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All right guys, what’s in my hand is not just a device to make phone calls. It’s actually something that can make everybody their own powerful media conglomerate, and that’s why this episode is for you, all the content creators. Whether you’re on YouTube, Instagram, TikTok, you name it. This episode is for you because we are talking to the global head of small and medium.Business at Visa, Jonathan Cole there. Listen, man, content creation isn’t just a hobby, it is now a business. We got 70% of content creators viewing themselves as a business, and Visa actually sees that, and now they’re giving them the same benefits that they would give other traditional small businesses, and that’s why this episode is for you.How you doing, brother?
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I’m good, Ross. It’s a pleasure to be here.
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Well, listen, man, one, a lot of love. I appreciate you. I know you are Bill’s Mafia. I’m, you know, the Bears, bear down, so this is a great, uh, hopefully I’ll see you guys in the, uh, in the finals, right? In the, in the Super Bowl. But this is also a great episode for me because I am a creator, and I know Visa just put out a creator report, a content creator report. Let’s talk about that for a bit. What, what did the creator report actually find?
1:09 spk_1
So the monetized report got released earlier this year, uh, especially, uh, the launch was at a Web Summit in Lisbon. But if I wind the clocks back, call it a year or so ago, we were at Web Summit Lisbon again, and our CMO Frank Cooper was on stage with P Pharrell, and they were having a conversation about creators and influencers. It was a really important landmark for us because Frank made the dedicated designation.That creators would get the same benefits, services, products that small business owners get across the globe at Visa. And that really was a point in time for us. Uh, since then, we’ve taken what I like to call a listen and learn approach. So, really understanding the segment itself, becoming subject matter experts, and intimately seeing kind of like the problems that all of you face in your daily challenges with cash flow management, working capital, you name it.And so, uh, one of the things we did was establish what I call our three P’s programs, partners, and then products. So in the sense of partners, uh, what you saw with the monetized report was working with TikTok.And Morning Consult, TikTok helped curate for us a set of global uh creators from the UK, UAE, US, Brazil, and Australia, all different types of segments and what they curate for content. And then Morning Concept as a partner helped us with the research and analysis that was the monetized report. Um, your question was around key findings. The first is, um, of the respondents, which was well over 1000.Almost 2/3 of them, if not closer to 70%, had actually indicated that they viewed themselves as entrepreneurs, true business owners. So what before was this idea that creators is anybody with a cell phone that’s just a consumer, is the truth is they’ve been turning that passion into profit.The second step that leads me to is more than 88% of them expect their revenue to go up in the next year. And to me, the key result of that is they have now found the unlock on monetization. But before was this argument like, can this segment really be profitable, right? Can financial services, you know, help them? The truth is they can and they’re continuing to grow. And then the third and final one is just the fact that um more than 34 quarters of them, about 76%.Uh, don’t view this as a side gig, and they do not think that they need to go get a traditional job anymore. And I think that comes with the fact that they have this huge support network from their friends, family, and just their entire community that is rooting for them to be successful.
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There’s no ifs, ands or buts about it, right? The content creator is the newSexy job, right? I think kids are saying, OK, do I want to go to school and be a doctor, or do I want to be a YouTuber, right? Uh, can I just literally pull out my phone and talk as I’m making different recipes? Like, at the end of the day, a lot of this stuff is lucrative, but another thing that I’ve been seeing is that less than 10% of content creators are making over $100,000 right? And so when you guys are working with content creators and actually underwriting them.Obviously there’s irregularity with those, you know, 1099s, right? You might get paid here, then it might be net 90, you’re not getting that W-2 paid every two weeks. Like, what are some of the things you guys are putting in place to uh try to underwrite them the same way you are underwriting a small business from a cash flow standpoint?
4:37 spk_1
It’s a great question. I’ll start by saying, I agree with you that the content creator is like the next gen entrepreneur of the digital economy. What was like storefront brick and mortar to ecom now even moves to like agentic commerce. And we see the content creators are at the forefront of that with how they’re adopting technology and what they’re using it for. Um, we also tend to see that this idea between, uh, personal right finances and business finances tend to be conflated.And so, some of the research that came out of our monetized report had actually indicated that of the respondents, 62% were using their personal accounts to run their business. The crazier stat that we found was another 41% actually opened a dedicated second personal account versus only 15% opened a business account. Now, the reason why I bring those stats up gets to your, your question around underwriting.So, um, we as Visa don’t underwrite, our issuer network does. And so we enable our issuers, meaning the financial services providers, whether that’s a bank, an independent or integrated software vendor, or an enabler in the network, to work with Ross, right, to underwrite him for a working capital or credit card product. Um, but what we’ve seen is that, uh, certain issuers within our network, Carrot Financial being one of them, they’re a leading fintech that has been working with Visa since 2019.And what they’re doing in order to ensure that this segment gets the right access to working capital, is they’re using leading indicators such as how creators monetize, so whether that’s brand deals, affiliate brand deals, or direct product sales, and then the monetization volume of what they’re doing within those channels.And so by taking those and weaving them into the underwriting criteria, they’re producing a score that’s more effective for this segment versus what traditional more static underwriting teams have been in the past.
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AsI sit, right, you are in a a seat where youControl the data, you are able to understand the data. And so when you talk about some of the numbers that were in your report saying, you know, the vast majority of people are saying, hey, I am a full-time entrepreneur, I don’t need to get a second job, and he said over 80% believe they’re gonna make more money uh the next year.Help me understand, you know, like some of the data that you’re seeing, because I’m seeing a lot of data that is showing, you know, credit card balances are at all-time highs, I want to say over 1.2 trillion, and you get uh buy now, pay later, balances also at all time.Highs, inflation still, uh, you know, consumer confidence for the most part, is low. How, or better yet, what’s the data that you’re seeing? Is it showing that, hey, people are actually better off than they show, or is it, you know, people kicking the can down the road, just, you know, borrowing more money and, uh, kind of, you know, living paycheck to paycheck, kind of, what are you seeing from the data?
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There’s 200 million plus creators globally, right? And I think there’s around like 5 billion of us that are social media users. If you think about our purchasing influence, it’s not necessarily coming from the Super Bowl ad or what I see on, on just on Instagram, but it’s actually like that influencer network that has to be on those social channels that actually creates some influence in my decision rights, in my power to make a decision on what I purchase.Um, I bring that up because this industry itself is projected to get to $500 billion in value by 2030. So, a lot of the stats you just mentioned are, are, are spot on, right? Like credit tends to be an issue, access to working capital tends to be an issue. Now, whether that’s consumer or business, sometimes can vary. But some of the confidence levels that we’re seeing in the data, and I’ll give you a couple of stats. One is that for creators specifically, more than 50% of their revenue is actually generated through cross-border.And so what we’re seeing is that they’re not just local, right? They’re actually global. Now, like the example I always give is, if I’m the, you know, artist in London who wants to work with a partner or supplier in New York, and I purchase certain inputs to produce my output to be sold to the consumer in Dubai, that is a cross-border model. And so they’re not just local business entrepreneurs anymore, they’re global, right? And they’re global in the sense of that digital economy.Um, the two other points I just made that are more related to your, what I would say, uh, reference of like the challenges we see and what we think we can help provide for both our issuer network but creators directly, is the fact that they have two major pain points that came out of our research. Uh, the first, and over a third of them said that this was critically important, was payment flexibility.So to your point around like credit, what it means, they are predicated, right, the success of their business on reach and frequency of posts, of content, and then the interaction and engagement with that. So if there’s any level of seasonality or ebbs and flows, and they can’t have flexibility in how they make payments to run their business, that becomes a barrier for them to be successful. The second, and it’s probably not gonna be any surprise to you, is actually faster access to their receivables.How do I get right payment from the platform in an expedient manner, so that way I can make sure I can go produce that next piece of content, pay my accounts payable invoices and bills, and really manage my cash flow more optimally.So, one of the things we’re working on to help maximize their probability of success is this idea of like using agentic technology. How can you create an agent working on behalf of Ross to manage their account receivable cash flow in a way that optimizes it, creates the most flexible payment options, and gets you paid as quickly as possible. So you can focus more on your content, which is your passion, and less on the financial health of your business.
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So what advice are you giving to creators to better utilize AI and agents, right? Like how should I, as a small, well, as a content creator, I’m no longer small. How should I be thinking about utilizing AI to, you know, make my day easier, be my own virtual assistant, and you know do all the bookkeeping? What should other content creators be thinking about when it comes to AI and utilizing it better?
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The confidence level of creators and self-teaching is off the charts, maybe higher than any segment that we’ve seen within small business historically. Now, I’m a firm believer in small businesses are not homogeneous. There’s a massive set of diversity, and I think creators are just adding to the complexity of that pie in a really great way, which is also growing it.The reason I bring that up is because while they’re self-taught on a bunch of things like how to create the best content, where and when to post, one of the things we saw was their confidence level in financial services and business strategy was a little bit lower. They were actually seeking financial service providers to help them with business strategy and financial acumen and how to help manage their business. So what we’ve done at Visa is we’ve created this, uh, one of those three P’s I mentioned, which was the programmatic approach.Uh, first was this last year we created a get paid series. So this matched, uh, mature creators who’ve been, uh, engaged, involved, you know, in this line of work for a long period of time with up and coming ones from like fashion, culinary, media, art, music, you name it. So that way they could maximize that probability of success by understanding what it means to have that reach and frequency that they need. So, financial oriented, sure, but also just about the total of their business.Another, um, not directly AI related, but in that stream was we also had created an immersion program, where for about a year, we had creators come in and understand what it meant to use NFTs, non-fungible tokens, right, for their business. And then social campaigns like Take on 25, where we promoted the fact that we wanted to see creators follow their passion when it turned into profit.Now, your question was around AI and the big thing I keep referencing and that Visa is doubling down on is this idea of intelligent commerce. Uh, the fact that today, right, if I’m a small business owner and I run a roastery, I wanna get high quality beans at a price I want in the time frame I need them.Well, to do that, historically has taken me time to work with suppliers, suppliers who offer that quality in the time I need, accept payment the way that I want them to, and instead of having Jonathan take time out of his day, how do we automate that, where an agent can work on behalf of Jonathan with prompts and criteria to go secure, right, and procure the inputs they need to produce their outputs. Not to mention contract negotiations, payment flexibility, terms like you mentioned.And so one of the things we’re gonna pilot this year with Carrot Financial is a specific use case uh with their platform today that offers banking, tax, and lending to creators. But overlaying that with this accounts receivable, accounts payable agent that acts on behalf of the creator. So think of a world where I produced content that Ross wanted at his company. Um, you had a certain invoice period, and let’s just say, right, I was net 30 days or net 60, but it was a 30-day time frame I should be paid.Well, instead of me hounding, right, my client, and in which I have multiple clients, think of the agent acting on behalf of. And so tracing those accounts payables and accounts receivables, and then automating them in a way for both reconciliation, but what I call this uh kind of like trilateral problem of purchase order or content, invoice, and then payment. And so that’s an example of where we’re trying to add value-added services to our issuers to help supply creators to, to make them successful.
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Remarkable. Look guys, we got to take a quick break, but when we come back, we’re gonna have more with Jonathan, the global head of small and medium business at Visa.Welcome back to Financial Freestyle. We’re talking with the global head of small and medium business at Visa. And look, I’m a content creator and now content creators are viewed as small businesses, medium businesses, entrepreneurs, and I always had a question, right? Because I do believe in OPM, right? Utilizing other people’s money, but only for the benefit of growing your business to make more money, right? I love borrowing money to make more money.How are content creators, you know, doing that, right? When it comes to, you know, working with Visa, how do you, how are you seeing content creators saying, OK, let me borrow money. Is it to, to fill a gap, meaning they don’t get paid for 3 months, or kind of they borrowing to actually put more money into their business? Kind of, what are you seeing?
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When you go from entry level or what we call like solo preneur content creator to mid-level, and then what we’re actually calling, which is like the modern modern day entertainer, right? Which is the, the massive like MKBHDs like Cobby Lames, Mr. Beast, you name it.Um, to me, one of the huge reasons they need this infusion of capital is scalability. It’s just simply like, frequency of content, sometimes travel, right? Not just being a travel content creator, but traveling to different locations in order to produce your content as well.Meeting different people, bringing content creators into your content itself. Uh, the other is honestly creating, uh, their outputs. So, I mentioned earlier the mass diversity when it comes to small business, and we totally believe that there’s heterogeneity with it.And content creators too, whether it’s again like music, art, fashion, culinary, you name it, some of those do have heavy requirements in order to produce output, not indifferent to, you know, the production company that had a brick and mortar store that was distributing toys or bicycles. And so what we see is some of its first supply chain purchases, right? I need X amount of materials in order to produce the fashion icon symbol that I want to start creating, and then, and then sharing and selling.And then some of it is, I wanna scale my business. I wanna go make a post in Brazil versus where I’m located in New York right now. And to do that, I need some capital before I can actually get the content out there. And so I think those are a few of the examples that we see, right? Which is scalability from one part of the business to another, and then honestly, supply chain purchases as inputs in order to produce their outputs.
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So tell me, how is Visa, like, when you think about uh the future, right? And we think about different technologies, obviously cryptocurrency, stablecoins, those are the things that are often kind of you uh talked about when we talked FinTech. How’s Visa thinking about either uh crypto or stablecoins?
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A second part of the reason we were at Web Summit was, uh, Mark Nelson, who’s our, our chief product officer for commercial money movement and solutions, uh, made an announcement about Stablecoin. Specifically how Visa was gonna play a role piloting with partners and the ecosystem to leverage stablecoin for payouts, especially to creators. And so if you think about that example I gave where one creator is in a country, buying supplies from another.Selling to another and then wanting to get paid. Some of these creators are in markets where currencies can be volatile. And so stablecoin helps provide a, um, you know, no pun intended, stable, right, uh, risk mitigated on currency level payout that allows the creator to get paid in a timely fashion, a secure fashion, but also in a currency that they know that they can trust with all the volatility that’s going on.And so I’d say between the agentic play on that I mentioned earlier and the stablecoin payouts, those are two primary use cases we’re pursuing, and trying to pressure test with what we know is a segment that frankly is gonna benefit from it greatly.And then the idea is we take that work, and we actually transcend it to other business segments. And so, the, the one thing that, you know, was in my remit and still continues to be is creator is a segment, but there are multiple segments and verticals we serve at Visa on behalf of our issuers and enablers, whether that’s agribusiness, construction, medical, and we think this technology can transcend to certain use cases in those industry types as well.
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That’s epic. So once again, you see all the data, right? And I think that, uh, especially over COVID, we saw a rise in, you know, people getting side hustles, people starting to make more content. Where, and I think you have the number that there are 200 million uh creators or something like that. Like where do you see that going in the next 5 years or so?
18:48 spk_1
So I think the industry is gonna just continue to grow. Both the valuation of the industry, but anybody with a smartphone today can be a creator. Um, and I think what you’re gonna see is a little bit actually, Ross, of what you said, right? Is youth are now being put in the position where they don’t look at traditional jobs like finance or marketing or you name it. They look at how do I become a content creator, a gamer, right? How do I put myself in a position to be this influencer? So I think what you’re gonna see is this continued evolution of opportunity.And then a monetization of that opportunity as well. Um, one of the things that we ran as a body of research this last year, uh, tangentially related to Creator was our next gen research, which followed like Gen Z millennials, especially post-COVID, and preferences when it came to, excuse me, how they work with like financial services. And you’d be amazed, like, a lot of them wanna consume things digitally. They’re willing to try new tools and resources. When they wanna have a real meaningful, serious conversation about finance though, they wanna talk to somebody.And so the human element, what was post-COVID that we thought was gonna be totally digital, is now hybrid, right? And there’s moments where I want everything at my fingertips on my phone. There’s also moments where when serious impactful decisions about my business come up, I wanna talk to a trusted advisor, which is why I feelI think the financial services system is also gonna continue to evolve to benefit those segments.
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I see that for sure, right? Uh, people need to talk to people. People need advice. Where’s Visa headed next, right? Uh, as we continue to think about supporting small, medium businesses, where’s Visa headed?
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Yeah, so we talked about a lot of it today, which I’m so grateful for being here and chatting with you about. I, I think the, the biggest thing for us is understanding the profile of businesses globally.And so I have this huge benefit of being in a global role. So I get to travel around the world to India, Singapore, Mexico, you know, you name it, and see all types of businesses of all shapes and sizes. Some of those, uh, markets and regions and countries, you know, are cash-rich in the sense that they’re making this migration from cash to digital payments. Some of them, right, are super advanced in how they view digital payments and how they leverage and use them. For us at Visa, the biggest thing is listening to our customers.Understanding the challenges they face with their end users and how they benefit them, and honestly then working with both the private and public sectors, so like our financial services providers, our enablers, you name it, but also like government entities. You know, we often hear that small business and medium business is the backbone of economies, and the truth is that’s correct. Um, so what we at Visa are trying to do is make sure that we uplift everyone to be the best way to pay and get paid.And a large part of that is not just on the issuance side of credit and debit, and you name it, but also the acceptance side. How are we enabling small businesses to accept digital payments in ways, uh, that maybe they haven’t in the past or have had barriers to entry.
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OK. Last question, right? I just saw the other day that the last ever penny was sold for over $16 million right? And I think during COVID, uh, people didn’t want to touch money, so we went cashless for quite some time, right? And my question is, in the future, do you feel as though there ever be a time where fiat currency is kinda extinct, right? We go full cashless.
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I think there absolutely could be.I think the world continues to evolve and change in the sense of how we carry capital and and money versus also how we expect to receive it.Um, and the reason why I bring it up that way is a large part of the work that we do at Visa, and a huge part of our, uh, reason why our brand has been so trusted in the legacy of our company is, uh, risk, security, and trust with the Visa platform and network. And what I mean by that is the fact that when money travels from point A to point B, you wanna make sure you get it in a timely manner, in a secure way where risk and fraud are mitigated and delivered to you in the format that you want.Um, I don’t carry a cash on me in most instances, right? I am, I am using my visa credentials, I’m using our visa products that are enabled through the issuers that I work with. Um, and, and frankly, like, I’ve even been talking to my kids who are young, but wanna understand like howWe pay for things and what it means. And so, I’m, I’m not entirely surprised by that, uh, number that it was sold for. I’m also not entirely surprised that it was the last printed one. so I do think there’s a world that we get to an ever evolving and maybe end state where it is a digital economy powered by digital payments.
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That’s it, man. That, that, that’s powerful. Well, that’s it, ladies and gentlemen. I want to thank Jonathan for coming on the show. This was, like I said, action-packed. I learned a ton. And to all the content creators, make sure you watch this episode again. Like, subscribe, share it with your auntie and your cousin. And this is it for Financial freestyle here on Yahoo Finance. I’m your host, Ross Matt. We’ll see you next week.
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This content was not intended to be financial advice and should not be used as a substitute for professional financial services.