Hello! This is Hank Green, general internet guy and cofounder of Complexly. This is my last time in the Decoder guest host chair unfortunately, unless Nilay decides to have another kid someday, but we’re making the best of it. Today, I’m talking with my friend Sam Reich, who is the CEO and, I at least think, founder of Dropout TV.You’ll hear him argue with me about being the founder, and that’s okay. He was there, he probably knows what he’s talking about. But it’s an incredible story: Sam bought the company, which used to be called CollegeHumor, for zero dollars, immediately had to lay off almost the entire staff, and then got smacked in the face with the covid-19 pandemic shutting everything down, because it was early 2020.Listen to Decoder, a show hosted by The Verge’s Nilay Patel about big ideas — and other problems. Subscribe here!You wouldn’t think that’s a likely recipe for success, but Sam has been very successful! Dropout has grown every year. You’ve probably seen some clips on a vertical video platform, if not watched them on TV, from its most popular shows — including Game Changer, which Sam hosts. Well, “host” might not always be the right word for what happens in every episode, but he’s definitely there, and you’ll hear us talk about that a little bit, too.But what Sam and I really spent a lot of time on was the problem of running a business that’s getting big. It’s much easier to do your creative work when your company is just you, or maybe just you and a few other people. It’s a lot harder when you have a bunch of stakeholders with competing priorities and they all want something from you.Most media companies, for example, have to deal with some combination of advertisers and shareholders, who all want to make money. Dropout doesn’t really have advertisers or shareholders; it has Sam and a few other folks, all of whom want to make good comedy. Sam described the business model to me as a comedy SaaS: subscribers pay money and get programs they want to watch. It sounds like a pretty good business model to me, honestly. But it’s pretty rare, so Sam and I really got into the weeds about why it’s harder to do than you’d think.This was a great conversation with a great friend, and I hope you enjoy it.Okay: Sam Reich. Here we go.This interview has been lightly edited for length and clarity.Sam Reich, you are the founder and CEO of Dropout. Welcome to Decoder! Hi!Thank you so much for having me, Hank. I’m flattered to be here.You’re doing a very interesting thing in a very different way than, I think, anybody else in media, which is why I think it’s really going to be exciting to talk to you about this stuff. And also try to figure out the whys and hows that you can do that.But to start, usually I don’t really tend to go in that much for origin stories. I think that they’re mostly just a way to sort of make people imagine that they could learn something from the very particular circumstances that one person experienced, which I think are going to be different from other people’s, and also a way for people to toot their own horns. But can you give me an origin story of Dropout from the beginning of Dropout? So we don’t need to get into 2006 and CollegeHumor and stuff, but just hit me with: how did Dropout end up in your hands?Sometimes, some people call me the founder of Dropout, which is actually not true.Oh, well.You beg to differ.I do.Dropout was a priority that came out of IAC, which was our corporate parent at the time.This was who owned CollegeHumor?This is who owned CollegeHumor, and for years and years, IAC was trying to figure out how we would make not just a lot of money, but a lot, a lot of money. And there was always kind of a… A cynic might call it a get-rich-quick scheme at the time. It was ad sales, and then social media took a big chomp out of ad sales, and then it was television. It turned out television production didn’t scale very effectively. And then finally, the idea was, let’s try going direct-to-audience.Just to go over-the-top, as they say. I’m not sure exactly what the top we’re going over is, but we’re going over the top of something. I guess the whole system.That phrase makes it feel like we’re gambling the house, and in a way, we were. There was a collection of executives who were very bullish about this within CollegeHumor. I wasn’t necessarily one of them. I slowly but surely warmed up to it, imagining that if it didn’t work, at least we’d get to create our own cool stuff for a while. The notion was to go direct-to-audience. There won’t be the gatekeepers that there are in Hollywood. We won’t have to start over every year like we do in ad sales. That is, by the way, one of the intrinsic benefits of subscription: you’re not starting your business over every year, versus ad sales, where you have to go out and sell every year.And things are always changing. And also, you’re not just doing the YouTube thing where certainly you’re selling against views, but you’re selling on these platforms that decide whether or not you get the views that can have their priorities shift in ways that are going to be advantageous or not to your business, and that’s always going to be their idea.That’s true. I think that was the sort of meat of our first announcement video, and I think it’s really true where AVOD, as it were, is like —What is AVOD?Advertising video on demand. It’s a word. You could also just say anyone who is not going with the subscription model. That is a business that involves us, the audience, the platform, and the advertiser. Bounce, and all those things. Yeah.It’s not even a ménage à trois, it’s a ménage à four?[Laughs] And everybody knows once you break trois, it’s just a mess in there. Somebody’s always getting left behind.That’s right. That’s right. [Laughs] It’s harder for everybody to achieve orgasm. You can decide to keep that in or not.[Laughs] Never break trois.Never break trois.That’s a business rule, honestly! Sometimes I look at YouTube and I’m like, “Oh my God, their party, the YouTube party that they are having, has so many different people at it that they have to satisfy.” And that includes the government, regulators.And I’m like, man, I just never want to break trois. I want to have my audience. I want to have my team, so the people who work for the thing, and then I want to have maybe the advertisers or maybe myself.You can decide not to break trois if, for instance, making money isn’t important to you or satisfying the YouTube algorithm isn’t important to you. You can decide that these aren’t priorities.Yeah. Well, I mean, if you’re going to pay people’s salaries, you can’t decide that money doesn’t matter.Exactly. Exactly. This was a big “aha” moment for me in running a business, realizing that the simpler your business is, arguably the better it is, or certainly the more effectively you can run it.Yeah, especially at the beginning. I mean, businesses get complicated because they’ve succeeded already, and they have opportunities to complexify. But they do not get complicated at the beginning.Yeah, yeah, yeah. I am willfully trying to keep our business as uncomplex as possible, and it is hard.You just added advertising. You did it. The last episode of Game Changer.We did not actually add advertising to Dropout. There are fans who are very concerned that’s going to happen. That is not going to happen.But there was a sponsorship, though —There was a sponsorship, yes.That [sponsorship] made a lot of sense in the place that you would have needed this, so that you could fund a high-dollar game show.“Made a lot of sense” is an interesting way to put that. [Laughs][Laughs] Well, as a viewer, it made sense.Yeah, for sure.So, I warmed up to subscription. I warmed up to the idea of, “Oh, going direct-to-audience means we get to simplify this operation.” It means that we get to call the shots. It means that even though budgets will be less, our creative autonomy will be more.Would budgets definitely be smaller? Obviously, per viewer, you’re making a lot more money. It’s really about the number of people you can convert. And that marketing, was there a lot of discussion about how you would actually market the subscription product, or was it just like, “Let’s make this available. We’ll pop a bumper on the end of the videos, and people will go sign up?”The theory when we launched was that we would be converting YouTube subscribers to paid subscribers for a lot longer than that turned out to work. That well ran dry fast.That sounds familiar.So it turns out a marketing vehicle eventually arrived, but this did not end up being a successful thing for the people at IAC and CollegeHumor. IAC is a big media conglomerate. They don’t like people; they own a bunch of magazines and TV shows, TV channels.I think IAC gets a bad rap in all of this, but for the record, they were patient with us in terms of us not delivering them a big chunk of money for over a decade. Arguably, they showed more patience than I think a lot of parent companies would in that same situation. And a lot of people, meanwhile, gave birth to spectacular careers coming out of CollegeHumor when IAC did not benefit very much.So I remain grateful to IAC for being our shepherds through that decade. And then when they got bored with us… We didn’t objectively fail; we just didn’t succeed spectacularly either. We had like 75,000 subscribers at the end of year one. I think they were hoping for double that number. They tried to sell us, but we looked very bad on paper because we had just burned through their whole investment. So a lot of people were interested at first, and then they saw the amount of money we were losing and the business plan, which had us losing even more money before turning profitable, and they all dropped out one by one, leaving me.And so you came with all your big piles of money that you somehow had, and you just said, “Hey, I’m going to buy it. Hey, what’s that? You got a cigar? Backroom deals.”No, this is the weirdest part of the story for me. So you did not, in fact, go to them with a bunch of money to acquire Dropout. How did you acquire CollegeHumor from IAC, Sam?I find it very funny when there’s a certain sound bite on the internet that’s like, “Sam used his dad’s money to come and buy Dropout.”Oh, wow.Which is very funny in the context of my dad being the inequality guy. You are misinformed in terms of how much money you think this family has.For those who don’t know, Sam’s dad is Robert Reich, who was the Labor Secretary under one of the… Bill Clinton. Is that right?Yes. Under Clinton, which, as we all know, Labor Secretary is the most lucrative profession that you can possibly imagine.You see him on the internet sometimes yelling about inequality, probably.Yes. Yes, yes, yes. And he does it very well.He’s very talented.So I went and I offered IAC zero dollars, which was the amount of money I had to buy it. There was another offer for $3 million, but it would’ve gone to a competitor. They would’ve fired everybody and taken the assets and seen what they could do with them.I think that they liked the idea of gambling, so my offer was $0. They would end up as the minority stakeholder. So it was sort of like idiot insurance for them.So they’d get to hold on to whatever Sam does with it?Yeah. Insurance for them in case things go very, very well. And I think that they liked the idea of gambling on me more than the idea of handing the company over to a competitor. It’s a better story if it works out. It’s more exciting for them.So we did that deal. And for the record, I would not have done that deal purely sentimentally. I did it because I really believed in the business case.Did you feel like you saw something that the people at the parent company didn’t see, or that the executives who had been operating CollegeHumor didn’t see? Like, where the value was maybe wasn’t where they thought it was?Maybe. What we did with the company was so disruptive. I have a hard time imagining any corporate parent going, “Yeah, let’s try that.” It was so extreme. I think it probably could only have happened in a new environment.So, the kind of immediate first step was that the company got very small after it was in your hands.Yeah, we went from 105 employees to seven employees overnight.Were you also signing up for that?Yes. We signed our deal with IAC on a Tuesday in March of 2020, on Wednesday, the basketball teams stopped playing, and on Thursday, we were in COVID lockdown.Whoa, I didn’t realize that. That’s new information to me. That’s wild. [Laughs] Isn’t that crazy?“The basketball team stopped playing” is such a triggering phrase to me.Totally. Totally. That’s how I get people with that story. They’re like, “Oh, I remember. I remember now.”And then you had CollegeHumor, which has since rebranded to align with the name of the pre-existing streaming platform, but I would call it at this point a pretty different business, and thus I consider you the founder of Dropout.But you don’t have to consider yourself that. You certainly are the CEO, though, and you’re super in charge. And a strange way for all this to happen. When you proposed this, did you feel like it was likely that they would say yes?No.Ah, love that.I saw the writing on the wall, which is to say I saw that they didn’t have a lot of options. But for the record, I was a chief creative officer, and even then, much to my own lack of credit over the course of 10 plus years at IAC, I didn’t really speak business. So it was a leap of faith in me as a non-businessman, and that’s what I felt very conscious of walking into that room.There was a time when media companies were more likely to be led by people who enjoyed making media and a time when, maybe now, media companies are mostly led by people who are kind of on the numbery side, the businessy side. You are a current example of a person who is a media executive, if you’ll excuse me saying that, but who is extraordinarily and deeply, and constantly involved as a creative force, as a host, on-screen talent, but also constantly ideating and even writing. You’re not just sort of showing up and reading the teleprompter. You are also coming up with ideas for shows, and you are the creative vision behind what I think is probably your most successful show, Game Changer.I think Game Changer and Dimension 20 are constantly duking it out for position on the platform.Dimension 20 existed as a product when CollegeHumor launched to Dropout, is that right?It was a day one Dropout franchise. So did Game Changer [exist], though.Oh, I didn’t know that. That’s why it’s been around. That’s why it has seven seasons or eight seasons or whatever.Exactly, exactly.And I know that you’re not super proud of those early episodes, but we love them in my home.[Laughs] That’s nice. That’s nice. So determined to jump the shark.I mean, you have got a real sort of creative problem with Game Changer in that you continue to escalate. And eventually, there are no more rungs on the ladder that you can keep climbing.It’s true, it’s true. It’s hard to go further than outer space.For the audience who don’t know this, the idea of Game Changer is that it is a game show in which the game is different every episode. The contestants arrive not knowing what the game is going to be, and then they have to figure it out, which is a delight.Sometimes it takes more and less work to figure it out, but yeah.I mean, the season finale of the most recent season, I don’t think I figured it out until I was halfway through. I was like, “At what point is this going to change? At what point is the next thing going to happen?” It was like, oh no, this is the whole thing. Buck wild.And also part of this is that you work with a lot of improv comedians, and so that’s the jam, that’s the vibe, that we’re going to play in this space together. But it does seem like you’re able to direct the future with the way that you write the shows. It felt like it could have gone a number of ways that would’ve been much less satisfying than the way that it went. Was that an illusion? Did you create that illusion for me? Was that sort of a written thing? Or could it have gone differently?I don’t think so. I mean, I think that we grappled with this internally because sometimes Game Changer is a game and other times it’s more akin to performance art. And there are certainly the game wonks who like those episodes better. And then there are sort of the lighter-hearted audience members who appreciate Game Changer no matter what it is. I really wanted to do this episode, and I would say that we pushed it through despite some inherent flaws that it has. And one of them is that the conclusion is inevitable, but what we wanted to do with Jacob [Wysocki] and with the audience is to tease them in terms of just how inevitable it is.It didn’t feel inevitable as a viewer.Yeah, yeah, yeah. To make him feel like there might not actually be a net underneath him, and to trick the audience into thinking there might not be a net underneath him either. But of course, I would not have let him fail. [Laughs][Laughs] Okay. All right. You’ve ruined that for me now. I mean, the Game Changer host I know would absolutely terrorize anybody in any way. That’s part of the character.I wasn’t going to stop the episode before he knew I stole his blood, let’s put it that way.Yeah, I guess there was a lot of stuff that you would want to have happen. Okay. It turned out very well.But back to the thing: Why do you think that it is less likely and harder to have a creative person at the helm of a media company now than it once was?Well, I mean, I think like what happens to industry in general, industries take on meta qualities as people want them to be more successful, and therefore, business people take over in an effort so that those businesses make more money. And I think what you get is a little bit of… What I’ve seen occur is this sort of separation between these companies that are giant and monolithic, and they’re run mostly by finance people or maybe promoted legal or marketing people, because those are the people who the board has basically decided can best pull the business levers. Creative is the product, but let’s pull the levers of the business. The product is a minor part of the business. I’m saying that facetiously, but that’s the attitude of these companies.And then on my side of the aisle, these smaller businesses that arguably shouldn’t exist because they’re much more vulnerable. It’s vulnerable to run a small business. It’s very vulnerable to run a medium-sized business in the world we’re in now, where the middle class of our industry has been hollowed out. Sorry to sound like someone you know.Your dad?My dad. But we are run mostly by people who would be doing something like this regardless of how successful it was, because we’re so passionate about it, which means that we need to be creators because no savvy business person would do this.Now, we are in an unusual position, to be clear. When I signed up to do this, I thought it might be nice and small and humble. That I could work without a boss on my own terms for a long period of time, which, coming out of the corporate world, is what I wanted. It’s been way more successful than I could have ever imagined, and it’s a lot more work, more stress, and more complicated than I could have ever hoped for. So yeah, I got into this to run a small business, and in fact, we’re in a medium-sized business.It has grown. What kind of business is it? Obviously, Dropout itself is a streaming platform, but I imagine that you do not consider yourself a person who runs a streaming platform. Do you consider yourself the CEO of a media company?I suppose, although I’m really into boiling this business down to its essence and also not glorifying it. And I think what it is is basically a subscription platform. If you were to really corner me, I would basically say I run a comedy SaaS.[Laughs] I don’t actually think that you’re allowed to say that.[Laughs] I feel really anti-pretentious about what this is. It’s a brand.You want laughs. We will provide them for $7 per month.Kind of. I do feel a little bit like Andy Warhol sometimes, insofar as I think Dropout means a lot of things to a lot of people. For my purposes, we are a Campbell soup can on a canvas, which is to say the transaction is you pay us now $6.99 per month, and we deliver to you this collection of programming. And yes, we have all sorts of creative ambitions, and yes, I think Dropout has collected this really unique and wonderful audience of people who are connected to the content. They’re connected to the talent, they’re connected to certain things that they’ve come to understand the brand stands for, but at the core of it is this mechanism that’s working. It could work or not work, and if it didn’t work, all of this would go away. And that feels really important for me to know.I guess I should ask, what is the mechanism that’s working? What’s the thing that’s working right now for you? Obviously, more people are subscribed to Dropout this year than they were last year and last year than they were the year before that. So it’s growing. What is the thing that is working there in terms of your funnel, in terms of why people sign up. Who are these people? Because you don’t have Friends, you don’t have a bunch of storied media properties, you don’t have that many shows. There’s not that much content on Dropout. But lots of people are signing up. I don’t know if you can tell me the number of people you have as subscribers?For a while, I’ve been saying we’re like spitting distance from a million, and that’s still true.Wow. Okay.I think what’s working, without putting too fine a point on it, is that people subscribe and they stay subscribed.And they watch.They watch.So these people subscribe. They don’t just coast the way I do with Netflix, where I’m like, “Well, maybe there’s something I’m going to want to watch there sometime.” My rocket money situation isn’t what it should be, and I haven’t unsubscribed. But Dropout pops up on my TV a fair amount. So these people are subscribed and actively watching?Yes. We have a highly engaged user base.What’s your funnel? How do people come into the platform? There are a few different ways. The dominant one is through organic social, meaning they’ve watched clips from our shows on Instagram, TikTok, and YouTube Shorts.And you designed shows to be good at being… Well, I don’t know if you designed them that way. But you do now.I would say sometimes better and sometimes worse, we do that.Game Changer is very good at this because it’s got that Whose Line Is It Anyway? vibe, for people who have never heard of any of this, where there are just good clippable moments [happening] a lot.I think Game Changer is good at this. I think Make Some Noise is very good at this, when you think of Make Some Noise being prompt execution, prompt execution. Arguably, Dimension 20 really shouldn’t be good at this, and yet it somehow is.Sometimes, yeah, they’re just talented, funny people. I say as a person who was once on the show. [Laughs][Laughs] Yeah, you get to claim a percentage of credit for that compliment.But it’s so true, Hank. I mean, you as that character creating moments on the show… Some little voice in the back of your head is like, “Let me turn this into a moment.” And when you have a great moment, that becomes marketing for the show in the world in which we now live.And that didn’t exist five years ago. When COVID happened, that was a very small ecosystem. And now it is a huge part of online video. And also very hard to turn into value. So very few people are able to turn their reels and their shorts and their TikToks into any amount of money. Some people have ways, some people have very large audiences, and then it gets easy. But you turned it around where it’s like this content only exists because of a thing that costs money, and if you would like to see more of it, you can become one of the people who are the reason that this content exists by being a subscriber.I think it’d be very hard for Dropout to work if we hadn’t imploded the advertiser-supported part of our business. Yeah, you just kicked it off. You were like, “I don’t need this.”Yeah, it was basically like, “I can’t run an ad business. I’d be no good at it. I’m, in a lot of ways, a terrible salesperson.”You can sell things, but I just don’t think that you want to sell that particular thing.Sure. Hey, thanks, man.This is a very different conversation from the last episode of this that I did.You are, on the other hand, a very good salesman. I have so many socks because of you, and I love them all.I love that!So what you’re saying is the vast majority or the biggest chunk of the people who are subscribed to Dropout came in because they saw clips, and then they saw another clip, and then they saw another clip, and they’re like, “Fine, I’ve got to watch this. And where is this? I’ll find it?”The vast majority of people. I think 10 percent of our subscribers right now come in through paid.Oh! Okay. So you just sort of run the best clips?Yeah, we do, we do. We use organic social performance to clue us into what clips we should amplify, and I think that’s helped us out through lull periods.But even for that, you’re using the clip. You’re moving from organic to paid.Yes.So that’s really the thing. I know that you did Dungeons and Drag Queens, where there was new talent to bring to the platform. These people have fans. Maybe those fans are going to sign up. Has that also been effective?Oh, for sure, for sure. You could argue that we are certainly using the content to market itself, but there are all sorts of ways that we’re doing that. So casting and stunt casting are certainly some of them. And Dungeons and Dragons Queens was huge for us.Are the shows that have the most audience the most responsible for signups?I would say so, yeah. It’s a bit of a self-fulfilling prophecy there, where the most popular shows, the most watched on the platform, tend to have the biggest social channels, and tend to also drive the most viewers.So what are those?I mean, none of the shows currently on the platform don’t have their own hardcore dedicated audience. If a show isn’t for the audience —Well, now that’s a problem because you can’t cancel anything, Sam.Yeah, I mean, we have not exactly formally canceled, but we have sort of…Paused production?Paused production, sidelined, put on the back burner, shows that didn’t collect an audience as well. The most popular shows on the platform are Dimension 20 and Game Changer. And then the second most popular shows on the platform are some combination of Smarty Pants, Very Important People, and Make Some Noise.Have you ever considered putting stuff on that you didn’t produce? So right now, everything on the platform is CollegeHumor or Dropout-produced.For sure, for sure. We have. We are. I think the reason why it’s tricky is that we consider social marketing to be a big differentiator in terms of how we do things. And if we were to license a mainstream show, there’s no way that they would allow us to power their social channels. So there is no point in us doing that unless we get to do that.Weird. That’s such a specific reason to not do that that I would not have imagined.The other reasons are out there, too. If we just license anything under the sun, does it dilute the brand? We’re not trying to be a utility; we’re trying to be more of a brand play. But I would say that we are interested in potentially hosting content on the platform that could power its social content. And so we are having some of those conversations because we think it’ll be an interesting experiment. But we’re being very, very, very choosy about it, obviously.Gotcha. So how many people are at Dropout right now?We are 40-ish on a full-time basis. But that really doesn’t account for so many people who are such major contributors to what we do, because there are so many contract players involved, the crew side, on the talent side.Those people do feel a lot like part of the team, especially because in terms of the Dropout cast members, those people are mostly not employees, and they are the folk that people imagine when they imagine what Dropout is. There’s just a bunch of recurring comedians who come in and are seen as the Dropout family by the audience. So those people are contractors, but are also something more, it feels like.Definitely. And which is why, by the way, profit share, and so many of the things that we do, we bend over backwards to make working at Dropout a positive experience for folks. I think that Hollywood is a system where people are used to this and expect this to a degree. There are all sorts of inherent benefits and drawbacks to the full-time equation. We did have full-time talent for a long time, and the benefit there is security for both of us. We know that we have people that we can turn to, and they know that they have that amount of job security. And then the downsides are that we have to make use of those people and only those people because we have to derive that amount of value from them. So it means that the pool gets smaller, and then the downside for them is that they can’t explore other opportunities that might pop up as a result of their employment with us.This has been a weakness of a lot of YouTube companies, BuzzFeed is the best example, where you have employees and then they get a really popular show, and then they’re being paid as employees, but their show is making the company a bunch of money, and they’re not being paid as talent. And so if Seinfeld gets popular, Jerry Seinfeld gets paid more, but if The Try Guys get popular, do the Try Guys get to negotiate a three times higher salary this year? It’s sort of not how business works. And so the Try Guys start to feel pretty uncomfortable being part of BuzzFeed and maybe want to go do their own thing. And this is from the very beginning of YouTube, a big problem.And I feel like this model of just listening to how Hollywood has worked in the past actually makes sense in this case, where it’s like, “Okay, well, you’re going to come and you’re going to do this show this season. And the next season, if the show did really well, your agent’s going to have a conversation with us and we’re going to be figuring out… And you’re going to be able to do a bunch of other stuff, but this is going to be a big part of your yearly income now because that show is popular because people really like it, and you’re creating a lot of value.”I don’t know how much people know about exclusivity, but I think this stuff is so interesting. If you are signing up to participate in a project, let’s say Apple TV comes and wants you to be in their show, you will sign a contract with Apple TV that’s like, “You are committed to X number of episodes over Y period of time.” You’re usually signing up for multiple seasons. But as a part of that contract, you can’t do other things, usually in that category. Which is to say you can’t do other streamers’ shows, for instance, without Apple’s permission.But then, imagine for a moment that Apple takes a long time to pick up a second season of your show. And those times are built into your contract. So maybe it takes them nine months to pick up another season of your show. For those nine months, you are not allowed to do other streaming things.You’ve just got to learn to juggle or something. What are you doing?What do you do? What do you do?What do you do? You just got to stay in shape, too, because they need you to look the same, and it’s like nine months went by, man, I’m a different guy.Yeah, for sure. Keep your hair the same length, keep your nails the same length.Oh my god. Yeah.That’s tough. Exclusivity is really tough for folks who are grateful to be working in this business at all, and so have very little negotiating room.So our attitude about it is, if we were not accommodating of people’s other work, we would simply be forcing them to make a choice between us and the other work, whatever it is. So the fact that we don’t ask for exclusivity of any kind means that Lou Wilson can work with us because otherwise, he is full-time at Jimmy Kimmel Live.Right. Oh. Yeah, interesting.We are trying to position ourselves as everyone’s favorite second job, unless they don’t have a first job, in which case they are very happy to be working with… we want them to be very happy to be working with us.You’re getting a reputation for this, for pioneering more creative ways of doing things, being more worker-friendly to everybody from PAs to talent and everything in between. And profit sharing for contractors, for talent, it’s not usually how things work. Though there are various ways of doing this, I’ve never heard of anybody doing a straight profit share. Why do that?I guess why? And also, why is it hard? Is it hard? Is the reason that other people don’t do it because it’s hard? Or is the reason that they don’t have to?I don’t think it’s hard. I don’t think what we’re doing is that hard, say nothing about our brilliant finance team who are doing it. But specifically, the reason we’re doing profit share and not —I don’t mean it’s logistically hard to cut the checks. I mean that it’s hard to make the business model work.Oh. I think it is kind of hard to cut the checks.[Laughs] I feel like Paramount could figure that out.I think royalties are harder.Yeah, for sure, royalties are harder. Yeah.Which is why we do profit share because it’s much simpler for us from an admin standpoint.I think that other companies don’t do this because it is not standard and because they can get away with not [doing it]. But the big one is probably this, which is that they have people that they need to satisfy, a whole category of people they need to satisfy who we don’t have.They broke the trois.[Laughs] They ascended trois. They made that critical error, going up from trois. And right there, number four, number five, number six, depending on the company, is the shareholders. And that means that there are people… Basically, by hoarding money, you are satisfying someone, right? Which we don’t have. There’s no one to satisfy.Well, I mean, IAC, theoretically.Theoretically.They never come knocking and say, “Man, you could turn this into a big boy now. Come and show us the success?”Me, theoretically, right?Yeah.Brennan [Lee Mulligan] is also a partner in the company.I’ve tried to invest, but you will not take my money.Maybe I will someday, Hank.Okay, let me know.And don’t get me wrong, we’re all making money. When we say profit share, we’re not even talking about the whole profit. Right? Some of that profit goes to me and to IAC.And of course, there’s also operational funds. You’re not going to zero out the bank account every year.Of course, of course. There are operational funds. There’s play money. We want to try new things. So all that money’s going all sorts of different places, but there are no shareholders to satisfy, which means us becoming more and more and more profitable every year is not necessarily our first priority.What is your first priority then? What are you trying to do? What are you trying to do, Sam Reich?! I don’t know, man![Laughs] Why are you doing this?[Laughs] I don’t know, Hank. What do you think I should do?I don’t know. That’s a good point.You’re in this same boat, more or less. I could really easily flip this around on you.I mean, I can tell you why I do it.Oh, please give me one. Give me one.Oh, I mean, I feel a strong sense of obligation to the things that I have made and the people I work with.Sure.I feel a strong sense of obligation to the audience. And I also am very rewarded by making things sometimes. Obviously, there are some parts of my job that I do purely because of the obligation. There are some parts of my job that I do because I get paid to do them. And there are some parts of my job that I do… And these are different amounts in every column, in different activities, but sometimes I’m doing it because I just freaking love doing it. It’s so fun.Yeah. Yeah. That’s interesting. I feel a little bit of a sense of obligation. I wouldn’t say that’s my primary driver. I think that I feel very aware and very grateful for the ability to create things under a unique set of circumstances where I don’t have… I feel uniquely under the trois, uniquely lower than trois.And you’ve got to hold onto that, what we’re learning. Hold on to the trois.It’s a really unique ecosystem to be a part of, and I think it means that we can create some uniquely cool stuff, and I love that. Giving birth to stuff is my favorite part. I’m an art snob at the end of the day. I’ve been to Edinburgh Fringe —That’s a nice thing to have be a part of your job.I mean, barely.You pulled some acts out of there. Fringe, by the way, is a very weird comedy festival that happens in Edinburgh. It’s like weeks long, and it’s tiny rooms, and it’s just weird art happens, and I’m very jealous. I’ve never gone.Oh, Hank, we’ve got to go some year and I’ll show you around.I’m waiting for my son to be old enough.Yeah, that’s fair. But I just love weird and unusual stuff, and when I think about what I want to leave behind in the world, it’s more of it.Okay, love that. How do you make decisions? That’s a Decoder question. We’ve got to ask that one.There’s a terrific TED Talk on decision making, which talks about how when you’re faced with a difficult decision, it’s usually because there are pros and cons that feel roughly equivalent to each other. And so it kind of doesn’t matter, so just pick one. Ruth Chang, How to Make Hard Choices.A lot of the important decisions, it’s pretty clear which direction to go. And then with the difficult ones, you sort of have to decide what you’re voting for, what you’re optimizing for. So if you have your priorities in order, oftentimes the right decision will emerge. Meaning, again, hopefully our business is pretty simple. There are a lot of factors that we have to incorporate, and those factors are something in between the content itself, the experience of the audience, the welfare of the cast and crew, our finances, and what’s personally creatively exciting to me. And if I have those roughly in the… They’re not in that order. I don’t exactly know what order they fall into off the top of my head. But if I have those in the right order, I can usually make the right decision.How do you imagine Dropout in the media world right now? Do you even feel like you’re a part of this industry? Or do you feel like you’re kind of hanging off to the side? Do you feel like you worry about the industry broadly, or are you just sort of like, “That’s not me.”It’s more “that’s not me.” I mean, I do feel like I’m on a little bit of an island where I get to be sort of the mad trickster king of the domain.For most streaming platforms that have been launched by big companies, to have a million subscribers would be a tremendous failure. In terms of macro media-ecosystem things, it seems like this is a totally inevitable thing, and that it should have happened more already, where everything keeps fracturing. So, more and more nichification of everything. And why wouldn’t this happen to streaming platforms? And we haven’t even talked about the fact that Vimeo enables this with a pretty low lift. So you use, I think, a product called Vimeo OTT.That’s correct, yeah.Vimeo basically lets you build a streaming platform, and they have a version that integrates with itself, and it can be in the app stores, on Roku, and on the PS5 or wherever, and that simplifies this process.I think that what Vimeo is betting on there is that this nichification will occur. But I think when you look at the people who use that, it’s a lot of individual creators or people who have a workout thing, they’re like lifestyle influence type things. I think that maybe the RuPaul streamer runs on it.Yeah, WOW Presents, I think so. Criterion Collection.Yeah. And it just feels like it would head in that direction, and that the different segments would each get their own little world, which will, of course, continue to alienate us from each other because no one’s watching the same things, but whatever.It feels symptomatic of this world of content that we’re living in. And so it’s a fair question, like, well, why not more? And that’s a good question. I kind of expected it. When Dropout first hit for me, I was like, “Oh, two years from now everybody’s going to have one of these things.” And that has not really happened, and people have tried to launch some that have been less successful…I do think that, as is the case with the internet, when you’re browsing TikTok and you learn about someone with 9 million subscribers or followers who you’ve never heard of before, there are plenty of examples in our industry of businesses that are just running a little bit under the radar that are doing very, very well. I think Nebula, for instance, is one of those businesses. And in the last couple of years, maybe a little bit inspired by us, maybe not, depending on the specific example, but the Try Guys have launched their answer to this, Critical Role has launched their answer to this, but my hope is that there are more people who follow in our footsteps because I think it’s only better for Dropout if there are more examples that people can point to to say, “I subscribe to this small collection of indie streamers.”And I think it behooves us to have that group be larger because it means better resources for our business as well. We depend on third-party technology in order to power Dropout, and if there aren’t enough streamers to use Vimeo OTT… They’re not going to keep supporting the product. Do you ever regret using Vimeo OTT or not building your own thing?No! We tried, but people don’t realize this. The first rendition of Dropout was built on Vimeo OTT’s API, but it was our own product. We employed something like eight sophisticated engineers at IAC to build our own product around it, and it was brutal. Which is to say, it’s just very hard to do very well. And these were great engineers.What you’re doing is in part running a company, being a business person, managing your direct reports. I should ask how this is all structured. How many direct reports do you have?Technically, I think I have two or three, something like that. What we decided pretty recently, within the last year, is that I should have almost no direct reports, basically just the C-suite, and then everyone else should fall under someone else. But that’s pretty new.And what are your departments? There is creative, burgeoning department. There is marketing —Do they make a lot of YouTube shorts in the marketing department? [Laughs][Laughs] Uh-huh! Yes. And paid and email, and everything else that falls into the world of marketing. There is tech, which is pretty small but does exist. There is production. There is programming as it is independent from production, which are the folks who not only handle our content as it’s related to metadata, but are also responsible for maintaining our programming schedule and putting stuff up into the platform. Also, QC is a part of that department, meaning quality control. We have, for instance, one very talented person whose job it is simply to, this is not all they do, but it’s a big part of what they do, to watch every episode to make sure that there are no glaring issues with it before it posts to the website, to the platform. I think that’s about it, with one or two straggling — oh, design — With one or two straggling departments that feature one person or two people.Yeah. There’s the person who keeps the Dimension 20 lore book to make sure they know all of that.Yes, well, interestingly, Dimension 20 is kind of like its own department because it’s such a big operation. And lately, Game Changer, Make Some Noise have sort of become their own department as well.So you’re partially running this business, trying to make all the things work, and I assume mediating when people disagree with each other and doing all of that work? HR is new! HR is new as of the last seven heads. And then you’re also on-screen talent, and creative, and writing, and all this, but there’s another thing that you are… I think that this is not that unusual. There’s always a public-facing role to a CEO. But beyond that, not only do you have a public-facing role as the CEO and on-screen talent and kind of founder, depending on how you want to count that, but also you kind of embody what Dropout is trying to be. And a strength and potential problem is that you’re trying to be a good guy while you do it. You’re not Carl Icahn, you’re not ruthless businessman Sam Reich. You’re trying to do this the right way. And one of the things, my brother [John] and I call this the perfect person problem, that if you tell people that you’re trying to do things well and you’re trying to do things right, then people will expect you to do it perfectly. And there’s no such thing as perfect, and there are always things that you’re balancing.How do you imagine and manage your own public perception, where you want people to know that you really are trying to do things better, but you also need to convey to people that you will not be perfect?I think this is definitely a work in progress, so — And I think that the Dropout audience, in part because of — I mean, there’s a demographic thing here, but they’re responding to and signing up in part because of a halo here that you’re helping to create by doing things well. Their expectations are going to be high. You’ve got a high-expectation crowd, and I’ve seen some examples where they feel as if you’re not living up to your values or something like that. That reputational management, do you see that as a big part of your job? And how do you imagine that?Yes and no. I mean, when I say work in progress, that applies not only to this meta question, but also sort of the way I look at Dropout in general, which is, perfect is an impossible-to-achieve standard.And I try, at least when I’m out in the world, to really convey, as much as possible, that I am a comedy person who inherited this thing who is trying to do things novelly and experimentally, but that I don’t even know as much about this kind of stuff as like Adam Conover does, as part of my peers do. So when I say work in progress, I really mean that we are trying things and we will make mistakes. And what I’m specifically not doing on social media, or anywhere else for that matter — in conversations like this, on panels — is to portend as if Dropout or I have it all figured out, that we are an exceptionally moral company or that we are an exceptionally idealistic company. I think that tension between running a company and being good to people inherently exists.So what I’ve claimed to be the case, and I really do still think is the case, is that I consider myself a highly creative person. I’m trying to make content that’s as innovative, interesting, and funny as possible, and I hope people hold us to that standard. And otherwise, I’m trying to set maybe some new standards for decency, but I would underline that word.I am also, as you have coached me through a lot over the months and years, Hank, [laughs] becoming quickly used to the fact that you can’t please everybody and that you will have to make decisions that are unpopular sometimes. And that’s okay. Some people, particularly entertainers, need to be liked by everybody, and I think some people worry about me in that way because they think that my affable nature means that I would really dislike being unpopular. And I am actually totally okay if some people don’t like me.Is this part of growing up in a household where a lot of nasty things might have been said about your dad?Honestly, nepotism, I’m sure, served me even in ways that I’m not fully conscious of, in all sorts of ways. But one thing that is really useful is that my dad modeled fame for me. So I do have someone very close to me out there in the world who is also a public person, who by virtue of his job, deals with controversy at least three times a year [laughs], which probably thickens my skin a little bit.Interesting. Is there, on the list of reasons that you like this or want to do this, we talked about this before, but let’s end here with this. Is [the idea] that people aren’t doing things weird enough, and you want to do things weird, on that list?One hundred percent. You and I have connected a lot on the topic of Homestar Runner over the years. Homestar Runner may be hugely responsible for my career taking the direction it has. It was incredibly influential on me. And something I loved about it was like, it felt like a walled garden of weird that existed at a URL. Yeah. That resonates. And I think about how sometimes I wish that I could plant a forest full of weird trees on the internet. I wish that the internet were still a place where, just like there was really fun, mysterious, hopeful stuff that existed a URL away. I would hope that Dropout can just be one of those things.All right. Well, that feels right to me. And I hope that you keep doing it, and I hope that people keep finding it, and… loving that weird! It’s a little place where a lot of strange things happen.Hank, you are also hugely responsible for and inspiring in the creation of weird stuff for the internet. You’re also inspiring insofar as you are just so prolific in terms of the amount that you do. [Laughs] If nothing else, there is that. [Laughs] And also a lot else. So thank you for being both the friend and the inspiration.There certainly is quantity. [Laughs][Laughs] But a sincere thank you for being both the friend and the inspiration that you are.Ah, well, thank you. Thanks a lot. I appreciate you coming on and chatting with me and getting into the weeds and the details here. And someday we will find another podcast where we will just do bits. [Laughs][Laughs] I look forward to that day. Thanks, Sam.Thank you, man.Questions or comments about this episode? Hit us up at decoder@theverge.com. We really do read every email!