1,000 True Fans

What's up, everyone? Welcome back to another episode of Founders Journal. I'm Alex Lieberman, co-founder and executive chairman of Morning Brew. Starting this week, I'm going to act as your startup Sherpa, curating the best content for entrepreneurs in the world and summarizing it so you don't have to read it yourself, as well as analyzing it so you have actionable takeaways to apply to your business. And for today's episode, I'm going to be reading and analyzing one of the most famous essays that has been published on the internet in the last 20 years. It is 1,000 True Fans by Kevin Kelly. Kevin Kelly is the founding executive editor of Wired magazine, and he wrote 1,000 True Fans to illustrate the ability for creators on the internet to make a very meaningful living with a seemingly small number of consumers or customers. Now, while the essay was written in 2008 originally, I believe it is as if not more relevant today in an age of technological and content abundance. So let's hop into it. Okey-dokey. We have the essay right in front of me. 1,000 True Fans by Kevin Kelly. To be a successful creator, you don't need millions. You don't need millions of dollars or millions of customers, millions of clients, or millions of fans to make a living as a craftsperson, photographer, musician, designer, author, animator, app maker, entrepreneur, or inventor. You need only thousands of true fans. Just to make a point about this here, Kevin obviously focuses this essay on creators mostly. Like, you'll hear him refer to content and media a lot, but I believe this essay is as valuable for startup founders and business owners. So even if you're not a content creator, you will glean just as much insight and lessons from this if you're just an entrepreneur. A true fan is defined as a fan that will buy anything you produce. These diehard fans will drive 200 miles to see you sing. They will buy the hardback and paperback and Audible versions of your book. They will purchase your next figurine sight unseen. They will pay for the best-of DVD version of your free YouTube channel. They will come to your chef's table once a month. If you have roughly 1,000 of true fans like this, also known as superfans, you can make a living if you are content to make a living but not a fortune. One thing I just want to say, another thought here in this idea of making a living but not a fortune is I actually think you can make a fortune by only having 1,000 true fans, depending on who your superfans are and how much they pay you. I think if you build a niche business where your average customer pays you hundreds of thousands of dollars, you can build a very meaningful business. I mean, a ridiculous example is I think about the country club model. Country clubs are hyper-niche to people living in a specific area who are into a very highfalutin lifestyle and playing golf. And I looked it up right before recording this episode. You wanna join LA Country Club in California, you're paying $250,000 just to set foot on their property, let alone all the annual dues you pay. So I actually think 1,000 true fans or even less can build a fortune if you have the right fan to build a fortune. Let's keep it going. Here's how the math works. You need to meet 2 criteria. First, you have to create enough each year that you can earn on average $100 profit from each true fan. That is easier to do in some arts and businesses than others, but it is a good creative challenge in every area because it is always easier and better to give your existing customers more than it is to find new fans. Second, you must have a direct relationship with your fans. That is, they must pay you directly. You get to keep all of their support, unlike the small percent of their fees you might get from a music label, publisher, studio, retailer, or other intermediate. If you keep the full $100 of each true fan, then you need only 1,000 of them to earn $100,000 per year. That's a living for most folks. 1,000 customers is a whole lot more feasible to aim for than a million fans. Millions of paying fans is not a realistic goal to shoot for, especially when you are starting out. But 1,000 fans is doable. You might even be able to remember 1,000 names. If you added one new true fan per day, it would only take you a few years to gain 1,000. The number 1,000 is not absolute. Its significance is in its rough order of magnitude. 3 orders less than a million. The actual number has to be adjusted for each person. If you are able to earn only $50 per year per true fan, then you need 2,000 true fans. Likewise, if you can sell $200 per year, you only need 500 true fans. Or you may need only $75,000 per year to live on, so you can adjust downward. Or if you are a duet or have a partner, then you need to multiply by 2 to get 2,000 fans. For a team, you need to multiply further, but the good news is that the increase in the size of your true fan base is geometric and linear in proportion to the size of the team. If you increase the team by 33%, you only need to increase your fan base by 33%. Another way to calculate the support of a true fan is to aim to get one day's wages per year from them. Can you excite or please them sufficient to to earn one day's labor. That's a high bar, but not impossible for 1,000 people worldwide. Okay, this is where the— where it kind of gets juicy for me. And of course, not every fan will be super. While the support of 1,000 true fans may be sufficient for a living, for every single true fan, you might have 2 or 3 regular fans. Think of concentric circles with true fans at the center and a wider circle of regular fans around them. These regular fans may buy your creations occasionally or may have bought it only once, but their ordinary purchases expand your total income. Perhaps they bring in an additional 50%. Still, you want to focus on the superfans because the enthusiasm of true fans can increase the patronage of regular fans. True fans not only are the direct source of your income, but also your chief marketing force for the ordinary fans. I just want to say a few things here. I think the biggest reason that you want to focus on superfans, whether it's in business or for a content creator, is because your odds are way higher that you can take a superfan and increase how much they pay you in a given year or how many years they actually stay along with you for the ride, like how long you retain them. It is way easier to do that than to try to attract 1,000 or 2,000 or 3,000 more just okay fans. And again, like I said from the very beginning of this, it is no different in business with finding customers. You're gonna acquire customers in the early days of your business. And actually one of your hardest but most important jobs is say you get your first 100 customers, maybe only 10 of those first 100 are gonna be truly the right customer, the obsessive customer whose problem you're really solving in a meaningful way, who is going to stick around with you for every new version of the product you launch. Your job is to figure out who that person is and how to only listen to them and tune out the other 90 people. So again, this is as valuable for businesses as it is for customers. And then in this last line where Kevin says, true fans not only are the direct source of your income, but also your chief marketing force for the ordinary fans. There's no better example of this than what we did with Morning Brew and growing our newsletter. We have 4.5 million subscribers, but if you were to ask me what has been the number one growth driver for Morning Brew. I wouldn't say it's our paid marketing that we did on Facebook. I wouldn't say that it's cross-promotions with other newsletters. I would say it is the fact that we have 400,000 true fans who decided to take time out of their day, take their referral link in their newsletter, share it with their family and friends, and get those family and friends to sign up. Because they were so passionate about our newsletter and they may have ended up signing up people who didn't become true fans and were just ordinary fans. But the only reason we got to where we are now is because 10% of our 4.5 million subscribers or 450,000 people decide to be obsessed with Morning Brew and scream from the mountaintops about our product. Okay, next paragraph. Fans, customers, patrons have been around forever. What's new here? A couple of things. While direct relationship with customers was the default in old times, the benefits of modern retailing meant that most creators in the last century did not have direct contact with consumers. Often even the publishers, studios, labels, and manufacturers did not have such crucial information as the name of their customers. For instance, despite being in business for hundreds of years, no New York book publisher knew the names of their core and dedicated readers. For previous creators, these intermediates and their often was more than one, meant you need much larger audiences to have a success. With the advent of ubiquitous peer-to-peer communication and payment systems, also known as the web today, everyone has access to excellent tools that allow anyone to sell directly to anyone else in the world. So a creator in Bend, Oregon, can sell and deliver a song to someone in Kathmandu, Nepal, as easily as a New York record label maybe even more easily. This new technology permits creators to maintain relationships so that the customer can become a fan and so that the creator keeps the total amount of the payment, which reduces the number of fans needed. I just want to reiterate what's being said here. Before the internet, social platforms and payment platforms on the internet, basically, if you wanted to have a relationship or get customers, outside of your small geography where your business or you yourself were physically located, you had to work through an intermediary. If you were an author, you had publishers that had access to distribution, meaning all of the bookstores around the country. If you were an artist, you had labels who would have relationships with music or vinyl shops to sell your songs again, and the intermediate would take a large percentage. of whatever the good was that you were selling. If you had a physical business, right? Like if you were selling a physical product, you were selling through retailers. Those retailers were selling to your end customer. You weren't. You knew nothing about your end customer. If you were a creator, let's say you were a video talent, you had to be on a TV network. Let's say you were the old school version of a podcaster. You had to work as a job for a radio station. Let's say that you were a writer. You had to be part of a newspaper who owned the distribution to all the homes around the country. Today, if you want to sell a physical product on the internet, you can acquire audience through Twitter, LinkedIn, any social platform, and you can have a direct relationship with that audience. You can sell your product through Shopify, who's not taking a massive cut of what you're selling. If you're an author, you can self-publish. If you're a writer, you can use something like Substack or Beehive. So basically there's just been this disintermediation that existed for the longest time before the internet, social platforms, and direct-to-consumer commerce was invented. This new ability for the creator to retain the full price is revolutionary, but a second technological innovation amplifies that power further. A fundamental virtue of a peer-to-peer network like the web is that the most obscure node is only one click away from the most popular node. In other words, the most obscure underselling book, song, or idea is only one click away from the bestselling book, song, or idea. Said differently, James Clear has one of the bestselling books on the internet. You could be a new author who decides to sell their book on Amazon, and you are hypothetically one click away from James Clear's Atomic Habits on Amazon.com. Early in the rise of the web, the large aggregators of content and products such as eBay, Amazon, Netflix, etc., noticed that the total sales of all of the lowest-selling obscure items would equal or in some cases exceed the sales of the few best-selling items. Chris Anderson, my successor at Wired, named this effect the long tail for the visually graphed shape of the sales distribution curve. A low, nearly interminable line of items selling only a few copies per year, that form a long tail for the abrupt vertical beast of a few bestsellers. Said differently, while Atomic Habits and 10 other books may sell millions per year, if you add up all of the books on Amazon that sell 2 or 3 books a year, what this is saying is all of those books added up together will be as much as, if not more, call it the top 10 or 20 books that are selling millions per year. But the area of the tail was as big as the head. With that insight, the aggregators had great incentive to encourage audiences to click on the obscure items. They invented recommendation engines and other algorithms to channel attention to the rare creations in the long tail. Even web search companies like Google, Bing, Baidu found it in their interest to reward searchers with the obscure because they could sell ads in the long tail as well. The result was that the most obscure became less obscure. If you lived in any of the 2 million small towns on Earth, you might be the only one in your town to crave death metal music or get turned on by whispering or want a left-handed fishing reel. Before the web, you'd never be able to satisfy that desire. You'd be alone in your fascination. But now satisfaction is only one click away. Whatever your interests as a creator are, your 1,000 true fans are one click from you. As far as I can tell, there is nothing— no product, no idea, no desire— without a fanbase on the internet. Everything made or thought of can interest at least one person in a million. It's a low bar. Yet, if even only one out of a million people were interested, that is potentially 7,000 people on the planet. That means that any 1 in a million appeal can find 1,000 true fans. The trick is to practically find those fans, or more accurately, to have them find you. Said differently here, and this is me, not Kevin, there are literally millions of niche interests or problems that creators can create content around or businesses can create products for. And in an age where consumers and customers have more choice than ever before because of technology and because of the tools that have lowered the cost of creating things for people, Going more niche versus less niche is almost always the best move, at least to start. Now, here's the thing. The big corporations, the intermediates, the commercial producers are all underequipped and ill-suited to connect with these 1,000 true fans. They are institutionally unable to find and deliver niche audiences and consumers. That means the long tail is wide open to you, the creator. You'll have your 1 in a million true fans to yourself, and the tools for connecting keep getting better, including the recent innovations in social media. It has never been easier to gain 1,000 true fans around a creator and never easier to keep them near. Now, I just want to make a point here. When Kevin is talking about big corporations, intermediates, like big players will be underequipped to connect with these 1,000 true fans. Basically, my view is this is one of the biggest drivers of innovator's dilemma in general, meaning it will never be worth Whether you're a creator and you're competing against The New York Times or The Wall Street Journal, or whether you're an app builder and you're competing against Apple, it will never be worth one of these massive companies' time to go after some small long-tail niche. But as a creator or a company, if you choose to, you hypothetically go after one of these small niches, you gain ownership over that niche. And what I've also found is most niches are bigger than you think. Most of them actually have way more than 1,000 true fans. But then as you penetrate one niche, you can think about how do I start moving a little bit outside that niche and how do I start aggregating niches together? And all of a sudden, new players, the way I view them becoming incumbents, whether it's in content creation or whether it's just in any type of business, is through the aggregation of many niches. And it'll be too late when incumbents notice it. Because it would have never made sense for them to spend time or resources on any one of these niches that were aggregated by a new player. Okay, going on with the essay. One of the many new innovations serving the true fan creator is crowdfunding. Having your fans finance your next product for them is genius. Win-win all around. There are about 2,000 different crowdfunding platforms worldwide, many of them specializing in specific fields, raising money for science experiments, for bands or documentaries. Each has its own requirements and a different funding model. In addition to specialized interests, some platforms require all-or-nothing funding goals. Others permit partial funding. Some raise money for completed projects. Some, like Patreon, fund ongoing projects. Patreon supporters might fund a monthly magazine or a video series or an artist's salary. The most famous and largest crowdfunder is Kickstarter, which has raised $2.5 billion. Remember, this was as of 2008 for more than 1,000 projects. The average number of supporters for a successful Kickstarter project is 241 funders. Far less than 1,000. That means if you have 1,000 true fans, you can do a crowdfunding campaign because by definition, a true fan will become a Kickstarter funder. Although success of your campaign is dependent on what you ask of your fans. The truth is that cultivating 1,000 true fans is time-consuming, sometimes nerve-wracking, and not for everyone. Done well— and why not do it well— it can become another full-time job. At best, it will be a consuming and challenging part-time task that requires ongoing skills. There are many creators who don't want to deal with fans and honestly should not. They should just paint or sew or make music and hire someone else to deal with their superfans. If that is you and you add someone to deal with fans, a helper will skew with your formula, increasing the number of fans you need. But that might be the best mix. If you go that far, then why not subcontract out dealing with fans to the middle people, the labels and studios and publishers and retailers? If they work for you, fine. But remember, in most cases, they would be even worse at this than you would. Something I just want to point out here is that we've had this big move to— whether it's employees leaving big tech companies or journalists leaving large media companies, there's been this massive move for people to go independent and launch their own things as creators or indie hackers, micro or niche entrepreneurs. And I think generally that being a creator or being like an individual software engineer building like a micro app is very different than being a full-on entrepreneur or operator. And what I mean by this is, in most cases, a creator's best move is to actually get more than 1,000 true fans so they can bring on operational help to do everything other than the act of creation. So for an engineer, what does it look like for them to bring on business help so they can focus on developing great software. For a creator, what does it look like for them to bring on someone who can help with selling advertisements, with thinking about growth, with thinking about content strategy outside of the one thing they're creating? And I think we're seeing this big move back from a lot of people going independent to partnering in some way, either with big companies or bringing on operational help. And I think it makes total sense. The mathematics of 1,000 true fans is not a binary choice. You don't have to go this route to the exclusion of another. Many creators, including myself, will use direct relations with superfans in addition to mainstream intermediaries. I've been published by several big-time New York publishers, I have self-published, and I have used Kickstarter to publish to my true fans. I chose each format depending on the content and my aim, but in every case, cultivating my true fans enriches the route I choose. In business, I think a very easy example of this is you have a lot of direct-to-consumer product businesses that some large percentage of their sales are through their website where they have a direct relationship with their customer, but they still use platforms, whether it be Alibaba or Baidu or Amazon, because these platforms still have access to millions of customers. And even though there are trade-offs like not having the relationship with your end customer or having a large percentage of the sale taken, there is still value in growing your business via intermediaries. And then the final paragraph of the essay. The takeaway: 1,000 true fans is an alternative path to success other than stardom. Instead of trying to reach the narrow and unlikely peaks of platinum bestseller hits, blockbusters, and celebrity status, you can aim for direct connection with 1,000 true fans on your way. No matter how many fans you actually succeed in gaining, you'll be surrounded not by faddish infatuation, but by genuine and true appreciation. It's a much saner destiny to hope for, and you are much more likely to actually arrive there. And I want to just finish by saying that in a weird way, even though Kevin Kelly talks about this is a path other than stardom, I actually believe the most likely path to stardom is by trying to go after 1,000 true fans and be more niche in the early days, whether you're a creator or an entrepreneur. And so if you take one thing from this essay, it is that If you are given a choice in building a business, in building an audience, in building anything, to go more or less niche with your business or your newsletter or your YouTube channel, in this age of abundance where consumers and customers have more choice than ever before, my view is that general is out. You cannot be all things to all people. People have too many choices. They expect more personalized and more customized experiences than ever before, which means that more niche is almost always the right answer. At least early on in your journey. And that is 1,000 True Fans by Kevin Kelly. It is one of the greatest essays in the last 2 decades for founders and creators. And now I would love to hear from you. I will 100% email you back. So shoot me an email to alex@morningbrew.com and let me know what is a podcast, podcast episode, essay, blog, or book that you think would be wildly valuable for me to read and break down for entrepreneurs who are listening to this podcast. And in return, I'll share one of my favorite resources with you so you can check it out on your own and consume it as well. As always, thank you so much for listening to Founders Journal, and I'll catch you next episode.