Linus's cost overhead?

[Big Head Tech]

 So something I was thinking about today is how much overhead costs Linus has vs people like Jay, Kyle, Paul and Austin Evans. Granted, Linus has 4-8 times more subs than those guys I started to ballpark some numbers  and realized how much profit he needs to generate to cover operating costs.

 

Now this thread is NOT about how much Linus himself makes or his employees as that is not really our business, but rather his expenditures his company has.

 

Awhile back they were seeking video editor and the listed salary was $50,000 a year I believe USD but not sure. Logic would say that his current staffers are making north of that. I don't have the exact count but I want to say he has around 20 employees at least which places his salary overhead at easily 1.5 million a year alone.

 

Now let's look at his other expenses. If you consider his rent which is definitely far more than say Jay's Studio or Kyle's Gramps house, utilities and equipment that isn't sponsored, I'd have to place that he will of dropped easily another 1.5-2 million on that alone by the end of this year.

 

Now I'm one to assume that Linus is profitable and is investing most of his profits back onto LTT. I'd have to think that his gross profits have to exceed 5 million or at least this year. Now gross is before expenses obviously and I doubt he takes a huge salary to be honest. He seems like a guy who would take as little as he needed to get by. This also isn't factoring in that Luke and other leaders aren't making more than the 50k I mentioned earlier which honestly I would presume they would be. They earned it imo

 

When I take a step back and looked at the other YouTubers I mentioned, I would say that their operating costs aren't even 20% of what Linus's are. Kyle, Paul, Jay and Austin might have 2 or 3 people including themselves and while they also have top end equipment, they don't have nearly as many to supply for. I would argue that Jay and Austin probably have the highest costs due to independent studios compared to Kyle and Paul.

 

So the point of this post is, I believe Linus has to be driving significantly higher income than the others mentioned. A magnitude more than the sheer multiplicative audience size. Linus being 4-8 times larger but I would say his gross income has to be 10-15 times larger due to significantly higher operating costs. But the question is how? Do people like the former make a lot more than my numbers indicate and Linus is more interesting in investing back into the business? Is Linus just more strategic? 

 

My only 2 thoughts are this. The former YouTubers and their staffs are making good money and keeping a small group. Or Linus's revenue stream is a ton more complex than I previously understood. 

 

And if the former is true, there is nothing wrong with YouTubers making 1/4 million+ a year. I know @JayzTwoCents was making good money at his previous job and he has a wife and kids to support. Kyle and Paul had management positions at Newegg. So it's definitely not greed at all. More like what Linus said down further. His business operation is just different. The former are content creators paying a smaller staff probably really good money because they work hard, Linus just went a different avenue. And I bet everyone here mentioned is working 50+ hours a week and maybe even more.

[AshleyAshes]

It's not something you can really calculate without looking at the books and that's obviously private information.  There's too many variable and too many unknowns.

Like, we can assume that when Linus does a sponsored video, he can charge more for that the someone who gets only 10-25% as many views as he does, afterall, that video will get more exposure.  But we obviously have no way of knowing what prices he'd negotiate.

 

Really, you can only be sure of a few things:

 

1) LMG is exceptionally successful as far as tech channels go.

2) LMG seems to be leveraging that success quite well.

3) This benefits many, as it allows LMG to employ more people, meaning the business and it's employees better contribute to the economy as a whole.

[suits]

Here's how they make money: 

 

[LinusTech]

We invest  heavily into our staff/business operations because I have a particular set of "end game" goals that MIGHT be different from other content creators.

 

Making great content that gets a ton of views doesn't take a huge team. Trying to build a sustainable business operation that (if all goes according to plan) could be capable of running seamlessly without yourself someday does.

 

There is a ton of merit to both approaches. Neither is "correct".

 

And to be clear, this is not an announcement or even a HINT that I'm going anywhere anytime soon. It's just the kind of thing where if I were to get hit by a bus tomorrow I would want my family to inherit a strong, sustainable business, and I would want all of my staff to still have jobs.

[AshleyAshes]

2 minutes ago, LinusTech said:

And to be clear, this is not an announcement or even a HINT that I'm going anywhere anytime soon. It's just the kind of thing where if I were to get hit by a bus tomorrow I would want my family to inherit a strong, sustainable business, and I would want all of my staff to still have jobs.

Anyone else imagining Linus dying young and one of his kids taking the place over King Joffrey style?

[Clanscorpia]

7 minutes ago, AshleyAshes said:

Anyone else imagining Linus dying young and one of his kids taking the place over King Joffrey style?

"10 year old builds PC with 5 year old sister"

[NinJake]

13 minutes ago, LinusTech said:

And to be clear, this is not an announcement or even a HINT that I'm going anywhere anytime soon. It's just the kind of thing where if I were to get hit by a bus tomorrow I would want my family to inherit a strong, sustainable business, and I would want all of my staff to still have jobs.

So thoughtful of you, glad to hear there are people still looking out for others instead of themselves!

 

9 minutes ago, AshleyAshes said:

Anyone else imagining Linus dying young and one of his kids taking the place over King Joffrey style?

No, just no. (At least not in the same "style" that Joffrey did lol)

[Centurius]

17 minutes ago, LinusTech said:

We invest  heavily into our staff/business operations because I have a particular set of "end game" goals that MIGHT be different from other content creators.

 

Making great content that gets a ton of views doesn't take a huge team. Trying to build a sustainable business operation that (if all goes according to plan) could be capable of running seamlessly without yourself someday does.

 

There is a ton of merit to both approaches. Neither is "correct".

 

And to be clear, this is not an announcement or even a HINT that I'm going anywhere anytime soon. It's just the kind of thing where if I were to get hit by a bus tomorrow I would want my family to inherit a strong, sustainable business, and I would want all of my staff to still have jobs.

Solid strategy honestly, and I'm fairly sure history will end up finding it the better one as it also makes the business more survivable should YouTube disappear or something similar.

[Big Head Tech]

1 hour ago, LinusTech said:

We invest  heavily into our staff/business operations because I have a particular set of "end game" goals that MIGHT be different from other content creators.

 

Making great content that gets a ton of views doesn't take a huge team. Trying to build a sustainable business operation that (if all goes according to plan) could be capable of running seamlessly without yourself someday does.

 

There is a ton of merit to both approaches. Neither is "correct".

 

And to be clear, this is not an announcement or even a HINT that I'm going anywhere anytime soon. It's just the kind of thing where if I were to get hit by a bus tomorrow I would want my family to inherit a strong, sustainable business, and I would want all of my staff to still have jobs.

First of all thanks for answering and it pretty much summed up my hunches.  While I wouldn't say I get the "businessy" feeling from your general videos, the interaction we see with the staff for projects and such you definitely understand how different your business strategy is.  You do employ quite a few heads and from my understanding you take care of your employees well, something many small businesses struggle to do.  When comparing your approach to say Kyle or Paul who might be a 1 or 2 person operation, you have several sales and development staff, 6 editors/writers, and who knows how many others for daily tasks as well as outsourced personnel for FPC etc.  

 

Love it or hate it, you definitely run a significantly different ship and approach than most in this space.  I think that tends to do with what you mentioned earlier, your endgame.  I feel as if you're not just a YouTuber but something more.  Someone who is using his success to build other things that will have a much larger impact in the long run.  An example is FPC and probably more we don't know about.  My biggest take away from this though is and by no means is this anyones business per se, is high your cost overhead is compared to others and I am not sure people can really appreciate that, or rather those who may not grasp it that well.

 

But to me, it really seems like you are the kind of business owner that could take home a higher paycheck but rather invests most of it (greater than half) back into the company.  You and your wife from my understanding aren't rolling around in a mansion or lambos, but rather live comfortably and focus funds towards growth and development.  And I think that really contributes to your goal of the endgame that you referred to.  While I can definitely tell the more professional approach you've taken over the years (scripts, teleprompter, equipment, etc), I think I've begin to respect to an even greater level what you have accomplished in the short time you've been out of the garage (4ish years?).

 

I really hope that this post brings to light what you've done and where you're going.  And that people understand that you're the real deal about what you do and that this is your true passion.  That you are more than a Tech Tuber but an innovator and if it wasn't, I strongly believe you'd have a 4 person staff in a small office in Vancouver. 

[Tsuki]

one other thing to consider, and keep in mind this is probably different for canadians, but every piece of equipment they buy, is a tax writeoff. everything is a business expense and can basically be completely written off.

[yathis]

Overhead has been talked about.

 

He bought his warehouse, obviously there is a condo fee, so typical would be $5/sf/annum

I think his was $750k but probably more, I cant remember what my guess was.

He needs to rake in $25k-35k/month to pay his employee's, mortgage, condo fee, utilities, wcb, warehouse insurance, health benefits for his employee's, offsite insurance, repairs and upkeep to warehouse and its equipment, then there vehicle repair + fuel which I think all in is $0.25/km, depreciation of said vehicles. He may even require flood insurance, if its a flood zone I cant remember how far he is from the big river.

 

He makes a big chunk from his affliated links when you buy shit. How that compares to his video making profit, I have no idea. Merch is pure profit. Floatplane Club who knows

[yathis]

6 hours ago, AshleyAshes said:

It's not something you can really calculate

Yeah you can, the biggest thing is finding out the sq footage of the warehouse. How many employee's, benefit costs then move down the list.

 

Now figuring out how much Linus makes, who knows. But overhead can be calculated.

[LinusTech]

3 hours ago, Tsuki said:

one other thing to consider, and keep in mind this is probably different for canadians, but every piece of equipment they buy, is a tax writeoff. everything is a business expense and can basically be completely written off.

People who don't run businesses often say this as though it's some kind of magical free pass to get stuff

 

You still have to earn the money.

 

The only difference is that you don't have to pay INCOME TAX on the money you earned that you spent on it.

 

Also, not everything can be written off immediately. Equipment and construction - anything that you'll be using for several years is never fully written off. You write a chunk of it off the first year, then a chunk more the second year, etc etc etc, but you never get to write off the full value.

Don't imagine "writing things off" means you don't have to earn the money to pay for them

[Tsuki]

4 minutes ago, LinusTech said:

People who don't run businesses often say this as though it's some kind of magical free pass to get stuff

 

You still have to earn the money.

 

The only difference is that you don't have to pay INCOME TAX on the money you earned that you spent on it.

 

Also, not everything can be written off immediately. Equipment and construction - anything that you'll be using for several years is never fully written off. You write a chunk of it off the first year, then a chunk more the second year, etc etc etc, but you never get to write off the full value.

Don't imagine "writing things off" means you don't have to earn the money to pay for them

oh yea i know!  its much more complicated than i made it sound, and you definitely still have to pay for it all.  theres just a lot more into it than im able or qualified to actually explain(my mothers actually a CPA, but i hate math).

 

it does still help to offset SOME of the insane cost of some of that equipment, eventually lol

[Aprime]

Linus on vacation is Linus browsing the forums and doing ad pickups.

 

Business owner blues.

[LinusTech]

5 minutes ago, Aprime said:

Linus on vacation is Linus browsing the forums and doing ad pickups.

 

Business owner blues.

Today I also:

 

- trimmed hedges

- reorganized shed

- bought new kitchen faucet at Home Depot

- played with kids

- replied to 60+ emails

- put seat covers back in car now that they've had the vomit cleaned off them

- cleaned up cat pee

- also I think I ate at some point...

[Aprime]

2 minutes ago, LinusTech said:

- trimmed hedges

- reorganized shed

- bought new kitchen faucet at Home Depot

- cleaned up cat pee

Thanks for reminding me why I don't want a house

[Droidbot]

5 minutes ago, Aprime said:

Thanks for reminding me why I don't want a house

Cat pee though. Unless cats come with the house in Canadeh

 

I can imagine there was a good old 'oh shit, I stepped in it' moment from somebody. 

[LinusTech]

18 minutes ago, Aprime said:

Thanks for reminding me why I don't want a house

Good news!

 

You live in Vancouver now. You can't afford one anyway

[MaxBunny]

11 hours ago, Snaeb said:

So the point of this post is, I believe Linus has to be driving significantly higher income than the others mentioned. But the question is how? Is Linus just more strategic?

Nope. It's just the Pewdiepie effect. He did kind of start the whole "tech news entertainment" in the same way Vince McMahon started "sports entertainment", so anything after that is just a derivative of his labors anyway.

[LinusTech]

1 minute ago, MaxBunny said:

Nope. It's just the Pewdiepie effect. He did kind of start the whole "tech news entertainment" in the same way Vince McMahon started "sports entertainment", so anything after that is just a derivative of his labors anyway.

Not that simple. Eyeballs are eyeballs.. and my "tech savvy" audience is (in some way) worth a LOT less than a more mainstream one.

 

A view on LTT is not worth more than a view on some other tech channel.

[You_are_a_cunt]

2 minutes ago, LinusTech said:

Not that simple. Eyeballs are eyeballs.. and my "tech savvy" audience is (in some way) worth a LOT less than a more mainstream one.

 

A view on LTT is not worth more than a view on some other tech channel.

Meanwhile everytime I watch the WAN Show VOD and ultimately fall asleep halfway through (mostly because I don't watch, just listen to it when I go to bed) and my PC forgets to shutdown, there's at least 8 hours worth of videos playing before I wake up or get up to manually shut down.

 

Think I've watched the entire LTT channel at least 5 times at this point <_<

[JayzTwoCents]

6 minutes ago, LinusTech said:

Not that simple. Eyeballs are eyeballs.. and my "tech savvy" audience is (in some way) worth a LOT less than a more mainstream one.

 

A view on LTT is not worth more than a view on some other tech channel.

People often forget that a view is a view.... the difference is how many views the outlet generates and the amount of time that those views are generated that dictate the rate

[Aprime]

2 minutes ago, LinusTech said:

You live in Vancouver now. You can't afford one anyway 

 

[Aluavin]

4 minutes ago, revsilverspine said:

Meanwhile everytime I watch the WAN Show VOD and ultimately fall asleep halfway through (mostly because I don't watch, just listen to it when I go to bed) and my PC forgets to shutdown, there's at least 8 hours worth of videos playing before I wake up or get up to manually shut down.

 

Think I've watched the entire LTT channel at least 5 times at this point <_<

same here. I think thats their business strategy. make content you watch with a hangover and fall asleep.

there can't be a different reason they air at 2am CEST.