#3: Bankless

An under-the-radar unicorn is being built. It's not a venture-backed startup. It's a media company started in 2020 by 2 guys who met online and didn't come face-to-face until last year.

Say hello to Bankless - The most popular crypto/web3 media company.

The Bankless team describes itself as a "thesis-driven media company". But they are so much more. They create content, build products, and invest. They started with a podcast and are on their way to making more money than most people dream of.

How can you even put "podcast" and "a billion dollars" in the same sentence??

It's simple.

Here's the 5-step plan for making an obscenely profitable podcast:

Step 1: Build an audience and credibility by creating brilliant content. Sell advertisements. Offer your audience the opportunity to never hear another ad by paying a small monthly fee.

Step 2: Thanks to your content creation, you are well-connected in your industry. Make angel investments in the most promising startups you come across. Build a portfolio of ~100 companies in one of the most exciting new industries.

Step 3: Build SaaS products. You know your audience of tens of thousands of people. You know the industry inside and out. You've learned a ton from advising and investing in many start-ups. Now's your time to build a new product. Buy something that is still small and let it be the first seed in your garden of home-grown products.

Step 4: Now we're getting serious. Raise a formal venture capital fund. 35 million dollars worth, to be precise.

Step 5: Repeat. Create more content. Sell more ads. Offer more subscriptions. Invest in more companies. Build more products. Repeat.

This is how you build an empire.

The flywheel starts with great content. David Hoffman and Ryan Sean Adams founded Bankless in 2020. Today, Bankless is the default way many people stay up to date with the crypto/web3 world.

So, what is the magic that attracts people to Bankless?

It boils down to one word - Authenticity.

Listen to a few episodes. It will fast become clear how genuine and passionate David and Ryan are. Their curiosity is infectious. And you'll admire their willingness to interrogate and challenge any opinion they hold. They are maniacally focused on the long term.

Okay. Stop with the airy-fairy, lovey-dovey chit-chat.

Get to the bottom line.

How do you get to $1 billion?

Time for me to come clean. I used the $1 billion to grab your attention. Now that I have it, let’s talk about the numbers behind how this business makes money.

Not much math went into this. Take ~100 angel investments and make 2 assumptions.

Assumption #1: One out of ten angel investments will be a 100x return.

Assumption #2: Initial investment of $25 000.

100 x 0.1 x 100 x 25000 = $25 million.

That's a decent starting point. But remember that they recently raised a venture fund of $35 million. This fund enables them to do at least 10 times all the investments they've done up until this point.

The returns of the fund might not be exactly proportionate to the angel investments. But David and Ryan's deal flow and industry knowledge give them the perfect setup.

We haven't yet included podcast revenue or internally developed products.

The podcast has had at least 30 million downloads. Revenue from the podcast includes ads and paying subscribers.

At the moment, Earnifi is the only product they own. In fact, they only recently acquired Earnifi as part of a new strategy.

I almost forgot. They also have a daily newsletter with 250 000 subscribers.

I don’t have estimates for add revenue. However, based on the numbers they’ve published, the podcast brings in more than $2 million per year in subscriber fees, and Earnifi makes a little less than $1 million per year.

This is clearly a valuable business. But it is also more complicated than what we've discussed. Some of the revenue is recurring, some is not. Investments are illiquid. Earnifi has no guarantee of success.

Let’s introduce an X-Factor.

This business is only ~3 years old. Imagine what it will look like in 10 years. How many monthly downloads of the podcast will they have? What products will they have built internally? How many startups can they invest in?

The compounding effects of building an audience, investing, and creating products are powerful.

Are they powerful enough to make Bankless into a billion-dollar business?

We'll have to wait and see.

Thanks for reading Arena

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~ Mordi Goldstein