Ask a fintech founder: Eric Wei and Will Kim, Karat

"We’re seeing a sea change here,” says Will Kim, Co-founder of Karat, a fintech focused on serving creators.

“There’s a new kind of sheriff in town, or new kind of business emerging. Today, creators are becoming businesses, and tomorrow, what we’re going to see is that all businesses are going to become creators.”

It’s a bold vision, one driven partly by Kim’s and Co-founder Eric Wei’s personal experience serving creators during former professional lives, and partly by the desire to do something bigger — to make a real impact.

“My co-founder and I had always wanted to build something helping increase financial access,” says Wei.

“And right before our eyes, we saw this entire population — a quickly-growing new business type — that really needed this and really needed us. That’s why we started Karat: to become the one-stop financial center for all creators and content businesses, helping them handle their money and scale.”

Here, Wei and Kim talk inspiration, the rise of a new class of business, and how it feels to be in on one big secret.

What inspired Karat?

Will Kim: Eric and I met six or seven years ago. I was an investor, and one of the big investment deals we started seeing come through were marketplaces connecting brands with influencers and content creators. I had grown up on some of these creators, thinking, "They're just high school kids, just like me, having fun." Well, little did I know, they were high school kids having fun just like me, but also making a million dollars. Not like me.

And as we started working more closely, meeting these creators at big conferences, what we started to understand was, one, you're a real business. And two, you might not have any idea that you're a real business. We built Karat to bridge that gap.

Eric Wei: I always wanted to be a creator. You know when you're young, your parents tell you, "All the things that you’d like to do for a living, cool, put them aside, because when you graduate, that becomes what you do in your spare time." And so, I went and worked in investment banking, consulting, and tech. But I was lucky because I was a product manager at Instagram. I got to build products for creators, and see, wow, for the first time ever, it's actually becoming possible to make a living doing the things that you like. But it's still really hard.

And I spoke with these creators in the act of transforming their art from purely creative canvas to a sustainable business. They ran into so many problems around figuring out how do I do taxes? How do I incorporate? How do I set up my credit? And I was like, "Huh."

How would you explain Karat to your grandparents?

Will Kim: We help new businesses stand up their actual businesses, spend money, and get access to money they hadn't had access to before.

Eric Wei: I'd explain Karat to someone who's not familiar with creators as, hey, now easier than ever, you can make a living posting things about yourself online. It could be video, it could be text, it could be photos. Suddenly you're a business. But it's really hard to figure out how to operate as a business when most traditional banks out there don't really get what you do. We're trying to solve that problem.

How does Karat work?

Eric Wei: To properly help creators with their finances, the most important thing is learning how to underwrite them. Because a creator today might have over a million followers and make over a million dollars a year, but they might not have credit history. So when they walk into a traditional financial institution, that institution doesn't know how to underwrite them and give them credit and limits that make sense. We're building our own unique underwriting model — one that actually understands creators for the businesses they are.

Will Kim: To understand creators and their businesses we look at two things. We look at the leading indicators of what makes their business successful, and then we look at the lagging indicators of that business's success. The leading indicators are, What's your reach? What's your engagement? What's your growth as a content creator and as a social media business? And the lagging indicators are ultimately, how did you monetize that business? So, how much revenue did you make on subscriptions, on sponsorships, on advertising revenue? And when we loop that together and put it through our proprietary underwriting system, we can come up with a limit that actually helps creators scale their businesses.

How does working with a company like Visa impact your business?

Will Kim: Working with a company like Visa is incredibly exciting for us. This opportunity to actually have the kind of rails and all of this investment that Visa has poured in over the past several decades, is incredibly powerful. We can make sure we power all of these transactions for our users and help them actually spend their hard-earned money, and be able to grow their business more quickly — and ultimately, for us, provide those financial services to them.

Eric Wei: Visa is the whole critical part of what we do. Karat cards are Visa cards. We wouldn't be able to help creators get access to credit if not for our partnership with Visa. And we consider ourselves very lucky to get to build together with them.

What do you wish the public knew about the creator economy?

Eric Wei: I don't even consider it the creator economy anymore; I just consider it the economy. Everyone's going to realize the way you grow is by making content, and those are all the businesses that we're going to serve. Our focus today is powering creator and content businesses, because traditional institutions don't understand them. And as that segment grows to encompass the entire economy, our focus and value will correspondingly increase too.

Will Kim: I feel like I'm in on this secret. And the secret is that creators are businesses. What we're going to see tomorrow is that absolutely all businesses will have to be creators. In the end, all of this comes down to trust. Who does a consumer trust? I believe the creators are developing a monopoly on that trust, and as a result, being able to power these kinds of creators is going to mean ultimately powering the businesses of the future.

Is there anything else you would like to add?

Will Kim: Creators are taking over the world. Karat is helping them do that.

Eric Wei: Every creator we work with is showing there's a new business model possible. Once upon a time, you had to make something. Right? Or you had to do some sort of service. And it's only recently you can create content about yourself and have people on the internet gather together to support you through it. It's such a new and nascent and fragile thing, and it's going to continue growing. And to be part of that story, to get to say, "We help creators figure out the business side of what they're doing, so that they can focus on the creative," it feels really special.

Learn more about working with Visa at Visa + Fintech.