Patreon and the problem with venture capital
It’s easy to say Patreon’s fate was sealed the moment it took venture capital (VC). It’s widely understood that VC locks a company on a trajectory with three possible outcomes: acquisition, IPO, or yet another “our incredible journey” shutdown. The received wisdom is that all of Jack Conte’s sincere pleas for patience and trust are meaningless because he no longer ran the company once the VCs got in. As someone who enjoys many things that depend on Patreon, this was...deeply troubling.
Patreon lets you export your patrons, email included, but not connect directly to Stripe. They aim to be a full-service creative destination, and giving you a way out doesn’t serve VCs who see a half billion dollar valuation. I’ve been around the e-block a bit and know exactly how it goes when companies get destination ambitions. See: AOL, Twitter, Facebook. All three followed the same path of closing off ways for third-party tools to access the services while they ate a growing market. Patreon hasn’t done that yet. Watch for it.
Companies with dreams of dominating (or saving) the world have four stages:
- They start out as a way to get somewhere and connect with people. Patreon connects creators with supporters’ bank accounts in a secure way.
- Then they become a destination, one of many points of interest along the way. Patreon has enough accounts that it’s easiest for a supporter to go there when they want to support someone even if the creator has a presence on sites like Ko-fi or Gumroad.
- Then they become prisons as a source of relief and prosperity turns into an obligation. Patreon is on the road to this stage. It isn’t yet so bad that people hate it, but most creators on there see that something is wrong.
- Something else comes along to remind people of what they lost, and the company rarely survives without losing most of its market.
Every company had an AOL keyword in their ads. Then it was a Twitter handle or a Facebook page. You already see Patreon pages mentioned in YouTube videos and podcasts. Now people are talking about their Substack. And even that is fraught with taking so much venture capital, but at least they're an Open Subscription Platform. Their open embrace of hateful but profitable voices doesn't seem to affect them as much as it should.
Patreon is at stage 3 and rapidly moving to 4 as they continue to crow about huge funding rounds with nothing to show for it. No one ever knows what #4 looks like even if they can make educated guesses. My guess: #4 will be a platform that gives maximum control over a subscriber base. I can walk from Ghost Pro, which hosts this site, at any time and set up something of my own with my email list, content, and subscribers on Stripe.