Eric Wei is the co-founder and CEO of Karat – the finance solution for creators. Starting at cards that uniquely underwrite creators and now growing into the one-stop shop for all things personal finance in this world – Karat has built a strong brand and community of influencer and funnily enough Eric has become a creator himself. In this episode we talk about why community must come before content and how the two can be a brands biggest growth hack.
We’re building a better financial system for creators. So if you’re a YouTuber, an Instagram influencer, a TikTok or Twitch streamer, you are a business, albeit a new and different type of one that makes a living from content. Many of these new types of businesses really struggle to figure out their finances around getting access to credit, help with their taxes, setting up business bank accounts. And so that’s what we help them do.
Our content strategy was really motivated by two things. The first is tremendous business value. The second is that personal connection you alluded to from a business perspective as more and more people learn how to make content. That’s how they’re learning to receive information and learn about new things too. The way to win distribution and marketing today isn’t necessarily through running ads, it’s by creating genuinely compelling pieces of content that people will go and watch. We believe in this thesis because our entire client and business segment we work with does this to grow reach and revenue for their products and services. So we said well, why shouldn’t we do this for ourselves?
I find it really hard. As I mentioned growing up I was so focused on ensuring that I did a good job in terms of landing in a financially stable and safe occupation that anything like putting myself on camera felt narcissistic. It felt like navel-gazing, like, why would anybody wanna listen to me? Why should I do it? And part of what eventually got me to try was, as I mentioned, seeing all my friends, seeing everybody finding it so casual and simple to make content nowadays. It’s the same reason Karat exists. Other people are figuring out this ease and simplicity, and it motivated me to try doing it for our company, too.
Our target client is someone who’s made a living from their content. Whether it’s shared via subscriptions, shared with users on Patreon, Twitch, or from ad revenue being shared with them as on YouTube or even sponsorships they’re doing themselves, which you see a lot of with Instagram influencers. Like any other businessperson, they’re focused number one above everything else on what’s going to help me grow my business faster. For them, that’s things that either help them make more content, more money, or build their following base, while reducing the time they need to spend on everything else. That is not one of those three things. Our very first product was a business charge card that provided them with limits that actually made sense, because we underwrote them based off their financials and social stats instead of their credit history.
The focus for us has been on building that card in every creator and YouTuber’s wallet that they pull out and say hey, that’s a Karat card. Because our vision is once you have the card, we’ll be able to cross-sell you into other financial products and services that you also need, but might not have considered because you didn’t have the time to assess properly and didn’t know who to trust.
Eric: We’ve been around for about four years. Even in the first year we launched the card we were seeing 50, 60, 70% growth month-over-month. And it was primarily organic, because this population didn’t really know much about how to figure out their finances. That’s why when they found a source that they actually trusted and heard of, they leapt on it. There was almost this pent-up demand that just didn’t know where to go that all suddenly just swept into us. Similarly, we launched our bookkeeping and tax service about a year ago. Initially we didn’t know what to expect. As I mentioned before, this space is really based on trust, and we had explored bookkeeping taxes as one of our very first products to start with, but there wasn’t much interest because no one knew exactly what we were doing. But when we relaunched it after having built up that trust and credibility, we again saw double-digit growth every month and quickly exceeded even our capacity to serve.
I think there’s two points here. The first is at this current moment, there’s more focus on ensuring the core banking infrastructure in America, and frankly the world, is stable before saying we’re gonna go and build the coolest new “Dogecoin for Uber drivers named Kevin” app. We saw a little bit more of that a couple of years ago. Now I think it’s more like, if you hold my money, will it still be there? So that’s a pretty big shift. The second, if you think about some of these recent collapses in the first place, they were driven by bank runs. They were driven by animal spirits. It is in the actual business model of a bank to obviously have a money multiplier, to have a reserve ratio such that if you think about it, any bank is potentially at risk of a bank run. It just occurs if people are scared. And I’m not saying just go and build good community and everyone’s gonna be super happy and hopeful, because let’s be honest: SVB actually did a fantastic job building community and it still didn’t work out right. But it doesn’t hurt in times where peoples’ fear, uncertainty, and doubt can manifest into wiping out billions of dollars of shareholder value. I think you do have to consider well, what can I do to help to reinforce trust, awareness that I exist, and that I’m doing the best I can? I think that’s a big part of where content and community can be helpful.
So yes, number one I actually do think Mercury’s done a really good job. Number two, I’m actually gonna pick a slightly older example than most recent-crop FinTechs. Look at Square and CashApp. When CashApp launched, Venmo had already been around for a long time. Payment apps really die and thrive based on their ability to build network effects. So in a way it’s actually very challenging and tricky to say “oh yeah, here’s a company that has already built this really cool digital peer-to-peer payments app, and they have tremendous network effects, and from a product perspective there’s a couple of things we can do differently, but yeah, let’s go in and fight them.”