The Rise of Media-First Investors
“Every battle is won before it is fought.” -Sun Tzu
It’s time to talk about the new wave of media-first investors. I was going to kick off with 25-year-old podcaster Harry Stebbings (20VC) who recently raised two venture funds with a total commitment of $140 million. But just a few days ago, writer Packy McCormick co-authored a piece with Chris Dixon for the Economist about web3 – and announced that he was joining a16z Crypto as an advisor.
There are other examples of creators leveraging their work to raise real money:
Matt “Mr. Metaverse” Ball: Roundhill Ball Metaverse ETF with more than $400 million in AUM (I had to adjust this number upwards every time I edited this piece!).
Patrick O’Shaughnessy, Invest Like the Best: launched his Positive Sum venture firm (Patrick had worked in asset management already, but not in venture ).
Turner Novak started with threads on Twitter before turning a fantasy VC portfolio into a job in the industry. Finally, his memes turned into Banana Capital.
A number of podcasters and writers have rolling funds to make angel investments.
While this feels like a new development, there is ample precedent. A.W. Jones launched the first modern hedge fund after writing an assignment for Fortune in which he profiled market forecasters and concluded that one could invest both long and short by betting on both fundamentals and investor sentiment. As Sebastian Mallaby wrote in More Money Than God, Jones’s efforts make a good living in journalism didn’t pan out. His plan B? He raised money from friends and family to use his insights and started a hedge fund.
Carl Icahn started out as a broker and, after going broke in 1962, found a niche in trading options. He established himself by publishing a newsletter called the “Midweek Option Report.” Marty Zweig published a market newsletter before forming the Zweig-DiMenna hedge fund. Bridgewater’s Ray Dalio started out selling his insights through a consulting service and newsletter (and to this day Bridgewater publishes voluminous research pieces for its investors).
More recently, Michael Moritz started his career as a journalist who covered Silicon Valley for Time and rose to be its San Francisco bureau chief. Moritz wrote the book The Little Kingdom about Steve Jobs and Apple in 1984 and also profiled legendary venture capitalist Arthur Rock. Moritz then left Time to start Technologic Partners, a newsletter and conference company focused on technology and the venture capital industry. In 1986, he joined Sequoia Capital.
How did Michael Burry get capital for his hedge fund? He published his stock picks online at night after working 16-hour shifts at the hospital. Analysts at Joel Greenblatt’s Gotham Capital liked his ideas and Greenblatt decided to back him.
Until now, people making the transition into the extremely competitive arena of professional investing through research, writing and meeting the right people were one-off occurrences. But I would not be surprised if we see more of this in the future. Here’s why.
First, as Sean O'Neill wrote, the “ability to propagate a viewpoint at scale is a new function in financial markets, and it is a big deal.” Firms like a16z are building media platforms. Individual VCs are present on Twitter, podcasts, and YouTube. Their ability to shape and amplify the narrative around portfolio companies can affect hiring, availability and cost of capital, and even the exit. Some creators with large audiences in technology and finance will be able to leverage their position to join the industry (as Packy just did).
Secondly, in the world of venture capital having an audience and network of collaborators can be core to the investment process. Sifted wrote about Stebbings:
“Since launching in 2015, he’s produced over 2.6k episodes and regularly speaks to the kind of founders and investors folks in the tech industry would kill to sit next to at a dinner party — people like Spotify’s Daniel Ek and Coinbase’s Brian Armstrong.
He reckons he sees between 25 and 40 “high-quality, vetted” deals per week. Dealflow comes from two sources: “Rounds coming together and people [bringing me] in proactively, or me finding something interesting and being proactively outbound on that market.”
Third, the media-first approach makes perfect sense for fundraising. Investment capital and investment funds are only as differentiated as the people who allocate it.
Access to deal flow and the ability to influence outcomes for portfolio companies? Cool.
You know what’s even cooler? Being interesting.
How many limited partners in Stebbings’s fund secretly hope to be on his podcast? I’m talking about the individuals allocating capital, not the institutions. How many would like to be invited to a dinner party to mingle not only with Stebbings but with his network of podcast guests – the top tier of entrepreneurs, investors, innovators and thinkers. I don’t know the number, but it is not zero.
In his book Influence, Robert Cialdini outlined the “universal principles of influence” as reciprocity, liking, authority, social proof, scarcity, and consistency. Let’s see how many of these apply to a podcaster approaching investors in his regular audience about a fund:
Reciprocity? Check. You’ve been getting something of value for free.
Liking? Check.
Authority? I would say so, although it’s not a traditional authority based on title or degrees.
Social proof? You bet.
Scarcity? Let’s see: how many opportunities do you get to invest with your favorite podcaster? Right.
A friend called podcasts “pure and uncut social proof.” Not only that, but podcasts and “learning in public” generally are the perfect pre-sale for products sold based on trust, authority, and social proof. Like investment funds. This capital was not raised through a traditional sales process and endless pitches. The decision to invest was likely made long before meeting, while being immersed in the listening or reading experience, when trust and a bond with the creator were being formed.
When Patrick O’Shaughnessy was asked about his most important career advice, he said to “learn in public, fanatically.” I agree. Because in addition to learning, you pre-sell the world on whatever ambitious project you dream up next.
If you enjoy my work, please consider sharing it with friends who might be interested. It would mean a lot to me and help me turn this into a sustainable effort. 🙏
You probably shouldn’t talk about your intentions with this newsletter that openly