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The founding story of Patreon

Patreon EC-1 Part 1: How two college roommates built the world’s leading creator platform

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Image Credits: Bryce Durbin /

It’s May 7, 2013 and Jack Conte is, in his own words, “totally exhausted, slash, totally wired, in that really weird in-between zone.” He has spent 18 hours per day for the last 50 days building a replica of the Millennium Falcon set from “Star Wars” and shooting a music video in it. When Conte has a vision for something he wants to create, he becomes obsessive. In fact, he maxed out his credit cards to see his vision through on this one.

But this is the moment. He uploads his video to YouTube where he has 100,000 subscribers. It’s not just a music video though: Conte inserted a segment at the end where he encourages fans to support him by going to a website he and his friend Sam have created called patreon.com. There, they will be able to download his new music (for free) and pledge money to help fund each video he creates going forward.

His fans respond with encouragement — and their wallets. While Conte normally makes just $100 in ad revenue per video, his fans commit to funding him with more than $5,000 per video within the first few weeks of the announcement. His creative economics had changed practically overnight.

When he was getting ready to announce patreon.com to his fans, Conte had reached out to 40 other creators asking them to create accounts, but none of them were interested. He, his girlfriend, and his roommate were the only creators on the platform when it launched. But buzz about Conte’s thousands of dollars in patronage triggered hundreds of creators to sign up. And so the story of Patreon begins.

Reading time for this article is about 8 minutes. Feature illustration by Bryce Durbin / TechCrunch. This is part of the Extra Crunch EC-1 on Patreon.

The founding

Conte came up with the idea for Patreon in February 2013 due to his own financial situation: the small amount of ad revenue he expected from YouTube wouldn’t come close to repaying the thousands of dollars he was expecting to spend on the “Pedals” music video (it ultimately cost $10,000). He believed there was a small subset of his audience who would be happy to help though, and to do so for each future video. He mocked-up his vision on 14 pieces of printer paper and, unable to build a software platform himself, reached out to his old Stanford roommate, Sam Yam.

Conte, who studied music as an undergraduate in the Stanford class of 2006, gained notability as a musician through the duo Pomplamoose he formed with his girlfriend and now wife Nataly Dawn in 2008. While Pomplamoose considered offers from several respected record labels, they decided they could gain distribution without giving up economics or creative control given the rise of YouTube and other direct-to-fan platforms online. After an initial surge of independent success, they fell into a three-year hiatus, a period in which the ad revenue creators earned on YouTube dried up considerably.

Meanwhile, Yam was building a name for himself in the startup world. After graduation, he continued studying at Stanford for a master’s in computer science (Marc Andreessen wrote his letter of recommendation) but took a leave of absence to become one of the first engineers at the social-mapping startup Loopt.

After Loopt was acquired for $43 million in 2006, Yam founded AdWhirl, which allowed iPhone developers to dynamically select their ad networks. It was acquired in 2009 by AdMob, which Google then bought a few months later. After a short stint at Google, he spent three years trying out new startup ideas. For part of that time, he worked out of the Dogpatch Labs incubator space, sitting next to Kevin Systrom and Mike Krieger as they tinkered with early versions of Instagram, as well as media entrepreneur-turned-VC Josh Felser.

After Conte reached out to Yam about his idea for what would become Patreon, they arranged to meet at Coffee Bar on Bryant Street in San Francisco on March 6, 2013. On that day though, Yam’s focus was elsewhere. He had discovered a startup concept he believed could be a winner: a freelance photographer marketplace called OurSpot. March 6th was the day Yam was unveiling OurSpot to the world, and he had arranged for coverage in TechCrunch.

Conte’s pitch struck Yam immediately. He agreed it was an enormous opportunity and that Conte was the natural entrepreneur to drive it forward as a creator solving his own need. Yam had started their discussion by telling Conte there was no need for an NDA because ideas are a dime a dozen and execution is everything, but by the end, he was urging Conte not to tell anyone else about the idea.

That very evening, even as inbound interest from the TechCrunch coverage of OurSpot rolled in, Yam went with his gut: he began coding the Patreon platform. It quickly became his main focus, although he kept running OurSpot in parallel until Patreon’s seed round closed.

Raising the seed round

The month after Conte launched his Patreon page, he and Yam — who agreed to be equal co-founders — set out to raise their first round of funding, setting a target of $700,000. Yam reached out to Josh Felser, who had passed on investing in OurSpot but liked Yam and was intrigued to hear he had suddenly switched to work on Patreon. Felser met Conte for the first time on June 7th and says he knew he wanted to invest right away. His firm Freestyle Ventures formally committed on June 12th, offering to invest the full $700,000 on a $5.5 million pre-money valuation.

Saar Gur, a partner in the Palo Alto office of CRV, heard about Patreon through Evan Tana, who had worked with Yam at Loopt. Gur saw the sudden rise of Kickstarter as a sign of a broader wave of transformation — the rise of a new online creative class with the ability to crowdsource their financing. He had been evaluating a number of crowdfunding startups that all launched around the same time, and he said Patreon was not the obvious standout among them in terms of metrics. But Yam had solid experience, and based on the behind-the-scenes video about the making of “Pedals,” he believed Conte had the qualities of a high-potential entrepreneur.

As Gur and others met Conte and Yam, Patreon quickly became a hot deal among VCs in the Valley. Some investors who had previously ignored them returned bearing term sheets. The founders decided to raise more than they anticipated: a $2.1 million seed round led by CRV and Freestyle and joined by several other investors, including Reddit co-founder Alexis Ohanian.

When I asked Conte how he decides which VC firms to work with, he explained that it has always come down to which individuals most genuinely understood and cared about Patreon’s mission. CRV and Thrive Capital (which led the Series B and C) won the jockeying to invest and gain board seats, he noted, because Gur and Thrive’s Chris Paik as individuals felt like the most authentic partners.

Early competition

Patreon faced competition from the get-go, but approached those companies with an open mind. YouTube star and VidCon founder Hank Green and his brother and notable author John Green were building a similar product called Subbable. The company focused on recurring monthly donations, and went on to launch three months after Patreon’s debut.

When Conte and Hank Green found out they were developing competing startups, they actually volunteered to help each other. “He sent me screenshots of their product before launch  in fact, we made Hank an official advisor to Patreon,” recalls Conte.

The companies remained independent for more than a year and a half until Patreon finally acquired Subbable in 2015. “Had we had a very adversarial relationship, I don’t think we would have been able to acquire Subbable,” says Conte. “Acquiring Subbable was pivotal for us. It gave us a whole roster of top-quality creators and a lot of credibility that enabled us to move upstream.”

First hires

Even after raising seed funding, Conte and Yam were the only people working on Patreon for the rest of the summer of 2013. In addition to being the only engineer, Yam was also handling customer service and running social media. They needed to recruit a team if they were going to accelerate product development and support more creators.

Their first hire was Tyler Palmer, who joined in September and brought much-needed experience to Patreon. Palmer had run operations at live-streaming startup StageIt, and had interacted with Conte, who used the product as a musician. He played a critical role in transforming Patreon from a project to a serious company by building out customer support, payroll and creator relations teams, as well as creating processes to enable the team to scale without collapsing. Palmer remains with Patreon today as their VP of Operations.

“[Tyler Palmer] brought Patreon through that early stage of development. Those were things I didn’t know how to do and frankly being operationally rigorous and detail-oriented is not one of my strengths. So partnering early … was critical.” – Jack Conte

The team’s first engineering hire also played a central role in the company’s early survival. Yam had originally built the platform in PHP, but he and Conte determined they would need to migrate it over to Python. “That could’ve killed us,” says Conte. “A lot of startups don’t survive porting over.” Albert Sheu, a friend of Yam’s who had worked at Quora and Twitter, came aboard and led the rewrite. (Sheu talked about the details of that process in 2015 on the TalkPython podcast.)

Evolving leadership roles

From these humble origins, Patreon has swelled to 170 employees in the nearly six years since launch. As founders, Conte and Yam stayed in their respective CEO and CTO roles, but have had to adapt to manage a rapidly evolving organization.

CRV’s Gur explained that watching Conte’s growth as a CEO since Patreon’s first seed round has been extraordinary. He was an outsider to Silicon Valley and not up-to-speed on the business concepts VCs talk about. On the day Patreon launched, he told the tech news site AllThingsD, “I’m not part of Silicon Valley and I don’t intend to be.” But he was eager to learn everything he could to make Patreon successful. Gur recalls Conte requesting lots of meetings with experienced tech leaders and always showing up to them with a long list of questions and a notebook in which he would scribble down detailed notes.

Conte now talks in the lingo of a technology executive and speaks with the weight of responsibility that comes with employing nearly 200 people. Having raised more than $100 million, he clearly understands how to speak with VCs. Through my own interactions and from experiences others shared with me though, it is evident that he still has the DNA of an artist: that creative, frenetic feel you get from his early YouTube videos and a wide-eyed enthusiasm about the role of creatives in society.

Conte wants Patreon to be led by a creator who also uses the product, and thus intrinsically understands the needs of artists. As Patreon grew, he had run out of time to create music and shoot videos himself, so last year, he committed to flying down to Los Angeles monthly to play with his bands Pomplamoose and Scary Pockets. Conte says he made roughly 100 music videos with the two bands in 2018.

Meanwhile, as Patreon’s team has grown, Yam has defined his role as CTO to fit his strengths and personality. He recently researched how CTOs at various tech companies around SIlicon Valley had designed their roles. He says, for example, that “Schroep” (Mike Schroepfer) at Facebook has a “visionary/futurist” approach, overseeing Oculus and working on crypto projects, whereas Nathan Blecharczyk at Airbnb (co-founder, chief strategy officer and former CTO) had one foot in business operations while he was CTO and Aditya Agarwal (former CTO at Dropbox) kept his focus on the core engineering organization.

Yam decided the right fit for him is to focus on technical recruiting and helping specific high-priority engineering initiatives get off the ground, like creating a dedicated payments team. To support this approach, he also spends time as a Y Combinator Expert, which he says generates leads for recruiting and gives him a pulse on general market trends.

The dynamic of Patreon’s founders — an ambitious independent artist paired with an experienced engineer — mirrors the dynamic of the company as a whole: supporting artists to run with their ideas by giving them a reliable tech infrastructure to earn a stable income from their fans. In this EC-1, I underscore a tension between capitalism and art that exists in Patreon’s business and product development, and that tension is represented within the personalities of the founders and the mission-driven culture they’ve established at the company.

The product of Patreon


Patreon EC-1 Table of Contents

Also check out other EC-1s on Extra Crunch.


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