoretically focus on just making excellent videos and not selling ads to sponsors yourself. And you would still have a monetized channel, though I'll tell you something that feels true to me. As someone who does not have a big channel on YouTube when comparing platforms like TikTok and Instagram. In Colin and Samir's interview with Cassey Ho, otherwise known as Blogilates, they highlighted that as far as conversions go, that is, you're trying to sell a product with short-form video. Instagram reels tends to be, seems to be top dog as a social platform, because while TikTok is a place that you can achieve mega virality, if you're selling a product, Instagram tends to be more highly converting. Again, though, this is an anecdotal opinion of mine that has been reinforced to me through other creators. 

The other reason TikTok might not be ideal is that it's at the center of a regulatory hot mess right now. It is the platform that is most at risk of being banned, censored, or otherwise changed, in which case my mental health will undoubtedly take a direct hit without my algorithmically flawless content IV drip of silly little cat videos.

But in our aforementioned creator ecosystem, there is a fourth member who is not the platform, the influencer, or the advertiser, and it's the follower or the subscriber. For those of us being sold to, the overarching question worth asking, beyond all of the business talk about the financial effects is, is it a net positive for society? When I weigh all the pros and cons, I do think it's a net positive, with the caveat that I feel that way most strongly about creators like Thomas who have a specific niche beyond generic lifestyle.

And I understand the appeal of lifestyle creators, but I fear that that's where the line becomes the most blurred around providing value versus shilling things that your audience probably does not need. The strict pay-for-play model that's employed without proper disclosures in many cases, and/or to sell a new life-changing serum every month, falls more in the “watch your back” category for me, wherein it's not inherently unethical, so to speak, but I have a harder time seeing how the net effect is value additive for the people that are being sold to. C Creators like Thomas, who share tips to help you be more productive or more fulfilled in your work, or Cassey, who teaches Pilates on YouTube. There's a specific skill or point of view that's being offered for consumption and entertainment. Learn how to master your to-do list and nail the perfect situp. The products that are being sold, like hand wipes for a home gym or templates for the Notion app, they're cut and dried applications of the core competency, and the inherent promise of such a product is obvious and probably fits the audience's needs. While everyone with an opinion and product is likely selling a lifestyle to some degree, the lifestyle that being productive or being fit will provide to you is adjacent to the product, as opposed to being the product itself. Or to use our own example, our show is about personal finance. The products that we sell support the skill that we are teaching, so it's relatively straightforward. 

The creator economy is a real, viable career path, but much like other high-risk, high-reward fields, success is nowhere near guaranteed. To be successful in the creator economy, I think a few things need to be true about you, based on the case studies that we reviewed today. Number one, it's not enough to want to be a content creator. The content that you're making has to be something that you are innately passionate about and interested in yourself, like Thomas making his Notion templates for fun on Saturday mornings, and even then, it's not enough to just be entertaining and passionate.

Building a viable business in the creator economy requires just that: business acumen. That, of course, can be learned. But looking at your efforts through that lens seems to be the key differentiator between a flash in the pan “get ready with me” creator, and those who establish legitimate businesses with sincere longevity.
All right, y'all. That is all for this week. I hope you enjoyed this episode. I will see you next week, same time, same place, on The Money with Katie Show. Our show is a production of Morning Brew and is produced by Henah Velez and me, Katie Gatti Tassin, with our audio engineering and sound design from Nick Torres. Devin Emery is our chief content officer, and additional fact checking comes from Kate Brandt.