Andrew Warner: This interview is sponsored by the payroll and benefits software that I highly recommend. Go check ’em out at gusto.com/mixergy. Let’s get started.
Hey there, Freedom Fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. Joining me is a Mixergy listener who had…
Created a video production company and I watched it grow from the beginning. And I’m really excited to hear the details of how he was able to grow it. Because what I’m seeing is these service businesses, which used to be, I don’t know, I feel like much less desirable for other entrepreneurs to get into compared to software are now the sexy new business.
And all you’re seeing are people who have audiences build up these, uh, service based businesses. And Justin Tan, who you’re about to meet, did it before they did. With a company called VideoHusky. VideoHusky is flat fee remote video editing services, and I’m happy to have them on here. Hey, Justin.
Justin Tan: Thanks
for having me, Andrew.
Andrew Warner: When did you start it?
Justin Tan: So we started video Husky in 2018. I think I first got the idea like January and then Reese. And then I said, all right, I’m going to give myself 90 days to get 10 customers in March. So it’s like, had to get there by May.
Andrew Warner: Alright, and we’re going to get to how you got the first 10 and we’ll break the whole thing down, but take me to today. many customers do you have? How much revenue? Give me a sense of
size.
Justin Tan: today we’re over a million, in revenue, the actual customer, but that’s a great question. I’m not a hundred percent sure. I think we have, maybe a hundred. 50 roughly, customers that we work with on a regular basis. So yeah,
Andrew Warner: And you’re saying over a million in revenue
a year. Is it significantly
Justin Tan: no, just, uh, maybe a couple of hundred grand, something like that. Maybe 1. 1, 1. 2.
Andrew Warner: How profitable is it? More than 40
Justin Tan: no. It’s a service based industry. So at the end of the day, it’s still pretty standard, numbers for profitability. We’re not looking at like crazy 40 percent numbers. It’s just more of your standard 15, 20, depending on the time of year.
Andrew Warner: Before we get into the story of how you did it, what’s the best part of running VideoHusky?
Justin Tan: it’s interesting because I don’t run it anymore, we have a general manager who does the day to day, so I’ve been removed for about a year and a half, two years, and I think that’s something that’s been quite big for me, because for, I guess I’m 29 going 30 now, and I started my first like 17. So it’s interesting that the best part of running the company for me was actually leaving it because that enabled me tominimize, entrepreneurship and business and founding stuff as a part of my identity to something smaller.
and then last year, I could take a sabbatical for a year, got to spend more time with my girlfriend. We traveled the world for 9 months. Got a dog this year. So really the weirdest thing is being able to step out of it and being able to see, what else is there to do? Because I think the thing that I didn’t want to do, and I see this a lot with people in our industry.
and even it’s within my family, it’s like the focus on business on growth of numbers of companies. if the focus is always there, it comes at a really high cost elsewhere, whether it’s Just relationships and, sacrifices. And that’s the kind of stuff that I didn’t want to give up in life.
And that’s like the most part why we want to start our own business, right? To be present in other things. So training, teaching myself to be that has been. pretty good.
Andrew Warner: Why’d you decide to do this? Where’d the idea come from?
Justin Tan: it started back in 2018 when I, at the time was running Facebook ads for kind of local businesses in Hong Kong, just doing lead gen for them. And that was when video edit, like video ads became popular, but I couldn’t find a good editor myself. And I think it was around then that I also came across design pickle.
So Russ Perry’s flat monthly feed graphic design service, use them for a couple of ads. I was like, Oh, this is a great idea. And I thought, wait a second, what if there’s a way I could do this for video editing? And so that was the seeds of getting it started.
Andrew Warner: Okay, and you said, I’m giving myself 90 days. I either get 10 customers or I move on. But it has to prove itself in that period. Right. And so how’d you get your first customers?
Justin Tan: the first customers weren’t too hard because I took my existing kind of Facebook advertising agency clients, maybe I had three or four of them who ended up, doing this video editing thing with me on a whim. Of course, in the long run, they all turned out because they weren’t the right fits, but they saw enough to get started, which was great.
I remember thinking a day, 83 4 customers. So I was like, Oh, this is a bus. There’s no way this is going to happen. Then in the last 6 days, we got 6 customers and that got us to 10. and all of them came from the last 6. All of them came from the dynamite circle. So an entrepreneur community that I’m part of, and it just to this day, I’m so grateful for everything that the DC has given me.
and that was definitely one of the initial contributing points where I was like, Oh, I can see it now that people want this so badly that they wanted to paint a stranger that they don’t know to try to get this done.
Andrew Warner: I know dynamite circle. The founder Ian is a good friend of mine, and he’s actually coming over to dinner later this week. I’m, I see the community that he’s built. I’m seeing how tight they are. They’re real entrepreneurs who are building and hanging out together. The thing I’m wondering with them is like, How were you able to get them to sign up to, to work with you?
Was it by working boards or something? I don’t actually, I don’t even know if they have
message
Justin Tan: Yeah, so there’s a forum and at the time I just put that on mark. I said, Oh, I’m new to the DC. This is what I’m currently doing. This is a new project that I’m launching. just follow along as I build this thing out. and so I’d post updates maybe every month or so. And then that just because I was posting updates, I wasn’t like building in public since it was under a closed forum, but I was building in public within that forum and it was.
Good enough I wasn’t promoting the service really. I was just saying Oh, this is what’s happening. And then all of a sudden one relatively big YouTube said, Oh, I’m in, I’m interested in this, how do I sign up? And then after that got bumped up on the post right up back to the top of the forum, then three or four or five other people said, Oh, I’m interested too.
So it was just like one of those things where it’s like the bus never comes and the bus comes three or four of them come at once.
Andrew Warner: What type of video work work did they
Justin Tan: Need?
for the most part, they were talking head YouTube videos. So it was just like a little bit like what we’re doing now, to an extent, but not an interview, just to themselves. And the long one actually ended up becoming our bread and butter, but yeah, that was the starting point.
Andrew Warner: Where would be two people doing an interview who wanted it edited in some way, and they would pass it on to
your team to do it.
Is that right?
Justin Tan: just one person. So we’re talking about non interview. So imagine there’s just only one of us here, not both of us.
Andrew Warner: And so what would you do with it? Would you add b roll to it? Music?
Justin Tan: Yeah, exactly. So the way that it would work is you give us the files, you give us a,a quote unquote recipe for like how you want it to be edited, and then we’re like the cooks. we might not be the, world famous chefs, but we can assembly line this thing. Get it done and then get you a draft within two days, two business days, which, at the time was really fast compared to your typical, Oh, we’ll turn it around in a week or whatever.
Andrew Warner: Yeah. Especially since the software was pretty intense back then. I think now you might be able to do this using or a couple of other easy, to use tools, but this intense
then, right?
Justin Tan: Yeah. So like, even up to now, we still use premiere pro for a lot of things, but I think especially post COVID, a certain number of editors, whether it’s V or Descript is still also offline, I think. but you have a lot more options. I guess like when we first started, it was still, everything was on premiere pro.
Andrew Warner: And you got that 10 customers, 5, 000. Recurring revenue. Okay. I feel like the recurring revenue part was smart that you now had a service business where you can count on revenue coming in month after month. Right?
Justin Tan: In some ways, yeah, that’s what I thought too. John Warlow, his book on product and service, built
us up. Yeah. Thank you. and then afterwards, his next book was automatic customer, right? He was talking about recurring revenue and I thought it was the holy grail and don’t get me wrong.
I still think it’s nice. yeah. But it’s very different when it comes to services versus SaaS, as to what recurring revenue actually means, I think.
Andrew Warner: What’s the difference then? I guess with SAS, you’re built into their life and the price is low. And so it’s much harder for them to churn out.
Justin Tan: Yeah, essentially. Versus for services, if you’re looking at an agency, I think regardless of the agency, if you have monthly churn rates of under 10, 10%, you’re like, that’s incredible. I think under 15 is already very, it’s already quite. Good from my understanding, but you can already see if you have a 15 percent monthly churn rate.
That means every you to replace your customers every 6 months. And so it’s not quite as automatic as you would ideally want it to be.
Andrew Warner: What was the churn after that first batch of
customers came in?
Justin Tan: I think in our beginning months, the churn was, it was horrific. It was something like 40, 50%. but that’s part of the process. It’s like the video editing. Can it’s like the different the differences required to edit the highlights of a football match compared to a talking head video compared to a real estate, showcase, it’s just all very different.
Right? And so I think at that point, we were still looking for what types of customers do we really want to double down on? And we did start to find our groove, I think, towards the end of the year for what we Thank you. Would do and most importantly, what we wouldn’t
Andrew Warner: What was it?
What’d learned?
Justin Tan: We learned that, weddings, people who do any kind of wedding videography, this is like an instant. No, there’s no way that turnaround times are too tight. just tight turnaround times. Huge files. There’s just no way to make it work, for the client that we’re working with, because we do need, 2 days in order to get it.
Right? And to have that kind of really fast turnaround service, it’s it would require incredibly fast internet. it’s not even fast editing is you’d have to have editing at the right time zone, which all of our editors are located in the Philippines. So it’s not as straightforward.
It’s just, bringing on another editor to bring on another editor who’s going to work at 3 a. m. and that would break the model. So we started to, say there are certain things we won’t do, but I think for us, most importantly, we, at that time, were able to find, just one customer acquisition channel and that brought in roughly similar types of customers.
Andrew Warner: So whereas it was super broad to begin with, it narrowed down at least to an extent. Around.How many people do you think you lost? Half of the customers?
Justin Tan: at the very beginning.yeah, we ended up keeping like three of the initial 10 for a longer period of time. And of course, over time, I think even they turned out, maybe like nine to 12 months. but yeah, it was. It was a big fact finding process as to who we were best suited to and who we can deliver good results for.
Andrew Warner: Why didn’t you say this isn’t working? Clearly I lost customers. They’re telling me that this isn’t good. I’m gonna move on.
on
Justin Tan: the biggest thing was even though we were losing customers, there was still interest, whether it was within the DC, whether it was my own personal network, whether it was eventually when like we’re trying other marketing things, people were interested. so that meant there was market demand, which is the hardest thing to find.
especially it was hard already back then. Today, it’s much, much harder. but it’s like what Gary Halbert said, right? It’s like, if you want to sell hot dogs, the most important thing is not how good your hot dog. It’s just how hungry customers are. And so we can always figure out how to make the right hot dog afterwards.
but it would only work if there was a. Hungry crowd. And at this point, at that time, there was a hungry crowd for this. So it was then my, and our team’s responsibility to build something to satisfy their needs.
Andrew Warner: You did actually. I was going to ask if you contacted Russ Perry from Design Pickle who helped inspire the business. But you did, you actually, you’ve written about this. did you end up having
with him?
Justin Tan: Ross at the time had a coaching program. It was a combination of a entrepreneurship slash, leadership slash, character building coaching program. and I had no idea what I was signing up for. I just saw he had a coaching program. I was like, this guy built the business that I want to build.
what’s the worst that could happen? Right? So I did a 90 day coaching program with him at the time. I think he shut it down already, but it was called expand. and it was like to build a better business, better body, better. It was like all encompassing men’s coaching program.
and it was a lot more intense than I originally thought. and. I think that’s because Ross himself is an intense guy. he holds himself to very high standards, holds everybody else around high standards, and he’s very, very focused on, being the, everything being optimized.
and It was interesting because I just have a very different personality to Ross. And I remember thinking at the time, it was like my one biggest memory was he was like, look, Justin, my biggest fear for you is one day you’re going to build this to a million dollar business. And then you’re going to spend your twenties floating or floating around in life.
Most like a lot of other, remote founders. and I just don’t think that’s a good life. I remember thinking that and I was like, I think that’s a pretty good life. I’d like to be fair, like credit for credit, Stu, fast forward four years. That’s exactly what happened. Um, I don’t think I have the same intensity that he has in terms of always wanting to grow, and push harder with businesses.
but I’m also okay with that.
Andrew Warner: What are some of the intense things that he asked on the non work side?
Justin Tan: at the end of the 90 days, there was like a weekend retreat. So me and five other business founders went to a two day summer camp. and there, it was interesting. we did everything from waking up at the crack of dawn to go do a boot camp, like a literal physical boot camp where we’re carrying logs.
Russ’s partner, like his coaching partner, was literally carrying a log by himself. so it was like literally physical bootcamp. We had to journal, we had to share our experiences.
Andrew Warner: We had to get like a super, vulnerable, I guess. and there’s already been many years now, so I don’t remember the exact details. I think I was like, this is one of the weirdest things I’ve ever done in my life. Was any of that
helpful?
Justin Tan: hard to say. I’ll say the VideoHusky grew a lot after that, so whether that just so happened to be the case, or whether, that’s just a matter of timing, I don’t know.
Uh, maybe it was, maybe it wasn’t, but I’ll say that it was an experience.
I was just gonna say the one thing that comes within coaching consulting and like I do this on a part time basis now,as a coach or a consultant, you want to be able to provide answers or make things better for your clients or whatever.
Right. andthat’s what the premise of most coaching programs. So it’s like, come work with me. I’ll show you, the secrets and whatnot. But at the end of the day, it’s this goes back to what’s the bottleneck of your business. And if the bottleneck and 99 percent of the time, the bottleneck is market demand.
There’s no coaching service in the world. That’s going to solve that. I think. And for example, as far as. Like how this coaching program went, did it make me a better person? yeah, I think so. Ironically, the one thing I really did take away from it in the long run was drinking green smoothies in the morning.
It’s like literally have, yeah. so I get my vegetables. So great. Like the, I think as far as businesses go,you really have to find the right market demand first and you can feel it. You can see people really knocking on your door to make it work. and no coaching service or no coach is going to be able to solve that for you, which I’ve tried on the other end.
It just doesn’t happen like that.
Andrew Warner: I was going to say that I got property here in Austin and I literally last week was moving logs because I decided that I would build a path using some of the fallen trees and branches that we had here in the big, uh, storm last year, I freaking enjoyed it. The discipline of having to move things and finish a project, the.
The satisfaction of seeing something get moved, so much of what we do is online. It’s just pixels on a screen to actually see something in the physical world, get moved, feels good. Sweating, pushing, all that to me is really significant. I would love to do that with other people. I would love to be Amish only in the sense that.
I would want to build a house with an Amish community together. And at the end of the day, see a house built up that wasn’t there. I feel like we should all get together as friends and learn how to build ADUs and do like a weekend ADU project where you get together with 20 of your friends, you’re all building the ADU and you all have this sense of connection to your friend’s house.
There’s something in that work together that we don’t get to do. I think,
do you know what I mean?
Justin Tan: Yeah. And I’ll say I come from Hong Kong, like big Asian city. So it was like this reserve that Russ brought us to. it was like picturesque. It was like, there’s like a forest.
it’s not like tame, but it’s also not like pure wilderness or whatever.
Right. And so it was just the first time that I saw something like, it was a big stretch and it was like green and I could see the sky there’s a creek, a natural one. this is one of the most beautiful areas I’ve ever seen. I still don’t know where it is.
we were blindfolded as we were driven there. So I don’t know where it is. I remember thinking, like, at the end of the day, you do have a feeling of satisfaction and I think you do lack that, building stuff online. And like we, my girlfriend and I recently moved to New Zealand.
And I know 99 percent of people here are, grew up in a Western world, but it’s we now have a front lawn. I think, that’s the first time in my life I had a front lawn. And we have to mow grass. I know mowing grass sounds so boring. but there is something to be said.
Oh, you just go out there. It takes a couple of hours, but it’s a very calm feeling to get it done and that you feel good because you see the results and you’re outside and yeah, just support things like that go a long way.
Andrew Warner: Yeah, it feels really satisfying. Alright, so we talked now about the non work stuff that you got out of being there. What did he teach you about how to run a service business? He’s run, and continues to run Design Pickle. What did he teach you about how to run, uh, Video Husky?
Justin Tan: he actually didn’t teach me all that much, uh, in terms of that. The one thing that, because he was like, look, the first 90 days is for becoming a better person. And the next 90 days, which of course you have to sign up for the next 90 days is to become a better business person. And I was like, okay, I’m not dropping another 18 grand on this, or 36 or whatever.
It was a lot of money. And I was like, I’m good. I’ll say the one thing that Russ did teach or did show me was like the intensity required to always be a leader within your business. And I can say, this is fast forwarding a bit, but three years into running Video Huskey, I burnt out.
this is just. I think a lot of founders go through this, and like we have, I don’t know, 40, 50 people at Video Husky. So it’s like a lot of people, especially during a talent haul, that are looking to you, to make sure that you’re showing them, where the next direction is. and at the end of the day, I think there are some people who love that.
Some people who, like myself, just don’t. As much as I could force myself to play that role, but over time, like there is a certain dissonance. and so as much as the business required me to be very, Let’s say a leader. It’s also not my natural form, my natural state of being. And it’s like one of those things where it’s if you want to be the leader of a huge team, you have to have a certain kind of personality.
And if you don’t have that personality, then you have to. Reconfigure yourself to that, and that has certain costs outside. And I think, after trying to be that for the longest time, I just burnt out. And I remember just thinking at the, at the three year mark for video, I was like, I’m just not like Russ.
And so maybe that’s why I’m not cut out to run this forever.
Andrew Warner: Okay, but at this stage you were going through this program, you 18, 000 to work out with this person and to become a better person. Meanwhile, your business was, uh, was finding its identity. You knew it wasn’t going to be wedding videographers. And I understand why a lot of video, a lot of need for.
Actually, they don’t even need it fast. It’s just for you to hit your two day timeline. It just wouldn’t work out for them. realize the people who are doing talking head videos for YouTube. Those are a good niche. What else did you realize? I want to the next batch
of growth.
Justin Tan: it was really finding that one, uh, customer traction channel, which, ironically, given what I previously did, I should have tried much earlier was Facebook ads. So I only tried Facebook ads for video husky, like 6, 7 months in, and that for us was like the enabled us to 10 X a business over the next, 10 months.
And so that was really the kind of lever that made it work.
Andrew Warner: is the thing that got you how many new customers and what kind of a, what kind
of recurring revenue.
Justin Tan: it got us all the way to over a hundred. I think at, over the course of a year, that was like the one traction channel and yeah, it just went gangbusters at the time.
Andrew Warner: What was it about the ads? What worked for you with the Facebook ads?
Justin Tan: that’s the thing. It’s not really about the ads, right? It’s just about at that time, uh, service, like there was a need and there was limited service options. We could come up with any ad really at that point and we just say flat monthly V video editing people just Oh, I’ve never seen this before.
I’m interested versus we run the same ads today. It’s there’s a lot of similar businesses. There’s a lot of remote video editors. the competition is just much fiercer. Andreally what worked about the ads was we did it at that time. when there was mass interest and not much competition,
Andrew Warner: You know what? I’m noticing now that they are becoming more and more specialized. There’s one that just shows a GoPro in their ad and says you come back with a bunch of videos on this and you never edit it, we’ll edit it for you. And I thought, that’s a very specific group of people, but I get it. There have been times in my life when I’ve been in the action camera uh, place in my life.
And yeah, there’s a bunch of video of me going and running in Mongolia and I just never edited it. Actually I did, but it was, it felt like it took forever to get it edited. so back then when you were going to a hundred customers coming in from Facebook, this was the period of September, 2018 to September, 2019.
It actually got you to 200 customers. customers, what type of work were you getting
from them?
Justin Tan: so at this point, besides wedding videos, we were still working quite broadly. We’re doing, all kinds from YouTube to real estate to working with agencies to, uh, to help them do their client work. we did quite a broad range. But I was also a very naive business person at that point.
And I just said, the more, the better, let’s just figure it out. as we bring in more customers and let’s just grow as fast as we can without really thinking through the delivery part of things,
Andrew Warner: everything. How much were you charging for it?
Justin Tan: we were charging
500 a month, uh, at that point with relatively little limits,
Andrew Warner: So, unlimited number of videos, 2 day turnaround, 500 a month, that essentially means a max of 15 a
Justin Tan: yeah, we were like. If we said unlimited submissions, but you can only get one video done at a time. so I think the max that one person managed to get done was like 12 videos. because we still don’t work weekends and whatnot. Uh, but yeah, that was roughly how it played out.
Andrew Warner: And that’s a pretty good price. that’s a great price, especially for the person who got 12 over to you. But even if you get five videos in a hundred bucks a video, knowing you get good turnaround from somebody who’s been working with you for a while, it’s decent price. You can get a cheaper if you go find someone in the Philippines on your own.
But barring that the service made sense. It was a really.
Justin Tan: Yeah. And so that was, that was the value prop, essentially. It was like, you don’t need to go out and find your own editor and you don’t need to hire locally. we’ll take care of all the HR stuff. Just sign up and you get your first video edited in two days.
Andrew Warner: How did you find the first video editors? The ones who, before we get into staffing up, the first one or three
Justin Tan: the first one was actually, uh, my friend’s boyfriend who he had just moved to Philippines. he was looking for work and I just said, Hey, I have a three month pilot project. You’re interested in giving this a shot? And he said, yes. What I didn’t know was he was working off of a eight year old laptop with a bootleg Premiere Pro.
I figured that up, that part out afterwards. So we sorted that in the long run. but yeah, he was the first editor and the second and third we hired off of Upwork. and from there, actually, the second editor we hired, his name is Paul. He ended up becoming our head of recruitment. And Over time, it became his responsibility to help us bring on new qualified editors.
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Andrew Warner: I remember talking to Russ a few years ago and he was starting to create software to manage this kind of agency work because people were sending clients through Basecamp, which is good, but it doesn’t scale to the numbers that you’re talking about. It doesn’t focus on video and audio feedback and so on.
up creating his software, but I do know this has been an issue for people who are taking on client work. What did you use to
organize it?
Justin Tan: So he did. it was called JAR, just a request. and it was just a ticketing service essentially or software. we tried it and it was interesting, but it didn’t really work for us because we needed some form of video feedback tool. so we settled on Wrike. W. R. I. K. E. because they have video proofing.
So that was great. So it was like framed. I. O. is industry standard. It’s not quite as sophisticated as that, but 1 level lower, right? Had better project management tools. but yeah, you’re right. It is a need. And I know, Like Robin van der Hayden, he started many requests. Chris, started, SPP.
io, which is software, service provider, but I know a good number of people who use both of those platforms and they’re quite happy with it.
Andrew Warner: issues in coordinating all this and making sure that each customer’s recipe was kept together with their video work
and all that?
Justin Tan: so after we found Wrike, no, it was, they had a pretty good tagging system, so we could go into each individual client’s workspace. And even on our back end, when we brought more editors and sorted them into pods, it was quite good in that we could see all the tasks and we could see the entire flow through a Kanban chart, which worked really well.
Great for the editors and for the clients, cause they could see how things moved one by one and all the completed projects that we had done for them. So I think it was one of those things where, visually it was quite helpful.
Andrew Warner: Meanwhile, so that every customer gets their own Kanban board and sees where their projects are and you get to see all of them together and got it. And each customer has their own recipe attached to it. How’d you staff up beyond?
Justin Tan: after the first couple of hires, it became abundantly clear to me that I didn’t actually know how to hire video editors because I don’t know how to edit videos. And so vet their skill. So that was where, yeah, Paul became our head of recruitment. He ended up, Sourcing our editors from job boards, from Facebook, from Upwork, from Fiverr, and even going to, schools locally and talking to, graduating classes of,
creatives, some of them who, of course, focus on video editing and just saying, this is what we do. This is what we offer. it’s a remote position, which for a lot of people in Philippines is ideal because they don’t have to then do a 2 and a half hour commute daily 1 way to Manila, the capital city.
And so that was actually where we. started recruiting and he came up with a test for how to grade editors. And over time, he even developed a boot camp to ensure, let’s say we bring on 10 recruits. they have to go through this boot camp of those 10. We know we can bring on 5 after we bring on 5 and we pay them for the boot camp.
It’s we’ll bring you on 1 at a time. as needed by our own, internal logistics schedule. It’s and capacity schedule.
So you don’t hire them full time, you hire them as you need them. Oh, no, we hire them full time, as we need them. So like I said, we grow the company, we’ll bring on another, uh, editor. Or let’s say we lose an editor, then we can bring on two, something like that.
Andrew Warner: What’s this thing that happened around the holidays where people kind of
revolted?
Justin Tan: Yeah, so one of the more painful things in my video Huskey journey, and maybe like the beginning of the burnout period was, Being like an online service as international, it’s you don’t really know what days are holidays. And so I was so scared and I thought, Oh, you know what, because I don’t know whether to follow American or Filipino holidays, we’re just going to do neither.
and we’re just going to work through the entire thing. And that was a colossal mistake. And I was so scared because I didn’t want our customers to think that we were skimping out on them, not delivering for them. And the way that it worked, it played out was. we only had like very specific, okay, Christmas was a holiday.
And then, then we had one other day. as the company grew into year two, what our editors did was they started banking up their own private leave. and they all want, and like something like 60 percent of people wanted to go on leave in Christmas. The problem was we couldn’t afford 60 people to go on leave.
At the same time, there’s a 60%. And so I just said no leave for everybody. Sorry. And so that was, we can’t deliver. And so everybody was very unhappy about that.
Andrew Warner: In retrospect, I get needing to give people vacations and one of the things I need to remember to always do is if I start working with someone from another country, I need to find the calendar of that country, calendar of holidays, and add it to my Google calendar so that I’m aware of their holidays. but how could you have handled the holidays better?
Would you go back and tell, do you now go back to tell your customers, we don’t work over Christmas because you can’t get editors
Justin Tan: Yeah. So if I were to go back and do this all again is figure out what’s acceptable and what is standard and be able to listen, not only from like a customer side, but also an editor side. It’s in my head, I thought, Oh,I personally like holidays whenever I don’t like to follow public holidays, because that’s when flights are expensive, etc.
So I’ll provide our editors with floating holidays, same number of days, but you can use them whenever. Turns out, on their side, they wanted public holidays. because that was when their friends, their family, were all free at the same time. And so, it was more a matter of… Uh, in my head, what do people value?
I can’t just go and push my own values onto everybody else, whether it’s our clients or our staff, it’s important to go and listen and understand, and then find the best solution, which is a little bit slower, a little bit like more emotional work, but a way better outcome. And that was a big lesson I had to learn.
Andrew Warner: And so you now give people public holidays and I’m assuming your customers are okay with
that, right?
Justin Tan: Yeah, because why wouldn’t they be? This is something that I built up in my head for so long. And
Andrew Warner: You know, where I imagine is have seen people like Casey Neistat over the holidays, share something that shows what they’re doing over Christmas and publishing it on Christmas day when you’re at home anyway, and there’s some value to that, but I’m guessing your customers didn’t have
that.
Justin Tan: yeah, most of them didn’t, and most of them didn’t mind it. I think it’s one thing if you are a Casey Neistat and you want to go and dominate, conquer the world or whatever, but… The reality is, the majority of our customers are just your bread and butter, small businesses, small business owners, right?
they work, but at the same time, they also want their time off. And so when we did that announcement to tell all of our, customers, Hey, we’re taking a December break from like kind of Christmas to new year. actually the majority of them were happy. They were like, Oh, we’re really thrilled that, your editor at the editing team gets our editor gets a break on.
We look forward to working in the future. it was an eye opening moment for me. I was like, Oh, I realized I’m not always right. In fact, I’m wrong a lot of the time.
Andrew Warner: from what I understand, people were all angry at you about this. Meanwhile, you had to handle this in real time. Did you make that decision that first year or did the first year everyone get pissed
off at you
Justin Tan: The first year was fine. The first year, because we only had a small team, we didn’t have that many customers. and it just so happened that a small team all didn’t really mind the whole floating holidays policy that we originally had. they were more similar to me. So it was like, okay, no big deal.
Uh, it was only, we got, when we got to the point of 40 editors that was like, Oh, actually, wait a second, the majority of people did want to have those fixed holidays. And yeah, we just did it. we did 2 town halls. I issued a massive apology. I went into every kind of, individual pod, to listen to what kind of the editors had to say.
And then from there, came up with, the new policy. I remember sending the email out and I was like. I sent out on a Friday. I closed my laptop. I’m not looking at this till Monday because I don’t want to see the responses. but it was all mostly positive. And the couple of people who weren’t happy about it, we just gave them an extension.
and so it was like, we won’t charge you for it at that time.
Andrew Warner: now through the churn? You’ve picked all these different customers. You’ve said yes to everyone You grew a team to handle them and at some point you realized I can’t work with everyone How did you figure out who the right person was and what happened when you lost the wrong
Justin Tan: So the big moment, I think, happened around covid just because it was a big thing for everybody, right? We lost30, 40 percent of customers overnight and we were only borderline profitable because I was focusing all in on growth. And I realized, wow, this is not sustainable. So what we did at that time was
I read the pumpkin plan by Mike Michalowicz, who he’s the author of profit first. This is other less famous book, but I think even more important. and the idea is fewer customers, bigger profits, better business. and his whole thing is just 20 percent of your customers would drive 80 percent of your revenue focus on those guys.
And I thought that didn’t apply to us because we’re a flat monthly fee. Every customer pays the same amount. Turns out, if you look at it on a month, like on a month basis, it doesn’t matter, but if you look at it over the course of the entire, like three years that we were in existence at that point, 20 percent of our customers brought in 72 percent of our revenue.
And worse than that, I think the bottom 40 percent of customers, or bottom 60 percent of customers were actually unprofitable because they only worked with us for two years. And that wasn’t enough to, uh, recoup the investment of marketing of bringing on staff members. And so the realization of, oh, if we just worked with our top 20 percent of customers.
For this entire time, we’d have four times as much profit, even if it was a lower top line number. That was like a eye opening moment for me.
Andrew Warner: How’d you figure out who they were what they had in common
Justin Tan: So we did this huge study internally of we’ve listed out every single customer. And at that point it was including churn customers. It was like a list of few hundred. and so we went through their projects, we went through their content and we said, okay, the ideal kind of client does talking head videos, 20 minutes in length, maximum amount of footage is 30 gigabytes, and they require this kind of editor. and so anything outside of that parameter, we now no longer do. So we found out in particular agency clients, for example, where they had their, we were like, essentially white labeled. Not a good fit. We’ll stop working with them. And we really want to focus with people who view us as partners.
And so that was going through that study of looking at the dollar amount they contributed to us over that three year period, as well as the kind of work that we delivered for them. That was how we figured out who our best clients were.
is it people who are, content creators who are trying to teach something?
Andrew Warner: How would you describe what all these people have in
common?
Justin Tan: Nowadays, I would describe these people as, small business or content creators who want a partner in terms of a video editor. They don’t want necessarily somebody to just delegate work to, and they’re not necessarily a huge business. They are either an individual or a small team, and they want somebody who will care to work through the small details of their projects.
Andrew Warner: So it looks like there’s someone here who has an art studio, I guess, and she’s teaching art. That kind of a person I right about that?
Justin Tan: Yeah, yeah. Really, it’s like small business owners,and content creators. it’s not your venture backed businesses. It’s not a corporate, it’s like a small, no more than let’s say 10 P person team. And they just want additional help.
Andrew Warner: And it’s not creators who are like Ali Abdaal trying to become the next YouTube careerist making millions from that. They have a business. They want to that show who they are and what they’re selling and how they’re
building. Am I right?
Justin Tan: Yeah, exactly. Cause somebody like, let’s say Ali Abdaal, the game he’s playing. he wants to be, like multi eight figure creator type of entrepreneur. You will bring in your own in house editor. And that makes sense. You absolutely should. But if creating videos is not your core competency in the way that it is for somebody like Ali Abdaal, there’s no point investing all that time, energy, resources into finding an editor.
It’s better to like bookkeeping. Give it to somebody who is a professional and then focus on what is your core competency, which in many people’s cases is their business. video just so happens to be one aspect of their marketing.
Andrew Warner: And now as I’m going through this while we’re talking, I see a whole lot of B roll. So you’re doing B roll. You’re not just editing people’s explanation of what they’re up to. This is pretty intense editing now.
Justin Tan: that’s the thing. It’s depending on what you need, Now we have multiple packages, where it’s if you need more b roll, if you want more transitions, is that we have a package more dedicated towards that. but yeah, it starts to add up because the key thing that we wanted to get VideoHusky to was to be a video editing partner, not just somebody you just send work off to.
Andrew Warner: Meaning someone who could suggest, go shoot a video of this next time, have this other angle,
that kind of a thing.
Justin Tan: Exactly. Yeah. Where there was More of a value add for lack of a better term. And it was like, Oh, you get the feeling of the person on the other end actually cares about the work that is being delivered for them.
Andrew Warner: do you charge for this? I’m sorry, I’m lost in watching these freaking videos. I don’t know why I didn’t see it before the video started, before our interview started, but videos on the bottom are really compelling. I didn’t realize you did this type of work. What charge for someone who, say, has car dealership and wants to do videos about cars and shoot some b roll and maybe have some videos of his customers coming in?
What does that cost?
Justin Tan: nowadays we have four packages and the majority of these, actually our current general manager came up with. And the smallest package is starts at five 50, but those are mostly for YouTube shorts, Tik TOK reels and whatnot. The standard package is seven 50. We have a, we call a Siberian package, which is for higher level creators, which is around 1500 a month, if I’m right.
And they, it’s if you need more like higher end editors, we can make sure that’s done properly. And then we have a more. Custom package, which is like for your highest level and our GM, he comes from a marketing agency, a larger marketing agency background who has experience building out this kind of a package.
So he wanted to implement it. So it was like, great. If you know how to do it, then go for it.
Andrew Warner: All right. Earlier you said, one of the best things about this business is that I don’t have to run it all the time. You got somebody who is running it. How did you find that person?
Justin Tan: I found that person through dynamite recruiting. I think today it’s known as remote first recruiting, which is a business launched by, the dynamite circle guys. and they’re a recruiting service, so they actually helped me find, our GM Fed.
Andrew Warner: And what were you looking for in a GM?
Justin Tan: at that point, I was so burned out. I was looking for somebody who could bring the energy and take the lead. and I wanted somebody who was significantly more experienced than me.
Andrew Warner: Mm hmm.
Justin Tan: I think at the time I was 27 and the majority of our team was younger than me. It was a lot, I think a lot of burden on my side to try to always know what to do.
Cause I didn’t know what to do versus something like fed. He has a lot more experience, a lot more, just I think time does matter. where it’s you’ve gone through multiple business cycles of recessions of like growth periods and you can see those waves. And I wanted somebody who had experience working remotely running agencies and most importantly, working with, creators.
And so. In Fed’s case, his previous company was, they helped set up influencer campaigns for e com businesses. And I was like, Oh, you know what? This is not like a video editing company, but he works with the exact, like very similar types of customers that we do. So he understands the space. And, he also understands what it takes to deliver work for them.
and so like when we did the interview, it made sense to me. I liked him. He liked what we did. And so that was how it played out.
Andrew Warner: What was it like when you finally got to take space? Where you’re able to do it.
Justin Tan: This is an interesting one. Causeeverybody talks about, Oh, if you want to be a good, like. manager or whatever, right? You create SOPs and you make sure that the onboarding process is really like top notch so that your staff member can walk in day one and start adding value. and I did a lot of that stuff, and it works, but I think it only works for lower to mid level staff because the whole point of bringing in senior level staff is you want them to bring a fresh perspective.
You want them to bring fresh ideas and their experience. and giving them my perspective. Just meant that it would end up being, like a second rate version of what I could bring. But what I wanted was something else. And so if I could go back and redo it, the way I did it at the time was, oh, we do weekly meetings.
and then eventually bi week, like bi monthly meetings to give me updates. So twice a month, and it just didn’t work because it, the, that frequency was too tight. In terms of being able to give fed the space to implement some of his own ideas.
Andrew Warner: So, but then if you just, I guess what I’m trying to understand is the transition and how you do it, right? Is there is, I get what you’re saying. Look, don’t give SOPs to leadership who’s supposed to come and replace you and then take it to the next stage based on their experience. But you also don’t want to just send them in there and say, take over.
I’m burned out. You keep going, right? You want them to somehow be up to speed on what you’re doing and then give them space to. To go and do it their way.
Justin Tan: Yeah. So I think the middle ground is to make sure that they are the one to take initiative and you should ideally figure this out, in the job search interview, right? Do they have that kind of personality and, talk to the referrals, to give them the initiative to go and do all this stuff, because if they don’t even have that initiative, they’re never going to be able to drive certain things forward.
but on the flip side. be available to them when they have questions when they’re not sure over certain things. and That way you are a resource to them as opposed to the other way around, which for a general manager level position, I think is a better way of approaching things.
Andrew Warner: All right. What’s next for you? Now that this business is working, you get some space, you get time with your girlfriend, you get to enjoy New
Zealand.
Justin Tan: I’m not sure. it’s been like a year and a half, two years, sabbatical year was great. and now it’s like one of those things that makes you realize as I try to launch other things, whether it’s a little bit of coaching and consulting or other kinds of businesses, like timing matters, market demand matters.
And it is. at least at this point, my personal experience, harder now to find something that works than say one VideoHusky start point was there. So I think now it’s just a combination of continuing doing some coaching and touting for businesses founders of businesses who are similar to VideoHusky, as well as exploring other things.
I would love to develop a SaaS at some point, but I think that’s still a little bit away from me right now. So I’ll. We’ll see if I can come up with the right idea find something that has the right demand. I’ll go for it.
Andrew Warner: Would you do this kind of service business for another issue, another topic, another product?
Justin Tan: I don’t think I would. I know that the typical way that you play this game, it was like, once you build your first business, you build a very similar business and you speed run through it. Which, if you are very much a business person, very much an entrepreneur, I had to go for it.
Or you’d like to sell your business and go buy three more with leverage. Neither path appeals to me. Because I think what’s the most fun for me is finding those underserved Under like untapped markets and like building something new. I think at that point, video has to give us something new and that was the most, interesting part to build something that previously hadn’t really quite been seen.
I, and it’s much, much harder now because there’s just that many more people, especially post covid that are in the online space. But it has to at least be something new, even if it’s not necessarily market demand new. That’s why maybe a SaaS is more appealing to me at this point, where it’s I’ve never developed something like that, then I would want to try it.
Versus if I’ve already done something like VideoHusky, to find something else and do it all over again. It just is less exciting, I think, and I would rather work on something that is exciting, even if the chance of failure is much, much higher.
Andrew Warner: I hear you. I think in the past I would have said you’d be crazy not to just duplicate this. Do it again in a different area. You know what you need to do. You have your systems, you have your software, but now I’m understanding that changing things up makes me feel more alive. Now, I didn’t always in the past.
I wanted to just keep improving on the model that worked, but now I want to go and try something brand new and see if I can master that. Yeah. I have a guitar behind me. I suck at the guitar. It’s so different from everything else that I do. You have to move your fingers and sing and play at the same time.
And all that is just completely foreign to me. But it’s interesting because it’s so foreign. Have you found something like that? Something that’s, uh, like a personal interest. That’s so different that you get
Justin Tan: Oh, yeah. So for me, it was playing Competitive Age of Empires, which is like a real time strategy game. And I played a lot during COVID, still play a bit now, but while I can safely say I won’t go pro, it’s I did end up getting to the top 20 percent of… Players in the world, which is not great, but it’s not bad either.
And it was fun to go through the journey of trying to improve, find the minor points. And so I do think one of the things that like, if you, and I’m very privileged in this, but can. Create space in your life to explore other things. I think it is worth doing that. It’s like I know with like my family, for example, they run a family business and my dad, God bless him.
He’s 61. he’s still traveling I don’t know, 3, 4 times a month to various countries to run his business. and he loves it. but it’s just not me. And so I don’t think I have that level of intensity as I mentioned before. And so I’d much rather have the space to try other things rather than just make my life.
Business and family. I think that’s, I’d much rather be able to say, oh, at the end of the day, I’ve tried a lot of different things and, a lot of it was fun.
Andrew Warner: I’m glad to have you on here. the website for anyone who wants to check it out is videohusky. com.
Thanks. Bye everyone.