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If you’re finding value in our Creator Economy newsletter, I encourage you to consider subscribing to The Information. It contains exclusive reporting on the most important stories in tech. Save up to $250 on your first year of access. Hello! Jonathan Katz-Moses, a woodworking creator with nearly 600,000 YouTube subscribers, is an example of how the creator economy is evolving: creators are growing online followings with super niche content while running booming offline businesses. The 43-year-old creator posts educational woodworking videos on YouTube, but also is the founder of KM Tools, a 10-year old company that sells woodworking tools and accessories. For most of this time, he’s bootstrapped the business, but he lately felt growth had hit a ceiling. This week, he announced he raised $2 million from Slow Ventures’ $64 million Creator Fund, which invests in creators’ holding companies in exchange for a share of their business. Katz-Moses was one of the 700 creators who filled out applications to receive investment and is the first creator to be backed out of the fund launched in February. [Disclosure: Sam Lessin, the husband of The Information’s CEO Jessica Lessin, is a Slow general partner.] Before taking the new investment, Katz-Moses had already grown his operations from a 120-square-foot shed outside his home in Santa Barbara to a 30,000-square-foot shop, which includes manufacturing space, shipping and receiving facilities, a YouTube studio and office space. He employs 15 people full time, as well as some part-time workers, including people who work on marketing. Now with the new funding, Katz-Moses is building a new product development department and has greenlit 30 new products. These include a few that happened to be on his desk when we talked by video call, including a jig for sharpening chisels or plane blades, and a toolless counter sink, which he explains is a drill bit that can remove the heads of screws. “We’d gotten to the point where we were just juggling what things we’d let go out of stock so that we could develop new products,” he told me. “We’d reached an operational cash need that exceeded our bootstrapping abilities.” He’s also worked with other woodworking creators to develop products together, such as Tamar Hannah, who runs a woodworking YouTube channel called 3x3Custom. Katz-Moses said they sold 15,000 plates for routers in a 12-month span with an average order value of close to $100. “We’re utilizing the infrastructure I’ve built to [work with] people with loyal audiences who are experts in their field,” he said. KM Tools currently accounts for 95% of his total revenue. Katz-Moses has also dabbled with online courses in the past that go more in depth on complex woodworking projects than his YouTube channel, like explaining how to make a 3D cutting board. He could launch more in the future with the additional capital. “Becoming a CEO of a tool company has been detrimental to my content cadence,” he said, noting the new funding will give him more time and resources to invest in creating more educational content on YouTube. “I think that every business in today's world needs to rely on content,” he added. Here’s what else is going on… Fanfix, a creator membership site, acquired Sunroom, a similar startup that connects women and non-binary creators with their fans. Sunroom’s creators, along with their content and existing memberships, will move over to Fanfix during the next 30 days. It’s the latest example of how startups are using acquisitions to expand their customers. Sunroom, which has about 25,000 creators using its service, raised $7 million in total funding from investors including Blackbird Ventures since its founding in 2020. Fanfix was acquired by social commerce startup SuperOrdinary in 2022. SuperOrdinary was valued at $800 million in October 2023. Terms of the deal were not disclosed. This is at least the 11th acquisition among creator startups so far this year, according to The Information’s Creator Economy Database. Sunroom’s founders, Lucy Mort and Michelle Battersby, who previously were directors at Hinge and Bumble, will now take on advisory roles for Fanfix. See The Information’s Creator Economy Database for an exclusive list of private companies and their investors. TikTok rolled out a new feature called TikTok Go, which allows creators to link to hotel bookings, restaurant vouchers and other local experiences and earn a cut if a follower pays for the service. It’s available for creators in Indonesia, Japan, and the U.S., though only U.S.-based creators will be eligible for hotel bookings for now. TikTok previously offered ways for creators to earn affiliate revenue from physical products, like makeup or clothing items. YouTube’s new AI age verification detection system, which goes into effect on Wednesday, is facing backlash with more than 70,000 people signing a petition against the new system. The new system aims to differentiate between adult and minor users by using information such as the types of videos the user searches for or watches. The organizers of the Change.org petition say the new rules amount to “AI surveillance that violates privacy and autonomy.” A YouTube spokesperson did not respond to a request for comment. G&B Digital Management, a creator management firm, is launching a four-hour master class for professionals working in Hollywood to better understand the creator economy. The free class will take place in person on Aug. 21 and Sept. 4 in West Hollywood. ICYMI: Elon Musk threatened to sue Apple for alleged antitrust violations, claiming that the iPhone maker is unfairly favoring OpenAI’s ChatGPT over xAI’s Grok in its app store. Sara Kehaulani Goo is now the president of The Washington Post’s creator network, a new division at the newspaper focused on building “personality-driven content” and franchises in topic areas of interest to its target audience. The unit will operate independently from the newsroom. Most recently, Goo was editor-in-chief and later executive editor at Axios. She was also previously a reporter and editor at the Post. Sofia Richie Grainge invested in ShopMy earlier this year, according to the company. “I wanted to have a real say in the conversation, not just participate in it,” the model and influencer told Forbes about deciding to invest in the startup, which offers affiliate links and marketing management tools for brands. The startup raised $77.5 million in new funding in January. Topper Guild, a 22-year-old YouTuber who has amassed more than 25 billion views on his channel, signed with WME. Thank you for reading the Creator Economy Newsletter! I’d love your feedback, ideas and tips: kaya@theinformation.com. If you think someone else might enjoy this newsletter, please pass it forward or they can sign up here: https://www.theinformation.com/newsletters/creator-economy
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