How Fanfix Founders exited for £52m in 10 months whilst graduating

0:03We launched the company in August and we were quiet in June, so it was 10 months from launch to exit. And so it's very quick. We were still students. That was our last year of university. And then the deal went through the same month for his graduation. So it was very, very exciting. Unfortunately, I didn't get to graduate like Harry. Today, we're learning from Harry Gestetner and Simon Pompon, who exited their business for$65 million in just 10 months. 65 million in 10 months they'd started fanfix a platform that helps creators monetize their content it's a bit like patreon but designed for gen z mobile first multi-channel video that sort of thing harry simon welcome to secret leaders so i guess the place that i'll start is you guys are fucking young so uh you're young to be on secret leaders you're young to have had an exit like how did that all happen did you get lucky yeah i think there's definitely always an aspect of luck uh definitely always an aspect of timing i think you can't control luck and timing that much you kind of gotta just do the work and and hope that you also get the luck and timing so yeah we you know we we we did the work and then we also definitely got luck and timing as well good we've got the modest english answer and over for the bolder more confident american one please Yeah, I think at the end of the day, we were just persistent.

1:37We met a lot of roadblocks, being young founders, whether that was raising money or trying to build trust with managers, creators, whoever it may be. But we just kept our head down and kept grinding away. Amazing. All right. So set the scene for us. Where did you guys meet? Why did you decide to start a company? Yeah. So we met in high school. So I moved out here when I was 15 in 2015. And here is LA? Here is LA, correct. And Simon and I went to the same high school. We were good mates from kind of right at the beginning. And then kind of fast forward, university was still friendly with each other and COVID happened our second year.

2:22And so we all got sent home from school and thought we kind of had to do something. So we set up a charity called Fuel Our Heroes and it ended up scaling to the largest student organization during COVID. We had a team of about 140, raised about half a million dollars for healthcare workers all through kind of$5,$10 donations from students. And that was all social media marketing. And so that was sort of the first company we started together, obviously in the nonprofit sector. And then we were working through ideas and saw a big opportunity. We saw TikTok growing massively and we saw my cousin blowing up on TikTok and he got tens of millions of views.

3:04He got a ton of followers. He had a comment section full of fans, but he couldn't make any money. And we were quite shocked and thought there had to be a better way for creators to monetize directly from their most loyal fans. Hence, we got the idea for fanfics. Tell me a little bit about, like set the scene for listeners. So TikTok, I guess, is one of the more common channels where people have this problem, right? Like I can say this as a brand owner as well, you know, when we're trying to measure what creators to work with and everyone's like, this person's got millions of followers on TikTok.

3:33I'm like, I'd personally rather have someone who's got a hundred thousand followers on YouTube because I just imagine that they go deeper and you know, it's not as viral based. They're usually built up over time and all of these different assumptions I have, but downstream of those assumptions as well is the people with big audiences on YouTube tend to also be raking in a lot more cash, a lot more predictably than the people on TikTok typically. So set the scene a little bit for us about the business problems with the different social platforms. Yeah. So, you know, when you look at TikTok, TikTok is an incredible platform to grow your following, discover new audiences and really add followers.

4:14But the creators who work best on fanfics are the creators with highly engaged audiences. So these are creators who grow their following on TikTok, but then can show they could pull their following across all of the social platforms, whether that be Snapchat, Instagram, into Discord community, converting on long form content on YouTube or streams on Twitch, whatever it may be. Those are the creators who have the highest engaged communities and therefore drive the most ROI and most conversions on our platform. When you look at the large social media platforms, they have done an incredible job in building the discovery layer of the creator economy.

4:53So have done an incredible job allowing creators to grow their following, but in turn have failed in terms of monetizing the creators communities across their social platforms. And what we're focused on is the monetization layer of the creator economy, where creators could grow their followings across all of their social channels, but then convert their followings into a cross-channel membership platform, i.e. fanfics, where they could really manage their communities and monetize their following across all of their social platforms. Okay. So talk to me a little bit about the genesis of this idea.

5:28So you've clearly, like, you know, you've got the experience working together at university doing Fuel Heroes. You've created an opportunity for yourselves to understand that, you know, how to build some audience, you know how to create some kind of revenue and you've done good. So that's a good tick in your life so far. You've got a cousin who's blowing up on TikTok. Harry, that was you, right? Correct. So yeah. So then what? Like how does that turn into something that's actually even worth spending your time on? Yes. I think the first sort of part of the scene to set is that We'd had many businesses in the past that had completely failed and not worked out.

6:14Yeah, this was not our first one. And I think we saw the opportunity and we'd speak to all these Gen Z creators and they'd say the same thing, which is, yes, I want to monetize. That's my biggest problem. They would never join Ernie fans because they didn't want to associate their brand with the platform due to the sort of stigma and dirty aspect of the platform. And most of them didn't even know what Patreon was. So we saw a big gap in the market for a Gen Z first, clean brand friendly, mobile first, TikTok first, exclusive content platform. And so I think we really, from speaking to creators, we just kind of said to each other, we're going to go for this one.

6:52And we really thought it was a massive white space. And I think we were thinking through the sort of fundamental problems we had with our last businesses that had all failed. and I think the major thing was we just never really taken on any risk. We never had any skin in the game and we never really properly gone for it. The first kind of major thing we did was kind of sign a contract. We thought, okay, so we need to build a product. We're non-technical. How do we build a product? We need to hire developers. We can't convince anyone to work for us. We don't even know how to hire people, so we've got to outsource it.

7:27So we interviewed development shops. We found a development shop to build the platform. it was a six month kind of six figure contract that we didn't have the money for and we thought all right well we'll sort of blag a little bit that we do have the money and then you know we'll sign the contract we we know we can cover the first two payments ourselves and then past that we we just got to figure out a way to to raise this money and so um to sign a contract and uh and managed to cover the first two ourselves and then past that took about we we got like a very small investment to cover the third payment and then the fourth payment was very late on and then almost at month five we managed to raise kind of the the first uh first capital to to get the product built and the developers very nearly canceled the contract but thankfully they didn't and uh and and and then we launched fan fix august 2021 and uh brought on board cameron dallas a co-founder he's a he's a massive creator and pretty immediately got traction and uh and and really kind of product resonated with the Gen Z content creators, the sort of TikTok, Instagram, Snapchat type creator.

8:37And then fast forward, you know, ended up getting acquired in June 22 by Superordinary. So there's a couple of things I'm going to pull out there that you picked up on, or that you mentioned. The first is, without that all in fear of what are we going to do in month three? Fuck, what are we going to do in month four now? It doesn't really sound like you'd have made it, right? Because you have to make something work in that reality. And it sounded like your other businesses were ones where you guys had ideas and stuff, but maybe pussy out early on, which is very reasonable and very common, of course, because you just can't see how you're going to make it through something, which is quite black and white at the time, which is, they need money, we don't have money.

9:23So what are we going to do? I do think there's this really interesting psychology of great entrepreneurs, which is that you sort of psychotically go after anyway, even though you basically know the writing's on the wall, you're literally doomed for failure. It's kind of all obviously written down in front of you and you still do it. And I recognize that as a very common trait. It's a very weird one. No parents are going to teach you to do that. No school is going to teach you to do that. But that's kind of what you need to back yourselves in these situations sometimes. It's just that cold, hard belief in yourself.

9:59The second thing that I'm picking up on is the launch plan, realistically, which is like, yeah, there's the two of you. You've got together. You've managed to get through this hurdle, but you bring on a third co-founder who's a big creator. So how pivotal do you think that strategic decision was for you? Yeah, I think so to answer the first part of the question, I completely agree with you. I think risk is relative. I think what most of the great entrepreneurs have in common is just the way they see what they're trying to do. I think people, bad entrepreneurs are sort of attached to solutions and just want to launch a product.

10:38I think the best entrepreneurs, they see a big problem and they just say, I'm going to solve this problem. I'm going to take the next five to 10 years of my life to solve this problem, to figure this out. I will figure this out. And then they just go and launch things to try and solve the problem. And often it takes multiple iterations of the product to solve the problem, but they know in their head that they have fully committed and gone all in to solving that problem. So completely agree. On the latter part, yeah, Cameron was amazing. He was definitely extremely helpful. And I think the main problem we had was we were 20 and 21-year-old kids.

11:21We were students. We had zero background in the creative economy. We had very little connections. We honestly didn't really know any creators apart from my cousin, who was a one-hit wonder and was not even a creator by the time we launched. So the main problem we need to figure out was how do we get creators and managers to trust this new platform because you can count on one hand the amount of social media platforms creators use. It's like five. So Cameron was amazing just being one of the sort of original, he was arguably the first creator. He was the first creator to properly monetize. And so he really legitimized the brand and helped a ton getting those initial creators on.

12:02Yeah. And this was also a product that he wished existed when he was at the peak of his career. and he has really seen all the ebbs and flows of the creator economy in terms of how creators are monetizing their platforms and their following so he was really bought in and when he shared this vision with other creators in his network managers whoever it may be it really led a spark for us and and going out there and onboarding creators at scale what do you think that the main product difference is that i'm sure you've brought it brought up the main things that you uh tackle with all the time are comparing yourselves to Patreon or OnlyFans.

12:37You very neatly explained, you know, mobile first and for Gen Zs. Is that the main thing? Like just being super confident on that product vision and the audience, or is there something more to it as well? And what do you think the actual challenges are? Like why didn't Cameron go on, for example, Patreon? Yeah, I think the major thing in our fundamental differentiation is just how we saw this business and being non-technical, we kind of had no choice, but we did not see it as a technical problem, which most founders do. We saw this as a brand positioning and marketing problem. And I think the major problem here was not that the tech stack didn't exist.

13:15Patreons are a brilliant platform, OnlyFans, the tech is pretty good. So I think the major problem was there was no platform that TikTok blew up so quickly. And as a big company like Patreon or a big company like Facebook, when you have put a market fit, it's very difficult to take a risk on a new demographic or changing the sort of type of content on your platform, et cetera. And so they didn't. And that left a big white space. And so we just came in and and marketed the platform to Gen Z, sort of built the team by and for Gen Z. Everyone, vast majority of our team still to this day are Gen Z themselves, a huge amount of creators on the team.

14:01And I think creators, it resonated, they saw it as very authentic. And still, they see our team members as their friends. And that's kind of been our key differentiator. Yeah. And I think when you think about like Patreon, which is arguably the largest competitor in the space, Patreon just targets a very different demographic. They're a desktop first platform. The idea of being a patron, donating to support, we see more akin to the likes of a crowdfund, you know, and more akin to the likes of Facebook with the types of creators they're going after. So it left incredible amounts of white space.

14:41And when you think about OnlyFans on the other end of the spectrum, really the stigma associated with the platform. A lot of Gen Z creators don't want to join the platform because one, the stigma. Two, they lose out on high paying brand deals. Three, you know, they don't want to tarnish their reputation in any way. Image brand protection is so important to them. So really, we provided a place for them to monetize directly from their following. I actually think it's a really interesting point of view that you guys have. Two non-technical founders just basically looking objectively at a space saying, these guys are that narrative.

15:18Those guys are that narrative. There's a lot of space for this narrative in the middle. So like you say, brand and marketing positioning. I think there's a lot to be said and a lot to be learned from founders that are listening to this and understanding that not everything needs to be a reinvention of a wheel. Sometimes actually, there's just a lot of pent up demand not being met because of existing narratives, essentially. And if you can break free from that and do so at speed, there's an enormous opportunity. Obviously, the question would be like, is it enough to build a long term moat? And for anyone that doesn't know the context of your guy's story, tell us the whistle stop tour of just how quickly you started, raised money and exited like the big headlines.

16:05And then we'll go into some of the detail because I think it's pretty astonishing. Yeah, totally. I think first of all, on the moat aspect, there really isn't a moat in sort of marketplaces. It's very difficult to have a moat in marketplaces. I really don't think it's possible, but I think the key differentiation just has to be your team and has to be, you know, how hungry your team is, how driven your team is. and how adept they are to solving the problem that your users are facing. Yeah, so we launched the company August, and we were acquired in June by Superbundary. So it was 10 months from launch to exit.

16:45And so it's very quick. We were still students. That was our last year of university. And then the deal went through the same month as graduation. So it was very, very exciting. Unfortunately, I didn't get to graduate like Harry. Yeah, but, you know, why are you graduating? To get a job. Now you're already an exit founder. So I think you'll do okay. Exactly. How do you feel about that? Does that actually, is that something like in a sense of ego or pride that you give a shit about? Not really. I think at some point I'm about a year out from getting my degree. At some point I'll probably get it done.

17:21right you know i think i've learned so much more in the last two years building this business than all the years of school i've i've had since birth so yeah i like to think i'm still in college so 10 months after launching you sell to super ordinary disclosed amount undisclosed amount undisclosed amount we can say it was in the tens of millions but that's that's kind of what we fair enough so tens of millions in revenue after tens of months let's call it and you had 15 million users correct yeah so i mean that's pretty astonishing really in such a short period of time i guess the question is like how did you guys having gone from a bunch of failures as you say i'm sure like small scale failures that you can dust yourself off and try again but still how do you go from that cultural shift in mindset to shit, this is working.

18:15I mean, the thing with product market fit, you know, and I've had product market fit before, you don't need someone to explain to you that it's happening. You like really heavily realize and know, and your biggest problem suddenly is that you have product market fit. So how do you deal with that? Like what, and, and, you know, your relationship as well. How are you dealing with that stress together? Yeah, I think, I don't think you ever think it's working. You know, still don't think it's working. And I think, you know, first month of revenue, I was kind of showing people and someone was making intros for me and I kind of felt like a bit of a fraud because I was like, well, this isn't going to happen again.

18:51This is, you know, kind of a one-off. And then the next month it doubles and then, you know, the same thing. And then the next month it doubles again and it just keeps on going. And I think still, you know, every month you're like, oh, shit, how are we going to go and do this again? And now business has been around three years and, growing extremely consistently. So by every metric, it is working, but it never feels that way. You're always putting out fires as a founder. But yeah, Simon, what's your perspective? Yeah. I mean, I think we went about it by building an incredible team around us who had been at these larger companies that have scaled very successfully.

19:32Harry and I liked to always hire people smarter than ourselves. And our team has been absolutely amazing. And one, continuing this constant growth that we see month after month, onboarding new creators into our ecosystem on a daily basis, but two, really retaining the creators who enter our community, building those relationships with these content creators, building their trust as we become their main source of revenue. So I think just putting our heads down every day continuing to add more creators into our ecosystem and putting an emphasis on being creator first and building around our community yeah so i guess the next logical question is when you got an offer to exit like what happened take us through the emotional experience because 10 months it's like really barely long enough to even build a core team let alone like be in negotiations for exit so how quickly from the offer coming in to you being like yep we're taking that one were you or did you have to like think about it for a while yeah i think uh so we we always anticipated having an exit i think we were very confident that was going to happen at some point um uh just that's just a level of self-belief you have to have as founder we didn't think it was going to happen so quickly and we were out raising and and trying to raise and one of the parties we were talking to was a big strategic, super ordinary.

20:58And they came to us and said, actually, you have to be majority for us. And so we kind of thought, all right. And then they just gave us a term sheet. And I don't think we ever had an explicit conversation of, should we take this? I think, you know, we both, this was really peak of the market, you know, beginning of 2022. And I think, you know, we knew that the, you know, the party of 2021 was likely coming to an end. And this was - Your profits. Yeah. In every sense of the word. I think probably more luck there. But yeah, we thought, you know, this would be life changing event for us and our team.

21:42And so, you know, at a very young age with 21 and 22. I think it's good to get a win under the belt. And post-acquisition, I think that's the hungriest, personally, that's the hungriest I've ever been. I think having the end goal of every entrepreneur happen, which is an acquisition, really showed us that this is possible. And actually, it's also worth it. So, because I think when you're at the time, you know, at the time you think things are obviously difficult and nothing's easy and you're always putting out fires and it feels, you know, you're constantly getting rejections and it feels like you're rolling a boulder up a hill.

22:27And then I think an acquisition is just like a representation of the value your users are placing in the product, but then also just really like just showed us it was totally worth it. I guess what I can't say is like, why do you have more motivation post-exit? Why aren't you just sitting in Venice Beach doing fuck all? Or are you and you don't want the new employers to know exactly what's going on? We're builders. We continue to scale the product. We love what we do. We love growing our team, building relationships with our community members. And we also see how impactful FanFix has been in the lives of our community.

23:08You know, we recently did a poll of some of our creators and asked, what are you using your FanFix earnings for? And seeing some of these responses, whether it was putting a down payment on a house, buying a car for my mom, paying for med school, paying for college. I think the impact we're leaving, especially with these Gen Z creators, allowing them to build sustainable recurring revenue streams is super exciting for us. And we have built an incredible team that just continues to drive us every day and really, really want to get fanfics to even the next level. and hopefully, you know, IPO this business in the future or, you know, continuing to grow.

23:55And I also think if your goal is to retire onto the, you know, onto the beach of the business, then your end goal is money and you're doing it for the money. I really genuinely don't think you can, or at least you should, you know, go and be a founder if you're in it for the money. it's really not the best way to make money. It really is not. There are way, way easier. Well, being a creator is one. Yeah, yeah. Right there. There are much easier ways to make money. And we were unique in how quick this happened, 10 months long exit, that's extremely unique. But often it takes founders 5, 10, 15 years.

24:41And And really, you've got to go into it committed to doing what it takes, even if it takes 5, 10, 15 years. So you really should not go into this for money because in most circumstances, you earn nearly nothing for many, many, many years for a very low chance of a payday at the end. And I think if you're in it for the money, you'll quit before you get that most of the time. Yeah. And I think it's worth noting. I think Harry and I were one of the few founders who paid themselves absolutely zero for the first two years until the acquisition. And we treated the money in the bank like it was in our own wallets.

25:24And we were extremely frugal and extremely scrappy. And I think that's, as a founder, that's how you always have to be. On track for$100 million being paid out to creators by January, I think I read. Or this time next year. year early next year early next year all right i mean you know we're not going to hold you to it but the point is revenue is crazy growing fast right so the customer base is growing the revenue base is growing there's kind of this like exponential growth system it sounds like it's you've got going on like what's at the heart of that like what is the engine driving that growth Yeah, we saw this space as kind of a new space evolving, we call it C2C.

26:11And obviously there was B2B, there was B2C, everyone knows what those are. And then we saw this space as creative to customer. And creators are very unique in that there's no cold start problem. There's no chicken and egg problem. And they have really incredible network effects. And so FanFix really tapped into that in an organic manner. So there was this incredible flywheel where creators would join the platform, they'd post, they'd realize, wow, this could become my number one form of revenue. So they'd keep posting, it would become their number one form of revenue. They'd show all their creative friends how much money they were making, and all their other creative friends would want to come and join the platform.

26:53And obviously, in posting, the creators were bringing their fans on as well. And CAC is near zero. So all of our growth has been entirely organic. We still have not spent money in paid. And I think it's very important in consumer to get organic traction before you invest in paid because lack of product market fit is not a problem you can spend your way out of. so still you know Fanfic is entirely organic and I think the product was really excellent and just simply made creators more money than any other product did and so they kept on coming back and then they told all their friends about it. What is your proudest moment from like or maybe you have one each right your proudest moment from a creator?

27:42From a creator I think we've had some incredible messages from creators of how they spend their money I think you know one of them said to us last week like you know fan fixes the difference between her living a life you know her working a diner she was doing beforehand versus living a life where she's able to buy her mom a car and and help pay off her parents mortgage so I think like that's an incredible example we we had a creator tell us recently that the fan fixes they're in medical school they're trying to be a doctor and FanFix is paying for their medical school. We've also had a ton of creators say they're using it to pay off student loans.

28:22So there are some amazing, amazing use cases, Simon. Yeah. I mean, I was going to say one of our creators who is using their FanFix earnings to pay for medical school, which is something they've always wanted to do, but never thought they had the funds to do so and were out looking for scholarships, couldn't get any. And now they're doing what they've always dreamed of. So talk to us a little bit about the creator economy. So some listeners, you know, are running, I mean, most of our listeners are running businesses. I know increasingly a bunch of entrepreneurs who are like, I don't know, maybe I could have a turn at this creator gig after I've done my entrepreneur thing.

29:04And I know a lot that are doing it simultaneously and, you know, trying to learn how to be a creator whilst running a business. What are your like insights or top tips around like what the creator economy is evolving into at the moment? Like where is the space going and what do people need to know about it? Yeah. So a huge portion of Gen Z aspires to be a creator when they grow up. And, you know, they're currently 50 million creators, supposedly. I actually think they're a lot more than that. Goldman Sachs projects that to compound at 20 % year on year. So, that would be over 150 million by 2025 or in the next five years, rather.