From YouTube Channel to Media Company: Inside Smosh’s Business with CEO Alessandra Catanese

0:00Ian Shepherd:Why do most creator businesses burn out after a few years, while Smosh is still here nearly 20 years later? Still relevant, still growing, still evolving. The answer sits inside how the company is run. And today on The Business of Creators, I'm talking to CEO Alessandra Catanese to break down their success. You have to decide as a creator, how much of your art do you want to sacrifice to focus on the business? The creator-CEO hybrid is pushing for things creatively that don't always make sense business-wise or financially or the other way around. One of the reasons why Anthony and Ian picked me as the CEO is because they wanted to be able to focus on their art.

0:37Ian Shepherd:This episode is about why Smosh has lasted when so many others haven't. I'm Ian Shepard. This is the business of creators. Let's jump straight into it.

0:51mosh is looking to usher in the next gen of comedians we are on a path to become and feel that we are a premium comedy brand and that means we don't want people to just think about the youtube channels we want to be able to make our stamp in the industry beyond the youtube channels although i will say um the youtube channels are our bread and butter they're certainly the most important to us. And we love being able to have an AVOD solution consistently for our audience. We never want them to feel like everything smoshes behind a paywall and it makes us inaccessible, you know, so we like the accessibility.

1:27We love to work with YouTube. They're great supporters of us. And I think the things we're able to do and get away with on YouTube are so much more fun sometimes than when you think of traditional and how like serious things can be. But like, you know, we love to break fourth wall, you know. But what I'd say is, you know, as we look to the future of Smosh, yeah, we're becoming a premium comedy brand. We're ushering the next gen of talent and we'll always be dedicated to our mission statement, which is to make people laugh through comedy rooted in friendship.

1:56Ian Shepherd:Excellent. Well, I'm really excited to get into all of it. Let's start with your path to the CEO. So when Ian and Anthony were looking for a CEO, what were they looking for? Yeah, so I had been managing Anthony for a few years. I started managing him maybe a few months after he left Smosh, maybe six months or so. So I had been working with him for a while, so maybe seven years at the time, six or seven years. And we all came together to talk about the acquisition. And so our focus first and foremost was, can we acquire this company back? Through those conversations, it became more and more real.

2:29And then we started to be like, oh my gosh, this is happening. Now who's in charge? And so when we were talking about it, we were talking about kind of wiping the slate clean and starting fresh to a certain degree, both for like financial reasons, but also for like vision and future reasons. And so naturally the conversation became Anthony and Ian kind of turning to me and saying, hey, we think you should be CEO. And I think the reasons why are because of my background in talent management specifically, but also, you know, being OG with YouTube all the way back to 2009, 2010. You know, so I've seen the lifespan of YouTube and digital content and creators in general, and I've been fighting for it for the better part of 15 years, maybe longer at this point.

3:19And I think when we came together, we talked about wanting to make sure we all agreed on the morals and values of how to lead a company. And those were things like, you know, what we wanted to be able to pay people in terms of living wages. and how we wanted to create work-life balance and what kind of culture that leads to. So it was things like, you know, I don't ever want employees to think like, you know, I went home, but now I've got hours more of work to do even though I'm supposed to be clocking out, right? Or how do we make sure to have people who feel taken care of in a way? And that's things like, you know, we make sure everybody's fed every day, you know, at multiple meals.

3:59You know, if not breakfast and lunch, then you're taking lunch to go for dinner, things like that. And it was a foundational aspect of what kind of culture do we want to create? What kind of leaders do we want to be? And how do we want to make our stamp in the industry that says you can achieve success and you don't have to lead with fear to do it? And so I think us aligning on that vision gave them the confidence that I was going to be able to come in and acknowledge where I had strong skill sets and acknowledge where I had shortcomings. And so it wasn't just that, it was also looking to our advisors and our resources in terms of like coaching, right?

4:38So not only do I have executive coaching, but also we've been able to provide that to the company. Management, coaching and training, resources to be able to, I call her my work therapist, where I'll go sit with my executive coach and I'll be like, hey, I've never done this kind of thing before. I have these resources. I have questions. What else can I do? How can I learn and grow? And I think that's the attitude that we all wanted to come to the table with. And when we knew that we all had that, they had the confidence in me to be able to lead that charge. So I'm never coming into a room saying I'm the CEO because I'm the smartest person here.

5:10I'm coming in the room saying I acknowledge who we've hired to be experts in what subjects and I want to lead with their expertise. And then we come together and we make decisions as a team. You know, so being the CEO doesn't mean like, you know, I've got the key to the city and I can do whatever I want. It means I'm leading in collaboration and I'm leading by example.

5:30Ian Shepherd:That makes absolute sense. And what do you think has stayed the same since the business started, the channel started almost 20 years ago? And what's changed? We're still committed to YouTube, more committed now than ever. We're still committed to social media and especially platforms like TikTok and Instagram. We still upload on Facebook. You know, the revenue there is very significant. So, you know, there's a lot of that. I'd say some of our creative process is still the same, although it's definitely evolved and become more inclusive. I think, you know, the only changes really were that I just kind of cut some red tape so that they had a more clear path to upload.

6:07Right. And yeah, I feel like it wasn't a drastic like pivot so much as it was, hey, here's what's working. How do we make it better? And how do we improve it from there?

6:18Ian Shepherd:I know it's working much better and the revenue is growing. When you made the acquisition and you bought it back, what were the first levers that you pulled to grow the business? When I first started, we leaned into the tone and voice of the channels. And that was specifically leaning away from anything punishment based, anything that felt like it was punching down, anything that felt adverse to the mission statement of comedy rooted in friendship. And so we really leaned into that plus the delineation between each channel. Why are we taking this show and why is it on this channel versus that one?

6:51And it gave everybody a lens in which to think and create content through. and then from there we were able to say we have a lot of creatives in the building and they love to pitch even when there you know there was a little bit of this culture sometimes where it was like let me corner you at lunch i have this idea and let me you know and so we were like okay we don't want this to become a thing where people are just kind of constantly pitching and i wanted to reward people by saying like hey some people's here you know a lot of people here their job is not to pitch content so when they're passionate enough to come to the table and have a pitch I not only want to be able to create guidelines for them to understand what's going to be successful and why, but I want to financially incentivize them.

7:32So we created a quarterly pitch session where anybody from the company who's not a programming team member whose job is literally dedicated to pitching content and including our freelance talent, so our part-timers, can come to the table with ideas. And not only do they get a chance to pitch an idea and see it come to life and then get that bonus as a part of it, they also get an education on why we say no. So sometimes we'll pass on something and we'll say, hey, we already had something like this in development, but we'll give you a smaller, you know, kickback just because you gave us a really great idea for it.

8:09Or, hey, no, this isn't going to work because it doesn't lean into the mission statement in this way or it doesn't follow the guidelines in this way. You know, and so we constantly are trying to create paths of communication and that consistent dialogue to say, here's what works for Smosh. And we love when people push the boundaries. There have been a lot of things here where, you know, I think one of our prime examples is that we talk about all the time is culinary crimes. We had Marcus, who I think may have been a PA at the time, but became a coordinator very quickly. It was his idea. He called it, I think he called it like Reddit recipes or something like that.

8:44And we worked with him on the development of it. We kind of took it and run with him. And it also gave him an opportunity to come on as a producer and sometimes director. So it gave somebody who was looking for a path to learn more the path to execute that in real time. And I think that that serves as such a great example of, you know, when you open up these lanes, people can really rise to the occasion. And so that's not it's not for every single show. But the great thing is sometimes people come in and they're like, hey, I don't have a full show pitch, but have we thought about this twist on this format that we do?

9:17And we're like, wait, that's amazing. Like, that's such a great idea. So it really provides the lanes for people to like within a professional environment, show more passion and excitement about something that they might not normally get to do. And it also creates the boundaries necessary to make sure that that doesn't get out of control.

9:34Ian Shepherd:It's great to hear about those internal promotions. And from a commercial perspective, how do you think about the mix between AdSense and sponsorship and merch and live? Yeah, I mean, we try and create a good balance. I think these are all levers where we don't know what's going to ebb and flow, right? So to start, branded wasn't really taken advantage of here at Smosh. And, you know, I don't know, I can't comment on if that was like, we just didn't have the right people selling for us or, you know, if the market looked at us differently, right? Like, you know, views and engagement are much different now than they were back in 2023.

10:06So there's a multitude of reasons that could be why. But when I inherited Smosh, when I thought about those avenues of revenue, there was a lot of revamping we had to do, right? So with YouTube, it was one thing of, you know, YouTube AdSense was pretty reliable and we've grown it since. But bringing in Branded was strategic. We weren't trying to just be like, who wants to pay us to do like we'll represent any. You know, it was how can we position ourselves out in the market for people to understand what we have to offer as creatives and as comedians? And then how do we make sure that we're representing brands genuinely?

10:41And so it wasn't a, well, if you pay us, we'll talk about it. It was a, if we would actually use this brand and if one of our talent can give a very genuine read to it, then we should partner with them. And if there's any hesitation from us or our audience, we should just say no. And so that quickly became partnerships with larger brands now, you know, that we work with very often, like Rocket Money or Mint Mobile or any of those. For Mint Mobile especially, like, we got phones where they were loaded on and some of the talent who read those things used those phones for a week or two weeks or three weeks and was like, okay, I feel confident to be able to say this is actually a good service.

11:17I didn't like have a dropped call every single time I tried to talk to somebody and my messages went through and the Internet was very accessible. And knowing that that's an affordable phone plan to be able to offer our audience who might be struggling to make ends meet, like those are the types of value adds that we really wanted to provide. So anytime we think about that specifically, we think what kind of experience or value add are we providing our audience? And we lean away from things where, you know, we feel like, oh, it might be not the greatest feel or something we wouldn't use or even like risky.

11:52Right. So sometimes we get asked to do kind of sports betting stuff. And for us, it's like, well, one, we're not very excited about that. I don't think anybody in this building is really doing a lot of sports betting. But two, we would never want to pitch something to our audience that puts them in a position to be in debt or to lose, you know, any amount of money that might be meaningful to them. So instead, we leaned into the Rocket Money of it all. And they've been a great partner because we've been able to say like, hey, this is something that could potentially help you save money. I've even used Rocket Money before where I was like, I didn't realize I was paying for a Hulu subscription.

12:24And I'm also paying for this other Hulu plus Disney. Why did I do that? Right. Like so those value adds. And then the last thing that we really revamped was merch. I think I'm not 100 % sure what the strategy was before me coming on board, but I took the time to sit down with the talent as well as the programming team to say, can we create merch that we would want to wear ourselves? Can we create merch where we're not saying to the talent, like, hey, put this on before the video. Instead, we're saying, hey, here's a rack that you have access to and you can get any size, any piece that you want.

13:00Are there pieces here that you actually like? And can you be part of the creation process before we even get there? And then I was able to see the excitement. So not only did our merchandising manager, Mallory, really collaborate with our talent to say what excites you. And then we created, you know, the Smosh Essentials line, which I think was one of our like biggest and best first launches of you don't really have to know Smosh to like the colors or the material or those things. You know, it does say Smosh on it. So you probably want to be a fan of Smosh. But that was something where even the greater company was like, we want those pieces.

13:34Those are so cool. We're happy to represent. And then she took it a step further and was able to sit down with Courtney, with talent like Courtney and Shane and say, and so many others now and say, what would you make? Right. And that created the brutal tea or that created Courtney's URL, which is a really fun like Y2K throwback that I feel like is so powerful and so awesome. That also created moments with other talent like Angela where she came out with the Calm Down Tee, which is an honor and memory of her dog Spork that has passed, as well as Amanda Lehan's run of Chronically Offline. I mean, even people in my life were like, I don't know or care about Smosh, but I want a Chronically Offline t-shirt, right?

14:16So it's the heart of collaboration and making sure that we're thinking about things from you don't have to be a Smosh fan. You know, I cared even just like about guaranteeing our audience that the quality of the shirt wasn't going to just completely unravel in, you know, a wash cycle or two. I literally told Mallory, I was like, go have some of our cast just destroy some of these samples. And what holds up is what we should be working with. And so it was taking the time and space to think about those things and communicate that effectively to our audience. So like, hey, we're not pressuring you to buy merch at a higher price.

14:52But what we will say is it's at a higher price because we can guarantee you it's good. You're going to like the feel. You're going to like the look. It's not going to deteriorate in the wash. And it's something where you can wear and like the color, even the colorways you can mix and match. Oftentimes I mix and match them with my outfits for work. And I feel like, wow, this is a great outfit. I'm confident to wear this. And, you know, it says Smosh on it. Looks great.

15:15Ian Shepherd:You know, it's really great to hear. I love those examples there. And what about the studio? I know you've increased the space. What does that unlock? Yeah, so we went on a journey to find this new place. We got to this point, we're so privileged and fortunate, I just I can't even express the gratitude enough that we realized we had outgrown this place, but we have the ability and access to be able to launch more content and expand what it is that we're offering. We shouldn't have the physical space to do it. If I ask the art team to build one more set, they're going to be like, where do I put it?

15:47Like, your office? Go ahead. You know? So we worked with AJ Dorn at Newmark, who was incredible, really understood the vision of what we needed in order to bring the heart of what we have here into a bigger building that also matures what it is that we do as a company. And I hate saying, like, it feels more corporate because, you know, to a certain degree, it does. It does feel more corporate. But we like to make sure that that feeling is a little bit more bespoke to us. While you walk in the building, in this new building, and it should feel more professional and like, you know, an elevated atmosphere, it's not something where it feels like, oh, well, now I can't talk to anybody or now I can't do this or now I have to wear an appropriate, you know, outfit or, you know, whatever.

16:31To me, it's us maturing. We're growing up and we both needed the additional space. So this current building is 17 ,000 square feet and this new building is about 32 ,000. And that includes two floors of office space. So, you know, I want to hire people to help, you know, add into our different departments. I don't have desk space for them and I don't have another office here. And then, you know, on top of that, we don't have conference space. So sometimes it's, you know, Ian especially being like, well, I won't use my office today so that people have conference room space. And, you know, I wanted to acknowledge that we want to create an atmosphere where you can feel confident that you're going into a room and you are dedicated to that space and time that you need in order to get what work you need done.

17:16And sometimes that means providing a really flexible work from home space. But sometimes that also means we have to look at the future of the company and the needs. And if I want to hire certain types of people, I need to provide them with an office. There's certain conversations in this building that can't just be public in the middle of a bullpen, you know, and I need to make sure that people feel confident that they can get work done comfortably. And even the programming team was like, hey, we're elbow and elbow with each other at this point at these desks, you know, so even their space is upgraded in a way that I think honors and respects the amazing work that they've done for us.

17:50And I'm hoping that they can all be proud of, like we can walk into this new building and we can say like, wow, look at how far we've come. And like, I'm proud to work in the space and I feel taken care of.

17:59Ian Shepherd:That's great. And what does the team look like now? How many people have you got and what sort of department? Yeah, we have about 70 employees. At this point, it might be 71 or 72. I don't know. And it's important to me to acknowledge that, you know, we never want to get to a point where I don't know. I specifically don't want to get to a point where I don't know everybody's names. But that's also me just needing to do a little catch up because I at first when we acquired the company, we were in survival mode. We were like, how do we make this work? How do we make sure we get through the last six months of 2023?

18:32And then and we kind of like head down tunnel visioned, you know, stick to it, work hard, you know, get get the eyeballs, you know, work through these processes. And then, you know, this last year we were able to look up and say, OK, we have a lot of work to do to expand these teams. I never want somebody feeling like they have to work in this building until 9 p.m. to get their workload done. And I also don't want them to then feel like, well, I left at, you know, six or seven, like, you know, to respect my work-life balance. But that means that this channel doesn't get this thing for the shoot because I can't complete.

19:04I can't complete the work in the work hours provided to me. So we made a mandate. Anthony, Ian, and I made a mandate that was we will staff with our needs and not in anticipation of them unless we are sure we need that. So I didn't want to do the thing where, OK, well, we have some capital or we've got some funds. Let's just hire some people and just like flood the zone. Instead, it was, OK, this team is struggling to make ends meet with the time that's allotted. We clearly need to make sure that we get X amount of people in support. And what does that look like? What are the roles? How are they rolling up to people?

19:39Are we then having managers, right? And who are making decisions? Do they have the right training? Do they have the right power and authority to make those decisions? What guidelines do they have? So it was looking at the different departments and our future needs and wants. And sometimes that's taking on a project that teaches us what we need. You know, I think this year it was the We're All Gonna Die live series. That was like on top of everybody's work. It was a very quick decision. But George Primavera just made a series that I was like, we can't not be a part of this. He's so great at it and what we've been able to do with him and what our talent are able to bring to the table.

20:15Like, I just knew that we would learn so much from this and that it would provide so much of what we are trying to do next year better. And we were able to say, OK, we can dedicate this team to our live efforts. This will make sure that we have the right, you know, producers and cam and gaffers and this, that and the other. And we've adjusted the lighting a million times. We've adjusted the, you know, this, that and the other and staffed appropriately. So now, you know, instead of, you know, a Swiss army knife of an IT guy, we have Tim who manages Lopati, who came in here not just to help me with my microphone, but also is available for our lives to make sure that we're set up correctly and that he can run a rehearsal.

21:01And that doesn't take away Tim from being able to make sure everybody's needs in this building are met. Right. Or the other way around. You know, so we're looking at what are the needs? How are we staffing teams appropriately? And most of it is through that lens of can we go home at six? Can you have a work life balance? There's no such thing as an emergency after hours, right? Sometimes there is. It's very rare. But most of the time, I'm like, guys, we're talking about digital media and YouTube. This is most of these things that are, quote unquote, emergencies are things that can be handled the next morning.

21:30And we demand that same respect of our external partners as well. And I make sure to try and be as good of an example as I can be of that here in this building. And that's when we look through the departments and make sure that we're hiring efficiently.