IZEA Worldwide, Inc. (IZEA) Earnings Call Transcript & Summary

Good afternoon. My name is Ted Murphy, Founder and CEO of IZEA. And on behalf of our entire team, welcome to the Shake streaming event. Many IZEAns have poured their heart and soul into this new product, and we are so excited to share Shake with you today. When I started building this company in 2006, YouTube was in its infancy, Twitter had not been released yet, and the iPhone wouldn't be announced for another year. While I knew that social media would change the world forever, nobody could have predicted just how fast these platforms would be adopted. It took radio 38 years to reach 1 million users. It took television 13 years to reach the same milestone. The Internet did it in 3 years, and Facebook did it in 1. 1 million users in a year is impressive. But in that same 1-year time frame, TikTok amassed 100 million users. The rate of change is accelerating. And Shake provides a new platform for IZEA to move faster and capture more opportunity. Since our founding 14 years ago, there has been massive disruption in the media landscape. Television, movies, music, all of it looks radically different today. The Internet has transformed the way we communicate, share and transact, and as a result, where and how people spend their time. The average person scrolls through 300 feet of content per day. They see hundreds of videos and images every hour. But unlike 14 years ago, they aren't just consuming content. They are making it. With high-speed wireless internet, a 4K video camera and a keyboard, every smartphone is a compact connected content studio. There are over 1 trillion photos taken on the iPhone alone each year. And there are 3.5 billion smartphone users worldwide. And it's not just hardware. There is also an abundance of creative software. Photo and video editing software once reserved for professionals and companies are now available and affordable for individuals. Technology and networks have democratized content creation. Everyone is a creator. Your friend who makes dance videos. Your uncle who hasn't eaten a meal he hasn't photographed. Even your dog who has more followers than you do. Now everyone can express themselves. Everyone has a voice. Everyone has the potential to reach the masses with their message. This shift in the balance of power has caused upheaval in media and marketing. It has crippled the world's largest advertising agencies and destroyed once dominant media companies. The old guard now competes against teenagers with smartphones for audience and brand dollars.

And they are losing viewers and share of brand wallet as each year passes.

This shift has also redefined what it means to be a brand. Brands are no longer just manufacturers or service providers. They're expected to be publishers in their own right. This creates new challenges for brands and their marketing teams. The next-generation of consumer wants brands that are authentic, that market in a way that is reflective of their lifestyle and the diversity that they see in themselves. This new consumer is coming into their own, and they have grown up sharing everything from car rides to selfies with complete strangers. By age 12, 39% of Gen Z kids will have their first social media account. And the average age for a child getting their first smartphone is now just 10 years old. These digital natives thirst for content created by everyday people. They idolize YouTube stars and Insta celebs, and they grew up in a world of monetization platforms like Uber and Airbnb. Millennials are now fully in the workforce, but they are also entrepreneurial and driven. They sell rides in their car, rooms in their house and products online. 38% of millennials make money from side hustles each month, and 15% of those make an average of $1,000 per month. And millennials are not alone. More than 1 in 3 U.S. workers are freelancers, and that number is expected to rise with the onset of COVID-19. We set out to build Shake well before the pandemic hit, but this platform has only become more relevant to our future over the past 6 months. Tens of millions of people have lost their jobs, and many of those jobs were held by creatives of all types. Shake resides at the center of cultural, technological and financial shifts that are accelerating and global in scale, a shift underpinned by a movement away from mass media to media made by the masses. A revolution catalyzed by ubiquitous Internet, hardware and software tools, allowing individuals of all ages to monetize their content, creativity and influence. It is a mutually beneficial shift, helping marketers lower their costs, increase content output and connect with an increasingly diverse and fragmented consumer. We are living in a new economy, the creator economy. And Shake is designed to take full advantage of the changing landscape and opportunities the creator economy presents. It is an online marketplace for creators of all types to sell digital services. It will dramatically expand what creators can sell through IZEA, and provide a platform for our company to service a much broader base of buyers and sellers. IZEA's vision is to connect to buyers and sellers driving the creator economy forward. Our goal is for both parties to financially benefit by transacting and collaborating with each other. And we enable these transactions by providing software and services to both sides of the market. IZEA started by focusing our software development efforts on large enterprises as our buyers, but our aim has always been to make our software solutions accessible and affordable for as many people as possible. We began that effort in earnest with the release of IZEAx Discovery at $149 a month, currently our fastest-growing software offering. Last month, we introduced a starter tier of IZEAx Unity Suite at $500 a month, aimed at small agencies and brands. With Shake, we are opening our doors to everyone for the first time, starting at just $50 for a transaction with low marketplace fees and no monthly subscription required. Over the past few years, we have been building out the components of our 3-pillar platform vision: Gigs, Tools and Assets. As we think to the future, Shake creates another entry point for buyers and sellers and we'll provide some of the technological foundation for ensuing new product development in the Assets group. IZEA platforms are connected. Connected in philosophy, connected in technology and connected in our ecosystem of buyers and sellers. But they are also different by design. They are purpose-built to provide a distinct value proposition to their user base. As we introduce Shake to you today, I want to start with some of those differences. I would like to introduce Ellie Marongelli, a Product Manager on IZEAx, to compare Shake with our flagship platform, IZEAx Unity Suite. Welcome, Ellie.

Thanks, Ted. We are excited to welcome Shake to the IZEA family of products. IZEAx and Shake both facilitate transactions between buyers and sellers, but they do so in much different ways. That starts with how each platform approaches the market. IZEAx is a private marketplace. It's been designed to provide the highest level of privacy and security for enterprise customers. We don't expose the sellers to anyone unless they license our software. Shake's approach is a 180 and radically different in the world of influencer marketing platforms, in particular. It's a public marketplace where every listing and creator profile is open without a paid log in. Anyone can search for a creator or a Shake. And the listings are indexed by external search engines. The listing pages themselves are beautiful, mobile-friendly and shareable through social media. Not only does this create opportunities for organic sharing and discovery, we also intend to put marketing dollars behind the paid promotion of individual Shake listings. The best listings will get exposure unlike anything we've been able to offer creators with IZEAx with IZEA buying media to drive buyers direct to sellers. And the buyer universe has never been larger. With both commercial and personal license options, anyone can purchase a Shake, from the largest brands activating an influencer to the newly minted entrepreneur commissioning their first corporate logo. And because more types of buyers and sellers will become available on Shake, we believe it will ultimately yield more opportunities for creators to generate income. IZEAx is designed to help advertisers scale influencer marketing campaigns. The platform is built around the idea of having many people work on the same influencer initiative. It features robust workflow management and analytics capability designed for sophisticated marketers. Shake is the opposite. It's optimized to facilitate one-to-one transactions. It is simple, streamlined and designed to be used by someone with no training or experience. And because the workflow construct is simplified, we are also able to support many more types of collaborations with creators. IZEAx is squarely focused on influencer marketing. Shake also supports influencer activations, but facilitates a much broader array of creative services as well.

Different types of marketing initiatives call for different types of creators and workflows. To speak a bit about that, I've invited Kate Milton, VP of Client Services, to join us. Welcome, Kate.

Thanks, Ted. IZEAx provides an enterprise-class infrastructure for influencer marketing campaigns. It is used by our software customers as well as our Managed Services team, who have many of the same needs. But sometimes, there are creative requests that are outside what IZEAx does best. An example could be producing custom music for a TikTok campaign, a one-off illustration or infographic, recutting a video for use on different social platforms or removing an object in retouching a photo. These are all requests that can be a part of an influencer marketing campaign, but today, contracting workflow can be a bit disjointed, time-consuming and difficult to manage. With the introduction of Shake, marketers can easily switch back and forth between the right workflow tool and creator base for the job, whether it's a simple one-off engagement in Shake or a massive campaign with thousands of assets in IZEAx. It opens up more possibilities for teams executing campaigns and more opportunities for creators to collaborate with marketers in a different way. More importantly, Shake will save our buyers' time and money by accessing on-demand creative talent when they need it with no cost or licensing fees when they don't.

For all their differences, there is much technology shared between IZEAx and Shake. To speak about the synergies between the platforms, I would like to introduce IZEA's Chief Technology Officer, VJ LeBlanc. Hey, VJ, what's shaking?

Hey, Ted. We have talented people around the world that have been working hard to bring Shake to life, but it's important to understand that Shake is not a completely standalone platform. Shake makes use of core technology that IZEA has built, rebuilt and refined for more than a decade. IZEAx and Shake both utilize a common infrastructure that has allowed us to develop Shake faster and with less cost than starting from scratch. There are 3 core concepts that Shake and IZEAx share: UAO or Users Accounts and Organizations, our financial engine and our gemstone architecture. Gemstones are a series of micro services designed to perform specific tasks. They allow our engineering team to create independent technologies that can be leveraged by multiple systems. Shake makes use of the same gemstones that IZEAx utilizes. And in the process of Shake's development, our team has made the functionality of those gemstones more robust. Shake itself has its own gemstones, which can now be leveraged by IZEAx or other platforms in the future. Financial transactions are a fundamental building block of any marketplace. And Shake shares the same financial back-end that has been battle-tested with our IZEAx in Fortune 500 customers. That service has completed almost 4 million transactions between buyers and sellers. And because of its shared technology, it allows for seamless finances between platforms. That means that enterprise users of IZEAx can spend in Shake. It also means that a creator could earn money in IZEAx and spend the same money with another creator in Shake. So a blogger could hire another creator to design them a new logo or a YouTuber could have a custom intro song written. The best creators are marketers themselves, and Shake opens up creator-to-creator transactions for the first time in the IZEA ecosystem, which leads us to UAO. Finances are tied to accounts, and accounts are universal between IZEAx and Shake. While Shake is designed to be easy enough for any individual views, it also inherits the enterprise access controls to structural hierarchy from IZEAx. Not only is there a shared log-in between platforms, but there is also the ability for users to delegate access to an account. That means that a talent manager can seamlessly switch between a talent they represent or agency teams can grant access to their coworkers for shared buying or selling. We fully expect that small agencies will become sellers on Shake to help generate revenue and align new customers. This is all part of the vision to open up our ecosystem to everyone, and this foundational technology is what allows that to happen.

Thanks, VJ. Your team has done some incredible work bringing this vision together. Now that you have a little bit of background on Shake, let's dig into the details. We're going to start from the creator side or seller side of the marketplace. Let's have a Shake creator walk you through the process of listing a Shake for sale. Take it away.

Thanks, Ted. Happy to be here to show my fellow creators how to Shake things up. I love working with brands, and Shake gives me a new platform to quickly and easily transact in a safe way. It also has a flexible workflow. IZEA automates payments and I get more exposure to opportunities. I can also expand beyond just in terms of work and offer other creative services. But for today, let's focus on Instagram. The first thing I'm going to do is select a listing category. In this case, influencer marketing on Instagram. And we then add my profile URL, title, price, description and metadata to help this Shake get discovered. Next, I am going to upload some sample Instagram photos that I would like to feature. This Shake is all about product placement, so my content will focus on that. Next, I will add my deals to Shake. I want a brand to ship me their product, and I will provide them the original source content. I will give them 2 revisions, and it would take me 7 days to finish. This is both commercial use. It costs $2,000. I am also going to add a second deal for a TikTok video as well. With this, the brand gets posts on both accounts. I can then add options to the deals. I live within driving distance to Malibu Beach, and people love beach photos. For $200 extra, I will drive to Malibu and do the shoot there. Buyers tend to have common questions when purchasing influencer marketing services. I can address those issues upfront and minimize the time I spend answering the same questions. And finally, if I need anything from the buyer before I start, I can have ShakeBot make those requests here. In this case, I want to know a few things. What URL do they want me to drive traffic to? Is there anything they want to make sure I highlight? Are there any restrictions or preferences that I should be aware of? That's it. I get a preview of my Shake, and then I can submit it for a review. I can't wait to get Shaking, Ted.

IZEA reviews all Shakes for quality and completeness. Not every Shake is approved based on our standards. But those that are approved, then get listed in the marketplace. The Shake marketplace is beautiful, simple and elegant. It is built with high-quality images and videos from those that truly care about their craft. Being featured on the homepage of Shake will be meaningful. And we want to celebrate the best creators front and center. I just love what our design team has done with this experience. It's clean and smooth. I can navigate quickly. And these hover states give me an instant preview of videos and photos. Our featured listing here at the top is Richard Johnson, an incredible photographer. He is listing his photo retouching services on Shake. This is a service that both brands and creators alike can benefit from. I'm going to jump in and make a purchase of the Shake. But before I do, let's have Rich join us to share the creator side of the experience. Welcome, Rich.

Thanks, Ted. I'm super excited to participate in Shake. As a small business owner, I'm always looking to expand my client base and revenue streams. The prospect of working with major brands and agencies around the world is really exciting. I love how easy Shake is to use, and the chat-based workflow makes it very flexible for custom creative work.

Your photos are phenomenal, and we can't wait to expose you to more buyers with Shake, starting with me. I want to be a customer.