We are counting down to the first Moonfire Pulse event in London on May 19th where we are inviting our portfolio, investors and all those who helped us build Moonfire. It’s a community event but we only have place for 100 participants so unfortunately places are limited. We would love to see you all there so please let us know here if you are interested in joining us either in person or virtually.
This month, we’ve got lots more to share, including our research on the Passion Economy and some very exciting portfolio announcements. One of the highlights of last month’s letter was the unveiling of our open source Tokenomics code and data repository on GitHub!
New Raises in the Moonfire Galaxy!
We’re excited to announce that two of our portfolio companies have raised exciting new rounds.
GOALS is a ground-breaking new football game shaking up a category that has been in the thrall of FIFA’s hegemonic grip for far too long.
Led by Andreas Thorstensson, the e-sports legend well known to Counterstrike aficionados as ‘bds’, GOALS will be free to play with cross-play, a multiplayer-focus and e-sport ready on launch day.
The game's economy is built around NFTs, with players owning their assets and trading them freely. You can read more here or join their discord here to chat with the developers and the thriving community. They have an incredible team and Moonfire are very excited to continue our support of Andreas and the team as part of this latest funding round. Read more about them on Sifted here.
We are also delighted to announce that Oliva has raised a seed round and we’re proud to support them in the journey to provide unparalleled mental health support for employees.
Oliva is a platform providing mental health support to employees through curated care done by real humans, dedicated training & workshops, and a hassle-free digital experience. During the pandemic this has become such a pressing need and we fully support Javier and Sançar’s mission to help increase access to crucial care in a personalised manner.
That’s all for portfolio news but rest assured we have more announcements coming soon!
The Passion Economy: Empowering the Creators of the Future
The world of work is constantly evolving, now more so than ever. Workers can choose how they want to work, until what age, what hours and even how they are paid. However, within this nascent sector of the labour market, we are seeing a divergence between the freelancers of the gig economy, which we have written about here, and creatives who operate within the passion economy.
Coined by Li Jin, a former partner at a16z, the passion economy is about harnessing creators’ individuality (e.g. visual content creation or skills in playing video games or even ex-financiers recording podcasts about investment tips), whereas gig economy surrounds monetising narrow, often commoditised services (e.g. food delivery or transportation). Whilst the gig economy flattens individuality and creativity, the passion economy allows it to flourish.
The passion economy comprises those who are empowered to financially sustain themselves through their “passions” or a set of broader creative skills they have.
And it is a popular ideal. Today, more than 50 million people worldwide consider themselves as creators [Source]. A 2019 survey shows that a third of American and British children wanted to be YouTube stars as a career choice [Source]. The global creator economy surpassed $104 billion in market size in 2021 [Source].
The opportunity for the passion economy is to create a new economic paradigm for digital creators. The real question is if it is possible to break the centuries-old belief that extraordinarily few people are able to feed their bellies from their creation. Can the passion economy democratise and enable the long tail of creators to exist and thrive in this new world? Will the passion economy thrash the elite nature of the creative world or just recreate it anew?
Over the years, the passion economy has provided a multitude of success stories: in the podcast world like with Tim Ferris (tech broadcaster) and Joe Rogan (broadcaster); on social media with TikTok stars like Addison Rae (dancer) and YouTube creators like Alisha Marie (fashion & beauty). Even independent journalism is seeing a revival with Substack writers like Emily Atkin, Matt Stoller or David Sirota, who cover hard hitting stories on climate, monopoly power and corruption.
Whilst these markets are liable to become winner-takes-all economies, where a small percentage of creators get most of the revenue, the passion economy can provide for those with smaller follower numbers, particularly if they find a good niche.
As Kevin Kelly wrote back in 2008, you only need “1000 True Fans” in order to be financially successful. On Substack for example with 1,000 subscribers one can make $5,000 a month, while on YouTube you need to get to 100k followers to make a similar amount. It’s not easy, but there is a recurring nature of the income if one continually harnesses one's own reputation and brand.
What is causing the growth of the passion economy? We have identified four key drivers of change:
- Job dissatisfaction: There is a growing dissatisfaction in the general 9-to-5 job especially among millennials & Generation Z [Source], fuelling the Great Resignation of the 2020s. In the US, for example, resignation rates have never before surpassed 2.4%, but in 2021 they reached 3.0% by the end of the year. While there are many drivers to the Great Resignation, such as employee burnout, key drivers among younger generations are their desires for more control & flexibility over their work schedule, the option to be their own boss and operate in an area of passion [Source].
- Easy to use tools: It is easier than ever to create high quality content. Improvements on both the hardware and software side have made it easier and cheaper to become a creator. Take visual creations for instance, your average smartphone can take 4K videos or HD photos, a TikTok user can transform a normal video into monetisable content with a couple filters and readily available tools
- Increasing financial viability: Two trends are driving change here: new monetisation models (many to be enabled by blockchain) [Source] & increased spend by brands and loyal followers to support creators. Global brand deal spend on creators has grown 40%+ CAGR from 2017 to 2021 [Source] and average earnings per Patreon creator has grown 5x in the same period of time [Source]. There is a strong aspirational aspect of the passion economy, with 2 million creators earning 6-figure salaries. This creates “role model halos” for those aspiring to become creators
- Macroeconomic pressures: From higher unemployment (exacerbated by the COVID layoffs) to increasing inflation, many macroeconomic pressures give rise to a push them to find additional sources of income
There are some issues with the passion economy: creators sometimes find themselves forced to produce content to appeal to “the algorithm” rather than what they want to do. Burnout is common, especially on services like Twitch where it's not uncommon for streamers to be online for weeks on end. And marketing budgets are often the first thing to go when a recession starts, making the work more precarious. This is starting to change as services like Patreon and Ko-fi help shield creators from the fluctuations of brand budgets and the programmatic advertising industry.
The passion economy is part of a bigger change of our economy towards more flexible working and the ability for individuals to take power into their own hands to create, inspire and build a livelihood that fulfils their passions. Despite the issues, we believe that is a net benefit for workers. If you are looking to build a sector-leading company in this space, we would love to hear from you.
Moonfire Tokenomics Project
Last month, we released our open-source database on popular blockchain projects, detailing our token distributions, governance rights and more. If you would like to get involved, head over to our GitHub page and get started. Soon we will be able to share some exciting new interactive tools based on the project. Watch this space!
PODCAST OF THE MONTH:
All in Podcast Episode 73 - Late Stage VC Markdowns and Mistakes
This is an older pod from a month ago but it is worth listening to if you want to understand why the market is repricing tech to take into account the new macro economic paradigm we are in. We have reverted to pre pandemic market levels as quantitative easing has stopped and we have moved to a high inflation and high interest rate environment.
GOOD READ OF THE MONTH:
Partnering: Forge the Deep Connections that Make Great Things Happen by Jean Oelwang
This is an inspiring book about the importance of building deep relationships in a society where individualism is glorified. A journey through over sixty of the most successful partnerships of our time, from Ben Cohen and Jerry Greenfield to Sherry Rowland and Mario Molina, allows the author to spot common principles and patterns, as well as rituals and tools for nurturing meaningful relationships.
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