What's up y'all? I'm Skyler Diggins, seven times WNBA All-Star, Olympic gold, medalist, and mom. And I'm Cassidy Hubbard, host and reporter for nearly 20 years covering the biggest names and stories in sports and mom. And this is and mom, a community for athletes, game changers, and moms of all kinds.
Dropping May 14th. Happy and with us. Hello and welcome to decoder. This is Hank Green, general internet guy and co-founder of Complexly, where we make SciShow and Crash Course and a bunch of other educational YouTube channels.
This is my last time in the decoder guest host chair, unfortunately. Unless Neil, I decided to have another kid someday, just give me a call. But we're gonna make the best of it because today I'm talking with my friend Sam Reich, who is the CEO and I think at least the founder of Dropout TV. You'll hear him argue with me about whether he is the founder and that's okay.
He was there. He probably knows what he's talking about. But this is an incredible story. Sam bought this company, which used to be called CollegeHumor, for $0.
Immediately had to lay off almost all of the entire staff and then got smacked right in the face with COVID shutting everything down because it was early 2020. You wouldn't think this would be a likely recipe for success, but Sam has been very successful. Dropout has grown every year since then. You've probably seen their clips on a vertical video platform, if not, watch them on Dropout TV from their most popular shows, including Game Changer, which Sam hosts.
Well, the host might not always be quite the right word for what happens in every episode, but he's definitely there. And you'll hear us talk about that a little bit too. But what Sam and I really spend a lot of time on was the problem of running a business that is getting big. It's much easier to do your creative work when your company is just you or maybe just you and a few other people.
It's harder when you have a bunch of stakeholders with competing priorities and they all want something from you. Most media companies, for example, have to deal with some combination of advertisers and shareholders who all want to make money. Dropout doesn't really have advertisers or shareholders. It has Sam and a few other folks, all of whom make good comedy.
Sam described the business model to me as a comedy sass, subscribers pay money and get programs they want to watch. It sounds like a pretty good business model to me, honestly, but it's pretty rare. So Sam and I got into the weeds about why it's harder to do than you'd think. This was a great conversation with a great friend and I hope you enjoy it.
Okay, Sam Reich, here we go. Sam Reich, you are the founder and CEO of Dropout. Welcome, 2D Coder. Hi, thank you so much for having me, Hank.
It's lighter to be here. You were doing a very interesting thing in a very different way than I think anybody else in media, which is why I think it's really going to be exciting to talk to you about this stuff and also try and figure out the wise of hows that you can do that. But to start, usually I don't really tend to go in that much for origin stories. I think they're usually mostly just a way to make people think that they could imagine that they could learn something from the very particular circumstances that one person experienced, which I think are going to be different from other people's and also the way for people to chew their own horns.
But can you give me an origin story of Dropout from the beginning of Dropout? So we don't need to get into like 2006 and college humor and stuff, but just hit me with like, how to drop out, end up in your hands. Sometimes some people call me the founder of Dropout, which actually is not true. Dropout.
You beg to differ. I do. Great. I'll take it.
Listen, Dropout was a priority that came out of IAC, who was our corporate parent at the time. So this was who owned college humor. This is who owned college humor. And for years and years, IAC was trying to figure out how we would make not just a lot of money, but a lot, a lot of money.
And there was always kind of a, a cynic, my call it a get rich quick scheme of the time. And it was ad sales and then social media took a big chomp out of ad sales. And then it was television and turned out television production and scale very effectively. And then finally, the idea was let's try going direct to audience.
Yeah, just to go OTT, as they say. As they say. And there, there was a commercial. I'm not sure exactly what the top we're going over is, but we're going over the top of something.
Yeah. I guess the whole system. It does fit like that. Brays makes it feel like we're gambling the house.
And in a way, we kind of were. There was a collection of executives who were very bullish about this within college humor. I wasn't necessarily one of them. I slowly but surely warmed up to it, imagining that if it didn't work, at least we get to create our own cool stuff for a while.
The notion was go direct to audience. There won't be the gatekeepers that there are in Hollywood. We won't have to start over every year like we do in ad sales. That is, by the way, one of the intrinsic benefits of subscription is that you're not starting your business over every year versus ad sales where you have to go out and sell every year, start from zero.
And the things are always changing. Yeah. And also like you're, you're not just in the YouTube thing, where like certainly you're selling against views, but also you're selling on these platforms that decide whether or not you get the views that can have their priorities shifted ways that are going to be advantageous or not to your business. And that's always going to be there.
Their idea. That's true. I think that was the sort of meat of our first announcement video. And I think it's really true where Avod as it were is like, what is that?
Advertising video on demand. Kind of the word like you could also just say anyone who is not going subscription. Yeah. That is a business that involves like us, the audience, the platform and the advertiser.
Mm hmm. Bounds and all those things. Yeah. Yeah.
It's not even a menager. It's a menager. And everybody knows once you once you break, it's just a nuts in there. Somebody's always getting left behind.
That's right. That's right. It's harder for everybody to achieve orgasm. You can decide to keep that in or not.
Never break, never break, never break, twice business. That's a business rule. Honestly, I like sometimes I look at YouTube and I'm like, Oh my God, their party, the YouTube party that they are having has so many different people out of that they have to satisfy. And that includes like the government, you know, like regulate totally.
And I'm like, man, I just never want to break. I want to have like my my audience. I want to have my like team. So like the people who work for the thing and then I want to have maybe the advertisers or maybe myself.
And you, I mean, you can decide, you know, not to break, to if for instance, making money isn't important to you or satisfying the YouTube algorithm isn't important to you can decide that these aren't priorities. Yeah. Well, I mean, you can't, if you're going to people, sorry, so you can't decide that it doesn't matter. But exactly.
Exactly. Exactly. This was a big aha moment for me in running a business realizing that the simpler your business is arguably the better it is or certainly the more effective you can run it. Yeah, especially at the beginning.
Yeah. I mean, businesses get complicated because they have a lot of, because they've succeeded already. Too complex to find, but they do not get complicated at the beginning. Yeah.
Yeah. Yeah. I am willfully trying to keep our business as uncomplex as possible. And it is hard.
You just added advertising. You did it. So you the final episode of Game Changer. We did not actually add advertising to drop out.
There are fans who are very concerned that it's going to happen. But that is not going to happen. There was a sponsorship though. There was a sponsorship.
Yes. That made us a lot of sense in place that you would have made this. So you find it a high dollar game show. Quote unquote made a lot of sense is an interesting way to put that.
Yeah. I think I was a viewer. It made sense. Yeah.
Yeah. Yeah. Yeah. So I warmed up to subscription.
Like I warmed up to the idea of going direct to audience means we get to simplify this operation. It means that we get to call the shots. It means that even though budgets will be less, our creative autonomy will be more. I mean, would budgets definitely be less like the thing about like, obviously per viewer, you're making a lot more money.
It's really about the number of people you can convert. That marketing, was there a lot of discussion about how you would actually market the subscription product or was it just like, let's make this available. We'll pop a bumper on the end of the videos and people will go sign up. The theory when we launched was that we would be converting YouTube subscribers to paid subscribers for a lot longer than that turned out to work.
Like that well ran dry fast. Yeah. Yeah. That sounds familiar.
So it turns out you did have a marketing vehicle eventually arrived. But this did not end up being a successful thing for the people at IAC and college humor. And IAC is like a big media conglomerate. They don't like people, they got a bunch of magazines and TV shows, TV channels.
For sure. For sure. And I think IAC kind of gets a bad rap in all this, but for the record, they were patient with us in terms of us not delivering them a big chunk of money for over a decade. Arguably, they showed more patients than I think a lot of parent companies would in that same situation.
And a lot of people in the meanwhile, gave birth to spectacular careers coming out of college humor when IAC did not very much benefit. So I remain grateful to IAC for being our shepherds through that decade. And then they, when they got bored of us, we didn't objectively fail. We just didn't succeed spectacularly either.
We had like 75,000 subscribers at the end of year one. I think they were hoping for like double that number. They tried to sell us, but we looked very bad on paper because we had just burned through their whole investment. So a lot of people were interested at first, and then they saw the amount of money we were losing and the business plan, which had us losing even more money before turning profitable.
And they all dropped out one by one leaving me. Leaving you man. Leaving me. And so you came with all your big pile of money that you somehow had.
And you just said, Hey, I'm gonna buy it. Hey, hey, what's that? You got a cigar, back room deals. No, this is the weirdest part of the story for me.
So you did not in fact go to them with a bunch of money to acquire dropout. How did you how did you acquire college humor from IAC, Sam? I find it very funny when like there's there's a certain sound bite on the internet that's like Sam used his dad's money to come and buy dropout, which is very funny in the context of my dad being the inequality guy. You are misinformed in terms of how much money you think his family has.
Yeah. For those who don't know, Sam's dad is Robert Reich. She was the labor secretary under one of the Bill Clinton. Is that right?
Yes, under Clinton, which as we all know, labor secretary is the most lucrative profession that you can possibly imagine. You see him on the internet sometimes yelling about inequality. Probably. Yes, yes, yes.
And does it very well. So I went and I offered IAC $0, which was the amount of money I had to offer. There was another offer for $3 million, but it would have gone to a competitor. They would have fired everybody and taken the assets and see what they could do with them.
And I think that they liked the idea of gambling. Oh, sorry. So my offer was $0, they would end up in the minority, the minority stakeholder. So it was sort of like, alien insurance for them.
So they get to hold on to whatever Sam does with it. Yeah, yeah, yeah. Insurance for them in case things go very, very well. And I think that they liked the idea of gambling on me more than the idea of handing the company over to a competitor.
It's a better story. If it works out, it's more exciting for them. And so we did that deal. And for the record, I would not have done that deal purely sentimentally.
I did it because I really believed in the business case. You feel like you saw something that the people at the parent company didn't see or that the executives who had been operating in college or didn't see. Like where the value was, maybe wasn't where they thought it was or maybe I mean, what we did with the company was so disruptive. I have a hard time imagining any corporate parent going, yeah, let's try that.
Like it was so extreme. I think it probably only could have happened under in a new environment. So and so the kind of immediate first step was the company got very small after you. It was in your hands.
Yeah, we went from 107 employees. I think we were to or 105 employees to seven employees. Over there. So you were also signing up for that.
Yes, we signed our deal with I see on a Tuesday in March of 2020 on Wednesday, the basketball team stopped playing. And on Thursday, we were in COVID lockdown. Whoa, I didn't realize that. That's new information to me.
That's wild. That's the basketball team stopped playing is such like a triggering spray. No, totally. Totally.
That's how I get people with that story. They're like, Oh, I remember. Yeah, I remember now. Then you had college humor, which has has since rebranded to align with the name of the pre-existing streaming platform.
But I would call it at this point, a pretty different business, and thus I consider the founder of dropout. But you don't have to consider yourself that. You're certainly a CEO though, and you're super in charge and strange, a strange way for this all to happen. When you proposed this, did you feel like it was likely that they would say yes?
No, I love that. I mean, I saw the writing on the wall, which is to say like I saw that they didn't have a lot of options. But for the record, I was a chief creative officer. And I didn't even then much to my own lack of credit over the course of 10 plus years and I see I didn't really speak business.
So it was a leap of faith in me as a non-business man. That's what I felt very conscious of. Walking into that room. We have to pause here for a quick break.
We'll be right back. Welcome back. I'm Hank Green, talking with Dropout CEO Sam Rish. We were just talking about his origin story, how he became in my opinion anyway, though not his, the founder of Dropout.
And I think that's made him something very unusual, someone who actually cares about media. There was a time when media companies were more likely to be led by people who enjoyed making media. And a time when now, maybe now, media companies are mostly led by people who are kind of on the on the numbery side, the business side. And you are, you are a current, a current example of a person who is a media executive, if you'll excuse saying that, but who is extraordinarily and deeply and constantly involved as a creative force, as a host on screen talent, but also constantly ideating and even writing.
Like you're not like, you're not just sort of showing up and reading the teleprompter. You are also coming up with ideas for shows and you are the creative vision behind, I think, probably what is your most successful show of question mark? Game changer? I think Game changer and Dimension 20 are constantly duking it out for position.
Dimension 20 came a lot like existed as a product when College Humor launched Dropout. It was a day one dropout franchise. Yeah. So the Game changer though.
Oh, I know that. That's why it has seven seasons or eight seasons or whatever. Exactly. Exactly.
I think I know that you're not super proud of those early episodes, but we love them. And my. That's nice. That's nice.
So I'm so determined to jump the shark. Yeah. Well, I mean, you have got a real sort of a creative problem with Game changer and that you continue to escalate. And actually, there is there's no more there's no more rungs on the ladder that you can.
It's true. It's hard to go further than outer space. Yeah. So yeah.
If you don't know, the idea of this of Game changer is a game show in which the game is different every episode and the contestants arrive not knowing what the game is going to be. And then they have to figure it out, which yeah, sometimes it takes more and less work to figure it out. But yeah, I mean, the most the season finale of the most recent season. I don't think I figured it out until like halfway sure, sure.
I was like, what point is this going to change? The next thing that happened, it was like, oh, this is the whole thing. Yeah. But wild.
And also, like, you know, part of this is that you work with a lot of improv comedians. And so like, that's kind of the jam that's the vibe is like, you know, we're going to play in the space together. But it does seem like you're able to direct the future with the way that you write the shows. It felt like it could have gone a number of ways that would have been much less satisfying than the way that it went.
Was that an illusion? Did you create that illusion for me? Was that like sort of a written thing or could it have gone differently? I don't think so.
I mean, I think that like we grappled with this internally. Yeah. You know, because sometimes Game Changer is a game and other times it's more akin to performance art. And there certainly are the game wonks who like those episodes ever better.
And then there are sort of like the kind of lighter-hearted audience members who who appreciate Game Changer sort of no matter what it is. I really wanted to do this episode and I would say that we pushed it through despite some inherent flaws that it has. And one of them is that the conclusion is inevitable. But what we wanted to do with Jacob and with the audience is to sort of tease them in terms of just how inevitable is it?
Yeah, no, it didn't feel inevitable as a viewer. Yeah, yeah, yeah. To make him feel like there might actually not be a net underneath him and to trick the audience into thinking there might not be a net underneath him either. But of course, I would not have let him fail.
Okay. All right. You've really got for me now. I mean, the game here knows I know would absolutely terrorize anybody in any way.
That's part of the character. Well, I wasn't going to like stop the episode before he knew I stole his blood. Let's put it that way. Yeah, I guess there was a lot of stuff that you would want to have happen.
Okay, turn up very well. So, but back to the thing, why do you think that it is less likely and harder to have a creative person at the helm of a media company now than it once was? I mean, I think like happens to industry in general. Industries take on meta qualities as people want for them to be more successful and therefore business people take over in an effort so that those businesses make more money.
I think therefore what you get is a little bit of like what's occurred. What I've seen occur is this sort of separation between these companies that are giant and monolithic and they're run mostly by finance people or maybe like promoted legal or marketing people because those are the people who the board has basically decided can best pull the business levers, right? Creative is the product, but let's pull the levers of the business. The product is a minor part of the business.
I'm saying that facetiously, but that's the attitude of these companies. And then on my side of the aisle, these smaller businesses that arguably shouldn't exist because they're much more vulnerable. It's vulnerable to run a small business. It's it's very vulnerable to run a medium-sized business in the world where now we're the middle class of our industry has been hollowed out.
Sorry to sound like someone you know. My dad, but we are run mostly by people who would be doing something like this regardless of how successful it was because we're so passionate about it, which means that we need to be creators because no savvy business person would do this. Now we are in an unusual position to be clear. When I signed up to do this, I thought it might be nice and small and humble and that I could work without a boss on my own terms for a long period of time, which coming out of the corporate world is what I wanted.
It's been way more successful than I could have ever imagined and is a lot more work and more stress and more complicated than I could have ever hoped for. So yeah, I got into this to run a small business and in fact we're in a medium-sized business. Yeah, you do. It has it has grown.
What kind of business is it? Is it it? Do you see yourself so like obviously drop out itself as a streaming platform, but I imagine that that you do not consider yourself a person who runs a streaming platform. You can see yourself as a media company.
I suppose although I'm like really into boiling this business down to its essence and also not sort of like glorifying it and I think what it is is basically a subscription platform. Like if you were to like really corner me, I would basically say I run a comedy sass. I don't actually think that you're allowed to say that. I feel really anti-pretentious about what this is.
Like you want laughs, we will provide them for $7. I mean, I think I think I do feel a little bit like Andy Warhol sometimes and so far as like I think drop out means a lot of things to a lot of people. And like for my purposes, we are a cable soup can on a canvas, which is to say like the transaction is you pay us now six nine a month and we deliver to you this collection of programming and yes, we have all sorts of creative ambitions and yes, I think drop out has collected this like really unique and wonderful audience of people who are connected to the content, they're connected to the talent, they're connected to certain things that they've come to understand the brand stands for. But at the core of that is this like a mechanism that's working, they could work or not work and if it didn't work, none of all of this would go away.
And that feels really important for me to know. I guess I should ask what the mechanism is that's working. I wanted to ask this announcement, but hopefully I'll get there. What's the thing that's working right now for you?
So obviously more people are subscribed to drop out this year than they were last year and last year than the were the year before that and it's growing. What is the thing that is working there? In terms of your funnel, in terms of why do people sign up? Who are these people?
Because you don't have friends, you don't have a bunch of story media properties, you don't have that many shows. There's not that much content on dropout. But lots of people are signing up. I don't know if you can tell me a number of the number of people who you have subscribed.
For a while, I've been saying now we're like spinning distance from a million and that's still true. I think what's working without putting too fine a point on it is that people subscribe and they say subscribed and also more and more people are subscribing and they watch. And they watch. So there's people who subscribe, they don't just like coast the way I do with Netflix where I'm like, let me do something.
I'm going to watch this sometime. My rocket money situation isn't what it should be and I haven't died. But dropout pops on my TV fair amount. So these people are subscribed and actively watching.
Yes, we have a highly engaged user base. What's your funnel? How do people come into the platform? There are a few different ways.
The dominant one is through organic social, meaning they've watched clips from our shows on largely Instagram and TikTok and YouTube shorts. And you've designed shows to be good at being well, I don't know if you find them that way. But you do not. I would say better.
Sometimes better and sometimes worse. We do that. Yeah, right. Game changers very good with this because it's just like, it's like kind of, that whose line is it anyway, if people who have never heard of any of this, where there's just like good, clippable moments a lot.
I think Game changers get at this. I think make some noises very good. When you think of make some noise being being prompt execution, prompt execution. Arguably to mention 20 really shouldn't be good at this and yet it somehow is.
Sometimes they're just talented, funny people. I say as a person who was once on the show. Yeah, you get to claim a percentage of credit for that, but it's so true. I mean, like you as that character creating moments on the show, some little voice in the back of your head is like, let me turn this into a moment.
And when you have a great moment, that becomes marketing for the show in the world in which we now live. Yeah. And that didn't exist five years ago. Like that when COVID happened, that was a very small ecosystem.
And now it is a huge part of online video and also very hard to turn into value. So very few people are able to turn their reels and their shorts and their ticktocks into any amount of money. Some people have ways, some people have very large audiences and then it gets easy. But you have, you've turned it around where it's like, this content only exists because of a thing that costs money.
And if you would like to see more of it, you can come be one of the people who is the reason that this content exists by being a subscriber. I think it'd be very hard for dropout to work if we hadn't imploded the advertiser supported part of our business. Yeah, you just kicked it off. You were like, I don't need this.
Yeah, I was basically like, I can't run an ad business. I'd be no good at it. I'm in a lot of ways, like a terrible salesperson, like, sure, like in that. So that just wasn't hard.
You can sell things. I just don't think that you want to sell that particular thing. Sure. Hey, thanks, man.
This is it. Yeah. You are on the other hand, a very good salesman. I have so many socks because of you and I love them all.
I love that. So what you're saying is that the vast majority or the biggest hunk of the people who are subscribed to dropout came in because they saw clips and then they saw another clip and then they saw another clip and they're like, fine, I got to watch this. And where is this? I'll find it.
The vast majority of people. So I think 10% of our subscribers right now come in through paid. Oh, okay. So you do you just sort of like run the best clips?
Yeah, we do. We do. We sort of use the organic social performance to like clue us into what what clips we should amplify. And I think that's helped us out through low periods.
Even that is you're using the clip. You're just like, you're going, you're moving from our campaign. Yes. So that's that's really the thing.
And do you ever like, I know that you did like Dungeons and Dragons where there were some new there was like new talent bring to the platform. These people have fans. Maybe those fans are going to sign up. Has that also been effective?
Oh, for sure. For sure. I mean, you could argue that we are certainly like using the content to market itself, but there's all sorts of ways that we're doing that. So casting and stun casting is certainly one of them.
And Dungeons and Dragons Queens was huge for us. Okay. Okay. Are the shows that have the most audience the most responsible for signups?
I would say so. Yeah. A bit of a self-affilling prophecy there where it's like the most popular shows, the most Washington platform to have the biggest social channels tend also to drive the most viewers. Yeah.
So what are those? I mean, no show that's currently on the platform doesn't have its own hardcore dedicated audience. You know, if a show isn't that a problem? Because you can't cancel anything.
Yeah. I mean, we have not exactly formally canceled, but we have sort of pause production, sideline put on the back burner shows that are not didn't collect audience as well. The most popular shows in the platform are Dimension 20 and Game Changer. And then the second most popular shows on the platform are some combination of smarty pants, very important people make some noise.
That makes sense to me. We have to take another short break here. We'll be back in just a minute. Welcome back.
This is Hank Green talking with my friend Dropout CEO Sam Reich. We were just talking about what's popular on Dropout and how it got that way. And that gave me a chance to ask how they make it and what else might go on the platform. Have you ever considered putting stuff on that you didn't produce?
So right now, everything on the platform is college you marriage on Dropout produced. For sure. For sure. We have.
We are. I think the reason why it's tricky is because we consider social marketing to be a big differentiator in terms of how we do things. And if we were to go license a mainstream show, there's no way that they would allow us to power their social channels. Yes.
So there is no point to us doing that unless we get to do that. Weird. That's such a specific reason to not do that I would not have imagined. I mean, okay, the other reason the other reasons are out there too, right?
Like if we just license anything under the sun, does it dilute the brand? We're not trying to be a utility. We're trying to be more of a brand play. But I would say that we are interested in potentially hosting content on the platform that we could power it's social content.
And so we are having some of those conversations because we think it'll be an interesting experiment. But we're being very, very, very juicy about it, obviously. Gotcha. How many people are at Dropout right now?
We are 40ish on a full-time basis. But really doesn't account for so many people who are such major contributors to what we do. Right. Yeah.
Because there are so many contract players involved. The cruise side on the talent side. Yeah. And you and those people do feel a lot like part of the team, especially because in terms of dropout kind of cast members, those people are mostly not employees.
They are kind of the folk that people imagine when they imagine what dropout is. There's just a sort of bunch of recurring comedians who come in and are seen as dropout family by the audience. For sure. People like our contractors, but are also something more, it feels like.
Definitely. And which is why, by the way, profit share and which is why, by the way, like so many of the things that we do, we bend over backwards to make working at Dropout a positive experience for folks. I think that, you know, Hollywood is a system where people are used to this and expect this to agree. There are all sorts of inherent sort of benefits and drawbacks to the full-time equation.
Like, we did have full-time talent for a long time. The benefit there is security for both of us. Right. Like, we know that we have people that we can turn to and they know that they have that amount of job security.
And then the downsides are that we have to make use of those people and only those people because we have to derive that amount of value from them. So it means that the pool gets smaller. And then the downside for them is that they can't explore other opportunities that might pop up as a result of their employment with us. You know, there's also like, I mean, this has been a weakness of a lot of YouTube companies.
BuzzFeed is the best example where you have employees and then they get a really popular show and then they're being paid as an employee, but their show is making the company a bunch of money and they're not being paid as talent. And so, if Seinfeld gets popular, Jerry Seinfeld gets paid more. But if the Try Guys get popular, how do the Try Guys get to negotiate a three-times-hire salary this year? It's not how business works.
And so the Try Guys start to feel pretty uncomfortable being part of BuzzFeed and maybe want to go do their own thing. And this is from the very beginning of YouTube, a big problem. And I feel like this model of just listening to how Hollywood has worked in the past actually makes sense in this case where it's like, okay, well, you're going to come and do this show this season and the next season, if the show did really well, your agent's going to have a conversation with us and we're going to be figuring out, and you're not going to be able to do a bunch of other stuff, but this is going to be a big part of your yearly income now because that show is popular because people really like it. And you're creating a lot of value.
I don't know how much people know about exclusivity, but I think this stuff is so interesting where it's like, if you are signing up to participate in a project, let's say Apple TV comes and wants for you to be in their show, you will sign a contract with Apple TV that's like you are committed to X number of episodes over Y period of time. You're usually signing up for multiple seasons. But as a part of that contract is like, you can't do other things, usually in that category, which is to say, like, you can't do other streamers shows, for instance, without Apple's permission. But then imagine, for a moment that Apple takes a long time to pick up a second season of your show.
And then those times are built into your contract. So maybe it takes them like nine months to pick up another season of your show. For that nine months, you are not allowed to do other streaming things, which is a huge, you just got to learn to juggle or something. What are you doing?
What do you do? What do you do? You just got to like stay in shape too, because they need you to look the same, you know, and it's like nine months went by man, I'm a different guy. Yeah, for sure.
Keep your hair the same length, keep your nails the same length, you know, don't. I mean, it's that that's tough. Exclusivity is really tough for folks who are grateful to be working with the business in this business at all. And so a very little negotiating room.
So like our attitude about it is, if we were not accommodating of people's other work, we would simply be forcing them to make a choice between us and the other work, whatever it is. So the fact that we don't ask for exclusivity of any kind means that we will some can work with us because otherwise he is full time and Jimmy came alive. Right. You know, oh, yeah, interesting.
We are trying to position ourselves as everyone's favorite second job, unless they don't have a first job, in which case, you know, they are very, you know, happy to be working what we want for them to be very happy to be working with us even so. I mean, you're getting a reputation for this for being like pioneering the more creative ways of doing things, being more worker-friendly to everybody from PIs to talent and everything in between. And you know, profit sharing for contractors is like for talent is not usually how things work though. Like there's like residual systems, like various ways of doing this, but like I've never heard of anybody doing like a straight profit share.
Why do that? I guess why. And also like why is it hard? Like is it hard?
Is the reason that other people don't do it because it's hard or is the reason because like they don't have to? I don't think it's hard. I don't think what we're doing is that hard to say nothing about a brilliant finance team who does it, but like specifically the reason we're doing profit share and like not quite like it's logistically hard to cut the checks. I mean, it's hard to make the business model work.
I think it is kind of hard to get the checks. Yeah. I feel like I've been thinking about it. I think royalties are harder.
Yeah. For sure. Royalties are harder. Which is why we do profit share because it's like a much simpler for us from an admin standpoint.
I think that other companies don't do this because it is not standard and because they can get away with not. But the big one is probably this, which is that they have people that they need to satisfy, whole category of people they need to satisfy who we don't have because they brought the Twa company. They ascended to a, they made that critical error going up from Twa. And right there, number four, number five, number six, depending on the company is the shareholders.
And that means that like there are people like basically by hoarding money, you are satisfying someone. Yeah. Right. Which like we don't have, there's no one to satisfy.
Well, I mean, IAC, theoretically, are they never come knocking and say like, man, you could turn this into a big boy now. Come and show us the success. IAC theoretically, me theoretically, right? Yeah.
Brennan is also partner in the company, Brennan theoretically. I've tried to invest, which he will not take my money. Maybe I someday will hang. Let me know.
And don't get me wrong, like we're all making money. Right. Right. One, like when we say profit share, we're not even talking about the whole profit.
Yeah. Right. Some of that profit goes to me anti-IAC. And of course, there's also operational funds.
You're not going to zero out the bank account every year. Of course, of course, there's operational funds, there's, there's play money. You know, we want to try new things. Yeah, it's kind of thing.
So all that money's going all sorts of different places, but, but there are no shareholders to satisfy, which means us being more and more and more and more profitable every year is not necessarily our first priority. What is your first priority, then? What are you trying to do? What are you trying to do, Sam Reich?
I don't know, man. I don't know. What do you think I should do? That's a good point.
You're in the same boat, more or less. Yeah. I do it. Oh, please, give me one.
Give me one. Oh, I mean, I feel a strong sense of obligation to the things that I have made and the people who I work with. I feel a strong sense of obligation to the audience. And I also be rewarded by making things sometimes.
Like obviously, there are some parts of my job that I do purely because of the obligation. Yeah. Yeah. Parts of my job that I do because I get paid to do it and there are some parts of my job that I do that.
And this is like, you know, different amounts in every column and different activities. But sometimes I'm doing it because I just freaking love doing it. It's so fun. Yeah.
Yeah. That's interesting. I don't feel, I feel a little bit of a sense of obligation. I wouldn't say that's my primary driver.
I think that I feel very aware and very grateful for the ability to create things under unique circumstances where I don't have, I feel uniquely under the Toa, uniquely lower than Toa. And I think that's a very... And you've got to hold on to that. What we're learning?
Yeah. It's like a really unique ecosystem to be a part of. And I think it means that we can create some uniquely cool stuff. And I love that.
Like giving birth to the stuff is my favorite part. I'm an art snob at the end of the day. I mean, I've been to the Edinburgh Fringe now like three years in a row and this year... That's something to have be part of your job.
Oh total. I mean, barely. Yeah. You hold some acts out of there.
Yeah. Yeah. For sure. By the way, it's like a very weird comedy festival that happens in Edinburgh.
It's like weeks long and it's tiny rooms and it's just weird art happens and I'm very jealous. I've never come to go. Oh, hey. We got to go some year and I'll cheer you around.
I'm waiting for my son to be old enough. Yeah. That's fair. They got great kids stuff too.
They've got a whole kids programming component. All right. We're going. But I just love, you know, weird and unusual stuff.
And when I think about like what I want to leave behind in the world, it's more of it. Okay. Love that. How do you make decisions?
That's a decoder question. We got to ask that one. Yeah. I...
There's a terrific TED Talk on Decision Making which talks about how when you're faced with a difficult decision, it's usually because there's like pros and cons that feel roughly equivalent to each other. And so it kind of doesn't matter. So like just pick one, just pick one with Chan. How to make hard choices.
A lot of the important decisions are pretty... It's pretty clear what direction to go. And then with the difficult ones, you sort of have to decide what you're voting for, like what you're optimizing for. And so if you have your priorities in order, oftentimes the right decision will emerge.
Meaning, again, hopefully our business is like pretty simple. There are a lot of factors that we have to incorporate and those factors are something in between like the content itself, the experience of the audience, the welfare of the cast and crew, our financials, what's personally creatively exciting to me. And if I have those roughly in the... They're not in that order, I don't exactly know where they fall into off the top of my head, but if I have those in the right order, I can usually make the right decision.
How do you imagine drop out in the media world right now? Do you even feel like you're a part of this industry? Or do you feel like you're kind of hanging off to the side? Do you feel like you worry about the industry broadly?
Or are you just sort of like, that's not me? It's more that's not me. I mean, I do feel like I'm on a little bit of an island where I get to be sort of like the mad trickster king of domain. Yeah, and I mean, it's very weird to be like, for most streaming platforms that have been launched by big companies to have a million subscribers would be a tremendous failure.
And showing that that... It seems like a little bit, in terms of like macro media ecosystem thing, it seems like this is a totally inevitable thing and that it should have happened more already. Everything keeps fracturing. Right?
So like more and more niche-ification of everything. And why wouldn't this happen to streaming platforms? And we haven't even talked about the fact that Vimeo like enables this with a pretty low lift. So you use, I think a product called Vimeo OTT.
That's correct. Yeah. And so Vimeo basically lets you build a streaming platform and they have a version of it that's all it all integrates with itself and it can be in the app stores and it can be in Roku and all that, not PS5 or wherever. And that simplifies this process.
And I think that what Vimeo is betting on there is that this niche-ification will occur. But I think when you look at the people who use that, it's a lot of individual creators or people who have a workout like a thing, they're lifestyle influence type things. I think that maybe the RuPaul streamer represents. Yeah.
I think so. Criterion collection. Oh, okay. Yeah.
And it just feels like it would head in that direction and that the different segments would each get their own little world, which will of course continue to make alienate us from each other because not approaching the same things. It feels symptomatic of this world of content that we're living in. So it's a fair question. Like, well, why not more?
Yeah. And that's a good question. I think, you know, I can't expect it. Like when you drop up first hit for me, I was like, oh, two years from now, everybody's going to have one of these things.
And like, that has not really happened. And people have tried to launch some that have been less successful. Yeah. Sure, sure, sure.
I mean, I do think that like, as is the case on the internet, when you're browsing TikTok and you learn about someone with 9 million subscribers or followers who you've never heard of before, there are plenty of examples in our industry of businesses that are just running a little bit under the radar that are doing very, very well. You know, I think Nebula, for instance, is one of those businesses. And, you know, in the last couple of years, maybe a little bit inspired by us, maybe not depending on the specific example. But try guys have launched their answer to this critical role have launched their answer to this.
But my hope is that there are more people that follow in our footsteps because I think it's only better for dropout if there are more examples that people can point to say, I subscribe to this, you know, small collection of indie streamers. And I think it behooves us to have that group be larger because it means better resources for our business as well. You know, we depend on third party technology in order to power dropout. And, you know, if there aren't enough streamers to use Vimeo OTT or, you know, they're not going to keep supporting a product.
Yeah, exactly. Do you ever regret using Vimeo OTT or not building your own thing? No, we tried. People don't realize this.
The first rendition of dropout was built on Vimeo OTT's API, but it was our own product. And we employed something like eight sophisticated engineers at IAC to build our own product around it. And it was a rutal, which is to say, it's just a very hard to do very well. And these were great engineers.
Yeah. What you're doing is in part running a company, being a business person, managing your direct reports, I should ask how this is all structured. How many direct reports do you have? Technically, I think I have like two or three or something like that.
What we decided pretty recently, like within the last year, is that I should have almost no direct reports, like basically just the C suite. And then everyone else should follow, should follow on someone else. But that's pretty new. What are your departments?
There is creative burgeoning department. There is marketing. They make a lot of YouTube shorts. There is and paid and email and everything else that falls into the world of marketing.
There is tech, which is pretty small, but does exist. There is production. There is programming as it is independent from production, which are the folks who not only handle our content as it's related to metadata, but also responsible for maintaining our programming schedule and putting stuff up into the platform. Also QC is a part of that department of quality control.
We have, for instance, one very talented person whose job it is simply to, they do it. It's a big part of what they do to watch every episode to make sure that there are no glaring issues with it before it posts to the website to the platform. I think that's about it with one or two struggling design, with one or two struggling departments that features one person or two people. There is the person who keeps the dimension 20 to make sure.
Yes. Interestingly, dimension 20 is its own department. Because it's such a big operation and the lately game changer makes a noise that becomes a department as well. You have partially run this business trying to make all the things work.
I assume mediating when people disagree with each other and doing all of that. HR is new. HR is new as of the last seven heads. You're also on-screen talent.
I think there's another thing that, and creative, and writing, and all this. There's another thing that you are that, I think that this is not that unusual. There's always a public facing role to a CEO. Beyond that, not only do you have a public facing role as the CEO and on-screen talent and founder depending on how you want to count that.
You embody what dropout is trying to be and a strength. I think a potential problem is that you're trying to be a good guy while you do it. You're not Carl Icahn. You're not ruthless businessman.
You're trying to do this the right way. One of the things, my brother and I call this the perfect person problem, if you tell people you're trying to do things well and you're trying to do things right, then people expect you to do it perfect. There's no such thing as perfect. There's always things that you're balancing.
How do you imagine and manage your own public perception where you want people to know that you really are trying to do things better? But you also need to convey to people that you will not be perfect. I think this is definitely a work in progress. I think that's a dropout audience, in part because of, I mean, there's a demographic thing here, but they're responding to and signing up in part because of a halo here that you're helping to create by doing things well.
Their expectations are going to be high. You've got some high expectation crowd and I've seen some examples where they feel as if you're not maybe living up to your values or something like that. Is that management, that reputational management? Do you see that as a big part of your job?
Where do you imagine that? I guess, I know. I think that when I say work in progress, that applies not only to this meta question, but also the way I look at dropout in general, which is perfect as impossible to achieve standard. I try, at least when I'm out in the world, to really as much as possible convey, that I am a comedy person who inherited this thing, who is trying to do things novelly and experimentally, but that I don't even know as much about this kind of stuff, as Adam Conover does, as part of my peers do.
When I say work in progress, I really mean that we are trying things and we will make mistakes. What I'm specifically not doing on social media, or anywhere else for that matter in conversations like this on panels, is to portend as if dropout or I have it all figured out that we are an exceptionally moral company or that we are an exceptionally idealistic company, because I think that that tension between running a company and being good to people inherently exists. So we are, what I've claimed to be the case, and I really do still think it's the case, is I consider myself a highly creative person. I'm trying to make content that's as innovative and interesting and funny as possible.
I hope people hold us to that standard. Otherwise, I'm trying to set maybe some new standards for decency, but I would underline that word. I am also, as you have coached me through a lot over the months and years, Hank, becoming quickly used to the fact that you can't please everybody, and that you will have to make decisions that are unpopular sometimes. And that's okay.
I actually, some people, particularly entertainers, need to be liked by everybody, and I think some people worry about me in that way, because they think that my affable nature means that I would really dislike being unpopular. And I am actually totally okay if some people don't like me. So it's part of growing up in a household where a lot of nasty things might have been said about your dad? Honestly, like, nepotism, I'm sure, served me even ways that I'm not fully conscious of in all sorts of ways.
But one thing that is really useful is that my dad modeled fame for me. So I do have someone very close to me out there in the world who's also a public person who, by virtue of his job, deals with controversy at least three times a year, which it probably thickens my skin a little bit. Interesting. Is there on the list of reasons that you like this or want to do this?
We talked about those before, but let's end here with this. Is there on that list, just that people aren't doing things weird enough and you want to do things weird? You want to show that like 100% you and I have connected a lot on the topic of Home Star Runner over the years. Home Star Runner may be like, like hugely responsible for my career taking the direction it has.
Like it was incredibly influential on me and something I loved about it was like, it felt like a walled garden of weird that existed at a URL. Like I could, and I think about how sometimes like, I wish that I could plant a forest full of weird trees on the internet. I wish that the internet was still a place where just like, there was really fun, mysterious, hopeful stuff that existed a URL away. I would hope that dropout can just be one of those things.
All right. Well, that feels right to me. And I hope that you keep doing it. I hope that people keep finding it and loving that weird being a little place where a lot of strange things happen.
Thank you are also hugely responsible for and inspiring in the creation of weird stuff for the internet. You're also inspiring it so far as you just like are so prolific in terms of the amount that you do. Yeah, I do. Nothing else.
But and also a lot else. So thank you for being with the first quantity. But since you're thank you for being both the friend and the inspiration that you are. Thanks a lot.
I appreciate coming on and chatting with me and getting into the the weeds and the details here. And someday we will find another podcast where we will just do this. I look forward to that day. All right.