School of Motion

What's It Like to Sell a Studio? A Chat Joel Pilger

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How did Joel Pilger grow his studio to $5 million a year... and sell it?

Did you know, that you can start a studio, gain some traction with it, grow it to a decent size and then... potentially sell it? The concept of selling a company probably isn't foreign to you, but selling a Motion Design studio? How does that even work? Do you get rich once you've sold it? What do you do after that? And frankly... maybe an even better question is: How do you grow a studio to the size where that's even an option? What does it take to get a studio to the $5 Million to $5 Million a year level? And what if you don't sell it... what do you with it when you're ready to retire?
These are all great questions, and our guest today is just the guy to answer them.
Joel Pilger started his own studio, Impossible Pictures, in 1994 and wore many, many hats over the years. 20 years later he sold the studio, and then found himself at a crossroads, not sure what to do next. And then, he found his current calling which, in our opinion, suits him PERFECTLY. He's currently a consultant and partner at RevThink a consultancy for creative entrepreneurs including owners of Motion Design studios. His day-to-day involves helping studio and agency owners figure out how to grow their business, how to position themselves in the market, how to handle operations and finances, and all of the business lessons he learned in two decades of running a successful studio.
He also runs a Jumpstart Accelerator for owners who need some help getting things past the painful startup phase, and you can find out about that and all the other cool things they do over there at RevThink.com.
You're going to learn a ton from this incredibly accomplished industry veteran.

Joel Pilger Show Notes

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Joel Pilger Interview Transcript

Joey: This is the School of Motion Podcast. Come for the MoGraph, stay for the puns.
Joel: You may be super passionate about the work today, but there's going to come a day when you really don't care, and people are like, "No, that could never happen." Trust me, it's coming, and this is when you recognize that your business is huge, it's big, but there's something even bigger called your career, and there's even something bigger than that, it's called your life.
Joey: Did you know that you can start a studio, gain some traction with it, grow it to a decent size, and then potentially, sell it? I mean, the concept of selling a company probably isn't foreign to you, but selling a motion design studio, how does that even work? Do you get rich once you've sold it? What do you do after that? Frankly, maybe an even better question is, how do you grow a studio to the size where that's even an option? What does it take to get a studio to the $5 million to $10 million a year level? What if you don't end up selling it? What do you with it when you're ready to retire?
Joey: These are some very interesting questions, and frankly, ones that I've never even thought about or discuss, but fortunately, for you and for me, we've got Joel Pilger on the podcast today. Joel has a unique background. He started his own studio, Impossible Pictures, in 1994. Yes, that's right. He wore many, many hats over the years. Twenty years later, he sold the studio, and then found himself at a crossroads, not sure what to do next.
Joey: Then he found his current calling, which, in my opinion, suits him perfectly. He's currently a consultant and partner at RevThink, a consultancy for creative entrepreneurs, including owners of motion design studios. His day-to-day involves helping studio and agency owners figure out how to grow their business, how to position themselves in the market, how to handle operations, and finances, and all of the business lessons that Joel learned in two decades of running a successful studio.
Joey: He also runs a jumpstart accelerator for owners who need some help getting things past the painful startup phase, and you can find out about that in all the other cool things they do over there at RevThink.com.
Joey: In this episode, Joel and I talk about what it takes, besides good work, to be successful as a studio. We get into the realities of running a big business, and eventually selling it, and then we talk about his current role as a consultant for business owners. His perspective on our industry is very unique, and he has so many valuable insights that you are probably going to want a notepad or two next to you while you're listening to this.
Joey: So, if you're curious about what it looks like on the inside of an eight-figure studio or if you just want to experience a deep dive into the best practices of successful motion design companies in this day and age, get ready for a massive dose of that sweet, sweet knowledge. Here's Joel.
Joey: Joel, I have a feeling that we're going to be good buddies moving forward. I'm really glad that you came on the podcast. I'm really excited to talk to you. Thank you for doing this, man.
Joel: No. You're welcome, dude. I feel the same way. I think when you and I chatted a few weeks ago, we both realized, "Ooh! I think we're kindred spirits here." A lot have come in history and other things, but looking forward to this. This is great.
Joey: Right on, man. So, let's start here. I found out about you through a Motionographer article that talked about the work you do, and then I saw you on Chris Doss' show, and I was really fascinated by the worlds you're in, but I'm guessing most of our audience isn't familiar with you. So, your resume from LinkedIn and from learning about you is pretty wild. So, I'm wondering if you can give us the brief history of Joel Pilger.
Joel: Well, it has been a bit wild. I'm not going to lie. It's been a wild ride, but it's been a blast. Let's see, brief history of Joel Pilger. So, I guess I would start by saying I had an really entrepreneurial childhood. So, it started way back when I was a kid. I was born and raised in Atlanta, Georgia. My mom and dad were the types that they taught me, "Do what you love, and the money will follow." So, that turned into all kinds of crazy entrepreneurial things that I did when I was a kid.
Joel: One fun little note I'll mention is in 1977, my best buddy, Mike and I, we were, of course, Star Wars generation kids, and we went out and produced our own science fiction film that, was of course, a rebuff of Star Wars. It was called Cosmic Battles. It wasn't just, for us, a creative exercise because sure, we made a film, but we also made a business because we said, "Well, of course, we're going to hire the neighborhood kids to be actors, but then we're going to open a theater and play the film for everyone that was in it, and charge them money." So, we charged seven cents per ticket, and I think we grossed 13 bucks on that first film.
Joey: Wow!
Joel: So, it's a great example of how I've always been a creative, but I've also always been an entrepreneur as well. Anyways, if I fast forward from there, back in the early '90s, I was studying industrial design at Georgia Tech, and I was working at the forefront of what would later be called the digital revolution. So, I was getting hands-on silicon graphics workstations, and Photoshop 1.0, and doing 3D animation with Softimage. I mean, this was before anything else existed.
Joel: So, then in '94, I launched Impossible Pictures. So, that was my studio that I grew over a 20-year run to become a team of 25 people, and we were generating about $5 million per year. It started out as animation, and the effects, but it later evolved into I guess you'd call a hybrid creative agency slash production company. It was a total blast. Oh, and I should mention that that was based in Denver. So, what we were able to accomplish outside of, say, one of the major markets like New York or LA was pretty remarkable.
Joey: That's amazing. So, we're going to get into this a little bit later, but the mid '90s, the environment, and I mean, really, the thing that I think has changed the most is just how expensive it used to be to have a studio that did production or even post-production was really expensive. I saw one of your job titles in your LinkedIn during that time period was flame artist.
Joel: Oh, yeah.
Joey: So, we're going to talk to that a little bit later, but ... So, you ran a studio for 20 years, which is impressive, by the way.
Joel: Thank you.
Joey: Then how did that time period come to a close?
Joel: Well, I would say that around year 20, things were shifting as they always were, right? Yet again. I was having lunch with a good friend of mine. His name is Ryan. He runs the studio, Spillt, in Denver. I was saying, "I'm not sure if I should do this with the business or go there." He said something really interesting to me, and this is what good friends do to you, right? He said, "Joel, I think what I'm hearing is that you've accomplished everything that you set out to do, and you're done." I was like, "Damn! I think you're right about that. Yeah." It was like, "Ooh! Wait a minute. I wasn't expecting that."
Joel: It just so happen around that time that I got approached by a client of mine that I had worked with for many years doing commercials and stuff. He had formed a startup. He had raised a venture capital. He was like, "Dude, I really want you on my team, but I can't just buy you. I need you and I need to buy your company." So, we agreed for Impossible to be acquired, and I closed that 20-year chapter of my life because I was ready for it.
Joel: I realized, "You know what? I have accomplished everything I set out to do, and I'm ready for what's next," but that's just the tip of the iceberg for that whole story, but that's basically how Impossible came to wind down after 20 years.
Joey: Wow! Okay. So, we're going to dig deep into that story because the selling of a studio to someone else, I mean, that's something that it's just not really on the radar of most people in the industry. I want to get into what that was like. So, you sell the studio, and then what happens next?
Joel: Well, you would think, "Okay. You sold. You should now go retire, right? You got your big check."
Joey: Exactly.
Joel: "You're going to go right off into the sunset." I would say that there's actually a perception in the world, and that includes our industry, that, "Well, when you sell your business, you receive a big check, and you go just chill out and hang out," but it actually doesn't really work that way. Second of all, I would say this that not only myself, but everyone who goes through this transition, I had so much more left to do with my life. I had much more to contribute to the world. I was fortunate because I had hired a guy named Tim Thompson several years prior to this time.
Joel: Now, Tim's a consultant, and of course, he's the founder of RevThink, which we'll get into later. He's now my business partner. He invited me to join him, and the invitation was, "Joel, let's go help the entire industry." I was like, "Wow! That really sounds beautiful. That's a story that I want to play a part in." So, for me, we can get into the specifics of my deal and "selling my studio", what that all looked like, but the reason I didn't just retire is I had a lot more to contribute.
Joey: That's really beautiful, and I bet at the time, there were probably lots of opportunities that you could have gone after.
Joel: Sure.
Joey: I mean, I think a lot of people who run businesses and I would guess even more people that run studios probably daydream about the day where they can put the giant, heavy bag of bricks down, and do the next thing because they want to, not because they have to keep the lights turned on.
Joel: For sure.
Joey: Yeah. So, what was it that drew you into the world that you're in now, helping and consulting? I mean, were there other opportunities or was that just something that seemed very interesting?
Joel: Well, I mean, there were certainly other opportunities because it's funny, Tim knew me really well because he had been my consultant. So, I sold Impossible. I'm going to work for the company that bought my studio because there's always some earn-out three-year period, et cetera. Well, I'm less than a year into this thing, and realizing I am freaking miserable. As I'm talking with Tim one day and just complaining, basically, he says to me, "Joel, don't go start another production company."
Joel: I'm like, "Wait. What? Who said about?" He's like, "No, I know you, and you think your next move is 'I'm going to bail and go start another company like Impossible,'" and he was very insightful in that way, but what he recognized was, "No, don't go do that because all your knowledge and wisdom and experience, sure, it will help one company, yours, but if you work with me, you can help the entire industry. You can help 100 firms, right?"
Joel: So, that was, of course, very intriguing, but my other opportunities that I had in front of me, they were all interesting, but I would say none of them truly leveraged everything that I had to offer because I thought, "Well, gosh! I could go be an executive at a TV network. I could launch a content company, whatever. I could go to work at a studio. I could go be a COO or CEO or something at a production company or a studio or what have you," but none of those things really felt like they were going to, in a sense, tap everything that I had to offer.
Joel: Consulting was also a lot crazier, scarier, and I was inventing. So, to me, I'm an inventor, I'm a maker, I'm a creator. So, the idea of, "I've got to go invent this," well, that's really interesting. What would that look like? So, maybe my curiosity just got the better of me.
Joey: Yeah. I love that. So, it's realizing that you can scale your impact to a much greater extent by helping.
Joel: For sure.
Joey: I also love that you pointed out that it was scary, and that's a good thing because I found, too, in my own career that fear can often be an indicator that you're pointed in the right direction. That's counterintuitive, yeah, but I like a low level of fear at all times, actually. I don't know what that says about me.
Joel: No. I think that's really insightful because I learned early in my entrepreneurial career by one of my mentors that I was taught, "No, Joel. You're never going to get rid of the fear. In fact, it actually has a very healthy part to play in your journey." So, I've always looked for opportunities. When they have equal parts, fear and excitement, then I know I'm in the right place. If there's no fear, then I'm not doing something right.
Joey: That's some Seth Godin right there. All right. So, let's talk about some of the misconceptions that exist in the industry. I mean, this is really where the crux of your work seems to be these days is helping creatives and studio owners navigate a world that they're not really comfortable in, which is business. It sounds like you're uniquely set up to deal with this because you have that entrepreneurial bent already, and you were an artist, which it's a rare combo.
Joey: So, in preparing for this chat and when I listened to a bunch of your interviews, and in a couple of them, I think, you'd talked about this challenge that people who start studios face, and that's in the beginning, it's all about the work, and the work is enough in that initial phase, but why isn't the work enough to get that studio where they want to go? If they're starting out where it's a two, three-person collaborative thing, and they have visions of being a 20-person studio, why isn't it just enough to do good work?
Joel: Man, well, okay. So, great question. Like everyone listening, I am also a creative, like you said. I was in the chair for so many years making and very focused on creating great work, but there's this pervasive belief in our industry that it's like everyone loves to celebrate it like it's true, and it goes like this. If we just focus on producing great work, the rest will take care of itself, but it simply isn't true. The facts just don't bear that out.
Joel: So, everyday, I see lots of smaller shops that are producing great work, but they're also struggling to stay in business. Now, you might not see it. The average person may not see it because they see a website with some killer work, but behind the scenes, there can be a completely different story going on.
Joel: I'm reminded, I put this same question to David C. Baker on my podcast, and he put it this way. He was even a little bit more bold. He said, "Joel, there's so little connection between how creative a firm is, and how successful they are as a business. If anything, there might be an inverse relationship." So, think about that. What David is actually saying there, boldly, is that the more creative art, the more likely you will not run a successful business."
Joey: That's interesting. Why do you think that is?
Joel: Well, because in a way, here's the deal. In fact, creativity and business are actually at odds. Actually, it's trying to synthesize almost your left brain and what it wants, and your right brain and what it wants, and trying to do that all in one person or one entity. It's really challenging because think about it. What does creativity want? The creative wants more time, more money, more resources, more flexibility, okay? What does the business want? The business wants to be profitable, which means spend less money. It wants to spend less time. It wants to be all these things that compete with the creative. This is a natural tension, of course, that exists in business.
Joel: Effectively, if a creative runs a company and they're just great creative and that's it, and they don't have this business side, they'll essentially run the business into the ground. They'll give it all away to the clients. They'll just work themselves to death because they don't have those instincts in business that balance them to make the thing sustainable, and make it a going concern.
Joey: Yeah, and it seems like creativity also wants to take more risks, which if you're trying to grow business and make a lot of money, the easiest way is to appeal to the lowest common denominator, and have the widest audience. As a creative, that's the opposite of what you want to do.
Joel: Yeah. That's another dimension that comes into play, for sure.
Joey: Yeah. All right. So, even listening to this, I came from the world. I mean, I felt like when you're describing your background, I felt a lot of kinship there. I was never as entrepreneurial as you when I was young. So, when I finally got to the point, really, which is when I went freelancing, and I had to come to grips with the fact that now I'm running a business of one, there was this stereotype that I had to grapple with of, "I'm an artist, and business is gross, and it shouldn't be about that, and the talent and hard work, that should speak for itself." In your experience, do you find that that stereotype holds that artists are verse to facing these business realities?
Joel: Well, yes and no. I mean, I'm definitely very familiar with that stereotype, and I do run into it. Of course, my clients, for the most part, are running established businesses. So, they've evolved beyond that, but to address that stereotype, I've personally always rejected the notion that for creatives, business is somehow unsavory or beneath them or that being successful means you're somehow a sellout, right? As if you're only in it for the money.
Joel: Now, I get it, though. So, to someone that might disagree with me, I would simply ask, "Well, what is a business, really? I mean, what is it? Isn't it simply a group of people who've agreed to come together and produce a bigger, more amazing, more valuable impact in the world than they could have otherwise if they had stayed independent of each other?" So, when you think of it in that sense, I would just say, "Look, let's be real. Any given day of the week, a strong business will crush mere talent, mere hard work." I mean, we see it everyday.
Joel: There's reasons that companies come together and are successful and why they thrive. If you're alone creative thinking, "Oh, business is unsavory, and business is bad," it's like, "Well, watch out because they're going to kick your butt."
Joey: So, I was going to ask you, I mean, what's the biggest misconception that you see creatives make or creatives have when they're running a creative business? I mean, is it that? Is it that, I like the way you put it, mere talent and mere hard work is enough? Is that it or are there other things, too?
Joel: Well, I mean, let me be careful because I don't want to disk, by any means, the talent and the hard work because that's not what I'm here to do.
Joey: It's like the price of entry, basically.
Joel: That's exactly right. It's very much like, "Oh, that's your ticket into the game, but you're not going to win, especially not the Superbowl just because you got on the field," right? That's one of the important critical ingredients, but it's not everything. So, in terms of biggest misconception, I would say we hit on it earlier when we talked about that pervasive myth that I call it's all about the work. So, the biggest misconception is when you realized that the reality of running a creative business is that it's much more complex. There's actually seven areas of a business. This is what we call the seven ingredients. They have to be mastered.
Joel: Here's the trick, that being weak in just one of those ingredients can kill a business. So, once you start realizing that, "Okay, creative, the work, that's just one out of seven ingredients total," you start to appreciate, "Okay. Maybe I had a misconception that I was just going to be great at the work and the rest was going to take care of itself."
Joey: Yeah, and I want to dig into that in a minute. Just for everyone listening, we're going to link to Joel's website and RevThink in the show notes. There's a lot of amazing resources. Joel's got a podcast, and there's an infographic about the seven ingredients. You can see what they are. We'll talk about it in a minute. Before we move on, I want to talk about the same thing, but flip the perspective. We had a really great executive producer, TJ Kearney, on the podcast recently, and we dug into what these things feel like from the client side, not just from the studio side.
Joey: As creatives, we would, of course, love to think that talent trumps everything else, sales and marketing, and having a nice coffee machine in your office, and all those things. From the client's perspective, how important is talent in relation to all of those other things?
Joel: Well, first of all, I have to say that podcast with TJ was remarkable because somebody turned me on to it. I think one of my clients did, actually. I was like, "Wow! This is fantastic." TJ was so generous to be right, honest, open, transparent. I actually reached out to him and connected, and we had a great bromance bonding. I love the fact that you're flipping the conversation because here's what I'll tell you. As an entrepreneur, you live at the edge of the marketplace.
Joel: So, this whole idea that you can be in your Ivory Tower producing great work and people are just going to write you checks is a total fantasy because once you start living at the edge of the marketplace, where people are deciding whether or not to award you a job, whether or not to give you a big check for this creative work, your perspective becomes very different.
Joel: So, from the client side, you're asking, "Do all of these other businessy things matter just as much as talent?" Well, I would say this. First off, like I said earlier, believe me, like every creative person out there listening, I wish it was true that it was just all about talent. It's funny because many clients, even clients like to believe that what they are buying is talent. Does that make sense?
Joey: Right.
Joel: Okay. So, the clients might even say, "Oh, yeah. We work with them because they're the best," or something like that, but let's ask those clients. Let's actually grab one of them and say, "Hey, we're going to do this project for you. Do you mind if we totally miss your deadline? It's okay if our server melts down along with your project in the middle of things or let's say we put the wrong disclaimer on your commercial and you get sued by your customers. That's not a big deal, is it?"
Joel: You see my point here, clearly, those other businessy things like production or operations or insurance, they don't matter a bit to clients right up until they do. When they do, they actually matter way more than talent because when that kind of stuff starts to happen on a project, as a client, your career is on the line. So, you're like, "Look, the last thing I care about is whether or not this spot is cool. What I care about is if you guys don't deliver, I'm getting fired." So, this is why the businessy things, they don't have the appearance of they matter, but when they come into play, they matter a lot, even more than talent.
Joey: Yeah. So, I'm assuming that there are times when you're working with clients where you're probably advising them, "You need to do this," which on the surface appears to have no relationship with the work you're doing, but it's more of a signal that clients will see that makes you appear more trustworthy or something like that. I mean, is that what you're talking about, giving the client just a safer feeling to work with you because maybe your website is a simple Squarespace site, and then you go ahead and you upgrade it, and you rebrand yourself as a digital agency or something like that, but really, it's just about making yourself appear more robust? Is that the kind of things you're talking about?
Joel: Yes. That's one of them. Maybe I would frame it this way that when you're a small studio and you're cranking out great work, but it's smaller scale, the stakes are not nearly as high, but as you start to gain success, when you start doing $50,000 and $100,000 jobs, the game changes because you suddenly start entering a world where trust becomes paramount, where, "Yeah, the work has got to be great, of course," like you said that that's the ticket into the game, but trust becomes paramount, and confidence becomes such a crucial ingredient in the equation. I would also add expertise.
Joey: Of course.
Joel: Having a narrow expertise that sets you apart is also part of it that you're not just working with somebody because they produce pretty pictures. No. There's a hundred guys like that. What's the actual expertise here? So, trust, confidence, expertise, all those things become very, very important. So, a lot of my clients, that's what I'm helping them appreciate and even put systems and routines into place to create that environment or those relationships with their clients.
Joey: Awesome. All right. So, this might be a good place to start talking about some of the ideas and the principles that you talk about over at RevThink. You mentioned the seven ingredients already. So, let's just open it with this, okay? So, on RevThink's website, you have this other really cool infographic called The Seasons of the Creative Firm. For everyone listening, we'll link to it. Essentially, it shows you, I guess, the skillsets and the operations needed at different revenue sizes for different studio sizes, right?
Joel: Right.
Joey: So, if you're under one million, really at that point, it's about mostly the work, but at a 10 million plus revenue level, and that $10 million a year, you have a whole bunch of other things that you have to get right. I love how you labeled these things, too. I think the less than one million revenue, that level is titled Painful, which I'm sure a lot of people can get.
Joel: Yeah, the Painful Season.
Joey: Okay. So, I don't know how many people listening to this, probably not very many, but maybe a few are running a $10 million a year plus studio. So, I've never run a studio that size. I can't fathom what it looks like at that level. So, take as long as you want, but tell us what does it take to get to and stay at that level as a creative studio?
Joel: Wow!
Joey: I'm going to sit back now.
Joel: Yeah, exactly. I'm thinking of clients, owners that I work with that are at that level or above. Man, I have such tremendous respect and admiration. Of course, I had lived that life, so I can very much relate with these owners and their journey. I mean, in short, it takes everything, right? I mean, owners who reached that level have an insatiable appetite for learning, for growing, but also for adapting, and of course, ultimately, winning. I mean, they're just relentless. They are nothing short of obsessed.
Joel: Now, having lived that life myself, I can honestly say that top creative entrepreneurs, they're driven by something deep down inside that refuses to be satisfied with anything short of greatness. They just do not give up. They don't settle.
Joey: That makes sense, yeah.
Joel: They just don't settle. They won't give up until they either prove everyone or even themselves, for that matter, that they are either totally right or totally wrong. It's this, "All in all the way, we're going to make this happen come hell or high water." So, that tenacity is probably the thing that I would say is common when you're looking at an owner that runs a studio that's in that season or beyond.
Joey: Right. Okay. So, I mean, and that makes perfect sense to me that, I mean, I can tell you having run a studio that was just over that $1 million a year mark, there are many transition points. It's pretty easy, well, I won't say it's easy, but it's a lot easier to be a freelancer and to get to that 100K a year mark, right?
Joel: Yeah, for sure.
Joey: Then you can start scaling up with maybe put a collective together and raise your rates, and do something smart, and you can get over that quarter of a million mark, and maybe even half a million, depending on how busy you are. Then to get past the one million mark, there's a shift that has to happen, where you're going to have to have probably a producer, someone going out and doing sales. So, all of a sudden, sales becomes really important, which means marketing becomes more important.
Joey: That's one of the things, and then it trickles from there, and now, you're going to need an operations person to manage all this, and then finance. So, I'm wondering if you could talk about ... You mentioned the seven ingredients, and I just listed a few of them. Maybe you could talk about those, and the various stages at which you can get away with not having that much marketing, but then at some point, you will not grow anymore without it.
Joel: Well, let me first list the seven ingredients because this is actually what I would call a pattern that at RevThink we recognized many years ago. So, the seven ingredients, these are the things that really make, are required in order for a business to thrive and succeed over the longterm. So, first and foremost, it's creative. Interestingly, this is really the ingredient that we hardly touch because every studio or owner already has that down. That's where the competitive items lay, but the other ingredients are production, marketing, sales, finance, operations, and entrepreneurship.
Joel: So, now, when you look at the seasons, I would first say this that don't make the mistake of looking at seasons of the creative firm as a formula or even as a goal, okay? It's actually an observation. So, this is really the pattern, whether good or bad, this is the pattern that firms go through. So, as they launch, they grow, they succeed, thrive, whatever, but eventually, they cease to exist even. What are the patterns?
Joel: You called out that first season that we call the Painful Season. Any season has a name, these different stages of revenue and team size. Well, that painful season is really the season when the owner is stuck between a rock and a hard place because if you're that owner, you're living your dream, right? You're running your own business, woohoo, but you're also totally overwhelmed, wearing so many hats, and those seven ingredients explain why because you've got to actually have all of those down to some extent to even be a going concern.
Joel: The painful part comes is that you can get stuck there. This is for years. Like myself, I look back on my story, I was stuck in that painful seasons for six or seven years of my 20. It's quite painful because being in the painful season is where you are overworked, you're underappreciated not only by your clients, but also your team, and to make matters worse, you're also very underpaid.
Joey: Right. So, what is the catalyst that brings someone from that level up to the next level?
Joel: Well, if you talk in terms of the seven ingredients, it's you first have to start mastering production. So, this means you really have to understand how do we actually manage projects, how do we budget, how do we actualize, how do we keep clients happy, how do we keep this whole production system running in a way that we're making money, and we're keeping clients happy, and even stimulating repeat business. So, that's what I would call that production ingredient.
Joel: Once you have that in place, then you start realizing, "I think we need to get the word out," and you start thinking, "We need sales," but even before you can start doing sales, you have to be marketing, so you have to be generating awareness, you have to be putting your expertise out there in the world, communicating your uniqueness, your narrow positioning, all this. Then you can, of course, start reaching out and doing what's called sales. Sales is simply building trust, sharing your expertise, and helping people understand the solutions that you can provide, that you can produce, and the value of that expertise.
Joel: So, those are some of the, I would just call, again, the common patterns. That's the pattern that a studio would typically follow as they grow and evolve. I love the word you said. It was shift because there's definitely a shift in the owner's mindset when you've been stuck in the painful season and you go around, you're a crazy maker, you're wearing every single hat, you're doing every single job, and you think you're succeeding. Maybe you are. Maybe you're making $300,000 or $400,000 or $500,000 a year, and then after four or five or six years, you realize, "I can't do this anymore. I can't put on one more hat. I can't take on one more thing. I'm just at my limit."
Joel: A lot of people, they have their health becomes an issue, right? Their relationships become broken. There's a heavy price to pay of staying in that mode. So, once you get a sense of what's possible, you make that shift, was the word you used, then you start recognizing, "Oh, I think to reach the next level, instead of taking on more, I'm actually going to be getting rid of." So, you start to master delegating and all that goes with it, and focusing on what I call your genius.
Joey: Yeah. That leads perfectly into a question I had for you, which was, how can a talented artist scale their talent? Because when I think about, when I had made the decision to try and start a studio, I mean, that was what I was thinking. I'm like, "Well, my clients are telling me by hiring me over and over again that I'm good at this, and there's only one of me. So, how can I make it so that there's more of my skillset being utilized by leveraging hiring other people and stuff like that?" Everything you just described about the struggle of really entrepreneurs, that's what I started to feel as soon as I made that decision. So, how can an artist make that transition?
Joel: Well, in regards to talent, and this question of, "What does it mean to scale your talent?" I would say that, especially, when it comes to creative talent because that's a particular, peculiar talent, creative talent, it's actually not very scalable. Here's what I would say, okay? Because sure, the whole idea behind a studio is, "Let's create a structure that supports you as you focus and develop your greatest gifts." Now, I call that genius.
Joel: So, in a way, the business is there to support you, to help you focus on that, and develop it to be at a level that was never otherwise going to be possible, but at the same time, you're working with a team, and everyone around you is focusing on their genius. So, it's not simply your talent being scaled. It's everyone's genius coming together in a way that creates this really special alchemy of teamwork and culture. When that comes together, it creates something that's really way bigger and way more awesome than just one individual person who is scaling their individual talent. Does that make sense?
Joey: Yeah. I love that you put it that way because that's a much healthier way of looking at it, too. Sometimes when I talk to really successful freelancers, and they're rolling around the idea of starting a studio, I think that at that point, there's a very simplistic model in their head of what it's going to be like. It's going to allow me and my friends to do more work like I'm doing. I think it's better to think of it as, "We're going to create this entirely new thing that's more than the sum of its parts."
Joey: I want to loop back around to the $10 million plus level because we're talking about the creative, and then the production, which is how do you be more efficient, and scale the creative process, then marketing, then sales, but to get to a $10 million a year plus level. On RevThink and The Seasons of the Creative Firm infographic, you also have finance on there. You also have operations and entrepreneurship. So, I'm wondering if you could talk about those things because those are areas that I'd say the vast majority of people listening don't even really know what those words mean in the context you're using them.
Joel: Yes, yes, understood. Well, let's maybe add a little clarity, a little color to some of these terms, and what we mean by that. So, I would say that when we're talking about something like finance, for example, that the ingredient of finance is really simply about measuring and projecting money. This is probably the ingredient where most owners just totally suck, right? This is one of the areas where when I work with an owner, usually the first area we have to get to is fire the bookkeeper, bring in the new accountant, find a CPA that doesn't suck, and so forth. That's finance.
Joel: Now, the area of operations, I would say, is interesting because operations is all of the things behind the scenes that make a business run better. So, in fact, Tim, in our most recent podcast, he was describing operations when he was at Imaginary Forces and he was in-charge of operations. He envisioned operations as that giant vending machine that you as somebody inside the company, you could walk up to it and say, "Okay. I need a contract," "Oh, I need this HR matter taken care of," "Oh, I need insurance," "I need for our facility to run smoother," "I need a new server," all these areas of business that, wow, as the business scales and grows, these become critical to making everything else run smoothly. So, this is what we would describe as operations. It's legal, it's HR, it's taxes, accounting, systems, facilities, IT, that kind of stuff.
Joel: Now, entrepreneurship, I would say, is what it sounds like, and that is your skill and ability as the entrepreneur. That, certainly, is important when you start your business because you have to have the guts to actually go out on your own and have a vision of, "I'm going to do my own thing."
Joel: Over the years, it evolves and becomes more important because, ultimately, entrepreneurship is, "What's your vision?" and "Are you able to grow as a leader where you are in effect able to dream your dream into others? Can you actually give it away? Can you invite other people into your story?" That could play out in terms of your ultimate exit strategy even. What's your giant value proposition to the world? Are you building something that's going to be an asset? Are you going to leverage it? Are you going to merge it, sell it, so forth? So, that's that ingredient of entrepreneurship that is important all along the way, but it especially becomes important when you're in that power season, as we call it, or beyond.
Joey: Got it. Okay. So, some of those things you mentioned, and especially operations and finance, those are things that tell me you may disagree, but I feel like there's a certain level of winging it, you can get away with for a while.
Joel: Oh, man, big time.
Joey: Right? Then you get to the point where it's like, "Oh, well. Now, we're big enough where if this thing breaks, we're going to have 50 employees pissed off at it," that kind of thing.
Joel: You nailed it. You're nailing it because yes, operations is so much about this question of scale. Now, I'm laughing because I can remember when I was running my studio, I think we were at four million, okay? This is probably year, I don't know, 13 or 14. I had hired an executive producer from Troika to come work with me, which was awesome, that's just an amazing talented lady. She's been working with me for about a month on the team. She comes into my office one day and she says, "Hey, Joel. I was just give you some feedback that I've noticed here that at Impossible, nobody is really responsible for operations." Dude, you want to talk about winging it? You know what my response to her was? "What's operations?"
Joey: That's the wrong answer.
Joel: Yeah. I'm so just making it up as I go. This is what so many owners do because owners don't operate and run a company, and then go start their own thing. You're either an employee, and you're picking up bits and pieces as you go along, and you start your own firm or maybe you're a freelancer, and you start your own firm. Basically, everyone's making it up as they go. So, this is, of course, a lot of the value that I bring is that perspective of having worked with hundreds of firms. I know how it works.
Joel: That operations piece, yes, you totally nailed it. When I realized that there was actually people out there in the world who love legal, and facilities, and taxes, and HR, and recruiting, and retaining talent, all that kind of stuff, I was like, "Oh, my gosh! You're hired." That was a big game-changer. I think that was what pushed my studio from four to over five million was that simple move of bringing that in and recognizing that as a really important ingredient.
Joey: So, that entrepreneurship part, now, is that piece more about having that leadership quality of having a vision, being able to rally a team around it or is it more being able to predict the future a little bit, and take some risks, so that when as an example, the 32nd commercial starts to decline in terms of budgets and usefulness, you're ready for whatever is going to come next?
Joel: It's both, yeah. I mean, it's really both because you nailed it. The entrepreneurship aspect is that you're always right on the edge of the marketplace. So, you're always out there looking for, "What are the needs, and how are the needs evolving, and then how are my solutions or my resources going to meet those needs in order to create solutions?" That's something we call the entrepreneurial formula, where needs plus resources equals solutions. If you're a great entrepreneur, you just live in that tension all the time. It can be quite maddening because you're literally having to say, "Okay. A year from now, how is our expertise going to evolve?"
Joel: Once you start getting into two or three or four years into the future, I mean, who knows, but you still have to be asking those questions. So, you have to be very inquisitive, you have to be very curious. You also have to be extremely adaptable, where you're saying, "Okay. How do I take my genius and adapt it or evolve it, apply it to these needs?" Because I don't believe in this idea of ... Well, an entrepreneur is someone who sees a need out on the marketplace, and then you just create some resource to meet that need because that's a creative. That's sacrificing your soul. You have to be true to who you are. So, it's really saying, "How do I take my unique genius and not compromise it, but rather find where it can create the biggest value in the marketplace?"
Joey: Yeah, and it's making me think, too, that it's obviously very difficult to get a studio to the level of 10 million in revenue. It's probably even harder to stay there for long periods of time, right?
Joel: For sure.
Joey: Because once you're there, I'm assuming that there's a certain amount of inertia that creeps in, "Wow! This is working really well," and then you're thinking, "Well, but in three years, it's going to stop working. We need to make this painful change right now." Is that what you see?
Joel: Oh, for sure, for sure. I mean, when you're in a 10 million level or beyond, you are such the servant of all. So, there's this illusion or myth that we say, "Oh, if I was running a company that size, I could just do whatever I want. I would be in control. I have lots of money. I have lots of resources," but it really doesn't work that way because in a way, you're always a servant to your clients, but when you're that size, you're also a servant to your team.
Joel: So, when you get to a $10 million level, you as the owner, the entrepreneur, all you're doing all day long is either you're out working with clients, figuring out deals, and negotiating, and solving their problems, "How our company is going to work together?" or you're spending your time with your leadership team. You're coaching them, you're counseling them. Sometimes you're their therapist, right? It's a very different world you live in.
Joel: So, even though you might be like, "Woohoo! I made 10 million. I get to do whatever I want," well, no, because the question is, what does your whole team want to do? I mean, it's almost like, in a way, you're a politician of sorts because you don't just get to do whatever you want because if your team of 50 people don't like that idea, well, maybe that's not the direction you should go in.
Joey: Right. Yeah, I agree 100%. School of Motion is nowhere near that level, but as we've grown, I can feel my role, and I've really embraced it. I'm lucky that I'm into this, but I'm basically here to facilitate what the team wants to do, and to stay out of their way because they're way better at their jobs than I would ever be.
Joel: Well, that's you understanding that element of genius. Once you start realizing ... I think my genius, when I was running my studio, was I'm going to be the guy that actually rather than being front and center, the rockstar, I'm actually going to be the guy that builds the killer stage on which others perform.
Joel: That, for me, was my shift when I realized, "I'm going to get out of the chair. I'm not going to be the flame operator. I'm not going to be the animator anymore. I'm not even going to necessarily creative direct. I'm going to actually bring in creative directors that are far superior to what I'm capable of, and build a platform on which they can shine." I think that's part of what you're doing at School of Motion is you're recognizing, "Wow! If I can unleash the genius of my team, we're going to build something much more awesome and satisfying than if it was just all about me, and me being the guy that's out front and center doing all of the amazing things." It's like, "No. What you're building is bigger than the sum of the parts."
Joey: I love that metaphor of building the kick ass stage. I'm definitely stealing that, Joel. Nobody is doing that one. So, let's talk about RevThink a bit, and the work you're doing there.
Joel: Cool.
Joey: First of all, I'm curious, where did the name come from? If one of your family members says, "What does RevThink do?" how would you explain what RevThink is?
Joel: Okay. Well, let's see. So, the name is short for revolution thinking, and the name actually speaks to the particular needs of running not a business, but a creative business because running a creative business really isn't like running any other type of business. So, if you're going to be successful running a creative business, you're going to dispense with conventional wisdom, which means you're going to have to embrace a lot of counterintuitive, AKA, revolutionary concepts. So, that's the thinking behind the name. We also like to joke that ... My business partner Tim, he actually went to seminar. So, sometimes we joke and say the Rev is short for reverend.
Joey: I like that.
Joel: No. In a way, it does speak to the fact that there is actually a heart to what RevThink does, and that is we come alongside owners and we're like a friend to the owner because being an owner is very often a lonely journey, even if you have a business partner. It is a tough, tough job. When we come alongside an owner, it's like, "Wow! Finally, I have that person in which I can confide, who has my back, who understands the world I live in."
Joel: So, what do I do at RevThink? What would I tell my family and friends and so forth? Well, first, I'm a partner. So, I'm running a busy consultancy, right? That means I travel a lot, and I'm working with clients on site in the US, and also around the world. I do a lot of speaking at conferences. I host our podcast. I think the thing that your listeners will probably find just the most interesting is, well, how do I work as a consultant? What does that look like?
Joel: I guess I'd say, in short, that consulting is like I mentioned before. It's coming alongside a business owner. So, usually, I'm helping the owner regain control or grow the business or make more money or just achieve longterm goals, right? So, that longterm goals might be things like, "We want to get into content development," "We want to develop intellectual property," or "We want to someday be in a position for a merger or acquisition," those kinds of things.
Joel: So, in terms of day-to-day, what that looks like is it's me and my team because I do have a team of people behind me that also are part of our bigger engagements, but it's guiding the owner, and it's guiding the company as they master all seven ingredients of a creative firm, except for creative, like I mentioned before, because that's the one ingredient that we rarely touch. Everybody's got that down. So, it's all those other areas of business that usually need, that need my help, and the help of my team.
Joey: So, who are the clients? Are they people starting a studio for the first time? Are they established studios looking to push past into the next season or they're having a certain pain point? Who are these studios?
Joel: Well, I mean, I would say we're very picky. So, we generally don't work with first-time owners or startups because honestly, it's not that we don't want to help. It's just that they're not ready for our advice because our ideal client are really owners running a business say between $2 million and $50 million in annual revenue, okay?
Joel: Now, for those larger companies, I mean, for a $40-$50 million studio, the engagement is not just me, not at all. It's actually an entire team because I might have three or four people on my team where we're working with a big established studio. We're helping actually implement and run financial systems and routines, right? We're actually coming in and putting in operations pieces and helping run those routines.
Joel: I focus a lot, personally, on marketing and sales. So, I'm actually working with sales teams and coaching them, and putting a sales pipeline in place, and helping them negotiate, navigate pitches, and all these kinds of things.
Joel: Now, that said, I would say that there are a few exceptions because we're not just focused only on big studios because we do lead events. We do these quarterly evening masterminds called Cohort, where we're really focused on helping the community of owners and the industry overall. We even also run some programs for smaller businesses. So, one example would be I run an accelerator several times a year. It's called Jumpstart. That's actually just focused on helping smaller shops that really aren't ready for a full-blown engagement.
Joel: So, say you're below one million or two million, and you want to escape that painful season, we've talked about earlier, and reach that next level, that accelerator is a 60-day shot in the arm that is totally me helping the smaller studios reach that next level.
Joey: That's amazing, dude. I'll make sure I get all the links and stuff from you because I want to put all that in the show notes for anyone listening that's interested. I mean, I think I've mentioned it on this podcast before, but I have a business coach, and I've done coaching, and I've done these kinds of programs. It seems a little silly sometimes if you've never done it, but oh, my gosh, is it effective to have somebody pushing you.
Joey: That leads into a question I had which was, how much of the work you're doing with, and it may differ depending on the stage that your client is at, but how much of what you're doing is teaching them how to do something versus they know what they should be doing, they're just afraid of doing it, and you have to push them?
Joel: Well, that's a cool question. I mean, I would say teaching people the how part of it is good, but I think what I find even better is coming alongside and building up the entrepreneur's confidence or sometimes maybe it's someone who lost their confidence along the way, and it's helping them get it back.
Joel: It's a funny little word, confidence, because I would say when you ask me about pushing people through their fears, yeah, it's like that, but rather than pushing, I would say my job is often instead giving the owner permission to move forward because ironically, most owners actually know what they need to do, but they lack the confidence to act on it. So, I'm the guy that comes alongside them as they're wondering, "Hey, should we do that?" I might simply say, "Yes. Yes, that's exactly what we should do."
Joey: That's so true.
Joel: "Hey, by the way, I've worked with a hundred different studios, so I know this will work. I give you permission." Many times, that's what unleashes him or her to move forward. So, they already have this sense of the right thing to do, but I'm giving them permission to go do it. Of course, there's a lot more with that, but I would say that's maybe more true than simply pushing them through their fears is just unleashing them to move forward just ambiguity and uncertainty.
Joey: That's brilliant. You're saying, "It's okay for you to email that person and ask to set up a real showing at an agency," or something like that when they might think, "Well, they're going to think I'm pushy." It's like, "No, you're allowed to." That's amazing, man. I want to circle back real quick. You mentioned earlier a number that I wrote down, and I forgot to ask you about it.
Joey: You said that some of your clients may have a revenue of 50 million. That's a level where it's hard for me to even imagine a motion design studio, a true animation-driven studio getting to that level. So, I was just curious, what type of client gets to that revenue level? Is it possible to get that high just being a, I don't know if this is a bad example, but a Buck's creative firm where you're known for your design and animation or do you need to also have video production and almost be an agency, and be doing creative and strategy?
Joel: Wow! Well, I don't know that there would be a singular answer to that, but you're definitely barking at the right tree, so to speak, and that the Bucks of the world, they certainly have mastered a corner of the market. So, I would in effect say that maybe the common pattern is what I call category creator. So, what I mean by that is let's look at maybe Imaginary Forces as an example. So, this is where my business partner, Tim, he was there at the founding and working in these early years, and worked on seven, okay? We all know the opening title sequence to seven.
Joel: What people don't appreciate is that Imaginary Forces is still around, and they're still great, and in a way, they always will be because in many respects, you could argue that they invented the category called Open Title Sequence Motion Design. So, they will forever be known and recognized for that achievement, and they are able to leverage that in a way that no matter how good some competitor is at doing title sequences, they're always going to be second or third compared to Imaginary Forces because they created the category.
Joel: I think someone like Buck is also a good example of you could argue that they are a category creator in terms of modern motion design for major brands, major campaigns, that they have somehow been able to carve out their position as a category creator.
Joel: Now, I would just simply add to that because you heard this on TJ in his podcast. These guys are extremely brilliant at not only creative, but the business side is really breathtaking. They're so talented at developing talent, nurturing talent, retaining talent, leveraging that talent, and the systems and the routines that they have in place would really make most people's heads spin like, "Well, I had no idea that's what it took." It's not anything like, "Oh, yeah. We just do great work, and people call us, and we do their project." I mean, there's so much more going on there behind the scenes.
Joel: Of course, the dirty little secret is, too, that there's generally an 80/20 rule going on that usually, all the great work that any given studio or production company is known for might represent maybe 20% of their revenue. Yet, behind the scenes, really, 80% of the money usually never makes it into the public awareness. It's not on their website. They're not showing it because the money is made doing work that is good, but not going to be on your reel. Maybe it's not your expertise, it's not your narrow unique positioning. It's that stuff that it's really good work, some of it might even be great, but it's not going to be on the website because it's not quintessential, Imaginary Forces or Buck or whatever work. So, there's a lot of things in play there. I could probably spend a whole podcast talking about just that, just that question.
Joey: Yeah. That's really interesting because I've talked to a lot of studio owners, and I mean, it's definitely true for some of them, and especially the big ones. That's exactly the case. I remember at the first Blend Conference in Vancouver, I moderated a panel that included Ryan Honey, one of the co-founders of Buck, and he said that. I think he actually said it was something like 93% of the work Buck does doesn't go on their website, but it helps pay for the 7% that looks really cool.
Joel: What I love about that, too, is notice that Ryan actually knows that it's 93%. I mean, that tells you that they are actually watching and measuring those kinds of parameters. So, that's a very, very savvy business person right there.
Joey: He's a very, very smart guy. There are other studio owners I've talked to, mostly smaller, where I've asked that question like, "Is there some hard drive filled with boring stuff that keeps the lights on?" A lot of people say, "No. Actually, we're lucky. We only work on stuff that we want to." Generally, those studios are a much smaller scale. Do you see, I mean, is there a relationship there? Is there causality where to grow to a certain revenue level, you're going to have to go after that 80% because that's really where they pay their bills?
Joel: Yes. Yeah. I mean, I could generalize and say that between maybe two and four million, a studio, a production company can be very, very focused and very selective on, "We're only going to do this type of work, and it's going to be great. We're not going to take any assignments that we don't love." You might show the bulk of that to the world and on your website.
Joel: Once you start wanting to get past four million, certainly, eight or 10 million, that model just doesn't work. There's a lot of reasons why that I won't maybe bore our listeners with, but yeah, I would say that that two to four million range, I definitely have clients that fall into that category of they do great work, and they really don't do work that pays the bills. Well, I should say the majority of the work they don't do is to pay the bills. There's always work that you'd take. I have this concept I call the three R. Anytime you take on a project, it's because of the reel, the relationship or the reward. There's certainly times that you take a job for the reward. So, that reality is always in play no matter what size you are.
Joey: Got it. Let's talk about some of the common things that you see when studio owners come to you. What are the things that you look at where you can basically say, "If you don't fix this, you're going out of business"? What are the common problems that you diagnose and that need to get fixed?
Joel: Sales.
Joey: All right.
Joel: Yeah. Let me caveat that because everyone thinks they have a sales problem, but what's ironic is that a sales problem is usually a much deeper problem of poor positioning and weak marketing. So, for example, a studio, an agency, a production company, they'll say, "Oh, we just need more sales. We need a rep. We just need to get in front of the right people." That's actually a myth. What's actually usually happening is that a studio might be great at marketing and positioning their clients and those brands, but they suck at doing it for themselves.
Joey: Of course.
Joel: It's the classic, the Cobbler's kids have no shoes. So, that's a very common pattern I see with companies and my clients is, "We need more sales," but the deeper problem is often marketing and positioning.
Joey: Interesting. Yeah, that's what I assumed. In the end, if you're not bringing in enough revenue, the thing goes under. So, maybe you could talk a little bit about that, positioning. I mean, I think I know what you mean by saying their positioning isn't working right. What does that actually mean?
Joel: Well, I define positioning as a unique space or position that you carve out in the minds of your clients or I would say on the converse, you're not going to carve out a spot on their shelves, okay? You actually want to carve out a place in their minds. So, what that means is if you're running a studio and you say, "Hey, we're Studio XYZ. Nice to meet you," that that client actually really understands who you are, why you exist, and what makes you special, different, amazing, exceptional, and that later when that client has a need come across their desk, "Oh, I got to get this project done. I got to make this thing happen," that they know exactly why they would call you. It's not a question. They know, "Oh, I should call XYZ. I just met those guys a few months ago. They might be perfect for this."
Joey: So, how do you do that? So, as an example, I'll use Giant Ant, right? So, Giant Ant, when I think of them, there's a flavor to their work, and they have this story to them. I can't quite put my finger on why I know that or why I feel that way, and I'm sure a lot of people listening would agree with this.
Joey: So, intentionally or unintentionally, they have managed to position themselves a certain way, but I'm guessing a lot of studio owners might just say, "Well, I don't want to position myself as a niche or narrow my market too much. So, we're the VFX slash design slash animation slash post-production studio, and we can do everything." So, how do you approach that idea of, "Well, you need to have a position in your customer's mind"?
Joel: Well, it's not a minor undertaking, first of all. I would say every position, sorry, every studio out there is constantly evaluating their positioning, and it's never done, actually. I encourage my clients like, "Your positioning is never done. It's only better." So, it's this ongoing evolution of getting more and more clear, but there's a well-established principle in marketing that by appealing to everyone, you appeal to no one.
Joel: So, this idea of, "Well, we do it all," in fact, I did a meme, I don't know, a few months ago that I posted in our ... We have a Facebook group called Seven Ingredients. It's just owners, 500 owners around the world. I posted this meme, where I basically took a positioning statement like, "We are a creative studio that loves storytelling, and we're passionate about collaboration," and blah, blah, blah, all these things that studio owners say in their positioning. It's all BS.
Joel: The way I posted the meme, it was almost like a Mad Libs. It lit up because everyone realized instantly, you read this thing and you go, "Oh, crap! We do sound like everybody else." I would even say Giant Ant, in terms of just their positioning language that's on their website. Yeah, it's okay, it's okay, but does that really capture the essence and the uniqueness of what they are? No, it doesn't.
Joel: Now, I can say that because, obviously, I work with a lot of different companies, and I'm evaluating positioning based on hundreds of companies that you're trying to standout from. This is actually an exercise I go through with almost every one of my clients, where we evaluate our positioning, and then we give it a tuneup or we sometimes we totally overhaul it.
Joel: Like in Jumpstart, there's a whole module, we spend a whole week where I roast everyone's websites, roast everyone's positioning. They're all crying, and gnashing of teeth and, "Oh, my God! We suck," and then we spend a week repositioning. It's a process, right? There's a whole school of thought, and you go through this discovery of your power and your purpose, and your personality, and how do you express that around using the name of your firm, and so forth.
Joel: So, I guess the good news is there actually is a process that you can go through to get clear about this. I also would just encourage people to realize that the more narrow your positioning is, it seems scary, but it's like a spear. The sharper and more narrow it is, the more it penetrates the mind of your client. Really, all your trying to accomplish is how I defined marketing, and that is you are trying to create curiosity that leads to a conversation. That's it.
Joel: So, if your positioning or your website is actually answering questions, providing information, explaining your process, all this, it's actually failing. It's actually failing. So, a great marketing plan simply creates curiosity and makes the client go, "Huh? What's that about? I want to know more." That's it. That's it. Now, that's a big shift because 10, especially 20 years ago, it was very different. This is the reason a lot of people go back to this old conventional wisdom.
Joey: So, are there any examples that you can think of of studios that our listeners could go check out their site, and they are doing a good job of positioning themselves?
Joel: Yeah. I mean, I would say probably one of my favorites would be State Design. I worked with Marcel at State for a long stretch. They are a great example of they produce brilliant work. Their positioning is very clever. There's a lot of attitude. There's a point of view there, but there's not information. There's not much more there. A couple of other examples I would give would be BIGSTAR, the motion design studio in New York. Alkemy X is a good one, another client of ours. Oh, I know, Laundry. Laundry is another good one. I worked with PJ and Tony on some of their positioning. So, those are some good examples. Yeah. People could check out and see where the river meets the road.
Joey: Yeah, that's great. We'll link to all those in the show notes. I am a big fan of State Design. I'm actually looking at their about page right now just to see what they're saying. When you read it, I mean, there's a vibe to it. It might turn some people off, "We are humble, but amazing." Some clients might read that and be like, "Well, that's not humble at all. I don't want to work with these guys," and they're probably okay with that, which is scary.
Joel: No. They're more than okay with that. It's actually more than okay with that because you know what? You don't want to work with everybody in the world because that's not possible. You wouldn't even want to. My theory has always been, "Hey, I'm fine with 50% of the world hating me as long as the other 50% passionately loves me," because if I had 50% of the market share in any given market, geez! Who wouldn't want that? Right? So, it's a filter, right? Because if you go to State Design and you see that, and you go, "Yeah, I don't get it." Great. Goodbye. You just saved everyone a lot of hassle and aggravation because you weren't going to be a good fit anyways.
Joey: It's true. Yeah, that's very true. Let's move in to something that I'm super curious about because I know almost nothing about this, and that is the concept of selling a studio. I think it's funny because I think right before I met you, a studio that I used to do a lot of freelance work for in Massachusetts, Viewpoint Creative, they were acquired. So, now, in addition to you, I know two people who have sold their studio, only two. So, that whole idea is just a very foreign concept, I think, for most people. So, what should we know about this process? I mean, I don't know anything. Who buys a studio? Who the hell even does that? How much do they buy it for, all that stuff? Maybe you can just give us a rundown.
Joel: Well, okay. So, first, I'm glad you mentioned Viewpoint because I would say congrats to David and the team there at Viewpoint on that transaction. Kudos to those guys. I know them and love them. Now, this topic, I mean, obviously, we could devote an entire podcast to this topic, maybe even a series, but I would say, okay, just in terms of the top level things I can share. I would say first that the idea of selling your studio is a foreign concept, first and foremost, because most owners know deep down inside, here's the dirty truth, that their business isn't really worth anything.
Joey: Huh?
Joel: Now, I know, and I just made people go, "What? Did he just say that?" Because here's the thing. You actually know this already that all the value in your company resides in the gray matter that sits between the ears of the owner and its employees. So, anyone who is thinking about buying that business knows that all the value can walk out the door at anytime. So, what buyer would sign up for that? No one. Okay? So, this is why the concept seems so foreign.
Joel: Now, what I would say second is that what owners need to know about the process is that there really isn't a process. It isn't what you think because you don't just someday decide, "I'm going to sell my studio," and you start going to look for a buyer.
Joey: Right. eBay.
Joel: Right. Write the eBay for, "I'm going to sell my studio." I mean, instead of looking for this magical answer called a buyer someday, the process is really more about asking the right questions all along the way, all along your journey. Now, let me just skip ahead and say, third, what types of buyers are out there? Well, I've seen studios buy other studios. I've seen brands who say, "We need to build an internal agency," so they go out and acquire a studio. I've even seen larger agencies or bigger production companies that are in a certain vertical, who need to diversify, say, their portfolio into another vertical, and they'll go out and merge with another studio.
Joel: See, what we're missing here is there's this whole realm that's aside from selling your company, where all along the way, if you're asking the right questions, you're going to see opportunities to create intellectual property or to do joint ventures or to get into licensing. I mean, et cetera, et cetera, et cetera. I could go on and on. That's at least what I would offer as maybe a framework for people that are saying, "What do I need to know about this process?"
Joey: So, you brought up a really good question, which is when someone buys a studio, what the hell are they buying? Right?
Joel: That's right.
Joey: Because a studio, I mean, there's obviously assets. There's computers, and stuff like that, but you're right. The staff, I mean, I guess they come along for the ride as long as they want to, but they can always leave, and that's really where the power is in any studio.
Joel: Yes. Yeah, because the thing about when you're buying a business is you're generally buying cashflow, you're buying contracts and agreements. You're buying something that has a true longer term value and potential. So, the reason that it seems foreign for, say, a motion design studio to be sold as a business is they're just making money a project at a time. They don't actually have a three-year agency of record retainer with their clients that's a contract. They just have a deal to do the next project.
Joel: So, most of my clients actually have projects and contracts that maybe go 60, 90 days into the future, and then there's nothing beyond that most of the time. That's totally normal. So, you're right. If that's the case, there's not a lot of value there in terms of coming in and buying that business.
Joey: Right. Now, I can imagine it's pretty easy, I think, to make the leap to understand an ad agency, which some of them are humongous companies. They want to build internal capability to do production, to do motion design. It's going to be, frankly, pretty easy for them to take their favorite studio and write a big check, and then it's just now their in-house studio. That I can wrap my head around.
Joey: For other types of businesses, they get acquired for different reasons. Some of the ones you mentioned, private equity companies might want to buy it for some reason. Does that stuff happen with studios, too, or is it mostly a bigger agency or a studio buying it for capability?
Joel: It's both, yeah. It's actually both. It's funny because it's so hard to really talk about things in a generalized way because every deal is so unique that it's really difficult to step back and say, "Oh, yeah. They all follow into this pattern," and that's why I don't really ever advise any of my clients or even the industry to say, "Oh, if you want to sell your studio someday, just do steps one through five." It just doesn't work that way. So, it's really this process of you have to ... If you're going to be acquired, say, by a big agency that needs an in-house capability, where would you even start that conversation?
Joel: Well, guess what? It's called you're doing work for that agency at a very high level, and you as the owner are having conversations with the people way up the food chain that you may have been hired by a producer or a copywriter or art director, but then you get introduced to the executive creative director, who introduces you to one of the partners, who introduces you to the senior vice president, the CEO. I mean, this is a long, long journey, a long process. I would never tell anyone, "Oh, if you want to be bought by an agency, just go talk to the CEO."
Joey: "Send them an email."
Joel: That would be so grossly oversimplifying just one possible avenue.
Joey: Got it. Okay. So, let's talk about, I guess, the money part of this. So, I know that in the tech world, companies are often sold for multiples of their earnings. Does it work the same over the studio? So, if you have a $5 million a year studio with a track record of doing that revenue for several years, is there some multiple where you say, "Okay. Well, then to buy it, it's a 2x multiple, it's $10 million"?
Joel: No. No. Again, I'm grossly oversimplifying, but I would say the short answer is no because certainly, you're not going to buy a revenue because revenue and a multiple based on revenue is very specious. What's the guarantee that that's going to be here a year from now or two years from now? Nonexistent, but you might buy cashflow. I've seen studios be acquired because they have a strong consistent cashflow. They actually know how to manage direct costs versus indirect costs, and they can sustainably generate profit no matter what. We call it bulletproofing profits. It's a whole process and system, and a routine to do that. That might be an exception.
Joel: Even that is difficult because the same question still is in effect and that is, "Sure, you have strong cashflow and profitability today, but what's the guarantee that this is going to be here years in the future?" Now, what generally happens is there's some earn out. So, if a buyer does come in and they went and say to the owner, "Okay. Cool. I'm going to buy you. I'm going to give you a check for $3 million," but it doesn't happen that way because the fine print is, "I'm going to buy you for $3 million, which means over the next five years, I'm going to pay you, whatever, $700,000 a year or however that math works out."
Joel: Then you realized, So, really, what I'm doing is I'm really working for the man for the next five years. I'm no longer in control. I'm getting paid a large salary rather than paying myself a salary and profits." So, it's almost like this wager of, what is it that you're really getting? Because the idea of you're just going to get a check and walk away is a total fantasy. I would just say in earn out situations, generally, those are the worst, darkest, most miserable, most regret-filled years of any entrepreneur, and I've been there.
Joey: Yeah. I've heard that from multiple people.
Joel: Yeah. So, this is why looking for that big payday call, "I'm going to sell my business and get a big check someday," is really not a good strategy. There's a lot more out there. There's a lot more opportunities beyond just that.
Joey: So, maybe you can talk a little bit about your experience selling Impossible Pictures. So, what was that like? How did it come about? What was it like? How long was the process? Operationally, what did it mean? If you're comfortable, what was the sale price? What did actually mean for you?
Joel: Sure. Well, so, I talked a little bit about it earlier. It was in almost year 20 for me with this old client of mine. He was raising venture capital for his startup. He wanted me on his team, but he also wanted my studio. He realized it was a package deal, "If I want Joel, also, I'm going to be getting Impossible Pictures because I can't really separate the two."
Joel: For me, it was like, "Okay. 20 years, I'm ready to close this chapter and move on to the next stage of my career." Now, then, of course, most people listening are like, "Cool. How much?" They want to know a number, right? That, in effect, reveals then this conception that selling a business means, "Oh, you got a big check and you've ran off into the sunset," because as I mentioned, it doesn't happen that way.
Joel: So, selling a business that's a studio or an agency, a production company is usually a mixture. There might be an earn out. There might be stock options. There might be performance bonuses. So, in a way, here's what I'll say. Just being totally transparent, I'm actually still waiting for the answer to that question of how much because my deal was mostly stock options. So, if they're worth something someday, that will be nice. If not, oh, well, I guess in life, there's no guarantees.
Joel: So, sure, I have a certificate somewhere that says, whatever, 200,000 shares of something something. Well, if and when someday that company sells, I'll get a check, but honestly, right now, it's just a piece of paper.
Joey: Interesting. I never would have guessed that that would be a way of financing the sale of the studio by rolling it into some stock options for the next company. So, I hope this is a good buddy of yours that can make it happen.
Joel: Well, look, I mean, you live and you learn because this is part of what I learned is that as I wind down my business, I was saddled with a bunch of debt that I had to pay off, which was a total drag. I look back now and realized I could have negotiated a much stronger deal, et cetera, et cetera.
Joel: The good news is what I learned, I get to share with the next generation. So, I get to give it away now and say, "Hey, don't be like me," to quote Jack Nicholson, "Don't you be like me." So, there's definitely a way that you go through that process that would be better than the way I went through it. I mean, I was lucky. I was lucky. I won't lie, and I'm very fortunate, but I had to go work for that company for three years, and nine months in, I realized, "Oh, God! I can't do this." I was miserable.
Joey: Yeah. I'm friends with a guy who he started a very successful company in our industry, and sold it I think 10 years later to the tune of $40 or $50 million or something like that, but he did have a two-year earn out clause. You'd think, and he literally got a check for $40 million or for 20 plus stock or something like that, but was instantly a millionaire and super rich.
Joey: During those two years, I would talk to him and he was miserable, which is it's hard to imagine, you've got a gigantically stuffed bank account, and you did the thing, but there's something, I think, soul-crushing about going from, "This is my empire I've built," to now, "It's not mine, and I'm an employee."
Joel: Oh, for sure. Yeah, for sure. This, again, reveals the misconceptions because like your friend's story, is far and away the exception, but even he with that, "Oh, he got a payday. He got a big check," even he was miserable. So, there is this other side of it of going through that transition that sale, the toll that it takes on you as the owner.
Joey: Once you got through that three-year process, did you immediately go into RevThink or was there any downtime where you could face the existential dread of "Now, what?"
Joel: Oh, man. No. See, I didn't make it through the three years. Okay? Yeah. I was there nine months.
Joey: That was it? Then you left?
Joel: Then I left because here's the thing. Once I realized that my future, my knowledge, my wisdom, all my experience, whatever, wasn't going to be fully tapped and utilized in this role, even though I was walking away from 60%-70% of this earn out deal, I realized, "Who cares?" Once you understand where your future is going and where it needs to go, you just make the decision, and you go.
Joel: Granted. I spent the next year or two investing, rebuilding my network, and building up a client base, and building a body of knowledge and all this. I don't know. It was funny for me because at this company where I was working, I was a C level executive, but it was really ironic because it was so easy. I mean, it was so easy because after running a studio for 20 years, all the projects, and the clients, and employees, business, I mean, all the stuff, going to being an employee, even a C level chief experience officer, it was actually really simple by comparison. So, I don't mean any offense to people that are employees out there that have hard jobs, but I would actually leave my job everyday going, "That's it? That's all I have to do? I mean, this employee thing is a breeze."
Joel: The dark side of it for me was that closing that 20-year chapter of my life was definitely a very existential transition, and that was the hard part because my identity had been so wrapped up in my business, and letting go of that was pretty brutal. Then, of course, being miserable in this job made it that much worse. I just hated it, but do me a favor, I'm an entrepreneur, which means I make a terrible employee.
Joey: Yeah, unhirable, I think is the term.
Joel: Yeah, exactly. Exactly.
Joey: So, the way you just described that process of selling the studio and how the financial windfall isn't what everyone thinks it is. I mean, if I was still running a studio and I heard all this, I'd say, "Well, crap! That doesn't sound like a very good exit plan, actually," and there's probably a fair amount of luck involved if an opportunity even pops up, where someone would want your studio because maybe there's just no reason for anyone to buy it.
Joey: So, if someone is currently running a studio, what do you think is the smart, when I say exit plan, I don't mean how do you sell your studio, I mean, everyone is going to exit their business one way or another, right?
Joel: That's right.
Joey: They're either going to be fired or quit or it's going to go bankrupt or they're going to die, unfortunately, but we all have to save nest eggs, somehow. So, if selling the studio is not really a great strategy, what is a good strategy?
Joel: So, I think you're hitting on really the important thing, and that is you got to ask the right question because instead of the question being, "How do I someday sell my studio?" the better question is, "How do I leverage my studio as an asset that builds longterm value and wealth?" So, that answer is very different for each owner.
Joel: I think of a friend of mind that ran a sound design music studio, and he passed the baton to his employees. So, he created a plan by which they vested and came to own, whatever, 80% of the company, so that he retained 20% and retired, right? That's wow. I hadn't thought of that. That's one example.
Joel: Here's the thing to look for. A company that has, really, an asset, that has something that could build longterm value and wealth, I find there's two things there. One is the business has control. Meaning, the business owns something over which it has control. The second thing is value. Meaning, the business is generating strong cashflow, profits, what have you. So, control and value.
Joel: Now, as you might imagine, sadly, let's be honest, most studios, production companies out there actually have neither of those things in place. That's the ugly truth. So, the challenge for the owner is to say, "Oh, okay. I have this incredible asset with all this unrealized potential. Now, I got to put that to work, creating something that goes way beyond just work for higher projects for clients, where I get to scam a little profit and put it into savings." That's good, but there's something much better.
Joel: I would just say here, like we agreed earlier, this could be a whole podcast, but this is totally an area where RevThink, we are totally committed to solving this not only for our clients, but for the industry because we're almost acting as wealth management advisers for some of our bigger clients. It's because it's on our minds constantly because I'm working with each of my clients gradually, over time, constantly asking that deeper question over the longterm to come up with an answer that doesn't just satisfy the business, but the owner's career, and even their life, their total life.
Joey: Yeah. I'm really glad that you're bringing this stuff up, Joel, because it's the kind of thing that most people don't bump. They don't bump up against this earlier in their career, and it's not even something that's in their brain. So, you can aim in a direction that is really going to hurt you 10 years down the line not knowing that in 10 years, you'll get there. If you haven't thought about this, you may have structured things in a way that is just completely unsustainable, and now, it's going to be pretty painful to unspool that and restructure things. I'm sure you run into that all the time.
Joel: Well, you don't know what you don't know, right? When I was running my studio, I love doing the design work, and the promo work, and the branding work, and all that. It was so amazing. Then I remember one day, my feet hitting the floor as I'm getting up in the morning, and I thought, "I couldn't care less about launching this new show on Discovery Channel."
Joel: That was such a rude awakening for me because for anyone that's an owner out there, you just have to recognize that life is long, and things change. You may be super passionate about the work today, but there's going to come a day when you really don't care. People are like, "No. That could never happen." Trust me. It's coming. This is when you recognize that your business is huge, it's big, but there's something even bigger called your career, and there's even something bigger than that. It's called your life, and it all has to work together.
Joey: I'm speechless after that. That was really nice. It's just amazing, dude. Oh, my gosh! Quote of the episode right there. So, we'll start landing the plane now. You've been so generous with your time, man, and I'm learning a lot, and I'm sure everyone listening is just taking notes and stuff.
Joel: Oh, no worries. I'm having a blast.
Joey: This is incredible. So, let's talk about how things have changed a little bit. You have a really great perspective on this because you ran a studio for 20 years. Even when you started, I think you said 1994 you started, I mean, boy, that was right before tape deck started to become a necessary and stuff like that. So, you went through a lot of transitions. So, what I see now is that it's cheaper than it's ever been to start a "studio". You can have two talented artists that work well together, and you can call yourself a studio, and literally, your startup costs are your computers, and your Adobe Creative Cloud subscription, maybe some web hosting, and that's it.
Joey: On the other hand, when you started Impossible Pictures, and you were a flame artist, so flames, they we're not inexpensive. There were actual startup costs, and there was a lot more risks involved in doing that. So, I think there was an obvious upside to having the barrier to entry be so low, but also, you're working with a ton of studios that are probably being successful right away and then hitting a wall. Is there a downside to how easy it is to start a studio?
Joel: I love that question. Let me think. Okay. So, first off, yes, I was a flame artist for many years. Here's the fascinating thing when you think about that. When something like a flame costs $250,000, what's amazing is that those systems that we bought, they actually made a ton of money for my studio, right? Guess what? I never really borrowed money. I mean, in the early years, I think I borrowed five grand from my dad to get started, and then I, one day, borrowed $20,000, I think, to buy a Silicon Graphics Octane workstation, but other than that, I actually self-financed everything.
Joel: So, I could drop a check for $250,000 to buy a flame. So, think about that. That's like, "Wow!" We were busy enough and generating enough profit that we could have that kind of money in the bank and then go buy a flame.
Joel: Now, nowadays, are there downsides to running a small scale studio? I guess I would say in the short-term, no. The barrier to entry have fallen. If you have raw talent, if you have an unending ambition, and I would also say if you have a supportive family, that's often the secret ingredient, that you can produce a really good work, and you can make a good living.
Joel: I think when you start to look at the longterm, though, that running a small studio, actually, there can be a downside. I guess I would say this. I do see that a small studio can almost be a career killer. Now, what do I mean by that? I guess I would say that anyone going down that path of, "I'm going to run a small studio, one or two people," you should really have a strong sense of where is this headed because you're eventually going to be forced to choose between staying small and thereby limiting your career or growing the business and, of course, the decision to grow the business means you're letting go of running the small scale studio. That, I think, so it can be a bit of a trap.
Joel: I would say this. If you want to ruin a small studio, great, but don't do it for 10 years because the people that do it for more than five or certainly more than 10 or 15 years, they hit a dead end, and they don't know where to go next. They're not hirable, but they've also not expanded and grown, and increased opportunity. They haven't evolved their skillset to run a business because they're still an artist in the chair type of a thing. That I would say is the downside. Short-term, no. It's all upside, but over the longterm, I would say you don't want to just stay small forever.
Joey: Yeah. I guess it comes back to what we talked about a little earlier, which is that when you're small, you can wing it in some of these areas. I mean, I wasn't in the industry in 1994, but I was in it in 2000-2001. So, I just saw the scale of what post-houses used to look like. I mean, there are still big post-houses, but there's these boutique studios now.
Joel: Not many.
Joey: Right. Exactly. I'm just imagining that to start up something like that, you used to have to at least have a clue what you were doing to even be able to go get a bank loan if you need it. Right off the bat, you don't have the internet, really. It isn't really a big thing back then, right?
Joel: That's right.
Joey: So, you don't have Dropbox and Frame.io, and all these great tools. So, you definitely need more people. You need a producer. You need more expensive gear. It seems like back then you would have had to have a little bit more business savvy to even make an attempt at it. Whereas now, anybody with a reel can call themselves a studio and no one knows because all you see is the website. Would you agree with that?
Joel: I would. I would. I mean, I would add this caveat that it's extremely rare that in our industry, people go out and borrow money to start a business, even one that has intensive equipment software, whatever, needs because there's something about creative businesses that when you borrow money, it screws up all the incentives. You're in it for the wrong reasons.
Joel: So, none of my clients ever go out and borrow money to finance operations, ever. I would fire myself before I would let one of my clients go do that. It's just not how it's done. This whole build it and they will come is big time a myth that went away at least a decade, if not, two.
Joey: Got you. Okay. No, that makes sense. It does. All right. So, let's talk about some of the things that you've noticed working with lots and lots and lots of studios. This is something I'm really curious about because there are studios I see out there that in the late '90s, early 2000s were the studio, right?
Joel: Yeah, of course.
Joey: They're really successful, and became well-known for doing title sequences, 30-second spots, stuff like that, and then just never transitioned, and they're still trying to do that, and you can see staff leaving, they're circling the drain, they're closing down offices. Then you have other studios where they were in a similar position, and now, they're doing interactive things, and augmented reality, and they haven't pivoted, but they've just expanded their offerings, and their ... One of my favorite examples is a studio at National called Ivy. They use their motion design skills to make a game, a computer game. So, why are some studios able to do that and others aren't? What's the threat?
Joel: Okay. I think the most common threat is I would call this the owner that is essentially a fine artist, okay? So, think of it this way. This type of a person, here she is running a business as a means of self-expression, and it can be really successful, but that type of a business runs its course and then has nowhere to go.
Joey: There's a shelf-life.
Joel: Yeah, because think about it. If your clients are more like patrons, if one day they just don't like your art anymore, it's no longer en vogue, where do you go from there? Now, this can take the form of a studio that's maybe known for a particular style or an aesthetic, but it can also be a technology-driven business. Look at VFX or web design, okay?
Joel: Now, the studios that make the shift and keep evolving and stay relevant are actually the ones that transcend style, but they also transcend techniques or technology. So, I think it's like this deeper question of understanding that you're in business to solve deeper problems, and to create value that somehow meeting your clients' evolving needs, but doing it in a way that's authentic to yourself because as a creative, you always have to be operating from your genius. You can't just do it for the money or be working for the man because that's not sustainable either.
Joel: So, it is tricky, and it always breaks my heart when I see a studio that's trying to still live the dream. They're trying to hang on what I call the glory days of, "We used to do the big 30-second Superbowl spots," and they still show that work, and they're still trying to run a business based off of that. If you're not evolving into the new needs and the new markets, then, yeah, your time is very limited.
Joey: Yeah. Another trend that has been happening for years now is that a lot of companies and agencies are, they're deciding to build their own in-house teams, and their own facilities and everything, and maybe sometimes they acquire a studio. I know a lot of times they hire someone who used to work at a studio, and they have them build a team. What's the impact of that on the studio and our industry in that scene that you've seen?
Joel: Well, I think when owners see that happening, they freak out, right? There's a lot of, "Oh, this client built this in-house capability, and we're no longer doing work for them, and this is a scary trend," but honestly, I think it's a bit of a bogeyman myself. It's almost like the press and the attention it gets is overblown.
Joel: Now, yes, there are some studios that had a big client, maybe a big brand that was spending a lot of money with them year after year, and then one day the client says, "Hey, we're building an in-house capability. So, we don't need you anymore." Here's the thing. That's not really the trend to keep your eye on because what really happened there was that studio just had a big client concentration, and they fell asleep at the switch, okay? They fell asleep.
Joel: So, the answer is it's what I said earlier about what makes these 10 million a year entrepreneurs successful is that you always have to be learning, you always have to be growing, adapting. So, here's what I would say. From where I sit, okay, a lot of these big brands are building an in-house team, capability, agency, whatever, but from where I sit, ironically, the brand direct space is the absolute gold mine because for every brand out there that just announced they're building an in-house capability, there's at least 10 other brands that are just waking up to the reality that they have to be a content channel, whether they like it or not, okay?
Joel: So, that's actually where the biggest opportunities lie is, who are the 10 brands out there that don't have the in-house capability, but recognize they have a huge need? It's a hard space to get into, but it's really where all the big opportunity lies for the future.
Joey: Yeah. One of the things that, it's a sense that I get from talking with people, and I have an equally strange perspective on the motion design industry being in it, but not really. From my perspective, because I get asked this a lot from our students and from people who are thinking of getting into the industry, "Are there too many motion designers? We have thousands of alumni now. Are we saturating the market?"
Joey: From what I've seen, we're barely able to feed the beast. I mean, there is so much workout there. It blows my mind, things you wouldn't even expect. So, I'm curious, hey, is that what you've seen, too, that the amount of work is outpacing the amount of talent, and are there any other trends that you're noticing working with your clients?
Joel: Well, okay. So, most of my clients work predominantly in entertainment, and the advertising spaces, as well as some brand direct. It's really interesting what you said about this. You would think there's an oversupply of motion designers and animators and so forth in the world, but to your point, it's like the appetite of the world for that creative work, those products, those services, whatever that value is yet to be met. So, there's still opportunity.
Joel: Now, in my opinion, as I mentioned the second ago, the future is so much about this brand direct thing, going to work directly with brands. That's the trend that I see is rising, but for someone saying, "Okay. Cool. How do I do that?" I would just say, "Well, be aware. Capitalizing on the opportunity, it's not so simple because it's a much longer sales cycle, the client problems are far more complex than we just need a cool thing, we need a cool spot."
Joel: I mean, the needs are things are extent of things like strategy, and media planning. You're into ROI conversations when you're talking to a brand. This is why it's really hard if you're a small shop to get into this space. If you're one or two people, it's really, really hard, okay? To the firms that are able to evolve and grow, where they're not just focusing on execution like, "We create cool stuff," but they actually have a focus on creative development and execution. So, we come up with the ideas, and then we bring them to life. You also have to have a really strong grasp of account service.
Joel: So, yeah, this is where you're like, "Oh, you mean I need to think like an agency?" "Yup. Yup," because when you work with a brand, that's what you are. You're the agency, but if you can figure that out and make that leap, you're in a for a really fun ride. I saw this happened when I was running my studio. We did a lot of brand direct work for Dish Network. They were one of our biggest clients. We didn't really realize it at the time, but we were, essentially, their agency that was producing their commercials, their campaigns, their spots. We designed characters for them, I mean, all this kind of stuff. The fun thing is for people that figured that out, you'll have fun, and I think you're going to make a fortune along the way, too.
Joey: That's really cool. That's good advice, and I've seen that trend, too, especially with ... There's a concentration of companies on the West Coast that just have infinitely deep pockets, and seem to be insatiable for the amount of animation that they're acquiring, the Googles, the Amazons, the Apples. Right now, if you're able to get your foot in that door, I mean, there's a lot of cash being spent, and there's some really cool work being done, too.
Joel: Oh, for sure, for sure. Sometimes we worry that it's a bubble, but the good thing about a bubble is, well, you make hay while the sun shines, but for sure. I mean, almost all of my clients are working for either Netflix or Apple or Amazon or Hulu. I mean, there's just so much happening in that space that there's just tons of opportunity. Now, you start to think about, "Oh," and then there's companies like Marriott and, of course, Red Bull, and even Nike. I mean, all these companies are waking up to, "I think we need to be more like Apple. I think we need to be more like Netflix." So, think about the appetite, the appetite of those companies is pretty insatiable.
Joey: Yeah, and the trend that, I'm not sure how many people are aware of this, but one thing I've seen is that the budget that used to pay motion designers and studios was the advertising budget. Now, it's a different budget. It's the product budget, which is usually an order of magnitude bigger. So, to me, that's one of the big drivers of this.
Joel: Yes, and that advertising space is what I call really, it's a very mature space. So, it's not really fun to go into that space and try and compete, and try and differentiate, and try and make money. It's almost over-matured. Now, the entertainment space, it's still open. It's still evolving and growing, but it's also maturing, but brand director is the Wild West. You can definitely run out there and stake your claim, "This is my land," and recognize and capture opportunities that didn't exist just 10 years ago.
Joey: Love it. So, let's wrap up with this, Joel. We're approaching two hours, and I'm pretty sure we could probably go another two, but I won't do that to you, and I have to pee. So, there are definitely studio owners listening to this, people who are thinking about building studios, but I would assume the majority are either working full-time somewhere or they're a freelance. We have a lot of freelancers that listen.
Joey: A lot of people, they get into the industry, they work for a few years, and they're thinking to themselves, "My goal one day is to open a studio, and boy, I'd love to get to that place, where one day, it's making 10 million bucks a year." What advice would you give someone who's just starting out? Knowing what you know, the journey you've gone through, is there anything you could say to them that might just help them avoid some of those bumps that you hit along the way?
Joel: Well, it's amazing to me how common it is when I'll be speaking to an audience of creatives, and I say, "Who here either is running a business or somebody who dreams of running their own business?" 80% of the hands go up, okay? So, there's something about the creative soul that has this desire to strike it out on our own, and make it happen. I applaud that. I totally applaud that.
Joel: I mean, when I think about my whole journey, I guess I would go back to what my parents always taught me, "Do what you love, and the money will follow." Now, the caveat there is I would just say wisdom says, "Just make sure that you don't only love doing the creative work, that you also love the idea of running a business, and all that entails." So, if that's you, go for it because my parents' advice has definitely served me well.
Joey: Check out RevThink.com and JoelPilger.com to find out what Joel is up to these days, and to check out the free resources and podcasts that RevThink puts out. The information is super valuable and, frankly, pretty unique. There aren't that many folks out there helping our industry in quite this way, and the knowledge, really, is gold.
Joey: I want to thank Joel for being crazy generous with his time, and his insights. As always, thank you for listening. Head over the SchoolofMotion.com to check out show notes with links to everything we talk about in this episode, and make sure to sign up for a free account, so you can get access to our Motion Mondays Weekly Newsletter, which is a bite-sized email that catches you up on all the important doings in our industry. Is doings a word? Anyway, that's it for this one. Peace and love.