How 'Durable Audience' Became the Creator Credit Score | Josh Stein, Attention Capital

A New Asset Class Called Attention

Tim Rowe, State of Streaming 0:45

What if a creator's audience could be measured, valued, and financed just like any traditional cash-flowing asset? Welcome back to the stage streaming podcast. Today's guest is Josh Stein of Attention Capital. We discuss why capital markets continually misprice attention. We talk about what makes an audience actually durable and how underwriting these creator-driven businesses is providing a massive new runway for the creator economy. And wherever you're listening, make sure to subscribe to the podcast to keep leveling up your own media knowledge. Without further ado, on to today's episode. Some

The Speeding Ticket Origin Story

Tim Rowe, State of Streaming 1:34

attention compounds, some decays. The difference determines what's financeable and what isn't. Josh, that's from your substack, attention capital. Josh, by your own account, this all started with a speeding ticket. Can you take us from the side of the road in New York to pricing attention in the creator economy like its own asset class?

Josh Stein, Attention Capital 1:55

For sure. And you know, I Tim, I take it one day at a time, honestly. Amen. So it's a struggle, but it was a lovely April day sometime in 2001. It was my senior year. I was uh outside of Schenectady I-88, going from Ithaca back to Providence. I'm doing about maybe three miles over the speed limit. Another car comes zooming by me, gets pulled over. I get pulled over with the other car for some reason, get a ticket, never get a receipt from the radar. Look at my court date. It's during finals. So I just said, you know what? I think I pled like guilty or no low or whatever it was. You know, and I was like, paid the 60 bucks. And I forgot about it for a really long time. Got a job, went to law school, passed the bar. I'm in my last mile. And, you know, it's another lovely April day in the first department, first judicial department in New York City, going through my character and fitness exam. And I have a lovely woman who's most likely in her 80s, not much to do with her day. She's interviewing me for what's called character and fitness, which is, you know, that makes sure you're not like a, you know, a homicidal axe murderer before you start practicing law. I mostly passed with flying colors. We had a lovely conversation about growing up, my academic background. I wrote a law review article. Great. And then all of a sudden the conversation freezes and she gets super serious. So she says, Mr. Stein, I need to have a very serious conversation with you. And she says, So I went through your record and I noticed your violation in April of 2001. This is very serious. How can you be a pillar of community if you have a blatant disregard of the laws of the land? And so it's for six miles an hour. I have two choices. I could either die on a moral hill, or I could just do what I did and said, you know what? Not a day goes by that I don't wake up in a cold sweat thinking about what could have happened with my reckless driving. What with that six miles an hour? A week later, I uh was admitted to practice and you know, life was good. Phew.

From Wall Street To Creator Deals

Tim Rowe, State of Streaming 4:05

All right, we made it. So you're you're a lawyer by by training, by practice. You you your your career started in legal.

Josh Stein, Attention Capital 4:14

So my career actually started before that. So about six weeks after the ticket, I actually started my career on Wall Street. I started in investment banking at Bear Stearns and then went to law school and then worked in leveraged finance, corporate finance at a prestigious New York law firm called Cahill Gordon. And so it was the early 2000s. So I came up during the leverage buyout boom and the private credit boom. So, you know, Leb Finn, mergers and acquisitions, LBOs, public-private security transactions, you know, it was the level of finance discipline that I learned in those first 10 years of my career has anchored me everywhere else I've been. But what's interesting is, you know, growing up, I'm a creative. I grew up, you know, making videos with my brother as soon as we could hold a camera and figure out where my dad hid our family camcorder. So we started with stop motion, the Star Wars thing. We graduated to live action, writing. I was in a band. So for me, making stuff and entertaining people was always the thing that fed me, it drove me. And went to school, got a speeding ticket, ended up on Wall Street. And for years, if you would have asked me, what I did and what I loved were these two hermetically sealed parallel universes that could never touch each other. And then there was one magical day during orientation when I became a lawyer where they they sit you down and they talk about, you know, we've hired you because of your judgment, you're going to be doing blah, blah, blah. And then somewhere in that speech, they mentioned that pro bono hours count the same as billable hours. So, like 30 seconds after I heard that, all of my friends, former colleagues, and classmates who were hustling in the basement of entertainment music, they all now had a high-priced New York lawyer working for them. I started doing their deals, took my dark arts of finance, banking, and legal, helped them raise money, and they started winning. And that for me was the aha moment because I realized that what I did and what I loved, they work together. And my dark arts can help creators create and build sustainable businesses around that. So, you know, I, in my opinion, that day I split the atom for me personally. You know, it was great. And so, from finance, from Wall Street, I spent the last 15 years as a senior executive in the media ecosystem. I've been lucky enough to work at places like Vice Media, Univision, L Ray Network, Guillermo del Toro's Murata Studios. You know, I've been building teams, running PLs, and really my mandate has been to build businesses using IP, audience, and distribution. You know, my aha moment sort of during this phase of the career is early on, before the creator economy had a name, I worked with Dr. Phil to take, at the time, two nationally syndicated TV shows and build businesses off of them. And we did what you would now call pop-ups and drops. Uh, we built a publishing company through, and through no luck or skill on my part, we engineered two New York Times number one bestsellers. And so for me, that was the seminal moment because I realized, and this is like maybe 2013, I realized that the power of a durable audience and how you can build businesses off of that. And so you put all these experiences together. And for me, I realized really quickly that it's attention, it's audience. That's the thing that drives revenue, it drives margin, and it drives enterprise value. But to the point on the front of my Substack, capital markets are really bad at pricing it. And really, the places I've worked, you almost have like three competing gangs. You've got creatives, you've got your sort of operators, and then you have your financial stakeholders, and they don't speak the same language. So, you know, how I've kept myself gainfully employed these years is I speak all three, and I've been a bit of the Rosetta Stone. That's really been the sort of synthesis of my life's work. It's finance discipline, you know, it's building on durable audience. And so what we've built with attention capital is really, we believe attention is an investable asset. You know, creators are the first signal, but this shift really touches every modern business. So what we've built is really the operator and infrastructure for this asset class. You've got a private credit operator, you have AQS, which is scoring, monitoring, and risk signaling. And together, that's the thing that allows us to price durable attention, similar to how capital markets have traditionally priced any cash flowing asset. So that's the 30-second version in uh, you know, what four and a half minutes. Incredible.

Tim Rowe, State of Streaming 9:11

Really,

What Makes An Audience Durable

Tim Rowe, State of Streaming 9:11

really awesome stuff. Durability, that is a word that you introduced me to in our first conversation. I would love if you could unpack what we mean by durable audience. What does it mean to you?

Josh Stein, Attention Capital 9:24

So I mean, look, most audience, most viewership is noise, but durable audience is audience that behaves predictably, even if something adverse happens. So it's the audience that comes back, preferably unpaid, unprompted, and predictably in a nutshell.

Tim Rowe, State of Streaming 9:44

Unpaid, unprompted, and predictably.

Josh Stein, Attention Capital 9:47

You know, throughout the methodology, predictability is the key because if you can model it, you can finance it. But if it's noise, it's it's not financial. That that's kind of the key.

Tim Rowe, State of Streaming 9:57

Can you give us an example? Maybe my mind goes to like I'm thinking about my son, YouTube creators. There's like a clear differentiation between like a tier one creator and kind of like the rest of YouTube. Audience durability, like can you in practice, what does it actually look like?

Josh Stein, Attention Capital 10:16

So, like if you and I started a YouTube channel today, and maybe we, you know, paid a couple of bucks, got some algorithmic traffic, we'd have an audience. People would kind of show up, but then when we stop paying, they don't really know who we are, or maybe we had a flashy thumbnail or something like that. And so they saw us because the algorithm presented us, but they don't know us, they don't return. They're not really sort of a community around us. So it kind of just blows with the wind, right? That would be sort of noise or for whatever reason, it's just something where we're not, you know, the the audience doesn't know, doesn't care, doesn't want to return versus the state of streaming podcasts. I'm, you know, whenever you drop, I'm coming back. You know, I have appointment viewing, and you don't have to pay me. I know feeds my schedule, it feeds my brain, so I come back because you know, I need I need to know, I need to, I need to get my fix of Tim. So, you know, I I come back. That's a that's a durable audience. And whether you get deprioritized by the algorithm, whether you switch to another platform, I don't care because I'm coming to see Tim. That is the sort of paradigm durability.

Tim Rowe, State of Streaming 11:26

So when

Measuring Attention Beyond Nielsen

Tim Rowe, State of Streaming 11:26

we think about audience durability as a quantification of that audience, naturally that takes me into measurement and the thousand-pound gorilla in the room of television has traditionally been Nielsen. How does attention capital, how does how does your industry more broadly approach something like measurement and actually saying, okay, here's how many sets of eyeballs are here, here's how long they're there. Without giving away the secret sauce, how do you think about measurement? And have you ever worked with Nielsen in the past?

Josh Stein, Attention Capital 11:58

I've worked at Nielsen rated channels before, and you know, sort of when digi nets were a thing and sort of there was the boom of MOU cable networks, you know, I've made many a plan for uh new MOU. So I'm familiar with Nielsen, sort of ex ante and you know, during. And so on one level, what AQS, the attention quality score, is it does for attention, sort of what Nielsen attempts to do for making viewership legible to advertisers. So in some ways there's a similarity there, but you know, AQS is underwriting, it's not analytics. Like we definitely look at what happened, but it's really a framework for not predicting, but for working with what might happen. That's the zen of underwriting. So we're looking at really three pillars here. We're looking at, you know, durability, which again that addresses does the audience return preferably unpaid, unprompted? We look at cohesion, which answers the question of is your audience a community or is it a collection of random people? Is it brownie in motion? And the the land you're building on, is it owned or rented? And then there's cohesion, because this is for we're looking at businesses, we're looking at cash flow derived from audience. So this is not theoretical units of measurement. We're looking to see if that ball of people that's doing stuff converts reliably to cash. So it's those three working together. And you know, the beauty is it's sort of scoring, monitoring, and risk signaling, but it works together with traditional underwriting because we're underwriting loans. So we're answering the question of based on everything we know and what we think is going to happen, are we going to get paid back? Right.

Tim Rowe, State of Streaming 13:41

It's kind of simple math, right? Like we're not investing in startups, we're not betting angel money, we're we're taking calculated risk.

Josh Stein, Attention Capital 13:50

That's exactly it. This is not venture risk. These are all sort of companies, you know, these are we call them, you know, they're not influencers. These creator businesses are really companies with multiple revenue streams and multiple years of operating history. So, you know, if you're a YouTuber, we're gonna look at your ad sense, we're gonna look at the various metrics that are coming from Google, from YouTube, we're gonna look at your financials. So we sit next to traditional underwriting, they supplement each other and play off of each other. You know, I'm really good at predicting the past to a degree of metaphysical certitude, but I've been making models and projections for 25 plus years now, and every model I've done is probably wrong. But the reason I keep myself gainfully employed is that all of those models are useful. They tell us something that we need to make informed decisions. So AQS, you know, anybody who purports to tell the future based on metrics, they're trying to sell you something. What we look at is in underwriting, we look at what might happen and sort of measure the forks in the road. So there's really four quadrants we work with. We look at sort of deterministic variables, we look at your stochastic variables, and then we look at each one qualitatively and quantitatively. And what that starts to do is say, based on what's happened, we can start to make a reasonable sort of framework for what we think might happen and what might play out. We can't control any of it, but at least we can decide whether this is a credit that we want to fund or this is a show, for example, some of our clients that we want to green light. And so it's that four quadrant framework that really sets it apart and really lets it do its thing.

Tim Rowe, State of Streaming 15:32

What

How Underwriting Creator Cash Flow Works

Tim Rowe, State of Streaming 15:33

are some of the things that the capital is used for? You you shared some examples in previous conversations that we've had, but I'm curious if you can give the audience an idea of how our creators and the folks that you're financing, how are they using that capital?

Josh Stein, Attention Capital 15:47

So, you know, it's funny. It usually doesn't start as a capital conversation, it starts as a time conversation. It's someone we're talking on Monday that doesn't know what they're doing on Thursday because I'm a YouTuber who has to drop four assets this week. I have a brand wheel with, you know, sponsor X, and I'm like three quarters behind. They're paying me a lot of money. So I need to figure out my creative and my content cadence so that I can feed that beast. But I have this massive audience, I keep posting to earn. I'm on a bit of a hamster wheel. But what I really want to do is take that audience and do something that gives me 20 hours back in my week where I can use that to make money while I sleep or what have you. So that's where we start out. It's hey, I'm a YouTuber, I've got a great audience, I do X, and I really want to start a podcast. I really want to start a studio, I want to start a candy company, merch, hoodies, you name it. And so we start with what is that machine? Who do you have now? What do you need? And then finally we arrive at the cash need. And the conversation sort of focuses around a couple of things. I'm dealing with businesses that have been quite successful for three to five years. And so they're looking for growth capital to create that hoodie company, but there's also a really important thing that needs to be done on sort of the back office side, and that's professionalizing the org. Because, you know, there's one type of valuation for Tim Rowe, who does five to 12 different things at once. And then there's Tim Rowe's company that is a holding company that has a proper spine in a back office that happens to be engaged in 12 different lines of business. That's a very different exit multiple and a very different sort of valuation methodology. And quite frankly, it also runs better too. So the two main sources are always growth capital to get into that, call it third line, fourth line of business. And then it's the professionalization around that. Because again, you've got your team, you're doing something, but you're going to need real operators to sort of scale and expand.

Tim Rowe, State of Streaming 17:47

Josh,

What Creators Use The Capital For

Tim Rowe, State of Streaming 17:48

I've got three other topics that I'd love to get to with you today. For sure. Sovereign wealth funds, what they're doing differently, the WWE, and YouTube. All right. Do you have a preference in which order? Does one of those excite you most?

Josh Stein, Attention Capital 18:04

I would say my takeaway on sovereign wealth funds. I mean, there's a lot to it, but the real takeaway with sovereign wealth funds is sort of just its instrument and sort of strategy. You know, that's what I would get into on that one. WWE is the most interesting one. And then what was the third one?

Tim Rowe, State of Streaming 18:24

YouTube. YouTube owned and operated. You've written recently about YouTube and what they're doing. Let's spend some time though. Your thoughts on WWE, I think, will resonate, especially with our audience. What's what's the WWE doing that's so interesting?

Josh Stein, Attention Capital 18:39

I

WWE Quits Streaming And Wins

Josh Stein, Attention Capital 18:39

love what TKO is doing because they quit trying to be a streaming service. They quit trying to be Netflix and just sort of own their amazing, you know, they own what they're best at and just monetized it four ways, which, you know, again, I'm curious to see how over time it plays out with the audience, with the end user. But at least thus far, I was quite impressed by it. I mean, building and maintaining a streaming service, a platform, it's a thirsty master. It's very expensive, very capex heavy. And then it's the it's the proverbial, you know, pie eating contest, right? You win the pie eating contest and your prize is more pie. Your your prize is more capex and opex. And so, you know, just what they, you know, what they've done recently is just they they've solved that problem for themselves. And by the way, they've gotten also out of having to also maintain a strong customer service org. Because I mean, you know, if you have a very global, very visible brand, and if you get disgruntled customers, there is no better way to goose your churn in the worst possible way. So to sort of get out of the churn game, get out of the customer service game and just produce awesome events and then just split it and solve problems for four different constituencies, four different other services, you know, I think was brilliant. So it simplifies their business. You know, in the sort of the last 12 months, they've made about $2 billion doing it. You know, I think fairly comfortable margins, you know, but they're solving problems for Netflix. You're giving Netflix appointment viewings, you're giving NBCU basically cord cutter repellent, you know, ESPN gets anchor events, and you know, Paramount gets live differentiation with UFC, you know, efficacy with audience, we'll see how that plays out over time. But just in terms of you're looking at you know TKO as a business, I think it's a really smart move.

Tim Rowe, State of Streaming 20:43

Coming back to the the original three points I think you kicked us off with IP, audience, yes, distribution, master's class. You mentioned Paramount there. Do you think this deal closes? Yeah, got dog in the fight? I I mean it gets done.

Josh Stein, Attention Capital 20:59

No dog in the fight, but I mean, you're dealing this was never my expertise, but you know, we've already passed antitrust scrutiny, so it's really just states coming up claiming basically antitrust, from what I've been able to surmise from the news. So I think it's gonna drive up costs, you know, just because time bleeds. But I don't know. I mean, I don't have a crystal ball on this, but I'd be very surprised if the state challenges end up derailing this.

YouTube To Theaters And The Future

Tim Rowe, State of Streaming 21:28

We're about halfway through 2026. We're gonna be all of a sudden knocking on the door of 2027. What are you most excited about? Any any predictions you want to put on the record here?

Josh Stein, Attention Capital 21:38

Yeah, we haven't actually talked about this, but where I'm most excited is film, believe it or not. Ooh, go on.

Tim Rowe, State of Streaming 21:46

This has come up recently, actually. Uh another episode.

Josh Stein, Attention Capital 21:50

You know, my whole thesis is that you can build on audience. And I started to see this a couple of years ago when you had Raka Raka do talk to me. But you know, obviously recently you have with A24 and Focus with um backrooms and obsession, what you start to see is these filmmakers, they're filmmakers, they're not YouTubers, they just happen to be filmmakers on YouTube, and they build these extraordinarily durable audiences that keep coming back for a certain kind of content. And then what you're seeing with these box office sort of blowouts is you have really cost effective content that sort of already has an audience, and then it's translating beautifully to you know theatrical and sort of the windows beyond that. And that's not a fluke, that's physics. That's literally what happens when you build an audience that's durable and keeps coming back for a certain Certain thing. When you serve it to them in a different place, if you have a cohesive, durable audience, they're going to show up. So what happened with Talk to Me, what happened with Backrooms, what happened with Obsession is that those aren't anomalies. That's just called building an audience and serving them. And what what I'm really excited about, Tim, is horror, I think, is a really easy answer because horror has always been, oh, it's cheap, it's easy to make, and you know, you can kind of manufacture enough where the hits come. I think where this model is really going to be interesting and, you know, really sort of vindicate my thesis a little bit is when it starts to slip into genres and categories that are not horror and are not so on the nose, because you're looking at the same behavior. You're going to see a certain type of audience that comes for a certain kind of content. And when you port it over, you're going to, you know, I believe that that will result in a similar outcome.

Creator Businesses Need Real Credit

Tim Rowe, State of Streaming 23:40

You've described all of this as being very similar to small and medium-sized businesses. It sounds like you you've you've defined that very well for the audience today. And I'm encouraging my son, I'm like, dude, you've got to start the YouTube channel now. It's like having a small business and maybe thinking about it less like a flash in a pan and hey, I went viral, and more rigorous to how you've described here today.

Josh Stein, Attention Capital 24:06

Well, yeah. I mean, that's that's the funny thing. You know, once you have a durable audience and you've been going three to five years, the business is, you know, really sexy cocktail conversation, but they're really boring business. There's predictable, repeatable revenue. And, you know, again, you put your finger over the social handles and you forget, you can divorce yourself from the fact that our kids know and you know, or we know, or we it's content that we consume. There's just really boring SMEs. They're, you know, revenue generating, cash flow generating high margin businesses. But it's kind of, they don't have access to credit, they can't walk into chase. And that boggled my mind because I was, you know, prior to starting Attention Capital, you know, I was partnering with uh creator-driven businesses, building off of audience, but we're we were using a different instrument. You know, we were looking at venture and co-pros and things like that. And it wasn't the right instrument. You know, they said, you know, you have kids who are making, well, not kids, but you have businesses making five, 10, 20 million a year, and you're looking for that $2 million to start the hoodie company. And the only instruments that are really available are, you know, you can go into savings and finance that, which sort of a no-fly zone, because even with success, you know, there's a level of this is my safety net, and that's sort of an, you know, I we're not touch that. And so you're you really are left with, you know, in small levels, merchant cash advances, you know, factoring and things like that. But again, that's really expensive money. And then there's venture deals, which venture is a beautiful instrument when you don't have product market fit, you're seeking that or you're seeking your business model. So these are not venture risk businesses, these are SMEs, but they can't walk into chase and they can't get a loan. And so that's a massive market failure. And, you know, it reminds me of you know, the first part of my career during the rise of private credit, when you had middle market businesses that had sort of outgrown their local banking relationships, but were still too small to do massive leverage deals with your Goldman's and other bulge bracket investment banks. So they sort of slipped into this twilight zone. And that's where your GSOs and your blackstones of the world started to come in and service that. And, you know, obviously private credit as an industry has, you know, exploded in the last 25 years. But to me, this rhymes. It's just a massively unserved need. And so, you know, attention capital is here. We're different than sort of the other options. We're actually senior-secured private credit that's giving these businesses just the lifeblood that they need to grow. Incredible.

Tim Rowe, State of Streaming 26:48

Josh,

Where To Learn More And Closing

Tim Rowe, State of Streaming 26:48

we're gonna have to do this at least once a quarter. Feels like there's a great state of attention capital series we can build around. These are incredibly insightful themes and frameworks that you've given us here to think about. If folks want to learn more, get connected with you, where should they go?

Josh Stein, Attention Capital 27:05

If you're a creator or you're a creative, you can start at atn cap.com forward slash creators. If you're an allocator or just interested in the company in general, it's just atncap.com. And I have a substack as well, which is atncap that substack.com. Those are the three best doors.

Tim Rowe, State of Streaming 27:24

We'll make it all very easy to find. Josh, thanks so much for being here.

Josh Stein, Attention Capital 27:29

Thanks for having me, Tim. I appreciate you, man.

Tim Rowe, State of Streaming 27:31

Absolutely. Look forward to the next one. And if you found this conversation to be helpful, please share it with a colleague or a client. Start a conversation yourself today. We'll see you all next time.