Lessons - He Turned Down Every Investor and Bootstrapped Kit to $40M a Year | Nathan Barry - Kit Founder & CEO (Powers James Clear, Tim Ferriss & Arnold)

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In this lessons episode, discover how creators can turn audience attention into lasting business value.

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Understand why product market fit matters before launching a product.

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Explore how testing audience demand reveals stronger opportunities and uncover why great operators and real customer pain points are key to building a scalable creator business.

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How do you become a billion dollar creator?

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Oh, yeah.

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It's a high level, but, you know, kind of a challenging question at the same time.

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The idea behind a billion-dollar creator is taking something that is so, so valuable, which is attention.

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This idea, you know, attention is one of the biggest currencies that we have out there.

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Companies are spending hundreds of billions of dollars to buy attention through ads.

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And as creators, we have attention in spades.

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That's what we're the best at.

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It's creating and capturing attention.

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So it's taking that attention and then pointing it at something where you have real equity value.

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So a lot of creators are just thrilled to be, you know, earning a full-time living, paying their mortgage, that sort of thing.

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And they kind of scale up in there and say, okay, what if instead of making money off of affiliate products or some ad revenue, what if I was making it off of my own products, you know, and I'm selling courses, training, all of that sort of thing.

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But really the ones that become billion-dollar creators are the ones who build, use their audience and attention to build a brand with lasting equity value.

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So one of my favorite examples is Mark Sisson, who had a blog called Mark's Day of the Apple, who was one of the first paleo diet, paleo lifestyle blogs.

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He got that to the point where he was earning millions of dollars a year, which is fantastic.

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This is probably 2013 and 2015, around that time.

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And then what he did is he used that platform to launch a brand called Primal Kitchen, which is all around, you know, making a paleo friendly mayonnaise and then got in solid dressing and other sauces from there.

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And he was able to use that audience to launch.

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So it was really hard in consumer packaged goods and scale it up.

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And within a few years, I think three or four years, he sold it to Kraft Foods for $200 million.

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And so he took what was a good business and then instead of selling attention, he sold products and he scaled that up to a massive exit.

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Not officially a billion dollars, but you get the concept.

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Listen, that's a good amount of money for most creators.

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Yeah.

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I think that the hard part for creators, and I've thought about this a lot, and what Mark did is actually very interesting.

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And I find this slightly novel because a lot of creators are creatives first, and then they're business people second.

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And I actually think we're both of us were actually the opposite because I come from a background in SaaS also as do you.

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So you are business person, operator, build a business, understand it, understand the scale, growth, all of that.

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And then you're also a creator at the same time.

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But I think a lot of creators struggle with figuring out how to create enterprise value or to create something that they own.

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Because a lot of creators outside of, we're not talking like the Logan Pauls or the Mr.

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Beast.

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They just have such massive reach that, yeah, they sneeze out a product, people are going to know about it.

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But people that don't have reach like that and they want to start a product and they don't know how to build a business per se, they're not.

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So how come Mark was successful when how many creators launch merch lines or pick a product and it just seems to fizzle out and it just seems to be tired and then they kill it?

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Even, oh, who's that makeup artist?

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I'm going to blank on her name right now.

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Oh, my girlfriend's going to kill me.

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Anyways, there's a large makeup artist that just basically dropped her whole makeup line.

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But the point is, creators struggle building businesses.

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So how do they do that effectively?

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Or is it smarter for a creator to take equity in a company that has an operator, an entrepreneur that can actually build something out for them?

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Yeah, there's a few things in that.

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First, I think you have to know what your strengths are.

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Like if you're saying, hey, I am the creative through and through.

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That is what I'm best at.

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I can get attention, but I don't want to get involved in software development, supply chain, operations, finance, any of that.

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Then you should probably not get into those things just to chase money.

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So finding the operator is going to be really, really important.

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You know, in EOS, which is the Entrepreneur's Operating System, which is a popular framework that a lot of founders use, they have this idea of the integrator, right?

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Someone who takes your ideas as the visionary, you know, the spokesperson, all of that, and they're responsible for running the day-to-day operations.

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So I think at a minimum, creators are going to need a really great integrator, a COO, something like that.

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I think the creator should not shy away from those things.

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Like in the same way that you learn how to edit videos for YouTube, you can learn how to read a P&L and any of those other things.

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It's not just because there's some fancy certification that someone could get doesn't mean it's actually that hard.

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So I would, you know, encourage everyone to dive in on those topics.

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It'll make you, you know, much better at running a creator business.

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But I think, go ahead if you want to jump in.

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No, no, no, no, no, go ahead.

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I had another follow-up, but finish your thought.

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Yeah, in this business realm, I think that you should only pursue products on this level and scale if that's something that you're really, really interested in.

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I have seen this where people take an audience and say, hey, what should I shoehorn into this?

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And it's just not a good fit.

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Whereas you see the other angle of people testing things with their audience.

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So we mentioned Primal Kitchen.

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They had a recipe for avocado oil mayonnaise.

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They had salad dressing recipes.

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They were very popular.

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There's another CPG company called Wellness that they had this.

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It was spun off of a blog called Wellness Mama that was very, very popular.

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And they had this like homemade, you know, natural products, toothpaste recipe that was very popular.

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And so then they basically started saying, oh, let's take this thing that's already popular and put it out there.

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A third would be, what is it?

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Kettle and fire.

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They make a bone broth.

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That was off of a very popular bone broth recipe, and they built a massive business off of it.

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So

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You're following this trend that there's already interest and excitement.

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Another example that I really like is Mark Rober, where with his YouTube channel, he has 40 million subscribers or something crazy like that.

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He didn't start out saying, hey, I'm going to make a subscription science box.

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He started out being sponsored by, you know, a monthly subscription box.

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And he is looking at how well does that work with my audience?

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You know, he formed a great partnership with them.

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And at some point, he's looking and going, wait, I could make something significantly better than this.

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And I don't know the details, but they probably had decent terms for him.

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But he's like, wait, I can not only make a better business, but I can integrate it better with the videos.

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I can sell it better.

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And then, you know, he's ended up making crutch laps, which I don't remember the numbers, but...

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I want to say it's pushing $100 million a year in revenue or something like that.

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The subscription numbers are absolutely wild.

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But it's because he's really looking for the early signs of product market fit instead of going out and saying, I have an audience.

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Let's throw some merch at it.

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Let's just try to fill in some of these things in that aren't really a sustainable business.

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I'm wondering if you've thought through this because I'm sure you have.

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With ConvertKit, I know you're rebranding it as Kit now, but...

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A lot of the audience knows it as ConvertKit.

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Did you have a strategy for preemptively finding product market fit or reverse engineering a product for an audience that you knew was going to be a hit?

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Or were there multiple iterations and failures and stresses?

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And I'm sure there were a lot of stresses along the way.

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But how seamless was that product when you chose to launch Kit from the ground up?

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And how did, like, talk me through your specific example of what you just suggested creators do.

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Because at the end of the day, what you just recommended creators do is just a smart entrepreneur idea.

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So my background's in software design.

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I've built a lot of iPhone apps.

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I've written books on iPhone and web app development.

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And that got me into the creator world.

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And so I didn't have an established audience and think, okay, what is interesting, let me do software and figure that out.

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Because that's a whole challenging thing, as you know from a lot of time spent in the software world.

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And so I was really a student of that in that business and that industry.

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So what I set out to do is really as I came into the creator industry,

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is I wanted to build a better email tool.

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I was using, at the time, this is 2012, I guess.

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Yeah.

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So 12 years ago, I'm looking at the email tools.

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The main ones out there were Aweber, MailChimp, and Infusionsoft.

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And basically, if you were a direct response marketer, you used Aweber.

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If you had just gotten lumped into this industry, you just started, it was probably MailChimp.

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And if you were like sophisticated, you used Infusionsoft.

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And so I was using MailChimp and I remember thinking like, this is not made for people like me.

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Like I learned all these best practices and then you had to hack it in.

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I was running custom code and I was doing all this stuff for fairly basic things.

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And so...

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I think a lot of businesses are born out of a pain point.

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And that's where ConvertKit was of...

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okay, this can be done better.

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I can build in the best practices by default for a specific audience.

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And so that was, you know, we started out email marketing for bloggers and then expanded into indie creators, but it was not an overnight success by any means.

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And we can get into that if you'd like.

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Thanks for tuning in.

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If you found this valuable, don't forget to hit that subscribe button so you never miss an episode.

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And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode.

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See you in

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the next one.