The website Funny or Die has found a way to take one of the most hit-or-miss parts of the Internet — web video — and turn it into a brand that’s reliably hilarious.
It’s also consistently lucrative. Founded in 2007, the company’s had eight-figure revenues since 2009 and been profitable since 2010.
As CEO Dick Glover explained to Business Insider, the site’s success has come from marrying a low-cost, hands-off business model with Hollywood talent.
That combination has been baked into the company from the beginning. It began when Michael Kvamme, a would-be comedian, pitched the idea for a comedy site that would combine user-generated and celebrity-made content to his dad, Sequoia Capital partner Mark Kvamme. They then connected with comedians Will Ferrell and Adam McKay, who would become the site’s co-founders.
But they still needed a “business guy” to run the thing. So they called Glover, who had launched ESPN.com, served as an executive at Disney, and run new media and broadcast for NASCAR. Under Glover’s guidance, Funny or Die has weathered a financial crisis, landed an interview with the President, and gone way beyond the funny video roots.
We spoke with Glover about the evolution of the business, why he never gives notes on production, and how Funny or Die is becoming the new “Saturday Night Live.”
The below interview has been condensed and edited.
Business Insider: How much have founders Will Ferrell and Adam McKay helped grow the site?
Dick Glover: Will and Adam founded the site to have a playground for themselves and their network to be able to do new things. To provide for others coming behind them what “Saturday Night Live,” in many ways, had provided for them.
What we really try to maintain is a talent-friendly place to work. Creative drives the business; it’s not business drives creative.
Unlike the typical Hollywood model, where creative has something and 12 people weigh in and give notes. With us, it’s what do you want to do, let’s do it — no notes on what the final product should look like from management. I’m a suit, I’m not allowed. Over six years, I have not given a note on a piece of content. And I won’t, because that’s not what I do.
At Funny or Die, you can do things without risk and without interference, and you can do them really quickly. Get the video up in a week. Normally you can’t get a meeting scheduled in a week in Hollywood.
What’s an example?
We had met with Justin Long and kicked around ideas. Simultaneously, the Steve Jobs movie with Ashton Kutcher was going to come out shortly, and the Steve Jobs movie written by Aaron Sorkin had been in the press.
We do fake movie trailers, so we thought maybe Justin Long, who had been in the Mac/PC ads, maybe we could do a fake trailer. Then: Why don’t we do a whole movie?
We wrote the script over the weekend, got Justin Long all lined up, the rest of the cast, shot it in two or three days — we’re not doing a $US100 million movie here to say the least. It was up on the site within 10 days of the first meeting. We promoted it as the first Steve Jobs movie.
That movie was made literally for tens of thousands of dollars. Up on the site in ten days. The advertising impressions created were a million-something views on the site, more than paid for the movie. So, in essence, the movie is profitable. Then we sold it to Netflix for a very nice figure.
It’s a great example of our business model: keep the cost of content low, keep the cost of marketing low — because we have our own social media ecosystem — and be agnostic as to the distribution.
The Ashton Kutcher movie, I don’t know how much it cost to make, but I guarantee they lost money on that. For us, it’s almost a no-lose proposition, in terms of the economics.
So what is the business model for Funny or Die?
When Funny or Die was born, the basic tenets were to marry user-generated content, which was all the rage at the time, with some A-level talent, all with some form of self-editing mechanism — hence the voting.
We’ve also had the huge social media following, since we started when social media was in its infancy. Because of social, we can talk to millions and millions of people per day and keep marketing costs low.
To keep the cost of talent low, the idea was to make the A-list talent equity partners, as opposed to the standard work for hire, so their success was tied to the success of the company. To keep the cost of marketing low, you had the A-list to attract all the eyeballs and then the user-generated content. With the voting, we solved one of the problems of user-generated content — ‘how do I find the good stuff?’
The first thing to launch was Funny or Die with “The Landlord” (now with 81 million views) and some other videos. Will and Adam were totally invested in the company, so it worked.
And then what happened?
We thought, let’s replicate this. We’re going to be the Viacom of the Internet. We’ll do Shred or Die with action sports, and Tony Hawk was the equity partner, we did Eat Drink or Die with food, with Tom Colicchio of “Top Chef” as a partner. We did a thing called Pwn or Die with the video gaming business, with Johnathan Wendel one of the first professional gamers.
Then a few things happened, the biggest of which was the whole market collapsed at the end of 2008. We also realised that while our model was right, it didn’t work with every genre.
I remember Sequoia brought all their CEOs for a presentation — the first slide was a tombstone reading “rest-in-peace good times.” They talked about managing through a severe downturn, we were into a severe downturn. They said, you will never see another penny, so you better have an absolute path to profitability, you better have a competitive advantage, and you better cut to the bone.
So we stopped everything we were doing, we cut something like 30% of cost out of the company, but actually put more money into comedy. If you looked at what Funny or Die the property was getting, it was actually getting more resources. If you look at what we called Or Die Networks, it had been slashed.
But from that day in early 2009, we’ve been up and to the right on every single metric.
Having President Obama on “Between Two Ferns,” the interview show with “Hangover” star Zach Galifianakis, injected Funny or Die into the mainstream conversation. Who’s next?
We like joking around that Putin would be a challenge. With Obama, putting aside the wow factor of talking with the President, the video accomplished with goals — it got signups for the Affordable Care Act. It actually worked. That’s the message we want to send, that we are a great vehicle for reaching this relatively tough-to-reach young audience. And we can do that with any talent in the world.
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