October 2020 marked the first anniversary of the “passion economy”. The term was first coined by Li Jin in a now famous blog post. Since then, she developed her investment thesis and founded her own venture firm, Atelier, to help entrepreneurs build the future of the passion economy. I had the pleasure to have her as a guest for my newsletter. Here is our interview. Enjoy the read!
Nice to meet you Li, and a huge thank you for accepting this interview! It’s a real honor to have you as a guest for my newsletter, which I started a little over a year ago, a few weeks before you gave life to the amazing concept of “passion economy”. To start, can you tell us more about the context in which you published your first article on the subject?
Working in venture capital, I had the opportunity to meet many founders building marketplaces in a wide range of verticals. We were particularly interested in how entrepreneurs connect supply and demand in a given market. When I started in venture in 2016, the prevailing model was the “Uber for X,” approach applied to all types of services, whether in education, tourism, or health. The idea was to turn a given service into an on-demand convenience. The consequence of that design is a standardized offering, which commoditized suppliers thus drove prices down.
As a result, it was difficult for providers to build a career and have upside on these marketplaces. Many individuals stay on these platforms temporarily and don’t view it as a long-term career. And so, a big challenge for these companies is to retain the supply side. But during the last couple of years, I saw a shift where more entrepreneurs addressed markets with more complex or higher-stakes transactions. Their marketplaces served customers looking for more nuanced services and who valued the individuality of the suppliers. The key to the success of these start-ups was richness and diversity of service providers — which I thought was very empowering and aligned to a model of work that I believe will become more prevalent in the future.
Did you have a specific key moment that proved decisive in the development of your thesis?
One of the “aha” moments was a meeting with Amir Nathoo, cofounder and CEO of Outschool. Outschool is an educational platform that allows teachers to offer live online group classes to kids in K-12. A key element of the platform is that teachers have total freedom in the development of their curriculum, and so you can find a huge range of creative courses, like a class about seasons taught through Frozen characters.
What stuck with me was that the founder mentioned that Outschool was one of the only ways for their suppliers to earn income flexibility by leveraging their creativity and education. I found it really interesting that the marketplace not only prioritized the needs of the demand side, but also delivered a unique value proposition to the supply side. It was from this meeting that I began to think about the foundations of what became the passion economy and ways to monetize non-commoditized skills.
Why did you choose the word “passion” to illustrate this new economy?
I chose the term “passion economy” very specifically: passion comes from the latin word “pati,” which means “to suffer”. This is apt because people often confuse passion with happiness — in contrast, I don’t believe being a successful passion economy entrepreneur means being happy all the time. Creators that I’ve spoken to don’t enjoy every moment of what they do; there is a degree of suffering and sacrifice. Passion means continuous effort and work, but feeling that the painful moments are worthwhile because there is a deep-seated sense of fulfillment. I think this is a notion that inspires us and something that we all want in our lives.
Somehow the passion economy borrows a lot of ideas from the art world, which you seem to be familiar with. Has art influenced your thesis?
Very likely! What we typically think of as creative industries — art, writing, music — are full of people who are passionate about their work. And in the art world in particular, many people are putting their passion for their craft over financial compensation.
The biggest commonality is the expression of a person’s imagination and creativity. There is something unique and individual in the products and services you find in the passion economy, whether it’s a video course, a podcast, a newsletter, or other services. Just as a work of art reveals the personality of its creator, these passion economy creations reflect the personality of the people that made them. This is in direct contrast to the “Uber for X” approach, which treats providers as a fungible commodity.
In your writing on the passion economy, you focus on the supply-side. But I tend to think that passion is equally important to consider on the demand-side. Can we then consider passion as a kind of currency at the center of this new economy?
Every successful consumer company has to provide something of value to the consumers at the end of the day — it needs to be an improvement over something that already exists on some dimension. For creator-led offerings, that could be lower cost (because of a different cost structure), greater trust with their consumers, or something else. I wrote about this in a blog post about the links between the passion economy and disruption theory. Passion economy models will be most successful in domains where there is an unmet or over-served consumer need.
I think this is in line with the concept of aspiration economy coined by Ana Andjelic, which I find very complementary to your analysis. You’ve also explored how the passion economy enables us to shift to a society in which work is being unbundled from employment. What effects do you think we can expect on the identity of individuals?
Work is still one of the most influential identity markers in our lives. For instance, in tech, there are certain values that are conveyed from the company that employs us; when someone says they work at Google, Facebook, Airbnb, or another company, a certain image comes to mind.
With the passion economy and the unbundling of work from employment, I imagine a return to a more pre-industrial notion of identity, namely one in which we derive our sense of identity more from what we create, who our customers are, and who our loose association of peers and collaborators are, rather than from a single employer.
These are ideas that can be found in the software craftsmanship movement too. I have the feeling that the passion economy will keep blurring the lines between the personal and the professional, between private life and public image. What are the main potential risks on the mental health of creators, according to you?
I think that the personal and professional identities of creators will increasingly merge. This is both a source of fulfillment — that one’s life is one’s work and feels meaningful and is what we choose to do with our time — but it also comes with risks. I recently watched an interview with David Dobrik, where he mentioned that he constantly obsesses over what he’s going to film for his next video on YouTube. As soon as he posts a new video, he is already consumed with thinking about the next one. The prospect of not filming anything interesting is a huge source of anxiety for him. I don’t think this lifestyle is suited for everyone — some people want more balance and separation in their lives.
If the passion economy becomes a disruptive innovation in Christensen’s sense, then it will have a societal impact that goes far beyond creators. What are the conditions for the passion economy to remain accessible to all and not just become a new “winner-takes-all” system?
The key for it to not be “winner-take-all” is that there needs to be heterogeneity in consumer preferences. For example, a newsletter considered by some people as “the best” on a given subject may not suit the expectations and tastes of other readers. If there’s heterogeneous consumer preferences, that implies a long tail of successful creators, with many products/services that are popular among a large number of audience segments.
I would add that an independent creator only needs a relatively small number of customers to make a living. This is the point of my “100 true fans” blog, inspired by Kevin Kelly’s concept of 1,000 true fans: one can be successful with a smaller base of fans, because the internet removes intermediaries and connects creators directly to fans.
For me, this is the potential of the passion economy I am most excited about: one in which millions of people can participate and earn a living, not just a rarified tier of internet celebrities.
The first blog post in which you coined the term “passion economy” was a huge success and established you as a thought leader in this new ecosystem. Since then, I imagine that your articles are much more anticipated. Would you say that this has had an impact on your writing?
I’ve always had a really high bar for my writing. I want to make sure that my writing is worthy of my readers’ interest and attention. Time is our most valuable resource, and every minute spent reading my writing comes at the expense of something else. I always ask myself if what I write offers new insights that will be useful for founders, and am always trying to push forward into something new, interesting, and surprising.
For me, writing is without a doubt one of the most powerful vectors of serendipity on a lifetime scale. For your part, what were the most memorable events that happened to you following the article you wrote one year ago?
The article definitely catalyzed a few interesting things. It led me to meet Adam Davidson, who is a journalist, author, and podcaster (he cofounded NPR’s Planet Money). Earlier this year, he published a book called The Passion Economy: the New Rules for Thriving in the Twenty-First Century, which is a more human-centered account of how various individuals are thriving in their careers by leveraging their passions. We’ve become close collaborators. And, in a way, I also jumped into the passion economy myself by founding Atelier. I also become more active in creating content: I’m part of the Everything bundle, and co-host a weekly talk show called Means of Creation. I’ve also been writing more in my personal newsletter and take more time to paint and create art!
You actually fit perfectly the definition of a multi-potential person, with highly developed passions that occupy an important place in your life. How do you balance all your various passions with your life and career choices?
When I was a child, my mother told me that time is like a sponge — you can always squeeze more out for what you want to prioritize. That has guided me a lot in my choices. People often ask me how I can have time for all of my projects. I just prioritize and focus my time on what gives me energy rather than what drains it.
I’ve actually read this advice from Justin Kan in the past and I couldn’t agree more. That being said, I know people who don’t have a real passion in their lives or who don’t even find meaning in what they do. What would you personally recommend them to do in this situation?
I don’t think that we are born with a certain passion. I believe passion is mostly the result of your education, experiences, and the time you’ve invested in developing various interests. I wouldn’t be as passionate about art had I not studied painting from age 5–18. Even my interest in the passion economy and the future of work is very much influenced by my personal experience as an immigrant, moving from China to the US when I was 6 years old and watching my parents pursue the American Dream. I don’t see a miracle recipe for finding one’s passion other than searching for it — that could be delving into one’s personal history, cultivating your curiosity, or exploring new interests.
I can’t think of a better way to end this wonderful interview. It was a great pleasure to be able to ask you all these questions about your fascinating journey. So many thanks Li!
5 books that touched Li’s life:
- Rebecca — Daphne du Maurier: “Sent me down a rabbit hole of Gothic literature during my teen years.”
- Jane Eyre — Charlotte Brontë: “Contains some of the most beautifully romantic passages in the English language.”
- The God of Small Things — Arundhati Roy: “Prose that borders poetry.”
- How Will You Measure Your Life — Clay Christensen: “During my first year after college, I lived in New York City and went through a major existential crisis about work and the meaning of my life. Reading this book was like taking an oxygen supplement at the top of a mountain: it gave me renewed perspective and energy about my work and what I wanted my life to be about.”
- The Bell Jar — Sylvia Plath: “A meditation on what it is to be a woman.”