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This company never made sense to me from a “venture scale” perspective. It’s big, sure, but are the financials really ever going to be strong enough to go publi

by tempsy 7y ago

This company never made sense to me from a “venture scale” perspective. It’s big, sure, but are the financials really ever going to be strong enough to go public? I guess I don’t see it. Also annoying to basically admit that layoffs were basically avoidable given the “strong cash position” but made anyway to give the company a little more runway. Doesn’t look too great.

foota 7y ago
That's a fiscally wise decision. Better for the company and employees to let people go now to avoid having to do mass layoffs later if shit really hits the fan.
- icelancer 7y ago
  Especially while unemployment is paying $2400/month on top of your normal payment. Many workers are better off just being temporarily laid off and getting a pay raise.
  - harryh 7y ago
    $2400/month is less than $30k/year. I highly doubt any of the people getting laid of from Patreon are getting a raise by going on unemployment.
    - icelancer 7y ago
      $2400/month is the amount on top of your unemployment pay. Maximum in WA state puts you at $55k/year with the bonus amount.
      - akhilcacharya 7y ago
        that's...that's like a 2/3 reduction at best
        icelancer 7y ago
        Depends on the initial pay. Not everyone on the Internet is making $150k.
        akhilcacharya 7y ago
        sure, but it's a decrease for anybody working at Patreon.
        icelancer 7y ago
        Not sure how you can know that. Lot of support roles probably make less than that.
harryh 7y ago
$100M in annual revenue is generally considered the rough bar to go public. Various estimates put them somewhere between $30-50M in revenue for 2019. Another 2-3xing doesn't seem out of the question.
- tempsy 7y ago
  Perhaps. Moat seems really weak to me. There’s no real network effect there.
slg 7y ago
>This company never made sense to me from a “venture scale” perspective. It’s big, sure, but are the financials really ever going to be strong enough to go public? I guess I don’t see it. It looks like the company's biggest creator brings roughly $5k a month for Patreon and only one other creator has their financials public and brings in even 40% of that [1]. There is certainly money to be made in that business, but I just don't see how they scale revenue in any large way without pissing off either patrons or creators. [1] - https://graphtreon.com/patreon-creators https://graphtreon.com/patreon-creators
- Retric 7y ago
  Patron seems like a classic long tail situation. The fall off to 100th place is only 1/7th the number of subscribers and 1000th place ~1/37th the number of subscribers as first place. Patreon’s fees range from 5-12% so they could easily be making more make more money from the 10,000 to 100,000 creators than they do the top 10,000. Further, people can hide earnings which makes estimates of their finances difficult.
  - deleted 7y ago
    [deleted]
  - slg 7y ago
    Something like 350 of the top 1000 creators have their financials public. There are several in that list that likely bring in less than $100 per month for Patreon. That tail has to be pretty long and flat to justify 230 employees and any hope of the type of growth that many investors demand.
    - Retric 7y ago
      The list is not sorted by earnings but number of subscribers. So the 1000th most profitable content creator is unlikely to be on that list. Also, they have three different fees. The 5% to 12% fees are on top of the CC fees and money transfer fees. https://support.patreon.com/hc/en-us/articles/360027674431 https://support.patreon.com/hc/en-us/articles/360027674431 Ex: Someone with 500 subscribers at 3$ per month after CC fees on the middle 8% tier is 120$ per month to Patreon.
wpietri 7y ago
I also think there's a fundamental conflict in their business model. Their nominal goal is to deliver maximum financial support to independent artists, etc. But especially as they go for IPO, their interest is using platform leverage to extract maximum cash from those same independent artists. Personally, I've been using them to support creators for more than 5 years now, so I really believe in the model. But neither the software nor the UX has ever been great, and I'm amazed they've needed $165 million to get this far. If the people I'm supporting moved elsewhere, I'd quickly follow them and not look back. So I suspect they're going to have a very hard time giving their investors any major return.
- Apocryphon 7y ago
  Previously: Patreon is about to eat itself https://news.ycombinator.com/item?id=19091955 https://news.ycombinator.com/item?id=19091955
- jes5199 7y ago
  it’s exacerbated by the VC cycle. You could imagine a bootstrapped Patreon that wasn’t aiming for IPO, that could employ a handful of people no problem. You could even have the maintainers be listed as an “artist” on the platform

by tempsy 7y ago

foota 7y ago

That's a fiscally wise decision. Better for the company and employees to let people go now to avoid having to do mass layoffs later if shit really hits the fan.

icelancer 7y ago
Especially while unemployment is paying $2400/month on top of your normal payment. Many workers are better off just being temporarily laid off and getting a pay raise.
- harryh 7y ago
  $2400/month is less than $30k/year. I highly doubt any of the people getting laid of from Patreon are getting a raise by going on unemployment.
  - icelancer 7y ago
    $2400/month is the amount on top of your unemployment pay. Maximum in WA state puts you at $55k/year with the bonus amount.
    - akhilcacharya 7y ago
      that's...that's like a 2/3 reduction at best
      - icelancer 7y ago
        Depends on the initial pay. Not everyone on the Internet is making $150k.
        akhilcacharya 7y ago
        sure, but it's a decrease for anybody working at Patreon.
        icelancer 7y ago
        Not sure how you can know that. Lot of support roles probably make less than that.

harryh 7y ago

$100M in annual revenue is generally considered the rough bar to go public. Various estimates put them somewhere between $30-50M in revenue for 2019. Another 2-3xing doesn't seem out of the question.

tempsy 7y ago
Perhaps. Moat seems really weak to me. There’s no real network effect there.

slg 7y ago

>This company never made sense to me from a “venture scale” perspective. It’s big, sure, but are the financials really ever going to be strong enough to go public? I guess I don’t see it. It looks like the company's biggest creator brings roughly $5k a month for Patreon and only one other creator has their financials public and brings in even 40% of that [1]. There is certainly money to be made in that business, but I just don't see how they scale revenue in any large way without pissing off either patrons or creators. [1] - https://graphtreon.com/patreon-creators https://graphtreon.com/patreon-creators

Retric 7y ago
Patron seems like a classic long tail situation. The fall off to 100th place is only 1/7th the number of subscribers and 1000th place ~1/37th the number of subscribers as first place. Patreon’s fees range from 5-12% so they could easily be making more make more money from the 10,000 to 100,000 creators than they do the top 10,000. Further, people can hide earnings which makes estimates of their finances difficult.
- deleted 7y ago
  [deleted]
- slg 7y ago
  Something like 350 of the top 1000 creators have their financials public. There are several in that list that likely bring in less than $100 per month for Patreon. That tail has to be pretty long and flat to justify 230 employees and any hope of the type of growth that many investors demand.
  - Retric 7y ago
    The list is not sorted by earnings but number of subscribers. So the 1000th most profitable content creator is unlikely to be on that list. Also, they have three different fees. The 5% to 12% fees are on top of the CC fees and money transfer fees. https://support.patreon.com/hc/en-us/articles/360027674431 https://support.patreon.com/hc/en-us/articles/360027674431 Ex: Someone with 500 subscribers at 3$ per month after CC fees on the middle 8% tier is 120$ per month to Patreon.

wpietri 7y ago

I also think there's a fundamental conflict in their business model. Their nominal goal is to deliver maximum financial support to independent artists, etc. But especially as they go for IPO, their interest is using platform leverage to extract maximum cash from those same independent artists. Personally, I've been using them to support creators for more than 5 years now, so I really believe in the model. But neither the software nor the UX has ever been great, and I'm amazed they've needed $165 million to get this far. If the people I'm supporting moved elsewhere, I'd quickly follow them and not look back. So I suspect they're going to have a very hard time giving their investors any major return.

Apocryphon 7y ago
Previously: Patreon is about to eat itself https://news.ycombinator.com/item?id=19091955 https://news.ycombinator.com/item?id=19091955
jes5199 7y ago
it’s exacerbated by the VC cycle. You could imagine a bootstrapped Patreon that wasn’t aiming for IPO, that could employ a handful of people no problem. You could even have the maintainers be listed as an “artist” on the platform