A Deep Dive Into The Passion Economy

Photo by Ian Schneider on Unsplash

Do you care about your work? “Follow your passion”. “Do what you care about”. “Your best place is where your greatest passion meets the world’s greatest need”. Have you heard these phrases before? To be honest, I think they are usually nonsense. It’s often elitist, because most people can’t pay the bills from their passion. It’s often wrong in timing, because you may lack the experience necessary to work out your passion with skill and diligence. And it over-inflates the importance of any one individual to the resolution of the world’s greatest needs. Even Scott Harrison at Charity:Water isn’t going to solve the water crisis himself.

I’ve been reflecting on passion this week and what it means for work.
Finishing up the story of Tom Hayes and the story of the LIBOR manipulation, as well as re-watching the classic Margin Call, reminded me of the many days (and nights) spent in front of 6 screens, hundreds of flashing numbers and that constant fear of making a mistake on an investment call for my employer.

Once in 1997, the investments I looked after went down £100m in a day (to be fair, it was £3bn of investments so only a 3% move). It bounced back over the next 2 days but it was a bit of a wake-up call about capital markets and the future of returns.

Remembering the joys and the pains of the stockmarket led me this week to download a fantasy day trading app and I’ve been playing about with “trading” Bitcoin, Copper, Oil, GBPUSD and various shares. I was explaining trend lines and resistance levels to my five year-old son and he seemed excited we might make fake money. So far I have managed to turn $8000+ into $7166. It’s amazing what you can do with a hobby and leverage…..

What is the Passion Economy?

The phrase, Passion Economy, was coined by Li Jin who is a venture capitalist and General Partner of Atelier Ventures (and ex a16z, a top tier VC). Her 2019 thesis is laid out here.There's a growing belief that the masses (“regular individuals” as Li Jin calls them") can now monetise their passion and live from it.

In essence there are now tools available that can enable the average individual to bring their passions, creativity and influence to the market and monetise those. Historically this has predominantly been a local phenomenon (the artist) or for the exceptional (Sean Connery) but new tools enable the levelling, or at least flattening a bit, the playing field. Production and distribution tools open this door - leaving the challenging part being found by your audience and the monetisation.

Substack, the tool I use to write and distribute The Weekly Distillation, is one of those tools. Stripe and its simple integration and enabling of payments is another. Etsy, the marketplace that enables sell of craft products, is one too.

How do you define a passion?
I think most of us have several things we call passions. A good way to assess your passions is to look at how you use your spare time - what are the themes in what you listen to, what you read, what you watch, what you talk about and where you go. It doesn’t mean that all of those are passions - some of them are mindless time killers, but the themes will help some stand out.

My Dad (sorry Dad, I need to use you as an example without asking you as this is the perfect analogy) recently casually and humbly dropped into an online conversation that he has been playing the card game Bridge online. We got talking numbers and upwards of 30,000 players can be online globally in one day and sometimes he finishes no.1. In the world. I am a proud son. He has zero interest in monetising this and so we, as responsible children, were trying to figure out how we could monetise him….a dangerous path! This is a great example for me - a passion, an expertise, a platform - all it would need is a podcast, a blog, a website, a course on Teachable - any of those and that could be a full-time career. This wasn’t possible in 1990, 2000 or even really in 2010 because the tools weren’t there.

What the web looked like in the mid 1990s

Sharing your passions isn’t new

In the past, there were attempts to monetise passions. I have been a supporter of Heart of Midlothian Football Club (“Hearts”) since 1985 and I remember the 150 mile round trip from Dumfries to home games. One of my regular experiences was buying an Always The Bridesmaid fanzine (“ATB”) - a short budget magazine (£0.50, $0.65), written by fans and for fans, with amusing perspectives on our club. This was a product from my tribe, for my tribe, reflecting my passions and delivered to me in a form that I wanted, where I wanted and when I wanted it. I would have paid a lot more than they charged for that, even though at the time my wages were probably about £2/hour.

But the tools you have to leverage this are

The internet opened up the opportunity to take these passions to a global audience - or at least your tribe globally. So we had the tools for the rise of blogs (Blogger, Wordpress), and podcasts (iTunes), and home crafting (etsy). We then got music (Spotify), self-publishing (Amazon), video (YouTube). And now we have influencers (Instagram), eSports (Twitch), writing (Substack), audio (Clubhouse) and many others.

Work is changing rapidly

We have seen an evolution in work from:

1. I have labour, you have a need for my labour to produce goods (a factory or farm). Value accrues to the product inventor (R&D), the provider of capital and the brand owner.
2. I have labour, you need to deliver a service (the service economy). Value accrues to the high-value service labour (e.g. consultants) and brand owner.
3. I have someone’s capital and I am going to deploy it and charge a rent (capital markets or investing). Value accrues to capital owner, intermediaries, speculators and fund managers (brand owner).
4. I am going to connect two parties together to exchange goods or services or capital and take a commission for that service, in the processing removing friction and transaction costs (the marketplace economy). Value accrues to marketplace platform (the brand owner), advertisers, providers of capital and often the producers of supply, sometimes to the consumers too.
5. I am going to create a platform that allows companies to hire people as they need them, creating a highly flexible workforce but one with great insecurity, high-demands, low financial returns to the individual labour (the just-in-time workforce or gig economy). Value accrues to providers of capital, the creators of the platform, the developers, the brand owner but rarely to the labour of the services itself.

And now we have:

6. I am going to create a product or service that will enable you to take your passion to your tribe (wherever in the world) and get paid for it (the passion economy). Value accrues to the provider of capital, the creators of the platform, the developers, the brand owner and to the producer of the product or service.

Won’t the influencers make all the money?

Photo by Austin Distel on Unsplash

Yes, ultimately Pareto’s rule will apply and 20% of the individuals will take 80% of the earnings. But it may be that the long tail of that 20% of earnings is still a very interesting market for “regular people”. I wonder if day trading merges the scope for passions and ability to leverage capitalism’s dark truth that most financial benefits accrue to capital and not to labour?

However, there are non-financial benefits here that should not be overlooked. If you are in the Passion Economy, you can work from anywhere that has an internet connection (i.e. 3G phone signal). You can work when you want and how you want. You don’t have a boss. You can own distribution if you build an email list. You can take sabbaticals if your financial model works. You can use your platform to share non-financial things you care about that you want your tribe to know about. (e.g. CharityWater). And the big one - this CAN be a side-hustle. Although working a second job for Deliveroo might be impossible alongside your work for Bank of America, it’s perfectly possible to have a podcast or a YouTube channel that you work on in the weekends or evenings.

How do you assess the potential of your passion?

If you have a passion, can it and should it be monetised? I think the questions you should ask are:

• Is there an audience of people who care about this almost as much as you do (and therefore some of them might pay for this)? Who is your tribe?
• What can you bring to the table that is unique, additive or innovative? In what niche are you considered to be an expert?
• Do you feel passionate enough about this to produce consistently and to dedicate the hours to it? And is it at the detriment of your day job?

If I was being honest, most of my passions would fall away when those questions are asked. I started this newsletter almost a year ago because I wanted to write and to see if I could fit my writing into this passion economy. I’m still refining who the audience is (my LinkedIn audience is the closest reflection of the current readership- Partners, Founders, C-suite level executives, up & coming next generation leaders, non-profit leaders, professional services executives and professional investors), what the niche of content is (the intersection of technology, finance, geopolitics, values, impact, work and entrepreneurship - to inform, provoke and inspire leaders to learn, think and create - which isn’t very niche!) and what aspects I feel passionate about to dedicate the time to (explaining topics in a deep dive like this? Maybe. TBD). (I’m writing this paragraph at 3am and enjoying it, which probably implies I have found it - albeit not in a sustainable way).

How to take your passion to market

1. Once you have your tribe and niche, you need to determine your channel. If you like to talk - then podcasts (Clubhouse, Patreon). If writing - then newsletters or blogs (Substack, Revue). Music - Spotify. Video - YouTube. If you want to have a community for your tribe - MightyNetworks. Artists have recently leveraged non-fungible tokens (NFTs) to sell digital art.
2. Create. Consistently.
3. Prototype. Gather feedback. Learn. Iterate. Prototype. Feedback. Learn. Iterate. Etc.
4. Scale in tens - First 10 people. Then 100. Then 1000. Then 10,000. Li Jin argues it’s not about 1000 fans, but actually have 100 super fans. That allows you to sell super premium content to those that really want to commit.
5. Don’t monetise too early. Find the niche that people value. And don’t assume that all value you provide has to be paid for by someone else. Free can be the right price for most of your work.
6. Find a rhythm of producing that works for you and allows you to be consistent. I’ve struggled with this - often writing early into the morning to fit around the more important parts of life in family and work. I’m spreading the creation of my newsletter across the week now to ease that burden.
7. Make space to feed your own creativity. I’ve read 23 books this year, as well as countless online articles. I get to talk to amazing people in work and life. If you don’t encourage an input, it will be difficult to sustain an output.

And this week I learned about Bitclout from this post by Ryan Holmes. Bitclout (and its very early 1990s website) is a new “custom blockchain that decentralises social” - allowing you to buy and sell the level of influence of an individual - effectively democratising the capital markets into the passion economy. If you find the next Justin Bieber, as their influence rises, your financial return rises. And vice versa. Again, a great example of how the Economy element is creeping into the Passion Economy. You could track influence for years through Klout - but only now can the individual be both the investor and the influencer. It is splitting VCs and some say it’s a scam - but the concept is interesting.

Would love to hear your thoughts on the Passion Economy — reach out to me on Twitter or LinkedIn