The only thing that really matters the end of the day for most brands who are
doing creator sponsorships, which are going to be DTC brands, is conversion. So the
views don't matter, the subscribers don't matter.
There's just a whole lot of misinformation out there and this leads to this
belief that creators need to get X views to make X dollars when it really doesn't
work like that.
Welcome back to the Money with Katie Show Rich People. A few months ago we did
an episode on this show, it was number 58, called the monetization of
self, personal brands, and the business of influencing. And this episode
really explored how bizarre it is to commodify your personality and private
life for money. But we didn't really explore the creator economy as a whole.
And here's why we should. It's estimated that the creator economy could be
worth as much as $104 billion and one in four Gen Zers say that they plan to
become content creators. Now, I'm going to try to avoid today what I would
consider to be the obvious takes on this topic. And instead, I want to focus on a
few major pieces of this puzzle that I personally find most interesting and
the least discussed. Today, we're going to attempt to answer four questions.
Number one, who is the creator economy really good for? The brands, the platforms,
the creators, or all three? And where does the audience fall in this breakdown?
How is ROI measured and our influencers more effective than traditional
advertising? Number two, how much does the average influencer make compared to
the top earners are 1% of the influencers earning 98% of the available ad
dollars? How much survivorship bias is happening here? Number three, how
sustainable is this path as a legitimate career? And other ways to make it
more sustainable? Who's doing it well? So for that part, we're going to explore a handful of
creators who I think are taking an exceedingly business savvy approach. And I have to admit that
in researching this episode, I was stuck on one key non-scalable aspect of the influencer
industry. If everyone wants to be an influencer, who is left to influence? More importantly,
who is going to be our doctors and our farmers and our baristas and our postal workers
and our teachers, though I have mostly resolved this cognitive dissonance by realizing that
that is actually true of most professions that the world would be equally screwed if everyone wanted
to become, say, an attorney, no offense to my husband. But I do think it's a question we should
hold in the back of our minds throughout this conversation. And number four, how do different
platforms handle monetization? And where are the opportunities moving forward?
Our guest today, Thomas Frank, is a productivity YouTuber. He is nearly 3 million subscribers
on his main channel and another 160,000 on a side channel that he runs as a bit of a passion
project with niche tips for a software called Notion. So we're going to talk to him about
how he became a full-time creator and how much he makes from his various income streams.
He's going to break down the actual numbers. Thomas is, in my opinion, a very excellent example
of someone who's very plugged into his craft as an art form. And I really like that he provides
tangible value and tools to his subscribers. So we're going to unpack his philosophy about that too.
And we'll be right back after a message from the sponsors of today's episode.
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So let's get into this by discussing at a high level question number one.
Who does the creator economy benefit most? The advertisers, the platforms, or the creators themselves.
Because while it's easy to focus wholly on the individual influencers,
they exist within a larger ecosystem, a triumvirative capitalism, if you will.
And this ecosystem cannot exist without all three components, the influencer,
the platforms they're using for distribution, be it Instagram, YouTube, TikTok, WordPress, etc.
And the advertisers who pay them to promote their products.
Now in order to answer this question, we need to look at who stands to gain the most.
And I won't bury the lead. I think the real winners are the platforms.
YouTube owned by parent company alphabet of Google fame. Maybe you've heard of them.
Made $29 billion in 2022, which is a lot, but still peanuts compared to what meta the parent
company of Facebook, Instagram, and WhatsApp pulled in $116 billion in revenue.
And as a small point of transparency, I briefly worked at meta in 2021 on the WhatsApp platform.
Now the platforms and maybe more specifically, the founders of the platforms
are really in the catboard seat and they stand to gain the most because they are providing the marketplace
in which their users create the product itself. But these companies comprise tens of thousands
of employees. So one person is not making billions of dollars with the exception of the founders
and their early investors. Zuck, for example, is worth a reported $87 billion.
The top influencers by comparison are making somewhere in the tens of millions of dollars range
each year. The largest YouTube channel by revenue belongs to a guy named Jimmy Donaldson,
better known as Mr. Beast. His YouTube channel alone made $54 million in 2021 with 153 million
subscribers as of May 2023, which is amazingly only one element of his sprawling empire that we're
going to unpack later. So if you asked me, Hey, Katie, would you rather be the founder of a successful
social media platform or its most successful influencer? Well, if the metric we're using to gauge
success is money, the answer is probably clear. But the platforms themselves are often left out
of these conversations, which is funny because the industry literally does not exist without them.
Advertisers can pay influencers directly to promote products or they can pay the platforms
to surface targeted ads to their users. So how to advertisers, the true customers of both influencers
and platforms, stand to benefit or lose here. We have to poke at ROI in order to get our answer.
How does a business is spending on traditional advertising? So think commercials, banner ads out
of home like billboards, compare to the return on influencer campaign spending and social media
marketing. According to Neil Schaefer, the author of the age of influence and the founder of a
digital marketing consultancy, one study suggests that influencer marketing provides an ROI that is
roughly 11 times what a brand could expect from something like banner ads, which have you
ever clicked on a banner ad? Have you ever called the number on a billboard that you passed on
the highway? I didn't think so. Perennial, it's estimated that a brand earns $5.20 on average for
every $1 invested in influencer marketing. But it's important to note that this swings wildly
based on the influencer, the campaign, their audience, things like that. According to a study
from Smart Insights, 89% of advertisers said that they found the ROI from influencer marketing to be
at least as effective as other methods, and 48% said they found it to be more effective.
Annic, totally, I'd think that this tracks. According to Neil's book, 80% of people report making
a purchase decision based on an influencer's recommendation. And while traditional advertising
is great for brand awareness and brand affinity, it seems like both the platforms and human nature
itself would dictate that actual sales. Conversions, purchase decisions would be more directly
impacted by someone you trust online recommending it to you with a link and a discount code, of course.
When I worked in advertising and marketing, I remember seeing agency invoices for high production
value commercials that we were outsourcing. These things were works of art, the creative product
of dozens of brilliant minds coming together over months of laborious work, and the price reflected
that. Millions of dollars were spent on single campaigns that would run in a few 30 or 60
second TV spots. Now around this same time, I was periodically helping our influencer marketing
team lead. The team was one person at the time back in 2016, source new content creators,
whom we would pay thousands of dollars or tens of thousands of dollars at the most for content.
So while it's difficult to quantify the results from either approach since neither in our case were
directly intended to drive sales and were instead shooting for that nebulous brand awareness play,
it is hard to look at the scale of the costs associated and not wonder whether the latter would be
more efficient. So I asked Thomas Frank, our YouTuber guest, to weigh in on who he thinks the primary
beneficiary of the creator economy is. That's a good question. I think you could build an entire
podcast episode out of that question. So I'm going to put this in relative terms and then absolute
terms. I feel like in absolute terms, the platforms win at the end of the day. They are the ones
facilitating all this communication between the creators, the viewers, the advertisers. They also
have access to all that data. If we want to get into like machine learning and AI talk, they are
the best position for training models, like being the platform holds a lot of power. Relatively,
though, I feel like the creator stands to gain the most. If you think about the world 20 years ago,
30 years ago, anybody who's an artist, anybody who wants to express themselves typically has to go
through some sort of formal gatekeeper, like a record company or publisher to get any kind of
distribution. And now we live in a world where you can grab your phone. You don't need a professional
studio like the one I'm sitting in right now. And you can blow up overnight sometimes and have
a media business that sustains your ability to make whatever you want. So yes, the platforms are
going to have the most absolute gain, I think, but in terms of where we're starting and where you
can end up, I think the creators in the best possible position. And I think it's still quite good
for advertisers, but you know, at least with the five minutes of thought I put into this question,
it seems like they're sort of bottom the totem pole when it comes to like the real value that
can be gained from the creator economy. Overall, it doesn't appear as though anyone in the triumvirate
is really losing. A talented 25 year old has the potential to make millions with no barrier to entry.
Brands can achieve higher ROI and the platforms are obviously cleaning up. But what about the followers,
the subscribers, the influence sees, we're going to come back to them. But in the meantime,
let's go on to question number two, which is Mr. Beast might pull in 50 million a year,
but how much is the average influencer making?
And answering this question is more complex than we see eye for a few reasons. The first is
survivorship bias. Now, this occurs when only the strongest survive, so tales of challenges and
success are necessarily skewed by the fact that you are only hearing from the winners.
And content creation is a lot like any other business model. At first, you are doing a lot of
unpaid work and there is no promise of profitability. Number two, there's also no one standard way
that influencers make money. It's not the same as asking, hey, what's the average salary for a
software engineer with three years of experience? Influencers can make money by being paid by the
platforms directly through affiliate relationships with brands by selling something directly to their
audience or through a pay for play model wherein they are charging a rate for an ad or any combo
of the four. Making matters more complicated, two different influencers with the same number of
followers or subscribers can command wildly different rates based on things like audience
engagement and conversion rates. For example, it's reported that TikTok or Alex Earl charges up to
$70,000 per sponsored video, which sounds obscene until you peek under the hood and see how many
sales her brand collaborations drive. Because when you think of a TikTok or like a person who makes
260 second videos per week every year and earns $7 million from doing so, it sounds ridiculous
because it is, but ultimately creators like this can charge that much because the brands know that
they're going to make way more than $70,000 from that investment. We have to think about these
creators as though they're media companies or advertising agencies, not individuals.
And finally, the least exciting reason why these numbers are complex is because their costs
can significantly diminish the actual take home pay or rate per hour. You have things like agents,
lawyers, taxes, healthcare, publicists. These are business expenses that directly impact what people
are actually taking home as you'll see when we get into Thomas's numbers in a little bit.
But regardless of these complications, let's try to get a sense for scale. A company called
Hype Auditor, which LOL, sampled 1800 influencers and found that the average earnings are $2,970
per month on Instagram or about $36,000 per year. So if we categorize the middle class as earning
annual incomes between $50,000 and $150,000, about 22% or one in five full-time content creators
falls into that category per some research from ConvertKit. It was surprisingly difficult to find
metrics about the overall amount of money sloshing around in the creator economy and what
percentage of influencers it's concentrated within. But it is worth noting that the highest paid
influencers are still celebrities. Kylie Jenner reportedly charges $1,000,000 per sponsored
post. Lionel Messi brings in $500,000 per post, so to Selena Gomez. And in that sense,
it's hard not to reason that the bulk of the spending is still probably concentrated in a few
people who are already famous for something else. I asked Thomas how much he charges and he really
schooled me on the ins and outs of pricing and what the brands actually care about.
I'll give people the actual number right away. Historically, I've been paid between $10,000
and $15,000 per video on the main channel. I've never run a sponsor on Thomas Trek Explains and
I don't plan to. This gets into a whole discussion. But when it comes to what would I charge and if
that's useful at all to anybody listening to this, it kind of isn't because the only thing that
really matters at the end of the day for most brands who are doing creator sponsorships,
which are going to be DTC brands, is conversions. So the views don't matter, the subscribers don't
matter. It's how many people see the ad that I did for a brand and then actually go and convert.
What is that brand's CPA target? So cost per acquisition target. What is their customer lifetime
value? And so if you go to business school or you use Google for five minutes, you will probably
run into the LTV, CAC ratio. So that's customer lifetime value compared to the customer acquisition
cost. So that's what businesses are actually looking at on their own spreadsheets at the end of the
day. And then a lot of them will go through agencies who love to tell YouTubers that, hey, your views
are what get you sponsors or we're not even going to tell you what we're taking. And there's just
a whole lot of misinformation out there. And this leads to this belief that creators need to get
X views to make X dollars when it really doesn't work like that. Imagine I'm running a pool cleaning
channel. And my friend Matt actually does this called swim university. And he's reviewing like robot
pool cleaners and pool cleaning chemicals. And then imagine like someone else is running a channel
that's like talking about celebrity drama, like a moist critical, for example, he just talks about
anything and everything. Think about the audiences for those two different channels. People watching
the swimming pool robot cleaner review channel probably own pools. So if I'm an advertiser and I
have a product that I'm making for pool owners, I can almost guarantee that every single person
watching, let's say a 10,000 view video over there is a pool owner. So they're already a likely
customer for my product. Meanwhile, if it's moist critical talking about what he thought about
Overwatch 2 ceasing development on PVE or some other just like drama, it could be anybody, right?
Everyone likes drama. So if I'm again a robot pool cleaner advertising company, maybe I have like
0.1% of that potential audience who owns a pool, I can't afford to pay as much per view on a topic
like that. So it really doesn't come down the views. It comes down to what's it going to cost me
to acquire a new customer via this channel. The auction rates for a certain channel might be much
higher than on another channel. So that's why if we go on, you know, people on Twitter are always
posting their CPM rates. You'll see some people being like, I got, I think I saw $100 CPM
for one of all the Abdull's videos and it turned out to be his video on how to build a website
versus, you know, a lot of my friends who are doing movie reviews are lucky if they're getting
like a dollar or two CPM because that kind of topic just doesn't lend itself to intent to buy
on profitable niches. All I have to say, I don't want to give the impression that it's not a
lucrative career path, especially given its low barrier to entry. Sure, Kim K might get 400
grand for a post, but a lot of people in their early 20s pulling that much or more per year
after just a few years of creating content. And I think that that is an asymmetric bet that's
probably worth making if you think you have what it takes. But that's a question for another day.
And again, I would refer you to episode 58 about the mental health downsides of commodifying your
personhood. And as an aside, when I say people, I should probably say women because it's reported
that three and four content creators are female. To which I say, finally, an industry where we are
paid more. Just kidding. Kind of. We'll be right back after a message from the sponsors of
today's episode.
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All right, so now we're moving on to question number three.
How sustainable is this path really? Like mental health concerns aside,
is there an inherent expiration date on a 20-something NYSE fashion blogger?
The short answer is yes and no. Much like pop stars go in and out of favor,
audiences like novelty. If you think about the hot influencers of just a few years ago,
very few of them are still top of mind, though that doesn't mean they're not still making
an income from their audiences. This is partially why Taylor Swift has been and will always be a
business phenom to me because she was a huge deal when I was in middle school and now 15 years
later she is set to gross $500 million personally from her era's tour.
I digress, I'm a born against Swiftie, I think blondie is a genius. Okay, anyway, moving on.
This is why it's important to think about influencing like a business, like a media company.
It's not a traditional career path. There is no guarantee that your relevancy is going to pay
the bills 18 months from now. So approaching content creation like a small business is important
if you're going to try to make it your lifelong gig. I want to quickly explore five content creators
in the space who I think are incredibly business savvy and are making very smart long-term decisions.
The first is Blogilates, founded by 36 year old Cassie Ho. So Cassie started producing videos on
YouTube in 2009, practically the Paleolithic era in influencer years. And while she began by
producing fitness videos, her brand and content evolved over time. She launched her fitness line
Pop Flex in 2016 and this was not your standard merch deal. Cassie has a background in and
love for fashion. So she's the one sketching and concepting the clothes herself. And her
understanding of social media is a powerful sales tool. She makes short form videos that show
the behind the scenes process of coming up with the designs. And from a technical perspective,
these videos are excellent. There's a lot of movement. There's great storytelling,
the ability to be watched with or without sound. And in 2020, she signed a licensing agreement
with Target to produce a home fitness line, also called Blogilates. And she told YouTubers
Colin and Samir in a recent interview that both businesses, this is mind blowing, Pop Flex
and Blogilates are now pulling in eight figures each in recurring annual revenue.
For those listening who are trying to frantically count zeros in your head,
that is at least $10 million per year each. Cassie made the switch from monetizing content
to selling a physical product. But she continues to leverage her understanding of short form video
to drive said product sales. Then of course, we have to come back to Jimmy Donaldson, Mr. Beast.
We mentioned him earlier. I would say most people know about Mr. Beast, but I think he's unique in
that he has achieved such massive scale. And his stick is reinvesting all of the revenue
that he's making into future videos, which enables him to create extreme concepts that
I think nobody else can really compete with. He spends three to four million dollars per month
on his video production, which generates concepts like hydraulic press versus Lamborghini.
And last person to take their hand off jet keeps it. His real life squid game video cost more
to produce on an hourly basis than the actual squid games show on Netflix.
From YouTube views alone, it's estimated that Mr. Beast earns three million dollars per month
paid by the Google AdSense, the platform. But Jimmy has also expanded into product. So his ghost
kitchen concept partners with restaurants to produce the Mr. Beast burger, which reportedly earns
seven hundred and twenty thousand dollars per month. And his feastables line of chocolate bars,
which was launched in a Willy Wonka style video reportedly made more than ten million dollars in
revenue in its first few months. Again, we see these creators who achieve massive digital scale,
pivoting to physical product. And it's hard to know exactly how viable these businesses would be
if the creator decided not to pump out new content to support them. But in both cases, a single year
of revenue is life changing money that if you invested it properly means you're going to be set
for the rest of your life. It doesn't really have to work forever. The most interesting thing about
Jimmy's approach, of course, is continuously upping the ante, reinvesting practically all of your
video revenue back into future videos is something that basically nobody else is doing. The next
content creator that I want to highlight is Nick Hubert because his approach is something I haven't
really seen at what I'll call a normal person scale before. So rather than using the advertising
pay for play or affiliate marketing model, Nick monetized his Twitter following of 300,000 people
through equity relationships with the companies that he partners with. So in an interview that he
did with my first million, he told Sam and Sean that he reached out to a company he was posting
about a lot anyway and he was driving a lot of new business their way and he told them he wanted
to buy an equity stake in their business. His approach is a little, well, unrefined. It sounds
by his own telling that he basically threatened this business owner that he was going to stop promoting
them all together. If the guy didn't allow him to become part owner, which well, as opposed everyone
has their tactics, but it worked and now he reportedly earns around $50,000 per month in revenue
from his equity in that business. The main takeaway from Nick is that if your influence is specific
to a certain industry or niche, as it almost always is, you don't have to take ad dollars if you invest
in the businesses you believe in and you want to talk about them anyway. I'm not as familiar with
disclaimers around being a part owner and a business you're promoting, but I'm sure there are
certain disclosures that you need to make in your content that you are an investor in the business.
I like this model though because it's far more self-sustaining than affiliate revenue or
pay for play because even if you stopped creating content, theoretically, your ownership stake in
that business would still be worth something. And if your influence is especially trustworthy,
you can actually have a major impact on a small business's success. Next up is Melissa
Wig-Tepperberg, whose business model I learned about in a Harvard Business Review case study
that I paid $10 for because I'm putting the team on my back today. Melissa's strategy is reminiscent
of Blogilates, but with a twist. So rather than pivoting to physical product, Melissa has a
subscription-based fitness platform where her workouts are gated behind a paywall. So she posts
fitness and health tips to her 1 million followers on Instagram, but has her own online platform
that'll set you back $9.99 per month for access and according to Harvard Business Review,
she had 92,000 paying subscribers as of 2020. So for those doing the fast math, that's around
$11 million per year in subscription revenue. As for this business model, it leverages influence
and trust, but to provide a digital service. So it's less dependent on add dollars or constantly
hunting down new partnerships. Hopefully by now you've kind of picked up on this trend,
the different examples that we're covering are all far more interesting and diverse than
merely posting short videos and doing brand deals, which can dry up quickly and without warning.
When you have no product of your own, you're just an advertiser. The last creator model that we're
going to explore is Thomas's. Frank, not my husband. Digital product sales fueled by what I'll call
YouTube dominance. And we're going to let the creator in question speak for himself.
When did you start making videos on YouTube? I actually started in 2006. 2006,
which was one year after YouTube went live. This wasn't my official start date, but my brother and I
got our YouTube channel up and running in 2006. So this is probably like right after YouTube pivoted
away from being a dating app. Believe it or not, that's what YouTube it originally was.
And we were just uploading like videos for making our backyard. We were trying to make a movie
at one point, just like silly kid things. And then I started my channel lay dormant for years,
started blogging in 2010. I started my podcast in 2013 and 2014 I finally got the bravery to put
my face on camera and upload that to the internet. So 2014 was my what I call my official start
date on YouTube. I know like Thomas Frank explains was not your first foray into the YouTube world.
So I guess let's talk then specifically about Thomas Frank explaining the business that you're
running now. How long did it take you to hit your first 1000 subscribers? So I looked at my analytics
and I guess I should preface this with subscribers. It's the same thing as the as the views question
here like subs really don't matter these days. I guess they have some social signaling value for
people who still think they matter, but YouTube is a very algorithmic platform. So you'll see channels
that have 10 million subscribers that can't pull 50,000 views in a video anymore. And you'll see
channels that are blowing up right now, getting millions of views per video and they don't even have 500k.
So the subscriber question is less impressive than it used to be. I think on Tiav explains,
I had my first 1000 within the first two weeks, which is interesting because I don't remember doing
a whole lot of promotion for that channel in the beginning. The whole point of Thomas Frank
explains was to be like the notion channel. And I wanted to be separate from my main channel because
I wanted to talk about very nerdy technical things. One of my first videos was like if it was HTTPS
slash, you know, the regular URL handler would open a notion page in the browser. If you replace
that with notion, colon slash slash, it would open it directly in the desktop. And now they fixed
that and like it's automatic, but back in the day, you had to do it manually. So one of my first
videos was like, here's how you can build an Alfred shortcut on your Mac to automatically swap the
URL handler. And I'm like, that's way too nerdy for the main channel. I need to make a second channel.
You know, looking at the stats, we had a thousand subscribers within the first couple of weeks.
And I know we had a hundred thousand within two years.
I kind of want to back up a step and talk about how you became interested in your niche because
like productivity tips and these techy things with notion hacks. Like I'm interested in learning more
about what drove you to want to make content about something that niche. And why do you think your
approach is so successful because you do have a massive audience larger than I would think for
how involved and how to your point kind of techy and specific. Some of it is.
Yeah, so I guess if we're talking about Thomas Frank's planes in general, a lot of people have
written essays about this, but there's like this almost like Lego-like effect with notion. And I
think some other apps do this well, but notion does it particularly well, I think, where the user
gets in, it's easy to start, but then it's so customizable that they want to go and talk about what
they've built. And then they'll see somebody else try something and they'll be like, well, I want to
go do that myself and I want to customize it and tweak it. So it's this sort of unicorn type of
software where people are genuinely stoked to go talk about it because they've imbued it with
their own creativity. And I've had to explain this to brands because I've had other apps or like
other startups that make apps reach out to me and they're like, hey, do you want to make a channel
for our app too? And I'm like, no, this app has like four settings. So there's, you can't make
a channel around it. I can make a video about it. I can be like, hey, this is a useful app,
but there's a big difference between an app that has utility and an app that gets people excited
to go talk about what they've built in it. And notions just kind of like this great combination of
ease of use, but also customize ability. So you can basically make your own software without
knowing how to code, which means people are like, oh, I built a CRM, I built a task manager,
I built a pokedex, like all this kind of fun stuff. And I think that's what makes it such a
compelling topic for an entire YouTube channel. But I'll also note like, where Thomas Frank
explains is right now is pretty small potatoes compared to say any of the channels that are big on
Microsoft Excel or Microsoft Office tutorials. There are I think two million subscriber channels
at this point teaching Microsoft's office. So a long way to go, I think. When did you launch your
first digital product? What was it? How much does it cost? So the first digital product was
actually creators companion. And that is a notion template that basically gives people the exact
system that we developed with my team over four years for managing all of our YouTube channels and
blogs and social media channels. And I built that for myself because I was frustrated with the
juggling of apps that I had to do to be a full time content creator. Like we had scripts and ever
note, we had shot lists in, I think, to do list. We had like team tasks in a sauna. There was
all these different places and teams would be like, where's the script? Where's the, you know,
whatever. And there was a whole lot of other workflow frustrations. So I found notion initially,
I think because we're trying to build a company wiki. But then I kind of found some of the features
that made it really good for managing a YouTube video project. And we eventually hit upon a system
where we could capture an idea and notion, we could guide the entire project through the production
process. And then we could even make it a useful piece of archival content, which we could go back
into for a review or for referencing script parts or for like, where's a shot that we shot for
that video? What folder is on the server? We could have that in notion. So it kind of just became
like this central source of truth. And in 2021, I was finally starting to look at ways of monetizing
times for explains because I had built the channel with no monetization plan in place. I just
wanted to build a really great niche channel. And my first initial idea was, well, maybe I'll do a
cohort based course because they're hot right now. I think the pandemic had a lot to do with that.
It was very meta. There was like a course creators fellowship for people who wanted to make courses.
So it's like a course for course creators that on deck was doing. And that was a cohort based course.
So I signed up for that. I think I paid like three grand for it. I went through half the course.
It was really, really good stuff. I have tons of notes. It was very valuable. But half way
through, I realized, I don't want to do this. I don't want to make a cohort based course.
What I think I want to do is make a product. So I got to thinking like, well, this this whole
creator's companion that I had built for ourselves, this is like the book software that doesn't
exist anywhere else. What if I just made this into a template and tried selling it? And it felt
a little bit of a risk at the time because before I went and sold my templates, the only people
who were really making a lot of money in the notion ecosystem were people who had full-on courses
with community features. And the templates were almost like bonuses. And then you had a whole
lot of people in the community saying no one would ever pay for a template alone because notions
built for just making things. And I kind of had just a contrary and thought there, this feels like
the spoke software. We find it very valuable as a team. I think there's a niche for this. Let's try
charging a bit more. So we launched it into a beta. I did very little advertising because I did not
want a huge flood of customers before I knew it was battle tested and bug free. And we I think we
initially priced it at 99 for the base edition. And then I had a hundred and twenty nine dollar
version that came with my task manager built in. And with almost no advertising, it started making
like a few grand a month. I had a bit more advertising starts making like 15 grand a month.
And at that point, I was like, whoa, people are buying this. Number one, the assumptions
were proven wrong. People will pay decent money for a notion template alone. And what this is
done is it has basically replaced one sponsored video per month of the main channel. So initially,
the goal was can Thomas Freck explains be essentially a side business that allows us to put more time
in research into the main channel videos. So we don't have to have as big of a really schedule
or as frequent of release schedule. And then ultimate brain was the next one. That's my second
brain template. And that was more like kind of a passion project in my part because I had always
wanted this single system for notes and tasks and projects for my whole life. It had been an app
for basically notes and an app for projects. And there's a calendar over here and like you kind of
judge all these apps. So it was something I was trying to build my spare time with notions since
2018 when I finally I first started using that app. There were enough bugs and enough like
limitations that didn't work. But then 2021 rolls around. They had released enough updates that I
thought it was ready for prime time. And I had learned enough about the platform myself that I
just decided to build it. And then we launched that to a wait list and pretty quickly were making 90
grand a month and then 100 grand a month. And now it's like 140. So it's like it was quite a
surprise. When I hear you talk about this and I do want to get into your the methodology around
your product development and your customer service. But what I think is so charming about your
story and about you as an entrepreneur is that you really were solving your own problems. You're
clearly so passionate about these things and your brain is so just fully in it. It's like I think
someone that was just like woke up one day and was like, I want to make a lot of money quickly.
I'm going to come up with a template. It's like that would never work. Like you almost can't force
it. In this case, it just seems like, oh, this is something this guy would be doing this even if
he wasn't making any money from it. He would be making these things for himself and working on them.
So I just think that that is such a fascinating aspect of of the people that really make it big
and like do something really impressive nine times out of 10. They're just think that they would
be doing anyway. So let's talk customer service. Let's talk product development. How they go hand
in hand for you. I'll note this is my philosophy. I don't think that every single digital product
needs to have active support. But when I was getting into this, I realized, well, this is kind of like
something for nerds. We're working with very, very customizable software. We've got filters and
sorts and formulas and all sorts of crazy things. And I think if I just put the product out there
and my support philosophy is go figure it out and Google it. I'm going to massively limit the
potential audience for the product. And I think I'm going to have more dissatisfied customers
because there's a lot of that expert paradox where you as the creator who are in the thing all day
long are super familiar or something. It's like breathing. But then you give it to somebody who
hasn't really had as much experience and they're going to be stuck. So from day one, I knew I wanted
to have active support of some kind. My other thought on this was there are going to be things like
you mentioned that other customers are going to run into in terms of like workflow limitations
or friction or just things that they want to do that I wouldn't have thought of. And if I'm doing
support, I'm going to I'm going to get the best way of figuring out what those things are.
We ask for testimonials as well. We ask for feedback. But you're never going to get a more honest
answer from somebody about how they're trying to use your product than when they have a problem
with it. Because then they are super incentivized. You know, they're driven to reach out and be like,
hey, I'm trying to do this and it's not working. For one example, something that we're going to be
building into creator's companion very soon is a way to actually track sponsors and brands that
you have reached out to yourself and track their relationships while you're trying to negotiate
brand deals. I never put that into the original template because I've worked with an agency for
six years. They completely handle all that for me. The only thing I cared about was just having
a database of sponsors so I could keep like talking points and brand assets in a single place.
But now I have all these customers who are like, well, I don't work with an agency. I reach out
to brands myself. I want a way of tracking that. So we're going to build that. And the other thing
is I also believe wholeheartedly in refunds. I realize that this disadvantage is me because you
can't return a notion template. I have some people and I don't even ask them to do this, but they're
so sweet. They're like, I deleted the template from a notion workspace. Don't worry about it.
But my philosophy with refunds is you want to make sure your customers are satisfied 100%
and there's going to be a certain percentage who are going to get excited. They're going to hit
the landing page. They're going to buy right away and they're going to realize this wasn't for me.
And there's just there's no way to 100% eliminate that group of people before they buy
without making your sales page like overly wordy and overly copiated and it's going to be
way less effective. So a much better way to do this is just to provide a no questions ask refund
policy. This also means that people who are getting refunds are not clogging up your support queue.
And you're going to, you know, if they didn't have the opportunity to get a refund,
they're probably going to ask more questions. They're going to be more frustrated. They're going to
take more support time. So there's this great balance between having a great refund policy,
but also great support, which will prevent a lot of refunds from happening in the first place.
So I think sometimes people will hear that or see that and be like, oh, overnight success. But
what you're not seeing is the, you know, oh, well, I really started 2006 and then I kind of,
you know, then I put my face on the channel in 2014 is like, this is many, many years in the making.
And so I kind of want to dig into the relationship between your content and your digital products.
Because like you said, this is something where you're reliably producing over six figures in
revenue from this product every month. I assume that is because the content you were making and
the people you are attracting with that content are like your ideal customer for this type of
products. I didn't have a monetization plan basically at all when I started Thomas Freight explains.
I mean, it really came down to like, I was spending Saturdays just dinking around the notion
building stuff. And I still do. As one does, there's a little bit of casually build a notion template
on Saturday. I was just having so much fun building stuff in this tool. And then I also had some
inspirations in the past. I remember this guy Brett Kelly had kind of made of a name for himself
way back in like 2012, 2013 as the Evernote guy. 2013, this guy Brett Kelly was, he had Evernote
Essentials. I don't remember how much it was making, but it was pretty good amount of money. And I was
like, well, could I do that for notion or could I be like those people who teach Microsoft Office and
have two million subscribers on their channels and they've got courses and they're doing all kinds
of stuff? Let's just go and try to make like the ultimate niche channel for learning notion.
I'm loving this. I think it would be really fun to try to build like the ultimate library
of educational content for anyone who wants to learn this app. And I was thinking like covering
the entire vertical of it. So from the absolute basics all the way up to the top, I wanted to have
content covering it. And I just figured if I do this, there's probably going to be modernization
potential down the road somehow. It could be consulting. It could be writing the book on it
someday. It could be flying out and doing workshops. I don't know what it is, but it seems like
a pretty good bet. This app is growing and I like doing it. And sort of more generally, my philosophy
has always been that you want to be at the intersection of something you're good at,
something you enjoy doing and something that there's a growing audience for. And I perceived that
that's where I was with notion. It was blowing up, still is blowing up. I love doing it,
and I'm pretty good at it. So I just wanted to start building that channel. And then with the with
the templates, I realized like, well, the channel can almost act as like number one and educational
resource, but number two, a funnel for the templates. If people are interested in learning how to
build stuff, there's going to be some percentage of those people who either don't want to go as far
as I've gone and they still want to get their hands on a done for you template or there's going to
be some people who don't want to build all. They just want to use this tool because they think it's
cool and they want someone else to set it up for them. I can serve both of those markets and use
the content as a funnel for bringing them in. And how often are you publishing new things on Thomas
Frank explains like once a month, maybe once a month. Okay, so that's kind of the amazing thing,
though, is that it's a creative, right? Like you have this back catalog of educational content
that anyone that's searching on YouTube, they look it up. Doesn't matter if you put it out a year
ago, six months ago or yesterday, they're going to find it and they enter that funnel, which is
so to me, why YouTube is so unique compared to platforms like Instagram that are a little more
ephemeral where the shelf life of something is so short by comparison. So break down your revenue
streams for us. How much do you make from your various efforts and how do you think about this
holistic business that you have? So right now we make the majority from Notion Templates. I think
at the moment we're around 140,000 for this month raw revenue. And then there's refunds that will
come in and then there's paying everyone. So that's just raw revenue. Yeah. And then we have
other streams. But it mostly comes down to templates being the biggest thing. Right now we're not
doing any sponsorships. So pretty much zero from sponsorships. We have some coming in from affiliate
revenue still. We have a decent chunk coming in from AdSense on both channels. And then I guess
like I sometimes get revenue from music I've put out there or book sales. But right now it's definitely
like templates of the lion's share. We are gearing up to get new videos on the main channel again.
So that might mean new brand deals at the very least will be advertising Nebula, which is the
streaming service I'm a part of. And then we'll have more AdSense revenue at least from there too.
So let's talk costs then that's our raw revenue full-time employees, contractors trying to get a
sense for other business expenses. And like what does your take here look like and how much of this
are you kind of funneling back into the business. So in 2022 we did 1.4 million in revenue.
Yeah, that was mostly it was a million in ocean templates. The next biggest one was AdSense.
Oh, Skillshare courses brought in about a hundred thousand and then affiliate. Nice.
Staff was about 450,000 that year. Transaction fees were 68,000. They're going to be much higher
this year because the zero interest rate environment has gone away. Studio was 48k. We had about 30
grand in SaaS subscriptions, 20 grand in travel and then 180 in other stuff. So about 800,000
total expenses. I took home 615 before tax. Love the transparency living for this. And really
appreciate you being here just because anytime I see someone who treats this like a craft and
is just really striving for excellence and is all in. I'm like, yes. So thank you for being here
and being so bad pun, being so frank with us about about how much you're earning and then how
you've set up your business and kind of your philosophy. Can I plug a small thing? For sure.
So on my site, this is just like a thing that I've been brain dumping into for a long time. But
if you go to creator.tamasjfrank.com, it's just like a collection of everything that I think of
in terms of what I think creators should need to know. So if you are curious about building a YouTube
channel or monetizing it, I just add to it whenever I get a chance. It's just like for your
resource. So maybe check that out. Well, I can't tell you how much we appreciate your candor
and transparency. So thank you for taking the time. And to close out, I want to talk about how
the different platforms approach monetization and where I see the opportunity in the future.
And whether or not it's a net positive. I think the platform with the most potential and the
most creator first business model is drumroll, please. YouTube, but with a caveat. If I were starting
over today, I would start on YouTube. YouTube's algorithm is a very powerful search engine and
good content tends to get surfaced more regularly. Here's Thomas on why YouTube in particular is so
powerful. I almost see YouTube as more akin to blogs and SEO than to other social media. In fact,
I wouldn't even call YouTube a social media app. Like it has social networking functions, but is
primarily a distribution platform for video content. And it doesn't work. I mean, it has some
similarities to SEO and how Google works, but then it also has this additional recommendation algorithm
on top of it that you do see an Instagram or a TikTok or whatever. The big difference is it's
much more focused in the long tail. And then it also does have that search function that people
really do use. YouTube's approach to monetization is more lucrative than Instagram and TikTok, which
means you could theoretically focus on just making excellent videos and not selling ads to sponsors
yourself. And you would still have a monetized channel. Though I'll tell you something that feels
true to me as someone who just not have a big channel on YouTube when comparing platforms like TikTok
and Instagram. In Colin and Samir's interview with Cassie Ho, otherwise known as Blogilates,
they highlighted that as far as conversions go. That is, you're trying to sell a product with short
form video. Instagram reels tends to be seems to be top dog as a social platform. Because while TikTok
is a place that you can achieve mega virality, if you're selling a product, Instagram tends to be
more highly converting. Again, though, this is an anecdotal opinion of mine that has been reinforced
to me through other creators. The other reason TikTok might not be ideal is that it's at the center
of a regulatory hot mess right now. It is the platform that is most at risk of being banned,
censored or otherwise changed, in which case, my mental health will undoubtedly take a direct hit
without my algorithmically flawless content IV drip of silly little cat videos. But in our
aforementioned creator ecosystem, there is a fourth member who is not the platform, the influencer,
or the advertiser. And it's the follower or the subscriber. For those of us being sold to
the overarching question worth asking beyond all of the business talk about the financial effects
is, is it a net positive for society?
When I weigh all the pros and cons, I do think it's a net positive with the caveat that I feel that
way most strongly about creators like Thomas, who have a specific niche beyond generic lifestyle.
And I understand the appeal of lifestyle creators, but I fear that that's where the line becomes
the most blurred around providing value versus shilling things that your audience probably does
not need. District pay for play model that's employed without proper disclosures in many cases,
and or to sell a new life changing serum every month falls more in the watch your back category
for me, wherein it's not inherently unethical, so to speak, but I have a harder time seeing how
the net effect is value additive for the people that are being sold to. Creators like Thomas,
share tips to help you be more productive or more fulfilled in your work or Cassie who teaches
Pilates on YouTube. There's a specific skill or point of view that's being offered for consumption
and entertainment. Learn how to master your to-do list and nail the perfect setup. The products that are
being sold like hand weights for a home gym or templates for the notion app, they're cut and dried
applications of the core competency, and the inherent promise of such a product is obvious and
probably fits the audience's needs. While everyone with an opinion and product is likely selling a
lifestyle to some degree, the lifestyle that being productive or being fit will provide to you is
adjacent to the product, as opposed to being the product itself. Or to use our own example,
our show is about personal finance. The products that we sell support the skill that we are
teaching, so it's relatively straightforward. The creator economy is a real viable career path,
but much like other high-risk, high-reward fields, success is nowhere near guaranteed.
To be successful in the creator economy, I think a few things need to be true about you
based on the case studies that we reviewed today. Number one, it's not enough to want to be a
content creator. The content that you're making has to be something that you are innately passionate
about and interested in yourself, like Thomas making his notion templates for fun on Saturday mornings.
And even then, it's not enough to just be entertaining and passionate,
building a viable business in the creator economy requires just that. Business acumen. That of course
can be learned, but looking at your efforts through that lens seems to be the key differentiator
between a flash in the pan, get ready with me, creator, and those who establish legitimate
businesses with sincere longevity.
All right, y'all, that is all for this week. I hope you enjoyed this episode. I will see you next
week, same time, same place on The Money with Katie Show. Our show is a production of Morning
Brew and is produced by Hannah Valais and me, Katie Gatti Tossan, with our audio engineering
and sound design from Nick Torres. Devon Emory is our chief content officer and additional
fact checking coms from Kate Brandt.