December 8, 2023

A $100 Million Bet on Finding the Next ‘Mr. Beast’

The company, which will have offices in Austin, Texas, and San Francisco, will hire a small team of investors from TCG and Night Media.

The concept of Night Capital was fleshed out at a steakhouse in Austin in 2018. Over dinner, Mike Kerns, a co-founder of TCG, told Mr. Duchscher that he was interested in finding creators who could replicate the success of Mr. Beast in other categories. Mr. Kerns said Night Capital would look to take large ownership stakes in profitable businesses rather than make venture investments.

By giving creators equity in the businesses it buys, Night Capital aims to upend the traditional compensation model for influencers, Mr. Kerns said. Creators have historically received only a small portion of the revenue generated by their posts and videos, while the digital platforms they use to publish their content have gotten the bulk of the proceeds. But that’s changing, he said.

“The platforms all have incentives to help their top talent become more successful,” Mr. Kerns said. “And, if they don’t, that talent will shift to a platform that enables them better audience, better revenue and better technology.”

Mr. Kerns said the concept of Night Capital was informed by TCG’s investments in firms that pair content with e-commerce, such as Barstool Sports, the sports-media company; Food52, which focuses on cooking; and MeatEater, which caters to carnivores. Hello Sunshine, the media company founded by the actress Reese Witherspoon, was also an inspiration, Mr. Kerns said.

Night Capital’s thesis results partly from Mr. Kerns’s experience as the head of Yahoo’s media business from 2013 to 2015, when he saw Facebook overtake the company’s ad business. If Yahoo, with a billion monthly users and thousands of engineers, could not expand its online advertising business beyond Facebook’s, what chances did start-ups like Vox Media and Bustle Digital Group have to make a major dent?

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