{"id":16021,"date":"2023-10-02T16:49:59","date_gmt":"2023-10-02T16:49:59","guid":{"rendered":"https:\/\/mysourcefunding.com\/leadership\/how-padilla-hecox-bought-back-their-channel\/"},"modified":"2023-10-02T16:50:00","modified_gmt":"2023-10-02T16:50:00","slug":"how-padilla-hecox-bought-back-their-channel","status":"publish","type":"post","link":"https:\/\/mysourcefunding.com\/?p=16021","title":{"rendered":"How Padilla & Hecox Bought Back Their Channel"},"content":{"rendered":"
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While touring Smosh\u2019s 17,000 square foot studio, co-founder Anthony Padilla points out an old article framed on the wall that feels both poetic and ironic to read today.<\/p>\n

It\u2019s from Time Magazine\u2019s \u201c2006 Person of the Year\u201d which celebrated YouTube creators like Padilla and co-founder Ian Hecox as the platform\u2019s first generation of stars.<\/p>\n

\u201cSo far Padilla and Hecox haven\u2019t been able to monetize their viral notoriety on any significant scale,\u201d Padilla reads from the TIME article, cracking a smile.<\/p>\n

17 years later, with over 35 full time employees and 75 million followers, it\u2019s safe to say Padilla and Hecox along with Smosh CEO Alessandra Catanese and EVP of Production Zoe Moacanin have more than answered those questions of monetization and scale.<\/p>\n

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In fact, Catanese was instrumental in negotiating the deal with Mythical to buy back Smosh along with their legal team at Nixon Peabody and business advisor David Seivers. After working with Padilla for over six years and founding Pressalike together to produce popular shows such as \u201cI Spent A Day With,\u201d Catanese took on the role of Smosh\u2019s CEO. It\u2019s a similar story with Moacanin who quickly rose the ranks at Smosh after Hecox realized how pivotal she was in bringing the team together following the exit of former CEO Daniel Tibbets and SVP of Content Joel Rubin back in June.<\/p>\n

But long before the massive studio and impressive team, Smosh\u2019s story starts with a webcam and two friends from Sacramento. Back in 2005, years before today\u2019s robust creator economy, a full-time career on YouTube was far from the norm. YouTube\u2019s monetization program was in its infancy and there was no guarantee that the views would keep coming.<\/p>\n

I spoke with Padilla and Hecox along with Catanese and Moacanin about Smosh\u2019s journey, the duo\u2019s 2017 split, solo journeys as creators, and the ultimate reunion to buy back the content production powerhouse that Smosh has now become since their first upload.<\/p>\n

PIONEERS ON THE PLATFORM<\/strong><\/p>\n

\u201cI started to have this fear that maybe this thing was gonna just suddenly collapse,\u201d Padilla said. \u201cThere’s a chance that this might all fail if we don’t start\u2026bringing in money from someone else.\u201d<\/p>\n

Even as one of the most popular YouTube channels at the time, Padilla and Hecox weren\u2019t sure about what their careers might hold. They were pioneering new ground and that eventually led the duo to sell Smosh to Alloy Digital (which later became Defy Media) in 2011. For Padilla and Hecox\u2019s share of the sale, they received stock options in Alloy and a guaranteed four-year salary.<\/p>\n

\u201cI couldn’t foresee any future where that company didn’t end up going public,\u201d Padilla said. \u201cI foresaw this imaginary number that\u2026the stock would be worth exploding to like 10, 20 million times higher than what they offered.\u201d<\/p>\n

But when Defy Media (formerly Alloy) shut down in 2018, those stock options were suddenly worthless. Smosh became just one of dozens of media assets to be sold to the highest bidder.<\/p>\n

\u201cThere was just no understanding of how digital media worked,\u201d Hecox said of Defy. \u201cWe [didn\u2019t] have the resources of Disney.\u201d<\/p>\n

\u201cYouTube was always our priority,\u201d Padilla added. But he recalled how Defy stretched them too thin, pushing them to make Smosh The Movie, mobile games, cartoons, comic books, a magazine and live stream shows.<\/p>\n

\u201cIt always felt like we were juggling 10 projects at one time,\u201d Padilla said. \u201cI couldn\u2019t remain at Defy, I felt like my brain was gonna explode at any moment.\u201d<\/p>\n

When Padilla\u2019s contract expired in 2017, he left Smosh, citing a need to create independently before Defy Media ultimately shut down altogether in 2018.<\/p>\n

\u201cThere wasn\u2019t much of a friendship left at that point. We had gone from being childhood friends [to] business partners,\u201d Hecox said.<\/p>\n

\u201cI put Smosh before our friendship. And Ian did as well. So at that point it was kinda like, if I\u2019m leaving Smosh, where\u2019s our friendship?\u201d Padilla said. \u201cWe didn\u2019t really have one anymore.\u201d<\/p>\n

Padilla\u2019s departure sent both creators down a different path. Hecox suddenly became the leader of a company struggling with its identity.<\/p>\n

\u201cSo much of the Smosh brand was about me and Anthony being best friends, so without Anthony in the picture, what is Smosh?\u201d Hecox said.<\/p>\n

\u201cPeople started referring to me as like the dad of Smosh, like I was the dad who got all the kids in the divorce.\u201d<\/p>\n

By this point, Smosh had outgrown its sketch comedy origins. A new cast of characters was emerging on Smosh Pit and Smosh Games. With Padilla gone, Hecox was tasked with redefining what the channel would become.<\/p>\n

\u201cMy job was to shine the spotlight on everybody and say like, \u2018Hey, it’s not just me here,\u2019\u201d Hecox said. \u201cIt’s more than just the friendship that Anthony and I had.\u201d<\/p>\n

FINDING A NEW IDENTITY<\/strong><\/p>\n

On the other side, Padilla ventured on his own as a solo creator and wondered the inverse: who was Padilla without Smosh?<\/p>\n

\u201cI didn’t know who I was as an individual. I knew who I was as part of a duo. I knew that I made comedy videos,\u201d Padilla said. \u201cI thought that was the only thing that I could be.\u201d<\/p>\n

\u201cIt was a really public display of me finding myself,\u201d Padilla said, \u201cYou\u2019re figuring it out on the spot, your numbers are going to drop and the numbers are the most public thing.\u201d Padilla said. \u201cYou get these comments too that make you feel like you need to prove yourself: you’re nothing without Smosh, you’re irrelevant and washed up.\u201d<\/p>\n

Padilla\u2019s earliest solo content were half-improvised, half-sketch. Six months in, Padilla’s views were a fraction of what Smosh\u2019s uploads got and he was far from turning a profit. But it was at this point that Padilla found the creative freedom he\u2019d been chasing since going on his own.<\/p>\n

\u201cOnce I stopped thinking about myself from the third person, I stopped thinking about how others perceived me.\u201d Padilla said. \u201cThat’s when I started to get experimental in a way where it didn’t feel like I was just trying to give people what they wanted.\u201d<\/p>\n

Eventually, Padilla found a format that was both personally rewarding and grew his channel: \u201cI Spent A Day With,\u201d which was an interview show where Padilla speaks with an eclectic set of guests. From furries to flat earthers, content creators to celebrities, Padilla\u2019s genuine curiosity and empathetic approach resonated with viewers and guests alike.<\/p>\n

\u201cAs I continued to do more and more interviews, I started realizing that I was learning more about myself by learning more about others,\u201d Padilla said. \u201cIt forced me to learn how to communicate with people. To listen more. To be more observant.\u201d<\/p>\n

Today, Padilla\u2019s channel has 7.52 million subscribers, 990 million total views, and twelve full time employees working as part of his Pressalike Production company.<\/p>\n

\u201cAll those skills that I learned, oddly enough, culminated in Ian and I reconnecting. I was able to sit down with him and ask questions and just be genuinely curious,\u201d Padilla said. \u201cBefore I wasn’t able to see myself as anything except for the guy from Smosh.\u201d<\/p>\n

NEW BEGINNINGS <\/strong><\/p>\n

The year after Padilla left, Defy closed its doors permanently. The team at Smosh found out through an email, with no company leadership present to deliver the message in person.<\/p>\n

\u201cWe all got an email that said effective immediately, Defy is no more,\u201d Hecox said, recalling his team\u2019s disbelief. \u201cThat to me was really scary because this is all of our IP and it could just wind up in the hands of somebody that really doesn’t care,\u201d Hecox said. \u201cIf that was going to happen, I wasn\u2019t going to stay at Smosh.\u201d<\/p>\n

Luckily for Smosh, Rhett McLaughlin and Link Neal, the duo behind Good Mythical Morning, swooped in with a lifeline buy-out offer. Four months later, Smosh announced Rhett & Link had purchased the channel from Defy.<\/p>\n

Under the ownership of fellow creators, Smosh flourished over the next four years. Simultaneously, Padilla began to hit new levels of success with \u201cI Spent A Day With,\u201d as interviews started to top 10 million views.<\/p>\n

With both Padilla and Hecox seemingly hitting their stride, I asked them: why buy the channel back?<\/p>\n

For Padilla, it started with nostalgia. Clips from Smosh\u2019s heyday in the early 2010s were going viral on TikTok and Twitter<\/a>.<\/p>\n

\u201cFor a while I’d resigned myself to the idea that all of our old content was only really good in the past. It’s just nostalgia that makes me imagine it fondly,\u201d Padilla said.<\/p>\n

\u201cBut watching the clips I was like wait, our writing at times was really solid. And the chemistry that we had together off camera and on camera was really strong. And we fit together in this way where we kind of balanced each other \u2026That I hadn\u2019t found in anyone else,\u201d Padilla said.<\/p>\n

As Padilla and Hecox began reconnecting as friends, an idea started to grow.<\/p>\n

\u201cWhat if we owned this again? What if we had another chance at doing this exactly the way that we want?\u201d Padilla said. \u201cWhat would our jokes look like? Could we do even better than we did in the past? Is our writing even stronger?\u201d<\/p>\n

Eventually, the two got together and Padilla gave his pitch to buy back Smosh. Hecox described the 30 minute rant as a \u201cdiatribe\u201d but he was in as well.<\/p>\n

On June 20, 2023, Padilla and Hecox uploaded a video to announce that they had bought the company back from Rhett & Link and classic Smosh-style sketches would soon return.<\/p>\n

BEYOND THE BUY BACK<\/strong><\/p>\n

Walking through Smosh\u2019s 17,000 square foot studio, it\u2019s clear that TIME Magazine\u2019s line about lacking monetization was premature. Two soundstages are set for filming. Towering shelves line the walls with props and costumes carefully categorized. There\u2019s an equipment room, a workshop for building props, a stocked kitchen, makeup table, editing bays, offices, and a conference room big enough for basketball.<\/p>\n

\u201cWe\u2019re in the same position now that we were when we first started \u2014 us being two really close friends who love making each other laugh, love spending time with each other, love creating stuff together, love capturing the magic that we feel,\u201d Padilla said.<\/p>\n

That magic is evident with their latest uploads averaging over 2.4 million views each on the Smosh main channel. Padilla describes the tone of the channel as \u201cjoyful absurdity.\u201d But the main channel sketches are just one facet of the Smosh umbrella. Smosh Pit hosts the group\u2019s unscripted content, from \u201cTry Not To Laugh\u201d to \u201cEat It Or Yeet It.\u201d On Smosh Games the crew plays everything from Dungeons & Dragons to Mario Party and Cards Against Humanity. And then there\u2019s Smoshcast, where Smosh hosts their podcast, recently rebranded Smosh Mouth.<\/p>\n

With the re-acquisition, Smosh is also turning to a membership model to help drive revenue. Three dollars a month gets you exclusive access to the Smosh Discord, as well as loyalty badges and custom emojis for comments and live chat. Five dollars a month adds bonus behind the scenes content. And Smosh Royalty, for $10 each month, grants access to a members only watch party after every main channel sketch upload.<\/p>\n

Both Padilla and Hecox expressed that this new formation of Smosh would not be possible without Catanese stepping into the position of CEO and Moacanin taking on the role of Executive Vice President of Production.<\/p>\n

\u201cThey were instrumental in this new formation of Smosh. They were the ones that knew the secret before everyone else and helped us build this thing.\u201d Ian said<\/p>\n

Six years and six days before the buy back, Padilla announced he was leaving Smosh. Six years before that, in 2011, Smosh was sold to Alloy Digital. And six years before that, in 2005, Smosh uploaded their first video ever; \u201cPower Rangers Theme.\u201dClosing out our conversation, I asked Padilla and Hecox what Smosh will look like six years from today.<\/p>\n

\u201cI hope to turn this into a business \u2014 a company that is continuing to thrive with all the success that we\u2019ve seen, but keeping the element of Smosh that was there since the beginning,\u201d Padilla said.<\/p>\n

\u201cI think it’s just providing a place for the funniest people to come together,\u201d Hecox added. \u201cI think that was one of our missions and I think it will continue to be our mission. It’s so great to read the comments of people saying that they look forward to these videos and they love the dynamics that we’ve created with other cast members.\u201d<\/p>\n

With the team around them and history behind them, it looks like Padilla and Hecox will only continue making that mission come true for many years to come.<\/p>\n<\/div>\n