Markets by Grant | Everything as Content | Part 1

10 min readJan 5, 2023

Hello and welcome back to Markets by Grant. Heads-up: as has been the case for the last few markets I’ve touched on, this will be a multi-part series, starting with a pie-in-the-sky contemplation, written while wearing a black turtleneck, followed by a more grounded discussion of specific startups and strategies playing out in the space. I hope you enjoyed that run-on sentence as much as I did.

In this piece, I use the word “content” 101 times. Get ready. On the bright side, I’m not writing about the applications of Generative AI (yet). We’ve got enough of those pieces. What I don’t believe we have enough of, are fundamental viewpoints on content as a business capability or strategy. We’ve skipped ahead to the exciting tech, without understanding the underlying subject matter (at least some of us have).

What I will do, is add some fun Dall-E 2 images to break things up (all in the tasteful American Realist style of Edward Hopper, for aesthetic continuity):

“VC Investors Blogging, by Edward Hopper” by Dall-E 2

Now, onto the content:

When I tell people I like to invest in content businesses, they say one of two things.

“Grant, what’s a content company?”
Or “Grant, how is being a content investor relevant to our current discussion?”

And based on what question I get, I give one of two responses:

“Content companies, do, you know, content-type stuff”
Or “everything is content, and content is everything. So it’s relevant”

Both conversations end in the other person either leaving the conversation or totally checking out, so I’m spending this content piece attempting to better answer each of these questions.

First “Grant, what’s a content company?”

The word content is just about as nondescript as everyone’s favorite scientific term: “matter”. It’s, you know, stuff. Most traditional sources will say that content is “information or entertainment” which is monetized through traditional media industries, like publications, music, film, television, streaming, blogging, etc.

I think this market definition is pretty problematic. It’s frustratingly non-MECE, and it speaks more to rough categorizations of product format, rather than the inherent thing we are trying to discuss. And the whole “information or entertainment” definition is a bit of a rabbit-hole in itself.

Back in my startup days, we would spend time thinking “why do people want to read our content?”. Education? Escapism? Entertainment? Curiosity? Reassurance? Ego-building? — as if these categories and use cases had clear lines dividing them. Rather than spinning my wheels trying to break content into all its subcategories and psychological value props, I think it might be more useful analyzed at its most essential. And part of the reason for this, as I’ll discuss later, is that content is more than all this — it’s kind of everything. Many businesses are operating content businesses without knowing it — and they should know it, because it makes a difference for how they should do things.

So what is content?

Content is code for humans. It’s made specifically for us to consume, synthesize, and analyze. It’s written word, recorded sound, static images and video. But it’s also broader than that — it’s symbols, sights and sounds which are designed to carry information. And yes, that information can be entertaining, or educational — it can fulfill our basest or highest desires. All it needs to do is produce the right hormonal response for us to come back for more. That’s what makes content monetizable, and content businesses compelling.

(Although, as I’ve mentioned in previous pieces, some desires are more strong and durable than others, resulting in stronger user stickiness and willingness-to-pay. Content businesses may want to skate toward serving these particular desires. I’ll discuss this more in my next piece.)

How did content get to where it is today and where is it going?

Good question, Grant. Back in the day, it was trial-and-error.

Obligatory white guy fishing metaphor:

You create a series of fishing lures, and notice which produced the most number of bites. This yielded some tried-and-true categories, which have informed how most people look at this market today. Stuff like “conservative news”, “rom-com movies”, “self-help books”, “autobiographies”, “comics”, and thousands of other content recipes/frameworks.

Now, as everyone has been hitting you over the head with the past few months, we’ve reached a turning point. We don’t need to keep beating these formulaic dead horses of product formats, with minor variations. We have crowdsourcing and AI, where we can throw millions of lures into the water and see how fish bite.

As a result, new categories of lures emerge beyond the old-school ones we’ve relied on for so long. And new knowledge of our fish emerges in parallel, to the point where we can segment, target, and personalize for them better than ever before.

The parallel, challenging trend is that fish, with a finite appetite and number of “bites” per day, develop pickier palates.

“Fishing Lures and VC Investors, by Edward Hopper” by Dall-E 2

A bit more on the historical angle. The internet was just a radical democratization of content distribution. The stuff on websites? Content. Blogs, like this? Content. Content in its simplest form, is one-sided communication: information created by someone and consumed by someone else. Most social media businesses are just as easily described as democratized content businesses. Blogging on the internet started in 1994, basically with its inception. Twitter, when founded in 2006, was known as a “microblog site”. Instagram? Snapchat? TikTok?

Here’s a fact, from Forbes: America’s internet content is the nation’s third largest export. The market cap of its Big Tech platforms overshadows the gross domestic product of all but the biggest five national economies in the world (and beyond this factoid, this article is a great read on the industrialization of content, and content as a national strategy).

The extent to which these big tech social platforms have been successful largely depends on their ability to feed users content which generates a response and a desire for more.

The efficiency of this “feed” is perhaps a content business’ most critical feature. Much like in an industrial livestock farm, the feed is a conveyor belt of morsels to be consumed by the user. We want our users to eat as much food from this feed as possible, and we want them to like our feed better than anyone else’s. The more they eat, the higher willingness-to-pay exists for our feed, and for the plump users who are so ravenous for it. Sorry for the ugly metaphor, but hey, I didn’t name the feature “feed”, some psychos in product management did. Luckily, Edward Hopper’s rendering of this image is tasteful as always:

“VC Investors on a Pig Farm, by Edward Hopper” by Dall-E 2

One more trend in the history of content? Miniaturization. From the Bible to 5-minute bible meditations. From Lawrence of Arabia to TikTok videos. Why has content been miniaturizing? Attention spans shortening? Spoiled, impatient Gen Z kids in an instant gratification world? I won’t make such a trite argument. Instead, I’d say that shorter content is more efficient.

Shorter content has a larger total addressable market, in terms of an individual’s hours in a day (ie: one move or 50 micro-movies?). Shorter content also has more discrete data. If one piece of short TikTok content doesn’t work, we have a better reason of knowing why, and since it’s so short, it won’t be too much wasted time. The converse is true when a piece of content does work.

By unit-izing the data in more granular morsels, we can have our machine learn faster, evolve its content faster, and feed faster.

In parallel, content is pressured to get denser/richer/tighter, in hopes of maximizing its chances of producing its intended effect, and therefore winning distribution. While, in the case of TikTok, Instagram, Snap, Twitter, and others, the format and small size of the content is set by the platform, the wide adoption of these platforms has meaningfully shaped consumer preferences.

“Grant, how is being a content investor relevant to our current discussion?”

This is a critical point. Whether you’re explicitly a content business or not, consumers are starting to view you as one. As a kid going to the library, I would see the banner “books are windows to the world!” Now I think there’s been a bit of a reversal. The world is one big window into content. Everything is content. The ads I see on the subway, the menu I see at the dinner table, the product description I see for a t-shirt, every word I see on every screen or sound from every speaker. And they’re increasingly designed just for me, to make me want more. If they’re not, they’re falling behind.

“A VC investor Enjoying a Library, by Edward Hopper” by Dall-E 2

(Quickly, just to humble myself, this is not a novel insight. People have been posting about this since at least 2013. Even my thought piece title has been used at least a million other times on Medium alone).

Anyway — everything is content, but like I said, not everyone knows it. Two arguments:

Many businesses are content businesses, but don’t know it yet.
Content is now a core competency and competitive necessity of nearly every business.

Do they know it? Are they using the right strategies to create, distribute, incentivize engagement and monetize?

What do content businesses do?

As a content business, it doesn’t mean you only monetize directly by selling content, but it does mean that your success is proportional to the value of your content (more on that in the next piece).

Content businesses operate a seemingly simple process. For a given piece of content, you start with an idea, make it into a content product, find the right channel to get it into the hands of the right end consumer, and then do it all over again. It’s kind of a flywheel by nature:

“The Content Flywheel, unfortunately not by Edward Hopper” by Grant

Doing all this really boils down to two capabilities: creating the content and distributing the content. The successes of the means of distribution and the reception of the audience of distribution both inform what content formats to create and distribute next time.

“Content Competencies, still not in the style of Edward Hopper” by Grant

The competencies of creation and distribution are thus kind of discrete, and kind of not. The format of the content partially determines how it can be distributed (ie: you shouldn’t put a 2-hour art film on LinkedIn). The audience of the content kind of informs the format of the content in turn (ie: your grandmother is likely more comfortable with books and radio than SnapChat and Soundcloud). Long story short, this is complex stuff, which has spurred the development of content creation and distribution as deep disciplines.

So, this being a mature market, content businesses have organized themselves on every possible combination of these two core disciplines:

“The Content Company 2x2, by an admirer of Edward Hopper but still not Edward Hopper” by Grant

Here’s a quick breakdown of how I’d define each of these content business profiles:

Media Companies — These companies both create and distribute content. HBO is a media company, as is the NYT.
Syndicators — Syndicators take a piece of content that someone else created and distribute it through many channels. Multi-pronged distribution is their speciality. They’re often behind-the-scenes, the “brokers” of content. You’re a syndicator when you post the same meme on LinkedIn, Instagram, Facebook, and Twitter.
Aggregators — By comparison, aggregators find multiple pieces of content and distribute it in one place, themselves. Aggregators are often automated, and often source content based on web scraping.
Curators — People may say otherwise, but curators are just verticalized, more specifically-focused aggregators. They find content which meets a certain bar of category, quality, or audience, and feature it.
Platforms — Youtube, TikTok, Facebook, Medium. They don’t go out and source content, build it themselves, or distribute it other places. Their users contribute content and consume that same content.

Creators — These are all the people and companies which make content, but don’t necessarily distribute it themselves:

Farms — companies which spin up all kinds of content, at scale, and sell it to the highest bidder.
Influencers — “mini media companies”. They make content for themselves. The difference is, they usually use existing channels to distribute that content, rather than proprietary ones.
Freelancers — People who make content for others to distribute.
Generative AI — *gasp* (more on this later)
And many more subcategories…

Many content companies end up being a little blend of many of these categories. Netflix is both a media company and an aggregator. Youtube is both a platform and a media company. And so on and so forth.

And a reminder: even companies which don’t identify as content businesses will use one or more of these strategies, often under the monikers “advertising” (a classic content play) or “marketing” — or, *another gasp* “content marketing” (more on this later too).

I’ve got a bunch more in the hopper, but I’ll leave it here for today. I’ll continue this piece next week, answering questions like:

“what is good content?”
“do you honestly think this is good content, Grant?”
“how is content monetized?”
“how can content strategies be used by more businesses?”
“what about all those points you said you were going to make but didn’t?”
“why are your pieces so long?”

Questions/feedback/ideas? HMU at grant.demeter@av.vc

— G