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Media + Tech = Negative CAC

The marketing and communications landscape is changing. It happened with B2C a decade ago with the nauseating rise of the influencer. Now it’s happening in tech. This time with the creator economy movement.

Traditional media has been in structural decline for years, while new media—podcasts, communities, blogs and newsletters—is here, and it is thriving.

This matters because we, as leaders, need to know where to spend our budgets in the best way possible. We need to know where we have the greatest chance at turning $1 into $5. It used to be Facebook Ads, before that it was grey hatting your SEO. Cold outbound at scale worked wonders for years.

There have always been channels for a smart founder to go and exploit. In other words, you always knew how to grow. But now those dollars that get pumped into the Meta machine don’t come out as $5, they come out as $1 dollar and 10 cents.

In today’s piece we aim to demystify the creator channel, and show you how it may be possible for you to aim for negative CAC in the not too distant future.

Understand CAC and why it matters

CAC, or customer acquisition costs, isn’t rocket science. It’s the art dividing the expenses to acquire customers, mainly the cost of sales and marketing, by the total number of customers acquired over a given period. Having said that, CAC is more important than ever today.

In the last decade, as we went through the ZIRP period, the rhetoric was growth at all costs wins. Blitzscaling was being fetishised from San Francisco to Saint Petersburg. Companies like Fast were out there burning $120M to get to $600k of revenue. Those days are dead.

Today, money is not cheap, but expensive. Growth is not given, it is earned. And how much money you spend to land Acme Corp really does matter. This is where creators come into our story, and the idea of owning your audience.

Case studies: companies building through creators and vice versa

Let’s take a look at a few differing examples of companies that are building through creators, and conversely, some creators that are leveraging their own audiences to build big companies of their own.

Hubspot

In early 2021, in peak mania, Hubspot announced an acquisition that may have seemed odd to some. One of the leaders in CRM and marketing automations was buying The Hustle—a daily newsletter?

Although it’s not your typical tech acquisition, it made great financial sense. If you’re selling software, you are working with customers who more than likely have an incredibly high lifetime value.

Not only had they purchased one of the largest newsletters in the world, they also snared the My First Million podcast, which happens to be one of the most popular podcasts in the world, hosted by Sam Parr and Shaan Puri.

My First Million is kinda like the Joe Rogan Experience of business. Very loose, lots of banter, and with a broad listenership. Perfect for Hubspot, whose customer skew SMB.

Following this acquisition, in an incredibly crowded space where the cost to acquire customers is intensely competitive, Hubspot now have two owned media assets. And these assets will continue to drive revenue and brand value to Hubspot over the short to medium term.

Take a look at Ahrefs and you’ll see that HubSpot gets 12.3M monthly organic users into their website every month from their content strategy. This is just an extension of that.

Following the success of My First Million, Hubspot built out the Hubspot Podcast Network, which now boasts a total of 34 podcast. Incredible.

The many agencies of Sahil Bloom

Sahil Bloom, the ultimate threadboi cum business mastermind, has single-handedly turned has massive Twitter following into a portfolio of cash flowing businesses generating more than $10M in annual revenue.

Sahil, up until quite recently, was working in private equity. So rather than partner with large brands, or be acquired into big tech, he decided the better option was to take his influence and plow it into his own ventures. Some of which you can see below.

He built creator themed agencies. Most of which are selling done-for-you packages, using offshore talent to power it in the backend. The incredible thing about Sahil is he only wrote his first Twitter thread in May of 2020.

Sahil owns every one of the agencies mentioned, and runs ads for partners inside of his newsletter. This is the first instance of negative CAC we will hear today. It’s feasible that with every newsletter send Sahil could sell tens of thousands in ad inventory and drive tens of thousands of value to his companies at the same time. Negative CAC.

Robinhood eats up MarketSnacks

When Robinhood snapped up MarketSnacks in 2019, it wasn’t just a casual foray into content; it was a calculated move to turn passive users into engaged, informed investors. MarketSnacks, known for its witty, accessible takes on financial news, seamlessly morphed into Robinhood Snacks.

This integration meant that every Robinhood user now had a financial guru in their pocket, translating Wall Street jargon into everyday language for 10’s of millions of subscribers. Imagine getting your daily market updates with the same ease and humour as scrolling through your social feed—that’s the Robinhood Snacks effect.

Since then Robinhood has launched an independent media arm, Sherwood Media, led by co-founder and former editor-in-chief of The Verge, Joshua Topolsky. Sherwood, which not only houses Snacks, also just acquired Chartr, a company specializing in data visualizations and it plans to integrate into, you guessed it, Snacks.

In June of 2023, the company said it planned to expand to events, podcasts and build out a print magazine.

Jimmy Donaldson aka MrBeast

MrBeast first uploaded a video at 13 years old. It was a nonsensical, un-engaging two-minute Minecraft play through. You would never have assumed that video would be the spark that catalysed the transition of little Jimmy Donaldson, into the 266M subscriber, MrBeast, as we know him today.

Other movements in the space

But that’s not it. Companies all over the map are scooping up media. Take the Pendo purchase of Mind the Product for example, the premier brand for 300,000 product managers, designers, and developers.

Take a look at this list of other recent acquisitions. Tech acquisitions of value add media and community brands.

Admittedly, more than one of these acquisitions has been spun back out or re-purchased—most famously by Dave Portnoy buying Barstool back for $1—but the point remains. More and more companies are acquiring media brands.

The future of CAC and creators

All-In podcast co-host David Friedberg said recently that; “In 30 years time all traditional brands will be dead.” And I tend to believe him. As more techno-first, social-native youngsters grow up into the next generation of decision makers, more and more old media will recede into memory.

In the not too distant future; media will be led by humans, not brands. Creators will spawn businesses as fast as the algorithm refreshes, and who knows, maybe the first TikTok star will run for office. The future is coming fast, be ready.

How you can apply this

Further study

And that’s it! Now get out their and start building, buying or partnering with your own media brands.

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