Why More Creators Are Planning Their Exit

0:00Jasmine Enberg: Hi, everyone. This is Scalable, a weekly show about the business of the creator economy. I'm Kaya Yurieff. And I'm Jasmine Enberg. Every Thursday, we take you beyond the headlines to tell you what's happening, what it means, and why it matters. We call it like the YouTube became the adult in the room kind of phase. We said, okay, we've never seen a YouTube channel that has lived more than five years. So we have to have some kind of strategy, exit, and legacy plans for the intellectual property. It still feels like it's kind of new territory, especially now that we're having new types of buyers come in.

0:33A lot of channels that seem great at the outset have no buffer between them and just the next cute set of 20-year-olds who come along and do the same thing.

0:43Jasmine Enberg: So we've seen other creators buy their companies back recently. So is that something you would ever consider?

0:54Jasmine Enberg: Hi, everyone. Welcome to Scalable, our weekly show about the business. of the creator economy. I'm Kaya. And I'm Jasmine. Today, we're going to be talking all about creator exits. More than 60 % of full-time creators in the U.S. now have some kind of exit plan, according to data from the Consumer Technology Association. At the same time, we're also seeing more creators take on investment to expand their businesses, which helps set them up for an exit, or even try to buy their companies back after selling. Yeah, it seems like we're at sort of an inflection point because even just a few years ago, talking about exits wasn't really a thing among creators.

1:28Jasmine Enberg: And it's still something that many don't think about or know how to go about. If you flip that CTA data on its head, it shows that 40 % of full-time creators don't have an exit plan. It's so true. And there's also only a small number of creators who are in a position to take on investment, let alone later change their mind after selling their company and buy it back. But founder and former owner of Theorist Media, which runs popular YouTube channels like Game Theory, Food Theory, and Style Theorists. Stephanie and her husband and co-founder Matthew Patrick, better known as MatPat, were among the first creators to sell their company to LunarX back in 2022.

2:06And they helped to develop somewhat of a roadmap for creators to retire or exit their companies. Stephanie said that back in 2019, when she gave a keynote at VidCon about having an exit strategy. Half the room didn't understand why she was talking about exits. Here's what she said. The people who were, you know, sort of more up and coming onto YouTube, pushing to grow on the platform, they were like, why did I just go to a speech telling me how to leave the platform?

2:33Jasmine Enberg: Well, that's certainly starting to change now. And since then, we've seen several other longtime creators exit. Not all of these exits have or will look the same, though. Often the buyers and terms are very different. In February, for example, OG YouTubers and brothers Hank and John Green gave away their shares in their company complexly to turn it into a nonprofit, which was very different than OpenAI's acquisition of TBPN, which had a price tag of low hundreds of millions. TBPN is also a much newer show. It launched only in October 2024 and was acquired in April 2026. We had David Duxon from OpenAI at our Scalable Summit earlier this year, and he said, sorry to disappoint for any other tech podcasts out there, but they are not planning to become a media company and acquire any more shows.

3:15Jasmine Enberg: Another tech company might, though. Yes, we'll see. We'll see. I mean, it would be very interesting if Meta tries to acquire something. I wouldn't be too surprised, but yeah. But then there's also a much longer list of YouTube channels like Lunar X's acquisition of Theorist or Electrify Video Partners acquisition of Veritasium. The Lunars and the Electrifies of the world specialize in taking over YouTube channels. So there's a much longer list than just the TVPMs and Complexles. Yeah, for sure. I mean, there's no single way about thinking about an exit. But for creators, having an exit plan isn't necessarily about walking away from content creation.

3:48It's really part of having a goal for your business. So you don't end up on this endless hamster wheel of just creating content. And I think the reasons that we're starting to see the mindset of creators start to shift toward exit strategies is one, there are more creators now that have built real companies that go beyond social media, which makes an exit more realistic than ever before. And two, all creators are starting to think a lot more about things like ownership and also what the lifespan of a YouTube channel or an Instagram account might be.

4:19Jasmine Enberg: Yeah. And most creators now understand that they are building businesses on platforms that they don't control. So I think creators are also, you know, not only being cognizant of their business as a whole, but also thinking ahead and trying to figure out, you know, what kind of future do they want to build for themselves? Yeah. I mean, And going back to that CTA data that we cited at the top of the episode, it showed that the top triggers for a creator exit are personal, meaning things like getting tired or just losing interest in content creation, or if they had a big change in their personal lives.

4:47That was definitely true for Stephanie and MatPat. I mean, she told us that when they had a kid, that was really when they first started thinking about how they could step away from the business. What was really interesting in that data, though, was that when I've made enough money was actually the fifth, the most cited reason for an exit. And so I know there's a lot of people that would then interpret this as just more evidence that creators aren't in it for the money, and they're just doing it for the love of content creation. And maybe that is true for some. I mean, I think Hank and John Green are a great example of this.

5:17But for me, I kind of read this as the opposite, which is that they know that there's more money to be made. But you know, I also hate the comparison of creators to starving artists who are just in it for the art because that is not true.

5:29Jasmine Enberg: Yeah, and another big trigger in that study was changes or shutdowns on the social media platforms themselves, which was cited by more than half of creators. So let's talk a little bit about that instability, because we're seeing changes happen all the time. I mean, platforms will tweak algorithms, and all of a sudden, your view count drops out of nowhere dramatically. Metrics that used to matter, like follower counts, matter less now. There's also the monetization piece. So YouTube recently announced that it's making it harder for creators to start earning money. It's raising the entry requirements for its YouTube Partner Program, which shares ad revenue with creators.

6:02Jasmine Enberg: So as of early 2027, they will double the watch hour requirements for new channels looking to enter the program. So for long form, you're going to need 8 ,000 watch hours over the last year or 20 million qualified shorts views in the last 90 days. So that's a lot. It's a big, big jump. It is. And my LinkedIn feed, like I'm sure yours was too, was just full of outraged posts about these changes. And it's valid. I mean, I totally agree that it's a lot, but it's also not like the bar was that low to begin with. I mean, what we've seen is that ad revenue sharing programs in general can be really lucrative for the top, top creators.

6:40I mean, remember, Dhar Mann didn't take on brand deals until recently and was primarily monetizing through YouTube's AdSense. But for most creators, including those who are in YouTube's ad revenue sharing program, they're not going to be making a ton of money from it, though. Obviously, though, by raising the bar even further, it's going to consolidate more and more revenue to the top. And to your point, should make creators think about how much they're relying on any single platform.

7:04Jasmine Enberg: Yeah, and this is just one example of how platforms can disrupt the work of creators and potential income streams. And it's no surprise that full-time creators want more ownership and to be less dependent on individual platforms because of all these reasons. A few weeks ago, we wrote about how ownership of audience and diversification in general are just the real ingredients for creating a sustainable business that can set creators up for successful exits. Tyler Chow, a lawyer focused on the creator economy who also runs an M &A advisory firm, pointed out that buyers, whether it's private equity firms or studios, are less interested in data like follower counts.

7:36Jasmine Enberg: And they're much more focused on whether creators have multiple revenue streams that go beyond income from social platforms. The problem is most creators don't actually have a strong business beyond social media. Here's Tyler. I am working on four active exits in the creator space right now. And I'm working on one that's worth$100 million. And my client has 4 million on YouTube, which doesn't sound that big, right? Mr. Beast just crossed 500 million subscribers. But what buyers are looking for private equity studios that they're looking for, whether or not you own your audience and whether or not you have revenue streams beyond the platform.

8:12They don't want you to just be attended to YouTube. They want to know that you have a newsletter, an email list, a community, a physical product, a technical product. There are so many things that go beyond the face of a YouTuber. Okay, so let's talk a little bit more about what these exit deals might look like, because we've seen a lot of different types of exits. So a creator can sell and stay visible, like the TBPN guys have. A creator can keep ownership and step off camera, or they can retire entirely by selling and stepping out of the limelight like Stephanie and MatPat from Theorist have done.

8:45To be fair, they did stay on for two years after selling to help with the transition, but then they retired completely from YouTube. To prepare for that, though, they gradually brought on new hosts to lessen the reliance on them on screen. Hank and John Green actually did something very similar before they ultimately stepped away from Complexly. So they're both obviously still making content, but they also brought on new hosts and named a CEO, Julie Walsh Smith back in 2023 to help the company stand on its own. And as we set up top, the Green Brothers had a very different type of exit than, say, Theorist and also pretty much any other exit that we've seen so far in the creator economy because they turned it into a nonprofit.

9:25But Julie told us on a recent episode that they considered a lot of different financial models, including acquisitions and giving employees ownership before they made their final decision.

9:35Jasmine Enberg: Yeah. And she pointed out that their company wasn't necessarily the most appealing target for commercial investment because their mission is to create educational content for free forever. But they could have gone either way. I mean, she's told us they had plenty of investors knocking on their door before they decided to ultimately go this route. If you're watching on YouTube, you can check out our full conversation with the Complexly CEO via the link on screen. But the flip side of all of this now is that we're seeing some creators who sold their companies want to buy them back. So for example, the co-founders of Smosh, Anthony Padilla and Ian and Hecox had quite the journey with selling and buying back their business.

10:11Jasmine Enberg: They sold it back in 2011 to digital media company Defy Media. And after that company collapsed, YouTubers Rhett and Lynx Mythical bought Smosh. Amid all of this, the founders of Smosh, Padilla and Hecox, had a following out, but then they reconnected and were able to buy Smosh back from Mythical in June 2023. So they regained control in the end, but they do have a CEO, which I think really helps them separate operations from the creative work. But what a journey there. I mean, high drama, and we are so here for it. But this year, we've also seen other creators do similar things. So after selling the home edit to Reese Witherspoon's Hello Sunshine in 2022, co-founders Clea Shearer and Joanna Teplin decided to buy the media company back this past spring.

10:56Why? As Shearer put it, the company was owned by private equity and it was going to be sold. So she said, quote, why not take the opportunity for us to be the ones who own it again? It's our identity. I love the honesty. I mean, we always ask founders what it feels like after selling their company. And often it tends to be a mix of relief and happiness. But there also has to be a sense of loss or grief, right, to let go of something that they've built from the ground up.

11:23Jasmine Enberg: Yeah. And then we're also seeing creators take a different route and take outside investment to grow their businesses. We've seen so many creators bootstrap, and that's worked really well. But to accelerate growth, we're increasingly seeing them turn to outside capital. The latest example is Alex Cooper. Her media company Unwell just raised funding for the first time ever from WTSL, which is an investment firm led by Patrick Whitesell, who's a Hollywood super agent. Terms in the investment were not disclosed, but it valued Unwell at$500 million. And then news broke just one day after that Cooper was shutting down the beverage arm of her business.

11:56Jasmine Enberg: But her business also includes, obviously, her podcast network, TV film production, a philanthropic arm, and a creative agency. So quite a week for Alex Cooper. Definitely a big week for Alex Cooper. We haven't seen many valuations of that size in the creator economy. That$500 million valuation puts her just ahead of fellow podcaster Stephen Bartlett, who raised funding at a$425 million valuation last year for his holding company, which includes a media business, software services, and podcast production. but no one tops Mr. Beast's$5 billion valuation. And we actually charted out all of these and went into more detail on these valuations in Tuesday's newsletter.

12:35So make sure to go check that out. But obviously the shutdown of Unwell Beverages was also really big news. But I think what was most interesting in all of this was actually something that Cooper shared during an interview she had with Andrew Ross Sorkin on CNBC about the investment. So she said that revenue from her creative agency, which launched in October of last year, will soon match that of her podcasting business. Take a listen. Our creative agency, we created it this past year and already to date by the end of 2027, it is going to rival financially the podcast business, which is incredible to be able to say, right?

13:14It is extremely successful. And so we've been looking at the infrastructure we've built, the relationships we've already built. Now, how do we take it to the next level? We're looking at some creative agencies that maybe we could acquire that already has the infrastructure, more non-traditional, I would say, to add on to what we've already built. There's just so much to unpack here. I mean, right away, this shows how brands are still where the big money is for creators, even as they're diversifying to other revenue streams and lines of business. Podcasting is also really heavily tied to Cooper and to her brand.

13:46Obviously, she's been bringing on other talent to her podcast network, but Call Her Daddy really still is the flagship of Unwell, and it is very much dependent on her. And she really hasn't had all that many hit podcasts yet under her umbrella. Plus, of course, you know, there's all the beef with Alex Earle. So as you have Cooper potentially thinking about an exit, the more that she can diversify her business and away from herself, the better.

14:11Jasmine Enberg: Yeah, we've also just seen her content evolve over time. Famously, it launched as a very raunchy podcast, and now she's interviewing presidential candidates. And as she says, she's now entering her motherhood era, right? She's pregnant. And I wouldn't be surprised if she wanted to start, you know, stepping away or taking some time off soon, which kind of takes us back to the top of the conversation about how personal reasons tend to be the biggest reasons why creators think about that. I also didn't realize that she had a philanthropic arm until the CNBC interview where she was breaking down all of her different lines of business.

14:41I think I sent this to you on Instagram, actually. But the other day, she was fulfilling people's baby registries on Instagram, which I thought was just such an interesting way to, you know, build goodwill and get some good PR, right? Especially as all this drama continues to mount.

14:56Jasmine Enberg: No, totally. And she's been doing a lot more off-camera work in other ways, too. She's producing original shows for Hulu and Netflix and also YouTube Originals. So she's clearly thinking about how this business can stand without her necessarily being the face of it. And whether it's personal reasons, whether it's starting a family, whatever it is, I mean, also people don't want to be on camera all the time. But Cooper also had some really interesting thoughts about exclusivity, which is something that we've been thinking a lot about as streamers like Netflix are continuing to court major podcasters with exclusive deals.

15:27Jasmine Enberg: Many have declined. Here's what she said. If I've learned anything, it is you want to be everywhere. I think that a lot of creators are making the mistake of going to one singular location. you're cannibalizing your business. So those are some pretty stark words from Cooper, who used to have an exclusive deal with Spotify from, you know, 2021 to 2024, which was reportedly worth over$60 million. And now she's with Sirius XM in a deal reportedly worth over$125 million over three years. But her content is available everywhere, even though she does have a deal with them. Yeah. And Cooper isn't the only podcaster who feels this way.

16:01So Mel Robbins said on the creator stage at Cannes Lions that she wouldn't consider an exclusive deal because she wants to keep her content free and widely accessible. Like Cooper, Robbins also has a SiriusXM deal. And as part of that agreement, SiriusXM subscribers do receive early access to her new episodes, though it is true that her content is available everywhere else and it's available for free. This also goes to show you just how complex these deals have become. And so we went deeper into this exclusivity versus everywhere debate in our newsletter last week. So be sure to check that one out as well.

16:34Anyway, as we say all of this, it is also really good to keep in mind that there are still relatively few creators who are in these positions. I mean, saying no to a streamer deal like Netflix or buying a company back requires a lot of leverage and also often capital.

16:50Jasmine Enberg: For sure. And the reality is that an exit can also just mean abandoning the channel and abandoning being a creator and not having any sort of financial exit or, you know, changing of hands of account. It could mean going back to a nine to five and just leaving social media behind. I mean, one of the reasons in that CTA study was, quote, if I find another job I like. And that was cited by 28%, which was the same percentage of people who said, when I make enough money as a creator. See, Kai, I told you. It isn't just for the love of content creation. It is about the money. It's always about the money.

17:22Jasmine Enberg: People got to live, too. But there's also just the bigger question of whether the business can survive when the creator no longer wants to be the product. So the answer can be yes. And this is one of the things we're going to dive into with Stephanie Patrick, co-founder and former owner of Theorist. She'll be talking about everything from when she knew it was time to step away and how they structured their deal with Lunar X and also her advice to creators who are looking to grow rather than to exit. Plus, she tells us what she and MatPat have been up to since retirement and whether they'd ever buy back their channels.

17:53We're so excited to have you on the show. It is sometimes really hard to believe, but the creator economy has now reached a point where more of the top creators are thinking about or preparing for retirement. For a lot of them, that means having an exit plan. As someone who has been in this industry for a long time, how do you see this current moment in the creator economy? This is a really interesting time, and I think there's so many avenues of this to dig into. There has been a major shift in the time that obviously I've been on the platform in one form or another. I've been behind the scenes.

18:29I've been in front of the camera. I'm on the other side of an exit strategy now. And I think there's been a big push, you know, obviously during the first decade that I was on the platform towards how do more and more people get onto the platform. And then there was a maturing phase that definitely happened where we call it like the YouTube became the adult in the room kind of phase where the creators became businesses and they really grew up on the platform and started creating long term visions and long term strategies. And inevitably, those have now turned into a sort of full cycle business plan that includes not just launching and growth strategies, but also exit and legacy plans for the intellectual property they've built, for the channels they've built, and for these audiences that they've sort of grown and shepherded along the way.

19:26And it's not easy to transition from one of those phases to the next. And so I think that there's understandable growing pains as that happens while the platforms continue to do a lot of shifting underneath them.

19:39Jasmine Enberg: When did you start thinking that you could have an exit period? So early on in my history on YouTube, we're talking about 2014, 2015, the early days. My husband and I, who I run the channels with for 13 years, at the time we had our first channel that was getting to be about four, four and a half years old. And we had both gone full time onto YouTube. And at that point we said, OK, we've never seen a YouTube channel that has lived more than five years. So we have to have some kind of strategy because our expectation was that five years was the lifespan of a YouTube channel. We launched our second channel in 2015 because, one, our audience, we thought, had the appetite for it, and they did.

20:25And that was the most important thing. But also because we were already thinking, not in terms of a business-style exit, but in terms of a lifespan of what a reasonable YouTube channel could be. So as the first one, you know, sunsets, we'll have another one that'll hopefully be ramping up. And what we didn't realize at the time was actually that we could sort of start to build on more of a snowball style growth rather than this ebb and flow of one channel at a time. So we built four main channels. And then we also had a live streaming channel for a long time as sort of an audience connection vehicle.

21:02And when we got to a really sizable team for us, what we thought was a really sizable team was about 30 people full time and then another 20 freelancers. We were like, wow, this is a lot. We had just had a kid. And when you have a business that is you and your partner, it feels very personal. There's a lot of interweaving of your personal and your professional life. And so when something like a kid comes along, you also start to think about how that may impact your professional life for both of us, right? And so we started thinking about how we could transition the channel to potentially new hosts.

21:43At that point, we hadn't thought about exiting or selling completely ourselves, but we thought about taking a step back so that we could spend more time as a family, we could do more behind the scenes, and frankly, we could scale in a way that wasn't possible anymore. When you have four to five channels, scaling yourself any more than that is just impossible, right? So at that point, had the idea that we would transition the channels to new hosts, and then we would hopefully just float along in the background behind the scenes, cheering them on. And all of a sudden, we got a call from someone who said, hey, have you ever considered taking on investment or selling your channels?

22:20And we said, no we hadn't at all actually but we have been thinking about taking a step back and the more we looked into it the more we realized that that was a not just a plausible reality for us but a desirable reality for where we were with our creative arc so i wanted to go back to what you said about the five-year lifespan for for youtube channels because it feels like you were very early on and even thinking about a career on youtube in this way in 2019 you gave a speech at vidcon about creator exit strategies. Tell us about that because that was also very, very early to be talking about this.

22:56So I've been speaking along with my husband, Matthew, at places like VidCon since almost, almost since VidCon began, really since the early days. And most years between 2015 and 2020, we gave keynotes of some kind. And like we gave one on creator burnout in 2015. It was really early, kind of before people were really talking about it mainstream, but we were like, hey, we're really tired. I think all of our friends are really tired too. We had had our son in 2018. We were thinking about how to make that transition to step back from being on camera all the time. And we were like, let's give this as our keynote in 2019, because if we're thinking about this, I think other people are going to be thinking about this.

23:40And it turns out we were half right. So we gave a speech about the crux of it was not, hey, get off of YouTube. Not at all. It was really actually about how when you are starting any type of venture online, like a YouTube channel, podcast, whatever it is, those ventures, they don't have seasons like a TV show. And they tend to become these just treadmills that people are on forever unless you have a goal and unless you have a point where you say, okay, I'm okay to stop now. And our whole point of the speech was when you get onto YouTube, think about what type of channel you're starting. Think about your end goal from the beginning and you'll be a lot more likely to hit it.

24:22And one of the things that we talked about was how to create a channel with the end goal of eventually exiting, of selling it, or we even mentioned IPO-ing in that discussion. that one went way over people's head. They were not ready for that one. But I would say about half the people in the audience were like, yes, I get it. This makes sense to me because they were coming from more traditional media ventures at that point, TV networks, studios, that kind of thing. They got it. The people who were, you know, sort of more up and coming onto YouTube and they were just like, you know, pushing to grow on the platform.

25:01They were like, I, why did I just go to a speech telling me how to leave the platform. And then we saw, I think between 2019 and 2021, there's just this incredible shift happen where all of a sudden the platforms, all of them experienced such tremendous growth through COVID. And finally, YouTube caught the eye of a lot of investment-minded either individuals or firms, either in private equity, in VC. And so all of a sudden, during and in the shortly post-COVID era, a lot of those eyes started to turn to digital IP, to sort of endemic creators in the ecosystem. And that's when we started to get a lot of phone calls.

25:46Okay. So flash forward to getting a lot of those phone calls. You've been approached either for investment or for selling your company. What happens next? I mean, what was this process like from the glamorous to the less glamorous things? And how long did it all take, really? It was from the less glamorous to the stupidly unglamorous. It was a black box to us. I've never sold a company. I don't come from M &A. I don't come from finance at all. So that was a completely new world for me. And I ran our M &A process. Our first step was to find a banker. We called up one of the only people we knew who had successfully exited and sold their business and sold, at the time sold to Microsoft.

26:26And effectively, there are two really big steps. One is to get a banker and the other is to get a lawyer. We partnered with Liontree, who had previously done deals for CBS and Disney, for Warner Brothers. They had done all the big names, but they had never made a foray into new media. And so we had a conversation with them and said, hey, we're the first of this, but we think that there will be others who will be, you know, following this path. We think that if you can nail this model, there will be a lot more business out there for you. And then we found, I think, one of the very few lawyers out there at Greenberg Glusker who actually had super tangible long-term experience working with YouTubers.

27:14It was very different. You can't get someone who's worked with like movie studios or someone who's worked with movie stars or something like that. It doesn't translate. The terms aren't the same. There's a lot of that personal and professional entwinement. Anytime I think you have an endemic creator going into one of these deals where, for instance, if I'm Disney and I've created Winnie the Pooh and I'm trying to sell off Winnie the Pooh as an IP. I, as the person selling that IP, my face is not Winnie the Pooh, right? There's a lot of identity that's tied up in a lot of these YouTube channels, right?

27:56And so when you're negotiating, even stuff that would seem like it's kind of industry standard, like a non-compete or an image rights use, you know, what do you do with your nil rights in a situation where you're selling off your YouTube channel. You have to know exactly what you're willing to give and what you need to hold on to just as a person who needs to exist on the internet from that point forward, right? So having a lawyer who really understands not just media, but specifically the new media space we found to be invaluable and having a a really experienced bank in the room like Liontree allowed us to basically hand someone else the wheel to say, okay, we've run this business for 12 years.

28:44We're too close to it to know what it's worth. Actually, we are not in a good position to value our own company. We were getting calls from people and these were like, we had like sort of multiple suitors who were like, hey, I think these are YouTubers and they probably don't know much. So let's just lowball them with a number that sounds kind of nice if you are a regular person who doesn't have a ton of money, but is still not even kind of close to what the potential of the IP is, right? So we were getting figures in and we were like, these don't really sound right to us, but we have no evidence to back up what our company is actually worth.

29:25So we were able to bring a bank in and hand the reins to them and say, here's all of our information, here's all of our financial data, and here's all of our plans for the future. You do a valuation for us as a third party that we can then present to people who may be interested in doing a deal with us. And we have justification for our valuation. We have our EBITDA. For the last 10 years, you can track our progress and it's all really neatly laid out in a way that finance professionals are used to seeing, not in a way that a YouTuber may present something by taking screenshots of YouTube Studio.

30:05Jasmine Enberg: So looking back now, I mean, obviously this was such uncharted territory. You know, it sounds like you had the right partners, but what do you think you kind of got right and wrong in this process? The stuff that came before selling is the stuff that you have to get right. If you are fixing your company while the wheels are like falling off during a deal, that's like, that's not where you want to be. That's automatically going to devalue the company itself. It's going to scare off potential investors. You want to show that you were personally invested in the business. You didn't just start it to sell it.

30:35Having looked at the other side and having valued other YouTube channels since then, I think it's, I think it's clear when that happens and when, and when someone grew this project because it was a real passion project for them and that you grew a body of intellectual property, not just in what you created, but in the team that you put behind it. So one of the things that I think was a big advantage for us was that we had a lot of institutional knowledge. We had extremely low turnover in our company. We never mass fired people. We hated losing people because we invested so much into training and growing them as professionals.

31:18So what we were able to show was that the company was 12 years old and our longest employee had been there like 11 years. And that we had a lot of employees in that six to nine year range and working on a YouTube channel for six to nine years is like a lifetime in some other industries. And so the legwork that we put in before paid off. The stuff that we got wrong was underestimating how long the process would take. This is a field that has experienced very little, had experienced very little M &A activity up to the point where we sold. And there was a lot of stuff to work out. There were a lot of investors in the space who had also never been in this territory before.

32:09And understandably, I think that they were worried and nervous about what they were getting into. And so we had a couple of deals that we went down the road with that fell through. And they were heartbreaking at the time because I was, you know, I was running this whole process. And also, I couldn't tell our team about it at the time because you can't put people on a roller coaster like that at their job. And so picking yourself back up after that was it's it's really hard. Actually, I did not anticipate how long it would take. And that was, you know, something I would definitely be prepared for next time.

32:49When some of those deals fell through, what were the sticking points? Was it just the valuation or were there other things that like made you walk away from it? There was one that we kind of had to walk away from. They were trying to get us to make a ton of promises upfront about what we would do and what we would commit to and what our employees would commit to. We hadn't even seen a contract yet. They were using these hard sell tactics. The CEO and one of their lead investors cornered me in an office and was like, you're not leaving here until you promise that all your employees are going to stay for five years.

33:25And I was like, I don't know what you want me to do, man. I can't hold people hostage for you. And after that meeting, I was like, you know what? These might not be the partners for us. The second one was honestly, we got really far down the road. And on their end, I think they thought that they had the financing and backing for it. And it did not come through for them when they needed it. And unfortunately, that kind of stuff happens. We sort of went down the road with two of them and then ended up with the third one, which was Lunar X, which we ended up, you know, completing the deal with very efficiently, really timely and got it done really well.

34:03And I think YouTube channels in general or YouTube-led businesses are in a position where they can go in lots of directions when they exit. You could be part of a bigger media company. That risks potentially your organization being dismantled and then dispersed into a lot of preexisting departments. You also have some investors who are only interested in maybe one aspect of what you do. We had four different channels across four different verticals, and we had a couple of suitors who were only interested in one or two, and were kind of going to trash the other two. And that didn't feel as good to us.

34:40So it's interesting you say that it was new territory for the investors or the buyers back then because it still feels like it's kind of new territory in many ways, especially now that we're having new types of buyers come in, whether that's like private equity or family offices on top of the media companies that have been interested in YouTube channels. So when you're kind of looking across the landscape and thinking from the buyer perspective, what do you think is the most important thing that they need to know about the businesses that they're buying? Oh, absolutely. The most important thing they know is they can know is that they need to know more than they think they do, frankly.

35:14They need to know a lot more than the top line statistics of what they might be getting in an investment deck. when an investor is looking for a channel or an endemic creator to invest in, there are a few factors that obviously play in top line, which are things like viewership trends over time, watch duration over time, subscribership habits over time, recurring viewership over time. Those are obviously the top line key metrics, right? Along with things like auxiliary businesses, how successful has their merch line been over the course of years? Have they been able to expand that successfully or what experimental business ventures have they done that have either succeeded or not succeeded?

36:09A lot of times that will give you a gauge on how far that audience is willing to stretch with that creator. The other murkier picture that is a little bit harder to get a hold on, but is totally possible with some research and digging, is to understand the, for lack of a better word, competitive set around that creator, right? Our channels were lucky enough that they had a sort of built-in moat in a way. We had a team of writers that was able to do sort of deeper research than most. And we had a team of animators that were able to do much more graphically interesting things than most channels.

36:52And with a combination of the topics we covered and the depth we covered and the artistic style that we had, we had a little moat around us. But there are such incredibly increased expectations for what channels are supposed to be able to produce and how quickly teams can move and mobilize into different formats at this point, that a lot of channels that seem great at the outset actually have no moat. They have no buffer between them and just the next like cute set of 20 year olds who come along and do the same thing. Do you know what I mean? So understanding the ecosystem in that creator's specific genre is super important.

37:35And you actually have to watch the platform to understand. You have to understand who this channel is getting suggested against, what their business strategies are, what the business strategies are of this competitive set, and how ingrained one channel is in a community versus, you know, hey, is this just a community that's sort of transient and kind of bounces off of channels? Understanding how the audience moves through that channel and related channels is a harder one to nail down, but actually I think is one of the most important success indicators for someone who's actually going to put a lot of money into it.

38:11Jasmine Enberg: You had all of these different partnership opportunities. Was it the level of scale that you had reached? Was it a certain number of revenue streams? What do you think it was, especially to these kind of more traditional-minded investors that made theorist media such an attractive acquisition target? I think, if I'm honest, it was a combination of sort of the nuts and bolts, which were the viewership had been strong, was strong and had been strong for a long time. It wasn't a channel that had a meteoric rise overnight. It was a slow and steady grower over the course of a decade. So that's an easy growth story to sell back to investors.

38:49But I also think that from an intangible standpoint, there's a history of there not being that many adults in the room when it comes to running YouTube channels. Sometimes they're run really sporadically. They, like I said, don't hold on to staff. They don't have consistent workflows. They don't have HR policies and they don't feel like a business. When an investor comes along who may have been working in many other, frankly, more sophisticated or more mature industries, they come over to YouTube. And what makes people feel comfortable is seeing that there's a grownup at the wheel of some of these channels and that, you know, you walk in and there's an office manager and there's an HR policy and there's an AI policy and people are generally happy to work there.

39:42They understand what their roles are. And there are structures in place that feel like a traditional business, even though we have an understanding that it needs to be much more flexible than a lot of other even media industry companies. There's a feeling of safety. And I think actually that's what differentiated us more than some of the other stuff. You had so many potential partners, buyers, investors. What made you decide to go with Lunar X in the end? They came in to listen first and to talk second. For us, it was important to find people who didn't want to break up the channels, who didn't want to drastically change the business model.

40:22We had had people who had been working together in the same or similar capacities and had built these professional relationships, not just with us, but with each other. Lunar X was incredibly respectful of the structure that we had, the goals that we had, and the team that we had built. We were in the lucky position where we had already spoken to so many other candidates at that point that we knew what deal terms we wanted. And that, I think, helped us a lot as well. Understanding what our valuation was and understanding what we wanted personally from the deal. So we knew that we were aiming for a specific time range in terms of a lockup or an exclusivity.

41:00We knew that we would never want to, but we also knew that it would be impossible for us to sell the company and then immediately walk away from the channels. Like we were still hosting the channels. That would be crazy. But we knew we didn't want a lockup period of five to seven years. We were like, that's too long for us and that's too long for a platform like YouTube. We wanted a lockup of two to three years and that's what we got. That's when we started transitioning the channels. For us, our channels were mostly voiceover and Matthew's face appeared. It appeared, but it wasn't front and center all the time.

41:35And so it was one of those things that we believed that that that transition could be made on a shorter time frame, maybe, you know, like along the lines of over the course of six months rather than over the course of three years.

41:49Jasmine Enberg: What was that like to to stay for that period of time? but then, you know, you're no longer in total control of, you know, the company you founded. But what was that kind of transition period like for you? Our lawyer told us the day that we signed, he was like, well, I mean, now you guys just have like a nine to five. You can kind of relax, you know? No, it was, that was not, that was not it at all. Even if you're in the process of like handing over all the scripting to someone else, you're handing over all the visuals to someone else, you know, if it's going out with your face, your voice, your stamp of approval on it, it still needs to be at a specific standard.

42:25While maintaining that standard, you're also like, you know, like a duck with its legs underwater, like crazy, trying to work everything behind the scenes to teach all the new people who have just come into your company, how everything works, transition everything over to them in a way that feels really good for you and for them. And so actually we ended up working more after we sold the company than before because we did so much training and so much transitioning. And there were moments where we were like, oh, we see a light at the end of the tunnel. And there were other moments where I was like, this is just really stressful.

43:03How are we going to get everybody on the same page so that we, you know, by this date so that these new hosts take over? How do we know they're going to be ready. We likened it to sending your kids off to college. And we were like, okay, we raised them, we trained them, we gave them all the advice we could. And now we have to send them out there into the world to make their own choices and figure it out on their own. What about now, though? I mean, I remember one of the things that MatPat said when you guys sold was that now he'd finally be able to go on vacation without his camera, which he hadn't been able to do in like a decade.

43:39Have you been able to do that now? And what else have you been up to. Yes. It's been incredible, to be honest. You put aside all of your other interests. You put aside your other priorities. You put aside pretty much the rest of your life so that you can functionally run this business. And we had done that for so long. We had a decade of backlogged hobbies and movies to watch, books to read for fun, video games to play. And that sounds kind of kind of hokey, but we had hobbies for the first time in a decade. Um, we had also just moved. So we set up our house, um, and we got to spend a lot of time with our son, which was amazing.

44:21We also did get to travel, um, without microphones, which was really incredible. I had never traveled without an H six and I've been in so long. Um, but we did and, and it's been fantastic. but in that amount of time, we have also realized, you know, over the course of the last year and a half, slowly, that there is something that we really love about having that connection to an audience. We really loved the community that we built. And there are a lot of moments when we really miss that, or when there's something happening on the internet, and we're like, I really want to talk about that. And so that's one of the things that we've been considering, as to whether we can approach these platforms again in some way that feels less pressurized and a little bit more relaxed, where we can still sort of participate in the community, but not kind of be in the place where we were before, where we couldn't do anything else.

45:25And on the side, we also have other projects going on. Matthew's doing work with movies that he's gonna be able to talk about soon, which is exciting. We're working behind the scenes, potentially actually doing some theatrical producing. We've produced a show on Broadway and a show on the West End before, and we really enjoyed that. So we're sort of also in the arts and theater world as a passion project a little bit. We've also been working on education, both for the creator economy as a space and for policymakers in the creator space. So in June 2025, so I guess, yeah, a little over a year ago, we helped launch the Creator Caucus in Washington with Congress.

46:15And so we stop in there on a pretty regular basis to talk about issues that affect the creator economy, like AI and creator privacy, stuff like that. So we have plenty of stuff boiling underneath, but we have time for it now because we don't have all the channels to run.

46:32Jasmine Enberg: So we've seen other creators like Smosh and then also the co-founders of the Home Edit buy their companies back recently. So is that something you would ever consider? Oh, that's amazing. I know why Smosh did what they did. And I super, super applaud them for doing it. We love theorists. We will always love them. We love the people who work there. And we're so proud of everything we built. But I think from our perspective, we are actually really excited about new creative outlets and new creative opportunities. And when we closed that chapter, it took so long to get our deal done. And then we had, again, two years of working with the company to transition it.

47:16That gave us a lot of time to mentally, emotionally close that chapter in a way that felt really satisfying for us. and allows us to do stuff like, you know, maintain friendships with people who work at theorists. So I think that's a chapter that we're going to keep closed and root for them in the background. And for us, I think we're focused on sort of new ventures. That is a perfect note to end on, Stephanie.

47:44Jasmine Enberg: Thank you so much. Thanks so much for tuning into Scalable, and we will see you back here next Thursday.