Lee LeFever had a talent for explaining tough concepts, so he built a company that makes and sells explainer videos. Common Craft, the business he founded and runs with his wife, has been used by companies like Google and Twitter to help potential customers understand their new products.
I invited him to Mixergy because I’m fascinated by how companies make money by selling content in a world where so much content is available for free. If you listen to this interview, you’ll see how he does it and how he’s moving to a more scalable business model.
The transcript for minute 0 till minute 5 is BELOW this line.
Andrew: Before we get started, I want to tell you about 3 great tools for online businesses. The first is Grasshopper. That’s where I went to get my phone number and because of that I can create extensions for each department in my business or each person in my business. I can decide what my greeting is and customize it. I can accept faxes on this number. I can decide what music gets put on hold, even upload my own music on hold. And I can create enhanced extensions and so much more. Check out grasshopper.com and you’ll be able to do the same thing. Second is Shopify. That’s where people are going right now to create stores for themselves that are robust in features but also very easy to create. So you can create ‘em quickly and Timothy Ferris likes this company so much that on hi blog he announced a $100,000 jackpot for the best upcoming store from Shopify. So, create a store. And, finally, I want to show you some themes from RichWP, you go to richwp.com, look at these beautiful themes. Can you imagine how you can create a website just using these themes and WordPress, which is free. Using these themes and make your site look like the daily, like a daily newspaper. You can create a photo theme. You can create a professional business theme. You can create one for your blog. You can create just about any design because they’re all very customizable. I’ve gotta tell you that on my website, I was able to get bigger and better guests and bigger and better sponsors, to be honest, once I gave it a nice, new theme. Once I gave it a professional theme. And if you go to richwp.com just browse through this, the themes, you’ll be able to do the same thing for yourself. You’ll see and be inspired by what you can do for yourself. So go to richwp.com. Here’s the interview.
Hey everyone, it’s Andrew Warner. I’m the founder of mixergy.com, home of the ambitious upstart and as you know I like to interview Internet entrepreneurs about how they built their business. So that we can learn from their experiences. We can learn from the way they built their businesses and take those lessons and go build our own companies. Build our own empires. And today I’ve got with me, uh, Lee LeFever, he is the co-founder of Common Craft. Common Craft makes these videos, that I’m sure many of you’ve seen, that explain complicated subjects in a way that’s easy and engaging and they often use, well, um, uh, actually, how would you describe the videos you guy create Lee?
Interviewee: Well, we use stop motion as one, one thing that people understand. We, we take a whiteboard and point a camera straight down onto it and then use paper cutouts, uh, usually in stop motion, sometimes with markers and my hands to tell a story. That makes something that’s complex easy to understand in about 3 minutes.
Andrew: And you’re the ones who explained to, I don’t know how many millions of people, complicated. Is it over 10 million people, by the way, that have seen our videos now?
Interviewee: Yeah, just, just the Twitter In Plain English video has reached over 10 million. So we’re closer to 20 million, now, I think, overall.
Andrew: I see on a lot of websites, when they, especially in the early days of Twitter when they wanted to explain Twitter and get people engaged with their Twitter accounts, they would post the Common Craft video saying, “This is what Twitter is.” Same thing with RSS. In the early days of RSS when nobody understood what RSS was, and frankly, most people still don’t.
Interviewee: [laughs] Sure.
Andrew: If anyone wanted to explain to their users what it was, they showed Common Craft video. And you guys have, you started out explaining complicated subjects that most of us want to know, like RSS. You then moved on to, to doing custom work for companies like Google, that you work for, right?
Interviewee: That’s right.
Andrew: Today you guys create videos that we can, we can go and buy. We can license from you.
Interviewee: That’s right.
Andrew: So you’re not creating a custom video for Andrew Warner you’re creating a video that, that fits many subjects that people like Andrew Warner might need or many, many people like our audience.
Interviewee: That’s right, that’s the focus of our business right now is doing, we call it licensing, you know, licensing our videos to, to schools and businesses mainly. Individuals as well.
Andrew: So, what I’m, what I’m especially excited to talk to you about is, how are you selling data, content, in a world where data wants to be free? I’m always fascinated when I do interviews with entrepreneurs that are actually selling it. And the second thing is, how do so many or us know you guys? There’s something about Common Craft, about your videos, about your style that many people on the Internet associate with explanations online. And I wanna know how you got the word out there. And before we get into all of how you did it we talked a little but about how powerful and how well known your videos are. Over 10 million views for the Twitter video alone. I thought we could go back in time and just quickly understand what you did before you started the business. And then, how you launched the business, how it evolved, and then we’ll get into how you grew it and hopefully, we’ll learn some techniques that the rest of us can use. So, you weren’t an entrepreneur before you launched Common Craft, right?
Interviewee: No, I moved to Seattle, from North, actually from South Carolina, I’m originally from North Carolina, in 1998. And, got a job at a healthcare software company and about a year into the job I convinced them to let me create an online community program at the company, and this was about 1999.
The transcript for minute 5 till minute 10 is BELOW this line.
Interviewee: And this was in about 1999. That was a way for the customers to work with the company and each other to learn about using the software and supporting each other in using the software. And that really…and this is about the time I read the Clue Train Manifesto and started to get really into what’s now social media. Then it was online communities. And I did that job for about three years and really just felt that online communities were going to be the future and created Common Craft in 2003 to be…
Andrew: Before we get into Common Craft, how did you convince them to create a community? I feel like a lot of us still today need a little bit of convincing to create a community. I don’t have one on Mixergy really.
Interviewee: Well, they were open to taking the risk of just starting a Yahoo group and see what happened. So we started a Yahoo group which grew into three or four groups and then really was a sort of list serve functionality that sort of showed… the proof was in the pudding. The users really benefitted from it and they would express their interest in doing something similar for the long term. And it was a great way for the company to distribute support information in a more cost effective way. So there was a business case for it. And I liked being an evangelist. I was really convinced myself that it was going to work and that this was something the company needed to do and I spent a lot of time doing politics inside the company. Meeting with the product leads and saying, â€œLook. This is where I feel like this is going to head.â€ And there was…this was 1999 so it was still really new to people. But I think that it was…it was great to have a use case, to show that the way we’re doing support now works but what if we could share that bit of insight, instead of one person with hundreds of people that use the product. And that could be a daily thing. And I think they started to see it. And now I get emails sometimes from the people I used to work for that say, â€œWow! You were really ahead of the curve with that!â€ And that’s something I’m really proud of. And that’s really what got me started with Common Craft was I wanted to work with a number of companies to help them see those opportunities.
Andrew: I see. So 2003 you left Solucent [sp] …am I pronouncing the name right? Solucent?
Interviewee: Yeah. It’s like â€œsolution-entâ€. Solucent. It’s a crazy word.
Andrew: Solucent online community. So that’s what you did for them. You left them to create online communities for other people.
Andrew: Okay. How did that work out?
Interviewee: It worked out pretty well. It was hard in the beginning, like starting any kind of new consulting practice. Which is was really just consulting. It took a good year to sort of get my…to get into some companies who had interest in online community projects. I worked with Microsoft on a couple of things here locally. I’m in Seattle. Did a little bit of work with Boeing. One of my favourite projects was with the March of Dimes. There’s a website now called Share Your Story which is meant to give the parents of premature babies and other babies with health issues a place to share information about their experience, including blogs and message boards. And that was one of the more rewarding [INAUDIBLE] as a consultant was helping get that off the ground.
Andrew: Okay. I’ve got to say that we have a live audience that’s watching us right now. And Saad Malik, who’s watching us live now, just took a picture of his…he’s listening to us and watching us on his iPhone, which is amazing, on the road, so he took a picture of his iPhone with the road in front of it, in his car, I guess, to show us how he’s listening and how he’s watching it. Which is kind of cool to see up there.
Interviewee: I’d love to see it.
Andrew: I’m loving the conversation that we’re seeing and the live audience.
Interviewee: That’s great.
Andrew: Okay. So how did you transition from building communities to doing online explainer videos?
Interviewee: Well it was a pretty easy transition in some ways because in almost all of my consulting projects I had the same issues. And that was it was my job to have a positive influence on decision makers and what I found in 2003 at least was that a lot of them were not familiar with the basics of the social web. Things like wikis and RSS and blogs. At the time I wrote blog posts called RSS in Plain English and Wikis in Plain English and shared them with my clients but also put them on the blog and thought it was…I felt comfortable doing it and it was something I enjoyed but never thought it was going to be a bigger part of our business. And then, you know, I didn’t really do much more with it. That was in about 2004 and 2005. And then when YouTube got really big in 2006 I was still doing Common Craft and kind of looking for something new to do and Satchi, my wife, and I became a team as part of Common Craft â€“ and we’re still a two person company â€“ and had the idea of turning those old blog posts into videos.
The transcript for minute 10 till minute 15 is BELOW this line.
Interviewee: And with RSS, being the first one, sort of the low-hanging fruit, and it was Satchi’s idea. I tried for a while to be able to be the guy in front of a whiteboard, sort of UPS commercial style and that was happening at the about the same time. The first ones we saw of those, but it just wasn’t working. Like I wasn’t good as the guy standing in front of the whiteboard, so Satchi had the idea of pointing the camera down onto the whiteboard and using markers and paper cut-outs and we did the first video “RSS in Plain English”, sort of on a whim if you watch the version that’s on Youtube, we since remade the voiceover and things to make it sound better but we were talking directly into the microphone on the camera, we were lighting it with bedroom lamps. We had a consumer grade camera but it didn’t matter– it’s still our second most viewed video, it still gets licensed by people despite it’s sort of more hand-crafted feel then our current videos, I guess. And then within a couple of days, it got on the front-page of Digg and became sort of a hit which got us sort of established as video-makers for the first time and the question on our side became “can we do it again? Is this something we can do again, or is this just dumb luck?” And then we make “Wiki’s in Plain English”, which has similar results, not quite as big as the RSS one but that really put us down the path.
Andrew: Do I have your permission by the way, to show five seconds of one of these videos in this interview, when I edit?
Interviewee: Oh sure. That’s great.
Andrew: Okay, I want to show people who haven’t seen it, what it’s about. So what I’ll do is when I edit the interview I’ll go back when we first brought it up and show some of your video. Why did you even bother creating that original blog post? I read the blog post, you wrote it in 2004, it was “RSS in Plain English”. It was, it seemed easy, it made RSS easier for us to understand but I saw the work you put into it, there was a lot of text there, a lot of though that went into it, into a single blog post, what were you thinking? Why did you want to do that?
Interviewee: I would say that one of the things that we describe about the RSS video and a lot of our videos since is that, I felt like there was this real opportunity to be able to enlighten people about something that’s free, that could have a real impact in their lives. Anybody on the Internet has the potential to benefit from an understanding of RSS, it was partially for my clients at the time, but also just because I felt like that it was a shame that there’s this really useful, amazing tool out there that is not being adopted, and the reason that I felt that it wasn’t being adopted is that nobody was doing a good enough talk, was good enough at being to explain it in a way, that made people feel like it’s something that they could use and they could make a part of their life.
Andrew: But did you think that it would also help you get traffic for your website? Were you starting to think “HOWTO’s” deliver traffic, people are questioning what RSS is– I’ll be the guy to answer it.
Interviewee: I don’t know that, that was a part of it at the time as much, I mean of course any blogger thinks that when they’re writing a blog post that maybe this will get me some more traffic and I’m sure I was thinking of that, but I wasn’t thinking of it as sort of a business decision of “This is going to help me to carve out this niche”. It was really just, this will be cool for the blog and hopefully my clients like it and I can contribute to people adopting something new.
Andrew: Okay, Alright, lets dig deeper into how you decided to build a business around it, what I read was that you and Satchi decided to go for a long trip, was it a trip around the world?
Interviewee: Yeah, that was in 2006, that was when we first bought a video-camera and had our first experience editing video, was on that trip making little travel videos.
Andrew: I see, and you wouldn’t just show the long video the way that my mother might have when our relatives came over, you cut them up into what I think was thirty second, sixty second videos that you’d put up on Youtube.
Interviewee: Yeah, they were different lengths, we always tried to keep it short and that was something that was instead of gathering your family around the TV to watch four hours of travel videos, you’d rather do it on Youtube with two or three minutes at a time.
Andrew: Okay and I see that Monocat who is watching us live just linked over to that CommonCraft RSS video, thanks. Ok, so, what do you think when you started to create the videos. What did you think the business model was going to be?
Interviewee: Well initially it was, the first opportunity we saw was custom videos. We released the RSS video in April of 2007 and by June and July of that year, we started to get inquiries and actually put a link on our website that said “Hey do you want one of these? Contact us”.
The transcript for minute 15 till minute 20 is BELOW this line.
Interviewee: And the first client we got was PR Web, which is now a Vocus company. If you know Vocus in the PR world. And the second one was Google Docs in Plain English. And that was the one that we really felt like, ‘Wow. Maybe there’s some real opportunity here. This will really help us build awareness that this is something we can do.’ And it’s been great. Since then, it’s been daily that we get inquiries about doing more and more videos.
Andrew: Do you still do them?
Interviewee: We do. The videos…we are doing them less, much less than we used to. For a while we said that, ‘We’re done with it’ but we still want it to be a part of the business. It’s not something that is as big of a priority as it used to be for us but it’s something we still do a bit of.
Andrew: All right. So if somebody’s listening to this and has a web app that they’re launching and they want a clear video that explains what the app does and why people should show up for it and they come to you? What would you charge them?
Interviewee: Well, it’s a good question. It depends on how long they want it to be and we don’t about specific numbers but it is in the tens of thousands.
Andrew: Tens of thousands for a single video that might run three minutes?
Interviewee: Yeah. That’s right.
Andrew: Wow. Way to go. Way to go, Lee. And how long does it take you to edit these videos?
Interviewee: Well the editing is actually…yeah, yeah. When we talk to clients we say to plan on four to six weeks to do it. The editing part is actually…Satchi is our editor and she can do that over two or three days. But the most time is spent in crafting the script. I think that obviously we’re video producers but I think really the value of what we do happens at the script writing phase. That we’re writers that also use video, is the way I describe it sometimes. So we spend a lot of time with the client. Trying to make sure that we understand things but also can find the hooks that we think are going to be ways for people to understand the product or service. And you might have seen the Drop Box video which is one of the more recent custom videos that we’ve done. And we came up the idea of the magic pocket kind of thing, because we always try to create these relationships with the real world that anybody can understand. Everybody can think of a magic pocket and how great would it be to not have to think about where your keys are? They’re always in the magic pocket, kind of a thing. So it takes time and I think that’s what we’re hired for is finding those hooks that get people interested.
Andrew: I think actually Drop Box had pretty much nothing but your video on their home page for a while, explaining what the product was. Right?
Interviewee: Yeah. I think that’s still the case. It may have changed. And I just recently talked to them about that and it’s had an impact on their conversions. Which I’m always looking for data around that sort of thing. Although we’re not making custom videos we’re very interested in the industry that’s growing up around what we call ‘explainer videos’. Videos that explain products and services because we have our Explainer Network too which is another part of our business that we can talk about if you’re interested in that.
Andrew: Yes. What is the Explainer Network? Actually, before we get to that, I love data too. Do you have AB testing data that shows how much more effective your videos are than just standard text or than something else?
Interviewee: Yeah. I wish we did. We don’t. I think that next year’s going to be a year for us to dive much deeper into the data and doing some testing and optimizing our site. But also getting a better understanding of just the impact of video in general on our customer sites.
Andrew: I wonder that too. I have an instinct that tells me that if users see a video explaining what a web app or what a web site does, they’re more likely to be engaged with that website than if they just saw text. But I haven’t seen any data that showed one way or the other yet.
Interviewee: Yeah, I wish we had data. I’m not sure if you’re aware of it, part of the reason that our twitter video has over 10 million views is that when we made it we talked to the twitter guys. It’s a video that we made but we talked to Bizz [sp] I think it was probably early 2008 maybe and basically said, ‘Hey, you know…We’re doing this video. If you guys want to use it you can’ and they put a link to watch a video on their front page for over a year. And they put a little link above it that said, ‘Thanks to our friends at Common Craft.’ And so on. So that was really a big, obviously a big thing for us. And that really is what helped us be so well known which is something you asked about for is that having that link right off the twitter home page right at the time when they had really explosive growth.
Andrew: Yeah. I do. I want to get into how you marketed but let’s see where we a moment ago before…You were telling us about the Network. So it’s you guys can create it but if you guys cost too much for me or if you guys are too busy for me or one of my listeners, what do you do? Who do you refer us to?
Interviewee: Yeah, yeah. Well, what we found was there was a lot of demand for videos. People wanted Common Craft videos but they’re also just in the market for videos in general. And being business people we said, ‘Wow. There’s demand. Maybe there’s a way that we can help find supply.
The transcript for minute 20 till minute 25 is BELOW this line.
Interviewee: …maybe there’s a way that we can help find supply. So we worked with…starting with just three or four video producers that were interested in making videos with the same goals as the Common Craft video but not the same look and feel and said, “We’re going to create a page and call it the Explainer Network and you can essentially have a listing on it that has your logo, a little bit about you and your contact information and then whenever somebody comes to us and or our website looking for a custom video, we’ll point them to you.” And that’s been around for over a year now and we have six members. Only one member has dropped off in the year and we have a lot of people interested in being on there. So I feel like that’s going to be a big part of our business going forward is helping to match up this demand for video with producers that can make them.
Andrew: And what do you guys charge people who you list in that directory?
Interviewee: We don’t share that information publicly. It’s hundreds of dollars a month.
Andrew: Okay. What I’m seeing here, and I guess we’ll see this as we go through the rest of the conversation, is that doing videos is intensely manual and it’s almost one-off. You can only sell that Google docs video to Google. What you’re looking for are businesses that scale without you and so one of the things that you’re doing is creating this marketplace where people can come and find other companies to shoot their video. Another thing that you’re doing is, as you mentioned earlier, licensing your content, right? So is this what you’re trying to do? You’re trying to get out of creating…
Interviewee: Definitely. I believe that Tim Ferris, I think in Four Hour Work Week which is a book that I really enjoy, there’s things that I like and don’t like about it but one of the things he talked about in there is separating time and money. Doing custom videos is very much a service and services inherently are your time is related to the money you make. Whereas products are a different thing. So what we’re doing is trying to create products out of videos. Where if we can make a video and license it for ten years, hundreds of thousands of times, it doesn’t create more cost for us. We’re not having to spend more time each time that video is sold. So we’re big believers in trying to set up passive income sources is probably a simple way to put it. But licensing came from a need that we saw where once people…people would see our videos and contact us and in the early days they would say, “Hey. I want to put this on my intranet” or “I want to use this in training”, or “I want to use this in my classroom.” And we started to see this over and over and we said, “Wow. This is an opportunity. These people are asking for permission. Is there a way that we can give them permission but also give them a premium product where we’re not just selling permission we’re selling them a version of the video they can’t get anywhere else?” So we went back and re-made our videos and took out things that we might want to do over. We improved the voiceovers of our first couple of videos before we got the voiceovers dialled in. Took out any kind of advertising and delivered them as QuickTime and Windows Media files so that they could put them on computers. Use them in PowerPoint presentations, put them on intranets. They could convert them to whatever they wanted and really saw that there was a need out there for that. And since then we’ve learned it’s really a business-to-business kind of thing versus a business-to-consumer, where we’re working with consultants,
like social media directors inside large companies, technology buyers in school systems. They come to us and say we want to license your content to use it in our classrooms, whether it’s in companies or schools or non-profits or wherever it is.
Andrew: Do you have an example of a company that does this? I want to give people a clear understanding of who your customers are and why they would buy from you.
Interviewee: You know, that’s a good question. I hesitate to do that because I don’t know…
Andrew: We don’t have to mention their name. You can mention their industry. You can mention the type of company or the type of organization they were in, the type of use that they needed.
Interviewee: Definitely. I think it would be okay. Like Intel is an example of a company we’ve worked with that’s using our videos inside the company.
Andrew: So what kind of videos would Intel need?
Interviewee: Our biggest sellers are our social media videos. We have a pack of videos that’s nine videos, that will soon be ten, that we call the Social Media Pack and it’s really just a collection of everything from RSS to twitter to social bookmarking, social networking blogs. Things like that. And that’s really been our biggest seller especially to big companies.
Andrew: That’s interesting. There is a big demand for these kinds of videos. I wish that all the people who are out there who are just playing around with twitter and Facebook would understand that big companies want to learn how to engage in those communities and if, instead of playing with twitter and Facebook, they created videos about how to use them professionally I’ve got a feeling that companies would be willing to license those videos or buy them as training videos.
The transcript for minute 25 till minute 30 is BELOW this line.
Andrew: …or buy them as training videos. And one on the reasons that I know that is because I’ve been approached for the interviews that I do here on Mixergy by organizations that do videos that just want to buy or license the interviews that I do with people who are in the social media space so that they can then license them and share them with organization that they work with.
Interviewee: Yeah. Yeah. There is demand out there. I think that as companies start to get into social media and become aware of social media, they start to feel some anxiety about are they falling behind? Do they really understand things? And how can they get their front line employees to understand twitter and what’s happening out there? And I think they look to video to do that. It’s sort of a combination of the demand for education but also new tools that make it easy just to show a video to someone that’s three minutes long and helps them get up to speed.
Andrew: All right. So what about the question that always comes up when anyone considers selling content online, which is, ‘Can’t they just get this stuff for free? On YouTube? On Mimeo on anywhere? On Google?’
Interviewee: Yeah, yeah. Well one of the models that we’re adopting right now is the iStock photo model where you have a photo, an iStock photo, you can look at the photo. If you wanted to use it you could but it has a watermark on it that says ‘iStock photo dot com’ on it. So there’s an incentive for you to work with them to get a clean version of it. So really that’s the future I think for us making videos is to make them available. You can watch the video. We’re not trying to build our business around making money from consumers watching the video. It’s having a clean version that’s the licensed version, that’s higher quality that offers something that you can’t get from YouTube.
Andrew: Why? How do you offer anything that you can’t get on YouTube? I feel like there’s everything on YouTube and if it’s not there today in two, three years some kid who’s watching us now is going to say, ‘I’m going to offer it for free right now just so I can get the thumbs up from the audience’ in terms of the view count.
Interviewee: Sure. Sure. Well, you know, I would say it’s a double edged sword. We always say YouTube is both our best advertiser and our biggest liability. If it wasn’t for YouTube and having videos out there I don’t think we could have – giving them away essentially – that we could have gotten where we are in a lot of ways. Because it exposes so many people; it’s our biggest referrer to our website. So there is value there. I’m sorry. My phone’s ringing. I should have turned this off. And we realize it offers, for some, a viable alternative to licensing. Honestly. But at the same time, we’ve reduced the number of videos we’re sharing on YouTube. YouTube is not going to be as big of a part of what we’re doing in the future because we want Common Craft dot com to be the home of Common Craft videos versus another platform. So it’s a big part of our past. It won’t be as big a part of our future. But it’s something that we’re dedicated to continuing to use but to be more of a place to help promote our work versus being a source of our work.
Andrew: Well what about the competition? Well, let me offer this as a suggestion and you tell me if this is true for your business. I spoke with Linda, the founder of Lynda.com, they sell videos. Yeah. They sell videos. It’s all training programs taught by real teachers. It’s all videos. And I asked her, ‘Can’t people find those things online or equivalent of them on YouTube and other sites? And she said, ‘It’s going to take a lot of time to search. The quality that you’re going to get back isn’t the same. It’s not as dependable as Linda dot com. What we give people, what we give companies that have the money, is the ability – and individuals too – is the ability to get dependable education. Dependable videos from a source that they can count on.’ So it sounds like that’s what you guys are doing too.
Interviewee: I think that’s accurate. I think that’s accurate. I think that something that we found also is that, especially big companies, they have legal departments that really want to have that permission in hand. They need to have a piece of paper that says, ‘Yes. This is licensed from Common Craft. We have the freedom to use it.’ I think without that, even though the YouTube’s terms of service may say that they can do it, I think they’re often willing, and motivated, to have that licensing relationship with a source just to make sure everything is above board. And that drives some of it as well.
Andrew: I see. All right. Nothing like a company that needs to cover its butt and willing to spend the money on you to do that.
Interviewee: Yeah. I think it’s a reality.
Andrew: Okay. I’ve got two notes here that I wanted to circle back and talk about. One of them is marketing. But before we get into marketing, let’s talk about the second issue which is the initial product. I’d like to get a little bit more insight into what that original product was because what you said is something that I see often in my interviews which is: the first product just worked but it wasn’t perfect and it wasn’t this and it wasn’t that. So you, a company that’s known for this beautiful quality that other companies are spending money on, you were telling me that the first video wasn’t great quality. Can you tell us what it was like?
Interviewee: Yeah, yeah. Definitely.
The transcript for minute 30 till minute 35 is BELOW this line.
Interviewee: I think Satchi and I are both really open to just trying something even if we don’t know what we were doing. And that was the kind of case with that video where we knew it wasn’t good quality but we have been shooting the travel videos for a while, we knew we could create something so we just did it. And looking back, it was really an interesting thing to see happen, and since then we call it solving problems as they need to be solved, where I think if we had said okay we are going to make these videos, let’s go take a class and read a book and learn all about video production, we might not have done it all because we never would have thought prepared. I think instead we chose to just do it, it is not great, it is certainly not prefect, we can look at it and say ‘what sucks the most about this’ and say okay this sound, and so we fix the sound. And then we look at it and say, okay what else is broken, like we could lighting better, so the third video had better lighting. It is just a process and I think that what you get at the end of it is sort of a customized almost irreproducible thing that is perfectly fit to your needs versus trying to follow industry standards or what everybody else was doing. And I think it has really become a part of everything we do at Common Craft is to not pay attention to what the standards or, are what people think we should be doing, and find what works for us first. It is something that I really hold as some of the thing that has been the most instructive for me to this process is, it is just getting something out there and making it better over time and not trying to be perfect.
Andrew: Now, it sounds smart, is it harder than it seems to not be perfect when you know that this is what you care about, this is your baby, this is what people are going to judge you by?
Interviewee: I think it is different in the beginning versus as you are down the road. In the beginning we didn’t have anything to lose, like if it not perfect nobody knows about it anyway, and we don’t have a reputation writing on it. So I think it’s a great way to start. I think the middle ground is the hardest. We are still trying to build brand, and still trying to prove you that you can produce this quality over and over, that’s the tough part. That is really the hard part when you are trying to be, where imperfection is a part of what you are doing. But then, once I think if you are an established brand and it is a kind of given that you are doing, then it is time to maybe go back to being a little bit more risk taking and stepping out of that comfort zone a little bit more and being willing to be imperfect again.
Andrew: Okay, then let’s move on to marketing. One of the things that I admired about you is the way that you guys just kept reaching whatever I was and the first that you said that got your attention was the RSS video and Digg combination. How did you guys get on Digg. How did you get all those people to vote for you?
Interviewee: That’s a good question. I wish we could reproduce it. I don’t take any credit for development of site, from putting the video out into the world. I think that that was the was the testament to social media. One of our good friends Rob Cottingham up in Vancouver within minutes, I sent an email to my contacts when we posted the video to check this out, he immediately posted it to Digg and in the first comment on that blog post, was the link to the Digg saying hey Digg this. So I think Rob was a big part of helping us sort of build awareness that hey this could be a Digg thing too, and it kind of went from there. It wasn’t something that we had formulated in the past as let’s see if we get on the front page of Digg, it kind of just happened that way.
Andrew: Okay, and how did you capitalize on it? You get all this traffic, most people say Digg traffic is worthless because it just bounces in and then bounces right back out, how did you capitalize on it?
Interviewee: Yeah, I can’t say we were good at capitalizing in the beginning. I think that it sort of maybe is just an awareness building exercise that well  company that made this. I think since we have learned that if you expect to have traffic like this or you have a campaign that is supposed to generate traffic, then you have some sort of landing page for that traffic that has a call to action on it, whether it be sign up for a newsletter or subscribe to your blog, or hey look at another video, or whatever it is. But in those early days, it was just read our blog or remember our name kind of thing.
Andrew: Okay, and then you said that when you created the Twitter video, that  over at Twitter actually put a link to your site on Twitter.com. Were you actively doing this, did you know that was a part of your plan that you were going to email, that you are going to create videos about sites like Twitter, that you are going to email those founders and get links back to you.
Interviewee: No. Twitter was a special case I think where I felt like that Twitter was going to be the next big thing and was becoming the next big thing at the time and we made the video knowing that it would be a good video for our library, but then we thought, well if Twitter is interested in this and they want to use it, that would be great.
Andrew: I’ll send you a link to the person who’s doing this, and we’ll see if what they’re doing is okay.
Interviewee: Please do.
Andrew: And you’ll tell me either way?
Interviewee: Because the thing is, when you sign up for HARO, it says, â€œRead the 5 rules of HARO.â€ By signing up to HARO, you promise to abide by the 5 rules. Dude–It’s five freakin’ rules and the 5th rule is: Be excellent to each other. How freakin’ hard is that to follow? Really?
Andrew: Okay I don’t want to indict them without knowing more about what they’re doing. I’m going to send you a link, they seem like really good people. I just want to make sure that
Interviewee: I’m sure they are, I’m sure they totally are. And you know a lot of times they do it because they think they’re doing you a favor, and that’s really cool, except if it’s searchable on Google, the reporter gets really, really pissed really fast.
And it’s actually in their best interest not to do it, because if they find out who’s doing it, they’re going to ban that person–they’ll never take that person’s pitches. Oh yeah, you’re the guy who posted my email on the web. Thanks, ass.
Andrew: And naturally in many ways it actually helps you, because it means anyone who wants to find out about these listings has to subscribe, that’s the only way to do it.
Interviewee: Not necessarily; you could forward them to as many friends via email as you want. Forward them to your entire list everyday, I don’t care, just don’t post them on the Web.
Andrew: I see, okay. All right, I was mentioned in an article recently on MSNBC because of your list, because one of my readers saw one of the listings in there and said, Andrew, you’d be perfect for it.â
Interviewee: There you go. Sent to you via email, I have no problem with that. And that’s actually the big difference between me and Prosten [sp], I allow you to forward, they don’t. To answer Kevin Debraugh’s [sp] question, what’s my big picture goal? It’s to continue to grow HARO, switch into the vertical lists like that, and keep building it. And really at the end of the day, to keep getting emails from people that say, ‘hey thank you so much, you saved my small business.’
Andrew: Is there a vision beyond doing the lists? Is there a vision to be an intermediary between reporters and their sources, is there some other bigger play here that you’re going for?
Interviewee: Let me answer Kevin’s question first. Kevin, you subscribe to HARO, I’m assuming?
Andrew: I’m assuming he is, he looks like he’s your number one fan. We’re talking for anyone who’s just listening to us on tape delayers
Interviewee: Yeah, okay
Andrew: We’re talking to Kevin who is watching us live and is pounding at the keyboard over there.
Interviewee: Kevin, have you ever seen in HARO, you know those small little ads at the top? Those little â€œHey check out Bocus [sp] or hey, check out thoseâ€?
Andrew: Yeah, that’s are where the ads are, I’m surprised actually at Kevin .. oh yes, he’s saying yes, he’s seen them.
Interviewee: Kevin, those go from anywhere from $1,500 to $2,500 dollars per email; that’s why I don’t make money on selling books. You wanna buy my book, great; that’s lovely; maybe one day I’m actually going to make money off my advance. But you see those ads, those ads are what generate revenue. And if you didn’t hear this earlier, maybe you jumped later, one of the first questions I was asked by Andrew, was how much does HARO generate? HARO generated a little over a million dollars in revenue in the past year. So cool, so that’s it? Yes, that’s it, I’m fine with that being it. [Laugh]
Andrew: He’s saying so, that’s, oh no, so that’s– I don’t think he’s getting the tone in right. I think he means â€œOh, so *that’s* it.â€ He doesn’t mean â€œoh, so that’s it, that’s all?â€
Interviewee: SG Andrew, my margins are higher than anything you could imagine.
Andrew: Because you’ve got four people who you’re working with, and email doesn’t cost that much to send out at this level, even.
Interviewee: You’re right. And Kevin, you’re right also, I probably could make more without annoying me. You know what? I don’t have to. HARO makes a ton of money; I’m fine with that. I don’t to sit there and be greedy. From HARO I have a entire second revenue stream of speaking, an entire third revenue stream of doing a teaching company social media Why be greedy? You know? What I love is the middle ground. Why I’m not a greedy person, I’m not dissing you for that. The concept to me, is if someone said to me, oh my god, you’re 50% Rupert Murdoch, and you’re 50% Mother Theresa–I’m fine with that.
Andrew: This is interesting, we’ve got a new chat board, and people are just pounding away with their questions
Interviewee: I know I’m seeing the questions. Yeah, no, SG Andrew, they have all come to me.
Andrew: All your advertisers have come to you.
Interviewee: Yeah, we’ve never had outside sales in our life.
Andrew: What did you start charging at first?
Interviewee: 100 bucks?
Andrew: 100 bucks, and how did you know what level to increase, because right now you’ve got a waitlist of people, months long, why aren’t you increasing now?
Interviewee: Why should I? I could.
Andrew: How do you decide what to increase?
Interviewee: It’s a nice round number. [sigh] I don’t know, why did Madoff stop at 40 billion? You know?
Interviewee: It’s like over time, the HARO increase.. when we switch to vertical lists, that’s targeted lists, that’s worth a lot more. At that point yes, I will increase the price on the targeted lists. And keep the master HARO.
Again, a lot of what I’m doing here is good karma. You know why I stopped? I’ll tell you why I stopped. Because $1,500 per email, is something that a small mom and pop can reach. And they can reach 100,000 people and see where their money goes and get sales a second [snaps fingers] after the ad runs, and they can afford that. You know, $5,000 per email? The mom and pops couldn’t afford that. And the whole purpose behind HARO is to level that playing field, both from a PR perspective and from and advertising perspective. And if I can do that a 1,500 bucks, why the hell shouldn’t I?
Andrew: Do you have an example of somebody who’s bought an ad, and how well they’ve done, do you have a case study that you can share with us?
Interviewee: Yeah, hang on, you made me close all my damn programs
The transcript for minute 35 till minute 40 is BELOW this line.
Interviewee: We thought, “”Wow! If Twitter is interested in this and they want to use it, that would be great,”" but it wasn’t part of a strategy where we’re going to target these 5 or 10 companies to do this. I really was just Twitter at the time. I e-mailed Biz about it and he was into the idea, and he said “”Yeah, send it to me when it is ready.”" Then, once it was done, it was really just a handshake relationship, “”Yeah, you guys can keep selling it, do whatever you want with it, but Twitter, you can use it on your website all you want.”"
It was really win-win I think. I’m really proud to have been apart of that trajectory.
Andrew: What other marketing do you guys do?
Interviewee: For Twitter?
Andrew: No, for yourselves, to get the word out about CommonCraft.
Interviewee: We’re not advertisers. We’ve never really done any sort of AdWords or any kind of traditional marketing at all. One of the things about video, not just our videos, but videos in general, is that they have a way of selling themselves. One thing is to put it on YouTube, but also having the ability to embed that video in other sites, that’s where I think, when you mention seeing our videos everywhere, that’s not something we really did, that’s something our fans did we’re really thankful for is them putting it on their blog, or talking about it on twitter.
Again, it is sort of a testament to social media, that the people can take something they care about and share it with their audience, and that audience shares it with their audience. It has a way of going. We don’t spend any money on traditional advertising at all.
Andrew: All right, we’re getting a few questions here from the audience. Going back to what you said earlier about just starting with something, with anything, and you can improve it later. Saad Malik, who’s listening and watching us is asking, “”How do you get your users to come back to your service, after they’ve rejected you in the early stages? So if you come out with something that is not so hot the first time, are you risking alienating customers in the future?”"
Interviewee: You know, I think it’s a risk. One of the ways we look at our work in that way is, this is not a perfect comparison, but if you like a band, you have your favorite band, it is OK if you don’t like all their music. They may have two of your favorite song ever, but there may be five songs that you don’t like, but what matters is that you’re a fan of the band, and you’ll continue to follow their music in the future. That is really what we love to see from our fans. Yes, we recognize that our videos won’t be interesting to everybody all the time, but over the course of all our our work, hopefully, our library represents something that is fan worthy.
Andrew: All right, if somebody is listening to us right now and says that they want to get into this business, not exactly the way that you guys do it, but maybe do screenshots, maybe do some other twist on this, what advise do you have for them?
Interviewee: I think that we’ve, from the very beginning, felt like there was a lot of opportunity around finding simpler, more plain language, plain English ways to explain things, especially technology. Your audience is probably more technology related, and there is a lot of anxiety out there among regular everyday people that feel like they are being left behind by technology. I think that anything you can do that helps everyday people, which make up, despite what you might think, the vast, wast majority of people in the world, to help them feel that they are learning something and are getting caught up and not being left behind, then there’s a real market there.
I’m really a big advocate of more people getting into the video world and making videos that explain things, because I think there is a lot of need for it, there’s a lot of businesses to be built for it, and the demand is going to grow, I believe.
Andrew: Why’d you shift to charging users instead of depending on advertising? Advertising is based on eyeballs, you’re getting millions of eyeballs, why not just get into that space?
Interviewee: We’ve never been fans of the advertising model in general. I think that part if it is just the culture of our company to not make money that way. Obviously, it’s a viable business model, and there’s a lot of people who do it, and I think that that’s great. I think, just for our specific company, we’d rather find better ways to do it.
It goes back to something I haven’t mentioned about our orientation as a company. We want to be educators. We don’t want to be promoters. That’s part of the reason we moved from doing custom videos to doing licensing. Custom videos are, in some ways, inherently promotional. Not a bad thing, but they’re inherently promotional, where we don’t want CommonCraft to be known for marketing. We want CommonCraft to be know for education. If you can create educational products, they have a much longer timeline than promotional products.
That’s another part of it, just this orientation on education, and promotion works well with advertising, and there’s a business to be built there, but it’s not for us.
The transcript for minute 40 till minute 45 is BELOW this line.
Interviewee: But it’s not for us.
Andrew: I think one of your videos is how the internet works. Am I right?
Interviewee: Yeah, like world wide web?
Andrew: Yeah. Yeah, how the world wide web works, and that’s something that people are going to be wondering about for years. So I see what you mean. It has a much longer shelf life.
Interviewee: Yeah, we’re trying. One of our focus over the past year especially, and actually more than that, is making videos there timeless. As timeless as possible. So we try not to be specific and not talk about specific products and things like that. But talk about, you know, http is going to work the same way for a long time. You know? That kind of thing.
Andrew: OK. How are you selling the videos now? How are you getting at your customers?
Interviewee: I think that a lot of them come these days from search results and brand awareness in general. I think that having our videos on Youtube means that there might have been a Common Craft floating around companies for a long time. And in the latter videos, over the last year, year and a half, we have pre-rolls in the videos that say, “Hey this video can’t be licensed and put on your internet. OK, here’s Twitter search in plain English” You know, we’re building some of the awareness of our products into our videos that we do share publicly.
Interviewee: And that helps. And we also happen to be high search results for a lot of the social media terms. And that of course helps as well.
Andrew: Are you guys doing any outbound calling? Are you marketing that way at all or anywhere near there?
Interviewee: No. We don’t have time for that. We’re really, I mean, one of the things that’s important to know about Common Craft is we really are two people. Like, we do not have contract, well, we have technical help. We have people that help redesign our website, but day to day I’m responding to support emails. Sashi is going to the bank and the post office. And like every single part of the business is done by just us, so as much as we might want to do some of that stuff, and there’s a lot of things we want to do, being small and protecting our life style is really important to us. And I think that’s always a big part of the decision making on, well what are we going to do. Well what can two people do? And that goes back also to the difference between making custom videos and licensing is the only way to scale the custom video businesses by hiring people to make more custom videos. But by licensing, that business scales really easily. So that was a matter, the decision was based on scale. But what we could do with two people and still scale the business.
Andrew: OK. I got to ask you, the question that I always ask entrepreneurs and anyone in business. How much are you guys making?
Andrew: You knew it was coming.
Interviewing: Yeah, I can’t obviously, we don’t share specific numbers. I think we’re doing really well, we don’t have any problems paying the bills. I think we’ve been able to make some investments in Common Craft over the next, this year, the next couple of years. We’re doing well, I think.
Andrew: There’s an article that you guys were in a few months back that said 15 thousand a month.
Andrew: In sales or profits?
Interviewee: Well, that was just licensing income.
Interviewee: So you could see that as profit because once a video is made, the licensing doesn’t really have any costs associated with it. You know, especially purchases that happen through our website. We’re really not even involved at all; there’s no touch involved in that relationship. They just can purchase the videos right from our website.
Andrew: And how many videos do you guys have now?
Interviewee: I think there’s like 26 or 27 that’s available through our website.
Andrew: Wow, looks like there’s so many of them. 26, 27, that includes the environmental videos, the internet videos? The whole thing?
Interviewee: Yeah. Something like that.
Andrew: Social media? OK.
Interviewee: Lots more on the way, but yeah, that’s the extent of the library right now.
Andrew: Alright, so 15 thousand just from licensing those videos. Other income sources are the directory where you charge people monthly fees to be involved in that. And you do some custom work, you also have books that are available on the kindle. Right?
Interviewee: No, I can’t say that they’ve been a source of revenue for us. A couple hundred dollars, maybe, but that was an experiment. What’s that?
Andrew: Kindle’s not big.
Interviewee: Not for what we’re putting on the Kindle right now. You know, we kind of did it as an experiment to see what would happen. We’re big Kindle users and I think that the publishing platform that Amazon has created to allow people to do that, to put their work into the Kindle network, was something we wanted to experiment with. And I think that there might be things we’ll do down the road that might be better, but basically those books are screenshots from our video along with the pieces of the script going along with it. So, it almost reads like a cartoon of, you know, 30 or 40 scenes from a video.
Andrew: I see, so you’re just re-purposing your content. You’re not creating a whole new product for that.
Interviewee: That’s right. That’s right.
Andrew: OK. So I see we’re at the end of our time together. Any advice for anyone who’s building a business online right now?
The transcript for minute 45 till minute 50 is BELOW this line.
Interviewee: Man, there’s a lot. I say keep it simple. You know, I think that there’s a lot…we’re big fans of staying small. I think that people maybe were taught in business school – which Shotsy [sp] and I both went to business school – the goal is to grow and get big and hire a lot of people. And we’re big believers that we don’t want to have an HR department and I think that we use size as a constraint. And I think that’s something that I always tell people that I think that really balance your need to grow with your lifestyle and the life that you want to live because we’re lifestyle advocates and I think that being small is a way to build a business and protect your lifestyle at the same time.
Andrew: All right. Well let’s leave it there. Thank you for doing the interview with me, Lee. How can people get in touch with you if they want to say hi to you personally?
Interviewee: I’m at lee at commoncraft dot com. I’m also at leele [sp] fever on twitter. You can always use the contact form on our website. I think that will about do it.
Andrew: All right. I hope a lot of people who are listening to us go and say hi to you and of course they check out more of your videos. And there it is. Thank you all for watching. If you’re watching us live thank you for participating too, in the conversation. If you’re watching or listening to us on …listening to the recorded version of this interview come back to Mixergy and give me your feedback on this, add to the conversation on Mixergy dot com. Thank you for watching. I’ll see you in the comments.
All right. Thank you. Thanks very much for doing this. I’ll edit this and I’ll have it up next week and send you a link.
Interviewee: Awesome. Thanks a lot Andrew. And really, my apologies for being late.
Andrew: It happens. I’m glad you were able to do it.
Interviewee: Yeah, yeah. I really…wish that didn’t happen but I enjoyed the interview.
Andrew: …in person some time too.
Interviewee: Yeah, definitely. You’re in the Bay area?
Andrew: I’m actually right now in Santa…No. Where am I? I’m in Buenos Aires.
Interviewee: Oh wow! That’s a place that’s top on my list of places that I want to visit.
Andrew: I hope you do. Come down here, we’ll get you some wine, get you some steak, if you’re a meat eater.
Interviewee: Awesome. Thanks a lot Andrew.
Andrew: You bet. Bye.
- Hear how video went from a hobby to a business.
- Learn Common Craft found its first customers. (Actually, it was more like their customers found them.)
- See how licensing videos is helping them scale their business up.