Can The Creator Economy Help Democratize Entrepreneurship?

August 4, 2021 7 min read

The last year has presented extraordinary challenges for women in the workforce. Women lost a net of 5.4 million jobs over the course of the pandemic. The unemployment rate of Black women and Latinas doubled in the course of the crisis. Today, one in three women of color say that they’re planning to leave their current jobs, primarily due to burnout.

Against the backdrop of these sobering statistics something else has been happening — not entirely unexpected but offering a ray of optimism in an otherwise trying time. In the midst of a crisis that has disproportionately impacted women and people of color, we’re seeing a surge of entrepreneurs from diverse backgrounds entering (and thriving in) the creator economy.

For the uninitiated, the creator economy consists of self-owned businesses that operate largely on social media or digital platforms, selling creative content like virtual courses, videos or artwork. Although the creator economy is sometimes seen as a playground for influencers or “passion-preneurs,” its significance and applications extend far deeper.

Indeed, these new tools — and the ways of building community and doing business that they’ve engendered — are expanding possibilities for entrepreneurs traditionally left out of the fold. Around 50 million people now consider themselves creators, according to SignalFire, fostering a “creator economy” now valued at more than $100 billion. The surge has been especially pronounced over the last year, with a growing cohort of women pursuing opportunities in the creator economy.

I’ve seen this up close as the founder of an online courseware platform that’s used by 50,000 active course creators from 165 countries, who collectively have earned hundreds of millions in revenue. From this vantage point on the front lines, here are several key reasons how — and why — the creator economy is succeeding in democratizing entrepreneurship.

Bypassing capital gatekeepers

Although entrepreneurship has long been portrayed as a way for anyone to achieve success — the classic Horatio Alger pull-yourself-up-by-the-bootstraps story — the reality has been quite different.

Entrepreneurship has historically been the domain of men, and in particular those with access to resources and capital. Compared to American men, American women are only half as likely to become entrepreneurs. Entrepreneurs of color are 30 percent more likely than white entrepreneurs to experience a lack of relevant networks or capital. Meanwhile, male-owned businesses have revenues that are double those of women-owned companies.

The reasons for this are many and complex, but at one level it comes down to the role played by traditional gatekeepers in the entrepreneurial community and the hurdles that had to be overcome along the way.

Let’s start with the obvious: money. In the past, starting a business was a capital-intensive process. Even the most humble mom-and-pop shop needed an office or storefront, money for equipment, etc. Banks and investors were the critical gatekeepers of this capital — and the data overwhelmingly shows it wasn’t evenly distributed. BIPOC-owned ventures statistically receive less financing, less often, at rates higher than their white counterparts. Frustratingly, women of color receive less than one percent of U.S. venture capital funding each year. We’re starting to see groups like the Backbone Angels stepping up to help close the gap, but we still have a long way to go.

The digital revolution, and the creator economy in particular, has radically leveled that playing field. You don’t require a loan from the bank to start a digital business, or create a course. In fact, startup costs can be minimal. Take the example of Jam Gamble, a communication coach. She had carved out a niche delivering live Slay the Mic workshops to help people harness their authentic voices. Translating this content into an online program through free course-building tools enabled her to extend her reach; marketing those courses on social media was low or no-cost, too. With money no longer a barrier to implementation, more entrepreneurial ideas like these are able to become a reality.

Reimagining entrepreneurial education

Another traditional entrepreneurial hurdle has been access to education and expertise. Those who could afford the right business degrees were able to gain critical skills and certifications and leapfrog ahead of the competition. As their business grew, they also benefited from access to a network of colleagues and mentors who could take their ideas to the next level.

But access to formal education is far from equitable. Women in business school are still in the minority, and there has long been a racial gap for completing a bachelor’s degree. Indeed, during Covid, 56 percent of Black and Hispanic students reported the pandemic would affect their ability to continue going to school, compared to 40 percent of white students.

Here, too, the creator economy is shifting the rules of the game. Entrepreneurs today can soak up knowledge from the vast (and usually free or inexpensive) resources available online, whether that’s coding, video editing, marketing or beyond. In fact, sometimes these informal resources are more up-to-date than a college course might be. Network and mentorship, too, has been democratized, with remote and digital access to experts all over the world through formal online mentorship programs and more casual social media-based relationships.

Leveraging difference 

Finally, access to markets and customers — the lifeblood of any business — has long been mediated by gatekeepers. In the past, just to get your product on a store shelf, for example, required a stamp of approval from the retailer. “Mass appeal” and standardization were deemed essential prerequisites to reaching a “mass market.” Difference, in this context, was a liability.

The creator economy has turned that model on its head. The key is not necessarily appealing to a mass audience but rather reaching your audience. Success depends not on connection with millions of people, but instead on building a loyal community of thousands or even hundreds. In cultivating this kind of community, having a distinct background is now a decided strategic advantage.

Content creator Doc Jen Fit, for example, produces online fitness classes. Part of her success owes to her training as a physical therapist, but the other side of her appeal is her radical honesty about scoliosis, and her struggles with shyness. With time, she has forged deep connections with a very specific micro community. The combination of authenticity and expertise taps into humans’ psychological tendency to trust those who have been genuine and even vulnerable with us.

This same ethos is reinforced in some of the revenue models that underlie the new creator economy. Critically, today’s creators are increasingly paid directly by their target audience, whether that’s payment for courses and subscriptions, or even tipping on platforms like Twitch and Patreon. Rather than depending on brand sponsorships — which entail their own form of gatekeeping and biases — creators are able to monetize their community directly.

Ultimately, the creator economy affords not just a single pathway to democratize entrepreneurship, but many. It lowers capital requirements. It minimizes or erases educational barriers. It provides direct access to an audience, turning difference into a competitive edge.

And there’s more. As the creator economy gains momentum, there’s a powerful flywheel effect at work. As more women and people of color find success as entrepreneurs in the creator economy, we begin to fundamentally change perceptions about who can be an entrepreneur. Representation matters, and it functions here as a positive feedback loop. Although the challenges faced by historically marginalized entrepreneurs are real, and the current crisis has added new pressures, the creator economy holds real promise to finally democratize entrepreneurial opportunity, at scale.

Opinions expressed by Entrepreneur contributors are their own. Original Article Here.