[upbeat music] Welcome to the Rebooting Show. I'm Brian Morrissey. Glad you are joining me this week.
One of the enduring challenges in media business, I think, is finding leverage in your model. It's never been harder. I mean, it didn't used to be this case. There was a time when this was built in.
Newspapers had distribution lock-in, magazines had pricing power.
I was struck the other week, we were discussing this on the People Versus Algorithms podcast, that, you know, Vanity Fair could pay a writer five hundred thousand dollars a year for three feature articles and, and still run a profitable business.
That, that's a business with a lot of leverage in it, and that's mostly managed. I don't need to go through chapter and verse of this.
But we're starting to see this phase of media that Anonymous Banker calls the cleanup phase, and that's what comes, you know, after the collapse, right? And a lot of these models have collapsed.
And you see assets, you know, good assets like The Skimm, Tastemade, TechCrunch, they're not, not even exiting, they're, they're being absorbed, right?
And these aren't growth acquisitions, and they're really more like structured handoffs than they are financial cleanup jobs. We talk about that actually on the People Versus Algorithms podcast that we released on Friday.
So if you don't already listen to that, I recommend you. I think one of the quotes in there was that you're monetizing the carcass. That was a pretty blunt one.
But that's the default outcome for a lot of media brands that don't build durable IP and diversified revenue, and I think the IP part is incredibly important.
And, you know, when you think about where to find that leverage, it always comes back to the IP. And the...
It's funny 'cause that conversation stood in contrast to one I had had earlier in the week with Dude Perfect's CEO, Andrew Yaffe, and that's what this podcast is. Dude Perfect is a really interesting case study, right?
I remember them from the early YouTube days. They were one of the early stars of YouTube. And, you know, it started with viral trick shots. They were friends at Texas A&M, and they built a beachhead on YouTube.
And say what you want about YouTube, but YouTube is the one platform that I think you can build big and enduring media brands off of.
But there's a catch, and, and that's that you have to, you know, build not only, you know, good businesses, but you have to be able to have some kinda IP that you can take into different areas and you can make money off of in a different, in different ways.
You know what I found so impressive about Dude Perfect? I talked to Andrew about this a little bit, is I got my hands on their investment deck 'cause they basically sold a big chunk of the business to Highmount Capital.
I think I called them Highland Capital on this episode, so excuse me, my private equity friends. But they bootstrapped this business to about thirty-five million dollars of revenue with fifty percent plus EBITDA margins.
It's, like, really impressive. If you think about media businesses, they don't have that usually.
And, you know, I think what was interesting about it is not only is it, like, a creator-led business, but that it has what Andrew calls defensible IP. And, you know, they don't rely on advertising on YouTube.
That is a, that is a nice chunk of their revenue, but a lot, a lot of their revenue comes from brand licensing deals, and also they've got a big live events business. They're, they're...
They've got a big tour, and they're building this, this massive headquarters. I guess they built it in Frisco, Texas. I haven't been. And it's meant to be, like, really an experiential activation there.
You know, they've, they've started to expand into licensing of physical products. They have their own app. They had a toy line that came out with Walmart.
They sold something like two hundred thousand tickets to, to their tour at least in 2023 from the data I saw. And, you know, Andrew talks about this.
He, he says, you know, advertising and partnerships can scale linearly, but experiences and products can scale exponentially.
Hard to pull off, but I think it's worth noting that with all the doom and gloom of these cleanup deals, that there's still some really, you know, impressive media businesses that are being built and that still have a long ways to go.
So with that, here is my conversation with Andrew. [upbeat music] Andrew, thanks so much for joining me. Thank you for having me. All right. So let's get into Dude Perfect and the story.
We'll, we'll go through the story real quickly 'cause I think people know it. But five buddies at Texas A&M, I think it was 2009, viral trick shot video. I remember Dude Perfect from the early YouTuber days.
You know, there was, like, Rhett and Link, iJustine. There were some various [chuckles] people. And being early to a platform has a lot of advantages, but not everyone, not everyone broke out.
Like, there was Smosh and various other people, and it sort of petered out. But Dude Perfect kept going, and they built a business. Like [chuckles]...
And you joined, like, in October, and I almost don't know what to describe...
I don't wanna describe it as a YouTube channel 'cause I don't think it is, and just, yeah, looking at the, the, some investor deck that I got my grubby little paws on, it's not.
So e-explain to me a little bit, for those who don't know, like, how would you describe, you know, what Dude Perfect is now and, and what it can become? Yeah.
As you said, it started as five friends in a backyard in College Station, Texas, who were doing some trick shots and happened to capture it and post it to YouTube and went viral.
And now we're coming up in April will be our sixteenth anniversary as a channel. We have an eighty-thousand-square-foot headquarters in Frisco, Texas. We've got sixty-one million YouTube subscribers. But really we're...
We describe ourselves as a twenty-first century media company thatIt starts with content, but is much broader than that. This summer, we'll be going on our fifth live tour across the US.
We'll be in twenty cities, doing twenty one shows in NBA or NHL sized venues, twenty thousand seat venues, and have sold out many of them already. There's a few with tickets available if any listeners wanna come.
But, you know, we've done board games and beverages with our partners at Bodyarmor. We've done sporting goods. We have a bounce house that's available and a whole line of backyard products coming online.
And, and, you know, really, I think we're a brand and a media company that means something.
Like, we aspire to be the most trusted brand in family entertainment, and we think there's a lot of different elements that, that can come under that. Yeah. And I think it's funny.
It's like you, you need a bunch of things to come together. But, you know, the... like as you said, like the content is like family-friendly, right? And that's important for, you know, advertising and brands.
They love that stuff. And, and that's just like natural, right? But it's also, it's evergreen, right? Like, I mean- Yep... the...
you've got a big back catalog, and you guys monetize that really nicely because, I don't know, a trick shot doesn't go. Like, may- Yeah... a-after you've seen it or something, but I mean, this stuff has enduring value.
[chuckles] Um- Yeah, it still, it still works. Yeah, it's still impressive to make a, you know, seven hundred foot basketball shot. [chuckles] Yeah. And all those things like are, are gigantic advantages.
But the way I like think about it is, and I think this is interesting, we're at an interesting point with the, quote unquote, "creator economy." 'Cause I said I don't consider...
This isn't like a creator business even anymore. Yeah. But I think of sort of moving from creator to creator business to like franchise, right? And like franchise is where you, you...
that-that's, that's where you make l- a lot of money because it's not tied to individuals. And it seems like you guys are on that evolution.
And just like looking at this deck with, you know, the numbers, this is a massively profitable creator business. Like, the margins like are, are ones that like most media [chuckles] businesses don't, don't come close to.
Yeah. I know there's a lot of advantages of doing trick shots.
I don't know, I don't know the economics of how much they cost to do them, but it's not like a MrBeast thing where you're [chuckles]- Some of, some of them are, some of them are cheap and some of them are less cheap.
But- But overall, you know- Overall, we- You know. But, and I think one of the things that's amazing about this business is like the guys in our company grew up doing...
I mean, there was no money in it at the beginning, and I think this is how the creator economy, the...
one of the reasons it's so successful is that it wasn't, "Hey, we need a sound stage, and we need lunch served for everyone on site." This is five friends with a, with a- Yes...
phone or a d- a, and when they started, a digital camera. And it, it, it's been in our DNA to be efficient and, you know, cost friendly throughout our production process.
And now, you know, there are certain things that we take on that are obviously bigger and require more travel. Yeah.
But at the end of the day, the core content is still done in a really thoughtful and cost-efficient way. Right. So break down the, the business. I mean, there's advertising, right? I mean, that's often YouTube.
It's not primarily YouTube. You guys have your own app, et cetera, but I would guess YouTube is the overwhelming majority of the revenue there. Probably. Steady, and it's a good business.
You can sell the back catalog to Spotter, et cetera. And then there's brand partnerships. What... How do you guys think about brand partnerships? Yeah.
So, you know, it's funny, before you mentioned like how do we become a franchise, especially me coming from the world of sports. Before this, I spent n-nearly fifteen years at the National Basketball Association.
I look at us compared to a sports franchise, and we have all the same revenue streams and business lines that, that a sports franchise does.
We have brand partnerships, as you said, and we think about those as who are the brands that we're really aligned with and authentically enjoy their products and can build meaningful and, and authentic content alongside them.
So really value those long-term, deep relationships where we're doing really fun and creative things alongside our brand partners, and we can come back to what some examples of those are.
That's a, a big revenue stream for us and, and a really healthy business. Ticket sales to our lives event, live events.
As I said, we're, you know, we're gonna sell several hundred thousand tickets over the course of this summer, and that's a, a, a really healthy, meaningful business for us as well.
And then products, and that's again our... You know, we had a top-selling board game in Walmart. We have licensed products with some of our brand partners, and that's, you know, our own apparel and merchandising lines.
So those are really healthy revenue streams for us too.
Looks a lot like an NBA team where they have brand partnerships, they have ticketing, they have con-content and advertising against that content, and they have merchandise.
And so we compare ourselves to those and, and, you know, in a lot of ways I think are compared favorably. Yeah. But the mix is different though, right? I mean, like it seems like- Well, yes...
I mean, the, the growth trajectory would seem to be more on the, the, the products or licensing, like not as much as...
And I'm trying to get at it because I think the way you build media businesses is a little bit different now. That's right.
If you wanna have franchise value, you know, it's, it's about making money in a whole bunch of different ways that, that aren't just putting ads to try to take- I- You know, you get a bunch of attention, you put ads in front of it.
That's not gonna- Yeah, the way I, the way I and we think about it is that essentially our advertising and our brand partnerships business can scale linearly, so there's real growth and real opportunity in those businesses.But there is some natural cap to how big they can be.
Our live experiences and our products businesses can scale exponentially.
Obviously, there's a little bit more risk, and those are a little bit more unknown, but that's where the more significant longer term holistic upside is, I would say.
And so we're looking at opportunities in all areas, but as we think about where, you know, three, five, ten years from now, what long-term growth looks like, I think there's definitely more growth in the-- that we can unlock in the content business, and that also includes other channels.
And I mean, as you look at any other media company, new talent, new formats, those are all possibilities and opportunities for us on the content side.
But experiences and products are going to be very meaningful parts of our growth. And, and that's, I mean, the big bet is, I mean, you guys have this, like, massive, like, theme park, right? That's- Yeah.
[chuckles] It's either being built or I think it just opened. It is... No. It is-- The theme park, I would say, is, it's the North Star of our experiences business. Okay.
So it, it's something that I think we very much have on the, on the roadmap. But I think we're-- So we opened our headquarters.
Our headquarters is going to have a consumer experience within it where our fans can come, touch and feel, and experiment with a lot of things that make Dude Perfect, Dude Perfect.
But we wanna continue to scale that to standalone live experiences, and those could be traveling- Right. Those could be permanent. That can look like a theme park.
But I think some of those things are a little bit down the road. Okay. Okay. Because, like, the live events, like, I mean, going on a tour, I mean, that's a grind. I don't know.
[chuckles] I mean, I'm sure you lo- uh, everyone loves it, but like- Yes... at the same time, I don't know, nineteen cities, like, I don't know. It is, it is not, it's not the most scalable. Um. [chuckles] Okay.
That's what I'm trying to get at. It's, it's very hard to go to thirty-eight from, or forty from, from twenty. Yeah. And it's, there's a reason we do it for six weeks in the summer.
But y-yeah, we think that the, there are a whole host of other experiences that we can develop and bring to our, our fans that don't require nearly as much physical presence by us. Yeah. So you were at the NBA, right?
And I, I'm sure you knew Dude Perfect, right? They've got a, a, a young audience. You know, I think, you know, the, what, it's like sixty something percent are probably under twenty-five.
And their footprint on YouTube, which is that the future to you? You-YouTube is, is TV. It's, it's here now, right? I mean, it's the most important, obviously, media mode out there. Dwarfs like the NBA, right?
Like, I mean, it's not, it's not a perfect comparison, right? I mean, it- Yes... there's, there's differences, but I'm sure you, you saw that.
I think the question ends up being to me is, who gets to, who, who can make the leap to being a franchise business? Yeah. Right? Like, and what did you see that made you...
I mean, obviously, you thought that the, [chuckles] the Dude Perfect- Yes... will. Yeah. I, I mean, I think the way I think about it is, a-and I think I would... Or the term I use that I mimics franchise is- Okay...
defensible IP. Like what- Yeah... like, do we own IP that means something apart from the people who create that IP? Yeah. Um. And not just the back catalog of content- No... that you can put ads against.
That if I put, not to say we do this, but a Dude Perfect logo on a product, it will sell differently than not having that logo.
The reason I, I think the, the first thing that I focused on, one is the founders and, like, who they are and how they think about what Dude Perfect means, and they're super authentic about it.
I don't think you last cont- with continuous growth on a platform for fifteen years if you're not being the same person and, and producing the same sort of ethos of content on a regular basis.
And I think that's really important, one, because I get to work with them every day, but two, because that ethos is what becomes the franchise. It's...
If, if you don't have a real mission and a real view and perspective on what we are and what makes sense for Dude Perfect and what doesn't make sense for Dude Perfect, you will lose focus, you will have distractions, you will not mean anything externally if you don't mean anything internally.
So that was step one for me, was like, are these guys serious about what they want this mission to be and what they view the company as, and what the ethos of it is? And the answer to that is a resounding yes.
And so that was step one. Step two of that is, is there a dedicated and defined audience?
And that's something that I think people often overlook, that, you know, we have a very large audience, obviously, but it's also pretty clearly defined in that family-friendly- Mm... sports, sports adjacent audience.
And so we think that, you know, anything that a, really a five to eighteen-year-old kid who loves sports loves, we have a right to play. We have an opportunity to be present in that space.
There's a lot of stuff in, outside that, that maybe we could have a good business there, but it's not our focus because we think there is a, an audience that has told us, that has raised their hand and said, "We want more from Dude Perfect."
And so when you have that sort of community that we've built, and you see them at shows, we have several hundred thousand families on a text chain that we engage with, like, that community is an amazing resource and an amazing audience to build products for and with.
And so that was the second thing of like, this isn't a, "Hey, let's just go build content that might, or build products and experiences that might find a home."
It's like, "No, we know who our audience is, what the sweet spot is, and we're gonna make things for that audience." I think that's a, a- Mm-hmm... a critical piece that often gets overlooked.
So YouTube is the engine, but it's not a YouTube business, which is sort of where I wanna go. I mean, which is fine.
I mean, YouTube is so massive that-I think it's likely that, like, many billion-dollar brands will be built with YouTube as an engine, but, like, not as...
It's like you're not gonna make, like, a billion dollars from, from YouTube ads. Yeah. Yeah. No, and I, I... You know, we're, I would say, more selective than most in terms of the amount of content we put on YouTube.
We could certainly, if we were producing more frequently, we could certainly drive more direct business off it, but that's not our objective.
As you said, I think it's, it's amazing platform to build a brand, to build awareness, to help find your audience.
You know, when the guys founded this, they didn't, they weren't that intentional that, hey, we wanna cater to, you know, families and- Yeah, yeah [chuckles]... teenagers.
Like, that was- That's the thing, a lot of this stuff is really organic. It was an acci- yeah. In that it was, like, accidental, but you gotta get... You c- like, luck in retrospect is strategy.
But, like, you know, I mean, they, they started with stuff that's, like, evergreen. Yeah. By its nature, it's, like, family-friendly. They happened to start at a time when YouTube was just taking off.
The type of content that, that they're creating, it's not just family-friendly and every- Like, it w- went in the direction of the YouTube algorithm. Exactly, yeah.
The YouTube algorithm started rewarding that type of content- Yeah... in a, in a big way. And, and, you know, sports as a category is, uh- Yeah... massive on YouTube. It's also highly global.
And so, you know, our audience is, is highly global because the content of, you know, fun, the intersection of fun, family, and sports appeals, not just in the US, but across the world.
And so w- it was definitely not intentional, but the guys have been incredibly savvy about listening to that audience and understanding what's working and responding and following that, and it's evolved to a point where, in a super authentic way to who they are- Mm-hmm...
and what matters to them, we now have a, a really dedicated audience. And if you come to one of our shows, if you, you know, are, are looking at who's buying our products, like, there is a clear, hardcore demographic.
And that's a, a really exciting place to be as a business looking to, to launch new content, products, and experiences. Yeah.
And I think it's less of a question now, but I think it's always a question about whether, whether the properties that are incredibly successful on YouTube can be as successful elsewhere, right? Because there's...
Yeah, it's like, you know, MrBeast. I think the, the Amazon shows, I, I believe has been, has been successful.
You know, it's always a question b- particularly with the intermediate, the heavy intermediation of an algorithm. Like, an algorithm can... You know, it, it's-- This is normal in a lot of media.
It's like, just because you're good at one thing- Yeah... doesn't mean you're gonna be good at all sorts of other things. Totally.
I think the, the live events sort of show that, that this can, this can work outside of a YouTube context. But what, what did you see there that showed that, like, this is more than YouTube?
Yeah, I think the live, the live events. The way we... I- i- it's pretty amazing. The way we announce our live show, we provide no detail about what it is or [chuckles] our- Interesting lane to approach...
the length or the concept. I gotta try this. [chuckles] It is just, "Hey, we're, we're coming to your city as Dude Perfect."
And we announced it in October, and by Christmas, had sold more than 70% of the tickets for a, a tour that doesn't start until July, and that's in 20 of the top 100 cities across the country.
And so my, my sort of takeaway from that is there are millions of people across the country who want more access to our brand, regardless of what the product is.
Like, they are putting their money where their mouth is to say there's demand for Dude Perfect without even knowing what the concept is. It's not that they wanna see thing A versus thing B.
It is they want to buy what we're selling. They wanna...
They, they trust us to develop a great experience for them, and I think that trust can apply in more evergreen ways, in more permanent ways, and in more national and international ways. And that's, uh...
It, it's a really exciting- Mm-hmm...
place to be that our audience, that we have that trust, and it's something we t- we hold very dearly that we don't wanna mess up that trust, but that our audience believes that what we're gonna deliver is, is worth it.
And so that's, uh...
You know, I think that, I agree, when I was evaluating the business and coming over, was the, the biggest signal that there is, there are indicators of success that other products and other experiences will be successful here.
And then the same thing as we've done other products.
We had a w- a collaboration with Bodyarmor for our licensed products last fall, and it was available for 12 weeks and was Bodyarmor's number-one selling SKU nationally during that period.
And they were floored at the ability we had to, to move real life product.
And so you just continue to see that, okay, our audience not only consumes the content, but when we get behind something, they get highly motivated to go find it, and that's just a, a really exciting starting point.
Now, we don't wanna... We, we, as I said, like, hold that dearly. We, we don't wanna go do 100 things. Mm-hmm. That's the easiest way to, to break trust is to, you know, start slapping our logo on stuff- Yeah...
and start endorsing stuff that we don't- You can't go f- We don't think is- Yeah, you can't go full, you can't go full Hello Kitty just yet- Yeah. [chuckles]... like we meta. Yes. The Dude Perfect toaster- Exactly.
Uh, that'll come out. Yeah. So we're really thoughtful about what we do and wanna maintain and invest in and grow and broaden that family trust. But it's a, it's a, it's an awesome place to build a, a business out of.
Yeah. And how about the dudes themselves? Like, clearly they're pretty business savvy. I mean, when I looked at the, like, I don't know, I see 73% margins, I'm like, "Oh, they, they're pretty good.
[chuckles] They're good at business stuff too." 'Cause I think that's honestly a big question of a lot of...
I think it holds back a lot of creator businesses, I would imagine, because the skill sets of, of being a creator doesn't necessarily mean that you're gonna be great at, at business, right?
I mean, I think Jimmy Donaldson, from everything I've, like, read or, you know, the podcasts I've listened to about, like, he's just this, like...You know, he's a business savant as much as, as he is like a creator savant.
It, it might be more so. I can certainly va- yes. I think it is critical for- But then you're coming in as CEO too... creators to grow up. Like, I mean, that's also, that's like a- Yeah... a tough spot to it, right?
It is. It does. But I think that, you know- There's five of them. They outnumber you. That's...
Well, that's [laughs] yeah, that's the beauty of it, I think, and one of the reasons, is that they had five, and you know, most- Yeah, that's true...
it's been, it-- that one, historically, someone's led creative, and someone's led social, and someone's led finance, and someone has led production, and someone's led the business. And having
really like dear friends among them to rely on and to work through those issues, and to be savvy about that and so that it wasn't a solo person who had to do all of those things has been incredibly helpful for them.
But they also have just an amazing knack and an amazing savvy for what's going to work. That was one of the most compelling things for me in taking this.
You know, and coming in, like I think it's, it's incredibly helpful to me as CEO that they're not-- that they are as savvy as they are, because they're not throwing out ideas that are, "Hey, let's spend, you know, a lot of money to go do a thing that doesn't make sense."
Like we can work really closely on what's a cr- how do we evolve this creative or, "Hey, this brand wants to do this thing. How can we work around that?"
Like they understand because they've run the business, they understand what it takes to make the business thrive.
There's obviously experience I have and experience the team we're building here has that can help and can supplement and do some things that they don't know as well. Yeah.
But their input is incredibly valuable on all those things, and it's, it's been an amazing collaboration- Yeah... so far. And they wanna build this into like a massive business. Yes. Right?
Because I think that's important because you have to give up some am-amount of control, and then I think the big question with a lot of these creator businesses, I mean, it's the obvious one, right?
It's like they're often dependent on the creators. I mean- Yeah... I don't know. You don't wanna become the next Jackass. Like, I don't know they're [laughs] gonna be doing, they're not doing...
Not that the content, it's very different type of content from the Jackass. But I mean, it would be interesting if Jackass started today. I think it would actually be way more successful.
But- Well, but, but, and I think that goes back to your last point or your earlier point of building a franchise is- Yeah... like how do we...
And this is, you know, ultimately the, the mission is how do we create, how do we ensure that Dude Perfect means something above and beyond the five founders? And- Yeah... how that- They don't wanna be doing trick shots.
No-nobody wants to see them getting back injuries. [laughs] Like- They've, there've been-... rib breaks... there've been more than, more than a handful of torn shoulder labrums already.
So we're, uh- This will be depressing. Yeah. So I do think, you know, but that's, I think- But how are you, how are you gonna mitigate that? Are you gonna bring in more dudes, like younger dudes? Like what- I, I do.
Yes, I think not necessarily- Got to be ageist...
sort of carbon copies, but I think the idea of additional talent and additional content verticals in particular, like I think there is an umbrella of what Dude Perfect can mean, and so there are a number.
If you, you know, when we talk to our audience, there's a lot of asks that do more that looks like content type X or content type Y, where our creative influence can be involved, but it might be other people actually doing the, doing the challenges or doing the competitions or doing the shots, and that's something.
That's, I think, the next evolution for the company, that how do we develop more, you know, talent, more IP outside of the original founders that's really gonna be the next frontier for us. Yeah.
So the demo, though, is, I mean, it's, I guess it's like, I don't... It's not just male, but it's like young people. Like, I guess- Yes... but young, I mean, it's into, it's into children, right?
Like I would imagine like a lot are like in their teens. Y- and younger. Yeah. Yeah.
We've a lot, a lot of fam- If you come to one of our live shows, it's, you know, anywhere from little kids up through teenagers and high schoolers and young adults, and kind of a mix on that, on that spectrum.
So it's, uh, obviously there's some data elements we can't gather about our youngest fans. Yeah. But we know it's a highly family-oriented audience.
Okay, so that's not an issue 'cause I mean, a lot of, a lot of like, you know, particularly young people brand, like, I mean, I look at, I think about like Skim all the time, right?
And I'm like, okay, you started for like, you know, young women in their 20s, and then all of a sudden they're like, you know, they're well into their 30s.
They're getting like close to 40, like probably at this point, and you age out. There's less... I guess with children it's less, I don't know, to them, like anyone over 18 is like old, so it doesn't matter.
[laughs] Well, it's what's... One, and there's a couple funny elements there. One is like the guys have been around so long that there were college kids or teenagers who started as fans, and now their kids are fans.
And so there are parents who come up to us at shows and they're like, "Hey, I've been watching you guys since I was, since I was 16 and now I have an eight-year-old and I'm at the show." And like that's one element.
But honestly, one of the things that's most impressive about, about the guys, and one of the things that I'm most encouraged about, is they like over the last decade, they have captured every generation of those kids.
Like it's not as though we wouldn't have had the growth we've had, but they've, they've stayed very focused on, "Hey, here's our, here's the demo that we wanna, that we wanna focus on," and, or, "Here, that is our sweet spot."
We're obviously gonna happily take any and all viewers, but every, you know, six, seven, eight-year-old who loves sports and comes into our ecosystem, every year we're capturing and picking up those, those new customers and, and new audience members and being introduced to a new audience, and we're not trying to desperately hold on to the 14 and 15-year-olds as they age out and changing our ethos, changing our content- Mm-hmm...
changing our approach to maintain those. We're very authentically like hanging on to w- we believe that the next generation is gonna come in again and again.Yeah. How do you mitigate platform risk?
I think there are a few different ways to do it. One is developing new formats and, and new content that exists across other platforms.
So we've developed our own app now, and on that app, we have obviously all of our content, but we also have have in-sourced a number of other top family-friendly YouTubers.
So Mark Rober, How Ridiculous, which is an Australian trick shot group, Ryan Trahan, Zach King, Nick DiGiovanni, who's a cooking YouTuber who we just made some amazing content with, who are all amazing YouTubers and sort of friends of the family, all have their content on our app as well.
And so the idea is it's a, a fully family-friendly place to, you know, get deep and, and be able to consume all content in one place. And so that's one angle.
But then I think it's also, you know, how do you broaden the other revenue streams of the business so that you're not totally dependent on it, and you're able to, to reach people in other ways.
And so I think that, you know, even just having product and having direct-to-consumer elements, like having our, our app allows us to reach fans with products and experiences that we don't have.
We're not reliant on YouTube to do so. But so, I mean, you're on like Instagram and other, and like TikTok, right? But they're, they're, they're much smaller than- We're- than YouTube.
We've done-- We-- W- they are smaller, but we've got close to twenty million followers on our TikTok, and had a hundred million view TikTok a few weeks ago, and a fifty million view TikTok a few weeks ago. Yeah.
So those are, those, those business... But I would say those platforms- But that's like marketing. I mean, it's, it's like- Yes... you're not gonna make that much money off that.
They're, they're a little bit more difficult to monetize. Yeah. [chuckles] But we do okay. There's some, there's some, some tricks up our sleeve.
A-and they're, they're really valuable at, at, yeah, continuing to sort of spread our message, reach slightly different audiences, and ensure that the brand is, is being perceived in the way we want it to be perceived.
Yeah. But at the end of the day, like YouTube is, YouTube is the North Star and sort of the heartbeat of, of our content creation. Okay. And how about, how about moving into other video platforms?
I saw something in The Verge about you guys being on Netflix. I mean, there's a lot we've done already or historically. The guys had a, a Nickelodeon show. Okay.
We did an alternate stream on Amazon with the NFL for a, a couple of seasons. We're in regular conversations with all the, many of the platforms.
You know, we've done a lot with the ESPN and, and sort of the Disney family over the years. And so, you know, I think it's, it's certainly flattering. We're excited about that, you know, things on those platforms.
I think we w- we wanna make the right content for the right platform. That w- Yeah... as you said, what works on YouTube isn't necessarily gonna work on a, a streamer and vice versa.
And so if we were to go down that path, we'd wanna make sure that we're doing something that is of the scale and is appropriate for the audience on that platform, both in terms of format, in terms of language, in terms of age, all those things.
Right. But that's like the kind of diversification, right? Like, I mean, I think a lot of times when you think about like Y- YouTube and diversifying, like sometimes people just insert other platforms, right?
But they don't realize, like, I mean, Netflix and YouTube are direct competitors.
So, yeah, if you're, if you're d- if you're, if you're massive on like YouTube, like these other platforms are going to, you know, be com- competing, and then, you know, it's better to be basically selling to like multiple platforms than, than just one.
Yeah.
It's certainly-- We're certainly looking at what the opportunities are and are, are having a number of conversations because we're, we're intrigued about reaching other audiences and, and creating some really fun content.
Yeah. And I'm interested to see how the dynamics change w-when, when the content moves into different... I mean, I know you guys do lots of different like formats, right?
But a lot of, you know, YouTube, I think one of the interesting parts, it's really the, the Jimmy Donaldson, whatever, how to succeed in MrBeast, you know, memo is really striking because it's, man, it's just all about nailing the dynamics of YouTube, and the YouTube dynamics are like in every platform that's mediated by an algorithm, you're gonna have to, not have to, but it's just like if you wanna succeed- Yeah...
like you've gotta understand those dynamics. A-and they're different in different environments. Yeah.
And YouTube is, you know, in many ways the most democratized, where what people are watching is what more people are gonna watch, and it's freely available and, and the, and sort of consumption will determine more consumption, and is ultimately what the algorithm is.
But it is a very specific way of creating content. And we've had, you know, things that we've produced where we've looked at it and said, "Man, that is really high quality.
Like that might not be exact, like best purpose fit for YouTube. Maybe we need to edit it almost in a different way because we want it to work on YouTube," 'cause that's the platform it's currently being distributed on.
But as we've done that, we've said, "All right.
Well, what could a piece of content like this, if we were to make it for a different platform, we believe we have the capabilities and the, and the sort of creative to do so."
But given that YouTube is our primary distribution right now, that's been the, that's been the focus. But, you know, our... We've a variety show called Overtime, and we've done forty-nine episodes of it.
Our most recent YouTube post was, was the show Overtime, and, you know, it's a thirty-minute variety show with four segments that, you know, I think you could hold up to m-most late night network TV.
And w- you know, if you swapped it in, it would look and feel a little bit different, but not from a quality standpoint or from a production value standpoint.
And I think it's, it's amazing that, that, that works on YouTube too. It's not all sort of the gimmicks- Mm-hmm... and the, you know, big splashes.
Like the, the quality does perform there as well is a, is an exciting element of it.Yeah. And also, I mean, I- it-- and it's always interesting to see where this kind of brand can go, right?
Like, I mean, you can go into lots of different formats. You can go into video games, and there's- There's no shortage of ideas.
You know, I'm spending a lot of my time, and my team is spending a lot of our time prioritizing what are the best ideas.
Because at the end of the day, we're still a small team where we have limited resources and limited talent time available. And so we wanna make sure that...
And, and as I said earlier, like really focused on that family trust.
And so we don't wanna do anything that risks that, and we wanna make sure that we're spending our time on the things that are most likely to, to succeed.
So there's, for everything we execute, there's probably twenty-five things that we say no to.
And it's-- we're privileged to be in that position, that there's a lot of inbound, a lot of interest, a lot of opportunity, but it also puts a lot of, a lot of pressure on the things we say yes to to make sure they work.
Yeah, because I mean, look, licensing is great. It's like super high margin, right? I mean, someone else is actually doing a lot of the work. So it's very attractive, but you give up control, and- Yeah...
you know, and I think that's usually the risk, right?
Yeah, and there's always a mix of certain things that, you know, you wanna license if you don't think there's, uh, if you don't think there's a lot of risk to your brand, if you don't think...
if you think it's something that other people's expertise are gonna do better.
And then, you know, again, given that we've raised a lot of capital, there are certain things that we wanna do ourselves, and that where we believe we're gonna treat it best.
We're not gonna allow others to, to control our brand, and we wanna sort of caption the-- capture the lion's share of the upside. Yeah. Explain the capital raise, right?
Because I think it's, it's trickier with a lot of, like, creator businesses versus... Or maybe it's not. Do you... I- is it trickier with, with creator businesses than other media businesses? It is and it isn't.
You know, I think the... there's... If I had any concerns about the talent's commitment to the business, that's what would make it tricky in a creator business.
Because this deal basically, um, like explain, explain the deal. It's like Highland, like... E-explain all of it [chuckles] as much as you will. Yeah.
So the guys raised a significant amount of money from a group, Highmount Capital, and that-- and Highmount brought me in and brought other investors in to the business. And so now we're all in it together.
And so we have a lot of capital at our disposal, and there's a lot of sort of shared and aligned incentive to build a long-term sustainable business. So- But, like, some of that goes to the dudes. Like, I...
Like, there's always- Yeah. They-... de-derisking. Like, so, like you basically reach a point, right? If you have a... If you bootstrapped a, a highly profitable business, like there isn't...
You know, you either say, "Hey, I, I, I have a great life." [laughs] Like, "There's a lot of cash coming into this business. It's great."
Or you're like, "You know, I wanna build something, you know, really big, and I also-" Yeah. "... wanna have a great life." [chuckles] And so, like, why not both? Yes.
And, and yeah, I mean, the guys are still very invested in the business- Yeah. They still-... one hundred percent. [laughs] It's always that balance, right? Yeah.
Like you either sell the business, or you're like, "I'm gonna bootstrap it. I have a hundred percent control," or, "I'm gonna bring in capital/operating partners." Right.
And they had, as they, as they raised money, there were a lot of opportunities for them to sell entirely. And they, you know, as, as we've talked a lot about, they didn't wanna do that.
I mean, they thought about it long and hard as to whether they think that was the right approach, but they all decided like, "No, we're..."
And that, you know, they certainly could've taken a lot more money off the table in tho- in that circumstance. Yeah.
But they decided, like, this is something that we wanna be able to share with our grandkids and build something that twenty-five, fifty years from now still exists and still means something.
And so that's really the, the mission for us, is not... If they wanted immediate short-term return, they had other pathways.
We-- They chose an investor and leadership team that's really incentivized and focused on how do we build something that over a long term is going to be a, a really meaningful, sustainable business. Yeah.
So when you look at the YouTube ecosystem, right? I think people always go to MrBeast as the example. But, like, I mean, how many of these, you know, creator businesses can become these kind of franchise businesses?
'Cause, I mean, YouTube is massive. It is deep. Yeah. And there are, there are people who are building really great businesses there, and I think the question is just how many will end up becoming this.
I almost, I, I, I almost reject the premise of the question because- Okay... I, I look at them as businesses.
Like, I think we all just have, by having a large YouTube following, we certainly have a leg up in terms of marketing- Yeah... and brand awareness.
But I think you're gonna see in nearly every niche, whether that's beauty or fashion or, you know, like the business Mark Rober has built around CrunchLabs, around kids' toy development or- Mm-hmm...
you know, science projects.
Like, all of those niche, every niche where there is a business, there is no reason that it can't start with a YouTuber, or it can't start with who has massive authenticity and a big audience and a, and, and awareness there.
So I don't think there is some constraint on how many YouTube channels can end up being successful. It's really more how effective YouTube is at building those, building those brands and building those businesses.
I think there's a limit within each sort of vertical or niche as to how many of them can be successful, but the number sort of, of niches or verticals is, is massive.
Yeah, and it's interesting from YouTube's point of view because the kind of businesses, like, they, they end up... Like, when, when they succeed, right, they end up being less reliant on, on YouTube.
I mean, they still... You-- I'm not worried about Google. Google will be fine. Yeah.
[chuckles] You know, and when we, we talk to our friends at YouTube, like, they are very encouraging, and, you know, they just co-hosted our office grand opening a few weeks ago.
And I think they love that-A business like ours that started as five friends in a backyard could have evolved to this point is an amazing signal about the power of YouTube, and they're incredibly supportive of our live tour and our products and our broader business because I think they understand what it says about the power of building a business on YouTube, and that's can only be in their benefit for groups like us to be incredibly successful.
Okay, so just to wrap it up, what, what are like three sort of big priorities for the next year for Dude Perfect? Yeah. And I mean, number one, continue to build out our commercial team.
That's something that, you know, we wanna-- we are rapidly scaling the team as the business continues to grow. Two is invest in our products business.
I think there's a number of product opportunities and experience opportunities that you'll see us continue to develop. By products, you mean... That, that's-- Is that licensing or you-- Do you make- No...
the products or do you license? I think we will ha- we will have a mix of both going forward. I think there are certain products today that we license, but we're pretty involved in the development process.
There's not a lot we are not in... There's-- I don't think there are any where we're not pretty deeply involved in, in development- Okay...
and execution, but I think they're gonna be more where we're truly more of the manufacturer of the product.
And then the last thing I'd say is developing new content verticals, talent, and new formats so that, you know, you'll see other channels, other faces that are a little bit more focused at specific niches or opportunity areas.
But being able to execute that to continue to build out, as you said, the franchise of Dude Perfect as opposed to the channel of Dude Perfect is, you know, ultimately a big goal for this year. Okay, cool.
Andrew, thanks so much. Really appreciate you taking the time. Yeah. Thank you for having me. [outro music]