🔴 Why did OpenAI poach Patreon’s tech executives?

Two topics on my mind this week, two short opinion pieces for you in today’s newsletter:

— Francis Zierer, Lead Editor

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The big little “did you see this?” item in creator-tech circles this week: OpenAI hired a trio of Patreon’s tech-org leaders:

Senior as they are, they bring decades of high-level experience. Before Patreon, Ma most recently led the engineering team for Instagram’s private sharing products (DMs). Rowny was Head of Product for Gmail and Google Chat; and way back in the aughts, Yam worked for Loopt … Sam Altman’s first startup.

What could OpenAI need Patreon’s top technical brass to build? We’ll know what they’re building, per Yam’s announcement tweet, next week.

But products can be comms tools first and foremost.

Think about the big creator-world hire OpenAI made earlier this year — their acqui-hire of the TBPN team in a reported up-to $200 million deal. The big between-the-lines take there? It was less about the show and more about the team’s comms skills, to better position Sam Altman and the company in the public eye.

The most important possible outcome of this Patreon trio hire is … the same thing.

OpenAI (and the other AI labs) still face the extreme PR problem of not paying so many creators (writers, musicians, photographers, etc.) for using their work in training data.

The core three jobs of any creator are to:

The most creator product OpenAI has released so far is Sora 2, an audio and video generation tool (with a social feed). The app closed in April, and the API finally closed this week.

I never downloaded Sora 2. Absolutely zero interest.

You’ve seen a painting that makes you go, “Huh. Looks like that was fun to make.” You’ve heard a concert that makes you lean over to your friend and say, “Well, sounds like they’re having fun, at least.”

Sora 2 was a looks-like-that-was-fun-to-make machine.

My guess is OpenAI hired this Patreon executive trio in part because they came to understand that fun-to-make mistake. They’ve understood that audiences demand more.

Crucial detail from Yam’s tweet (bolding my own): “We're going to build together with Creators at OpenAI and share early access to a new set of tools that I think will be critically valuable to Creators and their communities.”

Patreon’s particular innovation was normalizing direct-to-creator payment during the rise of the creator economy.

A wide range of AI-powered creation tools already exist. The platforms creators use for distribution already use AI to help distribute more effectively. Audiences like to see creators and artists compensated for their work. OpenAI’s creator products division need to focus on monetization.

It’s a real mountain to climb, given the company’s current status with much of the public as a red-handed, global, historical-scale IP thief. Yam, Rowny, and Ma seem to have been chosen as sherpas.

In case you missed it, our guest for this Tuesday’s interview package was Jack Settleman, the founder of Snapback Sports, which he has grown from a Snapchat highlights page into a 15-employee business tracking for $2.5 million in revenue this year.

Snapback makes the vast majority of its money through advertising. Some of their biggest advertisers are “vice” brands — sports gambling and alcohol companies.

I started both the podcast and write-up versions of this interview with the fact that Jack took a cash-plus-equity deal with the sports gambling business Underdog in 2021, with the equity turning to at least $1 million this summer after Underdog sold for $1.3 billion.

Why am I bringing this up? Jack initially pitched me to come on the podcast last November, after we published a package on Joon Lee, a sports journalist-creator whose approach to the business side is defined by a vocal refusal to take gambling sponsors.

The one sport I watch regularly is soccer, or rather “football,” since I watch the English Premier League (EPL) and the UEFA Champions League (UCL).

The prime piece of advertising real estate in these leagues is the front-of-shirt. There are also sleeve sponsors, stadium-name sponsors, the advertising hoardings bordering the pitch … too many to list here.

The EPL never banned front-of-shirt booze sponsors, but the clubs did collectively agree to phase the practice out. Beer brands are all over the sport, of course; Heineken is in the last year of a three-year deal with the UCL to the tune of around €120 million ($139 million) annually. Starting next season, Anheuser-Busch InBev is taking over with a six-year deal worth around €200 million ($232 million) annually.

The EPL did ban front-of-shirt gambling sponsors. They agreed to the ban three years ago, and after giving contracts time to expire, this is the first season without them. Last season, 11 clubs had front-of-shirt gambling sponsors. This season, zero.

Of course, it’s not a blanket ban. The 138-year-old Premier League club Everton, for example, still has Stake as a sleeve sponsor. And down in the lower tiers of the English football league, front-of-shirt gambling sponsors are still allowed.

The Premier League is a media business, and media doesn’t work without advertising. Last season, the 20 clubs in the Premier League earned a combined £3 billion from television rights, which are funded by a mix of advertising and paid subscriptions.

But we’re talking about two small, independent creator businesses.

The commonality between Jack and Joon’s approaches is that they have a clear point of view on gambling; their worldview is legible to both advertisers and (crucially) audiences. If you are a sports fan who likes to bet and booze, who does not feel the need to moralize about it, you’ll probably dig Snapback. If you’d like to see the U.S. government roll back the clock on gambling app legality, Joon is your guy.

Of course, there’s more money in taking gambling sponsors than in refusing them; that’s why the EPL had to consciously ban the category. LeBron James, for example, recently launched a partnership with the prediction market company Polymarket. In the twilight of his NBA career, he’ll make nearly four times as much ($15 million) from the deal as he will playing for the Philadelphia 76ers ($3.9 million).

As long as there are advertisers who polarize, there’s opportunity for advertising-funded creators at both poles.

The lesson here is to wear your values on your sleeve.