Content Creation Beats Paid Ads

Garry Tan emphasizes that in today's digital landscape, businesses must embrace content creation rather than relying solely on paid distribution, as major tech platforms have created a monopoly on attention and advertising.

Key Points:

• The Current Digital Landscape:

  • Big tech companies (Google, Facebook) have a monopoly on eyeballs
  • They control the incremental user acquisition through advertising
  • Perfect marketplace dynamics mean they extract maximum value from advertising

• Why Traditional Advertising Is Problematic:

  • Second-price auction mechanisms make customer acquisition increasingly expensive
  • Companies compete aggressively for the same customers
  • Every dollar of gross margin gets extracted by advertising platforms
  • Market dynamics force businesses to pay maximum prices for customer acquisition

• The Solution - Content Creation:

  • Being a creator is now essential for business success
  • It's the "purest form of alpha" that still exists
  • Platforms still offer organic reach opportunities:
    • YouTube algorithm
    • X (Twitter) algorithm
    • TikTok (especially for new creators)
    • Instagram (though less favorable to new creators)

• Meta's Creator Strategy Issues:

  • Currently favors established creators
  • Not helpful for people trying to do new things
  • Dropping the ball on creator relationships

• The Alternative Cost:

  • If you're not a creator, you must buy eyeballs
  • Have to "pay the toll" to cross the bridge
  • Must go through established platforms' advertising systems
  • No way to avoid the high costs of paid acquisition

This perspective suggests that businesses must adapt to become content creators or face increasingly expensive customer acquisition costs through traditional advertising channels.