Vertical Capitalism:

The shifts towards WFH has brought back into focus a concept that I've been working on.

Much like the manner in which niche DTC brands attacked incumbents, vertical capitalists will carve out their own niche and spurn traditional employment...

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Vertical capitalism is rooted in an individual or small group that through experience, original thought, or creativity, has developed intellectual property of value to a certain niche audience

Picasso is perhaps the most notable and prolific example of a Vertical Capitalist

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The second step in the flywheel is Distribution

The vertical capitalist broadcasts original content: Tweets, Longform Articles, Newsletters, Videos, Music, Artwork, Podcasts, et al

Across owned channels: Twitter, Instagram, Youtube, Medium, Wordpress, et al

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The broadcasting of this original content reaches consumers, beginning with the most passionate users (value seekers) and spreading slowly to others (impressionables) via word of mouth and social virality

These are the foundations of a highly engaged audience

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As the vertical capitalist continues to produce unique and valuable content to end-users, domain authority is established

Once a vertical capitalist has domain authority, she/he has the platform by which to monetize their audience

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Monetization can take several forms based on the type/frequency of content, the direct channels, and the appetite of the audience

Monetization efforts for the vertical capitalist generally fall into the following categories:

Subscription
Paywall
Services
Direct Sales/Merch

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Step 5 of the flywheel is the point when a vertical capitalist diverges from more traditional models that follow a similar path (media cos, consultants, advisors) and is the most critical differentiator

Free cash flows from monetization are invested back into the community

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Investments are made via several vehicles: Seed/Angel Funding, Commissions, Partnerships, Services in exchange for equity, etc

The critical outcome here is that the venture capitalist acquires new unique and proprietary knowledge in trade for their hers/his investment

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This new vertical knowledge allows the vertical capitalist to both accelerate, and grow their flywheel

With each turn, the flywheel becomes more efficient and growth accelerates

This growth allows the vertical capitalist to move into tangential markets / build new flywheels

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Why is this a fundamental shift in the labor market?

Traditionally, creativity and IP has been owned by employers

This is the fundamental trade-off that employees make. They trade their talents, for the safety and security that stable income will continue in perpetuity

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But that relationship has been weakened by new communication and distribution tools and has shifted under our feet as global macroeconomic events have reshaped our perspective on work and value creation

This shift will not be immediate but will evolve over the next 1-5 yrs

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