In 2021, 47 million Americans quit their jobs in search of new employment opportunities elsewhere. At the beginning of 2022, the exodus continued as millions more resigned in droves (4.3 million in January and 4.4 million in February). While there’s evidence that this trend was underway before 2020, you can’t deny the pandemic gave it an extra push. Whether you call it the Great Resignation or a Great Realignment, there’s little doubt that a major cultural vibe shift is underway with profound implications for the future of work.
In the early days of the pandemic, more time spent at home resulted in many people reevaluating their lives in ways they couldn’t before. The act of slowing things down gave way to a new emphasis on mental health, wellness, and individuality. In the middle of it all, a collective a-ha moment occurred: why continue that stressful commute to work when I can do my job just as effectively from home?
Technology played an essential role in this phenomenon. While some workers got new jobs in far-off locations made possible by video conferencing and remote work tools, others took a more entrepreneurial approach, leveraging SaaS and social media platforms to monetize their unique skills and interests.
In past decades, it was not uncommon for the adage “pursue your passion” to be met with scorn and skepticism. At best, this kind of advice was viewed as downright impractical. But today, that mentality has changed as millions of people generate passive income through a new wave of digital platforms geared towards entrepreneurs, content creators, and the like.
In a recent study, it was found that more American kids want to be a YouTube star (29 percent) than a NASA astronaut (11 percent) when they grow up.
What Is the Passion Economy?
The Passion Economy is a catch-all term for digital entrepreneurship in the 2020s. While this framework is multifaceted and may look different for each person, we can distinguish it by three main characteristics, which are:
- SaaS companies that give entrepreneurs the ability to create digital products, connect with an audience, and sell their goods and services.
- Entrepreneurs who leverage their personal interests, hobbies, and skills into revenue-generating businesses.
- Customers who find value in those businesses and show support by making a purchase.
Often, entrepreneurs in the Passion Economy are content creators, but that doesn’t necessarily have to be the case. More accurately, it refers to people leveraging online tools to create niche businesses they find fulfilling. Therefore, it can include non-creative activities such as dog-walking or fitness coaching, as long as the lead generation and business development happen online. Forging direct customer relationships without an employer as an intermediary is a defining factor, as well.
Who Coined the Term Passion Economy?
Similar to the Wilhelm Leibniz-Isaac Newton calculus controversy, the term Passion Economy was coined by two people working on the same idea independently. As confirmed on the Means of Creation podcast, Li Jin and Adam Davidson came up with the term around the same time and were completely unaware of each other.
Li Jin, an angel investor and startup advisor, has been publishing articles about the Passion Economy since 2019. She was working at the venture capital firm Andreessen Horowitz (a16z) in the Bay Area, where she began noticing certain trends after seeing hundreds of startup proposals. First, she saw that in order for “Uber-for-X” businesses to be effective, they would have to “commoditize the worker.” Second, she saw a wave of new technology platforms that specialized in helping entrepreneurs build businesses based on their individuality. It was from this framework that her thesis was born.
For Adam Davidson, the 2008 housing crisis marked the beginning of his journey in examining new economic models. As a co-founder of NPR’s Planet Money podcast and a writer for the New Yorker covering globalization issues and the war in Iraq, Davidson came to his own thesis from a more journalistic perspective. In the wake of the economic meltdown/housing market crash, he was trying to figure out how small business owners could survive in this new economy. Years of research culminated in a book, The Passion Economy: The New Rules for Thriving in the Twenty-First Century.
Although they come at it from different angles, Jin and Davidson both agree that the Passion Economy combines elements of pre-Industrial Revolution society (buying handcrafted items from people in your community) with an Industrial Age economic model (producing goods at scale and exporting them to a worldwide). Jin points out that because of new software tools, entrepreneurs can specialize in a niche topic but still reach enough people globally to make a living.
The Gig Economy
You could argue that the Passion Economy is a natural progression from the Gig Economy, which took root in the 2010s and is still very much alive today. In this model, independent contractors trade time for money under short-term contracts, whether it’s delivering food (DoorDash), providing transportation (Uber/Lyft), or assembling furniture (TaskRabbit). The Gig Economy also includes marketplace platforms such as Fiverr and Upwork, where freelancers are hired based on a specific area of expertise, such as graphic design, copywriting, or digital marketing.
The main draw for many of those in the Gig Economy is undoubtedly convenience. Being self-employed means you can determine your own hours and work as much or as little as you’d like. Since customer acquisition rests mainly on the shoulders of the platform, there’s a sense of security in knowing that whenever you decide to open up the app, there will be plenty of new work opportunities waiting for you.
Although gig work has been a gamechanger in many ways, it’s not without its drawbacks. For example, as an independent contractor, you may quickly realize that there is a finite amount of hours each day, and there is only one of you. Therefore, trying to “get ahead” by working more hours can quickly lead to burnout and less of that precious commodity we are all after: freedom.
By contrast, entrepreneurs in the Passion Economy sell digital products and services that can lead to recurring, passive income. And thanks to sophisticated yet easy-to-use software tools, these businesses can be set up quickly with very little money or technical know-how. As such, this model provides the opportunity to move beyond the daily grind of trading time for money while pursuing one of your personal passions simultaneously.
Passion Economy vs. Creator Economy
These two terms are often used interchangeably, but there are several key differences.
The Passion Economy is a broader group that includes anyone who finds fulfillment in their work. Contrary to popular belief, they don’t necessarily have to be an online creator. It could be a tennis coach, a math tutor, or a personal shopper. To use a real-life example, Dumpling is a company that helps people start their own food delivery businesses. As you can see from the testimonials, these people love what they do.
On the other hand, the Creator Economy is a subset of the Passion Economy and specifically refers to content creators. This includes (but is not limited to) online course creators, podcasters, YouTubers, social media influencers, and bloggers.
How Do You Thrive In the Passion Economy?
There is no clear path to thriving in the Passion Economy. This is because 1) success is determined by various factors, 2) everyone defines success differently, and 3) personal preference in platforms and monetization methods play a significant role.
It’s important to ask yourself this simple question at the beginning of your journey: What am I looking to achieve? For some people, it’s a big paycheck at the end of the month. For others, it’s time, freedom, or personal fulfillment. Whatever your “why” is, you’ll need to figure out what that is and reverse engineer the steps required to get there.
In addition, you can increase your odds of thriving in the Passion Economy if you embody characteristics like persistence, grit, and resiliency. Make no mistake: there will be plenty of setbacks along the way. But if you can roll with the punches and adapt to the market as needed, your business stands a much greater chance of success.
Finally, diversification of your offerings is key. There are many different paths to monetization, including newsletters, ads, sponsorship deals, affiliate marketing, courses, consulting, and physical products. To avoid sudden income drops brought about by factors not in your control (user agreement changes, algorithm updates, etc.), it’s best to work on several different income streams based on your niche.
Passion Economy Startups
In the past decade, we’ve seen an influx of new SaaS tools geared towards small business owners and micro-entrepreneurs. It is beyond the scope of this article to list every single software and creator platform in the Passion Economy, so instead, this will serve as a broad overview broken down by category.
For a more comprehensive list, I recommend checking out this resource by Li Jin.
- Tiny Letter
- Facebook Gaming
- Mighty Networks
Passion Economy Size
According to research by Disciple Media, the Passion Economy was worth an estimated $38 billion globally at the end of 2019. The study found the three biggest sectors were: life coaching ($15 billion), self-improvement ($12 billion), and the influencer industry ($8 billion).
Side note: Given the growth that occurred during the pandemic, the global market value has undoubtedly gone up since Disciple’s 2019 study.
While there’s not much current data on the Passion Economy as a whole, research on various subsets gives a much better idea of the industry’s current size. Keep reading for some eye-opening statistics.
Passion Economy Stats
The Passion Economy has total available market (TAM) of 500 million users.
In a 2022 study, Linktree sought to determine what the market size would be if every person on social media became an entrepreneur. While this stat is more aspirational than anything, it does give a sense of the industry’s underlying potential.
The Creator Economy is worth approximately $104 billion.
This includes an influencer market worth $14 billion and a wave of new startups, bringing the total content creator market to over $104 billion in 2021.
More than 50 million content creators use the Internet to reach a global audience.
A report by Yuanling Yuan, senior associate at investment firm SignalFire, estimates that there are 50 million content creators producing content on Instagram, TikTok, and other social media. What’s more: about 90 percent of content consumed by Gen Z is made by individuals, not media companies.
Approximately 2 million content creators make six figures or more.
Of the 50 million content creators on the Internet, 2 million are making six figures a year. With a new wave of tools helping creators become founders, these numbers could grow in the coming years.
In the first half of 2020, daily livestreams on YouTube grew by 45 percent.
Undoubtedly propelled by the pandemic, YouTube reports that more than 500,000 channels livestreamed for the first time in 2020, representing a 45 percent growth rate.
Patreon hosts over 6 million patrons, also known as supporters.
The number of patrons has grown by 50 percent in the last year. Over the last three years, that number has tripled.
Twitch has 8 million unique content creators streaming each month.
According to data released by Twitch, 31 million people visit the streaming platform daily. Creators on Twitch can make money through donations, Twitch Bits, subscriptions, ads, and various kinds of off-platform sales.
There are over 500,000 paying subscribers on Substack.
This number is up from 100,000 in 2020. According to Backlinko, “The top 10 authors on Substack collectively make over $20 million per year.”
That concludes my guide to the Passion Economy.
Personally, I think it’s in an exciting time. Never before in history has it been easier to become an entrepreneur, grow your business at scale, and do something you love in the process.
That said, this path is not for everybody—nor should it be. There will always be people who prefer a career at a large company or work freelance in the Gig Economy, and that’s okay!
But for many others, technology is the new Main Street for entrepreneurs using SaaS to carve out unique careers in the Passion Economy on their own terms.