The Man Behind MrBeast’s $500M Business Portfolio (#475)
Creator Businesses, Feastables, Twitch, and Night Media - July 18, 2023 (over 1 year ago) • 01:18:17
Transcript:
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Shaan Puri | We'll bleep out every mention because this is the **0 Clout Podcast**—a **no clout chasing** podcast—and we have a **no clout policy**. We did not...
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Sam Parr | we did not wanna do that wait but do we have to use his face on a thumbnail | |
Shaan Puri | no we're gonna blur it out | |
Sam Parr | I think we have to put like his face and then Reid's face next to it and blur out Reid's face. The thumbnail is like "The Man Behind the Scenes" or something ridiculous.
We're live now! I was Reid. I went and listened to a bunch of interviews. I did the... I forget the guy's name. I like him a lot, the financial YouTuber in Vegas, and then I watched...
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Reed Duchscher | oh graham stephan | |
Sam Parr | Yeah, Graham Stephan. Then I watched Samir and Colin, and a few others that you did, including your channel. I was like, "Sean, what if we just don't say the word the whole time?" Because he's great, but I know I've learned a bit about it.
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Shaan Puri | you know | |
Sam Parr | let's just not mention it once | |
Shaan Puri | It's a bad business decision. You're not going to get the views, not going to get the clicks, and you're not going to get all that stuff.
But I don't really care. In fact, it's actually a great business decision to not be chasing the algorithm. So I say we just talk about whatever's actually interesting.
I think it might be... no bleep. So yeah, I think we might be able to go the whole episode without it. Let's try.
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Reed Duchscher | It's only up to you guys. The Colin and Samir videos took off. I think we expected it to do well, but I don't think I expected it to get whatever it's on—4,700,000 views. But yeah.
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Shaan Puri | you're like who's counting as accurate as of today but who's counting | |
Reed Duchscher | is it accurate | |
Shaan Puri | yeah that's that's pretty much the exact number | |
Sam Parr | How do you describe yourself? You're the founder of Knight Media, but Knight Media has a studio division. You have Knight Capital, I believe. I mean, Knight Media in itself is fairly simple. It's just like Endeavor or one of these other agencies, but it's a different genre. How do you kind of describe what you do?
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Reed Duchscher | Yeah, we've started to call ourselves a **creator holding company**. At the center of the business, we represent talent, and that's been consistent since I started the business in 2015.
However, we've built out these other verticals now. As you mentioned, we have a **venture studio** that has created things like **Feastables**. We also have a studio that makes shows on streaming services. Additionally, we have a **venture capital fund** called **Knight Ventures**, which is a $20,000,000 fund. We also announced **Knight Capital**, which is a $100,000,000 growth fund.
For us, it's like a platformized creator holding company. Early on, it was much easier to just say, "I'm a talent manager." Now, it's a little more confusing when I say, "I can be entrepreneurial, I can be an investor, and I'm also a talent manager." So, I kind of play in a lot of different spaces.
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Shaan Puri | I think it's great because talent management seems to be a horrible business from what I can tell. I've met a few talent managers, and basically, you're either talent poor, in which case your business sucks, or you get talent rich. But then your business is always hanging on a thread of this one whale or two whale relationships.
Even then, the value you might create a lot of value, but the value capture is fairly small compared to what you're doing now. You have this investing vehicle, and you have all these other components. You said you have a studio making shows for streaming. What have you guys made? Have you guys made anything that's come out?
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Reed Duchscher | We did a lot of stuff early on with YouTube Originals, and that was kind of the emphasis of why we wanted to get into it. Netflix, HBO, Hulu, and all these places started to ask us to make shows with them.
So, you know, "Creator Games" and some of the other things that we did with YouTube Originals led us into what we're developing now. I don't know if I can technically say anything about what's coming out, but I'll just say there are cameras around constantly as well.
We have a few things: one within scripted, one within non-scripted, and then we're working on a few different documentary-type projects right now. So, we'll have, I think, a pretty decent slate by next year. We'll see how the writer's strike and everything plays itself out. I think that one's been a little interesting for us to get used to.
But yeah, we'll have a bunch of different things coming out in the summer of 2023, so sometime in early 2024.
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Sam Parr | Is the agency business... Sean was joking, but he's being serious in that it's a bad business. Is that actually a bad business?
Because when I look at it, I mean, I'm totally outside of Hollywood. When I see someone like Ari Emanuel, it looks like his personal cash flow is pretty decent and on the rise.
Versus a lot of startups, you know, you're kind of in poverty until you have some type of liquid event. It seems like you guys have some type of... well.
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Shaan Puri | Let's explain the structure. So, what is the structure of a talent agency?
First, you basically recruit talent. You say, "Okay, I'm going to help you with the business side of your operations, or get you brand deals, or get you things that you want."
Now, in the world of YouTube, are those exclusive or non-exclusive? For example, for an NBA player, their manager or agent is their exclusive representative. They could fire them, but they can't have multiple people bringing them deals. It all has to go through that person, and they get a cut of everything.
So, is it usually exclusive or non-exclusive when it comes to YouTube?
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Reed Duchscher | I think it depends on the type of management company. We've always kind of sat on the fence of exclusive.
I think the interesting thing about talent management businesses is that they generate a lot of cash. Most of the management companies that you look at, that have actually started to create things, like the big Hollywood agencies—such as 3 Arts Entertainment, 360, and Brillstein—are the ones that have built and launched some of the biggest shows.
For example, shows like "It's Always Sunny in Philadelphia" and "Seinfeld" are some of the projects they have back-end deals on, which they will have in perpetuity. Those businesses generate a lot of cash.
I think the thing that they've struggled with is how to build something much bigger than just this cash-generating management company.
When I started Knight, the management company was really like the wedge of access into everything else. That's how I looked at it. If you could represent the biggest stars, I wanted to start with digital creators.
Starting this business by myself outside of the Hollywood system was very hard. It was difficult to say, "I'm going to go sign an actor, actress, or musician," because that is very much dominated by the Hollywood sphere.
So, I knew that it would be much easier for me to build a wedge in digital and go represent, you know, I started with Dude Perfect in 2013, but to go represent digital creators and build that wedge, then use that as the access.
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Reed Duchscher | To either continue building a bigger management company in other verticals or to go build something within a venture studio, having a venture capital firm like the management company gives you access to everything else.
That's how I saw this in 2015. I think that the managers who realize that—there are some really good ones who have realized that. Mav Carter, I think, realized that pretty early on. It's like the management business is kind of the means to the end to build uninterrupted.
Some of the other things that he's doing with LeBron, I think Scooter is probably the best example of what Ithaca became off the management company.
So that's really how we've thought about it. Management is the core of our business, but it really allows us to have a wedge that gets us into everything else.
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Shaan Puri | So that kind of proves the point, right? If a business has to be a means to an end, it's probably not the best business to stay at. You mentioned a couple of those; they sound like pretty cool businesses.
So, Maverick Carter is LeBron's longtime friend. I think they met in high school. Is he part of the high school crew for LeBron, or did he come a little later? I think one of them came later. | |
Reed Duchscher | I think he was... I don't know the full story. I think Rich Paul came later, after high school. I believe Mav was actually a high school friend and became his manager. They went on to, you know, now have a production company and a few other things.
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Sam Parr | That seems like one of the few times that would work out well. By the way, you're like your high school buddy, taking the reins. So good, good, good for them.
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Shaan Puri | And so, they have a company that does, you know, basically production and maybe investing. I think they own a bunch of pizza chains and other things like that. So, they do investing and production.
You mentioned Scooter Braun and his business. What is his business? That sounds like it might be a fantastic business. What is it?
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Reed Duchscher | Well, it started off... I mean, everyone knows the story probably. He met Justin, or found Justin on YouTube when he was really young, reached out, and you know the rest is kind of history there.
But he ended up building a music management company that was really, I think, the cash cow of that business. It was more about touring, right? With Ariana Grande, Justin Bieber, and some of the other people. Then he sold it to Hive about, I want to say, a year ago or 18 months ago.
They started either buying other management companies, buying music catalogs, and doing a lot of different things right now. He did build quite a few things with some of the talent. I know Justin and him built... I can't remember what the clothing business is, and there were some other auxiliary businesses that came out of Ithaca. They also did a lot of investing, a lot of venture investing. And so, I...
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Shaan Puri | So, he sold it for $1,000,000,000. Yeah, he sold his media company, Ithaca Holdings, to HYBE for $1,000,000,000. I think that's because it had those kinds of royalties on the music itself, not just like the touring, which might, you know, stop tomorrow.
Who knows what happens in the YouTube world? There's no royalties structure, correct? If you're a talent manager for Twitch creators or for YouTubers, you get a cut of these brand deals, 10-15%, whatever it is. But there's no royalties; you have to build other IP to get the royalties, right?
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Reed Duchscher | Yeah, when there's also no backend deals, like I said earlier, where you know, Brillstein or some management company in Hollywood maybe helped launch "It's Always Sunny," and now they have these residual checks coming in every single month or every single year, that also doesn't exist in the digital space.
So we had to figure out what that packaging business was for us, and we ultimately landed on the idea that it's business building. We think some of the biggest outcomes for celebrities over the last decade have been through products. Right? Beats by Dre is probably the best example. Vitamin Water was another one where athletes and different people had equity in those businesses.
So we think our packaging business is essentially this business building, which we call Knight Labs. A lot of different things have come out of that now. The management company has then allowed us to build these businesses with creators, where we take equity. We believe that this business is much more interesting long-term than just continuing to stack a management business, which some of these companies do very well.
You know, there are 30, 40, 50 million EBITDA businesses a year. I think they're now trying to figure out what to either build on top of this big cash-generating business or if they should just keep doing it because the partners every single year are making $3, $4, $5 million a year.
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Sam Parr | Do you have your own Night Media, Night Studios, or your wholly owned thing? How many staff do you have at the moment?
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Reed Duchscher | I believe we're just over 60, so 63 full-time within the Knight ecosystem right now. Some of the teams are relatively lean. I would say our ventures team is lean; it's like 3 people. Our studio team, which is our venture studio, is also relatively lean with about 6 members.
The majority of the company consists of talent managers and individual pod systems. In these pod systems, a talent manager will have a junior manager, multiple coordinators, and maybe an assistant under that pod. Each pod will represent anywhere between 5 to 7 creators on average.
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Sam Parr | and are you managing someone as well as running the 60 person operation | |
Reed Duchscher | I just managed... that happened about 2 to 3 years ago. I realized this was taking up way too much of my time, and also, it was the best use of my time.
This was really when we had started Festables as an idea. I was helping him produce creator games. There was just a lot going on while he was also growing, doing multi-language projects, and all these other things.
That's when I fully rededicated my time to everything that was going on on his end.
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Sam Parr | So, you're able to get your cut from managing him as well as from owning the 60-person company. Yeah, so in that regard, it seems like things are pretty good, even though you want to...
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Reed Duchscher | Go Big Management Company. So, yeah, things that I think are always a little hectic. Most of my focus right now is on Feastables. I think you guys have seen the chocolate bars. That, to us, is like... I and I are probably focusing the majority of our energy on that business right now just because it's growing so quickly.
We just launched in the UK, and we have other global launches that we want to do this year. It's just building into 2024. I knew this would eventually happen where you represent a creator, and then the business that you're starting becomes the big opportunity that you really want to chase.
We think Feastables is really turning into that, and so I've directed a lot of my energy toward that business. It's slowly, slowly consuming my life at the moment. | |
Sam Parr | Before you started Knight Media, what interested you? What were you aiming to start instead of that?
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Reed Duchscher | Well, I grew up watching *Jerry Maguire*, probably like everyone else. I wanted to be a sports agent; I wanted to represent Rod Tidwell. I wanted to be that bigger-than-life agent representing an NFL football player.
That's what I wanted to do. I knew that because I played football in college. In my freshman year, I realized that guys are built different. I couldn't run a 4.3, and I wasn't a 225-pound wide receiver that was 6'5". I knew that playing in the NFL was going to be very, very difficult, especially seeing the level of competition from high school to Division 1 football that I was at.
I started noticing that a lot of the players I was playing with were going to the NFL. Some of them were getting drafted, and some were having NFL careers that lasted 10 years. So, I positioned myself to be a representative for those players. That's really what I wanted to do.
Then, I stumbled upon YouTube in 2013 and kind of just became obsessed with it. In college, I didn't watch YouTube; I was so focused on football that I didn't really watch anything on the internet. That changed the trajectory of my whole career.
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Shaan Puri | I saw this t-shirt on Instagram yesterday. It said, "Creatives are the new athletes." Somebody was wearing that, and I thought to myself, "That's kind of a lame t-shirt," but I see where they're coming from. You know, I get what they're saying.
I don't know if you've seen, Sam, these deals that creators from Twitch are signing with Kik.
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Sam Parr | what's a kik is like I heard you talk about it what is it it's just a twitch alternative | |
Shaan Puri | So, Kik is basically a Twitch alternative. But the interesting part is that it was started by this gambling company, Stake.
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Reed Duchscher | so we | |
Shaan Puri | Talked about Stake before? Remember, it's this company that just absolutely prints cash. One of the main ways, or one of the best growth mechanisms, was they would pay streamers or give streamers money to gamble on Stake live on stream. So, people got to see...
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Sam Parr | didn't they give drake like a jet | |
Shaan Puri | yeah they gave drake like $20,000,000 and whatever | |
Reed Duchscher | But the issue was you couldn't do it in America, right? So a lot of the streamers, they would have to go to Mexico or Canada. It's still very much like that; you can't do it in America.
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Shaan Puri | yeah you gotta get on a boat go to international waters and start your stream basically | |
Reed Duchscher | Yeah, and a lot of the guys were doing this in Mexico. So now, Kik basically came in. They started Kik as a distribution platform, like a top-of-funnel for this gambling business. Who knows if it's going to be legal in the U.S. in 2 to 3 years?
They actually have Stake.us that you can play in America. It's just that a lot of the games you have on Stake.com are not available there.
But yeah, there's a lot of controversy on this topic because Twitch banned it. That's why Kickstarter is involved, because Twitch banned all gambling on their website.
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Shaan Puri | it's like there's these stories sometimes in business where it's like like I have a buddy who's like this the guys who bought milk road they own one of them started this thing called jm jm bullion which is like a gold it's the biggest website for buying and selling gold online and I was like how'd you do it what's the origin story and he's telling me the origin story and and really when he started he was just trying to be a lead gen for like somebody else would fulfill the orders he didn't have any gold inventory he wasn't shipping anything he was like dude I'm an affiliate marker I just I get the lead from Google somebody places the order I go tell the the the company who actually does this thing to go sell it to go send it to him and what happened was that they were they were kinda yanking him around changing the rates and eventually they just cut him off and he's like oh my god they just killed my business like they don't want my customers like what do I do he's like well either I take this 0 or I create the whole like distribute I create the whole supply chain myself I basically go I get the physical inventory I get the warehouses and we start shipping this ourselves so that's what they did they ended up becoming bigger than the other company and I think they bought them along the way they bought that other company that had rejected them and like went on to become the number one site for this and it's kind of the same the same thing that you're talking about here with like kik was using twitch as like a distribution platform and then when it didn't work they're like alright we'll have to make our own twitch which is kind of like a huge endeavor but what they're doing is they're giving streamers these contracts that I kicked the tires on this to figure out if it was real because they gave xqc who's one of the top twitch streamers like a reported 2 year $100,000,000 contract what so that means that this guy is making more than lebron james playing for the lakers this year like per year that that would be the the deal and same thing and and crazier than that is that he doesn't have to he doesn't have to stop streaming on twitch he could still stream on twitch right and so when you first hear this this sounds crazy it's like you signed a nonexclusive $100,000,000 deal for some kid in his bedroom playing video games that sounds insane and then they did that with a bunch of other streamers so a bunch of other streamers are also making you know 10,000,000 20,000,000 $30,000,000 a year to stream on kik right now and the big question is will this strategy work you know will kik become a thing will it just die will this give stake a bunch of customers or is | |
Sam Parr | This how... how new is the website? Because Kik.com, according to SimilarWeb, has like 150,000,000 monthly uniques already.
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Shaan Puri | yeah so this has been going for how long like | |
Reed Duchscher | 6 to 8 months maybe | |
Shaan Puri | yeah like within this year basically they've been they've been doing this and so | |
Sam Parr | that much traffic that fast I mean that's one of the faster growing websites out there | |
Reed Duchscher | Yeah, so what happened here was that 22 Twitch streamers, when they banned gambling, couldn't stream on Twitch anymore because their brands were essentially built around Stake. One of them was Trainwrecks, who had a really loyal following on Twitch. They also signed Aiden, and so Trainwrecks and Aiden started streaming on Kik, which drove a lot of people over to that website.
Then, XQC and everyone else they started signing were just driving more and more traffic. It started to become a thing of like, "Anti-Twitch, go to Kik."
Also, the one thing to point out is the ad revenue on Twitch. If you're a partner on Twitch, it used to be 70/30, but they brought it down to 50/50, which sparked outrage on the internet. Then Kik came out and said, "We're going to do 90/10 for everyone. It doesn't matter if you're a partner or not."
We're going to lose an incredible amount of money on the content business and just make sure that Stake.com remains like the cash cow. So that's the big thing that they have against Twitch: they don't really care if they have a profitable streaming business or not. | |
Sam Parr | But do they? How'd they find it? How'd they finance this entire thing? I thought, Sean, that we had talked about these guys. Was it the founder of Stake? Is it like a 28-year-old? Or back then, I think we were talking about a year ago, it was like a 26-year-old guy who bought like a $50,000,000 mansion in Australia. Is it still like a bunch of young guys doing this without financing?
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Shaan Puri | I mean not without financing the financing is stakes I mean | |
Sam Parr | outside financing an 800 | |
Shaan Puri | had like an $800,000,000 dividend last year or something | |
Sam Parr | like that | |
Shaan Puri | what like that business is just ultra ultra profitable and so their competitive advantage is basically that they they're like reid said their business model is not ads on kik or subscription cut it's can we funnel these users to come gamble on our in our casino and we have a casino twitch doesn't have a casino that's the bet that they're making the other thing that I because I tweeted this out I was like I said this thing is fishy I said they're paying xuc a $100,000,000 for 2 years of nonexclusive streaming are they a lying b is this like incentive based or some like tiered like you know some some like stock deal they're inflating the value of the stock or something like that to make the number set the headline number sound really big are they just laundering money is that what this is like what what is going on here and basically it was here's the here's what the the the answer was basically it's a combination of cash and equity so their equity part might go to 0 so that that part of the deal might might go to 0 or it has incentives where it's like it's based on the number of customers you bring over and the second part is that the non exclusive part is basically so that he can just like funnel traffic from twitch to kik so if he just turned off like this is like a big deal like when Microsoft poached ninja from twitch he had to stop streaming on twitch that day and like go stream on this other platform and so most people on twitch are just like kinda like out of sight out of mind you know some people followed him over there to check it out but like ultimately their habit was still built on twitch what these guys are doing is different he streams on twitch and he says alright I'm gonna finish my stream or I'm gonna like play the big game over on kik and then he just like it's like a a call to action he just funnels a bunch of traffic over over and over when I was at twitch we did the same thing when we were losing foothold in one market in brazil we acquired this huge youtube streamer and I was like and they were and it was an exclusive deal but he started streaming on youtube while he was streaming on twitch and I was like and at first people in the company were like yo what the hell man you just spent all this money 1,000,000 of dollars like signing the streamer and he's still streaming on youtube over there for free like what's the deal and I was like actually wait this is probably excellent because all we have to do is just get him to like block part of the screen or like end his like do a cliffhanger and be like I'm finishing this over at twitch and he'll just keep bringing traffic over and that's what he did we just basically let him violate his deal because we realized actually he was smarter than us that was a better funnel for us than than an exclusive deal would have been | |
Sam Parr | That's insane, Reid. I imagine you've talked to these state guys. Well, is this like a Sam Bankman-Fried type of company, or an FTX company, where they're just a bunch of crazy young kids? Or is this like a dialed-in thing? What are these guys like?
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Reed Duchscher | I don't know them well enough, honestly, to know if it's going to become a problem. I would say that from my conversations with them, they seem like they have this thing under control. It's generating a lot of cash. The FTX thing, the company wasn't generating any cash when Bitcoin went down. It just completely fell apart.
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Sam Parr | But I don't mean is it a scam. I mean like young people just being wild. You know, like imagine a 27-year-old making an $800,000,000 dividend. Just like a wild child type of setup.
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Reed Duchscher | I haven't seen that from them, but it seems like they're a little bit more laid back in Australia. They don't really communicate with a lot of people, so I haven't seen that behavior. I mean, that could change.
I know way too much about the deal structures and everything else, and how this stuff works. But I would say I'm pretty confident in Kyck over at least the next couple of years. We'll see where this goes. If they continue to want to do that business, I would imagine Stake is going to just continue to get so big that maybe Kik eventually becomes a distraction. I don't know.
But I would say they'll double down on Stake.us over the next 18 months as states open up and allow them to start doing this.
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Sam Parr | that's insane | |
Reed Duchscher | There was also a secondary business called Rhubet, which was essentially the competitor to Stake.com. I'm not 100% sure what happened to Rhubet, but it's still around.
There are other businesses like Stake, but Stake just completely won because they were able to sign the biggest creators, like Train. They signed Drake, which you guys mentioned.
At the moment, it's a runaway train; they're kind of taking all the market share.
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Sam Parr | In one of your other podcasts, you'd mentioned how a lot of creators think, "Well, I have an audience, I'm going to launch this product." You're like, "Well, that can work for a couple of months, but if you do a good job, this turns into a proper company."
The real challenge, you were saying, is finding amazing executives to actually run the companies and build these into real companies. You said, for example, you had the president of RXBAR come and be the CEO for the burger business or the restaurant business. You partnered with someone, and it sounds like you also had a president or CEO of that company.
What type of deals are you striking with some of these CEOs to make it worth their while to do this?
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Reed Duchscher | Yeah, thankfully, a lot of them realize the opportunity when they come into these businesses. They know that there's an unfair advantage in go-to-market because the creator has hopefully built this massive platform already that gives them instant distribution and access to consumers.
A lot of the people that we interview for CEO positions are actually incredibly excited about the opportunity and are willing to leave their big job at PepsiCo or wherever that is.
So, how the deals are really structured is very similar to any other business. You have a cash basis that you're paying them, and then you also negotiate some piece of equity over a four-year vesting schedule. We've had a lot of success doing that.
For the most part, we usually don't have to explain the competitive advantage to the business. When we start meeting these individuals, they already know. They've seen it; they saw it with Prime, they're seeing it with Feasibles, they've seen it with Happy Dad. A lot of the individuals that we're interviewing already know, and so it makes it a little bit easier for us to get them to leave that specific job.
It's structured very similarly to what a CEO would potentially make if they came in and ran the startup. | |
Sam Parr | and are you funding the company with a bid | |
Reed Duchscher | we fund up to a certain amount | |
Sam Parr | what's that amount usually | |
Reed Duchscher | It honestly depends on the business. I would say it falls anywhere between $250 on the low end and $1,000,000 on the high end. | |
Sam Parr | so feastables you fund that that that's with just a $1,000,000 you think | |
Reed Duchscher | Yep, the big issue with Feastables was, and this is the issue we're now having with some of our consumer products, is retailers. Instead of... so if you started a chips business or whatever, and you didn't have a creator attached to it or anyone that gave you an unfair advantage on go-to-market, you would go to a retailer and they would say, "We want to test you in 100 stores" or "We want to test you in 200 stores."
From a cost perspective, to fund the purchase order (PO) wouldn't be that... like it wouldn't put that much strain on the business. The issue that we had with Feastables was Walmart was willing to put us in all 2,650 or 4,650 stores right when we launched.
So that's becoming the issue with some of these businesses: how do you fund the PO of $6, $7, or $8 million right out of the gate to meet that retail demand? That's the one that we've had to either raise capital or go beg a bank to give us the money as a PO loan.
So that's kind of the issue that we've run into. Even at Feastables, we raised a small amount of capital, and it was really just to fund the 4 million chocolate bars that we ended up selling in Season 1, which sold out in, I think, 45 days. That was the biggest cash constraint to the business. | |
Shaan Puri | Let's talk a little bit about Prime. Prime seems to be just taking over. It's really, really impressive. I don't know how much we've talked about it on here before, but can you just explain what's going on with Prime in a way that would help someone who's kind of out of the loop? Maybe they've vaguely heard of it but don't truly appreciate the extent of what it's doing.
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Reed Duchscher | Yep, so if you don't know what Prime is, it's a hydration drink that was started by Logan Paul, whom many people are probably familiar with, and KSI, who is based out of the UK. I would say KSI is the most popular creator to ever come out of that region.
They very notably boxed against each other multiple times; they were enemies. The story was them coming together to start this business. The company that they partnered with actually made an energy drink called Alani Nu. You see it next to Prime in every grocery store retail chain I go into. It's like Prime sits here, and Alani Nu sits right next to it.
The founders of Alani Nu basically created this drink called Prime, and Logan Paul and KSI came in really as just the marketing engine. They don't do anything operationally for the business; they really just market it. It became like a clout piece to hold a bottle of Prime. Now, these 10, 12, and 13-year-old kids have to have it; they have to drink it.
We've seen some of the... I mean, I saw an article about people saying the FDA needs to go regulate this business because it has too much caffeine in the energy drink. So now there's just a lot of stuff going on about the company, but it's grown an incredible amount. I think... I can't remember what Logan said on one of his podcasts, but I think they did $45 million in revenue in January of this year. That was the last thing that I've seen them say publicly about the business. | |
Sam Parr | I think he said, if I remember correctly, Sean, we talked about it. It might have been 6 months ago. I think he said like $200,000,000 for the year. Is that right?
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Shaan Puri | Yeah, that's the number. That's one number we had heard, but $45,000,000 obviously would put them on a totally different trajectory than that. So, yeah, it appears to be just an absolute monster. | |
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Shaan Puri | who's the who's logan paul's manager who's who's | |
Reed Duchscher | His rep, his name's Jeff. He's on the podcast and he's been the same manager for a long time. Logan talks about him quite a bit. If you watch some of Logan's older videos, he would periodically show up. They've been together for a long time, and Jeff put together that deal. It's been incredibly successful.
We'll see how it ends up. I don't know; I would imagine they're going to want to continue to do this thing for another couple of years and then probably sell it. | |
Shaan Puri | And those guys who created the drink... you said they created a lot of new things, but that wasn't that big. I remember when Prime first came out, I was like, "Who are these guys?" I think it's two dudes, right? Who are the founders of that?
And though they didn't really have a huge hit before that, how did they even secure that deal? Why did they partner with them over, you know, some more established brand? Do you know?
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Reed Duchscher | I honestly don't know. I've never had that conversation with Jeff about why he partnered with this company instead of doing it himself.
I think I would imagine what happened was this company presented them with the opportunity, and it was something that really resonated with Logan. I remember the story of him saying he called KSI and tried to get him on board, which he did.
So, it probably is just right place, right time. Logan was ready to lean into something else. Logan has had a lot of different business ventures over the last 5 years. I mean, this one obviously is far beyond the most successful.
But again, I would imagine it was right place, right time. They liked the products and got along with the individuals who were operating the business.
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Shaan Puri | And the partnering with KSI, were they just actually friends the whole time? Was the whole boxing thing just a sort of frenemies thing? Because that's kind of a genius move, right? You kind of have to give credit to say, "You know, what will make this even bigger?"
Because normally, let's say you're one of the biggest YouTubers. Those people tend to have a bit of an ego. "I am distribution. I don't need anybody else to do this. I don't need to split the pie, especially with my enemy."
So that's kind of interesting. What's going on there?
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Reed Duchscher | No, totally not. They did not like each other. The boxing beef was real; they were definitely enemies.
From my understanding of the story, you know, I've only heard Logan's side of this. I haven't heard KSI speak about it. It took a lot of convincing for Logan to get KSI on board because there was still a lot of animosity in their relationship.
I mean, a lot of stuff was said—personal things about girlfriends and parents. It was a very personal beef that went on in this YouTube space for a while.
So, I think that's why it was so surprising when those two came together to launch Prime. They were the last two individuals you would have ever thought to partner together on a hydration drink.
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Shaan Puri | he said my pokemon was a psa 8 it was it got ugly | |
Sam Parr | yeah yeah | |
Reed Duchscher | But now it's like, for us, it's been helpful because, you know, they launched in Australia and it went incredibly well for them. They launched in the UK, and it went very well.
So, Feastables is like, we're probably 6 to 8 months behind because they had a product and launched a lot sooner than we did. But it's allowed us to then go into those conversations in Australia, the UK, and Southeast Asia, where the retailers have already had massive success with Prime.
It's a much easier conversation for us to explain to them why they should take Feastables. I think if we were the first ones coming into the industry, like into Woolworths in Australia, it would probably be a little harder conversation pre-Prime.
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Shaan Puri | And that prime seems like an amazing category. To me, the drink, the hydration drink, water—basically like fancy water—is a better category than chocolate bars.
How do you think about categories that you're going to go into? Do you think that's a better category? And also, how do you choose what category to get into? Because you could basically promote anything.
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Sam Parr | Dude, when we did the thing with Sean, he organized this event and brought a bunch of Feastables. I ate about eight of those things in one night. I felt horrible the next day. I did eat dinner, but I just ate all this chocolate. So at least for that night, it felt like a good category. | |
Reed Duchscher | yeah well okay so I have to back up just to explain how this all started and so you know this started with my you know in a parking lot kind of brainstorming ideas while he was it was in between him filming this video that never got posted like most videos that like just got filmed and and never people never saw it but anyway we we came up with this idea where we wanted to launch a snacks company and we wanted to build this constant idea around launching the snacks company and chocolate bars to us felt like the right category for a couple reasons like one is it's a massive business like it's a $26,000,000,000 industry it's it's very holiday seasonal dependent which with your parent going into a store for halloween or for easter or something like that it's like hershey's is sitting here and feastables is sitting here and you have an 8 9 10 12 year old son daughter like it's a no brainer like you're going to buy the feastables chocolate and so that that was one reason another thing is the 50th anniversary of willy wonka was in 2021 and so the initial idea was let's put golden tickets in chocolate bars and sell that and give away a chocolate factory which became just a thing in itself of you know buying a warehouse and turning into a chocolate factory it was no easy feat but that that really kind of sparked the conversation of okay well if we're gonna build this on this chocolate factory giveaway with a chocolate bar what are the other categories that we can eventually go into the the cookie really came because you know had this joke on his channel and it's been since the beginning is you guys see it in the banner it's like subscribe and I'll give you a cookie and so we we wanted to venture into cookies next it's it's not I would say as big of a focus for us as chocolate think we're really trying to build out seasonality in chocolate we're trying to build multipack in chocolate I don't think people truly understand how big hershey's actually is and how dominant they are in the space like they truly dominate chocolate because they also own reese's which is like if you walk into chocolate aisle and walmart target kroger wherever you see a giant wall of orange and a giant wall of brown it's like you very clearly those two businesses or those two brands dominate the chocolate aisle and so we thought it was a good space for us to go at because it wasn't it wasn't so oversaturated by 20 30 40 different companies it's like we really knew who we were competing against we were like we're competing against firsheet we need to be more innovative we need to build this gamification layer we need to build a better product that has higher quality ingredients we we we knew like what the the road map looks like to compete with them it's been a lot harder than we thought just global chocolate supply chain I think was something jimmy and I knew nothing about thank god for our team that like understands this that we've been working with but yeah I think we'll we'll definitely go I don't know if jimmy said anything to you guys when you were in greenville but I mean there's a road map of products that we're gonna do over the next like 2 to 3 years we're trying to figure out like what the rollout strategy is gonna be but for 2023 and going to 2024 chocolate is the main priority right in getting more space in retail | |
Shaan Puri | I gotta take back what I said. I think it's a great category; you convinced me I was wrong. That was great, actually. I think what you guys are doing is really smart.
By the way, Hershey's makes like $8 or $9 billion a year in revenue off of their products. The reason I think it's a great category, actually, based on what you said, was the audience fit. But also just look at how old that competition is.
You didn't say this, but if I'm Mars, or I'm Mondelez, or I'm Hershey's, I look at my acquisition targets, my M&A targets. There aren't many. I think this is an opportunity where I don't think the business itself is going to generate a ton of profit just because of physical goods. As you scale up, it's not the thickest margins.
However, I do think this is a business where you're going to look up and sell it for $500 million or something like that someday if you wanted to.
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Reed Duchscher | Yep, so I take that. You'd actually be surprised; chocolate is a pretty good margin business for us. I mean, Hershey is still, you know, they probably churn off $600 to $800 million in profit every single year and have been doing this for 50+ years.
So, yeah, it's been challenging for us, but we understand what the roadmap is. We really think that, and we don't know how Hershey is going to compete with us seasonally. That's one big thing for us. Halloween's going to be big for us this year. We're doing a lot of different sweepstakes and promotional things.
For us, if we can win those months, like October, then it becomes $100 to $200 million just in a single month. We can put our full force into just October and then into the holiday season. Then you turn it around and you're like, "Okay, now what are we doing for Valentine's Day? What are we doing for Easter?"
These are all the conversations that we've been having over the last year. | |
Sam Parr | What number would kind of cross the threshold of, "Alright, we should take this acquisition seriously," if one of those guys came to you at the end of the year?
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Reed Duchscher | I don't think he takes a multibillion-dollar acquisition right now. There's just too much upside in the business.
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Sam Parr | just for feasables | |
Reed Duchscher | Yeah, there’s just... it’s the amount of opportunity for us. Not only... okay, let’s just... I’m just talking domestically. So now, let’s talk about just the world, right? Chocolate is popular globally.
We haven’t really talked about this yet, but I know he discusses it on your guys' podcast. We launched all these multi-language channels. There’s really a method to the madness here. We now dub in, I think, 16 different languages, including Japanese, French, and Hindi. Those are all markets for us that we’re pushing into over the next 12 to 18 months.
The opportunity for us is just way too big to even look at an acquisition at the moment. For us, Asia is a huge market. The Middle East has actually become one of our highest growing markets at the moment. We’re now figuring out what the points of distribution are, and then we’re eventually going to be able to specifically market to those regions.
We’re going to be able to put a video file up, and it’s going to be the Japanese dub. Instead of saying, “Hey, go to your local Walmart and Target,” it’s going to be our dub artist in Japanese, who is the voice actor of Naruto, saying, “Oh, you can go buy it at your local 7-Eleven or other convenience stores available in Japan.”
We’re going to make everything very localized. To us, we haven’t even rounded first base yet in terms of what this business opportunity is. So, I don’t know... we haven’t even had like acquisition’s heart... that isn’t even a thing.
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Sam Parr | Well, when we all hung out with him, he was talking about the same thing. I don't know if he was saying "feasible," but just like his enterprise, you know? He threw around crazy ideas, like maybe an IPO or maybe selling for $1,000,000,000. I don't know.
But he approached it in a way that, this isn't an insult, but it was very naive. He sounded innocent, like, "Oh, I'm just gonna do this and then this and then this. That's it. It's gonna work."
I remember thinking that I found it to be believable. A) I believe that he actually could potentially do that, which is crazy. But B) I felt like his ignorance about business was actually a massive tool for him. I was like, "Man, that's like you'd be one of the biggest things in the world." And in his brain, he's like, "Well, yeah, what do you expect?"
I don't know if "naive" is the right word, but there was almost an innocence about it that I really appreciated. Do you think you have that same kind of mindset with this? Or are half the things that you guys are working on—not just you and him, but the rest of your artists or the rest of your folks on your team—are you like, "I don't know if we could pull this off, but whatever, let's just try and get into it. We'll see what happens"?
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Reed Duchscher | I think we're a little bit different in that regard. I consider myself a bit more of a realist in terms of knowing how hard these things are to build and how hard they are to sell. Ultimately, it's going to be his decision if he wants to sell this thing or not.
However, I think there is a level of naivety between him and me. At least when we entered the chocolate arena, we didn't really have a good understanding of what we needed to create or how we needed to compete. I actually think that was an advantage for us because we were just running as fast as possible, trying to get product out.
We made a lot of critical decisions that were either big positives or big negatives, and we were able to change the negatives very quickly. I think one is...
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Sam Parr | I think you said you you didn't even have customer support the day you launched or something like that | |
Reed Duchscher | We didn't have customer support, which we then learned was important in Feastables. It was a little different business, so we had a full customer support team when we launched Feastables, thankfully.
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Shaan Puri | And you know, you've done a couple of these now, and I think I've always been amazed. Some creators are much better promoters than others, and it's not just that it matters in a couple of different ways.
Sometimes, if your brand is like "I'm super real and authentic," anytime you say anything promotional, the audience is like, "You know, sellout." You can't do that. Other people, whose brand is to be more of a spectacle or more interesting, can get away with a little more.
But there's also just the creator's motivation. As brands throw money at creators to, you know, tell people, "Hey, swipe up and do this," at some point, I think everybody becomes a little numb to it—the audience and the creator.
What I've been impressed with is for something like Feasible, or I also felt this way with Prime. I felt like with Prime, Logan Paul is like the CMO. He's looking for every edge he's got. I don't think they own the majority of the company; I think they own a small minority of that company. But he almost treats it like a majority owner.
I remember when he went to, like, you know, the WWE thing or UFC fight. He's got his Prime bottle with him, and then he'll do something that he knows is going to embarrass himself so he gets memed like a million times on Instagram. He's like, "Yeah, I got memed, but I was holding Prime, wasn't I?"
Basically, it was all intentional. He's looking for these little edges, and that's very different than, you know, the old days when an influencer holds up some detox tea and just says, "Hey, try this."
What do you think is the difference in buy-in and that kind of mindset of, "I'm going to use my engine to promote this to level 100?" What have you seen as the difference there, and how does that happen?
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Reed Duchscher | Yeah, I mean, there's also just a different level of excitement when you have ownership in the brand versus when you don't.
Whereas, like, there's a cash exchange for you to promote Audible.com, you're not going to be as excited. You're not going to put as much time creatively into this, let's just say, ad read that you will if you own the business.
I actually first saw this when we did "Finger on the App." I'd seen him do a lot of mobile integrations on the channel, and then when we did "Finger on the App," it was our thing. We owned it. It was like our competition.
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Shaan Puri | just explain what it is for somebody who doesn't | |
Reed Duchscher | Finger on the App was a mobile game we created where a person puts their finger on their cell phone, and the last person to take their finger off the phone wins $100. There were little bombs that would pop up, so you would have to move your thumb around to avoid objects that appeared on your phone.
It ended up lasting 72 hours, and then someone won $100,000. The level of excitement and promotion just went to the next level. He was telling people why they should download it and messaging people back on Twitter who were saying, "Hey, I just downloaded it. I'm ready for the game." He was responding, and there was much more depth to the level of excitement on the creator side.
You really see that with Prime, and you see it too with Feastables and also Happy Dad with Nelk. They're going all in on Happy Dad. The podcast is essentially built around the idea that Happy Dad is everywhere for each podcast episode.
I do think the future is creators starting businesses. The issue is that most of the time, it's just going to happen at the top. We are seeing some interesting businesses for mid-tier creators who maybe aren't at the level of Logan Paul or Nelk, but they're doing things like Cars vs. Bid, where the channel has maybe 2 to 3 million subscribers, doing $500,000 a video, and they're gaining a lot of traction with that type of business.
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Shaan Puri | what are some other examples like that | |
Reed Duchscher | in in the creator space | |
Shaan Puri | In the creator space, there are cool creator businesses that are not just about being the most famous person on earth. It's not just about saying, "Whatever I say works."
For example, we had Doug DeMuro on for Cars and Bids. What are some other examples like that?
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Reed Duchscher | There's one called **Rare Candy**. It's with **Leonhart**, who is a relatively large Pokémon-style creator. He has a marketplace where you can buy Pokémon cards and do Pokémon unboxings. It's similar to **Whatnot** in how it works, but Leonhart owns a large piece of that business.
I mean, to go back to the top, **Emma Chamberlain Coffee** is another example. It's very organic to her; she talks a lot about coffee. Now, I'm starting to see a lot of businesses pop up on the smaller end.
For instance, you might have a channel that washes windows. It's like a TikTok creator who does ASMR through washing a house or washing windows. They use it as a top-of-funnel strategy in a city where all these individual houses are. Now, all these people are reaching out and saying, "Oh, this person's in Austin. I'll pay them $400 to come pressure wash."
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Sam Parr | For pressure washing, they're all over the place. And for grass cutting, like lawn mowing... | |
Reed Duchscher | Yeah, lawn mowing, vending machines... I'm seeing a lot of small niche businesses being built. But I think these businesses are much bigger than people think they are.
They're gaining traction, even in the pressure washing industry. I'm meeting creators who are making like $20,000 to $30,000 a month just from pressure washing homes.
Then, all of a sudden, they hire 2 or 3 other people because the demand is so high for people booking them to clean their homes. It starts to become a real business that once just began as one TikTok video of them pressure washing their own house.
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Sam Parr | are you from the midwest | |
Reed Duchscher | I am from north dakota | |
Sam Parr | you're the first person on the pod that says says the word wash like I do with an r | |
Reed Duchscher | I grew up 40 miles from the Canadian border, so I'm probably just as Canadian as I am American at this point.
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Sam Parr | I get made fun of all the time for saying that word that way. I'm embarrassed to even say it, but I just heard you say it. Are there any companies or creator businesses out there that are shockingly large that many people don't know about?
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Reed Duchscher | Yeah, so one that I was wildly impressed by, that was much bigger than I initially thought, was Dhar Mann.
It's the largest scripted YouTube channel on the internet. It's all about daily uploading, but it's long-form scripted storytelling. I really didn't understand how big of an operation that was, how many people were involved, how many sets there were, and just the sheer volume of content coming out of that business. That was one I was pretty surprised by.
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Sam Parr | And if you don't know what it is, I remember when I first saw it. I was like, "Are people watching this?" Then I just started paying attention. It's slowly growing. It's almost like the Hallmark or Lifetime channel, but for...
How do you spell it? What is it? Dhar Mann. D-H-A-R space M-A-N-N. He has 18,500,000 subscribers. It's like there's a lesson to be learned in each episode, is that right, Reid?
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Shaan Puri | Yep, he used to do something completely different, right? Like, Dar was doing something completely different, and then he pivoted into this. He did. | |
Reed Duchscher | Yep, he found his footing in scripted storytelling on YouTube. It's more fast-paced and a little bit lighter on the scripted storytelling aspect because it's about more content and volume. | |
Shaan Puri | I'm pretty sure this guy had a giant weed business before this | |
Reed Duchscher | makeup actually | |
Shaan Puri | but I I think he also had a weed business his wife is also an influencer I think she has a makeup business | |
Reed Duchscher | I'm pretty | |
Shaan Puri | sure this guy had a cannabis business I I don't know if I I got that right | |
Sam Parr | Why... why so funny? Yeah, we grow. He started... he started WeGrow. It sold hydroponics and marketed for growing medical marijuana. That's funny.
Why... why is this guy impressive to you, Reid? What... what's the behind-the-scenes information?
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Reed Duchscher | Just the sheer size of the production company... You know, people say it. They're like, "Oh, you can build production entities on top of YouTube," and creators are hiring employees.
This is a good example of a massive production entity built on YouTube, cash flow positive, making money. I think most people thought that you couldn't do scripted storytelling on YouTube and actually make it a profitable business. It just didn't make sense with how the ad revenue worked and how the splits worked.
But he's really figured it out. It's hard because you have to upload daily, and you have to average 2, 3, 4, or even 5 million views per video to start making a significant amount of money. However, they've really figured it out on a large scale.
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Shaan Puri | Did they get the revenue up, or did they get the expenses down? What did they do differently than you would have expected? What was the trick?
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Reed Duchscher | From what I've seen in the scripted space on YouTube, and this is also true for streaming services, scripted content is very expensive. You have writers on staff, and it usually involves long timelines.
They figure out how to create content on a scripted basis much quicker and more cost-efficiently. For example, Dhar Mann is doing a lot of the writing. They have a lot of part-time talent that comes in periodically to act, and they also figure out how to do this with their own sets.
They're not renting space; they actually built their own sets in Los Angeles and are just reusing the same sets. If you watch a lot of Dhar Mann videos, you'll see the school, the movie theater, and a gas station. There are a lot of staple sets that continue to show up, and they do a really good job of repurposing those sets.
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Sam Parr | That's amazing! I can't believe I remember seeing this guy when he was coming up. I never in a million years would have bet that this would have been a good one.
What are some other businesses out there that you've seen that are just shockingly interesting?
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Reed Duchscher | So, this wasn't it. It's not a channel that's a business yet, but I stumbled upon it a couple of weeks ago. It's called "Ryan Hall, Y'all." He was a former meteorologist, and it's a channel based on just what weather is happening across the country.
It covers different things that you should know about, like the hurricane season and how it's going to affect the Southeast. I've seen channels try to do this in the past, but he's the first one that's gaining tremendous traction. You can see it in the views per video; it's like 2 to 3 million views per video, just talking about different weather patterns.
This is one that could, I think, become pretty interesting long-term, whether he decides to build something on top of that. I'm guessing it's a very minimal team—probably him and an editor. | |
Shaan Puri | What is he doing? Because weather is so local. You know, what do I care about the weather in Toledo, right? Unless it's a natural disaster, like, you know, what do I care? So how is he doing this? This is incredible.
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Reed Duchscher | More of like the talking about just the whole things that you should know about tornadoes, or these are the most dangerous weather patterns of the year or the month.
So, he talks more holistically about just the entire industry. It's not really localized. I mean, I'm sure he could start localizing channels, but that becomes a much smaller opportunity. You have to make these videos appeal to everyone, and he's done such a good job with that.
But these types of little niche channels that start to pull a tremendous amount of views pop up every single month on YouTube. I mean, the vending machine one was something that I went down that rabbit hole, and farming—I went down the farming rabbit hole.
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Sam Parr | what what are the what's the farming and vending machine ones | |
Reed Duchscher | Yeah, so farming... Coal to Corn Star. I'll hit you with a few ones.
**Millennial Farmer** is probably the one that I watch the most. I grew up on a farm, so it wasn't that interesting to me because I know all the stuff that he's doing. But for a normal person on the coast who doesn't know about, you know, cultivating or anything like that, I think it's really interesting to them.
So he's one that I think appeals more to an older crowd. **Coal to Corn Star** is another one that probably appeals to a little bit younger demographic, where it's a little bit more like pranks and things like that on the farm.
Then there's **Lauren Farms**, a female channel that also shows the daily aspects of just what you do on a farm.
There really is a space for all types of content on the internet now. That's why the argument that the internet is so oversaturated and it's hard to break through as a creator... I just have never bought that argument. Because on TikTok and YouTube Shorts, I'm seeing things that continue to break through on a weekly basis.
People are figuring out how to turn it into an actual channel that's profitable. We're seeing it with people like Ryan O'Neal, who, you know, nobody would have ever thought that a channel about the weather could pull 3,000,000 views per video. But yet, here he is doing it time and time again. | |
Sam Parr | Well, that kind of makes sense. One of the comments on Ryan Hall's videos said, "Man, the Weather Channel has really lost its way." I'm so excited that Ryan is doing it this way, which is funny because that was actually the most upvoted comment. This means a lot of people pay attention to the Weather Channel enough to actually wonder if it's lost its way or not.
So, it kind of makes sense. You can look at examples like Court TV or C-SPAN. Some of these things have been around forever. You could go and look at their revenue and see what's interesting about them and what's not.
The Weather Channel is owned by Byron Allen, a guy in Hollywood. I think he was an actor and now he's one of the richest Black men in America. He owns the Weather Channel, and I believe they still make around $500 million a year in revenue. That's a great business.
We had a friend named John who was the president of BuzzFeed. He told me, "Man, if you look at CNBC, they only have like 50,000 concurrent viewers on their channel, but they make this much in revenue." He said he was going to create something similar for Facebook Live, and he ended up launching Cheddar and sold it for $100 million.
So, this is an interesting strategy: looking at which channels have lived for 50 years and are doing well, but have just been doing the same thing over and over again for a while. It's actually a fascinating approach. | |
Reed Duchscher | I totally agree. Building a new weather channel is incredibly complex and complicated. However, he definitely has the type of distribution that could start that business.
I think then it's just like you would need to find a partner to help him probably execute that. But yeah, that's why I found that the channel is so interesting.
It's like I go to the weather channel; I even have a widget on my iPhone that pops up for me. It's automated from the weather channel and gives me the weather every single day. I was like, I would much rather download a Ryan All Y'all widget that gave me the total amount.
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Shaan Puri | I would | |
Reed Duchscher | I'd much rather support that than the Weather Channel. So, yeah, I think there's a pretty interesting opportunity there for him. | |
Sam Parr | You made a comment. You said something like you would bet that YouTube will be five times more valuable than any other platform combined in terms of value from a creator's perspective.
You know more than I do, but Sean and I had made this argument about a year and a half or two years ago. We were like, "Man, Twitter's happening in the tech field, but there's not really a... what's the Kardashian lady? The Jenner? There's not like one of the Jenner people who have launched an Instagram business that became a $1,000,000,000 company off of Twitter yet."
But we think that there's going to be something there. Then Sean was like, "Yeah, there's the guys on the 'Guy Mafia' on Twitter. There's the strip mall guy, there's the storage guy, and they're actually raising a significant amount of investor money to create some of these companies."
Have you been playing around with Twitter and seen some of the micro-influencers? The major difference is that instead of what you do, which is more pop culture, this is a little bit more B2B and much older. Have you paid attention to Twitter and played around with the idea of one of these folks, whether it's like a Sweaty Startup or our friend in Cuba who's got like a 400,000 following, about them building pretty big companies in the background of Twitter as opposed to YouTube?
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Reed Duchscher | Yeah, I've seen it. I'm actually not surprised because I've been pretty outspoken about social platforms.
Where do you build the most fan loyalty across social? I've seen that Twitter is at the top of the pyramid in terms of fan loyalty. A Twitter follower that will comment on your tweets is much more valuable than a casual viewer on TikTok or Instagram because they actually care.
I think people are now starting to figure that out—that Twitter is actually incredibly valuable if you can start to gain traction and get people that really engage. It's also an older demographic.
I think the one thing that YouTube is really struggling with right now is, yes, there are people like Ryan Hall and Millennial Farmer who are appealing to maybe a 20 to 30-year-old audience, but it's much more suited for an 8-year-old to watch content.
Whereas Twitter, to me, is where I spend most of my time. The people that I meet on Twitter, I would buy products from if they actually promoted something. So, I just think that Twitter has been really interesting from a fan loyalty perspective. It's just the depth of the platform.
Instagram and TikTok, to me, have been more casual. I buy things on Instagram, but it's rare. TikTok is like my mindshare; every single second I'm seeing a new video. I don't even remember the names of the channels that I see on TikTok—they just come and go.
When I'm at different events and I see a lot of TikTok traders, I recognize them because I've seen them on TikTok, but I have no idea what their TikTok channels are, which is bad. However, I will remember someone's Twitter handle that I see and I'll be like, "Oh my gosh, that's @whateverit is." I very rarely say that about TikTok.
So, I just think that the depth of consumer engagement is much different on Twitter.
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Sam Parr | Who would you buy a product from? Which of the quote Twitter creators would you buy a product from? Or rather, who are some of your favorite follows?
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Reed Duchscher | I mean, I met Blake Robbins, with whom I did a podcast together. I met him on Twitter; that was how we connected. I thought his tweets were incredibly interesting. As an investor, he was discussing a lot of topics that interest me.
So, if Blake would have sold anything 3 to 4 years ago, before I knew him, I would have instantly bought it. He had built up that loyalty. I not only agreed with a lot of things he was saying, but I also found them really interesting. I would take the time to comment or like his tweets.
I have a lot of those accounts I follow on Twitter now. You get to see the tweets that are getting hundreds of thousands of likes. I think, you know, now we have bots and a lot of internet trolls and stuff like that. But where Blake kind of sits is in the 30,000 to 40,000 follower range, and a lot of those people care about what he's saying.
Then, the word-of-mouth becomes really interesting. For example, if someone says, "Hey, I use an Eight Sleep mattress; it's changed my life," and someone like Blake or you guys tweet that, I'm going to be like, "What is an Eight Sleep mattress? I should probably figure out why they like this so much."
But if someone on TikTok is like, "Oh, my Eight Sleep mattress, blah blah blah," I probably just scroll past it and don't even think twice about it. So, that, to me, is something that I've noticed.
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Sam Parr | I tweeted out that I love 8 Sleep. I don't have any affiliation with them; I just had one of their mattresses and I tweeted out how much I loved it.
Then, right away, their team reached out and said, "Hey, can we do an affiliate deal or do you ever want to partner together?" I'm like, "No, man. I'm just talking about cool stuff that I like."
But they said they sold a lot of mattresses from that tweet.
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Reed Duchscher | Yeah, the people that follow you also can't afford the product. They have probably been following you for a long time. They trust what you say because you guys aren't shilling a ton of stuff constantly.
So when you authentically talk about a product, people pay attention. It's like Tim Ferriss, right? I used to pay a lot of attention to what Tim Ferriss was using and talking about on Twitter.
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Sam Parr | are there any other good follows that that you have that you could see launching a business and succeeding | |
Reed Duchscher | I mean, you guys mentioned some really good ones. It's not a platform that I pay a lot of attention to in terms of individuals who can grow businesses. I think I'm much more suited for YouTube. I live in the depths of YouTube every single day.
Twitter, for me, is like following people I know—my friends and other people in the business sphere. But we'll see. I hope they're able to grow businesses on top of it. I have a lot of confidence in Twitter just as a platform to grow fan loyalty.
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Shaan Puri | what what about threads we didn't ask you about threads | |
Reed Duchscher | If you guys look at the Google Trends for Threads, it's not looking good. I also saw a graph this morning on daily active users for Threads that just fell off a cliff.
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Sam Parr | cliff and so it's plummeted it's it's | |
Reed Duchscher | we're that's predictable I I didn't have a lot of faith in it but we'll see | |
Shaan Puri | I don't think that I saw a lot of people talking about that. I think their takeaway is like, "Oh, it's not working" or "It failed." But that was always going to happen, whether Threads is going to succeed or not.
If they got 100 million people to download the app—any app—look at the Twitter app; it will do the same. If you get 100 million people in a day to download something, you're going to churn. Like, you know, 80% of them won't just start using the app regularly and habitually right away.
So, to me, I see that and I'm like, this is completely normal. That was going to happen either way. There was no chance that 100 million people were going to download it and 100 million people were going to keep using it next week. No app in the history of mankind has ever worked that way.
So the question is, what happens, I don't know, three months from now? Once they get their kind of core base of users, does that start growing or not? And what would... like, you know, there's no way to know until then.
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Reed Duchscher | Yep, totally agree. I haven't logged on. I logged on the first day I downloaded it and haven't really been on since. So, there's also like, you know, do you... | |
Shaan Puri | tell your talent to like keep an eye on it or what do you tell your talent | |
Reed Duchscher | No, we honestly don't care. It's up to them. Most of them will download it, and we'll post on it to see if they like it. I think we'll wait. Like you said, it's going to take months to figure out if this is going to gain traction. I think most of them are just going to patiently wait. I don't think any of our talent is going to fully... the threats. They're better off putting their time into making amazing YouTube videos.
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Sam Parr | We did this video. Sean and I did this video like two weeks ago or a week ago where we were talking about how we liked that Zuck did this, and we were Team Zuck.
Sean, we officially have a new nickname. I don't know if you saw this in the comments of YouTube, but we are officially now "Zuck's Cuck." That is plural.
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Shaan Puri | both of us | |
Sam Parr | zucks cucks they call us zucks cucks | |
Shaan Puri | the t shirts are getting printed we should be alright | |
Sam Parr | I don't know, like, how we are his... does that mean we are having sex with his wife? Or is he having sex with our wife?
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Shaan Puri | It's more like "The Mighty Ducks." It's like we're the Mighty Ducks. We're this small group of people who really believe in this thing that everybody else has kind of written off or hates.
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Sam Parr | Yeah, but we're a cuck, so I don't know who's having sex with whose wife. But something is happening there, of which we are involved in. We are officially "zucks cucks," which I'm okay with. I, but yeah, I'm a "zuck cuck" for sure.
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Reed Duchscher | See, well, once they box or fight MMA, I'll be in Elon's side of the octagon. So maybe we'll...
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Sam Parr | Will you really, bro? I will bet you a large sum of money that if that ever happens, Ed Zuck would crush him.
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Reed Duchscher | I guess in terms of who would win, I mean just looking at the pictures that Mark posted with Israel Adesanya and Volkanovski, it scares me a little bit if I'm Elon Musk. But I still like, I gotta support Elon, so win or lose.
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Sam Parr | Do you have a couple of last questions? But what would you sell Knight Media for right now?
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Reed Duchscher | I wouldn't. I created Knight because I really enjoy it. What would I do if I sold Knight Media? I'd become an investor. I already get to do that, so I'd...
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Sam Parr | like yeah but but there's there's always there's gotta be a number what do you think it's worth | |
Reed Duchscher | Man, I don't know. To be honest, it all depends on how you value the subsidiary lab businesses. I mean, I could probably... I know what the core management company is worth and what the subsidiary businesses are. I think that's where it could flex quite a bit.
But sure, I enjoy it. I think if I sold Knight, the acquiring business would have to make me the CEO. If we sold it to an agency, they would have to make me the CEO of that major agency or management company because I actually enjoy doing this.
It's not something like... I didn't start Knight Media to sell Knight Media. I started Knight Media because I was like, "I really enjoy this. I really want to do this." I find fulfillment in it. I have a venture capital fund; I get to invest, I get to start businesses, I get to be entrepreneurial, and I get to be a manager. I get all the perks of being a manager.
I don't want to do anything else right now. That might change in a few years; who knows what time will do. But yeah, I don't know. I wouldn't sell. We've had offers; I just wouldn't sell it. | |
Sam Parr | So, what is 100 of 1,000,000 dollars? I would assume low... I wouldn't sell it for $100.
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Reed Duchscher | of 1,000,000 of dollars there's no chance to know | |
Sam Parr | that's that's wild that's a good that you're in a good position to be in right yeah | |
Reed Duchscher | I mean, there's just... I feel like we're, I said this about a few souls, I feel this about the whole company in general. We haven't even gotten started.
It'd be hard for me to sell this thing with the amount of upside that I see over the next five years. I could see a partnership of some sort. I don't think I could just fully sell it and walk away or have an earn-out over multiple years right now.
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Shaan Puri | Yet, you raised $100,000,000, or you received $100,000,000 from Churnin in a separate fund to buy consumer businesses that you could then kind of plug in YouTube distribution into. I think that's the idea. Can you explain the big idea there and whether you've done anything with that yet?
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Reed Duchscher | Yeah, so Labs will start a business from 0 to 1. Feasibles was started at ground level, raised capital, and hired the CEO. Knight Capital is more fixated on finding a business that's generating cash, maybe doing $5, $10, or $15 million a year.
We think we can come in, probably buy a majority stake in that business, roll some creators or a celebrity onto the cap table, and expand what that business is doing or just continue to grow that business. It's very similar to what Churnin does and is doing with Cars and Bids, and did with Barstool, Hello Sunshine, and all these other businesses. | |
Sam Parr | yeah they've done that tons of times | |
Reed Duchscher | Yeah, a massive opportunity for us to do it as well. We understand this creator ecosystem and internet pop culture so much better than anyone else.
So, that ideally is why we did Nightcapitol. We're not in a hurry to do a deal. I think the economy has been something that scared us a little bit. Everyone that did deals in 2022 is really regretting a lot of those.
So, we're just patiently waiting for what that thing is going to be.
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Sam Parr | Well, dude, we appreciate you doing this. You're the man! It's always... I like just hearing what you're tinkering with. You have a very interesting perspective on things. What do you think, Sean?
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Shaan Puri | Yeah, this was fun, and I'm glad. I don't know how well we stuck to our mission, but I think we...
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Reed Duchscher | pretty good yep | |
Shaan Puri | It was pretty good. We'll bleep out every mention because this is the "0 Clout Podcast," a no clout chasing podcast, and we have a no clout policy.
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Sam Parr | we did not we did not wanna do that wait but do we have to use his face on a thumbnail | |
Shaan Puri | no we're gonna blur it out | |
Sam Parr | I think we have to put like his face and then Reid's face next to it. Blur out Reid's face, and the thumbnail is like "The Man Behind the Scenes." There's something ridiculous about that.
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Reed Duchscher | I'll I'll let you guys figure | |
Shaan Puri | that one out I mean | |
Reed Duchscher | there's plenty of things that no | |
Sam Parr | you gotta figure it out we don't know how to do it we suck at youtube | |
Reed Duchscher | no you're you guys are killing it so | |
Sam Parr | No, YouTube is... we have way more downloads on the actual podcast, you know, iTunes and stuff like that. We suck at YouTube.
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Reed Duchscher | I mean, I would argue that a listener on iTunes or Spotify is probably way more valuable than a single listener on YouTube in the podcast genre. So, I think what you guys are doing is incredible, and I would continue to focus on listens across other platforms. I wouldn't hedge too highly on YouTube at the moment. | |
Sam Parr | I agree that we've gone hard on YouTube for the last 12 months. Now it's like, "Oh man, actually the podcast numbers just steadily grow every single week," whereas YouTube is a little... it's a little lumpy.
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Shaan Puri | yep I'll be honest I love youtube I think it's great | |
Sam Parr | I | |
Shaan Puri | think I just like the comments I guess | |
Reed Duchscher | I love it too, but I do think that I consume your guys' podcast on Spotify.
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Shaan Puri | Yeah, it's... I guess that's what you get used to. Once you consume it, you're like, "This is a good place for things."
So, yeah, you know, that's where things go.
Alright, Reid, thanks for coming on, man. Where should people follow you or find you? Shout out wherever you want people to go.
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Reed Duchscher | I mean, we spoke a lot about Twitter. So it's just **@reidjd** on Twitter.
I probably am the most active on Instagram in terms of answering messages. So, same thing, **@reidjd** on Instagram.
I appreciate you guys. Thanks for having me on!
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Shaan Puri | See you! It is Producer Ben's last day—last day producing an episode. This is it! This is your Michael Jordan shot against the Jazz. Will there be a Wizards comeback? I don't know, but this might be your walk-off.
Alright, here are the rules: you can't say anything about the next chapter or adventure. I don't want to hear that. And you can't generically say you learned so much. If you say you learned so much, you better tell us exactly what you learned. Alright, those are the rules for this speech.
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Ben Wilson | Okay, great. So, the next thing for me is basically focusing on how to take over the world and getting the podcast as big as possible.
Speaking of things I learned when I was here, I think people talk a lot about focus. Focus is maybe easier when things are not going well because if focus is about saying no, the world is like saying no to you. But when things start going well, all of a sudden, the world is like saying yes to you. You have all these opportunities, right?
That was, I think, one of the things that happened to me early on when I came on "My First Million." All these people were like, "Oh, Ben Wilson, the new hot thing! Do you want to try this? Do you want to do this? What about YouTube? We should make some shorts. You want to do TikTok?" And I was like, "Yes, yes, yes, yes, yes! I want to do all these things!"
So, I had all these kind of half-finished projects that ended up not going anywhere because I was maybe a little too dispersed in my attention.
Now it's like, "No, no, no. Let's get the podcast to be one of the best podcasts in the world. That's all I'm focusing on for the next year, and then we'll see what happens after that."
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Shaan Puri | There's nothing better than quitting your job when you have just had twins, let alone even one baby. What kind of responsible Mormon are you?
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Sam Parr | I mean well how what kind | |
Shaan Puri | of decision was this reckless at best | |
Ben Wilson | Well, I mean, it's not like I'm starting from zero, right? It's not like I have an idea for a podcast. Luckily, you guys have put me in a position where the podcast is doing pretty well right now.
So even if I have a bad year and it doesn't grow that much, I'll be fine. And if it goes really well, then things will be great. So it's a little bit of a risk, but not an existential risk.
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Shaan Puri | And do you have, I don't know, a message to the fans? What do you... how do you want to leave us here? Where do you want to go with this?
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Ben Wilson | so obviously the first message is go follow how to take over the world wherever you eat your podcast you'll love it | |
Shaan Puri | my man | |
Ben Wilson | I guess the most important thing is **thank you** guys. My life changed about a year and a half ago when you brought me on the show. I called it "the ride of a lifetime," but really, I didn't know if I would be able to make a living as a creator before you guys brought me on here.
Now, I know that I can do that, at least in some capacity. My life has completely changed, so thank you. This has been amazing, and I've loved doing it.
To everyone who has supported me, been such a fan, and cheered for me on the podcast, thank you to you guys, the listeners as well. It has meant a ton, and I've loved it.
So, I guess that's the last thing—I'm just very, very grateful for this opportunity I've had.
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Sam Parr | The reason I didn't like celebrating you leaving is because I'm like, you're not really going anywhere. You'll be around; you're just going to be unemployed for a little while. Hopefully, it works out, but I'm sure it will be. I'm happy you kind of came into our lives. It's fun having you around. We're hiring for a producer, by the way.
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Shaan Puri | the way | |
Sam Parr | speaking of | |
Shaan Puri | we we we speak | |
Sam Parr | To a producer now. Yeah, so we're using one of Sean's Filipino assistants for a little while, but I don't know if that's going to work out. | |
Shaan Puri | my mom is trying to download audacity this | |
Sam Parr | Morning! So, we'll see what we can do. Yeah, we need a producer. But yeah, Ben, we love you and thank you for everything you did. You were mostly decent at a handful of things.
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Shaan Puri | was like this was the ride of a year and a half I gotta tell you | |
Sam Parr | Yeah, it was a leisure walk, but it was fine enough.
No, Ben, you're amazing! I still listen to all the podcasts, so that's how I know that it's a good podcast.
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Shaan Puri | You're doing this because we need more episodes. If you go, "I've listened to all the episodes, I just need more episodes," so this is good. I'm glad you're doing this. Thank you so much for everything that you've done. You've brought a lot of, I don't know, good support and good energy to what we do.
You make it very easy for me and Sam because we just get to show up, perform, and then not think about it after. As soon as we hit done, me and Sam don't really have to think about anything, and that's because of you and a bunch of other people behind the scenes.
So thanks for everything you've done, man. We will all go in solidarity with the gentleman's agreement today: if you don't subscribe to us, go subscribe to "How to Take Over the World," a fantastic podcast. It basically talks about, I don't know, great conquerors and people who achieved greatness and great things. Ben goes and reads like 50 books and then just summarizes it into one awesome podcast story, one hour, so you don't have to go read all those books and you get the story from him.
So it's an amazing, amazing pod. Go, go subscribe!
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Sam Parr | thanks ben talk soon |