Reed Duchscher: Inside Feastables, Night Media and Niche Creator Businesses

25:21And then they also then signed Aiden second. And so Trainwrecks and Aiden started streaming on kick, which drove a lot of people over to that website. And then the XQC, uh, the mid, like every, everyone else that they started signing was just driving more and more traffic. And it started to just become a thing of like anti Twitch go to kick. They'll also, the one thing to point out is ad revenue on Twitch. Uh, if you're, if you're a partner on Twitch used to be 70, 30, they brought it down to 50, 50, which sparked outrage on the internet. And then kick came out and said, we're going to do 90, 10 for everyone.

25:53It doesn't matter if you're a partner or not, We're going to lose an incredible amount of money on the content business and just make sure that stake.com remains like the cash cow. And so that's the big thing that they have against Twitch is they don't really care if they have a profitable streaming business or not. But how'd they finance this entire thing? I thought, Sean, that we had talked about these guys. Wasn't the founder of Stake... Is it like a 28? Back then, I think we're talking about a year ago. It was like a 26-year-old guy who bought a$50 million mansion in Australia. Is it still like a bunch of young guys doing this without financing?

26:28I mean, not without financing. The financing is stakes. I mean, outside financing. It had like an$800 million dividend last year. What? That business is just ultra, ultra profitable. And so their competitive advantage is basically that they're like Reid said, their business model is not ads on kick or subscription cut. It's can we funnel these users to come gamble in our casino? And we have a casino. Twitch doesn't have a casino. That's the bet that they're making. The other thing that I, cause I tweeted this out. I was like, I said, this thing is fishy. I said, they're paying XUC a hundred million dollars for two years of non-exclusive streaming.

27:06Are they a lying B is this like incentive based or some like tiered, like, you know, some, some like stock deal they're inflating the value of the stock or something like that to make the number set, the headline number sound really big. Are they just laundering money? Is Is that what this is? Like, what is going on here? And basically it was, here's the, here's what the, the, the answer was. Basically it's a combination of cash and equity. So their equity part might go to zero. So that, that part of the deal might, might go to zero. Um, or it has incentives where it's like, it's based on the number of customers you bring over.

27:39Um, and the second part is that the non-exclusive part is basically so that he could just like funnel traffic from Twitch to kick. so if he just turned off like this is like a big deal like when microsoft poached ninja from twitch he had to stop streaming on twitch that day and like go stream on this other platform and so most people on twitch were just like kind of like out of sight out of mind yeah some people followed him over there to check it out but like ultimately their habit was still built on twitch what these guys are doing is different he streams on twitch and he says all right i'm gonna finish my stream or i'm gonna like play the big game over on kick and then he just like it's like a call to action It just funnels a bunch of traffic over, over and over.

28:19When I was at Twitch, we did the same thing when we were losing foothold in one market in Brazil. We acquired this huge YouTube streamer. And I was like, and it was an exclusive deal. But he started streaming on YouTube while he was streaming on Twitch. And at first, people in the company were like, yo, what the hell, man? You just spent all this money, millions of dollars signing this streamer. And he's still streaming on YouTube over there for free. Like, what's the deal? And I was like, actually, wait, this is probably excellent because all we have to do is just get him to like block part of the screen or like end his like do a cliffhanger and be like, I'm finishing this over at Twitch.

28:57And he'll just keep bringing traffic over. And that's what he did. We just basically let him violate his deal because we realized actually he was smarter than us. That was a better funnel for us than than an exclusive deal would have been. That's insane. Reed, what these I imagine you've talked to these, you know, these state guys well. Is this like a Sam Bankman-Fried type of company or an FTX company where there's a bunch of crazy young kids? Or is this like a dialed-in thing? What are these guys like? I don't know them well enough, honestly, to know if it's going to become a problem. I would say that from my conversations with them, they seem like they have this thing under control.

29:30It's generating a lot of cash. FTX thing, the company wasn't generating any cash when Bitcoin went down. It just completely fell apart. I don't mean is it a scam, But I mean, young people just being wild. Imagine a 27-year-old making$800 million dividend, just like a wild child type of setup. I haven't seen that from them. But it seems like they're a little bit more laid back in Australia, don't really communicate with a lot of people. So I haven't seen that behavior. I mean, that could change. And I know way too much about the deal structures and everything else and how this stuff works. but I would, I'm pretty confident in Kik over at least the next couple of years.

30:14We'll see where this goes. If they continue to want to do that business, I would imagine stake is going to just continue to get so big that maybe Kik eventually becomes a distraction. I don't know. Um, but I, I would say they'll double down on stake.us over the next like 18 months as, as like states open up and allow them to start doing this. That's insane. There was also a secondary business called Rubet as well. That was essentially the stake.com competitor. I'm not 100 % sure what happened to Rubet, but it's still around. And so there is other businesses like Stake. Stake just completely won because they were able to sign the biggest creators like Train.

30:49They signed Drake, which you guys said. At the moment, it's a runaway train. They're taking all the market share. In one of your other podcasts, you'd mentioned how you're like, well, a lot of creators, they think, well, I have an audience. I'm going to launch this product. And you're like, well, that can work for a couple months. But if you do a good job, this turns into a proper company. And the real challenge, you were saying, the real challenge that I'm in is finding amazing executives to actually run the companies and build these into real companies. You said for Feastables, I think you said you had the president of RxBar to come and be the CEO for the burger business or the restaurant business.

31:26You partnered with someone and you also, it sounds like, had a president or a CEO of that company. What type of deals are you striking with some of these CEOs to make it worth their while to do this? Yeah, thankfully, a lot of them realize the opportunity. When they come into these businesses, they know that there's an unfair advantage in go-to-market because the creator has hopefully built this massive platform already that gives them instant distribution and just consumers. And so a lot of the people that we interview for CEOs are actually incredibly excited about the opportunity and are willing to leave their big job at PepsiCo or wherever that is.

32:00And so how the deals are really structured is very similar to any other business. You have a cash basis that you're paying them. And then you also negotiate some piece of equity over a four-year vesting schedule. And so we've had a lot of success doing that. But for the most part, we usually don't have to explain the competitive advantage to the business. When we start meeting these individuals, they already know. They've seen it. They saw it with Prime. They're seeing with Feastables. They've seen it with Happy Dad. A lot of the individuals that we're interviewing already know. And so it makes it a little bit easier for us to get them to leave that specific job.

32:35But it's structured very similar to what a CEO would potentially make if they came in and ran a startup. And are you funding the company with a bit? We fund up to a certain amount. What's that amount usually? It honestly depends on the business. I would say it falls anywhere between the$250 on the low end,$1 million on the high end. So Feastables, that started with just a million bucks, you think? Yeah. The big issue with Feastables was, and this is the issue we're now having with some of our consumer products is retailers instead of... So if you started a chips business or whatever, and you didn't have a creator attached to it or anyone attached to it that gave you an unfair advantage on go-to-market, you would go to a retailer and they would say, we want to test you in 100 stores or we want to test you in 200 stores and from a cost perspective to to fund the po wouldn't be that like it wouldn't put that much strain on the business the issue that we had with feastables was walmart was willing to put us in all 2650 store or 4 650 stores um right when we launched and so that's becoming the issue with some of these businesses is that how do you fund the PO of six, seven,$8 million right out of the gate to meet that retail demand?

33:52And so that's the one that we've had to either raise capital, go beg a bank to give us the money as like a PO loan. And so that's kind of the issue that we've run into. And even with Feastables, we raised a small amount of capital and it was really just to fund the 4 million chocolate bars that we ended up selling in season one that sold out in, I think it was 45 days. That was the biggest cash constraint to the business. Let's talk a little bit about Prime. So Prime seems to be just taking over. Really, really impressive. I don't know how much we've talked about it on here before, but can you just explain what's going on with Prime in a way that would, for somebody who's kind of out of the loop, maybe vaguely heard of it, but doesn't really truly appreciate the extent it's what it's doing?

34:43Yeah. So if you don't know what Prime is, Prime is a hydration drink that was started by Logan Paul, who many people are probably familiar with, and then KSI, who is based out of the UK, but I would say the most popular creator to ever come out of that region. And so they very notably boxed against each other multiple times. They were enemies. And the story was that I'm coming together to start this business. And the company that they partnered with actually made an energy drink called Alani Nu. That's actually, I mean, you see it next to Prime. I think in every grocery store, retail chain I go into, it's like Prime sits here, Alani Nu sits right next to it.

35:18And so the founders of Alani Nu basically created this drink that they had called Prime and Logan Paul and KSI came in. Really is just the marketing edge and they don't do anything operationally for the business. They really just market it. And it became like a clout piece to hold a bottle of Prime. Like now these 10, 12, 13-year-old kids have to have it. They have to drink it. And we've seen some of the, I mean, I saw an article about people saying the FDA needs to go regulate this business because it has too much caffeine in the energy drink. And so now there's just a lot of stuff going on about the company, but it's grown an incredible amount.

35:53I think, I can't remember what Logan said on one of his podcasts, but I think they did $45 million in revenue in January of this year. And that was the last thing that I'd seen them say publicly about the business. I think he said, if I remember correctly, Sean, we talked about it. It might've been six months ago. I think he said like$200 million for the year. Is that right? Yeah, that's one number we had heard. But$45 million obviously would put them on a totally different trajectory than that. So yeah, it appears to be just an absolute monster. um how did who's the who's logan paul's manager who's who's his name's jeff he's he's on the podcast he's been his same manager for a long time uh logan talks about him quite a bit and so if you if you watch some of logan's older videos too he would periodically show up and so they've been together for a long time and jeff put together that deal and it's been incredibly successful we'll see how it ends up i i don't know i would imagine they're going to want to continue to do this thing for another couple of years and then probably sell it.

36:52And those guys who created the drink, you said they created Alani Nu, but that wasn't that big. I remember when Prime first came out, I was like, who are these guys? And I think it's two dudes, right? Who are the founders of that? And they didn't really have a huge hit before that. How did they even secure that deal? And why did they partner with them over some more established thing? Do you know? I honestly don't know. I've never had that conversation with Jeff of why partner with this company instead of doing it yourself. I would imagine what happened was this company presented them with the opportunity.

37:29And it was something that really resonated with Logan. And then I remember the story of him saying he called KSI and tried to get him on board, which he did. And so it probably was just right place, right time. Logan was ready to lean into something else. And Logan's had a lot of different business ventures over the last five years. I mean, this one obviously is far beyond the most successful. But again, I would imagine right place, right time. They liked the product, got along with the individuals who were operating the business. And the partnering with KSI, were they just actually friends the whole time?

38:03And the whole boxing thing was just a sort of frenemies thing? Because that's kind of a genius move, right? You kind of have to give credit to be like, you know what will make this even bigger? Because normally, let's say you're one of the biggest YouTubers. those people tend to have like a bit of an ego. I am distribution. I don't need anybody else to do this. I don't need to split the pie, especially with my enemy. So that's kind of interesting. Well, what's going on there? No, totally. No, they did not like each other. The boxing beef was real. They were definitely enemies. And from my understanding of the story, and I've only heard Logan's side of this.

38:38I haven't heard KSI speak about it. It took a lot of convincing for Logan to get KSI on board because there was still a lot of animosity between the relationship there. I mean, a lot of stuff was said. A lot of personal things were said about girlfriends and parents. And I mean, it was a very personal beef that went on in this YouTube space for a while. And so I think that's why it was so surprising when those two came together to launch Prime because it was the last two individuals you would have ever thought to partner together on a hydration drink. He said my Pokemon was a PSA 8. It was, it got ugly.

39:11Yeah. Yeah. But now it's like, for us, it's been helpful because, you know, we, they launched in Australia and it went incredibly well for them. They launched in the UK. It went very well. And so Feastable is like, we're probably six to eight months behind because they, you know, had a product and launched a lot sooner than we did. But it's allowed us to then go into those conversations in Australia, UK, Southeast Asia, where the retailers have already had massive success with Prime, where it's a much easier conversation for us to explain to them why they should take Feastables. where I think if we were the first ones coming into the industry, like into Woolies in Australia, probably a little harder conversation pre-Prime.

39:52That Prime seems like an amazing category. To me, the drink, the hydration drink, water basically, like fancy water is a better category than chocolate bars. How do you think about categories that you're going to go into? Do you think that's a better category? And also, how do you choose what category do you have to go into? You could basically promote anything. dude when we we we did the thing with sean organized this thing and he brought a bunch of festivals i ate about eight of those things in one night i was i felt horrible the next day i did eat dinner i just ate all this chocolate so at least for that night it felt like a good category yeah well okay so i have to back up just explain how this all started and so you know this started with i you know in a parking lot kind of brainstorming ideas while he was it was in between him filming this video that never got posted like most videos that like just got filmed and never people never saw it but anyway we we came up with this idea where we wanted to launch a snacks company and we wanted to build this content idea around launching the snacks company and chocolate bars to us felt like the right category for a couple reasons like one is it's a massive business like it's a 26 billion dollar industry it's it's very holiday seasonal dependent which which if you're a parent going into a store for Halloween or for Easter or something like that, it's like Hershey's is sitting here and Feastables is sitting here and you have a 8, 9, 10, 12-year-old son daughter, it's a no-brainer.

41:22You're going to buy the Feastables chocolate. And so that was one reason. Another thing is the 50th anniversary of Willy Wonka was in 2021. And so the initial idea was let's put golden tickets in chocolate bars and sell that and give away a chocolate factory, which became just a thing in itself of, you know, buying a warehouse and turning into a chocolate factory was no easy feat. Um, but that, that really kind of sparked the conversation of, okay, well, if we're going to build this on this chocolate factory giveaway with a chocolate bar, um, what are the other categories that we can eventually go into the cookie really came because, you know, had this joke on his channel and it's been since the beginning is you guys see it in the banner.

42:03It's like subscribe and I'll give you a cookie. And so we, we wanted to venture into cookies next. It's not, I would say, as big of a focus for us as chocolate. I think we're really trying to build out seasonality in chocolate. We're trying to multi-pack in chocolate. I don't think people truly understand how big Hershey's actually is and how dominant they are in the space. They truly dominate chocolate because they also own Reese's, which is like, if you walk into Chocolate Island, Walmart, Target, Kroger, wherever, you see a giant wall of orange and a giant wall of bread. It's like you very clearly, those two businesses or those two brands dominate the chocolate aisle.

42:40And so we thought it was a good space for us to go at because it wasn't so oversaturated by 20, 30, 40 different companies. It was like, we really knew who we were competing against. We were like, we're competing against Hershey. We need to be more innovative. We need to build this gamification layer. We need to build a better product that has higher quality ingredients. We knew what the roadmap looked like to compete with them. it's been a lot harder than we thought just global chocolate supply chain i think was something jimmy and i knew nothing about thank god for our team that like understands this that we've been working with but yeah i think we'll we'll definitely go i don't know if jimmy said anything to you guys when you're in greenville but i mean there's a roadmap of products that we're going to do over the next like two to three years we're trying to figure out like what the rollout strategy is going to be but But for 2023 and going to 2024, chocolate is the main priority in getting more space in retail.

43:34I got to take back what I said. I think it's a great category. You convinced me. I was wrong. That was great. Actually, I think what you guys are doing is really smart there. By the way, Hershey's makes like eight or nine billion a year in revenue off of their thing. And the reason I think it's a great category, actually, based on what you said, was the audience fit, but also just like how old that competition is. And like, you know, you didn't say this, but like if I'm Mars or I'm Mondelez or I'm Hershey's, you know, I look at my acquisition targets, my M &A targets, there's not many. And I think this is an opportunity where I don't think the business itself is going to generate a ton of profit just because physical goods and, you know, like as you scale up, it's like, you know, it's not the thickest margins.

44:20but I do think this is like a business where you're going to look up and sell it for $500 million or something like that someday if you wanted to. Yeah. So I take that. You'd actually be surprised. Chocolate actually is a pretty good margin business for us. And I mean, Hershey is still, you know, they probably churn off$600 to$800 million in profit every single year and have been doing this for 50 plus years. And so we, yeah, it's been challenging for us, but we understand like what the roadmap is. we really think that and we don't know how Hershey is going to compete with us seasonally that's like one thing big for us like Halloween is going to be big for us this year we're doing a lot of different sweepstakes and promotional things and so you know for us if we can win those months like October then becomes a hundred to two hundred million dollars just in a single month and we can put our full force into just October and then into holiday and then you turn it around and you're like, okay, now, like, what are we doing for Valentine's Day?

45:17What are we doing for Easter? And so these are all like the conversations that we've been having over the last year. What number would kind of cross the threshold of, all right, we should take this acquisition seriously if one of those guys came to you at the end of the year? I don't think he takes a multi-billion dollar acquisition right now. There's just too much upside in the business right now. Just for Feastables. channels yeah it's just it's the amount of opportunity for us not not only okay let's just just i'm just talking domestically so now let's just let's talk about just the world right chocolate is is popular like globally and we haven't really talked about this yet but i know he talks about on your guys podcasts is we launch all these multi-language channels there's there's really a method to the madness here is like you know we now dub in i think 16 different languages including Japanese and French and Hindi.

46:08Those are all markets for us that we're pushing into over the next like 12 to 18 months. And so the opportunity for us is just way too big to even look at an acquisition at the moment, because for us, like Asia is a huge market. The Middle East has actually become one of our highest growing markets at the moment, which we're now figuring out like what are the points of distribution. And then we're eventually going to be able to just specifically market to those regions. Like we're going to be able to put a video file up and it's going to be the Japanese dub. But instead of being like, Hey, go to your local Walmart and target, it's going to be like our, um, our, our dub artists in Japanese, which is, uh, the voice actor of Naruso saying, Oh, you can go buy it at your local seven 11 or other convenience stores available in Japan.

46:52And so we're going to make everything very localized. And so to us, like we're like, haven't even rounded first base yet to what this business opportunity is. And so I don't know, we haven't even had like acquisition tart, like isn't even a thing. Well, when we when we all hung out with him, he was talking about he was talking to the same thing. I don't know if he was saying feasible, but just like his enterprise, you know, he threw around crazy ideas of like, maybe IPO, maybe sell for billions of dollars. I don't know, like, but But he approached it in a... This isn't an insult, but it was very naive.

47:28He sounded like an innocent like, Oh, I'm just going to do this and then this and then this. That's it. It's going to work. And I remember... But I found it to be believable. A, I believe that he actually could potentially do that, which is crazy. But B, I felt like his ignorance a little bit about business was actually a massive tool for him a little bit where I was like, Man, that's like... You'd be one of the biggest things in the world. And in his brain, he's like, well, yeah, what do you expect? And I don't know if that's... Maybe naive is not the right word, but there was almost an innocence about it that I really appreciated.

48:03Do you think you have that same kind of mindset with this? Or are half the things that you guys are working on, not just you and him, but the rest of your artists or the rest of your folks on your team, are you like, I don't know if we can pull this off, but whatever, let's just try and get into it. We'll see what happens. uh i he's probably we're a little bit different in that regard i think i'm a little bit more of a realist in terms of you know knowing how hard these things are to build knowing how hard these things are to sell i said ultimately it's going to be his decision you know if he wants to sell this thing or not but i i think there there is a level of him and i are very naive to to at least when we entered the chocolate arena we didn't really have a good understanding of what we needed to create how we needed to compete.

48:46And I actually think that was an advantage for us because we were just running as fast as possible, trying to get product out. And we made a lot of critical, I would say, decisions that were either big positives or big negatives. And we were able to go change the negatives very quickly. I think one is... I think you said you didn't even have customer support the day you launched or something like that. We didn't have customer support in... which we then learned in Feastable. It's like, okay, and a little different business. So we had a full customer social support team when we launched Feastables, thankfully.

49:19And you've done a couple of these now. And I think I've always been amazed. Some creators are much better promoters than others. And it's not just like, it matters in a couple of different ways. Sometimes if your brand is like, I'm super real and authentic, anytime you say anything promotional, the audience is like, sell out. You can't do that. and other people whose brand is to be more of a spectacle or more interesting, they can get away with a little more. But there's also just the creator's motivation. So as brands throw money at creators to tell people, hey, swipe up and do this. Hey, swipe up and do this.

49:57At some point, I think everybody becomes a little numb to it, the audience and the creator. What I've been impressed with is for something like Feastable or I also felt this way with Prime. I felt like with Prime, Logan Paul is like the CMO and he's like, he's looking for every edge he's got. It almost, you know, like, I don't think they own the majority of the company. I think they own a small minority of that company, but he almost treats it like a majority owner. I remember when he went to like, he goes to like, you know, the WWE thing or UFC fight. He's got his prime bottle with him and then he'll do something that he knows is going to, he'll like embarrass himself.

50:33So he gets memed like a million times on Instagram. But he's like, yeah, I got meme, but I was holding Prime, wasn't I? And he's like, basically, it was all intentional. He's looking for these little edges. And that's very different than the old days when an influencer holds up some detox tea and just says, try this. What do you think is the difference in buy-in and that mindset of, I'm going to use my engine to promote this to level 100? What have you seen is the difference there? And how does that happen? Yeah. I mean, there's also just a different level of excitement when you have ownership in the brand versus you don't.

51:11Whereas like there's a cash exchange for you to promote audible.com. You're not going to be as excited. You're not going to put as much time creatively into this ad. Let's just say ad read that you will if you own the business. And so I actually first saw this when we did finger on the app. I'd seen him do a lot of like we've done a lot of mobile integrations on the channel. and then when we did finger on the app it was our thing uh we owned it it was like our competition explain what it is for somebody who doesn't know finger on the app was we created this mobile game where a person puts their finger on their cell phone uh and the last person to take the finger off the phone went 100 grand and there's little bombs that would pop up so you'd have to like move your thumb around to just avoid objects that would pop on your phone it ended up lasting 72 hours and then someone won 100k but uh level of excitement and level of promotion just went to the next level uh he was you know telling people why they should download it and he was you know messaging people back on twitter who was like hey i just downloaded i'm ready for the game he was responding and so there's like a much more there's much more depth to the level of excitement on the creator side and you really see that with prime and too with feastables and you see it with also happy dad with nelk uh they're going all in on happy dad the podcast is essentially built around you know happy dad is everywhere for each podcast episode and i i do think the future is creators starting businesses the issue is like most of the time it's just going to happen at the top uh where you know where we are seeing some interesting businesses for like a mid-tier creator who maybe isn't to the level of logan paul or nilk but they're you know cars versus bids or something like that where it's you know the channel maybe has two three million subscribers doing 500k video and they're gaining a lot of traction on that type of business what are some other examples like that um in the creator space in the creator space cool creator businesses that are not just like well i'm the most famous guy on earth so whatever i say works uh you know what are some like we had doug de maron for cars and bids yeah what are some other examples like that uh there's one called uh rare candy it's with leon hart who's you know he's a relatively large pokemon style creator and he has a marketplace where you can buy pokemon cards and do Pokemon unboxing.

53:27So it's similar to what not and how it works. But it's, you know, Leon Hart owns a large piece of that business. I mean, to go back to the top, like Emma Chamberlain Coffee, I think is another one. It's like very organic to her, talks a lot about coffee. And now I'm starting to see a lot of businesses pop up on the smaller end where it's maybe you have a channel that washes windows, right? So it's like a TikTok creator who maybe it does ASMR through like washing a house or washing windows and they use it as like this top of funnel in like a city where all these individual houses or all these people are now reaching out to and be like oh this person's in austin i'll pay them four hundred dollars to come pressure a lot of those for pressure washing they're all over the place and the grass cutting uh like a lawn mowing yeah lawn mowing vending machines uh seeing a lot of like little small niche businesses getting built but i i think these businesses are much bigger than people think they are.

54:22They're gaining, even in the pressure washing, I'm meeting creators and they're making$20 ,000,$30 ,000 a month just from pressure washing homes. And then all of a sudden, they hire two or three other people because the demand is so high for people booking them out to clean their home that they start to hire employees. And then it becomes a real business that once just started as one TikTok video of them pressure washing their own house. Are you from the Midwest? I'm from North Dakota. You're the first person on the pod that says the word wash like I do with an R. I grew up 40 miles from the Canadian border.

55:01So I'm probably just as Canadian as American at this point. I get made fun of all the time for saying that word that way that I'm embarrassed to even say it, but I just heard you say it. Are there any companies or any creator businesses out there that are shockingly large that many people don't know about? Yeah. So one that I was wildly impressed by that was much bigger than I initially thought was Dharman. So it's the largest scripted YouTube channel on the internet. And so it's all like it's daily uploading, but it's long form scripted storytelling. And so I really didn't understand like how big of an operation that was and how many people and how many sets and just the sheer volume of content coming out of that business.

55:44That was one I was pretty surprised by. And if you don't know what it is, I remember when I first saw it, I was like, are people watching this? And then I just have been paying attention. It's slowly growing. It's almost like the Hallmark or Lifetime channel, but for... How do you spell it? What is it? Dhar Mann. D-H-A-R space M-A-N-N. He has 18.5 million subscribers. it's like um it's there's like a lesson to be learned in like each episode is that right reed yeah he used to do something completely different right like dar was doing something completely different and then he he pivoted into this he'd yeah found found his footing in scripted storytelling on youtube uh more fast pace a little bit more light on the scripted uh like storytelling aspect because it's like more content and volume i'm pretty sure this guy had a giant weed business before this.

56:36Makeup, actually. But I think he also had a weed business. His wife is also an influencer. I think she has a makeup business. I'm pretty sure this guy had a cannabis business. I don't know if I got that right. But that's so funny. Yeah, WeGrow. He started WeGrow and sold hydrophonics and marketed for growing medical marijuana. That's funny. Why is this guy impressive to you, Reid? What's the behind-the-scenes information? Just the sheer size of the production company. People say it. They're like, oh, you can build production entities on top of YouTube and creators are hiring employees. It's like, this is a good example of massive production entity built on YouTube, cashflow positive, making money.

57:16I think most people thought that you couldn't do scripted storytelling on YouTube and actually make it a profitable business just because it didn't make sense with how the ad revenue worked and how the splits worked. And he's really figured it out. And it's hard because you have to upload daily and you have to average two, three, four, five million views per video to start making significant amount of money. But they've really figured it out on a large scale. Did they get the revenue up or did they get the expenses down? What did they do different than you would have expected? Or what was the trick?

57:46From what I've seen in the scripted space on YouTube, and this is also in the streaming services, scripted content is very expensive. You have writers on staff. like it's usually long timelines they they figured out how to create content on a scripted basis much quicker and much more cost efficient where it's like dar is doing a lot of the writing they have a lot of just like part-time talent that comes in periodically and acts uh and then they also just like figured out how to do this with their own sets so they're not renting space like they actually built their own sets in uh in in la and they're just just reusing the same sets i mean if you watch a lot of darman videos you'll see the school you'll see the movie theater uh there's a there's like a gas station there's a lot of like staple sets that just continue to show up and they do a really good job just repurposing those sets that's amazing i can't believe i remember seeing this guy when he was coming up i never a million years would have bet that this would have been a good one what what are uh what are some other businesses out there that you've seen that are just shockingly interesting so this wasn't it's not a channel that's a business yet but i i stumbled upon it a couple weeks ago it's called ryan hall y 'all and he was a former meteorologist and it's like a channel based on just uh what weather uh is happening across the country uh different things that you should know about like the hurricane season and how it's going affect the the like us the southeast and you know it's i i'd seen channels try and do this in the past he's the first one that's gaining like tremendous traction and you can see it in the views per video you know it's like two three million views per video just on just talking about different weather patterns and this this is one that could i think become pretty interesting long term whether he decides to build something on top of that and i'm guessing it's like a very minimal team.

59:40It's probably him plus an editor. What is he doing? Because weather is so local. What do I care about the weather in Toledo? Unless it's a natural disaster. What do I care? So how is he doing this? This is incredible. More of talking about just the things that you should know about tornadoes or these are the most dangerous weather patterns of the year, of the month. So he talks more holistically about just the entire industry. It's not really localized. I mean, I'm sure he could start localizing channels, but that becomes a much smaller opportunity. You have to make these videos appeal to everyone.

1:00:16And he's done such a good job at that. But these type of like little niche channels that start to pull a tremendous amount of views pop up every single month on YouTube. I mean, the vending machine one was something that I went down that rabbit hole and farming. I went down the farming rabbit hole. What's the farming and vending machine ones? Yeah. So farming, Cole the Cornstar, I'll hit you with a few. So Millennial Farmer is probably the one that I watch the most. And I grew up on a farm. And so it wasn't that interesting to me because I know all the stuff that he's doing. But for a normal person on the coast who doesn't know about cultivating or anything like that, I think it's really interesting to them.

1:00:54And so he's one that I think appeals more to an older crowd. Cole the Cornstar is another one that probably appeals to a little bit younger demographic where it's a little bit more like pranks and things like that on the farm uh and then lauren farms a female channel also kind of showing like in the in the daily aspect um of just what do you do on a farm and so there really is a space for all types of content on the internet now that's why the the argument of the internet is so oversaturated it's hard to break through as a creator like i just have never bought that argument because on TikTok and YouTube shorts, I'm seeing things that continue to break through on a weekly basis.

1:01:36And then people are figuring out how to turn it into an actual channel that's profitable. And we're seeing it with people like Ryan Hall, y 'all who, you know, nobody would have ever thought that a channel about the weather could pull 3 million views a video. But yet here he is doing it time and time again. Well, that kind of makes sense that one of the comments on Ryan Hall's videos that said, man, the weather channel has really lost his way. I'm so excited that Ryan is doing it this way. Which is funny that someone like... And that was actually the most upvoted comment, which means a lot of people pay attention to the Weather Channel enough so to actually wonder if it's lost its way or not.

1:02:11So it kind of makes sense where you can just look at what are... For example, you could be like, well, Court TV. Court TV has been around for... Or C-SPAN. Some of these things have been around forever. You could go and look at what their revenue is. You could see what's interesting about them, what's not interesting about them, take a new spin. So Weather Channel is owned by... It's that... The guy in Hollywood, Byron Allen. I think he was an actor. Now he's one of the richest black men in America. He owns Weather Channel. I think they still make$500 million a year in revenue. So great business.

1:02:38We were friends with this guy named John, who was the president of BuzzFeed. And he told me he was like, Man, if you look at CSNBC, they only have 50 ,000 concurrent visitors or viewers on the channel. But they make this much in revenue. I'm going to create that, but for Facebook Live. And he ended up launching Cheddar and sold it for hundreds of millions of dollars. And so this is an interesting strategy of just looking at which channels have lived for 50 years and are doing good, but they're just been doing the same thing over and over and over again for a while. So it's actually an interesting strategy.

1:03:10Totally agree. Building a new weather channel, I think, is incredibly complex and complicated, but he definitely has the type of distribution that could start that business. I think then it's just like you would need to find a partner to help him probably execute that. But yeah, that's, I think, why I found that the channel so interesting. It's like I go to the Weather Channel. I even have a widget on my iPhone that like pops up from it's like automated from the Weather Channel. It gives me the weather every single day. I was like, I would much rather download a Ryan all y 'all widget that like gave me the totally much rather support that than the Weather Channel.

1:03:43And so, yeah, I think there's a much there's a pretty interesting opportunity there for him. You'd made a comment. You said something like you would bet that YouTube will be five times more valuable than any other platform combined in terms of value from a creator's point of view of the type of business you can build on top of it. You know more than I do. But Sean and I had made this argument a year and a half or two years ago where Twitter is happening in the tech field. But there's not really a... What's the Kardashian lady? The Jenner? There's not one of the Jenner persons who have launched this Instagram business that became a billion company off of Twitter yet.

1:04:22But we think that there's going to be something there. And then Sean was like, yeah, there's the guy mafia on Twitter. There's the strip mall guy. There's the storage guy. And they're actually raising a significant amount of investor money to create some of these companies. Have you been playing around with Twitter and seen some of the micro influencers? And the major difference is instead of what you do, which is more pop culture. This is a little bit more B2B and much older. But have you paid attention to Twitter and played around with the idea of one of these folks, whether it's a sweaty startup, our friend Nick Huber, who's got a 400 ,000 following, about them building pretty big companies in the back of Twitter as opposed to YouTube?

1:05:04Yeah, I've seen it. I'm actually not surprised because I've been pretty outspoken of social platform. Where do you build the most fan loyalty across social. And I've seen that Twitter is at the top of the pyramid in terms of fan loyalty, like a Twitter follower that will comment on your tweets is much more valuable than a casual viewer on TikTok or Instagram, because usually like they actually care. And so I think people are now starting to figure that out that, oh, Twitter is actually incredibly valuable if you can start to get traction and start to get people that really engage. It's also, it's an older demographic where I think the one thing that YouTube is really struggling with right now is, you know, yes, there's people like Ryan Hall and there's people like Millennial Farmer who are appealing to maybe a 20 to 30 year old, but it's much more suited for an eight year old to watch content.

1:05:53Whereas Twitter to me is like, I spend most of my time on Twitter. The people that I meet on Twitter, like I would buy products from if they actually promoted something. And so I just think that Twitter for me has been really interesting from just a fan loyalty perspective uh it's just the depth of the platform whereas instagram and tiktok to me have been more casual uh i i buy things on instagram but it's rare and tiktok is like my mind shares like every single second i'm seeing a new video i don't even remember the names of the channels that i see on tiktok they just come and go like i and when i'm at different events and i see a lot of tiktok creators i i recognize them because i've seen them on tiktok i have no idea what their TikTok channels are, which is bad.

1:06:37But I will remember someone's Twitter at that I see and I'll be like, oh my gosh, that's at whatever it is. Very rarely do I say that about TikTok. And so I just think that the depth of consumer is just much different on Twitter. Who would you buy a product from? Which of the quote Twitter creators would you buy a product from? Or rather, who are some of your favorite follows? I mean, I met Blake Robbins, which we did a podcast together. I met him on Twitter. That was how we met. I thought his tweets were incredibly interesting. I thought as an investor, he was talking about a lot of things that interest me.

1:07:12And so if Blake would have sold anything three to four years ago before I knew him, I would have instantly bought it because he had built up that loyalty. I had that loyalty of like, I not only agreed with a lot of things he was saying, I thought it was really interesting to the point where I would take time to comment or like that tweet. And I have a lot of those now just that i follow on twitter and then you get to like the of it that are getting hundreds of thousands of likes and i think you know now then you have the bots and you have a lot of internet trolls and stuff like that but where blake kind of sits is in the 30 40 000 follower range and a lot of those people care about what he's saying and then the word of mouth becomes really interesting where someone says hey i use an eight sleep mattress um it's changed my life if someone like Blake or you guys tweet that, I'm going to be like, what is an eight sleep mattress?

1:08:02I should probably figure out why they like this so much. But if someone on TikTok is like, oh, my eight sleep mattress, well, I probably just scroll past it and don't even think twice about it. So that to me is like something that I've noticed. I tweeted out that I love eight sleep. I don't have any affiliation with them. I just had one of their mattresses and I tweeted out how much I loved it. And then right away, their team reached out like, hey, can we do an affiliate deal or do you ever want to partner together i'm like no man i just i'm just talking about cool shit that i like and so but they said they they said they sold a lot of mattresses from that tweet yeah the people that follow you also can't afford the product they you know probably been following you for a long time they trust what you say because you guys aren't shilling a ton of stuff constantly so when you authentically talk about a product like people pay attention it's like tim ferris right like i i used to pay a lot of attention to what tim ferris was using and talking about on Twitter.

1:08:54Are there any other good follows that you have that you could see launching a business and succeeding? I mean, you guys mentioned some really good ones. It's not a platform that I pay a lot of attention to in terms of individuals like that can grow businesses. I think I'm much more suited for YouTube. I live in the depths of YouTube every single day. Twitter for me is like following people I know, you guys, my friends, like other people in the business sphere. But we'll see. I hope they're able to grow businesses on top of it. I have a lot of confidence in Twitter just as a platform to grow fan loyalty.

1:09:28What about threads? We didn't ask you about threads. If you guys look at the Google trends for threads, it's not looking good. I also saw a graph this morning on daily active users for threads that just like fell off. It plummeted. It's it's I didn't have a lot of faith in it, but we'll see. I don't think that I saw a lot of people talking about that. And I think their takeaway is like, oh, it's not working or it failed. But like that was always going to happen, even whether it's going to succeed or not. If they got 100 million people to download the app, any app, look at the Twitter app will do the same.

1:10:02If you get 100 million people in a day to download the thing, you're going to churn like, you know, 80 % of them won't just start using the app regularly, habitually right away. So to me, I see that and I'm like, this is completely normal. And to me, that was going to happen either way. There was no chance that 100 million people are going to download it and 100 million people are going to keep using it next week. No app in the history of mankind ever has worked that way. And so the question is, what happens, I don't know, three months from now, once they get their core base of users, does that start growing or not?

1:10:40and there's no way to know until then. Yeah, totally agree. I haven't logged on. I logged on the first day I downloaded it and haven't really been on since. There's also like... Do you tell your talent to keep an eye on it or what do you tell your talent? No, we honestly don't care. It's up to them. Most of them will download it and we'll post on it and see if they like it. I think we'll wait. Like you said, it's going to take months to figure out if this is going to gain traction. I think most of them are just going to patiently wait. I don't think any of our talents are going to fully end the threads.

1:11:13They're better off putting their time into making amazing YouTube videos. We did this video, Sean and I did this video like two weeks ago or a week ago where we were talking about how we liked that Zuck did this and we were Team Zuck. And Sean, we officially have a new nickname. I don't know if you saw this in the comments of YouTube but we are officially now Zuck's Cuck. Cuck's plural. Both of us. Zuck's Cuck's. They call those Zuck's Cuck's. Uh, the t-shirts are getting printed. Uh, we should be all right. I don't know like how we are his cock. Does that mean we are having sex with his wife or, or is he having sex with our wife?

1:11:49It's more like the mighty, the mighty ducks. It's like, we're the, we're the mighty ducks. We're this, this, this, uh, the small group of people who really believe in this thing that everybody else kind of, uh, has written off or hates. Yeah, but we're a cock. So I don't know who's, who's having sex with whose wife, but something is happening there of which we are involved in. we are officially Zucks Cucks which I'm okay with I'm a Zuck Cuck for sure well once they box or fight MMA I'll be in Elon's side of the octagon so maybe we'll will you really? bro I think so I will bet you a large sum of money that if that ever happens Zuck would crush him in terms of who would win just looking at the pictures that Mark posted with Israel Adesanya and Volkanovsky scares me a little bit if I'm Elon Musk, but I still like, I gotta support Elon.

1:12:40So, win or lose. Do you, last couple questions, but what would you sell Night Media for right now? I wouldn't. I created Night because I really enjoy it. What would I do if I sold Night Media? I become an investor? Like, I already get to do that. Yeah, but there's always, there's gotta be a number. What do you think it's worth? Man, I don't know, to be honest. It all depends on how you value the subsidiary labs businesses. I mean, I could probably, I know what the core management company is worth and what the subsidiary businesses are, I think is like where it could flex quite a bit. But I enjoy it.

1:13:21I think if I sold Knight, the acquiring business would have to make me the CEO. Like if we sold it to an agency, like they would have to make me the CEO of that major agency or management company because I actually enjoy doing this. It's not something like I didn't start Night Media to sell Night Media. I started Night Media because I was like, I really enjoy what I really want to do this. I find fulfillment in it. I have a venture capital fund. I get to invest. I get to start businesses. I get to be entrepreneurial. I get to be a manager and I get all the perks of being a manager. I don't want to do anything else right now.

1:13:58That might change in a few years. Who knows what time we'll do? But yeah, I don't know. I wouldn't sell. it we've had offers like i just wouldn't sell it so what um hundreds of millions of dollars i would assume low i wouldn't north of hundreds of millions of dollars there's no chance of now that's that's wild that's a good you're in a good position to be in right yeah i mean there's just i feel like we're i said this about feastables i i feel this about the whole company in general as we haven't even got started it'd be hard for me to to sell this thing with the amount of upside that I see over the next five years.

1:14:34I could see a partnership of some sort. I don't think I could just fully sell it and walk away or have an earn out over multiple years right now. Not yet. Well, you raised$100 million or you received$100 million from churning in a separate fund to buy consumer businesses that you could then plug in YouTube distribution into something like that. I think that's the idea. Can you explain the big idea there and if you've done anything with that yet? Yeah. So Labs will start a business zero to one. Feastables was started, ground level, raise capital, hire the CEO. Knight Capital is more fixated on finding a business that's generating cash that maybe is doing$5,$10,$15 million a year.

1:15:23and we think we can come in, probably buy a majority stake in that business, roll some creators or a celebrity onto the cap table and expand what that business is doing or just continue to grow that business. It's very similar to what Chernin does and is doing with Cars and Bids and did with Barstool and Hello Sunshine and all these other businesses. Yeah, they've done that tons of times. Yeah, a massive opportunity for us to do it as well. But just because we understand this creator ecosystem and just internet pop culture so much better than anyone else, And so that ideally is like why we did my capital.

1:15:56We're not in a hurry to do a deal. I think the economy has been something that scared us a little bit. And everyone that did deals in 2022, I think is really regretting a lot of those. And so we're just patiently waiting for what that thing is going to be. Well, dude, we appreciate you doing this. You're the man. It's always I like just hearing like what you're tinkering with. You have a very interesting perspective on things. What do you think, Sean? Yeah, this was fun. And I'm glad. I don't know how well we stuck to our mission. but I think it was pretty good. Yeah, it was pretty good. We'll bleep out every mention because this is the zero clout podcast.

1:16:32Zero clout chasing podcast. And we have a no clout policy. We did not want to do that. Wait, but do we have to use his face on a thumbnail? No, we're going to blur it out. I think we have to put like his face and then Reed's face next to it and blur out Reed's face. And the thumbnail is like the man behind the scenes or something ridiculous. I'll let you guys figure that one out. I mean, there's plenty of things that... No, you got to figure it out. We don't know how to do it. We suck at YouTube. Nah, you guys are killing it. No, YouTube is... We have way more downloads on the actual podcasts, iTunes and stuff like that.

1:17:08We suck at YouTube. I mean, I would argue that a listener on iTunes or Spotify is probably way more valuable than a single listener on YouTube in the podcast genre. So I think what you guys are doing is incredible. and I would continue to focus on listens across other platforms. I wouldn't hedge too highly on YouTube at the moment. I agree. We went hard on YouTube for the last 12 months and now it's like, oh man, actually the podcast number that just steadily grows every single week. Whereas YouTube, it's a little lumpy. Yeah. I'm the opposite. I love YouTube. I think it's great. I think I just like the comments, I guess.

1:17:44I love it too. But I do think that I consume your guys' podcast on Spotify. so yeah i guess that's what you get used to once wherever you consume it you're like this is a good place for things and so yeah you know that's where things go all right reed thanks for coming on man where should people uh follow you or find you a shout out wherever you want people to go i mean we spoke a lot about twitter so it's just rejd on twitter um and then i i probably am the most active on instagram in terms of like answering messages so uh same thing rejd on instagram so I appreciate you guys. Thanks for having me on.

1:18:15See ya.

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