Lessons From the Manager Behind YouTube’s Biggest Creators

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0:23Hey, how's it going? I'm Shuang Esther Shan, and this is Shopify Masters, your companion for starting and building a business. Today's guest has turned his lifelong passion for entrepreneurship into creating a business that helps creators become founders. I have a really deep understanding of what I think they will enjoy being the founder of or what they will enjoy promoting. From working in tech sales to launching One Day Entertainment, serial entrepreneur Zach Hanavar helps YouTube giants like ARAC and Yes Theory skill companies beyond content. Too many people have been a little bit too precious because it's my face and it's my name on the channel.

1:02In reality, what often is being created is a media company. Zach is here to share his secrets to building successful merch companies, what it takes to succeed as a creator, and knowing when to pivot. Thank you so much for being here, Zach. Thank you for having me. Super excited to be here. This is quite the full circle moment for us. You actually were one of the earliest salespeople at Shopify. You've seen some of the biggest brands in e-commerce build and scale. What do you take from that experience with you today? I think one of the biggest things was just working in tech sales and calling merchants and trying to convince them to join the Shopify platform.

1:42That cold calling experience of being able to get on a call and have a lot of people hang up on you, be rude, say no, showed me really early on that no matter how good what you sell is, you're going to have to go through a million no's to find yeses. And I remember just being so confident in the offering of the Shopify platform for merchants. It felt like a no-brainer, but still so many people just didn't consider it. And learning that lesson early on, I think, gave me the grit as an entrepreneur to realize that no matter how good your idea is, that's just part of the process. And also got me really confident in picking up a phone and calling someone and not waiting or, you know, the art of the perseverance of following up.

2:21I think that Shopify experience was pivotal in teaching me so many of the skills that I think have been helpful to get me where I am today. And then it also allowed you to travel to LA a whole bunch, which allowed you to meet some very important people. How did you end up managing some of the biggest creators on YouTube? I pitched at the time that I thought it was a really good idea for streetwear brands in particular to use the Shopify platform. I was like, here are the reasons why I think that's the case. And please let me travel to the States so that I could go to trade shows to try to sign these brands onto the platform.

2:56and I remember getting the blessing from my boss to go out to what is called Agenda in Las Vegas and they were like, if you can sign one or two brands, this entire trip is worth it. I think I came back and had signed six or seven and then they were basically like free reign. If you want to go to any trade show, you can go to trade shows and that got me to travel to LA, Vegas, New York, Miami. It was an unreal opportunity for at the time being like a 22, 23 year old and in one of my trips to Los Angeles, a friend was like, you should meet these guys that are making YouTube videos It's really interesting.

3:26And the whole philosophy is to seek discomfort, which is very much like how you live your life. And so in one of those trips, I went out to LA and the guys were Yes Theory and had about 100 ,000 subscribers. And they were really interested in what I was doing at Shopify. They were like, oh, this is so cool. You work in e-commerce. You're really familiar with men's fashion. And a few months later, they came to me and said, we want to start a merch brand. Do you think that you could help us evaluate a couple of different merch companies? and I looked at a lot of the contracts and they were really bad.

3:55It was like one of the contracts with a big merch company had them signing away the IP of their brand and then getting it licensed back to them. And I was like, guys, do not sign any of this. It's super predatory. Like you should just do this yourself. Like Shopify makes this really easy. You should just do it on Shopify. And they were like, well, we don't know how. Can you help us? And so I did. And that went so well that they kept bringing me other creators who were asking them, who does your merch? Like, this is really good. We want to do merch too. And mind you, this is 2016, 2017. So it's like the heyday of, you know, Maverick merch by Logan Paul and Fanjoy starting out with Jake Paul.

4:27And so merch was like the thing. And we came up with an idea where we said, you know, the innovative way to do it is to not hold inventory, to do it where it's also not print on demand, but you do a big sale. Drop model of sorts. A drop model, which at the time was super innovative. At least we thought so. So we did that. And that went so well. we started signing all these other creators and actually started a merch company that's still around today called Fan of a Fan that I started while I was still at Shopify. And Shopify even gave me like some of the initial funding at the time that a program for people that were starting up businesses using the Shopify platform.

5:01And that was kind of what got us working with the, or got me working with the S Theory guys. We ended up bringing in a third co-founder in person to run it in the day-to-day. And that went so well that the guys eventually said, you should move to LA and manage us. And I've always wanted to be an entrepreneur. In my interview at Shopify, I told them this will be the last job I ever have. And they freaking love that. And it's true. Yeah. Yeah. And so that's been true so far. That was really cool. And so 2017, early 2018, I left and started one day entertainment. I love so many parts of that story.

5:33I think the first part is you seeking out opportunities while at Shopify, which I think a lot of people don't think about even when you're in quote unquote, like a corporate job, in order to make things happen, you kind of have to be entrepreneurial in the job. And then as well, when you met the guys at Yes Theory, you also made that relationship develop and also create those opportunities. I guess like the question here is like, how do you know when to kind of pursue things and do those pivots? It's a really great question. I remember I did a guest lecture at a university in Toronto around the time that I had left Shopify.

6:07And the topic or the title of that talk was how to hack the corporate world to become an entrepreneur. And some of the things that I had said in that, which I thought were if you want to be an entrepreneur, but you don't have the resources to do it. Or at the time I had student loans, I knew that it wasn't a smart idea to start a business with a crippling student loan. So I was like, okay, I'll get a job that at least helps me build the skill that I need to be a successful entrepreneur. And when I reflected on what that would be, it was sales. So I was like, okay, let me go get a job that will help me master the art of sales or at least progress in that.

6:38And I think the other thing that was in that talk was try your best to have a forward-facing role, like something that helps you interface with external partners. And so being able to interface with all these different merchants that were in the Shopify ecosystem, as well as the partners that ran development agencies, started to build my reputation and my network. So I started making friends with all these merchants. Merchants would invite me to their events. I started to become the person that was a subject matter expert to people outside of the confines of the Shopify walls. And so that started to get me opportunities.

7:07People started coming to me and saying, hey, would you want a job at this company? or hey, would you want to start a project together? And obviously one of those things that was interfacing with an external company was with the Yes Theory guys themselves. So I think if you want to be an entrepreneur, but you're currently in a corporate structure, there are certain things that you could do like that, putting yourself in an external facing role that increase your chances of the serendipitous moments that might lead to other opportunities. I think the other thing was when I felt like I wasn't learning anymore and I had tapped as close to the metaphorical ceiling as possible in terms of what I had to take away from that Shopify job in terms of learning sales, I had that very honest conversation with myself and said, okay, then I feel like I've done what I said I would do.

7:51Now it's just on me to make that leap. And I made that decision in one day. I had come back from LA meeting with the Yes Theory guys and I sat in the Monday morning sales meeting and I felt it inside of me that like, I think I'm done here. And then that day I decided, okay, I'm going to leave. And that's why the management company is called One Day Entertainment because that decision was made in a day. And I know this is like such a big question, but you've watched these creators to your point, like grow from hundreds of thousands to millions and tens of millions of subscribers. What do you think has set them apart to be able to have so much success with content?

8:25With each of them, it's actually different. So I'll say this with the Yes Theory guys, it is a deep sense of like authentic purpose. what they're trying to create on YouTube and what they've always tried to create on YouTube is not trying to copy another channel or do what they think will get views. It is authentically stories that are within them that they want to express or things that they think should exist in the world that don't exist, that they feel uniquely positioned to tell. I think a lot of what we see with content creators today is chasing a trend or chasing a format that is like in vogue.

8:58And the thing that's worked really well for Yes Theory is that they really dug deep and said, what is the philosophy that we believe in that we want to live our lives by? And can we document that in a way that other people will find interesting? And they did that at such a vulnerable level as like young men who, you know, were showcasing, like, we don't want to get to being 90 years old and on our deathbed and regret the life that we've lived. And we want to go after the things that have meaning for us. We don't want to go into a boring corporate job just to like, you know, chase the milestones that society sets out for us.

9:31And at the time, even just that motto, seek discomfort, like it was almost controversial. It was like, oh, you should actively become uncomfortable. That was something that a lot of people didn't, it wasn't like totally agreed. And because they were able to draw a line in the sand and go to that level of vulnerability, it amassed a bunch of people that agreed and were like, yeah, we want to live our lives that way. And that's true. And I think they caught it at a very interesting moment where it was becoming a very popular philosophy for young people that were looking at what their parents had done and said, I don't want to do that.

10:02I want to travel the world. I want to have a more unique job. And I think that's what really worked for them. With Eric, I think it has been a relentless curiosity of how do I make really entertaining content? And what is the almost like the science underneath these videos that get people to enjoy them? And what is viewer satisfaction at a rudimentary level? What's interesting is that you're able to take both of their ethos and build businesses that actually make a lot of sense. The clothing line Seek Discomfort with Yes Theory and also PizzaFi with Eric. So I guess like talk to us about building businesses that make sense for creators' communities and also that kind of like grows outside of their content as well.

10:46Yeah, for sure. I think one of the main things is the level of relationship that I have with both the Yes Theory Guys, as well as Eric is so intimate and we're such good friends that I have a really deep understanding of what I think they will enjoy being the founder of or what they will enjoy promoting. I think sometimes when creator, operator, creator businesses don't work, it's like, oh, this creator targets this audience and therefore this product will work for them. I think that that's like a very surface level. Someone in a boardroom is looking at it being like the audience is 70 % male, therefore a burger would work.

11:21And I don't think that that works. I think the reason that some of these swings have been successful have been more that we really sit down and I try to understand like, okay, I know this person at a very intimate, friendly level. Do I think they're going to enjoy promoting a clothing brand for the next 10 years of their life? Do they enjoy and take pride in the apparel that they put on their bodies? Do they like looking at designs and picking between 10 and picking their favorite? And the answer to that for the Yes Theory guys was yes. Like Amar is the visionary behind a lot of the designs of the brand.

11:51And he'll stop people on the street and go, where'd you get this? And like, can I take a picture of the tag? What materials is this built off of? And so I knew that for decades, he'll enjoy doing that. And then there's like other things where you look at and say, okay, what is the demographic of the audience? Is the reason that people watch this channel related to the reason that they might buy this product? For Yes Theory, I think most of their community, especially the most diehard members of their community, watch their content because they feel inspired by that philosophy. And when you're inspired by something, you want to wear it, you want to represent it.

12:22Like, you know, we wear jewelry or chains or crosses because of our religions and our spirituality and what we want to represent to the world. And so that felt like, okay, well, some other people may not want to do a merch company or not should probably shouldn't do a merch company because it's just too taboo. But for the S theory guys, it's really a philosophy that people want to wear on their chest. And so that was kind of the decision there. And I feel like you were early in the curve as well. This is like before all creators were dropping some sort of merch. So I feel like you were definitely a trendsetter in that as well.

12:51The thing that I would say like we were earlier on was when people were doing drops, they'll say, here's this shirt, buy it. If you buy it, it won't get to you for six to eight weeks because what will happen on the back end is that they'll take all the orders, send that to a place where they'll order the garments. That garment will get sent to another location where they'll actually like embroider or screen print on that garment. And then they'll send it from that building to another building, which is like a 3PL or a fulfillment building, where then it will get picked and packed, put into a polyester bag and then shipped out to the end customer.

13:25And the thing that we realized is every time this sends from the garment building to the print shop, to the 3PL, there's two to three to four days of receiving, two to three or four days of shipping. And depending on what states those are all in adds additional time. So the reason that that would end up taking six to eight weeks is because there were three different businesses talking to one another. And so we were like, what if we just put this all under one building? What if we have a building that has garments in one section of the building and then screen printing devices and embroidery machines in one part of the building.

13:56And then we have a fulfillment side in the same building. And that reduced our timelines from six to eight weeks to two to three weeks. And we felt like, okay, that there's no one else doing this. Why is no one else doing this? And that's become fan of a fan's bread and butter. Also is like very backwards in e-commerce that a brand would have a massive amount of sales in a very short amount of time and then not sell anything for a while. Most e-commerce brands were like trickling orders in. We run Facebook ads. And then those Facebook ads bring in one or two or three orders that you need to have inventory for.

14:26But creators don't promote like that. Creators are like, here's a video. It got a million views in 24 hours and a ton of traffic. And then we're not going to sell anything else for the next like one or two weeks or we have brand deals on our next video. So we're not promoting anything else. It's a very new way of promotional cycles. And so this fit very well with that. So I would say if we did anything early, it was just doing that. Yeah, really like vertically integrating the business, thinking about the backend, the logistics. And then for Eric, I think that idea has made his business so meaningful and also like just so fun for his community as well.

15:01What made you think about a sauce that makes everything taste like pizza? We had someone to actually approach us, a really cool company called Kira that does food products for creators. And they had approached us. I thought that their pitch was really smart and the way that they were positioning themselves in the creator economy was really thoughtful. And they were like, you should do a hot sauce. Or have you ever considered doing a hot sauce? And I was like, I don't think hot sauce is interesting. But I was driving one day and I had a conversation with Eric about businesses that we could start together.

15:31And I remember him saying, the only two things I really care about in this world are making YouTube videos that are great. And I really like pizza. Like those are the two things that I really genuinely love a lot. And so I was like, okay, how do you build a business around those? And we had creator now that was built around him being a YouTube creator and teaching other people how to become YouTube creators and the education around that. And we thought it would be fun to just do like a fun drop around something that was pizza related. And I was just driving one day and I was like, what if there was a sauce that could make anything taste like pizza?

16:00And so it was just a driving thought. And I just thought it was kind of dumb, but then I brought it up in the next like team meeting. I was like, do you think that this would work? Is there pizza flavored ketchup? And we kind of just went down that rabbit hole. And then the name PizzaFi came up and we were like, oh, that's so clever. Okay. You could see it like on broccoli. So it was honestly just like being kids in a sandbox being like, oh, I wonder what this would look like. And then just having fun with it and being like, what if there was a pizza character? So I think honestly, sometimes fun ideas come from that too.

16:26It's not taken too seriously. It was never meant to be like a business that was going to go off and be sold to Frito-Lays for a billion dollars. It was like, Like, could we create something fun for the audience where they'll have fun with it and people can make fun videos where they try it on really like obscure objects. And then the first drop went so well that we were like, let's just keep it around and like put it on Amazon and just like keep it as an ongoing business. But honestly, it was never even meant to be that. So sometimes I think entrepreneurship comes like that as well. You never really mean for something to turn into a business.

16:54Both of those ideas are so meaningful to the creators. And I think like a lot of people ask you about, you know, if you're a content creator, at what stage do you think about starting a business? And like, when do you even think about maybe getting management? Really early on is when you should think about what is the thing that you want to sell to the audience that you're aggregating. There's a whole line of like dominoes that happen once you make that decision around thinking like, okay, who am I targeting? What are their problems and pain points? One of the things we do with all the creators that I've worked with or consulted on projects is we make their audience one person.

17:29Who is a Yes Theory fan if they were one human being. What would be their name? How old are they? Describe what they do on a day-to-day basis. That exercise is, I think, really helpful in getting into the mind of that person and the problems that they have and the behaviors and the consumer patterns that they exhibit. That would be what I would say to do. In terms of a management decision, I would say one of the best decisions any creator could make is really early on, try to find a friend that you think is smart from a sales operational business perspective that matches what you are probably strong in from a creative perspective and making videos and ask if they are willing to help you run the operations, find contractors to hire, reach out to brands, like all the operational stuff.

18:15And before you ever go to like a big management agency or talent representation company, ask that friend if they'd be willing to do it for either a percentage of the money that they bring in or percentage of all the money that they end up like working on or for a percentage of your channel, like for a percentage of this business that you're creating. I think that startups often say, okay, I'm a technical founder. I'm going to go partner with a non-technical founder so that they can do the pitching and the sales and the business development. And we're going to split equity in this thing. I think it's only a matter of time until creators start treating their businesses in the same way.

18:49I think too many people have been a little bit too precious with this being about me because it's my face and it's my name on the channel. When in reality, what often is being created is a media company. At the early stages, it doesn't feel like that because it's like, it could be as simple as like you vlogging your life. But the operational side of it and the business development side of that is just as important. And I think bringing someone on that feels like a co-founder that's willing to like, you know, stay up late nights and put in that work just as similarly as you are is invaluable. And also I think someone that cares at that level is light years more valuable than someone who has relationships with the brands or a network of, you know, celebrity or, you know, traditional Hollywood relationships.

19:30Someone can build that with the right level of like care and attention and work ethic, I think. Yeah, I like that because it's putting a business lens on something that's creative. And oftentimes creators feel like this is more of my art versus like looking at it as a business. So that's quite important. So you You mentioned previously that you have a company called CreatorNow with Eric, and you've actually exited the company. How did you know that this was like the right pivot, right decision for you? Yeah, well, first off, CreatorNow is a online learning community for creators who are trying to start their channels and grow and make money online.

20:06It came from Eric and I just seeing that what we thought was actually going to work for creators that were looking to grow their channel was not what was inside of courses. It wasn't going to come from people watching course materials, but rather from actually finding a community of creators around them where they could hold each other accountable to posting frequently and then providing personalized feedback on their videos. And then we ended up having a couple of opportunities where companies came to us or one particular opportunity came to us around like, hey, would you guys ever sell this?

20:34Like, are you interested in selling this or would you want to do this forever? And we had never really asked that question before. We had never really thought that we could do that this early on in the process. that got us to kind of like go to our investors and be like, what do you think of this outcome? We had been running the company towards like profitability and we didn't want to go into like the venture game of continuing to raise. We thought, you know, we raised our first round. We could probably just go profitable from then. But then when that opportunity came in, I think we all said, okay, well, let's run an actual process and see what would happen.

21:03And that was a lot of learning. It was the first time I had ever done that. We built a short list of about five companies that we were like, we see a business case here for them. And we think that this could be really valuable for them. And it almost became like a sales process. It was like, hey, reach out to these five companies. Here's what we think this could be valuable for you for. And we also see the vision in your company. We think that your company is awesome. And we think we can enhance the potential that you guys could reach as well. And I think that became like, okay, rather than try to do this on our own or continue this into profitability, what if we can actually have a bigger outcome for everybody?

21:35And that was a pretty eye-opening experience, just going through those hoops and chatting with the different stakeholders that are involved. And eventually, we reached an agreement with vidIQ. And it was like a perfect instance of vidIQ being this powerhouse company in the creator economy that was really good at all the things we sucked at. Like they had an incredible SaaS model, incredible products, world-class engineers building like really frontier AI stuff. And we were more like branding, sales, marketing, like really cool community, really cool educational resources. And so we kind of looked at it and we're like, Like this is like a two plus two equals five situation.