Find your business model as a creator with Ali Abdaal

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And now, let's get back on air with our creators!

00:40 Ali: What is the business model? What is ultimately the thing that you are trying to sell? Because ultimately a business makes money by selling something.

00:56 Akta: There's a good chance that you've heard of Ali Abdaal. He has over 3 million followers on YouTube, a growing team, and his business makes over $350,000 a month.

Ali has really established himself, not only as a creator, but an entrepreneur, and in today's episode of Creators on Air. I was lucky enough to join Ali at his studio in London to talk about how he's managed to move his business forward.

You started YouTube in 2017 and now your business brings in like over 4 million a year...

01:31 Ali: which is Yeah, something like that.

01:31 Akta: Crazy. At what point did you realize this is more than a hobby or a side hustle? This is a legit business now.

01:39 Ali: I still don't think of it as a legit business.

01:40 Akta: Really?

01:41 Ali: because it, it just, it still just feels like I'm screwing around making silly internet videos and it just happened to do around people who I like.

Um, but I think. Uh, really I think when I turned on monetization, about 83 videos in, which is similar to how many videos you've got now. Yeah, it is. So I think at the time I was on about two K subs, three K subs-ish, something like that. So about half of what your current sub count is instead, Um, it's nice.

Uh, and then I started bringing in like five Quid a day. Yeah. And I was like, My God, I can get lunch every day for free. Cuz now I'm, uh, I'm making money off of YouTube. And then, When I started work as a doctor a few months later, at that point, the channel was bringing in maybe 1500 a month, and I was like, Damn, that's like half my doctor salary.

Yeah. That I'm making on the internet, making a video week. This is pretty sick. And I was kind of reversing it, like, hang on, that's like for five extra shifts, working as a doctor on locum rates and stuff. Oh, hello. That's, that's pretty good. And then, within a few months of that, it started, it sort of matched my salary as a doctor.

And I remember people, I was working in a and e and anytime, you know, some, some of the consultants would like clock at some point. They'd be like, Oh, I, I, I think I've heard about you. You're the YouTuber. And the ones who were more confident would be like, So how, how, how much money are you making off of YouTube?

And I'd be like, Oh yeah. I mean it's, it's basically the same as my F1 salary, my junior doctor salary. And they'd be like, Wait, what? Like you're actually making real money on the internet. It was really kind of one foot in front of the other, and when it came to making the decision to take a break for medicine, I was gonna do that anyway, two years later.

It just so happened that the channel was pretty successful at that point. And now it's just a case of figuring out, Yeah, I mean I don't, I don't suspect the sun is gonna continue to shine on this particular career. I suspect, like most creators, there's like a bit of a peak and then there's a slow decline over time, and I'm just like, you know, let's enjoy the ride while it's happening and not be too attached to the fame or to the money cuz fame comes and goes, money comes and goes, but as long as we're enjoying the journey, that's, that's all good.

03:44 Akta: Agreed. But you still have grown a lot when you compare your business to other creators to have a different, you know, similar audience size. Yep. Your seems more like a legit business in that you've hired quite a lot of people.

You have, like the office space, it seems like a really legit company. Is, what do you feel like has contributed most to that? Is it like having systems in place, hiring people? What's moved you more from being a creator to an entrepreneur?

04:15 Ali: Hmm. Yeah, that's a good question. I think three things. I think money, I think team and I think systems, so let's start with money.

Um, it's a very nice place to be an educational creator because an educational creator. You can sell courses. So there are other creators with 3 million subscribers who make less, a lot less money than we do as a business because they can't sell courses cuz their audience is more interested in entertainment for example.Yeah. And it's really hard to monetize that other than through brand deals.

So automatically we have an advantage in the sense of being an educational creator is sick cuz you can make courses. Um, getting lots and lots of money means that the business is very cash-rich, and that means that it becomes a lot easier to then hire people because the decision to pay 40 K, 50 K, 60 k to hire someone full time is not a decision that requires much thinking about, uh, it probably should.

I've realized that over time, that actually purely making that decision based on money is not, is not the best thing, but that's a lesson that you learn, you know, as you, as you progress through the world of business. And that meant that like at every stage of the journey, it was like, you know, I, I wanna do more stuff.

I don't wanna do this stuff myself. Cool. Let's find someone, either a freelancer or a contractor or a employee to do the thing. And again, just through one foot well one foot in front of the other and realizing every few months that, oh, there's actually more things we wanna do. We don't have the capacity to do them with the team we currently have. Let's hire more people.

There's a point where that becomes too much. Um, and I think we've probably reached that point. So now I'm sort. Trying to keep the team a bit more lean and a bit more sustainable, especially with the recession coming up. We don't know whether the sun is gonna continue to shine on this sort of creative business.

But I think kind of having extra revenue through courses, which then allowed the hiring of people, which then sort of creates this flywheel of, in theory, hiring more people lets you create more stuff, which then helps you create more courses, which then makes more money and you sort of end up in this nice flywheel.

But then systems on top of that. Were particularly helpful when it was just me or me and an editor, because then the systems helped me create the content on the side while I was still working. Yeah. But now it's like the systems help the team broadly stay aligned. It's a, I think that we're still struggling with, I think every business struggles with having appropriate systems of appropriate scale for the team size that you have.

Yeah. Uh, I think in the past we've tried to become over systemized and now we're sort of clawing it back a bit. It's a, it's a learning process, but it's all been pretty fun.

06:33 Akta: And let's talk about the team, because you've got 13 team members. How did you know, you know, when to start hiring? What roles to hire for, what you actually needed in the business and like what job titles to give everyone?

06:46 Ali: Yeah, so job titles are a bit of myth. We don't really care about job titles. Um, really what we say to people is feel free to pick whatever title you want, that it looks best on your LinkedIn profile or your CV. So job titles can be just throw another window. Window. Um, the way that, I mean, essentially it was two years into my YouTube career.

It was like mid 2019, uh, I had like a friend slash mentor who you know, was talking about the business finances and he was like, Why haven't you outsourced your editing yet? And I was like, Oh, cuz no one can edit like I can. And like I I, I tried hiring someone in the Philippines a year ago and it didn't work out. He was like, You've gotta outsource your editing.

Um, and so that push made me outsource my editing and I realized, oh my freaking God, I have so much spare time on my hands. Not that I've about source my editing. Then, um, as the business continued to grow, the same person said, Okay, you're, you're now making 30 K a year. Why don't you hire a full-time employee?

And I was like, I'm only making 30 K a year. Think it was like, trust me, if you hire a full-time employee and pay them 30 K a year, and i.e. the business makes a zero money overall, you will find ways to then use them and you will gar And I basically, he was like, I guarantee that you'll find ways of making more money when your time is more freed up.

So that was how Christian first came on as a full-time employee. And then at every stage along the way, as the business has made more and more money. Employee number two, Angus dropped me a cold email and said, Hey, do you need a writer? At the time I was thinking, Ah, I could do with a writer. So he started one day a week, then two days a week, then four days a week, and now he works about eight days a week.

Um, Elizabeth number three kind of randomly slid into my dms being when I sent I need an assistant. And she was like, I'll be your part-time assistant. So she was working one day a week and then that just sort of flexed up and then down, depending on whether we have a YouTube Academy cohort running.

And so really it's like at each step along the journey, it's about thinking what, what do we want to do six months from now? And what is the team that we need to get there? Great. Let's hire some people.

08:32 Akta: Yeah. And then in terms of your business, what revenue stream has really made your business really go forward?

08:39 Ali: Yeah, I think there's, So initially in the early days it was adsence where that was kind of making the sort of 1500 to several thousand a month-ish.

Um, the next major stream was Skillshare. I started making classes on Skillshare at the end of 2019. Immediately that started making 5K a month. Then within a few months was making like 30 K a month and suddenly like eclipsed assets by mile. And now like 90% of our revenue was coming from Skillshare, like actually just teaching classes on Skillshare.

And I thought, Okay, this is bad. We should make our own courses. Um, and then at the end of 2020 we've, we released our Part-time YouTuber Academy, which was supposed to be just a sort of $200 self-paced online course, uh, and ended up being like a much more expensive life cohort. And then that really skyrocketed our revenue.

So now 50%-ish of the business revenue comes from the YouTuber Academy, 30%-ish from Skillshare and the other 20% from Adsense and brand deals. And we're trying to launch more courses and diversified a little bit more. Maybe. Maybe we'll do something on Patreon. I don't know. It's all just stuff that we're pencils catching at the moment.

09:42 Akta: And is there anything that you've invested like time, money, or resources in that hasn't actually moved the needle forward as much as you expected?

09:50 Ali: Loads.

09:51 Akta: Like what loads?

09:51 Ali: Uh, a lot of it was like team-related stuff, actually. Uh, I think the assumption that we made this time last year was, uh, hiring more people equals more output.

But what we actually found was hiring more people equals less output, which was a bit surprising. Like, hang on, why is this happening? But then this is a thing in the world of business where you think that hiring people for a job will make the job get done better or faster. Yeah. But actually what it causes is managerial and communication overhead.

And unless you have skilled managers and solid systems, you can't actually, you know, you get in a sort of too many cooks situation. Mm-hmm. where, you know, we were finding that when we had four people working full time and just trying to make the YouTube channel grow, we were producing like way less videos than when it's just me riffing off for bullet points.

Um, so it's been things like that. We, we, we tried a few projects. We had this whole membership thing for our YouTuber Academy, the inner circle, which, uh, we ran for six months and then we refunded everyone every penny they paid for it. I remember they paid for it cause they’re just like, Oh, we can't really add value consistently. And it, it didn't feel right.

We spent about six months preparing a new brand new YouTube channel. We were gonna launch the Part-time Creator Academy, which was gonna teach people how to be creators like Masterclass for creators, but on YouTube for free. And realized actually, it's a lot of work. It's a lot of work running on YouTube channel, let alone two. And we thought, you know what? What if we just scrap this project?

So there's a lot of stuff that we've done. We've, we've put time and effort and money into the thing and then decided, you know what? It's actually not worth continuing it. Yeah. We tried it as an experiment, decided that we don't wanna do it. And this is a thing that they teach, that they say in a lot of business books that actually you wanna focus down on the things you're doing well and just do those better. Like do less better.

Yeah. But it's easy to think, oh, you know, wow. We could easily hire someone to do that thing. And then another thing, another thing, another thing. And it's easy to get essentially project overloaded in a business. Yeah. And even though, you know, at one point we had a team, I think of like 18 or 19 people, uh, like full-time employees now we've sort of dropped it down and we have more contractors and stuff.

Even at that point, it still felt like we didn't have enough people. And that's just means we were taking on too much stuff. Wow. So we've, Yeah. Paired it down a little bit now.

11:50 Akta: So how often do you and your team sit down together? Take a step back and assess, okay, where is this going? Do we need to add a new revenue stream?

Do we need to be on more platforms? How, how often you doing that?

12:03 Ali: Yeah, so we have, uh, there's this book called Traction, uh, which basically teaches you how to run a business and we follow that methodology that they're teach in that. So essentially the leadership team, which is five. Four, we have five of us get together every week for an hour and a half, and then every quarter or every six weeks we have a big, a longer sort of planning e type thing.

But like, I'm always thinking, well, what's happening? So like my, my job in the business is basical, basically to talk to a camera and to think about the future. Mm-hmm. and everyone else's job is a bit more sort of, Sort of micro time horizon, whereas my job is ready to think in terms of the macro, like what are we gonna be doing five years from now?

Yeah. Even though planning five years out is a bit of a myth, but

12:45 Akta: do you feel like you always have to be growing though? Or will you ever get to this point where, you know, I'm happy with the YouTube channel, I'm happy with PTYA, maybe I don't need to add anything more, Or is the goal always to be growing?

12:58 Ali: Yeah, that's a really good question. I don't know. I think with, there's always a level of entropy. There's always a level of decay. So even if the sort of, I'm happy with the YouTube channel at its current level, it's like actually at its current level means it's in decline because there's always gonna be subscriber churn.

I'm happy with the YouTuber Academy, unless we do stuff, we're not gonna maintain our like, revenue numbers or our student numbers cuz the default is like to decline over time. And so in a way we have to, to to, to even stay at the same revenue and at the same margins. We have to put in more effort over.

And this is like a classic thing in in business when it comes to marketing, in that it's really easy to acquire your first however number of customers, but then over time as you exhaust the warm audience, like it was so easy for us to sell out our first cohort of the YouTube academy cuz there was so many people lining up to buy.

But each cohort gets harder and harder and we have to feel, it feels like we have to do more and more because just that warm audience has gone and now we have to reach out to colder audiences, which means it costs more money to reach those audiences. And so what all businesses find is that their cost of acqui acquiring a customer goes up over time.

Um, their fixed costs go up over time because they get an office and they hire a team and they find that, Oh shit, our revenues is kind of declining. Cause it's a lot harder to find a customer than it was in the past. Um, and so to combat that, in a way, you kind of do have to keep on growing. Mm-hmm. But to be honest, I'm, I'm, I'm at the point where if we sustained whatever our current level, Our current revenues and margins are, I'd be happy.

I don't, I don't need any more money in my life. Yeah. But it just feels like more growth, just future proof of the business. Yeah. And so that's kind of why I care about growth.

14:35 Akta: So where do you see the company going now? Like what's the future plans or do you know, really allow to tell us things?

14:41 Ali: Yeah, I kind of do more of the same stuff.

Yeah. I think. . Really, for me, the point of the business is threefold, uh, to make money, to have fun and to help people. Yeah. And as long as we're doing those three things, then I'm fairly chill and I don't really need to overthink it. Yeah. And so conveniently, our business model means that by helping people and having fun, we make money by default.

Yeah. And so that leads me to think, what do I wanna be doing to help people? Like if I won the lottery, what would I be spending my time doing? And the answer is, I would be continuing making YouTube videos and doing the podcast and stuff. I probably won't bother with courses I just checking for free on YouTube.

Cuz at that point I don't need to charge anything for any to anyone. Um, but it would broadly be the same stuff. And so given that that's I guess my infinite game, it makes sense to just find a way to continue sustaining that kind of lifestyle where I can spend my time instead of, you know, working in the National Health Service.

I can spend my time just like making silly internet videos and learning stuff and teaching stuff. Yeah. And that's my jam. So I guess the way I think of it is that the point of the business is to facilitate me being able to do that. Mm-hmm. , and also leverage my own, I guess, output. So, for example, if I make a video about a thing or about a concept or an idea, then I don't want to also be the one to write it up as a blog post.

So I can hire a writer to write as the blog post. So it's, it's things like that. It's like the content is stemming from me, but it's being chopped up Gary V style by other people for different platforms. Cause then it just reaches more people and helps more people and that's kind of nice.

16:13 Akta: Yeah, I've spoken to Joe already about that actually for another episode.

Nice. But do you think that's important for all creators to do so as well as increasing their revenue streams also increase the platforms that they're on? Does it actually help the business?

16:26 Ali: Um, hard to say, I have to say, like in a dream world? Yeah, I, I guess it kind of depends on the business model as well.

Like there are people with millions of followers on TikTok who are making no money because it's hard to monetize a TikTok following. But then there are people with millions of followers on TikTok who get ridiculous seven figure book deals and then write a book and hit their best seller list because they've got an audience on TikTok.

Yeah. So a lot of it depends on what is the business model, what is ultimately the thing that you are trying to sell? Because ultimately a business makes money by selling something. And I think the mistake most creators make or some creators make is that they don't think about selling their own stuff. They only sell brand deals and affiliates, or probably not in affiliates. Just brand deals and Adsense.

And if your business is reliant on brand deals and a sense, that feels like not a very. Sustainable place to be. Mm-hmm. . Whereas if you can sell a thing and you have a product that people want, you know, I interviewed Grace Beverly the other day who sold, I think think she said sort of 300,000 copies of a 30 pound pdf.

Wow. She made like freaking 10 million pounds by selling a 30 quid, 30 35 qui PDFs. Absolutely absurd cuz she had a product that were audience valued and was willing to pay for. Mm-hmm. . Now for Grace Beverly in that situation to be on all the platforms make sense because she can funnel those, that those audiences to buy the product.

but if there's no product to sell, then growing for the sake of growth, it's still potentially valuable because fame is kind of good because it helps, gives you more optionality in the future. But I think really the, the way a creator becomes an entrepreneur is by finding that funnel which lands on something that gives the money.

Mm-hmm. , whether it's a Patreon on whether the subscription, digital products, physical products, whatever that thing might. and then in that sense, growing all the platforms makes sense. Cause you're funneling an audience. Yeah. But growing all the platforms without doing that is, is a bit more of a gray area.

18:15 Akta: Yeah. It's less intentional. Yeah. So do you have any advice for creators on how to figure out what they should be funneling to? Hmm. Like for you educational, you know, content, it makes sense to do courses. Somebody who's not really got that clear niche. Do you have any advice on how they figure out what their business should be about?

18:31 Ali: Um, yeah, it's hard. I think the easiest way to do it is to think about who are the people you are currently serving because you are serving people with your content in some capacity. Uh, what are the problems that they have and what are the problems that they would pay to have solved?

This is why I don't really like targeting students cuz students don't have money and don't wanna pay for stuff. I also don't really like targeting like junior doctors, for example, who famously don't have money and don't wanna pay for stuff.

But targeting business owners is amazing. If you target business owners and you can solve a problem that they have, they're likely to be willing to pay for it. And so they're likely to pay for your thing.

You can do a Grace Beverly, and you know she's not selling to businesses, She's selling to individuals and she knows that their problem is that they want it. Or back in the day, they wanted workout plans cuz they kept asking her for it. And so she made a pdf, sold it for a Fiverr initially, and people bought it.

It's like essentially money is an exchange of value and you make money by solving a problem that someone has that they're willing to pay money to have solved. And I think most creators don't actually speak to their audience or have a, like, people are like, Oh, I don't really know my audience. It's like, oh, a 17 to 86, like from all these different countries.

Um, we recently hired this agency to literally, uh, do a sort of 20-minute survey for like 2000 of our audience members and hop on calls with like 50 of them to get some insights as to who are the people who are watching our stuff, what do they want, and what are the problems that we can then solve for them, A, with our free content, but b, with our paid stuff. And I think really it's just about getting into the mind of your customer, which involves speaking to them.

And the nice thing about being a creator is that if you have any kind of following, if you were, for example, to post on your Instagram story or Twitter being like, Hey, would love to hop on a Zoom call 20 of my of people who watch my videos just to ask you a bit more about yourself.You'd find loads of stuff, loads of problems that people have, which would a give you loads of content ideas and also give you ideas for products that you could potentially make

20:17 Akta: That actually a good idea. I think I might do that.

20:18 Ali: Yeah. That's what we do for our courses. We open Zoom calls with people and be like, What are all your problems? We write them all down or like, Right, let's make sure every lesson solves one of these problems.

20:25 Akta: That's a great, Thank you so much, Ali. This was amazing. I really appreciate you coming on.

20:30 Ali: Nice. Thanks for coming by.

20:30 Akta: of course.

Ali has really paved the way for creators by showing us what's possible. If you want to learn more from Ali about how you can scale up your creative side hustle, check out his Creatorpreneur course. This is the last episode of Season one of Creators and Air. I just want to take a moment to thank all of the amazing creators that have joined me on air, and thank you to you guys for listening in.

If there's any creators that you want to see on air in the next season, please make sure you let me know. Check us out at GetPassionfroot on Twitter, Instagram, LinkedIn, or subscribe to our weekly newsletter Filtered Fridays. Stay passionate, and I'll see you in the next one.