Read time: 3 minutes

To the 4,984 of you that signed up for today’s launch 🚀 …

Welcome to Strategy Breakdowns!

It’s a 3-minute email, every 2 weeks, on a strategy playbook or growth hack behind one of the world’s greatest companies.

In each edition you’ll get:

• Chess Move: The what
  A quick-and-easy explanation of the strategy.

• Breakdown: The how

  The strategic playbook, but boiled down to 3x actionable takeaways.

• Rabbit Hole: The where
  3x high-signal resources to learn more.

Consider it your reliable plug for value-dense, bite-sized strategy insights, delivered straight to your inbox every other Tuesday.

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Now then - let’s get into today’s issue!

It’s no accident that being a ‘YouTuber’ is the most-desired career among kids in the US and UK.

What started as “Your Digital Video Repository" somehow became the world’s 2nd most visited website with over 75 billion monthly hits and $30 billion in annual revenue.

They may not have known it then, but their winning strategy was born the day their slogan changed to the remarkably prophetic “Broadcast yourself”…

Chess Move

The what: A TLDR explanation of the strategy

In December 2007, YouTube piloted a program that allowed people to monetise their content by placing ads in their videos.

Originally, creators weren’t paid to be on the platform, but with the YouTube Partner Program (YPP) they were financially incentivised to upload original content.

At the time, the idea of sharing revenue with your users was unheard of, but less than 1 year after launching YPP, YouTube was already paying some creators over $100,000 per year.

So - how did the strategy work?

Breakdown

The how: The strategic playbook boiled down to 3x actionable takeaways

User Acquisition Flywheel: 

YPP rewarded creators for growing their own communities of subscribers, which helped YouTube build a massive user base.

By incentivising creators to produce and promote their own content, a flywheel formed: The more users YouTube had, the more creators it attracted. The more creators it had, the more attractive it was to users.

Takeaway: An optimal mechanic to aim for - align incentives so that your users bring more users.

Long Tail of Niche Content: 

YPP created a unique home for a ‘long tail’ of creators who could profitably produce niche content for small, passionate communities that were underserved by traditional media.

For example, a basketball fan in 2007 had 3 options: ABC, ESPN, and TNT. YPP has created a world where you can easily find thousands of creators producing ‘follow-along dribbling drills’, ‘high-school phenom dunk mixtapes’, and ‘how to coach zone defence tutorials’ with millions of views each.

Takeaway: Can you provide unique value for users that they can’t find anywhere else?

User-Generated Content Ecosystem: 

YPP spawned not only a new class of paid creators, but also an ecosystem of advertisers interested in these new marketing surfaces.

This shifted the marketing metagame - brands started experimenting with ‘influencer marketing’, where they partnered directly with creators to promote their products.

New opportunities and a broader ecosystem gave creators even more reason to commit to growing on YouTube.

Takeaway: Consider ways in which third parties could help compensate your users for using your product (advertisements or otherwise).

YouTube didn’t just make a platform for content that wasn’t anywhere else; they created the only ecosystem with the right incentives for niche content that couldn’t be anywhere else.

The ultimate competitive moat.

Rabbit Hole

The where: 3x high-signal resources to learn more