How OnlyFans Was Able To Pay Creators $3 Billion Dollars #scottsthoughts

Welcome to success story, the most useful podcast in the world. I'm your host Scott DeClaire. And today we're going to go into the history of only fans. I'm going to break down how they were able to grow into the name they are today. We're going to break down how they were able to pay creators over $3 billion. I'm going to tell you the story of the founder. I'm going to walk through roughly the four failures he had before he hit it big with only fans. This is a business case study. All right, so let's be real. The internet has definitely changed the way that we live our lives. You can find almost anything online, including tons of porn, tons of adult content, but only fans does it a little bit differently. Now it's not to say that it wasn't a smart business decision to get into that niche pornography websites get millions of visitors every day and in the pandemic they saw a significant increase in traffic. Everybody stuck at home with nothing else to do. But only fans was one of the first iterations of a company that was gating pornographic porn, adult content, whatever you want to call it. And it was in a very similar subscription model to what you saw with Patreon. So today I'm going to break down only fans. We're going to talk about the concept of gated content. We're going to talk about their incredible growth strategy. We're going to talk about their founder Tim Stokeley. Let's get right into it. So we're going to start off with a glam worship. So in 2011, Tim Stokeley spent his time partying around the world. He comes from a very, very well-off family. He eventually pivoted from partying to using his family's money to try and start businesses. So now he's trying to become, you know, a little bit of a contribution to society wants to try something that may actually end up working out. The first business idea that Tim has is called glam worship. Now glam worship is a website that focused exclusively on financial domination. Now financial domination is a sexual fetish in which submissives give gifts of money to a financial dominant. I don't know why this is a fetish. I don't know why I would look for a reason to give my money away, but apparently this is something that people really get into. So the idea came to Stokeley when he stumbled upon a subreddit about financial domination. And I guess guys that were into this stuff, I don't know if women are into financial domination as well, but anyway. So he saw how much money people spent on these experiences. And when I say guys being into it, I mean guys being the ones that are paying random strangers online. I guess that's what he tapped into with the subreddit. He saw how much money people were spending on these experiences, but nobody was really creating products for this group of people that loved to glam worship funded by his family. He put a couple tens of thousands of dollars into this business idea and he decided to develop glam worship, develop the business concept, develop the website. What it offered, so glam worship viewers offered, well rather sorry, what the platform offered was the ability for viewers and users to offer big money in exchange for playing out their wildest fantasies with creators online. For performers, so the adult entertainers quickly took advantage of this opportunity and basically it was a cameo for financial dominance economy that started to grow and blossom. So you would go into this platform, this website and you would just pay money for whatever you wanted to have access to. It was a mini economy and it leveraged Twitter, so it leveraged people building their networks out from their Twitter followings and whatnot to bring them in, bring them into the funnel. But a mini economy rather that leveraged Twitter and Venimo started to remove glam worship as the middle man in this equation. So glam worship was the platform where people would come in and they would start to facilitate these transactions and you'd have audience members and you have creators and that was the community. But because now you had the ability to connect with these people, glam worship, the business model was to basically skim fees off these transactions. So of course, if you have the contact of the person that you are paying to do whatever and you realize that hey, instead of doing this on glam worship, why don't I just go over to Twitter, we can just chat on Twitter, I can DM you whatever I want and send videos or pictures via Twitter or any other Snapchat doesn't matter. And then I can just Venmo you the money. So what's the point of glam worship because now it actually cost me less and I get less fees or perhaps the creator gets to keep more of the money that the person is sending them. So glam worship doesn't really make sense anymore, it just seems like something that can be removed. So what it started to happen with this new mini economy that was being built on the back of glam worship is users would view content on glam worship and then they would reach out to the performers on Twitter because again the performers basically brought in their following to glam worship through their Twitter followings and their social followings and then once they reached out to the performer on Twitter, they would request a video and then they would pay the performers in Venmo or PayPal and then they would receive the video. This basically allowed users to bypass the fees that resulted in the profits and the revenue for glam worship. So obviously this wasn't great. Stokely wasn't happy with this. He saw the fact that people were just avoiding and circumventing the platform. So he killed glam worship. But he wasn't done yet. He still wanted to build something that had some likes to it. So he started a new company and it was still focused on creating exclusive content. So second company he created was customs for you. So instead of users independently finding finding performers on Twitter, contacting them and arranging payments, customs for you handled all of the transaction. But to keep people on the platform, you had to focus on volume. You had to focus on getting as many people into customs for you as possible. Again, if you didn't have volume, there are still easy ways to circumvent and just go direct to the performer. So he focused on volume the second time and the performers were still not happy because this lowered the barrier to entry into the industry. It saturated the market with new performers and it made the niche very competitive. So the basically the largest performers or adult entertainers that basically could have made this plan or driven awareness to this platform. It made customs for you more well known. They basically said, listen, you're catering to people that are just getting started, which is fine. But we want to we want to put our work on a platform that favors people that have some sort of tenure in the industry that have some sort of following some reputation. If you're just focusing on people that are just getting started, that's fine, but then we don't want to have anything to do with it. So when you have your biggest advocates and influencers in the industry saying, I don't really care about it, it's not getting the traction that you want because that in it of itself is really hurting your marketing and your growth efforts when the people that you really want to champion your platform really don't care about it. So Stokely killed that after customs for you. He started a business called 121 with now 121 with moved away from adult entertainment and then he moved. He was still trying to figure out how to connect and create marketplaces and communities, but this particular this particular business was not focused on adult entertainers. So for 121 with the concept was for trades people to sell their expertise on an audio or a video call. So if I need a plumber or if I need somebody to perhaps change a tire instead of bringing somebody out and hiring a specialist, which is, you know, it can be expensive just for a small job. Maybe I can do a video call with that specialist and they can walk me through what I need to do myself so that it saves me money. It gives the specialist a scalability because now they can charge hourly rates without leaving their house and actually going on site to do work. So it's a win win. The client saves a little bit of money, but it also allows the specialist to scale their service. So 121 with similar to customs for you, although different industries, they leveraged the creator fan relationships as well as like the professional fan relationships. For no real reason other than it perhaps wasn't the right time or it wasn't taken to market properly, 121 with also failed. Still couldn't get the traction, couldn't get the critical mass, couldn't get as many people on the platform as stokely wanted, so he killed it. So this is three failed businesses at this point, but as you can see the model for only fans is starting to develop. He understands the power of building community, he understands the power of gating, he understands the power of facilitating payments between creators and professionals and the audience and the users. But he just needs to figure out how to bring all of these pieces together and that's what happens with only fans. So stokely took some more time off, so this is again, this is his third business venture. Well, he's failed with three business ventures and then eventually he gets, you know, he gets only fans and we know where that ends up. But he takes some time off, he goes back into adult entertainment, because if you remember 121 with was just with trades people, not with adult entertainment or the adult industry. So he still wanted to get into the adult entertainment industry and he also saw an opportunity because you saw a lot of social platforms. So at this point when he's building this out, Instagram is massively growing in popularity for content creators, for influencers, many adult entertainers, try and use it to post videos or pictures to remote themselves. But Instagram is banning these pictures, banning these accounts, banning these users. So they don't have a social platform to publish their content because now what are you going to use? You're going to link LinkedIn, band, Facebook, band, Instagram, band. Twitter actually does have some adult content on it, but Twitter is not a visual form. It's really focused on tech. So the best place for visual content before only fans was Instagram creators were not welcome there. So this gave Stokely the idea of building a paid social feed like Instagram or Twitter obviously focused on visual where creators can earn money directly from their content. In 2016 he launched OnlyFans and let's just pause for a second because let's not forget that most of it, like I'm doing this case study in 2021, right? Like I've only heard of OnlyFans in the past maybe a year. So even though now it's obviously successful, it took him four to five years to get it to the point after three fails, three failures so that he had a successful business. There's a lesson there. Anyways, in 2016 he launched OnlyFans. Here viewers would pay subscription fees ranging from five to fifty bucks a month, access content created by performers. OnlyFans received a 20% cut of the subscription creators received the rest. And let's be real, like the reason why OnlyFans was a success because of the experience that Stokely gathered from all of his previous business ventures through glamour ship. The company gained insight into the concept of paying performers directly for special video requests. Meanwhile, the initial OnlyFans customers came from customs for you, but the business model evolved with 121 width. The early days of OnlyFans revolved around enabling creators to upload custom content. By tailoring their content to their audience's preferences, the creators built incredibly close relationships with their followers. Something they were not able to do on any existing major social media platform. Now let's talk about the way that OnlyFans grew. So the first strategy they used was a highly effective referral strategy. Stokely and the OnlyFans team didn't just want people that would use the platform. They wanted users on the platform that would contribute to the platform's success and growth. Turn your customers into your evangelists. So therefore OnlyFans created an incentive structure, an affiliate structure for lack of a better description that aligned the platform's goals to encourage users to recruit the right people. The key objective of this referral program was quality over quantity. So if I have a user on my platform, if I have a creator or content creator on my platform, I want them to get other like-minded professional content creators onto the platform. Because they all run in these same circles. If you are in an industry, you'll know other people in the industry and you'll know you'll have connections, just any industry, this is how it works. So Stokely knew this and he knew that if I could incentivize the content creators to speak to their friends, their peers, other people in an industry, they can bring them onto the platform. So what OnlyFans did, they set up an affiliate program. 5% lifelong revenue share. So if you recruit someone, for example, who makes $100,000 per year on OnlyFans and keeps them on the platform for five years, the company OnlyFans will pay you $25,000. On top of the fact that you are still making money from your audience members. So that's an incredible affiliate program for a social media platform because yes, affiliate programs exist in other industries in other ways. But for social media, there's no affiliate program to get somebody to sign up for Instagram. There's no affiliate program to get somebody to sign up for YouTube or for Facebook or for LinkedIn or for anything really. So this is a little bit novel for social and the affiliate program worked. This was a good strategy for Tim and the OnlyFans team. Creators were creating content but they were really trying to get into other people's revenue potential by sending affiliate requests, getting their friends in, getting their peers in because they tapped into that revenue share. So a very smart, effective referral strategy by Tim Stokeley. And the second way they really focused on growing OnlyFans is through the use of Twitter. So they created a product called FanScope. Now, FanScope was the first product that OnlyFans developed to help creators leverage their Twitter following. Because remember, a lot of these creators, they weren't either very prominent on other social media platforms or they were banned from other social media platforms. So FanScope was basically a live version of Cameo. That's the best way you can describe it. Creators can start a FanScope session through OnlyFans and have the link automatically posted to Twitter. So then now your live session receives exposure from your entire Twitter following, which is again where some of these creators had their largest audiences. And to watch the live stream, the Twitter user must click the link and sign up to OnlyFans. Now this strategy brought more people to OnlyFans, brought more audience members to creators because it lowered the barriers to entry. So new users who could potentially be new content creators or new users who could just be content consumers could sort of test and see what they could expect from an OnlyFans page before they started investing any money. So again, it's all about teasing people into a platform. How do we find ways to get people in? Let's tap into where the people already are and bring them in. I don't need somebody to, I don't need to, when I'm marketing something, for example, say I'm a content creator on OnlyFans. If I'm marketing myself, I don't want to have to first get Joe Blow to care about me and then I have to get Joe Blow on to OnlyFans. I want to go to, you know, other, you know, John Doe and who's already following me on Twitter. And I want to say, hey, I'm also overheard because John Doe already knows who I am. Joe, you know, Joe Blow doesn't know who I am. So I want to bring in people who already know me because it's an easier, it's an easier way to build my audience on OnlyFans with people that already care about me. So the integration between existing social platforms is very effective for that reason because these people already like your content and you're just moving them into another platform with a very low barrier to entry. You're making it easy, right? Now, these two strategies really paid off. Of course, we started off in 2016, but these strategies were just ramped over the years. So in contrast to other live platforms, OnlyFans saw Adel performers as assets. So instead of prohibiting them, as we know, the company empowered them. And this was empowering a niche group of content creators that really were marginalized by most other social media platforms. So as a result, they never restricted Adel content. They encouraged the creation of unique content. And this, along with their growth strategy and the fact that nobody else was really serving this target group of content creators saw OnlyFans grow incredibly fast. In 2018, Leo Rudwinski, who's a Ukrainian American web entrepreneur, he built a fortune with a website called MyFreeCams. He was able to buy 75% of OnlyFans. And then after that, the company just kept compounding and compounding. And then now, fast forward to 2020, OnlyFans success soared tremendously when celebrities began to publicize it. Beyonce was name-dropping it in her song, Cardi B joined the platform. These are some of the major celebrity events that started to accelerate OnlyFans growth. Now, to date, OnlyFans has now paid to creators more than $3 billion and they have over 120 million active users. And it's worth noting that the vast majority of OnlyFans creators today are adult entertainers. That was the marginalized group that they built their community on. But the company is now taking their success and they're trying to build it out to a wider audience. So for example, they just launched a creator fund of 20,000 pounds or 27,800 approximately US dollars to help for aspiring musicians kick off their careers. And they're doing more initiatives to bring in other segments, other types of content creators. So will it work? We'll have to see. But that is the story of OnlyFans from when they started to today. And incredibly interesting. And a lot of entrepreneurial lessons, regardless of whether or not you're into the content, doesn't matter. The fact that I'm going to actually, I'll break down four lessons. So we can sort of itemize some of the main things that we saw Tim do and that led to OnlyFans success that are basically industry agnostic, transferable to any industry, any type of startup or entrepreneur. Let's go into it. So four lessons from OnlyFans. Tim Stokely had multiple failures before OnlyFans success. Most overnight successes take years. And that's true in any business started by almost anybody. So just a lesson there and something to think about if you are doing your own thing. Another lesson. If something is not favored by a larger market, sometimes there's a reason for that. But there could also be a potential or an opportunity for business. So Tim saw a need for a marginalized market segment. All these adult entertainers were kicked off other social media platforms. He gave them a platform. He gave them a community. And that's what that's what was the core that built OnlyFans. So look for underserved, underappreciated market segments. It's a smart idea to see if you can find a way to tap into that and to create a product, a platform in a community that helps an underserved segment. Third lesson. Growth strategy. Get your customers to sell for you. OnlyFans launched a highly lucrative referral program which brought people onto their platform, allowed content creators to bring peers into their platform. Money talks. Align your audience or your customer rather. Align what customers want with your business growth goals. What do customers usually want? There's a variety of things. But I mean for content creators, revenue money, like they need to make money. This is what they do for a living. Any content creator is trying to find new ways to make money, especially when you're first starting to create content. And you're starting to build a name for yourself. So what OnlyFans did, they just created an affiliate program that tied the goals and objectives of the content creator to the goals and objectives of the business. You bring in more people. That's a business goal. You bring in more content creators. That's a business goal. We'll pay you. We'll pay you money. That's a content creator objective and goal. So very straightforward. Not many other social media companies did this. And OnlyFans basically just wasn't greedy. And fourth lesson, the fact that they leveraged existing Twitter followers. This is a smart marketing strategy. And let me sort of describe how you can conceptualize and think of this for any business. So what OnlyFans did, remember they just said, okay, we're going to let you ask us your Twitter following the lesson here is if you're trying to market anything to anybody. Make the marketing and make the ask of the individual as simple as possible. What do I mean? What do I mean by that? So what OnlyFans did is they said, okay, we know that your audience is already on Twitter. They already like you. All we have to do is get them from Twitter to OnlyFans. As opposed to we're going to get people to know about you who've never heard about you. And then we're going to move you to OnlyFans. So they just said, let's just tap into what's already there. So this, so let's bring this out to other business use cases. If you're trying to find customers for your product, if you're trying it, I'll use, you know, I run a podcast. I'll talk about that. So when I'm trying to get listeners to my podcast, who do I try and reach out to? Who do I try and advertise against? I usually advertise to one of one of two segments. I'll advertise to my audience on other social media platforms. It may have not heard about my podcast because I know they already like me. I just need them to know that I have a podcast or I'll advertise to listeners of other podcasts because I know they already like podcasts. They just don't know about me. What I don't want to do and I don't really care to do is I don't really care to advertise to people that don't know me, don't like me, don't know or listen to podcasts because then I have to get them to like me and then I have to get them to like podcasts. It's much easier to market to somebody who already likes me or to already who already likes podcasts because there's only one more set that I have to do. If I'm trying to find that new people, then there's two steps. I got to get them into me and into podcasts and it's a bigger lift. It's a harder sell. So just make it as easy as possible and tap into existing followings, existing communities, existing customers. Another strategy only fans could have done is they could have said, well let's just cross and they probably actually do do this. They could just cross promote between creators. So if you already are subscribed to content creator one on only fans, well why don't you go check out content creator two on only fans because you obviously like this type of content. So again, it's all about just tapping into adjacent communities so that you don't have to make a big ass and you don't have to move somebody too far to get them involved in your product or service or business or to consume your content. I hope that makes sense. And last lesson, I cannot reinforce this enough. Tim started, I thought it was for I guess when I'm going through this case study again, I put this together a while back. Actually three businesses, I'm sure there was other stuff that he didn't mention just because it honestly was probably just such a massive failure that he didn't. He hasn't even gone on record publicly about talking it, talking about it or building it, but three notable failures. So if you don't give up, the timing will eventually be right. What do I mean by that? Well Tim launched multiple businesses. Some of those could have hit, could have worked out, could have failed. And also one of the reasons why only fans really really really got massive amounts of traction was due to the fact that there was also a global pandemic event that led to more people being online, being at home looking for alternative places to consume this type of content. So if you think about it, why was Tim lucky? Why was Tim lucky that a celebrity named dropped his platform in a song? Why was Tim lucky that everybody was online and online activity and people searching for different, you know, adult content or whatever increased dramatically during a global pandemic. It's because he kept going. It's because he was building things for years and years and years and years. And you'll notice that when you continuously build stuff, opportunities, luck, you'll start to, you'll start to run into it a little bit more. So if you think you're not that lucky, if you think the timing isn't right, keep going, keep building, keep trying. And eventually if you put the time into something and you put in the effort, the timing will eventually be right and luck will eventually find you. And this is just because you haven't given up yet. So really, really great lessons from this story for any entrepreneur. Yeah, he started with some maybe some family money. We don't all have that luxury, but that being said, he could have started with family money and given up after the first venture and just gone to work for somebody. Or perhaps he has so much family money, he never would have had to work. I don't really know. But the point is he didn't give up. And then when he didn't give up over years and iterations and trying and failing, then all of a sudden, something hits. Now everybody's looking at him like he's lucky like the timing's right, but it's really just because he didn't give up. That's it for the only fans story. I hope you enjoyed. If you like this, share it with your friends, family peers, co-workers, anybody who you think would find this interesting. If you're listening to this on iTunes or Spotify, leave a review if you're listening on iTunes. If you're listening on Spotify, leave a follow. I think those are like the two algorithm metrics that matter. If you're watching this on YouTube, hit that like button, hit the subscribe button. Leave a comment for the algorithm and I appreciate you. That's all I can say. Have a great day. Hope you enjoy. Talk soon.