OnlyFans’ New Investor Reveals Financials, IPO Ambitions in Rare Interview

One of the most interesting deals of the year had nothing to do with GPUs or tokens. This spring, Architect Capital bought a 16% stake in the adult content platform OnlyFans, at a valuation just north of $3 billion.

The founder of Architect Capital has been mum about the deal—one that most other investors wouldn’t touch. But this week, I sat down with him for a first-of-its-kind extended interview covering how the deal came together, the new financial products OnlyFans is planning, his plans to eventually take the company public and much more. (My husband co-invested alongside Architect Capital in OnlyFans.)

James Sagan, 34, cut his teeth in what he calls “harm reduction businesses” like high interest-rate lending in emerging markets and e-cigarette company Juul. In other words, he likes businesses other investors don’t. (Sagan isn’t the CEO of OnlyFans but he will be calling many of the shots in partnership with the other major shareholder, Katie Chudnovsky, the widow of OnlyFans founder Leonid Radvinsky, who inherited control on his death earlier this year).

I pushed him on his plans for the platform, the serious allegations the company has faced about non-consensual content, whether he thinks the zeitgeist around the company really can change and much more.

Here is the full transcript of the interview that aired on The Information’s TITV.

Lessin: I am thrilled to be sitting here with James Sagan, the founder of Architect Capital. Now, James, in a world where most investors like to see their name in lights and to have big headlines around their activities, you’ve taken the opposite approach. You have been completely under the radar as an investor, first in Juul and most recently, OnlyFans, and I’m thrilled to sit down with you today to talk about the future of OnlyFans and your other endeavors.

Sagan: Thanks so much for having me.

Lessin: And I should say off the bat that my husband, Sam Lessin, was a co-investor alongside you in the OnlyFans deal, so we’ll let people know that. Okay, so how did the OnlyFans opportunity come about?

Sagan: Yeah, you know, it’s a fairly sort of personal story actually. I got to know the owners and an employee of the company on a personal level, and you know, unfortunately, the owner was sick, and I was sort of helping in an advisory capacity, helping them sort of sell the business and find another partner. And I eventually realized that I was kind of the best person to do this by virtue of my historical endeavors. We’re not afraid of complexity at Architect. We have a real spiritual mission to lean into complexity and sort of a call to adventure, which has kind of been forgotten in the financial world.

Lessin: Too much AI?

Sagan: Well, it’s not even that. It’s just there’s a number of market structure problems whereby the canonical funds can’t participate in certain opportunities because they have restrictions in their limited partnership agreements. They have LPs in some cases that are incentive misaligned. And in our view, you know, we lean into complexity, the moral and otherwise, and we lean into things we think are really good and misunderstood.

And you know, Juul was, I think, maybe the most poignant expression of that, where I think, from a public health perspective, it’s one of the best businesses in the world. If you had the world’s billion smokers transition to Juul, which is far safer than a cigarette, you would save hundreds of billions of dollars globally in preventable healthcare. And you know, OnlyFans I think of is a very similar kind of structure, whereby it’s a harm reduction business at its core to a degree, and then it’s a lot more than that.

Lessin: Say more about that. So OnlyFans, as most of our viewers will know, is an adult content platform. You call it a harm reduction platform.

Sagan: Yep. I think it’s much more than a harm reduction platform, Adult content and sex work is the oldest thing that exists, and this is the safest way in which adult content has ever been provided on the internet. There are no harmful intermediaries. The creators themselves make 80% of the revenue. We have you know some of the lowest instances of CSAM [child sexual abuse material] and illicit content because we have incredible content moderation, and every creator is KYCed in a way that is tantamount to getting a bank account.

So from that perspective, it’s inarguable if you’re a pragmatist that this is like a completely disruptive business model that is far better for anybody who participates in this space, and I would argue that today that is why it’s so successful. It’s not an accident of history. The reality is that you know advertising platforms in the adult space are pretty harmful at their core to creators. You know, advertising platforms are good at making you famous. They’re really bad at helping you monetize. And so, you know, in 2018, 2019, a number of adult content creators realized that they could interface directly with fans with no intermediaries and charge them for exclusive content, and they made you know orders of magnitude more money, and they could do it as you know whenever they wanted. Nobody was coercing them into this work, and some of them have become so successful that they’ve retired their parents, and I think that is inarguably good.

Lessin: I want to talk a little bit about the deal, and then get into some of those interesting issues and how the company approaches them. So you bought around 20% of the company.

Sagan: Yeah, around 16%

Lessin: At a valuation of about $3 billion.

Sagan: That’s right.

Lessin: That seems like a discount. Given the strength of the business, how did you think about the deal? Were you looking to acquire more? And clearly, there’s a pretty big tax on that valuation because I suspect most investors didn’t want to touch it.

Sagan: Yeah, that’s largely correct. What’s interesting is that there are a lot of investors who were very interested in the platform, and they had no more deep moralistic concerns. They had broad reputational concerns. Well, my friends might, you know, judge me for this, and so I think that provides an opportunity to reauthorize what the platform really is, because if people really understood it, and it’s tough to understand. Most people, you know, everything is behind a paywall.

Lessin: There’s no app.

Sagan: There’s no app. It’s a nascent form of content that’s largely, you know, intimate, and is like the only venue on the internet for intimate sort of adult connection. And people pay for it directly. You know, people don’t pay for pornography, and so there’s obviously something different here, and there’s obviously ways in which the platform can horizontalize into other spaces outside of adult content. It’s the only platform that’s incentivized with creators on the internet. It’s a business model innovation—

Lessin: And you mean that because there’s no advertising that the platform is selling against. It’s just all direct payments between the creator and the customer.

Sagan: That’s right. And that sort of direct monetization sort of business model, let’s say, I think will represent a lot more of the social media economy in the future. And it’s sort of the inverse incentive structure from the Metas and the X’s, and those platforms are wonderful in many respects. But this is the largest creator economy on earth. And it’s the only one with the resources and the sort of brand recognition to sort of you know meaningfully expand what is possible in the direct monetization space.

Lessin: So you did this deal. What did your LPs think of it?

Sagan: Well, I’m really fortunate in the sense that my LPs, I’ve intentionally sort of designed my limited partnership base to be incentive aligned with me, and to make money, as opposed to preserve some narrative structure or so on and so forth. And there’s a big principal agent problem that’s emerged in private markets, which has narrowed the aperture of what most funds can invest in, and I don’t have that problem. And I’ve intentionally structured our business so as not to have those problems. And we’ve typically dealt with really complex mission-driven problem sets.

So, namely, financial inclusion in emerging markets was kind of how we started, and we became the most prominent second floor lender in emerging markets when there wasn’t any, and there’s some moral and you know sort of cosmetic complexity around that because people don’t like high interest rates. Yeah, but guess what? Our borrowers, our NPS score is like the highest you could imagine because we’re giving them credit when nobody else will. Yeah, you know, with Juul, smokers who have successfully transitioned to a safer alternative love us. So the business might be controversial, but our customers love us. Yeah, and OnlyFans creators absolutely love the platform, and even though they might be judged or condescended to, we need limited partners who understand that and are mission driven behind us, and we’ve been able to design that, mostly large family offices and very sophisticated ones at that.

Lessin: So, what can you say about OnlyFans, the business? This would be a great time to just reveal revenue, profitability. But what because it’s so secretive, because most people have heard of it but never experienced it. Give us a sense of what the business is like.

Sagan: Yeah. So until very recently, it was all family owned, and it was a wonderful, wonderful family. And a lot of people don’t know that. And so, Katie [Chudnovsky], who’s now my partner, is one of the most mission-driven, amazing people in the world, and I think she’ll be one of the most prominent people in the oncology world, where she donates a lot of her resources to. And so, I kind of fell in love with this family, honestly. And you know, OnlyFans today is the largest creator economy in the world.

Lessin: Do you mean by revenue, by users?

Sagan: Yeah, so you know, GMV is—and these are sort of public figures—and that’s what I’ll allude to, which is it’s like $8 billion of GMV, about a billion and a half of revenue, and about $750 million of EBITDA.

Lessin: So you invested it less than 3x revenue.

Sagan: That’s right. What we intend to do is we’re starting in a minority position, and and then to leg into a majority position over time, with the vision to bring sort of world class talent to the business that the business deserves and and hasn’t had yet, and to meaningfully expand the ways in which this platform can be used, and basically to build much better tools for the creators on platform, where we haven’t done that to date, and by building better tools, you allow them to be more independent, you empower them, and you allow them to provide. Access to their authentic sort of personalized brand to millions of users, and so the fans also benefit by having better, more personalized, more authentic content that is more connective, more intimate.

Lessin: So, in this vision, as you’re scaling the business, what percentage is non-adult content? I will confess, I’m a surfer. I follow a lot of surf influencers. I feel like there was a period a couple months ago, maybe when they were pushing their YouTubes to their OnlyFans. But actually, I don’t see that as much now. I get a sense that backed off. So, what’s your plan for that?

Sagan: You know, I think that a lot of I think there’s profound demand from the non-adults space, and I won’t get into specifics. But what I will say is that we don’t have the tools today to unlock that demand. And so—

Lessin: Is one of those areas, like the relationship with payments and payment processing, has been challenging. Obviously, like where does that stand, and how important is that to the next phase of growth?

Sagan: It’s incredibly important. You know, the platform has historically had a lot of challenges with respect to working with payment providers and so on and so forth. But believe it or not, it’s destigmatized materially in the last few years. The funny thing is that harm reduction businesses in general become more controversial than the terrible businesses that they disrupted because the zeitgeist hasn’t been able to understand it yet, and that is why in my viewnOnlyFans is one of the most one of the biggest brands in the world, one of the most misunderstood brands in the world, and it’s because the zeitgeist is kind of digesting what’s going on. And as that has happened, I think that there are more and more institutional payment providers and banks who kind of understand that this is a big platform.

It’s a big legal platform, and it’s doing good for the world in many respects, and so you know we do anticipate bringing in best in class payment processors, some of which we work with today to lower our payment processing costs. But importantly, we want to provide financial products to creators who are some of the highest earning and most underbanked people in the world. And

I think that is to treat creators with dignity and respect. Everybody deserves financial services, and that’s been an important part of my career. And we can do so today by I won’t get into specifics of the products, but by providing them a litany of financial products.

Lessin: I’m thinking loans. What financial products?

Sagan: A whole host of financial products that they don’t have access to today, and I don’t think that the banks are prejudicial in some way. It’s just there’s a structural problem because they don’t understand what’s going on in the platform, and we do, so we’re advantaged in the—

Lessin: Well, the banks want…The Information has done a lot of reporting on this. How can you know your customer if they’re from the bank’s point of view in a creator economy world, right?

Sagan: That’s right. That’s right. And so we can help provide that visibility to other third-party financial providers, and importantly, like we can provide a lot of these products ourselves. And I think that’s a profoundly good thing to do.

Lessin: Let’s talk a little bit about harm reduction and some of the challenges. You talked about KYC and moderation, but there have also been a lot of reports and allegations of non consensual use on the platform, middlemen exploiting people. I mean, obviously, this could be very treacherous. What are your responses to some of those allegations?

Sagan: You know, every platform on the internet has problems. You know, we have several orders of magnitude less CSAM than a lot of big businesses.

Lessin: For people who don’t know, what do you mean by CSAM?

Sagan: Child pornographic content, and you know, so Reddit has a lot of adult content. In fact, I would submit it’s a large minority at the least. X has a lot of adult content. I mean, the internet, you know, the the demand for it all is significant, and OnlyFans is the safest platform because we have the structural advantage of being able to KYC all of our creators,

Lessin: Meaning you know who they are, real name, real identity.

Sagan: That’s correct.

Lessin: To onboard, they have to provide that.

Sagan: That’s correct, and we have an incredibly robust KYC process. Every piece of content is moderated by a human being.

Lessin: Every piece of content is moderated by a human being.

Sagan: Every single piece of content—that’s right. And so we have these unusual advantages at OF, whereby if you—

Lessin: And what violates your terms of service?

Sagan: I mean, there’s so many edge cases I won’t get into the specifics there, but there are a lot of ways in which you can violate the terms of service, and we’re very active in sort of cleansing the platform at all times of any sort of bad behavior. But relative to other platforms, we we we have structural advantages that allow us to be safer, and what we’ll do in the future is make it even safer, and so our intention is to help the creators become more independent, help them earn more money, and empower them in the in the in the truest sense of the word. And they’re some of the most interesting entrepreneurs in the world, and they’re not often understood as that.

Lessin: I interrupted you before you got to answer my other question, which is how you see the balance of adult and non-adult playing out into the future.

Sagan: You know, I don’t have a real opinion, to be honest. We have an inclusive content policy, and we care deeply about our creators today. And my belief is, if you build better tools for our current creators, that there will likely be other use cases and other creators that join the platform. And if it remains adult, that’s totally okay. You know, we don’t, we won’t shy away from that. And if it becomes more than that, that’s also okay.

Lessin: That’s so interesting to me because I could see someone in your shoes, and I feel like over time, other management teams have been trying to shake off the stigma by getting the surfers or getting the athletes. But you have a different point of view. How does that play to what you think in terms of potential exit opportunities?

Sagan: I think that I think as we reauthor what OnlyFans is, to define it as it really is, as what the platform is, and I think almost everybody intuits that it could be more than it is today. And I don’t exactly know how that looks, but we have a sort of spiritual mission to really help the creators that we have today be as independent as possible, and to help the fans have you know the best content that that to allow the creators to disseminate the best content in their truest nature that they can. There are several worlds in which we can go public.

Lessin: Public? In the United States of America?

Sagan: Absolutely. There’s there’s no reason, regulatory or otherwise—

Lessin: But right now other investors wouldn’t even invest at $3 billion, which seems like the deal of a century.

Sagan: I think that’s largely a market structure problem again, because in private markets, believe it or not, they’re more restrictive than public markets. Yeah, and this is an absolutely legal business with an incredible compliance function, incredible KYC function, and I think that you know it is the largest creator economy on earth, and so I see no specific reason, foundationed in regulatory matters or otherwise, why it can’t be a public company.

Lessin: Have you floated the waters of that with any institutions out there?

Sagan: We absolutely have, and they’ve been very receptive.

Lessin: You’ve talked about why OnlyFans is the most creator-focused creator economy business. Compare and contrast it to some others because you know YouTube and Instagram. I mean, we have behemoths in the creator economy that, if they weren’t doing well for creators, I don’t think the creators would be showing up in droves. So put a finer point on that.

Sagan: They do. They do provide a very important function for creators, and in fact, a lot of our top of funnel comes from those platforms. And so, you know, advertising platforms are wonderful at helping creators generate visibility, at generating sort of initial community, where fans have a propensity towards a certain kind of content, and they allow for you know wonderful discovery features that allows them to find it, but then when it’s time for the creators to monetize their content, those platforms are not necessarily the venue to do so.

And OnlyFans, in its first initial use case in the adult industry, has provided that venue for monetization. So I think of it as like the yin and yang of social media, and we are the only yang, let’s say, that is at scale. And so, it’s not that those are not really important platforms; they are, and they’re symbiotic.

Lessin: What are your relationships like with them? I don’t know what a formal business relationship would look like, but given they are top of funnel…

Sagan: We intend to have amazing relationships with them, and we can work in a really collaborative capacity. Because you know creators of all varieties need both, and the different platforms that help them generate a lot of visibility and when it comes to earning money from content as you become famous, as you become well known, as you become influential. Direct monetization seems to be a deserved place in that ecosystem that has not yet expressed itself fully.

Lessin: So you’ve mentioned changing the zeitgeist a little bit, and I got to tell you, I was shocked to find I had to wrest a New Yorker copy out of the hands of my nine-year-old only because I didn’t want him seeing the lengthy feature on OnlyFans that The New Yorker just published. I’m also a fan of the TV show “Margot’s Got Money Troubles.” It seems like the culture is changing just from where I sit. What are you seeing? Are some of the creators on the platform getting to that next level of creator fame, sponsorships, so forth.

Sagan: Absolutely, and you know, there’s a few really courageous creators who really just own their small business, and have also been able to be sort of accepted by brands, and I know some of the creators in that New Yorker article I’ve met personally and they’re just amazing articulate intelligent women and I think that the more visibility that creators get with respect to who they are as individuals the more that the brand will destigmatize. I think “Margot’s Got Money Troubles” was obviously an amazing illustration of that. Margot is a creative, interesting, thoughtful person, and she’s sort of introduced this really creative way of providing content to her fans and to support herself as a single mother.

Sagan: And so more and more of those stories, as they’re articulated, I think people understand why this platform is deserved, and why it has a place in the ecosystem.

Lessin: So I would not be representing The Information if I didn’t ask about AI. Does AI disrupt OnlyFans? I mean, we’ve seen Grok and ChatGPT’s gone in and out of saying whether adult content will be a part of their strategy. I have to imagine it could be insanely disruptive.

Sagan: You know, I think part of our premise around this transaction was that it’s probably the least likely platform to be disrupted by AI, and the reason for that is that people are not coming to OnlyFans for, let’s say, the quality of the content which AI might be able to faithfully replicate, but in fact, for like human connection, you know, there’s a a loneliness epidemic that we’re all aware of, and this is the only place on the internet where you can authentically communicate with a human, and that’s why people pay for this content.

Lessin: So it’s a no bot platform, I guess, because of the KYC.

Sagan: That’s correct, which is oftentimes misunderstood, but that’s correct. And so, you know, the closer that you could get to the creator, the more that you can have an authentic connection with the creator. Typically, the more money that you’ll spend, and so people pay upon the dimension of authenticity.

Lessin: How do you know that? As a human journalist, I’d like to believe that’s true. But how do we know that the closer to the human is actually going to retain its monetary value?

Sagan: Well, we see that in the data, and we see that in that subscriptions used to be the largest part of the platform, and then it was sort of you know pay per view and messaging that took over as our predominant revenue.

Lessin: So most of the revenue comes from an individual getting a direct message from the creator.

Sagan: That’s right. And so I think that’s sort of illustrative of the fact that people are looking for connection more than they are looking for, you know generic pictures. Let’s say, and I think that you know AI will be something that will benefit the platform only to empower creators. We will never use AI in any capacity to disrupt creators, and it’s not disruptable anyway. But I do think there are ways in which it can meaningfully empower creators by using the technology thoughtfully at the platform.

Lessin: What’s an example? Not that you’ll do, but just for people to understand.

Sagan: You know, I’d rather not get into specifics yet because we don’t exactly know. But what I will say is that you know LLMs are particularly useful tools in terms of you know capturing somebody’s personality and helping them scale that personality and authentic capacity,

Lessin: But that would be a bot, not a person.

Sagan: There are ways in which they can be really useful tools, but importantly, we’ll only ever build tools to help the creators empower themselves and to help them make more money and to help them scale their authentic brand. Never in a capacity to intermediate them. Which I think the good news is that’s not likely in a world in which you have a lot of AI slop, in a world in which everything is AI generated.

The scarce asset is authenticity. The scarce asset is human connection, and I think that that will be more and more important on a forward-looking basis.

Lessin: So before we wrap, James, you don’t give many interviews, really any interviews. So I want to know more about what makes you tick as an investor. Give us more of how you got into this “harm reduction business” and how you found this edge?

Sagan: I think that we’re interested in solving problems. We’re both investors and operators in with respect to financial infrastructure largely, and so we kind of go where people don’t, which sounds you like a platitude, but it’s really true in our case, with a real call to adventure at the firm. We have a very spiritual mission.

Lessin: And you’re based in San Francisco.

Sagan: In San Francisco. And so, you know, we’ve typically succeeded by identifying market structure problems, structural inefficiencies in private markets, and solving them either by creating new financial instruments, solving them by you know raising capital for things that are misunderstood, where we can attach at a you know low price that’s very downside protected and help build you know a way in which we generate meaningful convexity, and so what makes me tick is I’m sort of a value investor at my core, and today that looks like dealing with really complicated things in private markets.

Lessin: Yeah, not many of you around these days, right? Are there? Or it just seems like everything has swung in the other direction.

Sagan: There’s, there’s really not, and we are kind of unusual, and I think that’s why we’ve been able to attract amazing talent at the firm because it’s really exciting, and we’re having a lot of fun.

Lessin: Well, James, thank you for joining. Thank you for sharing more about your plans and and you know addressing the controversy. We will be watching and have you back on TITV to see how it’s going.

Sagan: Thanks so much, Jessica. I really appreciate it.