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The Art of Animation Entrepreneurship (on YouTube)

Discover how strategic outsourcing and inventive incentivization fuel the success of animation channels on YouTube

The Creator - Oliver Gilpin

Oliver Gilpin owns and runs a portfolio of education-focused animation channels, including MrSpherical, SolarBalls, OtherWorldly History, with over 6M subscribers in 10+ languages.

His operating approach is a masterclass in talent strategy, incentivization, and bootstrapping. I’m already percolating on how I can use some of his insights in my business, so I’m sure you’ll find it valuable as well.

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Let’s get into it!

Animation - International Outsourcing

Oliver’s team is huge - roughly 70 people globally work on his channels! His approach to managing and incentivizing them is brilliantly inspiring.

Everyone is legally a contractor. So we have 70 people, roughly, who are contractors, though we set up the financial incentives so they care like they're an employee and that's a key difference.

Oliver’s overall strategy is hinged on the idea that animation done in the West on YouTube is unprofitable, because it’s expensive ($35+ hourly) and the economics of YouTube wouldn’t cover the costs. Thus, to have a successful animation channel, one needs skilled animators who are in countries with lower wages and costs of living.

So the general approach is: animation on YouTube that is made by Western animators is just unprofitable, period. Animation is too expensive, and YouTube money is not good enough, so there's a big risk to hire someone for $25 - $35 an hour to do animation.

So that's not what we do.

We only make channels where we can have a cost structure which has animators abroad - so they might be in South America or Southeast Asia or in Eastern Europe.

If anyone looks at animation content on YouTube that's really succeeding, like The Infographics Show or there's this Meet My Story animated channel, these guys all have teams outside the West. They have them in South America, Eastern Europe etc. There's like two exceptions I know, which is Cory Crater with NewScape Studios, who has Game Toons and some other properties. He has a team in the US. There's also Shane, who has some Minecraft properties as well. But everyone else that I know doing animation, they have teams abroad because it's just too too expensive.

So that's how we do it in terms of what the difference is. Obviously if you're hiring in a country where the average salary is $500 US dollars a month, you can pay $1000 a month and they're very very happy with that.

He doesn’t stop there, though.

You can hire someone as an employee, but that doesn't mean they're going to care about doing anything more…right? How do you incentivize them beyond that?

Well, whatever we're doing - AdSense shares, sponsorship shares, profit shares, all this kind of thing - bonuses - that's how you get someone to care.

It's so easy to have a contractor who works for you 10 hours a month and they're going to care more about the channel than an employee that just gets a salary and does 40 hours a week.

It's the financial incentive that really matters more than whether they're technically legally employed or contracted, in my experience.

Rather than paying hourly, he pays per minute of animation - thus tying his fixed costs to the actual quantity of “product” produced - and then he incentivizes the animators to do great work by cutting them in to the upside of the channel.

I don't tend to pay salaries. What I tend to pay is per minute of animation cost. So again, this comes down to the incentives alignment, which is:

“Okay, I don't want somebody to sit around waiting to animate stuff, I want somebody to produce. So if I can pay you a rate where total monthly earnings is pretty fantastic for your country, but at the same time you're motivated to actually produce animation minutes, then it's kind of a win-win for both of us.

The last thing I do there, which I think is really useful, is if you pay per minute of animation or you pay per minute of video editing - whatever the situation is - then the issue with that is you are incentivizing somebody to rush. So how do you solve that?

The way I like to do it is like try to create an incentive that is the direction you want, but then also have a counter-balance to that incentive, because otherwise you're gonna be pushing someone in the wrong direction.

So the counter balance of that incentive is to pay them 5% of AdSense from the video they animated, and then they get to benefit from the quality. So if they make the animation at a good pace, but they also have some quality to it, then you get the benefit of them carrying out some quality as well.

So that's how I do it and it works really well. People are happy with the the rate, and they're incentivized in a way that aligns with what I want, which is quality animation that's done at a relatively fast pace.

The results speak for themselves, as he built 5- and 6-figure revenue channels in less than a year.

Another approach that he’s not taking but has thought of is to partner with locally-focused agencies, rather than the ones that work with international (US) clients, as the local agencies will charge local rates without the international business premium. This could be a hack for aspiring animation Creators who don’t want the headache of managing a team, and would rather just have a single vendor partner.

You don't want to find an agency that's also welcome for international clients, because then they're going to be charging Western rates. Find an agency that's working with local clients. It’s a bit of a hack, I mean I'm not doing it myself as I'm focusing on building my own team, but it's a good approach as well to really scale fast.

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