On Thursday 7/23 we held our members’ roundtable on Creative Capital, led by founder, investor and advisor Jules Ehrhardt.
Jules has spent his 18-year career working in and around digital products, including eight years at the heart of industry-leading product studio, ustwo. ustwo consults for the world’s leading brands on their emerging tech, products and services. The studio is also well known for its own products including the Apple Design Award-winning Monument Valley, and joint ventures such as Pause & Wayfindr.
Since exiting from ustwo, Jules has taken a career pause to dive deep into exploring alternative models for how creative people can get compensated for their work, beyond selling their time for cash. The product of his research is Creative Capital, an open-sourced project to define a set of standardized tools to give creative people a stake in the wealth created by their work.
Video & Audio Recordings
Brick & Wonder members can access full session notes, and video + audio recordings here.
The creative industries are often seen as commercially illiterate. I spent most of my career selling my time, but ultimately didn’t feel like we owned what we built.
Creativity has massive business value, and Creative Capital is about creating a framework to help creatives share in the wealth they create.
There are some conventions around leveraging creative capital structures. One is that you have to be excellent at what you do. If what you do can be widely purchased, it’s commoditized. You can’t transact a commodity for equity.
You’ve got to speak VC language, so when I’m pitching a startup, I don’t talk about how cool we are, how successful we’ve been in the past. We talk on their terms – they are concerned with time to market, which we will reduce. They are concerned with risk, which we will problem solve to minimize, they are concerned with recruitment, which we can help them defer.
I think this is where the cash and equity mix needs to come in, so some of the risk is mitigated, while there is still access to the upside. We shouldn’t undersell ourselves and price the equity portion 1-2-1 with cash / cost. I think it should be 4-5x the cash value – because there is risk attached to it.
In the fine art world, it used to be that if you did the $20m lobby of Morgan Stanley you were excommunicated from your sphere for selling out. I think some of that mentality is still out there. We need to band together across industries and have creative LPs who contribute their expertise and get paid in basis points.
I believe this model of redesigning the value chain and getting more alignment is a noble pursuit – driving toward a more benign economy, where we’re all connected to each other, where we are all aligned.
As an architect, I often found myself being in the position of helping clients choose a property, but not being paid for that work. I became a broker in order to access some upside later on when the client came to sell the property. However, I found I wasn’t able to turn this into a meaningful source of revenue.
How is it that architects lack the vocabulary available in tech – we lack a basic ability to make a value proposition for our work in terms of financial projections. You should pay more for your architect who considers floor plate efficiency, for example.
I’ve taken some equity in projects in exchange for strategic communication design and marketing for RE developments, replacing a traditional broker taking a 5-6% transaction fee on each sale.
One thing I noticed was that I had no ability as a limited partner to do anything with this investment. When you’re a limited partner, you don’t get to participate in operational decisions. I came to the conclusion that I would rather get paid in cash, and then have control of where my money is invested.
The challenge becomes: how do you communicate the value you deliver the complex value you deliver to a client who is not sophisticated in understanding this kind of value.
Food, service and design are the trio that makes a restaurant successful. I learned when I was quite young that the design also acts almost like an insurance policy for the restaurant’s success.
About Out Roundtable Discussions
Led by subject matter experts, Brick & Wonder members dive into challenging business topics with an accomplished and intersectional peer group, surfacing tough questions and valuable insights.