Eric Wei - Creating A Bank For The Creator Economy With Karat Financial

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Welcome back to the Casey Adams Show. Today I am sitting down with a good friend of mine, Eric Wee, the co founder of Carrot Financial. Thanks so much for coming on the show, Eric.

Absolutely. Kasey, thank you so much for hosting and making this happen.

Of course. So, I mean, I've been excited about this. I know that, you know, when it comes to our relationship, we've known each other for just under a year now. I think it is.

That's right.

But I've just been so impressed by what you've been able to build at Carrot and, and also obviously very excited about what our companies have done together at Mediakit. So I'm excited to dive in, but for people that may not know what Carrot Financial is, I'd love for you to just give a high level overview before we dive into it.

Yeah, naturally. So at Carrot, we're building financial infrastructure for the creator economy. If you're a YouTuber and you're hitting millions of dollars in subscribers, you're making a full time living, you're a business. But the crazy thing is the rest of the world doesn't see you that way. And, and if you go into a bank to try and get help opening up an account or opening a credit card or mortgage, I mean, Casey, they're going to turn to you and be like, what is this? Are you laundering money? They have no idea how to help you. And we've realized, also working really closely with creators, that creators often don't have the time to figure this out either. So we're building financial products, starting with a business card, credit card that bases its limits and rewards off of social stats and financials instead of credit history. So I think I have one in my pocket right here, right now. So this is one we did for YouTuber called Carter Sharer.

Yeah.

And you know they're high quality.

Yeah, totally. No, it's so cool too, because I think, I mean first off, a lot of creators are younger, right. I remember when I first started my podcast, I was 17, 18, I was very unfamiliar with credit lines and everything that comes within that. But you're totally spot on when it comes to the access that creators have. It's very limited. So where did this idea come from when it comes to, you know, like providing credit and financial infrastructure for the creator economy? I know, hint, the T shirt. You worked at Instagram previously, but where did this idea come from?

Yeah, so it's a combination of my experience and my co founders. So as you said, I used to work at Instagram as a product manager. I helped build Instagram Live and other products for creators, got to know a lot of them and I saw, wow, these folks are blowing up as entrepreneurs do not have the time to figure out their financials and walking into banks and getting treated really, really poorly. We were working with this YouTuber who had over 15 million subscribers and his credit card limit was like $10,000 a month. We work with another Twitch streamer named Alexandra Botez who has over a million followers on Twitch today, went to Stanford, started a Y Combinator backed company and, and she was rejected for a business credit card multiple times. And the second part of it is my co founder came from working within the financial system. He started a microfinance company in high school, he worked at Goldman Sachs. He was running his own venture fund afterwards. So it was a mix of, well, I'm working with these creators, I'm seeing the problems they have from a financial perspective. My co founder's coming in and saying, okay, the financial system is broken. It uses outdated metrics to try and assess how credit worthy you are as a person or business. That doesn't map to who's moving and shaking in today's world. So let's combine our forces. Let's build financial products for creators that treat them like businesses that. Yeah, we've started with a credit card because it's the easiest way to explain what we're doing. We're going to go into bank accounts, into taxes, mortgages, and just a little bit of everything to make it a one stop shop.

Very cool. I'd love to dive into, you know, prior to carrot, how did you initially get the job at Instagram and what were you doing before that?

So when I was growing up, I had no idea what I wanted to do. Actually a lot of admiration. I Have for yourself is how this all got started was you at a young age, hustling, saying, hey, I want to do a podcast, and just reaching out to people and doing your own thing. Cold. I always had those impetus and inclinations, but I was like, there's so much going on in the world, maybe I should go and learn first. So I went to Harvard, I studied economics, and I worked in investment banking at Blackstone. I worked in Fintech Consulting at McKinsey. And the realization I got to was, actually, I'm going to quote Ashton Kutcher here. This world was built by people no smarter than you or me. Nobody really knows what's going to happen. It's not like you can go study and learn and come out and be like, now I know what to do. You only learn by actually going and doing. And so I had this big career realization where I was saying, hey, I want to build products for people. I want to do something in finance, I want to work with creators. Why am I spending all my time in this corporate world? So about five, six years ago, I packed myself up, moved over from the east coast to the west coast, where, yeah, I joined Facebook and Instagram. And I was very fortunate because they had a program where they were bringing in non traditional candidates to become PMs. Usually the old stereotype was a product manager. You need to be technical, you need to be an engineer, you need to be a designer. And then they were like, one day, maybe we should bring in people who don't have necessarily the sense of how to build XYZ product, but have a sense of what is the right product to build in the first place. Who are the people to build for? What are the problems to solve? And I loved it. I think a lot of what's guided our success today is what I learned at Facebook and Instagram. Building products for people.

Very cool. So how long were you at Instagram or Facebook? Instagram.

Yeah. So I joined in 2016 and I left in 2019 to start Carrot.

Very cool. I'm sure that the amount of learning you had there was probably incomprehensible in terms of how you've been able to relay that into what you're doing at Carrot.

100%. I think, again, going back to my previous point, there's sometimes the conception that while people must really know what they're doing. And I remember one summer at Instagram, I. I was fortunate enough to sit at the table with people who had come up with stories and were literally pushing the envelope on consumer product leaders and probably the entire world. Everyone was looking at Instagram, what to do, and we were just sitting around and the product lead was just kind of like, huh? Like, what should we build next? Like, what are kids into these days? Like, oh, you know, Bob, what's your son doing? And he's like, oh, you know, my son hosts these kickbacks. Right? That's what they call parties these days. This is what they do. I was like, wow. No one actually knows, but if you find the right mission, the right people, and you have the resources, you can just gather together and figure it out. And I imagine, I'm so curious for you media kits, but for us at Carrot, we pivoted. We had a mission. We knew we wanted to build better financial products for creators. My co founder and I loved working with each other. So we had the team and we were fortunate enough to raise a little bit of money from the co founders of Twitter, Twitch, YouTube, on the resource side. But the actual products we built changed multiple times before we even get to where we're at today. And that's something I definitely saw. Facebook and Instagram, I love that.

And, you know, that brings me to the next point I wanted to talk about, which is just the entire creator economy landscape. You know, you guys have not only raised a significant amount of money for Carrot, but I think it speaks to just where the industry is going and the amount of funding that's being put into creator tools, including our company, Media Kids. So I'd like to ask you, like, where do you see the current state of the creator economy and how are you looking at the landscape, being one of the biggest companies that have raised, you know, tens of millions of dollars for a creator tool.

Yeah. The root cause of all the excitement today, I think, is this very existential yearning in people where everybody has this creative aspect in them. Everybody, when they're young, has these things they want to do, and then grownups come in and say, oh, no, you can't make a living off of that. At least mine were like, go into finance. Like, go be a doctor. And that was fair because to make a living off of what you love to do often requires you to have distribution and access to show what you're doing to other people so they can find ways to come support you. Five, 10 years ago, before YouTube, Twitter, Twitch, TikTok, Instagram, it was really hard to share with the world what you were doing. So that business model was impossible. And what's so gratifying over the past few years is, no, it is possible you can make a Living off of what you love to do, whether it's playing video games on the Internet or cooking bibimbop on a YouTube video and showing those online or doing dances on TikTok and you know, showing off your abs. Like this is newly viable.

Yeah.

And all of the interest is like, oh my gosh, like it's been unlocked. I don't just have to go and watch what Hollywood's been pushing out through movies or what the record labels are doing through radio stations. It's organic, people just making content, getting out there for me to watch and find. And so all of the hustle over the past couple of years has been two things. One is okay, these creators are now businesses. Every business needs to have distribution through all the social media platforms. Monetization, tons of companies have come in to help with that and now small medium business tools to run their operations. That's where we fit in. Right. As well as yourself, you're helping creators think through how do I put together that media kit to show off to brands. Now the next step, and here's where I think it's going, is creators finding more and more ownership over their own content separate of the platforms. You see this indirectly as, you know, all creators try to be multi platform and they're building their leverage because they can move between different platforms. And you know, when you watch a video with say you in it or Mr. Beast in it, like sure, people can like copy paste that 50,000 times but they know it's you. I think the next step is of course all of the excitement about the blockchain is how has a single source of record to make clear to everybody you own this. And when a creator can demonstrate they own this not just because their likeness is over it, but because literally mathematically it can be proven, I think it's going to lock a whole nother wave of monetization that's going to continue to grow. The creator economy.

Love that. What would you say the biggest like current problem is within the creator economy? And where do you think, you know there's an opening gap because there's so many tools out there. And you know, you guys have a great perspective working with hundreds and even thousands of creators. Where, where do you see a current opportunity that isn't being filled right now?

Yeah, I think the number one thing when I spend time with creators like yourself are many of the ones that we work with. Right. Our investors include Blau, Graham, Stephan, Sam Kolder. It's time because this is such a new business model, people are constructing as we speak. You're always thinking about, how do I make more content, how do I get more followers, how do I make more money? And how do I also then build and scale this beyond just me and my content? I chatted with one really big Twitch streamer who is literally. She's literally building like a business empire. And in the back of her mind, she's like, okay, but I still also have to keep up the content because that's where all of this was started.

That's the main driver.

Yeah. And so from a timing perspective, anything people can build that saves creators time or helps them scale more effectively. Like, you see some of the really big creators out there, they start to bring on people and opening up multiple channels where they're not always on camera, I think that's the real opportunity. Anything you can help there.

Love that. It's funny. So I had Blau on the podcast a couple months ago here at the studio, and, you know, he talked about the intersection of Web2 and Web3 and how digital ownership is so important. Are you guys, as a company, looking into crypto and anything in that world?

So my co founder previously ran a crypto hedge fund, and I actually worked at Coinbase before. So I was thinking about it. Here's the way we see it, right? There's the existing financial system centralized institution has to understand you and trust you to let you do anything, not just getting credit and even opening up accounts and doing payments. A world where in the blockchain is exciting because there's no longer a centralized institution that gets to sit there, determine whether you can be trusted, and get your access to basic financial abilities off of that. It's, hey, there's just an algorithm that people have tested empirically that has really worked. And, you know, it's not any one person who's determining what that is. So it's a free market. Theoretically, the best ones went out, and it's not like any one person can cut off your access. So we're like, cool. We're in this Web2World today, including the Financial System Web3. Absolutely. A lot of the problems we're trying to solve, helping banks understand creators be translated to. We're not helping the centralized institution know how to work with a creator. We're trying to build the translation layer for everybody in web3 who wants to provide financing and business financial tools to creators, where that underwriting layer that sits in between, it says, here's how to understand this creator's worth as a business. Because we've bootstrapped this. We have this understanding. And now we can be that bridge between a creator and Basically everyone on web3 who wants to provide banking services. Now, the tricky thing is Web3 is exciting, but most people don't know what it is. And we're really focused. Our mission is financial literacy. We succeed if creators know that they need to care about these things. It's already a lot of work to explain to creators the existing financial system why they should care.

Yep.

We've realized it's another layer to then add crypto on top of it. So our mission is start with existing financial system as it is now, explain to creators how it works, helping them there. And then when more and more things move into the blockchain, that's where we'll also help them make that transition. So that's how we think about it.

Very cool. And speaking on creators and the current wedge that you guys started with, which is the credit card, what are some of the requirements? Or if a creator is watching this right now, like, how could they go about getting access to this if it's, if this is, you know, intrigued them.

Overall, we get that question a lot. Folks often reach out and say, hey, like, I'm not a creator, I am a baker, you know, but like, why can't I get access to this? Like, this just seems strictly better. Because our card, for context, it charges no fees to the user. It provides higher rewards and limits than typical banks, which usually look at your credit history. We look at a lot more and we're building all these really cool perks, right? Like we have events, we feature creators on billboards. And so people are often like, well, why can't I get access to that? I say two things. The first one is say instead of being who you are today, a Renaissance man, all forms of content and companies say you are just like a baker or restaurant owner. There's no reason why we understand you better than a normal bank and could provide better terms. Our entire wedge is precisely because banks don't get creator businesses. So if you're not a creator, there's no reason really to work with us and there's no reason why we could do better for you. That's the first thing I say. The second is we decided to focus on full time creators first because, like, I think there's a journey as a creator. In the early days, it's all about help me figure out what content to make, help me build distribution, help me monetize. And we really are focused on that last step, help me scale as a business. So we sort of went top down working with the biggest creators in the world first. And what that means is because we want to make sure we provide really good service and don't have the resources to serve every creator out there. We ask as a full time creator that typically correlates for example to at least a hundred thousand on YouTube or a couple hundred K on Instagram or a few million on TikTok for the simple reason if you're before that, you're probably not going to find or service that helpful. You're not that level of being a full stage business.

Yeah, very cool. And when it comes to the like the type of creators on a high level, I'd love for you to just go through some of the names so that people can get some insight into, you know, the top creators that you guys work with.

Yeah, absolutely. So I think one of the favorites I enjoy talking about because he's figured out how to scale beyond himself is Graham Stephan. Now Graham is a great example of somebody who started in one career as a real estate agent. Yep. But started to share what he had learned from a business and financial perspective and people loved it. Again, it's someone who has built his own business and learnings from the ground up, sharing in a very personal way to the point where, as you likely know, he's got a booming YouTube channel. And what's crushing it brilliant about him is the scope of his ambition and how he's diversified. So for example, it's not just adsense right off his YouTube videos or sponsorships, it's also launching his courses, it's launching his own line of coffee products. It's opening up multiple other channels and bringing on members of what he calls the family to go figure out what's the right content for this channel that people are going to care about. He's really elevating himself from Graham Stephan the creator to Graham Stephan the media empire and being extremely savvy in the way that he does that. Right?

Yep.

And you know, there's to be clear, there's always like multiple ways to go about this. Right. Like another example of a creator we work with is called Wendover Productions. And this speaks to the diversity of the creator landscape. Wendover Productions isn't even on camera.

I haven't heard of them.

So if you look at his YouTube videos, it's like how does the economy work? Like how do errors plane miles work? How do gas stations work? And it's like informational. You sit and you learn and you think about that. It's even more so because he's not even on camera, it really helps him figure out how to focus on improving the content more and more over time. As you sort of see, Graham's a great example of someone where it's not just his personality went over productions well. It's because he's not in camera that the content is what he's really, really leaned into. And there's creators all in between in that spectrum. But the point is both of them have figured out how to really make businesses. And like, that's extremely inspiring.

Totally. When you, you spend a lot of time speaking with creators, what would you say is the biggest differentiator from creators that are, you know, just starting out and then the creators that are really full time and how do they make that jump?

It's really interesting. So it's a mixture of both the scarcity and abundance mindset, right?

Yeah.

Because when you're in a scarce mindset, you're like, oh my gosh, everything's going away. I need to hustle, I need to grind. This is like, you know, Alexandra Botez, when she graduated from Stanford, did a startup startup, didn't end up working out. She spent months just in her home playing chess on Twitch every single day by herself. Everyone's looking at her being like, you should go into tech, you should get a job. Are you okay? And she is just like, I am going to make this work and Maybe there's a 10 people watching, but I just believe in myself. Right. That conviction. Right. And eventually as a top creator, you get to a point where that mindset that helps you hustle and grind takes you to a certain level. But then you need to have to cultivate more of an abundance mindset where you have to believe that, you know, another creator I work with, Carter Share, yep. Is huge. He's just moving his operation, his company over from LA over to North Carolina. And because he's thinking through an abundance mindset, the global optimization, he's going to be able to do so many more things in North Carolina. There's so much more space. The scale of his videos is going to be bigger. And that does mean there's like some short term pain and hustle as anybody would have in making the move. But he's now found that right mix between the hustle mentality and now this abundance mentality where he's able to think through the broader term picture. And I see this in Alexandra Botez too. She's thinking about so many business opportunities beyond just the content. And so I say the top creators have this really interesting mix where they're able to grind a lot harder and be like, I'm going to get this the same way you were when you were starting your podcast to this abundance thing where it's more like, okay, cool, even if I'm not on camera every single day, I can do more. Example what you've started to do with media kits, right? You might be doing fewer of these podcasts and that's okay.

Yeah, absolutely. And I think too it's like for me that started out as a creator that is, you know, now full time founder. It's like making that jump and figuring out like how, how can you leverage your, you know, creativity into something that you really want to do. Right. And like our whole thesis at media kits is helping creators easily share their creator analytics and overall help them monetize. And I wanted to just being a founder. Right, like for you, I know we've, you've been very helpful across fundraising efforts on our end and just very a good resource to, to bounce ideas off of. If a founder is out there watching this today, how would you suggest that they go about raising capital if this is their first time? Because I know I can say I've learned so much over the past year and I'm sure you have as well, but what would your advice be now that you've had multiple rounds of financing?

Yeah, I'd say also first time founder and so it's cool we get to do this journey together. I think honestly, two, three really big things. I think the first thing is the easiest way to raise money is just if you have an incredible company, idea's got to be great, do what comes naturally. And the incredible company part, a huge part of it is the team. The idea matters, the market matters. But what I didn't realize as a first time founder is how much the co founding team matters. Because like I said before, a lot of things are going to pivot, a lot of things are going to change. But if there's a constant where you can trust the person you're working with, you know, I trust will my co founder with my life. Right. We go to co founder therapy every week. It's basically couples coaching. Right. Because we just care enough in the relationship to invest in it. And even though, you know, today we're working on Carrot, but even before all the iterations in the creator economy space, we had been working on tons of ideas even outside of it because we knew we wanted to work with each other. So I say that's actually a really important thing because if you have that really strong co founding team, you will find an idea, a market where there's an opportunity. Which leads to my second point. Every raise I think of is tied to a specific question. But because when you're looking at venture backed companies, right, say a company is worth $100 million, right? I remember Clubhouse very early on raised money at like $100 million valuation.

10 at 100.

Yeah. And everyone was like, how is this company worth 100 million? It doesn't even make revenue. And the key point is VCs aren't looking at this company saying this is worth a hundred million. They're saying this company has a 10% chance of hitting a billion dollar outcome. And so every valuation, okay, it's 10 million, it's 100 million, it's 150 million. That's just VCs deciding the likelihood of you hitting that billionaire outcome is going to improve. Which means when you go on fundraise, you need to structure that narrative as look, here's where we are now. Here's the three, four questions. If we answer, we will be a billion dollar company. And each stage is meant to tackle one of those questions and turn that from an unknown known into okay, we think we've got it answered. So like for ourselves, right? How does carrot become a billion dollar company? We become a multi billion dollar company. If every single content creator business in the world comes to us to set up their backend financial and biz ops not just on cards, but bank accounts and payments and more. What are the three questions we had to answer on each successive round of funding? The very first question was literally, are creators even a thing? Now it's immediately clear to you and I and it's not to venture capitalists. And that's okay if it's incredibly blindingly obvious there wouldn't be an opportunity. But the first round we ever did was really just investors saying, we think creators are going to boom and we want to prove it out with the money we're going to raise in our precede? Then the second question is, okay, creators are a quickly fast growing market. Are they businesses? Can you build business products for them? Or is it always just going to be a few sitting in Hollywood and everybody else? And we were like, yes, the third thing is, okay, if creators are going to boom and their businesses, what's the first business product you build for them? That is the right wedge. And that's where we did a round of funding. We said we think it's the card. And then after that it's okay, cool. Can you then develop from the card into these other financial products? Can you do the cross sell and like, you know, if we succeed in all of those like that, that's a billion dollar business. Right. So every round is going to VC and saying here's the question we're trying to answer to help you increase the probability we hit a billion dollar business. And here's how I'm going to use this round to answer that question.

Very cool. It's very clear when you put it like that.

Totally.

Couple more questions. We wrap up here. Eric. When it comes to building a team, building team culture, I know you guys do that very well. You guys have incredible poker nights for creators, all these cool events. How have you guys gone about building a the team but also the culture within Carrot? Because I know as a cardholder myself, you guys have incredible benefits. You treat your creators like gold and I felt that firsthand. So how have you initially taken that idea to build culture and be build your team and how has it played out for you guys?

Absolutely. It's about finding people who think the same way you do. Like the way we view it is if you join Carrot, you are a business owner. Right. Like all of our full time employees, like they have equity in the company and everyone's sitting down and thinking through, yeah, how do we grow, how do we do better for creators, what do we do next? Now of course everyone has a different area of particular expertise where okay cool, we're thinking through what to do, how to get there and actually accomplishing it. Okay, maybe our head of engineering obviously has a lot of insight into, okay, well here's what I can build from a technical POV that could help that, that I don't have. But he's still thinking through what do creators care about and how can I help this business. And so the number one thing we look for are people who, number one, really, really care about building for creators the mission, care about improving financial access. Number two, really want to work with us, the co founders, but also the team of people we have now. And number three, we always look for slope over intercept. Just really able to grow fast and grow quickly. And we've brought multiple people in our company where they've ended up doing something really different than what they did before. And that's totally the nature of startups, sometimes to be really expected. Now tactically getting and hiring those people are so I call it, that's of course very hard and we've talked about this before, recruiting is always a very important and difficult task. As a founder, Totally. Yeah.

When you. When you think about the future of creator economy, I know we're building a tool in the space and there's dozens of them. How do you think, you know, tools can help each other? I know we have, you know, our own partnership that we announced a couple months ago, but there's so many tools out there to help creators, and I think we believe at MediaKits that there's so much overlap and on ways that you can, like, rub shoulders with people and actually help them help you and vice versa. So how do you guys think about partnerships and, you know, working with other creator companies?

Yeah, I love that question. We love working with you. We always view it from the perspective of the creator. Right. Why are these things bundled together? It's got to be because as a creator, hey, Sam. Using one thing, here's another thing that can make my life a lot better, and it's because I'm on this first thing, that the second thing is even better than just if I went to a cult. Right. And like a great example, the partnership between us. Right. When you play out the visions of our company, you can totally see a world where a lot of our onboarding creators can skip because they're on media kits, and a lot of your onboarding, they can skip because they're on Carrot. And, well, that's valuable to creator because it's like, oh, because we have a relationship, I get to save time, right?

Totally.

And I think you always have to find a partnership that, like, saves them time or makes them more money or brings them more clout based on some unique advantage you have because the two of you are bundled together that others don't.

Yeah, love that. Last question before we wrap up here is, you know, if you were to take a step back and restart the, you know, the journey of Carrot, what advice would you have for yourself looking back at the early days of the creator economy?

It's a mental game, actually, because in the early days of the care economy, and I'm not even going to say that early, when we started care, it was like two and a half to three years ago, where, I mean, you go to any creator like yourself, be like, yeah, this has been killing it for a while, but it was before the rest of the broader VC financial market really woke up and saw the opportunity. And so the reason why I say it's the mental game is the earlier something is, the more opportunity there is, the more people who will go to you and be like, you're so brilliant that you figured out how to address this in a way other people have not. But also the more people who are going to come to you and be like, this is the most stupid idea ever. And that's okay, because again, if everyone thought it was a great idea, you're too late. Like, the market's already been captured. And so the earlier you are, the more opportunity, the more people come in, you be like you've seen something nobody else gets, the more people are going to come to you. Like, this is so, so stupid. It really is that mental game to believe in the conviction you had around that initial idea and to believe in your team and your co founder. And even now, two and a half years later, right, we've much further along, there remain a lot of uncertainties. And it's about having the mental space to figure out how to take that ambiguity, grapple with it and move forward. I love that.

Well, just before we wrap up here, Eric, where is the best place for the listeners to follow you to learn more about carrot overall?

Absolutely. Check out our Instagram. We're at Try carrot. So that's Try T R Y and it's carrot K A R A T. It's not like the vegetable for bunnies. It's not carrot. Carrots. It's like 24 carrots. So go check out our Instagram at Tricarat and you can direct message us there and we'll reply.

Awesome. And for everyone watching or listening today, thank you so much for listening to the Casey Adams show. And of course, thank you to Blue Wire Studios for having us at this incredible studio here at the Wynn Hotel in Las Vegas at Artisan.

Monarch. Legacy of Monsters an Apple Original series. The world is on fire. I decided to do something about it on November 17th. This place, it's not ours. Believe me, the most massive event of the year arrives. If you come with me, you'll know everything. I promise.

Oh, my God. Go, go, go.

Legacy of monsters streaming November 17th only on Apple TV.

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