Thread by @joethomsett

The #gumroad saga is a severe case of misunderstanding why your customers buy.

Let's dig in 👇

Gumroad thinks it's an all-in-one tool for creators.

It offers:

- payments
- landing pages
- posts
- content hosting
- email marketing
- A 'discover' tool

and more.

The problem is, it offers most of these sub par, or at least worse than competing products, who serve a part of the stack.

The use case for Gumroad is not as a full stack creator tool.

It's ease.

It's damn easy to use.

If you've never sold anything, if you're lazy, or if you can barely point and click, Gumroad has you covered.

Many a now top creator on Gumroad started this way.

They had either never sold anything, or didn't want to spend the time putting a custom solution together for what was probably a side hustle.

But over time, they emerged as top creators, becoming brand evangelists in the meantime.

And this is important for Gumroad, especially, because nearly 100% of creators are indie creators.

This often means, when someone purchases a product from a top creator, they aren't just purchasing a product, they are purchasing the aspiration to be like the person they just purchased from.

It's mimetic.

By losing their top creators, because of the recent announced price hike, they lose the raison d'être for thousands of other creators on the platform.

It's catastrophic.

It hits revenue straight away, as top creators move away.

It hits future revenue, as the mimetic effect is no longer in play --> If @joserosado is no longer on platform, 'Steven' is no longer going to mimic him on platform.

It hits future *potential* revenue, as these top creators will drive thousands of users either directly or indirectly.

Which means, this is either the most ridiculously bad decision from Sahil, or Gumroad has a new user type in mind.

I appreciate that Gumroad needs to make money.

But in my opinion, it should never have raised money.

It burned once doing this. History doesn't repeat, but it rhymes.

It's an indie tool for indie creators, of which there are thousands.

But its significance is amplified by those top creators using it. Penalising them is insane.

So what business model would work?

A low cost monthly fee, even $4, for all creators that have made X sales, plus say a 3.5% transaction fee (including Stripe).

And then additional revenue streams. Get damn creative!

E.g. look what @nathanbarry did with the @ConvertKit sponsorship network.

And then focus on increasing the user base!

Build a generous referral program.

Survey customers for what's important to them. Cut the bloat and double down on the key features.

Finally, as a company, get on top of the comms, and fast:

- Call investors
- DM all top creators
- Reverse the decision; apologise
- Work with key stakeholders to figure out how to build profitably
- Get hold of the narrative, turn it in your favour, and work collaboratively