How Mark Rober built the perfect creator business

0:00The Colin and Samir Show is supported by Microsoft Copilot. This is something I thought I would never say, but can I share with you my favorite prompt? I mean, like when you say something like that, I have to say yes. Were you going to say no? No, but okay. Just let me hear it. So when I'm researching for a guest or I need to know a lot about a subject matter, I say, make me a podcast about. And when you do that, you're going to get a short blurb about that subject. And then in like two minutes, you're going to get a podcast. So check this out. Welcome to Co-Pilot Podcasts. Picture this, a guy working the front desk at a hotel, making lacrosse videos in his spare time, completely unaware that he's about to become one of the most influential voices in the creator economy.

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1:10Try it for your research. Try it for getting variations of your titles, your ideas. It's one of my favorite tools on the internet right now for our creativity. And now back to the show. What's up everyone today on the Colin and Samir show, we are talking about our trip to go visit Mark Rober and how Mark Rober has built the perfect creator company. The video of our experience is live now on our YouTube channel. I highly suggest you check it out. But throughout this episode, we talk about some of the scenes you didn't see and just some of the things we learned while we were with Mark. Now, we're also going to be talking about Watcher, a company that's built from ex-Buzzfeed employees and a shift they just made that has the internet in arms.

1:53Up in arms? Up in arms. Up in arms. They're not in arms. People are up in arms. Yes. In arms would be like a hug. Yes. Okay. Yeah. You get it. All right. Before we start this episode, I did want to tell you about our second cohort of Creator Startup. It's a 30-day cohort that has a series of pre-recorded videos, exercises, as well as live sessions where Colin and I walk you through the four key pillars of building your creator business. By the end of the course, you'll build a pitch deck, which you can use in your brand deal pitches. And it's also something that just brings you a lot of clarity.

2:27We wrapped our first cohort last month and it was one of the most rewarding experiences to do that and to see the outcomes afterwards. I want to play just a quick clip from a creator named Phil about using the pitch deck. I left the cohort with new knowledge, connections, and a pitch deck feeling more professional and confident than really I ever have in this creator career. And just a few days later, I used the pitch deck that we make throughout the cohort in a negotiation with a big national brand. And I landed my largest brand deal on a single video ever. That deal alone was worth the price of admission of this cohort.

3:02The cohort is definitely for professional creators who are in the business of brand deals, who are in the business of brand partnerships and looking to get clarity in their businesses, as well as get an asset they can use to go pitch themselves. So if that sounds interesting, go to colinandsamir.com slash creator startup. Learn more about our second cohort, which is going to be launching soon. All right. And now for today's episode.

3:32What a week for Colin and Samir right now, or I guess a month. What a month. I mean, first off, welcome back. Yeah. Thanks, man. I've been all over. I've been in Italy. I've been in India. I'm now back to your wedding next week. This is a crazy time. Yeah. I mean, this company is basically 95 % weddings and wedding prep at this point. Yeah. I mean, the first part of this year, I guess the first four months of this year, we've been traveling quite a bit as well. Not only did we go to Greenville, but right when we got back from Greenville with Jimmy, we went and just turned around, got on a plane and went out to San Francisco to see Mark.

4:05On very short notice. Very short notice. Yeah. Called us and told us that he had one of his biggest productions, actually his biggest production ever happening. And, you know, told us a little bit about Crunch Labs and just some of the development of his company and invited us to come up and see it. But this is on very short notice. It was on short notice, but it was really fun. Like I've always enjoyed our time hanging out with Mark. Sometimes I actually feel like when we go up there, we don't have enough hang time. We're like shooting and like, you know, he's shooting and we're more like behind the scenes.

4:36It's like, she's just a great guy to hang out with. Especially this trip, because we flew out very early on a Thursday morning and we had to take flights back around like 8 p.m. So we only had a day. Yeah. Yeah. It was, you know, with everything that Mark does, I'm always like extremely impressed. Like the first time when we went up there, his organization was pretty small at that time. He had just launched Crunch Labs when we did our first interview with him. But the thing that impressed me was his passion for video making is just so, I think, palpable when you're with him. He was editing all night the first time when we saw him.

5:18It's very core to who he is, considering he has, what, upwards of 30-something, 40-something million subscribers? More now, and we'll get to that. Someone in the Discord asked, how did Mark Rober gain more subscribers than Mr. Bases Month? We'll answer that question. For how large his channel is and the impact it has, at that time when we first visited Mark, a little over a year ago, the fact that he was the one up until four in the morning editing the video speaks to how much he cares about the core videos and the message that he's putting out. The one thing, and this will play into the rest of this discussion today, but the one thing that I love about Mark is that you understand that if all of this went away, he can still make YouTube videos himself.

5:59And I think that as creators grow, you get further and further away from the process and more reliant on a lot of other factors to make your videos. But Mark is like in timelines, editing, doing voiceover. He is one of those creators, similar to Ryan Trahan, who's just like, yeah, I can just make this video myself. Before we go much further, can we take a second and talk about what we don't like about Mark? Yeah. Yeah, yeah. I don't like how fit he is. Agreed. I don't think it's fair. I was hoping you would bring that up because he's gotten fitter. Yeah, he's getting fitter. And I don't think I have since I've seen him last.

6:32Agreed. I want to say it inspired me, but it didn't. Yeah. That's basically it. Yeah, that's it. That's it. So everything else about Mark I find completely delightful. This video that we made is also part of our effort to make more behind the scenes, more docu-style content, similar to what we did with Ludwig earlier this year. But when we went up there, we actually weren't certain what exactly we were going to tell a story about. We knew that Mark was launching this new product, Hackpack, with Crunch Labs. And right when we got there, when we walked into his space, into Crunch Labs, you started to see the walls were opened up, and there was new offices.

7:11And we started walking around, and there was all these people. and it was unlike what it was like in 2022 there i mean to just go by the numbers there's there's 54 people work at crunch labs now and when we were there there were around 10 max it was eight yeah yeah so like it had the company had grown and he had taken out all the space and it was like whoa man this is this is like an operation now and you could feel like crunch labs from a creator product perspective, I am a customer of Crunch Labs for my nephews. I bought them a subscription as a gift and they're still on subscription for almost two years.

7:47They love it. It's like, they still love it. I thought maybe they would get over it at some point, but they still love it. Love receiving the boxes. They watch the exclusive content with Mark. And as a product, I think like Prime and Feastables get talked about a lot. Chamberlain Coffee even. And a lot of that is because of us. We do talk about those products a lot. But Crunch Labs is this incredible product for multiple reasons. One of them being that it's a subscription. When you look at Feastables and Prime, you can go to Walmart and buy a Prime for, what,$1.70, right? Or like two bucks. Yeah.

8:29Doesn't mean you're going to buy another one. When you subscribe to Crunch Labs, it's coming every month. Again, my credit card has been on subscription with Crunch Labs for almost two years. Yeah. Which also speaks to, you know, not only from a revenue perspective, but the incredible engineering feat that these designers at Crunch Labs go through where they are tasked with coming up with a new engineering toy for kids right now that launches on a monthly basis. And it just never stops. So it's pretty incredible what they're doing in Crunch Labs. The second reason I think Crunch Labs is so incredible is Mark's ability to naturally integrate it into his videos.

9:07And I don't think this is talked about enough in our space. If you're going to launch a product, how are you going to talk about it? Can the product make the videos better? We call it content product fit, right? Your ability to seamlessly integrate the products. There are a lot of creators who start businesses and then when they talk about their businesses on their channel, it feels almost like an ad integration. exactly because you're breaking because like even with jimmy like how is how does jimmy naturally talk about chocolate in all of his videos or logan talk about feastables or emma talk about chamberlain coffee or even us talk about our newsletter or of course of course or of course yeah which i think is a better comp because it's something you have to pay for yeah yeah and i i think um mark is like the most thoughtful when it comes to how he does it and if you just watch his voiceover and watch how he does it in every video you're just like wow this is this is a master class in product integration and what really struck us when we were in san francisco this most recent time was being at the production so this is a production for a video for the main channel and he's firing off this massive turret gun firing almost like nerf style darts that are aimed at drones in the sky, and he's trying to shoot down drones, right?

10:25So that's kind of like the premise of the video he tells us is we've got these self-autonomous, these flying drones. What does it take to actually shoot them down? That's kind of like the setup, and then he gets into the science of how that can actually happen. So it's cool. That's a video that is cool no matter what, and it's perfect for Mark's channel. But we find out when we're there that the massive turret gun they're using to shoot down these drones with is an enlarged version of a much smaller one, which is the first product as a part of this series hack pack, which is basically Crunch Labs, but designed for older audiences.

10:58So this whole video is actually about a product that Mark sells and that you can have in your home. Yeah. The amazing thing is though that like, it's not necessarily an ad because it has so much value to it, right? The video is educational. Mark is a really good teacher. So with the video being educational, You're engaged the whole time. But yeah, then you are like, well, now I feel like engineering. It's so good you don't realize it's an ad. Yeah, it's so good you don't realize it's an ad. And I think it's the type of video also that Mark wants to make, whether it's an ad or not. And that is so unique.

11:33And the video that his audience wants to watch, whether it's actually an ad or not. I think it's something he brings up, but like the monetization of IP, like really taking a step back and going like, how are you building IP? And the thing he brings up in the video is the Cars movie. You have the Cars movie and then you have the Cars toys. And that's when like entertainment and IP is really, really lucrative is when you can connect a product to media. And it's happening a lot in our space, but the style of which it's happening is very different actually across all products. It obviously started with merchandise like clothing, right?

12:14but this one um with what he's doing with hack pack now and like increasing the age that people can engage with this it speaks to two terms that come up in the video cac and ltb which are classic commerce terms cac being customer acquisition costs where it's like okay yes mark's videos cost a lot of money now he talks about it at um to get to break even on his channel it's five hundred thousand dollars a month he's spending six million dollars a year to make YouTube videos, but how many people is he reaching, right? It's like 20 million or 40 million per video. That's crazy times 12. So his customer acquisition cost is actually really low because he also has a back catalog of videos that are just continuing to generate organic viewership.

12:56He's not paying for distribution where a typical company would make an ad and then pay for the distribution of that ad on YouTube. He's making these videos and they're organically getting 10, 20, 30, 40 million views. So it's customer acquisition cost. The cost to actually get a customer into Crunch Labs is low. And then once they're into Crunch Labs, they're a subscriber. Have you been giving a lot of speeches lately? Listen, come on. I've had to, my brother has had 12 wedding events. It's like a, it's a big fat Indian wedding. Yeah. Across three continents. Yeah. Not only have I been giving a lot of speeches, I've been in multiple time zones this week.

13:40Let alone the dances. Let alone the choreographed dances. You know what? Should I post one of them on Instagram? Please do. I was thinking about it. No one asked for it, but I feel like people are asking for it. No, I think - Like, I can feel in the air that people are like, just post the choreographed dance. Yeah, that feels something like deep down inside that you would like it out, but sure, people are asking for it. It was hard to learn, man. It's not easy to learn a choreographed dance. Samir, you say this to me often. You think my life is easy. I don't think your life is easy. But you do.

14:04I feel like you do. No, I don't. I fully I acknowledge that I don't want your life I have to give a speech at your wedding too you know yeah I appreciate it thank you for doing that and there's like a weird amount of pressure it's like too much pressure for my wedding yeah I spoke at your wedding I know and there was a weird amount of pressure yeah it's a weird amount of pressure yeah there's only like this guy must know him really well there's only two guys and Colin and Smear so like looks like the other one's telling a speech the other one's telling a speech about the other one yeah so there's a lot of pressure on that that's true Well, if you need help, let me know.

14:36Anyways, I think what you were getting to was LTV. Oh, LTV. Customer acquisition cost is low. Yeah. And the next thing we talk about in the video is LTV, which is lifetime value. Yeah. And specifically now with Hackpack being designed for older audiences, people and kids really can get involved in Crunch Labs at an early young age. And as they graduate and start to learn more, they can keep the subscription going with Hackpack, which is a little bit more advanced and allows you to do elements of coding and takes it to another level where really you could be a full-on adult and still, you know, find Hackpack interesting and valuable.

15:11So the, like, the real advantage of the creator economy for commerce is, is dramatically low CAC and dramatically high LTV. But most products are not subscription products in our space. Most of them are consumable products or, you know, especially if they're physical products. Like Jesser just released his, mini hoop in Walmart. That's playing like a quantity game, right? It means like how many individuals can buy one of these. And that's a hard game to play. Same with the game that Jimmy's playing or Logan's playing. Those are more repeatable, but they're not automatically renewable repeat purchases.

15:54And I think just that, you know, I would urge if you haven't watched our video yet, go check it out. If you have watched it and you already know all this information. Hopefully you've been enjoying this. We are going to talk about some different stuff. But I will just say that seeing Mark's operation, I was like, oh, this is how a creator company is supposed to work that has commerce attached to it. It's fully vertically integrated where you have the videos promoting the product and the product is now financing the videos. That's the interesting thing. And I think the shoot that we were at, the fact that it cost $400 ,000 and it was his biggest production to date for a main channel YouTube video was very representative of where he's at with his Crunch Labs journey.

16:37You know, when many creators, including Mark, start a new venture or a new company, the money from the YouTube videos goes towards funding this new venture. And it's a big risk, right? You're putting money into it. You are also putting your name on the line in a different way again, but you probably have a little bit less control, right? Like there are tons of people who work at Crunch Labs. Mark's not making every decision like he was on the YouTube channel a year and a half ago when he started it. Yes. And stuff that doesn't show up in the video is us sitting in on other meetings with Mark. He's involved.

17:08He's very like involved, but in the minutia of like the email copy. But because he has to be, if something happens with Crunch Labs, it doesn't just impact Crunch Labs. It impacts the Mark Rober brand. And so that's where a lot of these creator companies start is YouTube videos. The money from the YouTube videos funds the company. It's a risk in the beginning, not only financially, but also a brand risk potentially. And now we arrive and the script has flipped here where Crunch Labs is doing so well that it's now up to 50 employees. And the revenue generated from Crunch Labs is funding some of these productions and allowing him to make bigger and bigger videos and taking the pressure off of him to be an advertising backed business.

17:51So I think the reality, and this is something that I think we're going to see across the board, is that everyone is trying to solve how to not be a ads reliant company in the creator economy, right? Like how do we not rely on the ad market? Because the ad market is volatile. It always will be. It always has been. It's a volatile game to play. And, you know, Mark talks about in the first six months, they had what, 100 ,000 subscribers to Crunch Labs? Yeah. They thought they were going to have that in the first two years. Two years. And now they've shipped a few million boxes. He says millions of boxes.

18:27Yeah. Millions of boxes. In the video, we do a little bit of math and rough estimates. But if the average price relatively for one of these boxes that gets shipped every month is$27, and we conservatively say they've shipped$2 million, it's$54 million in revenue. It's definitely more than that. Oh, my gosh. It's much more than that. And keep in mind that, again, these are subscriptions. So this just keeps rolling and keeps going and keeps building. So that then gives you this bed of predictable revenue that now allows you to operate as a content creator in such a different way. And there's a lot of lessons to be learned here.

19:03And I think the first one that really sticks out to me, though, is like, although Mark's videos cost$400 ,000,$500 ,000 now, I believe Mark could make great videos without all that. Yeah. And I actually think that's one of the most important lessons. Like he moved at a pace that was like, I can make these videos by myself. I'm not leaving my full time job till I have 10 million subscribers. He's like reluctantly growing. And that's supportive of what he's doing. And credit to Mark, you know, the money that's coming in from Crunch Labs, yes, some of it's going towards the YouTube videos, but it's not like he's just stashing the rest of it and just like stockpiling it.

19:41I know he announced recently, and we spoke to him while we were there, about an initiative where he's investing around$10 million in getting more STEM learning into schools. For free. For free and making content specifically for schools. Okay, we got to move on from Mark because it sounds like we're just like really... Really into Mark? Yeah. And I am. I think coming off of that trip, I was like, that is an almost perfect creator company. Except for how buff he is. That's the issue. Gotta be the only issue. So I think this does speak to a macro trend right now that I want to talk about, which is the volatility of the ad market.

20:19And I think this year more than ever, you and I have been talking about this a lot. I feel like I come in every day and I'm like, dude, I feel like the ad market is so different than it's ever been. It feels right now like, which is rightfully so, a lot of companies I think are looking at how they're spending and going, okay, if I was going to spend$100 ,000 with a YouTube creator, could I spend$10 ,000 with 10 short form creators and spread my spend? And I think that is a reasonable approach for advertisers because also short form content is more like dedicated video about your product. You probably can negotiate like a paid media usage rights for it.

20:57And you're just betting on 10 different creators rather than one. And it makes sense to me that the spend actually in the creator economy might be going up, right? There might be way more spend, but it might be spreading in a way that's taking some of these big companies and putting their models into question. One company that we saw just change their model totally is Watcher. If you're unfamiliar, Watcher is a group of former BuzzFeed employees who left to create their own studio. And a lot of BuzzFeed employees did this. Try Guys did it. And they've been making videos. Their videos get millions of views.

21:37It's not like they don't have an audience. They have a big audience. They raised money. They've transformed to a full-on company. Yeah. They have a full-blown media company called Watcher. But on Friday, they released a video that was titled Goodbye YouTube. And they announced that they are moving away from publishing their content on YouTube and everything will be behind a paywall. It's about$10 a month to subscribe to Watcher TV. And they will post the first episode of their new series on YouTube, but then everything else is behind a paywall. And the audience, as expected, is upset. And it really puts into focus this conversation around like, these guys are generating millions of views, but they need a more reliable monetization model.

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23:08Save up to 40 % your first year. Visit LifeLock.com slash podcast for 40 % off. Terms apply. which you know was the problem for a lot of big media companies for vice and for buzzfeed and companies that expanded you know obviously different scales but there was an interesting comment on their goodbye youtube video one of the top comments that read you either die a hero or live long enough to see yourself become buzzfeed that's an interesting comment because i think what this person is saying is that you either die a hero which from my assumption means you go down swinging, making the stuff you want to make.

23:44Right. Or you live long enough to see yourself become BuzzFeed, which means that you've become a full on media company and you have to make certain decisions based on shareholder value probably. Yeah. Yes. And there's an underlying darkness to that because BuzzFeed has not been doing well. Right. Like they're saying like you live long enough to see yourself become BuzzFeed. BuzzFeed, not necessarily a thriving media company who's figured it out. Yeah. So, I mean, look, Watcher in the last 28 days has done 11.6 million views, has gained 40 ,000 subscribers, and the revenue estimate on view stats is like $80 ,000.

24:23And additionally, they have a Patreon with over 5 ,000 paying subscribers at an average of$10 a month. It's another$50 ,000, right? So let's just say we're somewhere in the ballpark of like$150 ,000 a month that they're generating. Yeah. The issue is you have three founders of this company. You probably have 15 employees, right? And you're looking for a path to growth and probably more reliable income. And as people are building media companies where they're raising money or have a ton of employees and overhead and studios and high production values, they like this is enough money if there were probably three guys just making videos editing their own videos but we're getting to the age where people are in their mid to late 30s running these companies expecting to build media companies like what are the media companies that we've seen in the past it is buzzfeed vice right like where that comment is kind of true it's like where else do you go with it?

25:25Unless you're like a solo creative making videos. Yeah. And the beauty of YouTube, you know, you talk about this a lot, but the best business model generally is if you keep your production costs the same and are able to increase your margins, right? Grow revenue, but your production costs stay the same. And many times that's also what audiences like, right is when the content feels diy it feels homemade it feels like you're truly connected to the creator and it's not trying to be tv and there were comments on the watcher video that also said no watcher fans are thinking i wish watcher had better production and another comment was talking about the production value saying none of this was ever needed i was happy when it was just you guys in the beginning what do you think's happening like is it is there a pressure on production value right now?