Can artists find the fun in business?
When he was growing up in Greenwich Village in the 70s, Adam Davidson was immersed in the life of artists. His father is an actor, his mother has had many roles in the arts—actor, dancer, arts administrator—and almost everyone in the Westbeth Artists' Housing community where he lived was more passionate about chasing the muse than the money.
Money was more like a mysterious distraction, something competing for attention and tempting them to compromise. So when Davidson became fascinated with the financial world and made it the focus of his journalism, he probably seemed like an Alex P. Keaton black sheep among the bohemians.
But Davidson wasn't disavowing the artist's path. He was looking for the yellow brick road that could connect it to commercial viability. Not in pursuit of fame and fortune, but in pursuit of a life where you could embrace your individuality, lean into your weirdness, and find others who would not only celebrate that, but pay you for it.
Throughout his career, Davidson has traveled the world to find stories about people who've navigated tumultuous economic changes and forged a new path. On his way to finding his own niche as a leading proponent of the passion economy, he won the Daniel Schorr Journalism Prize for his coverage on the war in Iraq, and co-founded NPR's Planet Money podcast with Alex Blumberg. In 2008, they won a Peabody award for “The Giant Pool of Money,” an episode of “This American Life” that detailed the events that led to the subprime mortgage crisis. Shortly after, writer/director Adam McKay hired Davidson as technical consultant for the Academy Award-winning film “The Big Short.”
Davidson wasn't disavowing the artist's path. He was looking for the yellow brick road that could connect it to commercial viability.
In January 2020, Davidson published The Passion Economy: The New Rules for Thriving in the Twenty-First Century and launched a podcast spotlighting pioneers in this emerging sector. As the pandemic turned the world economy upside down, it also revealed new opportunities. We spoke with Davidson about how the past year has accelerated entrepreneurship and opened the doors for many who'd never before considered starting their own business.
Dropbox: Have you noticed new niches rising to address problems surfaced by the pandemic?
Adam Davidson: One of the core ideas of the passion economy is that you can find your group— those people who most value what you uniquely provide—even if they're spread all over the world. That has just fast-forwarded by many, many years. So every trend that was happening is just happening more so.
I think of this woman I met who's a food stylist, a very customer-specific job where she would be hired by a magazine or advertiser to come on set and figure out how to make that bowl of Cheerios or eggplant or pasta primavera look gorgeous. She's now doing it remotely. Before, she had a very customized customer base. She had to be in New York, or maybe Milan or Paris. She couldn't just be anywhere, because there were very few cities where there was a density of demand.
Now, she could do a New York gig in the morning, a Paris gig in the evening, a Shanghai gig. That does a bunch of things. First off, there's more work. But then more importantly, she could match to those people who value her the most, wherever they are.
It's a trend we've been seeing for decades, but it is so much more the case that since people have been forced to accommodate remote work—even for industries we didn't think could do remote work—the spread of the ability to find your unique customers all over is all the more possible.
Would you say there's growing interest in entrepreneurship? Are you noticing new businesses sparked by unmet market needs that weren't apparent until the pandemic happened?
For years and years, the three areas that have been the most resistant to the disintermediation of technology have been healthcare, education, and government. If you think of the in-person activity you do with healthcare, or the in-person nature of education, and the throughput government has in solving problems—everything has been stretched beyond comprehension. I actually was on the phone for 40 minutes today with a government office. Then they just shut me off. ‘We're just too busy.’ It was just maddening.
Something that's been really striking, certainly for me, as someone who's had multiple COVID tests just to be safe, and watching my son's educational struggles, it becomes really clear what part of an experience is adding value and what part is annoyingly inefficient.
If you think of the bundle of things called 'going to school' or the bundle of things called 'seeing the doctor.' When I go to the doctor, I have to sit around and wait for a while. That's kind of annoying, but that's just with the bundle. Or filling out insurance forms—It's a big pain in the butt, but that's just how life works. Or if you're in school for eight hours, there's gonna be some number of those hours that are just boring and your mind wanders.
It feels like this has really crystallized the pain points, the frustration. We got to the point with our son, who was in third grade during the worst of the remote learning period. We really knew minute by minute: he's actively learning about 20 minutes a day. Nothing more than that. How could we expand that? How can we increase that? So yes, I think this is cutting into the bone of the greatest resistance.
“First off, there's more work. But then more importantly, she could match to those people who value her the most, wherever they are.”
Some have pointed out that remote work during a pandemic isn't a fair example of what remote work really is because working parents like yourself have the added stress of trying to help with homeschooling. Would you say the same thing applies to anyone starting new a business over the past year?
Periods of crisis are known to be periods of a lot more entrepreneurship. During the Great Recession, you might even want to be an entrepreneur, you might have a great idea. But the lure of a steady paycheck is pretty powerful. When you don't really have a choice, you're sort of forced to be entrepreneurial.
The other thing is, recessions or great economic disruptions come at hinge points in an economic system when we're moving from one model to another model. Those generally create lots of new opportunities that people can take advantage. So I think overall, my prediction would be: this will be good. We'll see a lot of new firm creation, a lot of entrepreneurship.
But yes, I think it is frustrating. It's also clarifying. You really need to refine what is the value you are adding uniquely. How do you communicate that value? How do you find your people if all you're doing all day is sitting on your couch, talking to people? We've discovered that there were some firms that were tailor made for this moment that really can't survive.
What advice would you give to people trying to pitch a new business idea at a time when many are already overwhelmed by the news? How do you break through and create “intimacy at scale” at a time like this?
I would argue that now is not a good time for broadcasts. Now's not a good time for, 'Great solutions for everybody!' or 'This is a product that everybody will love!' I think you really want to go small and intimate.
My instinct would be solving specific problems for specific people and being able to identify where those people are. When they're thinking about their problem, how do you communicate to them? How am I going to save you time? How am I going to take a worry off of you? How am I going to easily onboard you?
“My instinct would be solving specific problems for specific people and being able to identify where those people are.”
This has been a trend forever, but you have less time, less space—you have to have clear value. That means really knowing who I am for and who I'm not for?
I saw a pitch for a food site. I was like, 'That was awesome. It's so clearly not for me.' I really appreciated it. They just started, like, 'Here's what we are.' I was like, 'Cool. That's not me.' So I don't have to waste another minute, you know? If there is deep engagement, once you get them in, I think people will linger. I think there's increasing understanding of the value of a niche, the value of a good story, the value of going back and forth—the marketplace as community, not just the marketplace as transaction. Getting them in is the challenge but once you get them in, I think they might linger longer. I'd be curious what the data says.
For people seeking a niche, a unique set of skills other people don't have, do you think it's better to begin by looking for a problem to solve or looking for the work they really want to do?
I am an advocate of both. You do need to have a passion, need something that really is self-motivating, something that is unique, that you can do that probably no one else can quite do, that feels really helpful. But then you need to match it to the market. That's where it goes from being inward to outward.
The 20th century model, this supply meets demand model, is you price things at what economists call the point of indifference, the place where people just don't really care that much. I have a buck, you're selling me a comb. I could kind of go either way. ‘Fine, here's a buck, I'll take the comb.’ You're trying to price it that low, because if you price it at a buck ten, a lot fewer people buy the comb. So you want the most people to buy it. You make it up in volume. By producing them more and more, you'll develop efficiencies.
But the model that I'm thinking about is, you're actually trying to find the person who really wants a comb a lot and is willing to pay a lot for it. You're getting to know a lot about them, and designing the perfect comb for them. I don't know why I'm talking about combs, a bald guy, but it just popped in my head. (laughs)
Do you think there's a role for AI to play in matching people who have a niche product or service with people already looking for that? Have you seen any tools for matching passion economy entrepreneurs to their customers?
I almost wanted to call the book “The Matching Economy” because if you think of the 20th century model, you make one product that's perfectly fine for everybody, not amazing for anybody—like Ivory soap or a Hershey's chocolate bar. If I'm on the east coast and you're on the west coast, the way I sell it to you is I sell to every single person between us until I get to you. I don't need to know that much about you, because it's priced at the point where you're not making a big investment, you don't care that much.
But if I'm creating a passion product or service, the matching is what matters. I need to find those people thinly spread around the world who really value this thing. Economists call that matching—how do I match what I'm offering with the people who most value it? That's turns out to be a really tricky problem. It's really hard. Especially because a lot of times you don't actually know what you want, and you don't realize that the thing I'm offering is the thing you want. I think AI has the potential to be even better at creating those surprising matches. It feels like we're in the very early baby stages with recommendation engines.
When I fantasize about the future, just imagine a world where the beverages you drink, the cups you use to drink those beverages, the clothes you wear, the furniture you sit on, the car you drive, the movies you watch are really the most perfect for you. Your accountant, your chiropractor, your doctor or whatever is most perfect for you. That might mean I walk into your house, and you just have all different stuff.
“You do need to have a passion... But then you need to match it to the market. That's where it goes from being inward to outward.”
I see that with my son. He has his YouTube creators that he loves, and his friends might not even know who they are. Unlike when I was a kid, whatever cartoons you watched, all your friends watch those because those were the only cartoons. So I feel like we're in the very early stages of this.
The other thing that is exciting is, it's never solved. Ivory soap came out and then that was the dominant soap for three generations. Hershey's chocolate was the dominant chocolate for decades, then it competed with Snickers and they still compete. In this new world, you might find the physical goods in your life are changing every few years. It's just never gonna be done. It's always changing, which to me is exciting. I think for some people, it's a little terrifying.
Do you see a lot of redundant supply coming out of the passion economy? What advice would you give to a musician or filmmaker who wants to find a niche? Is it about creating a super specific subgenre?
I think genre may not be the word. I grew up in Greenwich Village in a building filled with artists. It was subsidized housing. You had to make below a certain income. I believe that there's a place for broke artists. Some people really do their creative work. They don't want it in a marketplace at all, and they're willing to live a poorer life.
I think A) that's a perfectly legitimate choice if you make it, but B) it's a reminder that wanting to make money means wanting to figure out who is going to voluntarily spend money on your thing. That means needing to be a bit outward directed. For a lot of the artists, I know that's a deep challenge. They're not sure they want to meet that challenge. Others have no problem with it.
I'm not offering a world where everyone gets to create exactly what they want to create, and they also get to make a really good living at it. It's really about understanding that audience. Who's that group of people who you're connecting with? What do they want? How do they value it? How do you create value?
Another big idea in my book is, how do you capture the value. Those are two very different things. You can create value and not capture it. You can create no value, but capture a lot of value. I'm a big fan of Patreon, but there's a sort of inherent recency bias that the last thing you did, or the next thing you do is the valuable thing. If you did an amazing thing three years ago, it sort of loses value.
So I do hope that we have business models that don't just reward frequency. I think that's a big issue in podcasting. Because of the nature of the RSS feed, and the way ads are sold, a new episode has about six weeks to capture all its value. I actually don't like the incentives that gives. Because I'm pretty glad that Bruce Springsteen would spend two years or more crafting the perfect album. I'm glad he didn't feel like he had to turn something out every week, you know? That's good. I want that model to still exist. It feels like we're not quite there.
Have you seen a pattern to the success stories? Do they have something in common in terms of what they're creating or is their success more connected to finding the right buyers?
What I've been thinking lately is that learning to be playful about your business model, learning to see the way you make money as a creative act, an experimental act, a playful act—not just a fear-based, externally defined act—is almost like a conversion to a different religion.
If I think of artists I've known, graphic designers, other creative people, they almost have contempt for the business side. It's like, they do this beautiful thing called creativity, and then there's this crappy world run by boring people in suits called business.
“Learning to see the way you make money as a creative act, an experimental act, a playful act—not just a fear-based act—is almost like a conversion to a different religion.”
I actually think once you click on, 'Oh, that is fun, too!' Thinking about what the price should be is fun. Thinking about who my customer is, is fun. Thinking about subscription, selling products, selling events. If you want to connect with other people, you want to bring value to them, and you want that value to reward you, then that is part of the fun of the whole exercise.
The thing is, you're gonna have to try a bunch of different things. A lot of them are going to fail. Probably the things that'll work aren't going to be off-the-shelf solutions. So if you don't have a bit of passion, a bit of curiosity, a bit of hunger, and a bit of playfulness, I think you'll get discouraged too quickly and make decisions based on fear.