Beacons: Not Boring Memo
The Battle for the Bio Link and the Value Chain of the Creator Economy
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Hi friends 👋 ,
Happy Thursday!
Monday’s essay on the Creator Economy and NFTs, Power to the Person, was one of the most popular Not Boring posts yet. One reason, of course, is that everyone is talking about NFTs right now. The other is that there’s something incredibly appealing about the idea that we, as individuals, have the potential to take our professional destiny into our own hands by participating in the Passion Economy.
Today, I’m thrilled to be sharing an investment memo on a company that I believe is going to have a huge impact on Creators’ ability to not just build audiences, or products, but full, Multi-SKU businesses: Beacons.
I love helping early stage companies tell their stories, and putting our money where our mouth is by backing the companies building the future I write about.
Let’s get to it.
Beacons: Not Boring Investment Memo
The Beacons Investment Thesis
What do you get when you combine four Stanford machine learning experts and some of the most valuable real estate on the consumer internet? Beacons.
Beacons is the fastest-growing and most innovative company in the incredibly competitive battle for the “link in bio.” If you’ve spent any time on Instagram or TikTok, you’ve seen your favorite influencer tell you about a product and direct you to get it at the link in their bio. It’s become a meme -- “Link in bio!” -- but the bio link is increasingly crucial to the growing number of creators who build their influence on social media platforms and monetize off-platform.
In order to make a living, creators on Instagram, TikTok, and even Clubhouse, and more need to convert their clout on the platform into either more clout on other platforms and then into dollars, or directly into dollars. But since they can’t put links in their posts, they need to direct people to their bio, where they get only one link. That link determines the next step in their funnel: do they send fans to YouTube or Cameo or OnlyFans or Patreon or their Shopify or Etsy store?
The problem is, not all of your fans want the same thing, so sending them to a single destination is suboptimal.
Over the past couple of years, a wave of new startups (alright, a tsunami, 58 on last count) have popped up to give creators one link that leads to an easy-to-create website with links to all of the places they create and monetize online.
With over 10 million users, 4-year-old Australian company Linktree is the leader in the space today. It raised a $10.7 million Series A in October. But despite its youth and funding, Linktree already feels like a slow-moving, tired incumbent.
Like Linktree, Beacons is a mobile website builder for content creators that gives them one digital home for everything they create and sell online.
That’s where the similarities end. Beacons matches the positively chaotic energy of the creators that use it, and funnels it into direct monetization options right from their Beacons page. It’s developing integrations with category-leaders like Shopify, and building its own products and monetization solutions for creators where ideal ones don’t yet exist.
Everybody in the link in bio space has a similar vision. They understand the acute pain points and the massive opportunity. But they’re not all Beacons. Beacons has distinguished itself by being able to get distribution despite being a latecomer in a crowded market. In a short time, it’s ridden its steep trajectory out of all of the noise.
The company is also a brilliant case study in counter-positioning, giving away everything that Linktree charges for, for free, and charging for things that Linktree doesn’t offer. It also takes a small cut whenever creators and their fans complete a transaction on Beacons.
When Tommy and I spoke with Beacons CEO and fellow Duke alum Neal Jean for the first time in the fall, we knew he was special, and his team’s raw brain power made our heads hurt, but we didn’t think anyone could emerge from the bloody bio link wars victorious. Then we spoke to him again in January, and he brought the traction numbers to back up his bold vision and an inspiring, data-driven product roadmap.
Tommy and I are sold. Beacons is going to win the link in bio battle by helping multi-SKU creators build smarter businesses.
Today, I’ll explain what we find so compelling about Beacons, why we think it has what it takes to beat out 58 competitors, and how it’s going to become a crucial tool in the Creator Toolkit:
Meet Beacons
The Creator Economy Value Chain and the Multi-SKU Creator
Competition, Growth, and Moats
The Beacons Vision and Opportunity
Risks
It all starts with those four Stanford machine learning wizards I mentioned earlier.
Meet Beacons
Beacons begins to make sense when you realize that “link in bio” isn’t just a thing that Instagram models push to sell flat tummy teas; it’s air traffic control for the Creator Economy.
Millions of creators send hundreds of millions of people through their bio links billions of times per month. That means that the bio link winner will be one that can scale rapidly and use all of that audience data to help creators build better businesses. Luckily, Beacons is the only link in bio company on the market with four Stanford-educated machine learning founders (3 PhD’s and 1 MS).
The co-founders, collectively, have four patents (for MRI and RNA sequencing analysis), worked on the Apple Watch, used deep learning on satellite images to map poverty, and developed a computer vision model for food recognition that’s used by Samsung.
They joined forces in 2019 and got into Y Combinator’s S19 batch with a consumer hardware idea. When they realized that idea wouldn’t work, they pivoted, and pivoted once more into what is now Beacons.
At its simplest, Beacons is building the social commerce layer for the Creator Economy, a mobile-first and multi-platform website builder targeting creators who just need a place for their links, content, and storefronts to live.
Beacons makes it easy for multi-SKU creators to build mobile websites to house all of their content across platforms, via links or direct content embeds. For example, on my Beacons profile, you can subscribe to Not Boring or see my latest tweets. The onboarding process starts with entering your social handles, and then uses ML to recommend backgrounds, themes, color palettes, and which types of content blocks to include.
It even uses GPT-3 to help write a starter bio (like many GPT-3 projects, it’s a little rough right now, but it will get better over time). From there, your page is set up, and you can customize everything from font to colors to images to blocks. It takes two minutes to get a page set up, and then you can spend hours tweaking and optimizing to make your page perfect.
Linktree lets creators aggregate links for free, and then charges $6/month for everything else. Beacons lets creators add links, customize their site, collect emails and SMS, run analytics, embed content, create two pages, and monetize directly all for free. It charges $10/month for up to five pages and to add a custom domain, and takes a fee (9% for free users and 5% for paid) when they transact on Beacons.
The Beacons team understands the need for speed in such a competitive space. It needs to get big fast, collect reams of data, and build products and integrations that build moats around the users it’s acquired.
It’s working. Since coming out of private beta in October, the company is growing at an absurdly high rate week over week.
Already, based on an analysis of over 1.5 million TikTok creators, Beacons is the fourth most popular bio link for creators with over 1 million followers on TikTok, right ahead of Facebook — in less than four months!
That kind of speed and growth highlights why Beacons is so special relative to the other players in the space, and this is very much just the beginning.
Until now, it’s mainly been focused on TikTok and Instagram, but it’s beginning to expand. Now, it’s turning its attention to Twitter users and newsletter writers, among others. The more platforms and users it onboards, the more data it gets, the better products it can build, and the more likely it is to become the monetization infrastructure for the Creator Economy.
But that’s in the future. For now, Beacons is sprinting to own the most valuable piece of the Creator Economy value chain.
The Creator Economy Value Chain & the Multi-SKU Creator
The Creator Economy value chain is simple: create content to build an audience and monetize that audience by selling subscriptions, merch, courses, access, and more.
It’s all about turning content into money.
The Creator Economy flips the traditional commerce experience on its head. As I wrote on Monday in Power to the Person, people follow people, not companies. Instead of going to a store or website and looking for a thing, increasingly, people go to other people, who they trust to tell them which thing to buy. That might be affiliate products, an online course, a message via Cameo, a hoodie via Shopify, a mug via Etsy, or just a subscription to the Creator him or herself.
As a result, the Creator Economy is blowing up, both in terms of creators and dollars. According to SignalFire, there are now over 50 million Creators, and BusinessInsider projects that the influencer marketing industry will be worth $15 billion in 2022, up from $8 billion in 2019. That’s a huge market, growing very rapidly.
And those numbers tell just a small part of the story, because influencers don’t just market other companies’ products anymore. Increasingly, influencers and creators are directing attention to their own products, whether digital or physical. In December, Hugo Amsellem mapped the Creator Economy, and highlighted all of the tools that creators are using to connect with, grow, and monetize their audiences.
That’s why the link in bio is so important: creators are both multi-platform, meaning they reach their fans in multiple places like TikTok, YouTube, Twitch, Instagram, Snapchat, Twitter, and more, and Multi-SKU, meaning they monetize in a variety of ways, from memberships to courses to donations to events to interaction to merch. Many even launch their own brands and apps (see: Dispo).
Controlling the flow of traffic from the multiple platforms to the multiple SKUs is potentially the most valuable place in the Creator Value Chain. The bio link is the point of leverage in the Creator Economy.
Where profits accrue, there will be competition. I’m betting on Beacons.
Competition, Growth, and Moats
Everybody wants to own the bio link. Josh Dance put together a list of all 58 competitors. It’s a shockingly crowded space, because it’s relatively easy to mail in a basic version of the product. Beacons is competing with all of the existing website and no-code products (e.g., Wix, Squarespace, Webflow), and new players designing specifically for the creator use case (e.g., Linktree, Shorby). It’s taking the smartest approach, combining my favorite power, viral growth loops, and integrations-based moats.
Today’s clear leader is Linktree, and they provide a great signal on the amazing growth potential for “link in bio” real estate. Launched in 2016, Linktree raised a $10M+ Series A in October off a user base of 8M global users, 28k+ daily sign ups, and over half a billion visitors to Linktree bios in September 2020. Based on those stats, Linktree is a top 20 trafficked website in the world. There are incredible network effects here, allowing the most successful players to tap into the world’s largest social networks and creators to fuel their growth.
But as Jeff Bezos would say, “Your margin is my opportunity.” Linktree has paywalled almost all customization features behind their $6/month pro accounts, squelching creativity for some of the most creative people in the world. It’s crazy to think that a startup founded in 2016 has already become a complacent incumbent, but Beacons is coming with a fresh energy and perspective, and leveraging my personal favorite of Hamilton Helmer’s 7 Powers: counter-positioning.
Flo Crivello describes counter-positioning as “the practice of developing your business model such that incumbents have conflicting incentives preventing them to compete effectively.” I wrote about it in my piece on Ramp, and described it as the business strategy version of the Five Point Palm Exploding Heart Technique from Kill Bill.
In this case, Beacons is re-thinking what a Creator’s site should do, and opening up new ways to monetize. It gives away everything that Linktree charges for for free, and charges for features beyond what Linktree offers -- custom domains, multiple pages, and direct monetization. Additionally, because Beacons allows Creators to monetize directly, it can make money by taking a small cut of each transaction.
As a result, in order to retain their leading position, Linktree will have to make difficult decisions around their business model, and they’ll need to do it quickly.
That said, I don’t think it’s a winner take all market. Signalfire estimates that 30% of Gen Z want to be content creators, and the TAM will double to $15B by next year. Website builders are a good corollary, with Wix ($18B), Webflow ($2.1B), and Squarespace ($1.7B - 2017) all achieving healthy valuations and market share. This market has the opportunity to be just as massive, with creators tapping into the enormous audiences across social platforms and slowly building their own direct, personal brands.
But there are compelling reasons to believe that Beacons will take the lead spot, both in terms of users and profits: Beacons is moving faster than anyone else, and has a unique data advantage over existing, verticalized solutions.
The average creator on Beacons links to 5.6 platforms, with some using up to 15, and Creators with bigger followings use more platforms.
That means a few key things:
Beacons is working, and solving an existing pain point for Creators, who face the challenge of needing to choose where to direct their audience among multiple platforms.
Beacons can observe consumer behavior and utilize that data to inform their product roadmap and future integrations/ partnerships.
Creators become increasingly Multi-SKU, with more complex needs, as they grow.
Beacons has huge ARPU potential once monetization streams are fully up and running.
Further, unlike Patreon or Medium, Beacons has also committed to allow creators to own 100% of their user data, aligning themselves with the interests of their creators. That alignment, plus a robust free offering and more features than Linktree, has helped them achieve retention of 80%+ for creators with more than 100k followers.
As Creators choose Beacons, and stick with it, Beacons achieves a viral growth loop. Every time someone goes to a Creator’s page and sees the Beacons link, that’s an impression for Beacons. If popular Creators are using Beacons, their followers will start using Beacons too, and the loop continues. The loop is working: Beacons generates 77% of new users from this viral growth loop, and 18% from an incentivized referral program, meaning that 95% of new users come from other users.
As more Creators use Beacons to connect more of the platforms they’re on and more of their monetization SKUs, Beacons amasses more and more data. This is where things start to get really wild. Beacons (remember: four Stanford machine learning experts) can do all sorts of things with that data:
Help Creators Build Better Businesses. Beacons can see which types of monetization works for which types of Creators, and use that data to make smart recommendations to other Creators. It can tell a makeup-focused TikTok star that the rest of the makeup-focused TikTok stars are monetizing via Etsy, for example.
Prioritize Integrations. Creator behavior drives the Beacons roadmap. Since many Creators are monetizing through Shopify stores, Beacons is building direct integrations with Shopify that will allow Creators to easily create stores to feature select products, and allow fans to buy directly from a Creator’s page.
Build First-Party Products. Beacons can also use its data to build products of its own that compete with, or fill niches currently not addressed by, existing monetization tools. For example, it’s building a shoppable layer for TikTok, on which Beacons Creators can link to and sell the products highlighted in their videos.
This is the part that gets me the most excited about Beacons, the part that makes my head spin. As Beacons controls more and more bio links, the possibilities for what it can build are endless.
Beacons Vision and Opportunity
The Beacons team is too talented to build just another bio link. You don’t leave Apple to build a static page with a bunch of links on it. Instead, the team is bringing its data and technical chops to completely rethink the way that Creators build businesses.
The team is using website building as a wedge into the broader Creator Economy, and when it’s successful, it’s not only going to steal share, it’s going to grow the whole pie. Beacons brings power to the person, and is a textbook example of the idea that new software will let individuals build full-scale businesses that can compete with companies.
Their vision is to re-build the business stack specifically with Creators in-mind. It’s a massive opportunity, and recent raises by Stir, a service to help Creators run their finances and split revenue, or Karat, a credit card designed for Creators, highlight the appetite for products built specifically for Creator use cases. New Creator tools are being built and funded at a frenzied pace, and more people are deciding to leave the corporate track to strike out on their own every day. As the Creator Economy grows in size, scope, and complexity, a team that has the skills to wrangle all of the newly created entropy has the potential to build a massive business.
Beacons wants to help creators build smarter, more successful businesses of their own, which means extending their product offering beyond website building. Once they’ve created relationships with Creators, Beacons plans to roll out products and services designed specifically with solo-entrepreneurs in mind, such as an audience CRM, content marketplace, affiliate partnerships, email marketing, and more.
And that’s just the roadmap through Q3. In Q4 and into 2022, it has things on it that I can’t disclose publicly, but that have the potential to completely shift the balance of power in favor of the Creators. It’s as ambitious a roadmap as I’ve ever seen at this stage, and the team is already executing against it.
Owning the link in bio is the rare opportunity to aggregate the Aggregators. It’s the “most coveted real estate in tech.”
But when Beacons succeeds, that little piece of digital real estate will be a portal into a much richer world, one in which Creators own the relationship with their audience and modularize the platforms. Beacons is a glimpse of the future I wrote about in Power to the Person, and I’m thrilled to tell its story. If you’re a Creator of any kind, go get yourself your own Link in Bio:
Risks
Now for the boring but necessary part. Early stage investing comes with major risks, and Beacons is no different. As with any early stage investment, the numbers suggest that you should expect any money you put into an early stage startup to go to $0. There are a few Beacons specific risks that you should be aware of.
Competition. The battle for the bio link is intense. There are at least 50 companies competing for the same coveted real estate, including Linktree, the leader in the space.
Integrations. The ecommerce companies with which Beacons plans to integrate may choose to block Beacons if they view them as a competitor.
Willingness to Pay. Creators may not be willing to upgrade to paid Beacons accounts, and may be unwilling to pay fees for transacting through Beacons.
Growth May Slow. Beacons is growing very fast right now, but that growth may slow for any number of reasons.
Social Platforms May Allow Links in Posts. If TikTok and Instagram begin allowing creators to link out directly from posts, the value of the bio link declines.
Exit Opportunities. Beacons could do everything right, and there still may not be public market appetite for the stock or interested buyers at a price that would make you money.
There are certainly risks that neither I nor Beacons is currently aware of that could sink the business. This is not investment advice, and you should do your own diligence before deciding whether to invest.
Thanks to Tommy for making this happen and the Beacons team for your insights and letting Not Boring get involved!
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Thanks for reading, and see you Monday,
Packy
Loved your point on counter positioning! We wrote a piece on it a few weeks back and would love if you gave it a look if you ever have a spare moment.
https://deliberatecapital.substack.com/p/counter-positioning