The Entrepreneur Economy and Our Investment in DubClub

Over the past five years, we have witnessed the general rise and cultural popularization of the concept of the creator economy. You’d barely have to be paying attention to know the stats: there are now 50 million content creators globally and Gen Z would prefer to be a Youtuber than an astronaut. For better or worse, the term elicits visions of TikTok dances and pouty-faced Instagram models, and has been written off as wholly unserious by the institutional powers that be. In their race to write the next chapter of “What’s wrong with the kids these days,” I think the establishment is making a mistake. While it differs from their parent’s idea of the path to success, we have an emerging generation that deeply desires to start their own companies and be their own bosses. They want to follow their own passion, but also prosper. We’re in the very early innings of the entrepreneur economy, and I think it’s awesome.

Twenty years ago, when I graduated from college, there were only a handful of respectable options for the ambitious: Wall Street, big law, consulting, or medical school. Soon after that, we saw the monumental rise of tech, but it required a specific skill set (computer science generally) and was highly geographically focused (predominantly around the San Francisco Bay Area). While the institutions of the day changed (Goldman Sachs to Google, McKinsey to OpenAI), their importance persisted. Today, while these institutions remain as powerful as ever, for the first time in several generations, it is no longer a prerequisite for an ambitious twenty-something to join one as they embark on their career.

Today, an enterprising young adult can skip the institutions and start their own business that she is passionate about. It doesn’t have to be an obvious or massive idea, but as long as it solves a problem or provides a service to enough people, she can build a company and a life that her parents could only dream of having. One key insight is around scale: it doesn’t have to be huge, just big enough to support you and potentially a small team comfortably. Why aim small? Because it’s the risk-adjusted, smarter thing to do. There are dozens of opportunities to create a billion-dollar-plus company. There are millions of opportunities to create a ten million-dollar-plus company. Or said another way, would you rather compete with 1,000 people trying to build a $1 billion company or compete with no one (but your own talent and ability to execute) to build a $10 million company? Odds say the latter. Furthermore, big ambitious companies take big teams and typically require a lot of capital — if a founder exits a $1 billion company and still owns 10% of the equity, she did a very good job managing the inherent dilution.

A founder who builds a smaller opportunity company — leveraging technology, new platforms, and increasingly AI — can do it very efficiently. Even with considerable success, that type of founder could reasonably expect to own 100% of the business. As a result, they get to make 100% of the decisions. Want to sell the business? It’s your call. Want to move the business to Santa Fe? Do it. Don’t want to work on Tuesdays? Who does? One trend that I’m particularly excited about is the effect that generative AI will have on these types of smaller opportunity companies. Starting a company is daunting and lonely, but budding entrepreneurs will have agentic AI as de facto co-founders in their businesses. Find that one skill that you’re great at (and hopefully like doing), and AI will do the rest. You’re a master electrician, but don’t like promoting yourself? AI will handle your marketing. You can design beautiful jewelry, but don’t have a head for numbers? AI can handle your finances (and so on). Even if it’s not obvious, I think the zeitgeist is shifting — we’re seeing thousands of new businesses being founded that couldn’t exist five years ago (at least in this structure), and it’s just the beginning. The kids are (still) alright.

So, why am I — a venture capitalist, highly dependent on big opportunity companies — talking about how great it is to build smaller companies, 100% owned by founders? For starters, I’m a humanist who celebrates entrepreneurship and risk-taking in all forms. More self-serving, I’m obsessed with the technologies and platforms enabling this entrepreneur economy. I’ve spent thousands of hours searching for them, thinking about them, and trying to invest in them. The last generation of these enabling platforms was pretty great (ie Stripe, Shopify, etc), but I think the next generation could be so much bigger (both in terms of financial outcomes, as well as impact to the underlying entrepreneurs). The problem is, when these companies are at their earliest stages (where I try to invest), they are deeply not obvious (as a reminder, Shopify started as an online snowboard shop).

Let me give you a tangible example of an entrepreneurship-enabling platform (and recent Uncork Capital investment): DubClub.

DubClub is a platform designed to connect amateur sports bettors with professional sports handicappers, commonly referred to as “cappers.” While inherently a marketplace, DubClub is primarily focused on its capper constituents. A capper is an individual (or increasingly a small team) that does two things very well: predicts the outcomes of sporting events well using quantitative strategies (a good capper is right ~58% of the time) and effectively promotes their expertise and accuracy to the world. DubClub allows the cappers to focus on those two things and takes care of the rest (payments, customer communications, subscription management, and anything else an information services SMB might require). A good capper can command a $40 or $50 monthly subscription and have thousands of active subscribers (do the math — this is not a side hustle). Despite being a young company, DubClub’s best cappers will collect (net of DubClub’s rake) well into seven figures of income this year. Hundreds of additional cappers will have net incomes comparable to a typical full-time job, with the expectation that they’ll grow from here. All of them consider themselves the CEO of their own business.

I like the DubClub example in part because it does not seem obvious that it could be a platform that could support hundreds (and hopefully soon thousands) of lucrative small businesses. At first glance, it sounds ridiculous that a twenty two-year-old could make 10x the income selling insights about college sports than they could working 80-hour weeks at Goldman Sachs, but it’s true. In the near future, I predict the majority of highly talented and ambitious college graduates will forgo the institutional career path for something far more entrepreneurial. Most of those opportunities don’t even exist yet, but they will soon (in 2021, you could not be an online sports handicapper because DubCub didn’t exist yet). Despite this trend feeling risky and a bit disorienting, I think giving those who want it more agency and an opportunity for self-fulfillment and prosperity is generally a good thing.

Now, will DubClub be one of those select, few dozen $1 billion revenue opportunities? At this point, I do not know, but it’s heading in the right direction. When I first met Ryan Gaertner and Lewis Burik, the Founders of DubClub, two years ago, my first instinct was that it might be too much of a niche. But the world is changing fast, and the world of legal sports betting is changing even faster. Fast forward to today. They are well on their way and well ahead of all my expectations. They recently announced their Series A financing led by our friends at Renegade Partners. From here, their success is much more obvious to me than some online snowboard shop.