>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.
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.
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.
That's not really representative. If you sort by publically available earnings, you can see 100 Patreons pulling in $10k/month, another 100 making $5k/month, then another making $3/month. the rest are private.
Assuming this is a representative distribution of the top 1000 (and I bet it's actually higher!):
- ~$285k/month for Patron just from the official cut
On top of this, Patreon probably has revenue sharing with the card processors for a small percentage of the fees (let's say even 0.1%), which adds a couple k.
Now people in the high-paying pro plans that get you the 5% rate (the lower end is 12% platform fees!) will pay $300/month.
that alone doubles their revenue, adding $300k/month _for just these first thousand patrons_.
So you're already at $600k/month in MRR. Hell of a lot more than a lot of "serious venture scale" B2B CRMs that are trying to be the next Salesforce or whatever but utterly failing at providing the value add needed to make big billings.
You might not need 300 people for it. And yeah it would be a lot better to make a lot of money. But they're being pretty successful at getting money here. And this is just assuming that they only have 1000 patrons (which is just false)
Patreon makes more sense as a medium-sized business than an epic-scale corporation. Unfortunately reliable recurring revenue is a tough pill for "To The Moon!" investors to swallow.
Honestly, $600k/month for 300 knowledge workers is horrible revenue if growth and margin aren't on the right track. This is more like a "20-30 pretty decent consultants in a second-tier American city" number.
Wait, how does $50M not cover 300 employees? Is fully loaded cost of employees (I imagine most of those 300 are _not_ super high level engineers, but things like CS and admin) in SF really above $160k/employee?
Yeah I don't disagree that it's not nearly enough for 300 workers. I just think that they totally have a legitimate business model to make Real Money. And my whole calculus was based on just the first thousand patrons, but I think there's a very long tail here.
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
reply