How Smart Creators Are Turning Influence Into Equity with Jeff Frommer from OWM

0:00Ian Shepherd:There's something interesting happening in the creator economy. For years, creators have been paid to promote products. But what if there was a different option? What if creators owned a piece of the business instead? I'm on a mission to make creators owners because I think if creators can be owners, then they'll talk about ownership and more people will want to be owners. That's Jeff Frommer. His view is simple. Equity isn't just another form of payment. It's alignment. It's long-term thinking. It changes how creators show up. If your most valuable currency is equity,

0:32Jeff Frommer:why not use it as a growth engine to incentivize the people who actually believe in what you're building, who want to participate in the outcome and not just be paid for the content output to actually have some skin in the game and tell their fans, which they've earned the trust of, that they believe so much in what you're building that they were willing to invest and become an owner. And this isn't just theory. What Ohm is, is the infrastructure to put creators on your cap table and to help get more value out of every single person who's already on it, right? And so that's what we've built, a marketplace to find creators who want to be invested as long-term partners.

1:24Ian Shepherd:This could be game changing for creators and brands. And this episode gives us a glimpse at what the future could look like.

1:37Ian Shepherd:So Jeff, how do you explain what you're building in the simplest terms? Om is an influence for equity platform.

1:45Jeff Frommer:If I'm talking to a creator and if I'm talking to a founder, it's Carta for creators, right? I think every single founder today, no matter what you're building, if no one knows you exist, you die. And you can either pay Meta or Google and rent an audience, or you can pay influencers. But if your most valuable currency is equity, why not use it as a growth engine to incentivize the people who actually believe in what you're building, who want to participate in the outcome and not just be paid for the content output to actually have some skin in the game and tell their fans, which they've earned the trust of, that they believe so much in what you're building that they were willing to invest and become an owner.

2:42Jeff Frommer:And so what OM is, is the infrastructure to put creators on your cap table and to help get more value out of every single person who's already on it, right? And so that's what we've built, a marketplace to find creators who want to be invested as long-term partners. We built the contracting templates so that you don't have to pay the legal tax. You know, lawyers, is it phantom equity? Is it options? Is it warrants? Like, what is it? And you start from zero every single time. And so spending$10 ,000 just outweighs the cost of this incentive I wanted to go out with. And then what we found is like you spend all of this time negotiating and thinking about the structure.

3:30Jeff Frommer:You put it in a contract. And then you know what we do with it? We put it in a folder or an email somewhere and we never look at it ever again. And so the thing that we tried to say was what we were going back and forth on the value never gets done. So let's find you the right partners. Let's contract them and let's get the most value out of them. That's what OM is. And it's OM because I want more people to be owners. And what we built was an ownership management platform. I'm on a mission to make creators owners because I think if creators can be owners, then they'll talk about ownership and more people will want to be owners.

4:07Jeff Frommer:So that's what we're cooking.

4:08Ian Shepherd:Excellent. I'm really excited to get into it. What was the Eureka moment where you just knew this had to exist?

4:14Jeff Frommer:Look, I spent 10 years building a media entertainment business. I sold it to a public fintech. And while I was there, a lot of brands couldn't afford Mike Tyson or Kevin Garnett or some of the celebrities that we had been working with. And they'd offer us equity. And because we bootstrapped the business, because I had managers who ran our talent agency who got 20 % of a cash deal, I didn't know how to compensate them. I didn't know the value of the equity. I didn't know how to evaluate the company. It just became too cumbersome and complicated. So I missed out on a lot of those deals. And then when I was an exited founder and I was writing checks to a lot of founders who I believed in, they were taking my money, giving me equity.

4:57Jeff Frommer:And then I, in the same day almost, turning around and paying influencers with my cash to go talk about the brand. So they now had my money, but no actually aligned incentive to the success of the business. And I just thought there had to be a better way. Why is this so complicated? Why are so many people so uneducated? And if influence is really social capital and currency, why can't it be invested just like cash in return for upside? And if every dollar that comes out of venture, 40 cents goes to paying for marketing and customer acquisition anyway, right? And this tailwind of creators who see Mr.

5:39Jeff Frommer:Beast and Hailey Bieber and Jake Paul and all of these, you know, entrepreneurs and these celebrities building brands looking and now saying, well, what do I own? If the answer is nothing, the question is why? And it's because you just haven't asked. And the infrastructure didn't allow you to get, right? So ask for ownership. Reduce the friction so that you can actually get it. Make it earned. and if you earn it, you should get it. And if you don't, then the founder should get it back. And that's what I thought should happen. And that's why it became very apparent to me we needed to build home so that more founders could use their currency in equity in return for the thing that every single person needs today, which is real influence, trust, distribution.

6:25Jeff Frommer:Those are the only moats left in a world of democratized AI.

6:30Ian Shepherd:Why was it important to build a platform and not just do the deals?

6:35Jeff Frommer:because like today, founders would call CAA or UTA and go, who do you have on the roster? And then you'd get just the people on that roster or you'd go to a broker and the whole industry is built on a who do you know, right? Like it's like vibes, right? I wanted to have real data science and signal. I looked at all of these platforms that were these influencer marketing platforms. Like, oh, we've got 5 million people. We've got 10 million people. It's like, who are you looking for? I go, I don't know. But you know what I do know? My customer is a 25 to 35-year-old female who shops at Whole Foods, makes 100 grand, wears aloe, and takes good care of herself.

7:14Jeff Frommer:Who influences my customer? When they are strolling through their feed, who do they stop and listen to? And that data science exists. And so we wanted to help founders who are making the ultimate decision of giving someone equity, right? Someone who they believe is going to be a long-term partner and a value add for the brand, not be built on vibes, not be built on who do you know? Let's use access to data to tell us the who. And then who's raised their hand and said, I've been, you know, when we put, when we, we've been, we've done like 50 deals now. And like, when we put people together and you hear a creator go, this was what I dreamed of building, right like this is exactly what i wanted to build that's when the sparks fly and what you're finding here is that there are incredible operators that have incredible story to tell and they just need great storytellers that's where the best partnerships come together and so i think creators are now the capital and the co-founders of these businesses of the future great and for a

8:24Ian Shepherd:brand, how does a creator turn up in a different way if they own a stake versus if they're just being paid? Yeah, look, I think when you own it, you treat it differently.

8:36Jeff Frommer:I think you have to believe in that. And, you know, whether you study Charlie Munger and you understand that incentives drive outcomes, right? What we're trying to do is to do a couple things for both sides, right? when a creator, you know, I kind of always use LeBron James as an example. When you see him drinking Sprite in that commercial, you know, he just, he's like, when he sits on the side, he just, he chugs some Sprite. You kind of know, like, you know, he's grabbing the bag. Like he got paid to do that, right? And I think there's a lot of fatigue between audiences that have allowed creators to earn their trust and attention.

9:23Jeff Frommer:and they, in return for that trust and attention, sell them something that they have no real vested interest in. And I think over time, you start to lose your audience because, you know, as a creator, you're like trying to build an audience and you're like building an audience, all of a sudden you have an audience. You're like, oh, well, how do I make money off of this? And then you start taking brand deals and, you know, sometimes you get excited and some of those brands don't, you know, you don't even try the product. You're like, here's this great thing that I love. And you're like, you know, and I trusted you.

9:55Jeff Frommer:And you don't even believe in the thing that you just told me. And then the next week you turn around and you sell the exact competitor, right? So what we wanted to do, and I think that fatigue and the maturity of the creator economy is here, is say, look, can you go a little more all in with a longer term partnership, right? And actually believe in the thing that you are telling your audience that they should as well. because at the end of the day, all we have is trust. And that's where this campaign of hashtag owner to hashtag ad comes into play. Because what we actually have to do in a lot of cases is reprogram a creator and how they talk and sell a product to their audience.

10:37Jeff Frommer:I think you can sell this differently, right? You can say, you know, you want to drive sales. You need to drive sales. But like, it's not an ad. You're not being paid to promote this. You invest in it. You could have taken the cash somewhere else, right? But you decided that you were going to go all in. So tell your audience that, right? You have to change the way you talk about things because it's now yours. And that's where I think there's a really, like, you know, Mark Hyman, you know, the face of Functional Health, the first 30 million of that business, zero cack, right? Just trust. and I don't think there's a lot of Mark Hyman's out there, but there are millions of creators who have earned the trust of their audiences, right?

11:29Jeff Frommer:That I think in a world where AI will make millions of entrepreneurs, those creators can go and be the face of these seven and eight, maybe even nine figure businesses. I think the industry was built on venture capital and trying to figure out how to build a$10 billion exit, right? Versus I have a hundred thousand followers and I'm making a million dollars a year because me and an operator, you know, found each other. They were building the thing that I always wanted to build, but I had no idea how to do it. And I've been talking about it with my fans and now it exists. And now I get to go all in on that, right?

12:02Jeff Frommer:And I think that's the future we'll live in.

12:05Ian Shepherd:Let's get into the detail. How do you value a creator in an equity context?

12:09Jeff Frommer:Think about it as the time commitment that you're asking for someone to the compensation that you should expect to pay them. So at home, we came up with a creator framework, right? I call it an advisor, an ambassador, or a co-founder, right? And so I think every company in the future should have a creator advisory board. If you're building blank, you probably have like some, oh, we've got an ex Coca-Cola exec who's been 20 years and this guy from McKinsey, and you've got this stacked advisory board. Today, in a world of attention, The thing that I care about is who's helping you with creator strategy, content strategy, creative strategy.

12:51Jeff Frommer:Where is the people that can advise you as a founding team, an operating team, and what's happening within your customers? And in return for that advice, like every other advisor, you can maybe give them a quarter point, right? But they're not forced to talk about the brand, right? They don't have to promote the brand. And their responsibility is maybe 30 minutes a month with you. And you always want, and no matter any contract that you structure, you want what I call a tether for termination. Because when you're negotiating advisor agreements or influence for equity agreements, you want to make sure the agreement doesn't just say Jeff, right?

13:31Jeff Frommer:Because what I've learned is that people only do what you tell them to do. And you want some way where if someone's not helping the business to pull it back. So for an advisor, just say, look, once a quarter, once a month, you got to join a creator advisory board, you and the other three people. I want to know what's happening, right? Okay, cool. As an ambassador, maybe you now want to use their name, image, likeness on their website. You want them to have it. You want to use category exclusivity. Well, if I'm a fitness influencer and you're a supplement brand and you want to give me equity and no cash and I make a million dollars a year selling other products every year, you can't expect me to take food out of my mouth and be category exclusive and just take your potential for a five-year exit down the road, right?

14:23Jeff Frommer:So in our structure, we always say, what's the cash compensation? Treat them as an employee. Give them a monthly guarantee. What's the$2 ,500 or$5 ,000? They're still making content, right? Give them some upside. Give them an affiliate. And then I always say, use the Elon Musk milestone. And where I think equity is the most valuable as an incentive is like when you're a kid and you put a Ferrari on the wall and you say, you know, one day I'm going to have that. It's like losing weight. set a goal so far out, so absurd, that if someone hits it, it unlocks something that they want, right? And so you can use equity for an ambassador and you can have five, 10, 100 for your affiliate army.

15:15Jeff Frommer:Say, hey, my best affiliate, you can win a Porsche or you can win 2 % of the business. because if you drive$2 million this year in sales, you're worth it. And that might seem absurd that no one in the world could ever do that, right? But that's what they said about Tesla, right? Elon Musk's pay package at the time was like, no way, sure, you want 50 billion? You're gonna do that? No problem. You know what? Using equity as an incentive means what if? what if someone was to change the trajectory of your business? And I think that's where incentives drive outcomes. And so that's where I think in that structure of ambassador, here's the things that we say at home are the levers that you can pull.

16:02Jeff Frommer:And here's the type of compensation. And then finally, it's co-founder. Look, you want someone to lean in and have on their handle. When I go to your Instagram, it says owner of blank, co-founder of blank. right? You want, when I show up on Oprah or on someone else's podcast, I am talking about it. Then you have to make it meaningful for me, right? That means 10, 20, 30, 40 % of the business. It could be 2 % if the business is worth a hundred million dollars already before you got in. I think a lot of these roles, I think you'll start to see, you know, you, oh, this is the chief creator officer, chief content officer.

16:42Jeff Frommer:Great. Don't just give me a salary. Give me some real upside because if I make the impact that you thought I was going to have and that I know I'm going to have, I want to participate that at the outcome of the business, right? Because I'm going to lean in and I'm going to tell people, yeah, I took this job because I want them to go public or I want this business to be the next ramp, you know, like Saquon Barkley. So that's our structure, advisor, ambassador, co-founder, everything in life is a negotiation. But what we've been able to do is as we aggregate all of the data that we have, anonymize it.

17:16Jeff Frommer:And then over time, we can start to give people some guidance. It's kind of like the black box of creative marketing. What's someone worth? Are we still using CPMs as our guidance? Like, you know, is that like, what's, what's the value? Oh, they got a million followers and it's like, I don't know. You know, that's the best way I can describe worth. And just to finish on this, and I'm sorry to be long winded, is if you raise that a 10 million val on your business and right now someone said hey the market says when i post it's five grand well if i do 10 posts maybe we negotiate but there's 50 000 of fair market value there and 10 million dollars of fair market value there so at least there's a baseline that two people can start negotiating and then you can look at that framework and say okay what am i asking that person to do and how should i compensate them got it i love your passion it

18:08Ian Shepherd:sounds very compelling. If you're a creator, how do you sign up?

18:12Jeff Frommer:Yeah, look, as a creator, you should go to omowm.ai. And there's only one question that I want to know from you because in a world of social content and AI, I can scrape everything about you. There's data pipelines that we've bought. I can understand who your audience is and what product they would buy. But what I can't get is what's the dream company that you love to invest in and start? Because a lot of times creators will tell us, oh, I always wanted to build a kitty litter product. For whatever reason, I think kitty litter reads disruption. And then you go and analyze their audience, they could give two shits about kitty litter.

18:51Jeff Frommer:They're never going to buy it. So there's a misalignment there, right? When there's an alignment, that's when there's real opportunity. but when there's not an alignment that's fine i can go get a kitty litter operator who is not a great storyteller who's been dreaming of having you as the face of their brand so we want to know what is that dream company that you would love to own or invest in and our job is to help you go actually and become a partner and an owner of it i love it can you share some examples of deals

19:23Ian Shepherd:you've done i mean you don't perhaps need to go into the specifics but just give us an idea of some of the things that you've been working on?

19:30Jeff Frommer:Yeah, I mean, there's this awesome app called Vibes Dating App. Zach Justice, you could see he's an owner of the brand now. He built a whole video series around it with Vibes Villa. It's a great example of where a creator naturally fits within the brand, right, who has incredible storytelling capabilities. Didn't just be like, here's this app you can go and find. Concept an entire video series with them. And that's the power of creators. You know, I think people outside looking in think that they are these megaphones and that's it. But they are entrepreneurs. They are creative geniuses. They are studying the algorithm.

20:08Jeff Frommer:They are looking at their YouTube videos and understanding, hey, in the first five minutes, I saw this drop off. How do I get people to extend? And when you're trying to get someone to buy your product, right, you need a creator who is thinking like that on your behalf and not just trying to sell. sell, sell, but tell, tell, tell. We did a deal with Calm. They're like a doctor in your pocket with Dr. Nick Norowitz. And he has an incredible view of the world and talks about how the things that you put into your body can truly affect your body. Maybe not you, Ian, because you obviously have some genetic predisposition to the Benjamin Button syndrome.

20:49Jeff Frommer:But for other people, that's a trusted voice that he gets to extend to a product that has come out the gate from two exited founders and is building something really disruptive. And then there's a ton of others in CPG and AI and tech. And, you know, what's also, I think, really interesting is, is hopefully we get to announce it soon, is like creators that are coming to us saying, I want to build a blank. And because we now have a network of not just founders and operators, but corporate venture partners, right, and venture studios that have the infrastructure and the supply chain are already seeing the data.

21:26Jeff Frommer:You know, they don't want to buy Haley Bieber's business for$500 million every time. They want to incubate and fund really powerful businesses today. And that's where the connection happens. And so hopefully when you go to our site and you see the opportunities, we're really starting to see a huge amount of flywheels happening. I love it.