One Person Companies are (Still) Underrated

Why the next McKinsey, Harvard, or Benchmark might start on Substack, with a Teachable course, or as a podcast

The unbundling of the firm has been in flight for decades. Increased access to global labor markets brought us outsourcing. The proliferation of cloud computing and mobile took this a step further, making it possible to externalize an increasing number of key operational functions and allowing for more asset-light business models.

The next step in the evolution of the firm will build on this but will come at the problem from a different direction. It will be defined by the rise of One Person Companies. Creators and knowledge workers will access external services that provide the capabilities to start and scale a firm and then re-bundle them in unique ways around their core skill set. They will monetize by selling products, services, and expertise to an owned audience that their core skill set has helped them build.

New platforms and infrastructure providers will emerge to support the tens of millions of individuals capable of building successful One Person Companies along with the billions of consumers and businesses that will support them. More generally, the rise of the One Person Companies will inject dynamism into the broader economy and will play a role in driving more inclusive innovation.

Why is this market underrated?

One approach to identify underrated market opportunities is to ask the following questions (discussed in more depth here):

  1. Does the audience skew "young"? (i.e. a toy market)

  2. Is there a gap between engagement and monetization?

  3. Are there artificial barriers holding back scale?

The market for One Person Companies answers affirmatively to all three.

People who forge their path alone — as solo educators, product designers, consultants, developers, coaches, media personalities, or investors — often lack the credentials to gain access to traditional halls of power and are overlooked by incumbents. Thus, the audiences they build at the outset tend to be in niche areas with consumers that are unattractive to entrenched players. Despite high engagement, the two sides need to grow together towards monetization.

This is a classic application of Disruption Theory and is playing out in real time in many markets (ex. 123).

The artificial “accumulated accidents” holding back scale are myriad — in the United States it is the tie between healthcare and employment, in other markets it is the social norms around entrepreneurial risk-taking. As these are unwound (accelerated in part by the pandemic), new paths to scale will emerge.

The next L’Oreal started as a blog, the next ESPN as an Instagram page in a dorm room. The next McKinsey, Harvard, or Benchmark might start on Substack, with a Teachable course, or as a podcast.

Accessing the One Person Company opportunity

There are at least three levels at which an investor can take advantage of the One Person Company opportunity. These remain non-obvious to most in the market with an institution-centric view of value creation and underrated despite the rise of platforms like Shopify, Etsy, Patreon, and Substack.

I have personally been active in the early stage market at all three levels, highlighted in parentheses below.

Dive Deeper

What follows was not included in the memo, but if you want to learn more, I did a video on the "Rise of Creator Led Media Companies" and wrote a post about some of the things we have learned investing in this space over the last few years.

The Professionalizing Creator Class