He Made $26M on YouTube...But Nearly Lost It All (Linus Tech Tips Interview)

33:34And that's why we brought it in-house, but our team is outstanding, and they are a big part of why we can weather a storm in our AdSense because if you look at it, in-video sponsor spots and fully sponsored videos are each about as much as AdSense overall. So where one channel that doesn't have those might have their AdSense drop by a third, which drops their revenue by a third, our revenue will drop by one ninth, which is a lot more sustainable. Right? And just to differentiate those, in video sponsorships are like a 60 second integration. Sponsored projects are like entire video is about the product.

34:15Yeah. Yeah. YouTube AdSense is like pure profit. I don't have any headcount that's directly associated with YouTube AdSense. Whereas sponsored projects and in-video sponsor spots, they're a lot of work. They're a heavy lift, right? We could just upload the video and we would get AdSense. Well, I mean, there's a ton of editing costs and production costs. Sure. But that's kind of shared across a lot of them. But it's shared across everything. Yeah. Whereas, you know, directly there's people who create Floatplane. To double click on sponsorships, like, do you have any, like, tips or, like, how do you guys pitch, like, sponsors?

34:44Or, like, how do you, like, land a deal? because I think bringing in-house is such an interesting move. We've done the same thing, and I find that we've been far more effective. I'm wondering, like, how have you been able to land bigger sponsors, or what do you do in-house that kind of differentiates you guys? I would say, you know, a big part of it is understanding who you're talking to. And for us, a really important thing is treating every brand deal like it could be a long-term relationship. And sometimes that means not charging as much. Someone might come to you with an offer and you go, that's too much.

35:18I cannot give you ROI on that. Because I want them to come back. I want repeat customers. I want, because that's part of having a diverse, predictable, right? Predictable. I want a predictable revenue stream. So we like to work with brands on at least a quarterly, ideally an annual basis in terms of their upfront commitments for what we're going to do for the year. and we like to make sure that they are getting taken care of and make sure that they're getting a return on that um so like okay we had a collab product a little while ago that was like a co-branded one i'm not going to name it because it flopped and you know that was impacting their willingness to spend with us and i basically went to the business team and i said fucking find a way to sell it it's to be clear it didn't flop because it's like bad it's not harmful to the user or It's a perfectly good product.

36:12It was kind of expensive and it's kind of a niche product. Whatever, right? But it's fine. It's a good product. No such thing as a bad product, just a bad price. Sort of, not really. The point is, I went to them and I was like, hey, we need to do what it takes. We need to promote this, buy the inventory from them and then sell it at a loss on our store. I don't care, but we have to do right. Because at the end of the day, I take the word partner extremely seriously, right? And brands are not just brands. They're partners. They give us something. We give them something in return. Tech companies, I see them as a partner too.

36:52They give us the product to review. We give them our honest feedback. The deal has to be clear. It has to be upfront. So in the case of a brand sponsor, right? They are expecting some kind of ROI. We'll find out what it is. What are their KPIs for this campaign? Do they want people to sign up for their giveaway? Do they want sales? Do they want awareness? What are they after? And how do we make sure that we are not taking such a ridiculous amount of money that it's going to leave a bad taste in their mouth? And we don't always get it right. Nobody does. But in general, we try to, I like to stack Ws, is what I tell the team.

37:28And the more Ws we can stack, the better. So one of my best examples, this was like probably my best idea ever, was our tech upgrade series, which at first we had sponsored by Intel and then they dropped the ball and now it's sponsored by AMD. And we take a member of our team and it's drawn by lottery system and they get a 5 ,000 US dollar budget to do a tech dream overhaul of whatever. It has to incorporate something from the sponsor brand just to make sure they're like getting some on-camera time in the video. But beyond that, it's up to you. We've had people buy things as diverse as neck massagers to controllers for their meat smoker to freaking model trains, like anything.

38:13You imagine it and someone on our team has an interest in it and they want to spend money on it. And that's one of my favorite examples of stacking W's because the company wins because we get the sponsorship revenue. The sponsor wins because they get this incredible positive brand association that is deeply integrated, to your point before, into content that is just for tech lovers, by tech lovers. It creates all the good vibes that you want from naturally sponsored content that's not shoehorned in there. It's not unnatural, right? The audience wins because they love it and they get an opportunity to meet members of our team that they otherwise would never get a chance to meet.

38:53They get to see behind the curtain that way and they freaking love it. They also get a lot of practical inspiration from these because we're making very different decisions, very personal decisions when someone is spending their own$5 ,000 budget versus when we're trying to imagine a hypothetical person and design a gaming PC for them, right? And then the fourth W is for the person who gets the upgrade. They get a$5 ,000 upgrade. Everybody wins. What else in this pie chart? create a warehouse okay that is greater than half of our total revenue now give context for people who don't know what is that so that's our that's our merch brand our merch development company essentially now i mean it's got like 20 people works for or something like that uh you know plus you know 3pl logistics plus you know contractors and whatnot um and it's it's it's a huge source of revenue for us now but it has sort of the worst things of all the others all piled into it, right?

39:57Like it has lower margin compared to just uploading a video and getting AdSense money. Much, much higher overhead. It is, I guess these are all just money. It's so expensive to run a physical goods business. It has a ton of potential brand damage exposure, right? Like all it takes is one customer service representative to miss one stupid email and someone's on Reddit being like, so much for Linus's trust me bro guarantee. It's like, dude, if I'd seen the email, I'd have been happy to respond to it. But stuff happens, right? And to be clear, I'm not upset with them for airing their grievances. It's a real valid grievance, but it is also frustrating for me because no, I literally cannot reply to every customer support ticket.

40:44And sometimes there are things beyond our control, like the whole situation with tariffs in the US right now led to a lot of confusion in the logistics industry that led to a lot of packages being failed to deliver and just ultimately destroyed. And so people would order like a limited edition product and we only printed it limited edition because we're not going to lie to you and say it's limited edition, but actually we're just going to make it forever. And then your package gets destroyed because it got lost in the tariff confusion and then we can't send you another one. Like, I didn't ask you to cancel the order.

41:16I just wanted my order. It's like, I don't have one. I don't have one to send you. Yeah. Right. And so it creates a lot of it's a huge surface that your brand is exposed over. And the lead times are horrible. Like, I mean, we famously took three years to develop our screwdriver. That's just R &D, R &D, R &D, R &D, R &D for maybe a return. Right. And so, yeah, it looks really impressive. right it's that big piece of the pie but it's the kind of thing that i wouldn't encourage every small creator to go chasing right away because there's other lower hanging fruit you know more profitable easier to scale things more predictable more predictable and but this is i mean this is how you turn yourself from an online influencer into a brand and that's something that i can't take any credit for pioneering, but it's definitely something that I recognized over time because we ask ourselves, you know, what value are we adding?

42:18And when it came to just like putting our logo on t-shirts and hats, I wasn't convinced there was a ton of value, but if we had an idea, you know, whether it's a folding clothes hanger or whether it's a really amazing everyday carry knife, you know, to call out a couple of other really cool creator products or whether it's a just a better balanced screwdriver um then yeah i think using the resources that you gain on the the influence side to to make a product that people are really going to love is as far as i can tell the current end game yeah how many products do you guys have like how many have you built in-house oh uh at least 100 i don't know lots like everything i'm wearing right now this hoodie the zippers everything else this t-shirt wow no the zippers ykk yeah but i mean you guys have like put this all together oh yeah yeah these are for the cargo pants i'm wearing are fully custom the lanyard my keys are on is custom my underwear is ltt wow uh the only thing that i'm wearing that is not ltt other than the vessi shoes from our sponsor vessi are these socks that I got at Creator Summit.

43:27YouTube socks. Got it. Linus, can you share what top line revenue is? How much is Linus Tech Tips worth today? Linus Media Group. Ooh, that's a good question. I try not to, like I had to look this up. I don't actually get like a quarterly breakdown of this stuff. I like to be really focused on the creative side of things as long as, you know, the lights are on and everybody's being paid on time and I can have a budget for wackadoodle projects. Like I bought a$30 ,000 CPU cooler recently, which is like insane. We bought, we spent 15 grand on a display wall, you know, like LED display wall on Craigslist.

44:11Yeah. Sight unseen, but our viewers love that stuff. You know, they want to see us be the one to, who would possibly buy this on Craigslist? I'll be the guy, I'll do it. And let's all experience what that's like together, right? So as long as I have that, I don't worry too much about that. What I will say is that if someone were to offer for our company today, it wouldn't be as much as the offer that I've talked about in the past, which was$100 million. I would be surprised if it was less than$50 million. You would sell for less than$50 million? No, no. I'd be surprised if someone offered less than$50 million.

44:49I would laugh at them if it was less than$50 million. Why would the value or the offer of Linus Media Group go down? We had more viewership two years ago than we do today. And so I would say that there's some weakening in the brand there. With that said, even though viewership is maybe half of what it was then, I wouldn't say that the valuation would be half. And the reason for that is that the physical goods business has picked up in a big way. The creator economy has generally matured over that time. So sponsorship rates are always kind of going up for us as more and more dollars come flooding into this space.

45:25We are less dependent than ever on those sponsor dollars, thanks to our in-house developed merch and our wonderful supporters on Flowplane. So for that reason, I would say it would probably be somewhere between, you know, where our viewership is and where the previous valuation was. Is there a number you'd sell Linus Media Group for now? A hundred mil was a lot. and what I asked myself was, how would this change my life? And the answer was, it wouldn't. I have been extremely lucky. I've worked hard, to be clear, but I have been extremely lucky. I was in the right place at the right time with an incredible team, a supportive partner, and I have a fancy car now, but it was like I bought it when it was not just affordable you know I went straight from I went from my old Civic that we would jokingly call the Lamborghini um just like ramshackle Civic manual transmission you know to I got like a Chevy Volt and that was when that was only really because we were um we put my Civic on the show floor at one of our conventions and we put out pens and like glitter and stuff and we let the community decorate it and they trashed it unfortunately it was not a proud moment for our community they like put glue all over the wind screen and stuff so i had to get a new car and we'd also been thinking about doing more car content so i was like okay maybe a way to do this would be i like daily drive them and that's so i bought a chevy volt because it seemed like a super practical car and i went straight from there to like a porsche tycan there's definitely cool stuff that i could do but the big dreams that i had at that time were either within my reach without selling or they were dreams that I could only really achieve by staying as the head of the company.

47:24So the ones that I needed to stay with the company for were, I think what we're doing with labs is really important. We have had some missteps along the way, but I think that in time, someone has to do something about the shitification of trying to buy stuff like listicles that are written by people or realistically AI bots that have never actually touched the product right storefronts like Amazon that are just full of you know random brand name that's just a bunch of consonants who paid the most to be at the top of the search result right like I want us to go back to what I tried to do at NCIX where we educate people on their purchases in hopes that we will create less waste that way.

48:14Because I am such a buy once, cry once person. I'm not saying that you shouldn't, you know, engage in consumerism, right? You shouldn't like buy a fancy thing that appeals to you. But by all means, you know, whatever. I'm not here to judge. I just want you to make a wise decision that you're happy with. I don't want you to be misled into buying the wrong thing. So our labs team is working on just you know testing making sure that people are ending up with the right product and we weren't done yet we're still not done we have a we have a ton of work to do and i need to be in charge because i need to know that it's not just going to get cut when times are tough that team is a resource sink and doesn't have revenue directly attached to it and so i see the value but if we were to sell to some private equity firm or something like that i don't know that they would see the value yeah i also don't know that they would properly recognize the value of our team on an ongoing basis so that was a big part of why i didn't take it from that standpoint and then in terms of like the financial goals that i still had i'm looking at it going well like i wouldn't get a hundred million dollar offer if i wasn't making money at this company right there so i wanted to start a badminton club but i was like can i save up for a couple years and do it then i could i can wait you know yeah so so to be clear like do you regret not selling your channel for 100 million dollars i mean i don't think anyone could look you in the eye across this table and say i've never thought what that might have been like but regret no yeah i want to rewind to when you almost went broke um i i which time well i want to talk about this because I've watched all your past podcasts and I feel like this is a moment you don't talk about enough.

50:03Can you take me through like when you were getting started and you were getting the channel up and running and that bank account is going to zero? Sure. What was happening? Because I think it's something that a lot of creators relate to. Okay. How deep do you want to go? As deep as possible. Okay. Let's start then when I was working at the computer store. Yeah. So I was still there. I was doing my day job. I was watching the revenue pour in from AdSense at the time and I was going - This is NCIX. That's right. Yes, yeah. And I was going, okay, wow, this could be sustainable, right? This could be enough.

50:37It's not enough enough. I mean, we had 117 ,000 subscribers, I think, when I went indie. So, you know, you do the math. That's not enough for a team of three people right out of the gate. It was me, two employees, and then my wife was helping with a lot of things behind the scenes. But she also had her day job as a pharmacist. Now, we didn't have a huge nest egg. We had just purchased a home and we had just had our first kid. So that was eight months before we started the YouTube company. So everything was just the worst possible timing, really. And but I was still I was looking at those numbers.

51:12I was going, OK, this could be doable. I went to my boss. I said, OK, I want to leave. I want to negotiate a deal where I take this Linus Tech Tips channel. You keep the NCIX Tech Tips channel. I help you run that channel. I help you with a succession plan, but I want to buy the Linus Tech Tips channel for a dollar. We ultimately did reach a deal and I didn't have to pay for the channel. So that was huge. But that didn't mean that I had startup capital. That didn't mean that I had a huge runway. All I really had was a small nest egg that my wife and I had started to build up around the time that we decided to do it.

51:49So that was in August, you know, and we split in the end of December. So not a ton. And then we also had my wife's income, but even that was reduced because she was on maternity leave at the time. So looking back, it's insane. I don't know what the heck we were possibly thinking, but the trick was doing it. And what I learned is that in business, You make a lot of friends. You make a lot of people who you think can, well, have your back, you know, if you were to ever lose your job or shift positions or need help in some way. And what you discover is that once you're not in a position where they kind of need you to buy their product or market their product or whatever else, a lot of those friendships evaporate.

52:38And so what happened was I looked at it going, okay, well, here's all these brands that I have really good contacts at, if even a fraction of them will sponsor us, then we can make this work. And that's exactly what I ended up with. I ended up with just a fraction of them. Our very first CES, basically the only reason we were able to do it, and that was a really make or break moment for us. So CES is the Consumer Electronics Show. That's where every tech brand goes. And I knew we needed to be there because we needed a bunch of content and I needed contacts, both to get our hands on products so that we could review it and also to try to make inroads with the marketing folks so that we could sustain our business.

53:24And this is your first CES as an independent YouTuber. That's right. So we got enough sponsorship. I believe our gold sponsor was$5 ,000 and that covered, we uploaded, I think, somewhere between 30 and 40 videos. That was our gold sponsor for those videos. And our silver sponsors, I believe were$2 ,500 each. We got$10 ,000, which was a ton of money at the time and still a lot of money. But a week long trip to Vegas for four people, right? It was me. I had Luke. I had Edsel. And then we actually had another guy who was there with us to kind of help us out. And that's where the magic kind of comes in because you're probably looking at it going, okay, hotel and flights for three to four people for$10 ,000.

54:11How could you possibly make any money on it? So the fourth guy was just a buddy of Luke's whose dad wanted him to make inroads in the tech industry. So he was a tag along and his dad covered our hotels, if I recall correctly. So that was the only way we were able to get there. And when we got there, we were able to make some connections that ultimately led to our first brand deals. They were really small. But what they allowed us to do was survive. Because the first six months we were burning. Like any startup business, we were burning cash. Payroll goes out. AdSense comes in, but it's not enough.

54:52And right the week, literally the week that we ran out of the nest egg and Yvonne's income, and we reached that inflection point where we were not going to have payroll, the first sponsor check arrived from those connections we made at CES. But that's how close it was. And that was what it took. So that week we did over 30 videos. Plus I was having meetings with any brand manager that would even take a phone call or a text message or an email for five minutes. Just please let me talk to you about what we're doing. I had this cringe pitch deck. This is the pitch deck you use to get your first sponsors.

55:32Yeah. Wow. I like pretty much did it myself. Ed cleaned it up a little bit. I did all the copy and it's not very good, but Hey, it got the job done. I'm wondering when you were at your like old job at, um, NCIX, like were there things that you were learning before you went independent that you now apply today or that helped you make that jump? Like I'll tell you the last thing that I learned there first, the most important one is time management. So my boss calls me into his office. He goes, our competitors are making these videos. I think online video is the future. I'm like, okay. I've always been more of a text guy.

56:10I like reading. I like writing video. I had no background in video whatsoever in front of behind a camera on a timeline, nothing. So he calls me into his office. He goes, well, I want you to make these videos so that we have videos too, because I don't know, you seem presentable enough and you care about, you know, what a RAM timing is. So, so, so go make videos. And like many of his assignments, I treated it like it was a passing thought of his that he'd forget about. So I ignored it. And then he brought me in a few weeks later and he goes, why haven't you done this in much more colorful language?

56:43Basically, where the fuck are these videos? And I kind of go, well, I didn't want to tell him. I didn't do it because I thought you weren't serious about it. The same way that I, you know, did things with my father, you know, my, my dad, when I was growing up, he would ask me to do something. And the only way to know if he actually cared or not was to not do it and then wait to see if he followed it up. Right. Because he'd ask all kinds of random stuff. So I was like, I didn't want to say, well, Jack, I didn't do it because I thought that you probably would forget. So I kind of went, oh, yeah, well, I've just been really busy, you know.

57:14And he goes, well, no more excuses. And he literally goes to the president of the company's office. He takes the camera that he bought for his son for Christmas that apparently he didn't use. He brings it over. He hands it to me. He assigns me someone from our graphic design department, who is the original, the cameraman to operate the camera and to edit the videos. And he goes, okay, no more excuses. Do it. And I kind of went, okay. So that very first one was, I basically had no idea what I was doing. And I was trying to find something bite-sized, Something I didn't have to do a ton of research for because time management.

57:52I already had multiple jobs. So I picked a heat sink. Very simple, easy story. I decided very early on. To make a review video about. Well, I wouldn't necessarily describe it as a review. And I'll get to that because very early on, I felt that the worst thing that you could do as a company was sell. Selling is gross. Nobody, you know, think about a salesman trope. Do you like it? Whether it's an extended warranty upsell or, you know, whether it's going to check with my manager to see if they can do that price. Do you like anything about salesmanship? No, I mean, definitely has like a stigma around it.

58:34Right. And so I decided very early on that if we were going to build an authentic relationship with our customers, who ultimately we wanted to sell them computer hardware, it had to be through education. So that very first video was not intended to be a review. It was intended to simply impart some knowledge that would help people make an informed decision when they were shopping. So I got this heat sink that I felt was a really good value, the Sunbeam Tech Tunic Tower. And I did a simple tutorial of how to install it. And I got a lot of pushback for that approach because upper management wanted me to sell, sell, sell, sell.

59:12Do a segment on our weekly special. And I'm like, No, no, no, no, no. We should create a more informed customer base. And then naturally, if you do a good job of the weekly sale, they'll see products that they recognize are good and they'll buy them. And that's a much healthier relationship. But where we had a fundamental disagreement was where he said, our primary goal as a company is to stock less, is to buy less inventory. And I said, I don't think that's a good guiding star. I think our primary goal as a company should be to sell more, not buy less. Because buying less is a shrinking company mindset.

59:54Selling more is a growth mindset. And we argued about it sort of back and forth for a while. You and the owner. Yeah. And he ultimately said, look, I don't want to argue about this anymore. This is the direction I've set. And if you can't get behind it, then maybe you should just make videos. Well, obviously he meant for him, but I mean, the numbers had been going up, you know, the, the first time I could buy coffee with an AdSense check was well in the rear view mirror. The first time I could buy a meal was also well in the rear view mirror. It had been growing and growing and growing. And I kind of went, yeah, maybe I should just make videos.

1:00:39And that was when I started to kind of lay the groundwork for what a plan would look like to separate, what a negotiation with him might look like to be able to retain the channel. And so I basically came to them with two offers. I'm leaving. Offer number one is I buy the Linus Tech Tips channel for$1. You have no equity. I own it. And I own the IP. I own LinusTechTips.com, the domain, which currently you own, but then I will own. And I will, in return, give you two years of a very reasonable deal for me to continue to host NCIX Tech Tips on what will still be your channel. During that time, I will come in once a week.

1:01:24I will host the videos and I will also do some mentorship to help you build out an internal team that will continue to run those videos for you. Also, I will give you a perpetual license for any Linus Tech Tips content to continue to use it as rich video merchandising on your site. Because if you recall, that's how they were using it. Any product that they sold, it was nice to have a video on the page. So you guys, forever, license fee free, will use Linus Tech Tips content on your website. Number three, I will sign a non-compete where I will not take sponsorships for a period of, I think I gave them two years.

1:02:02or three, something like that, with competing retail entities. And I had some stipulations for what made something competing. But we agreed with a handshake that Newegg was competing and Amazon was competing and tech retailers were competing. But if I was to do something for, say, Home Depot, that that would not be competing. It wasn't just a blanket. Anything that's a retailer is competing. That was my offer. offer number two i'm leaving and i have no prospects so i'm going to go work for new egg their biggest competitor yes because i don't want to be here anymore wow and what happened from there was there a response so it took them actually almost four months to sign the deal and i have to take part of the responsibility for that because the way that i departed was in retrospect not great on the one hand i did graciously give them four months notice which is a long time i now recognize especially a very long time and to go back i would not do that and i wouldn't ask anyone for that much notice because realistically once someone has given their resignation they're done they're like they're done they're out and and no amount of of self will power can make you care about something that you literally are not invested in anymore.

1:03:27Right. So I gave them four months notice, but without talking to them about it, I tried to poach the cameraman. And when they found out our deal that we had, they wanted to rip it up. They came back, they said, and it was emotional, but it was a valid emotion. They were really angry that I would, without even talking to them. And these are people that we've got to remember, right? Business is business, but relationships are relationships. These are people that I've stood in the trenches with and we've done store grand openings with and we've worked hard together. And yeah, it was work and I was paid and they were paid and everything, right?

1:04:12But I'd like to think that it's a little deeper than just an exchange of money, goods and services, right? And so, yeah, I agree that that was a betrayal of of trust to not talk about it with them say hey before you tried to poach i'd like to bring him with me yeah because my intention from the start was to bring him with me yeah as as our shooter editor and and and business partner because you realized you needed a staff yeah like to go independent and i wanted him i wanted him to be the one he was there from day zero yeah and um not realizing that could hurt like ncix the company that you're leaving with their video?

1:04:52Oh, I knew it would hurt them. He was very important there. By that time, he was not just a graphic designer. He was pretty senior in the leadership team as well. And so I should have known better. I should have talked through it. I should have given them that opportunity to at least consider the entire scope of what they were agreeing to. So when he found out, he wanted to completely cancel the deal. The owner did. Yeah. And basically what happened then was I was there. I was still working there. Things are a little tense, as you can imagine. I don't have a signed deal for the ownership of the Linus Tech Tips channel, but I'm still plugging away day to day on the PC systems and product management, training my replacements, uploading YouTube videos, trying to move forward in good faith.

1:05:41And he basically comes to me and he says, okay, new deal. He doesn't go with you. And number two is I want equity. And I kind of went, okay, I'm not giving tag-along equity to someone who knows absolutely nothing about this business. I don't think that that makes sense. I wanted to bootstrap it because I wanted to have the control to never have someone tell me again, you know, you have to sell. It can't be about the education. You have to do this. You have to do that. The whole point was that I wanted to build a team the way that I wanted to do it. And I wanted to build a company the way that I wanted to do it.

1:06:14And so I ultimately, you know, I talked to the cameraman. He's like, yeah, I mean, my job here is realistically not that bad and this isn't going to be a guarantee anyway so um you do what you got to do and and i respect him a lot for that um for making it possible for us to even come back to the negotiating table but i said no equity so okay new deal but no equity and it wasn't until literally december 31st with the incorporation of linus media group being january 1 of the following year uh december 31st he was actually in china and i was like hey we still don't have a deal my payroll starts tomorrow do i have a channel or not because i'm not coming to work you're like talking to the owner yeah yeah and i i was hard to get in touch with him he's like i'm overseas i don't want to talk about this right now i'm like dude we've had four months to talk about this are we doing this or not and he says yes and so it like came down to the line with my team too, having no idea how I'm going to pay them.

1:07:18Like they walked away, one walked away from school and the other walked away from well school and potential job opportunities to come and do this with me. It was, the whole thing was crazy. We didn't even have a channel yet. So that was probably one of the most tense moments in my life, right? Because I remember walking around in the family room at my old house, pacing, pacing on the phone, like, will he, won't he, will he, won't he. and I've had conversations with the team members like, do you guys think we can do this if we have to start a channel fresh? I don't know. Turns out we wouldn't have been able to because we almost ran out of money even as it was, even with an established channel.

1:07:59Wait, so you were going to start your own YouTube channel regardless? Well, that's what they had signed up for. The two employees. I told them we'd try. So wow, you were ready to go. Like you're going to start like another channel. Did you have a name if it wasn't going to be Lionel? No, because we were counting on getting the deal done. Getting the deal. Yeah. But if you didn't get the deal done, you would have started a YouTube channel, had those two employees with you, but been starting with zero subscribers as opposed to the 100 or 200 ,000 you had at that time. That was the plan. And I don't think we would have made it.

1:08:31What gave you that conviction, Linus, to go all in, even if you didn't acquire Linus Tech? The team, what choice did I have? they walked away from other opportunities to to do this and you had already promised them salaries and jobs yeah but it's that's fascinating on day one of you being an independent creator you already had two hires yeah which is actually very different than most creators who like they're gonna go on their own solo oh yeah until they make enough money um like what gave you the clarity to hire two people on day one because i actually did the same thing like when i worked to Instagram and YouTube, I built up enough savings.

1:09:09I was like, I'm going to this as a business and made my first hire shortly after leaving my day job to just grow and scale. But I find it surprising that very few creators do that. Savings is obviously a big component, but what gave you the clarity to do that? How much money do you have saved up? Because obviously YouTube back then, what year was that? 2012, I want to say. Okay. Even wilder West than it is now. Oh, yeah. um how much savings if i could ask did you have at this time to be able to hire two people on day one gotta be honest with you i don't know but i doubt it was more than like 10 grand wow like we had regular income coming in from yvonne's like maternity leave your wife yeah sorry and but like yeah i mean i was just i was just working a job at a computer store like i had a i had an infant child i i didn't have a ton of money oh my god so you're a new dad $10 ,000 is all you have in the bank.

1:10:04But there's no way it was a ton. It was not, no, it was a ton. And then you have two employees on day one. Yeah, maybe it was 15 or 20. I don't know. It wasn't a lot though. Like it's not an amount that I remember. I'll tell you that much. Did you get to a point in those early days of Linus Tech Tips, like you as an independent creator now, where you're like, oh my God, this is going to end? Of course, every day. I mean, what do you think animated me to get up in the morning and do, like I said, over 30 videos in a week? That's insane. Remember, there's travel. I was doing this at CES. So I was moving from place to place.

1:10:36I would arrive at the booth and be, okay, what do you got? Got it. Thank you. So we're here at the booth and we're doing this and here's everything about it. And then I'd hand it back to them and I'd leave and they'd go, how did you do that? I'd go, because I have to, because I don't have time to not be able to do that necessity. We had to survive. what are some of those other big swings that you took in those early days that helped you make it man because there's another version of the story where you just go broke oh yeah oh 100 percent um we were pretty slow and steady but there was there was one crazy existential dread moment um so we started out in my garage yeah and that was fine because that cost nothing right you just park your car in the driveway.

1:11:23No biggie. Then we actually bought a house to use as a studio. So it turns out the city don't take kindly to using a residential property as a filming studio. And once we reached the point where we had, I think, 10 employees, the complaints started rolling in. We actually had a group of neighbors come to our door. We know what you're doing in here. And we're like, I mean, yeah, we weren't really hiding it, but sure. You know, we've complained and city sent out an inspector and the inspector was super nice. They basically went, OK, look, I'm not going to come in there because like, I'm not a cop.

1:11:55I don't have a search warrant. You don't have to let me in there. But what I am going to do is I'm going to give you notice that I'm going to come back. And next time I'm going to come in there and there better not be a business in there. I kind of went, okay, I need a little more time before you come back, but we're making good faith efforts to move. We had put a down payment on a studio. So it was, the plate was about 6 ,000 square feet. And then we were building a tenant improvement in it that was going to be about going to add about another 1500 square feet or so yeah so about 7500 square feet big yeah was a million dollars right and so the down payment on that was like 200 or 300 000 or something like that it was hard for us to get financing yeah because nobody took our business seriously back then like i couldn't even get a credit card for the business for two years i couldn't get a credit card i just had to use my personal credit card and then i had to like reimburse that made the accounting way more complicated for no reason other than that creator was not a job title so on top of the down payment so we had to like build offices and sets and so that was another like 150 000 like it was a lot of money a lot of money for us especially at the time and that's where vessel came in do you remember vessel yeah yeah yeah so people subscribe to vessel for three dollars a month if i recall correctly and then it's early access to all your favorite channels on vessel.com and then the same uploads go to YouTube a week later.

1:13:20That was their model. Yeah. And I had said no. I'd said, yeah, forget it. I'm, I'm, you, you know, you cut me open. I bleed red. No, but like YouTube red, you know, not just blood. Um, you know, I was, I was like, I, YouTube has gotten me to where I've, where I've gotten. And I, I'm a firm believer in riding the horse that got you to where you've gotten, but they were offering huge signing bonuses like what um tens of thousands of dollars which was a lot of money for us and then vessel came knocking one more time and i went yes yes i i need the money because otherwise how am i going to build the tenant improvement in this space i don't have the money for it because we had signed the deal for the real studio we were working out of the house we were going to get kicked out of the house so i was i was stuck in this house that i was not allowed to work in i had a studio space that was just a big empty warehouse that I couldn't afford to build sets in.

1:14:14I had to take the vessel money. So that was a wild time, man. I don't know if I had ever worked that hard in my life or if I've ever worked that hard again in my life. Just to close here, I'm just curious like where this goes from here because I think you have a unique perspective, especially as AI becomes a bigger deal. Like, you know, Sora recently launching. Like that is a wild, like I feel like a step change in like. Yeah, I hate to use the D word, but disruptive. Yeah, for once. Yeah. Where do you see as a tech expert this all going, this changing your creative process and flow, this changing YouTube?

1:14:49I wanted to ask you because you have a unique perspective on this. At the end of the day, none of those things matter. What matters is how it's going to change viewer and consumer behavior. And then from there, we can derive how to engage with that. I would like to believe in much the same way that our product development philosophy is, you know, don't save 10 cents if 15 cents will last twice as long. You know, I came from the made in China generation of kids where all of my toys broke in 10 minutes. Right. And so, you know, when we were developing our products, I went, no, I want to make stuff that's not like that.

1:15:32I want to make stuff that actually lasts. And I don't think I'm the only one. I don't think I'm the only one my age that goes, yeah, yeah. You know, water guns used to actually last for multiple seasons instead of just immediately leaking right out of the box. What the heck happened with that? And in the same way, what I'm hoping is that as quality decays like crazy on online content, we're going to reach that point where people who grew up with that go, well, this is garbage. I want something that's more bespoke. I want something that's human crafted. And we are obviously aware of generative AI.

1:16:14We are obviously looking at ways that it can or can't integrate with our workflows. We don't want to completely miss the train, but I don't personally believe that an AI can ever be a substitute for a real human opinion. Because, you know, let's take my controversial take on the AirPods Pro 3s recently. An AI can never put them in its ears. It can never know how they feel. It can never struggle to take off the eartip. It can never feel. And so I think, I hope that in time, everything is going to decay to the point where there's going to be a snapback and we're going to go no what i want is human validated testing of the things i buy rather than some ai recommending something that it has literally never touched because it literally isn't a physical entity but i mean that's specific to your industry yes in terms of youtube i do i do i do worry about about some verticals that are more um pure entertainment yeah um you know just like i i was very stressed for the hollywood writers guild when they were on their most recent strike right where they're trying to push back against ai and they're trying to you know make all these demands at a time when you know on the studio side they're looking at it going oh you guys are like more replaceable than ever um and at a time when it feels like man like a lot of the stuff that i fire up on netflix it's just like yeah an ai maybe this was written by a human but i wouldn't be able to tell like this intersection of cost cutting on the studio side to um cost like earnings expectations on the writing side to just slack jawed slash second screen attention span on the audience side is not good i'm glad they got a deal done uh but i it was it was it was funny i saw the justification for what was it a one-year deal two-year deal can't remember what it was but the justification from the writer's side was we wanted a short deal because we wanted to see what loopholes they'd find to like work ai in in ways that we couldn't have expected but i'm looking at it going i bet they were happy to sign a short-term deal with you because it gives them two more years for this stuff to get better and for your negotiating position to deteriorate further i i uh i'm not like an AI bull.

1:18:43I'm not invested in any AI companies. I'm not sitting here going, yeah, AI is going to replace everything. But I also think that to imagine that it isn't going to have a significant impact on certain industries is just naive at this point in time. So the pure entertainment, if you make something that people are generally content to have on on a second screen or not really be paying attention to, I would be deeply worried right now that's an interesting distinction that's what's at risk versus yeah i don't think the human connection well i shouldn't even say that i i mean you've got your full-on ai influencers but even that i kind of look at it and i go like what's the difference between an ai influencer and a team of people behind a real person yeah in terms of like it's still being human crafted in a sense like yeah there's a difference but um the way that some people in particular you know craft a persona for a real human you know meat sack right and have a team behind it you know like the the way that we would derisively talk about certain music artists back in the 90s or the early 2000s zero product yeah you know yeah um m &m diss right there right you ain't nothing but a product um you know it doesn't seem that different yeah from these ai influencers because they're really just singing the words that like people have written for them or labels or like companies like yeah yeah so it's a familiar model yeah interesting right um but you're right it's all forms of entertainment versus like maybe more education or like giving an opinion or it requires a bit of trust and yeah you know anything with a real human connection uh i think will survive for longer but even that you know you look at the kinds of relationships and i i use that word that is a that's one kind of r word for sure um relationships with ais and i kind of go yeah maybe not even personalities are safe yeah well i'm sorry to be a bit of a downer on this but i i mean i'm up close and personal with it all the time and it really is getting better all the time and i just hopefully we're so deep into this video that most people aren't watching it anymore um but most consumers are quite frankly not very discerning yeah and the only proof you need of that is the back when we used to have a like dislike ratio on youtube you know you look at the like dislike ratio on some of the most just totally unbelievable apology videos it's like that ain't even good acting bro you know and you'll have you know two-thirds of the community rallying around this like crocodile tears like fake ass apology and you look at it and you just kind of go like you realize it's a decision to cry on camera right you could do another take where you're not crying live stream that's one thing yeah you might like break down on a live stream but when you record a take put it on a timeline cut it up and export it you made a decision to be crying right um and so you know i think that's something that just people are just they ain't that savvy viewers yeah interesting like whereas i look at something i go everything that's in a video is there on purpose yeah i don't buy it you know yeah well line is i i feel like if anybody's gonna navigate like you know the next five years and whatever holds like i'm i'm fascinated to see how you're gonna do how you're gonna build a company do our best well dude i appreciate you just walking through it like yeah showing us like so much of the inside of how you built your channel and business and yeah those scary early days and uh man yeah i appreciate you coming on the show appreciate you for having me on thank you very much amazing thank