Building a $720k/yr GMV CGI Marketplace: Henning Sanden (Flipped Normals)
Welcome back everyone to the Ramen Club Podcast, formerly known as Ramen FM. So this is the show where we interview Ramen profitable founders from the Ramen Club community and how they discovered, built, and grew their product to Ramen profitability and beyond, whatever that means to them. My guest today is a friend and long time Ramen Club member Henning Sanden. He is a founder and three d artist from Norway with a background in the film and animation industry. He is also the co founder of Flipsnormals, the number one computer graphics marketplace, where you can buy curated three d models, brushes, textures, tutorials and much more, primarily for three d and computer graphics artists in the creative industries, making 720 k per year and is about 12, 13 years old now.
Charlie:Henning, how are you doing?
Henning:Yeah, pretty good. Pretty good. I'm excited to to be on this one. I usually am on the other side listening to to this.
Charlie:Yeah. Much appreciated. And how was my intro? Did I miss anything major out there?
Henning:I think it's pretty good. The big thing is we started Flip Momos in 2013. That was when we started that we bought a domain and we got set up as a basic store where we started doing our own things, mostly the Vimeo back then, not YouTube. Then we went full time on Flip Momos with the marketplace in 2018. So that's like seven years now, full time.
Charlie:So it's twelve years of you know, creating content and running YouTube and stuff and about seven years of the marketplace. Yeah. And so you had quite a long history working in loads of amazing kind of production companies and like CGI companies in London across Europe and that kind of thing. So can you just tell me a bit about your story, taking you from being a three d CGI artist and how you got to building a tech company?
Henning:Yes. And just to remind my partner, we've had a pretty similar background. We went to school together, did three d there. We already done three d for years before we attended school. So, were at quite a decent level when we were in school.
Henning:So, in third year, we decided to just start doing a tutorial company. We thought that was a pretty interesting idea. We thought you can actually make some decent money on that. This was 2013, right? So, it's still early days.
Henning:You're basically few years before you even strike this era. Like, it's just difficult even build the infrastructure to the same degree as what you can now with just a few buttons and you're basically live. But yeah, we came to London in 2014, so just over ten years ago, joined the film industry here, the visual effects industry, and just focused on a career for a while there, just working on movies. So, I'm a monster guy. I made creatures for movies.
Henning:I worked on Batman v Superman, Alien Covenant, a few others like those, Tarzan, Pacific Rim two. So, just making tons of really cool characters for that. But what we always wanted was doing something on our own. I don't really like the nine to five style where you I think fundamentally it was, I didn't really enjoy working for somebody else. So, it was always about trying to find a new way to make a living out of that.
Henning:So, while doing three d was really fun working for like really big production companies, it was tons of fun. It's the most awesome job you can have. It's still one of those who's still working for somebody and also obviously you can't scale your income, right? It's like anything. If you want like any job, if you want more money, you have to work more hours or more money per hour.
Henning:And obviously not sustainable over a certain amount. So, we started building tutorials in our spare time. So, a lot of YouTube stuff, a lot of Vimeo stuff. Back, we don't do Vimeo anymore. This was when Vimeo was the more creator space and basically everything moved to YouTube now.
Henning:And we started making paid tutorials and we saw that we can actually make some decent money off of just paid tutorials. And we started thinking how much we're making at the time. And if we could scale that because we're full time on foot problems, we could actually make a living out of doing that. So, that was a pretty cool realization. There is almost something like the moment you go from being full time in a company to just realizing that it's possible to break out of that, something happens in your brain.
Henning:It's a genuine interesting psychological phenomenon where you're just going your own path. That's one of the cool things about being in the Raman space now, just talking to people who's already It was everyone has basically gone through that shift. It's a really freeing mindset. So, you have a few business models, right? And within this space, either you can just sell tutorials and that's totally fine.
Henning:Like selling tutorials, selling resources, you can make pretty decent money on that. But we wanted to make something that again was more scalable and marketplace is in theory pretty scalable. It's what everyone is trying to chase, right? The passive income, of course, there's no such thing as passive income because you're just spending all your building the main platform and you have to maintain it and like you build new content for it. So, but at least it's passive in the sense that, you know, we don't work for a paycheck.
Henning:We like people buying stuff while like at any time during the day across the world. So, we were able to basically use our three d skills to get a following. We were able to build a decent YouTube channel with that. Currently, that's at around 330,000 subscribers. So, a lot of people inside the three d industry, they know about us, which helps a lot with marketing.
Henning:Just having marketing down as a channel where people generally know who you are. You don't have to do any kind of bootleg SEO hacks or growth hacks or any kind of silly things like that. You don't have to experiment with crazy ads or anything for Facebook or Google, anything like that. It's all organic. People genuinely know us because of the content we did on YouTube.
Henning:And then through the courses we would do on our own marketplace, we're still doing all that. And yeah, just building the audience from that is one of those where, going back to your question, It wouldn't be possible to build flutonals without our expertise within three d. It's one of those that's kind of remote in a way. If you try to build something like we're doing, but without the genuine expertise of the three d industry, it will be really, really hard. It's not just because it's like you need expertise to build the platform.
Henning:Like you don't really need that, but you need to curate it. But also, if you're building products and you're basically the face of the company, people need to trust you. And having an IMDb next to your name with pretty big heavy hitters there for both myself and my partner, that helps just a lot. It just adds legitimacy to what we're doing. And of course, we put that into our videos as well.
Henning:That's one of the reasons people like our content, like on our YouTube channels and our paid tutorials, because we're generally putting in industry expertise into it. We don't just go through documentation and just reading up tips. We're going through really hard problems and being very surgical in a lot of different ways on how to solve issues. So, people just Googling something very specific and they find one of our videos, which is exactly this issue. Not because we have some crazy insight into that.
Henning:It's just like, this is an issue I'm having. If I'm having this issue, probably some other people are having this issue, which is also how we build our own products as well. When it comes to building products, we have tutorials and resources. So, I'm working on a brush pack now for one to three days after, and I'm also working on tutorials as well. And when you're doing that, you can market research this stuff to death, but at end of the day, there is like a gut feeling to it.
Henning:You kinda have to shoot from the hip to some degree. I think if you market research something too heavily, you're gonna build something that everyone thinks is a good idea, but they don't necessarily feel strongly about it being a good idea. They all agree that, yeah, this tutorial should exist, but would they buy it? Maybe not. So, what we're doing is in large way thinking about what products do I need right now, which is literally what I'm building now.
Henning:Like, I'm doing something that I'm which is straight on the speed of my work. If it's gonna speed up my work, it's probably gonna speed up somebody else's work as well. And that's what we're for tutorials as well. If I need this tutorial either now or I needed it when I was learning, probably some other people are doing that as well. So, we're almost like vibes based when it comes to what's needed, which in some cases works phenomenally and other cases, obviously, it doesn't work right.
Henning:We're not gonna of hit them.
Charlie:And for someone that has never made kind of a three d character model, especially to a fidelity of being in a movie or animation or something, like, much time does does it take to even learn how to make this stuff or to actually create this character for this? Just to kind of demonstrate, like, how important it is to have education on this.
Henning:A lot. You're talking about years. In The UK, the general courses for the universities, they're three years long for this. Some people take a master's. Even that isn't close enough to get good at this.
Henning:Even if you're practicing a lot, because there's so many disciplines inside of this. In terms of the, I know there are more developers listening, right? It's almost like how long does it take to become like a full stack developer. That's basically what you're dealing with when it comes to being a character artist, where there are specialized areas within three d. Like you can be a texture artist, which means you're just painting textures all day long, or you can be a modeling artist, you're modeling props or modeling vehicles and spaceships and all that kind of stuff.
Henning:But when you're doing specifically for a character artist, one of the reasons is so time consuming is because the character you're modeling might literally be the name of the movie, right? When I worked on Alien Covenant, I worked on the Xenomorph for that. You can't screw that up, right? You need to be just solid at what you're doing. If you're sitting in meetings with people who are like one step away from Riddle East Scott, or like in some cases, supervisors would be in meetings with Riddle East Scott himself.
Henning:You need to be able to generate something that's genuinely of high quality and that's really tricky. So, you have a lot of disciplines you have to learn. Have to basically, like at the core, you have to be able to make those models in clay. It's digital clay we're using tools like ZBrush. So, you have to learn how to sculpt.
Henning:You need to learn anatomy, appeal. You have to learn all the technical parts about how do you even model that? Like how do you make it animation optimized, rigging optimized? You have to just understand how everything works together. And also, it just has to, at the end of the day, it just has to look really good while at the same time being really functional.
Henning:So, the stuff we are providing, at least what I'm working on a lot, which is like in this case, character art tutorials. It's so specialized that nobody's really ever gonna learn this at university because the people who are teaching at universities, they don't know this stuff. It's just highly, highly specialized knowledge. Meaning if they were to know this stuff, they would just probably not be university teachers because they would just make a lot more money being in the industry or doing mentorships or doing something else. So, that's kind of the foundation on which we build footnormals, strong character art, strong character art portfolio, just being able to teach people how to do this.
Henning:Because if you can teach this, then you have some authority in a lot of fields as well.
Charlie:So you and your partner, you started the YouTube and Vimeo channels. You spent about five years until 2018, building up the channel, getting loads of viewers, loads of subscribers. I think he said there's over 300,000 YouTube subscribers, which is amazing, especially in well, you know, it's not like a tiny niche, obviously a big niche, but, you know, it's it's something that is an important niche. Around 2018, you decided to launch a marketplace. But what was the income streams prior to that?
Charlie:Was it just via YouTube advertising? Or was it other forms of that as well?
Henning:Honestly, the YouTube advertisement has always been around a year. Like, even now, we're barely making anything from YouTube. Like, during COVID, they sliced YouTube drastically. So we could probably make some money now from YouTube, but it would be through sponsorships. So, if you just sponsor videos, I'm sure you can make some, but we don't do that at all because we have our revenue stream afterwards with the marketplace.
Henning:But before that, it was honestly our own income. That was the biggest thing. We didn't really spend our own money on it because it wasn't too expensive what we're doing, but had a full time job in the industry and we did this all in the spare time. But that said though, we did make some products in our spare time there, which we were able to demonetize. And I think, I can't remember fully, but I think we had something like $40,000 in the bank from the products we made at that time, which was obviously really useful because when we built the marketplace, we basically hacked that together through WordPress plugins.
Henning:But obviously that doesn't work all the way. So, you need some developers here and there. So, just being able to have a little bit of a buffer with that. Obviously $40,000 is nothing like absolutely a real chunk of cash, but it's also at the same time, not enough to hire a full time developer, right, for any sustainable time.
Charlie:Oh, I see. So with the YouTube channel and Vimeo, you weren't directly making much money from that at the time, but you indirectly managed to monetize that through selling products. Yeah. I'm talking about before you launched the marketplace.
Henning:Yeah. So we had our we had a basically, version one off the site that was it was still from almost a com. And that was a that was a landing page where we sold different products through Gumroad. Actually, Gumroad was the back end of it. So, people will find the products on flipgones.com and this would be like character tutorials.
Henning:It would be like resources for three d soft like Maya or ZBrush, and then they would buy it through Gumroad. And then we would just get paid from Gumroad into account. So, that really helped. But also more more important than maybe than the money we made for that, it was like a validation, right? Because we don't come from a business background.
Henning:We had to learn, what the hell is an MVP, right? We read the Lean Startup and we're like, all right, this is the terminology we need to learn. And the whole thing is basically honestly built on vibes. We had a decent intuition about things. I still don't know whatever terms people are throwing my way.
Henning:In Ramen, people are asking me, What are all the different CPMs? Whatever terms, I have no idea. Because we never built it that way. We built it in a more fundamental approach. We didn't go with a proper business plan going in and following these steps.
Henning:We had a decent idea what would work in terms of what people wanted to buy because of our expertise within the field. And we built products for that. And then we used that money to develop the first site even further. And then at some point, the company we worked for, DNEG, the that last company. We both worked at DNEG at the time, double negative.
Henning:They were having a bit of a drought period and our contracts were up. We were on like a year or six month contracts at that time and our contracts were up at the same time. And we were like, we're not gonna try to renew it. We probably could have, but we were just like, it's time to build now.
Charlie:I was gonna ask, what was that moment where you had the YouTube channel, obviously things were going super well, but then you realize, okay, we think there's an opportunity to start to sell, obviously paid courses through the website, but also actual three d models that are downloadable that people can buy. What was that kind of thought process that led you to think let's do this?
Henning:So, we only had our own products on the site. That's what we were selling. It was exclusively the stuff we made ourselves. But we started in 2017, then we started to build the actual platform. And you are shooting from the hip in a way that you have no idea if this is gonna work or not, but it also wasn't very expensive because it was based on WordPress.
Henning:So, in January 2018, Dnig allowed us to go four day weeks. So, over four day weeks. And we had Mondays off. So, Monday we just spend a full time on Fluton's. So, we were able to hack together a platform, mostly my partner, Morten.
Henning:He's more technical than me. None of us are developers, but he's more technical in that regard. So, he was able to hack together, basically glue together a lot of plugins. We use WordPress with a framework called EDD, Ease of Digital Downloads, which had base in theory, all the stuff you need in order have a marketplace. Like if you have a competent WordPress developer, you can get something up and running real fast with that.
Henning:We launched this in early May, twenty eighteen. And then we saw that our sales were up to around $10,000 a month. And we saw that we actually make a living from this. So, we basically never been below 10,000 a month, which is obviously fantastic, right? Like we really, really happy with that.
Henning:So, we didn't really have the A lot of people are doing the Like we're putting it with sauce. This is not a SaaS. It's all sales. So we didn't have this slowly increase and such. We basically launched that as a starting point, and then we grew from there as well.
Henning:And then we saw that, yeah, we're actually making decent money with this. We can actually make a living from this. We resigned and that was it. I remember the first tutorial we launched. This was in 2016, I think, 2015, 2016.
Henning:That was a creature tutorial. Just had to sculpt the creature for production. And it sold decently, but the first day it sold for a thousand dollars. And we were just thinking, holy crap, dollars 1,000 a day. Obviously, we're not gonna make that every day.
Henning:But what if we do? Wow. Right? Then you're at like 365,000 a year, which divided by two is still, it's of absolutely fantastic income. So, it's actually like, just the fact that we made money, we made some sales on these products just proved that we can actually scale this, which is insane.
Henning:Because I think what a lot of people do, they're building something really, really technical and they're spending a lot of time just refining everything, perfecting everything. And then they launch it without thinking about, all right, cool. How do we actually make money? How do we actually get money from somebody's bank account into our bank account? And that's what we started.
Henning:Again, we started basically with a This is also WordPress landing page just using a theme, just connected to Gumroad, very simple stuff. And people were buying it, right? So just being into validated that early on, this ten years ago now, allowed us to slowly scale things up and then taking a leap of faith with the marketplace.
Charlie:And when you kind of made the transition to the marketplace, did you before you went both on full time, did you do anything like you do a living off savings and would just had to get to your revenue goal? Or for example, I know for a long time you were doing it on the side, but what was that point where you decided to go all in? Did you just feel you had enough money from the 10 k a month that you could just go all in and if something went wrong, you go back to having a job?
Henning:Yes, what we did is we kind of that, right? We thought that worst case, we just go back to having a job. It turns out that worst case is a really, really bad scenario. Like going back to a full time job after you've tasted the sweet freedom of full time, Those are some pretty heavy shackles. So, we really want to avoid that.
Henning:But I mean, we had an income stream from the beginning, but at the same time, we also had to cut our salary drastically. We were working as senior artists in VFX, which is decently paid, And we went back to a junior salary. So, we just cut away all services, right? Just like all subscriptions, just cut away that. Switch to a gym that's from Β£50 a month to like Β£15 a month.
Henning:Like just anything you can. And yeah, just down to basically like a 20 ks salary a year, which obviously sucks to do, but it is what it is, right? It allows you to scale it up. And we thought that, well, if it doesn't work, have the skills to go back in the industry and make money. But the four day week helped a ton because we obviously take a 20% pay cut, but we were able to basically fund the development.
Henning:I mean, in one way we did fund the development with our own money there because we basically subsidized the development with a 20% pay cut, which helped a lot. So, what we did then when we took that Monday off, we spent that also in large way just building the YouTube channel. That was really when we started growing the YouTube channel. Before that had been Vimeo, and we saw that we were growing by like 10,000 subscribers a month, I think, some point, which was fantastic. So we just gained notoriety quite fast in the industry.
Charlie:What I love about this process is that you saw us out as domain experts in the three d character artist world, spent years honing your craft, building a reputation, then you use that to build an audience because you have the knowledge to do that. And then you suddenly have this highly relevant audience and you kind of understood what they wanted. And then because you are one of those people, both of you are you and your co founder, you then knew what to do next, which was to launch products which serve that audience, which was the marketplace. So when you look at it like this, it kind of follows a kind of a fairly logical pattern, which other people in other industries can kind of do. But the difference one maybe key difference was you launched a product where neither of you were technically developers, whereas your your partner was a bit more technical.
Charlie:So how did you divide up what to do between you and your co founder and any other team members at that point?
Henning:Yeah, that's a good question. We kind of, our roles fell pretty naturally into where we were good. When we started out, he was a little bit more technical than me back in 2013. Meaning I built my own website once and he built his own website twice, right? So, just that tiny difference meant that when we started with the website, it just made sense for him to fiddle with WordPress things, like just connecting some stuff up, connecting the APIs, all that kind of stuff.
Henning:And since he was doing that, well, I was doing some slightly more creative stuff with that. And we've both been doing videos in the beginning when we lived together in London and we were roommates. And then we're both in the videos. Now we live in different places. He lives in Denmark, I live in London.
Henning:And I mostly do the videos now, but he's transitioned more into a more technical role. We were trying to get him more back into the creative part as well. But yeah, we basically kind of gradually just went into these roles. There was no point in having two people on the tech side because then we wouldn't be sure I could learn this stuff as well. But again, the foundation for what we're doing is the creative strength that we have.
Henning:Mean, somebody at Rama could rebuild FlipNormals in like three months, like with blindfolded, right? If you're a strong senior developer, It's not about the strength of the platform, it's about the strength of the branding and the strength of the YouTube videos. So, that's more what I'm doing now. Like, I'm creating more of the content, like the shorts we're doing in TikTok, Instagram on YouTube, and also long form videos as well. But, yeah, we're trying to get him back more back on the creative side as well, because it's not good for a creative to only be doing tech stuff as well.
Charlie:I love to get into the weeds of growth as well. So typically these days, how much is of your website traffic is via different places such as YouTube versus SEO versus TikTok, anything else? How would you roughly bucket the main sources of traffic now?
Henning:I don't actually have any of those numbers, but it's not even where specifically where the traffic comes from that's important. It's more like why the traffic almost, because I think the vast majority of people will know us through YouTube, will know us through our social media presence and from that. So, if they Google it and they go from Google Ads, or if they click on Instagram posts, it's more like the foundation comes from Like YouTube really is our foundation. YouTube have really screwed up the algorithm. So, it's a lot harder for established channels to use your audience.
Henning:So, our videos aren't getting a crazy amount of views now, but we have such a legacy of videos. So, basically whatever you Google, you're finding us that way. But yeah, without being too technical in the specific numbers, YouTube the foundation and then they might go directly to the site and they might click from one of our posts. We're doing active social media as well, which obviously will have links to that as well. And but, yeah, a lot of people go directly to the site for sure.
Charlie:So you don't put a huge amount of effort into SEO, for example, to try and rank for loads of keywords, but you know that your videos show up quite high for different types of queries and stuff, and that gets them in the funnel.
Henning:It's pretty nuts actually looking at how expensive it would be to get the organic traffic that we were that we were getting now. We we we put our posts. I sent this to you earlier today. Right? Like, the we put out we keep putting up statements about our stance on AI.
Henning:And I think this post had 170,000 impressions or something like that. And I just forget about buying that, right? The organic reach we have is so much higher than paid reach by a smaller account, right? It's just trying to get to that. We would would be spending tens of thousands of dollars just on the organic reach we're currently having.
Henning:So, we tried that. We tried ads. We tried old things. We paid a marketing agency to This is like in 2018, 2019. We paid a marketing agency to do proper ads for us and man, it doesn't work for us.
Henning:There are a lot of people who are saying, Oh, just try this little trick and all that, then it's gonna work. And I don't know. Particularly for like Facebook ads, I think that is borderline a complete scam. But what do I know? I mean, obviously it doesn't work for us.
Henning:So, for us, it's pointless to throw more money into that. We are spending money on Google ads just for our keywords. And we have also consulted with SEO consultants about just putting in keywords in a correct manner for our site as well. We're not being silly about it, but SEO is probably one of those things we could definitely do a better job at. But even so, I still think just the organic reach we're having with the content we're producing is so powerful.
Henning:So a lot of the audience would be like a lukewarm or a warm audience anyway.
Charlie:So two sided marketplace is notorious for big challenging to get off the ground, the cold start problem. And my understanding for you is you already had half of that kind of, to some extent ready in terms of the demand side, the people who would mostly be people who would be downloading three d models from your website. Correct me if I'm wrong. And then when you launched the website, did you have to do a bit of work to build up the supply? So it wasn't just your own products, though you had lots of other artists with lots of content on the website.
Henning:Yes, have basically two kinds of content. We have the Flip Almost Exclusives, which is what we're producing. And then we have everyone else on the site. Technically, we are just another creator. That's what we call the partners on the site.
Henning:They're just a creator. So, anyone can join the site, but you have to be approved by us. Every day we go in and we approve creators. So, that's a main thing we're having that. This is also entirely accidental.
Henning:We can talk that later on. But our strategy is very much you need to be approved to sell because otherwise you're gonna be flooded with absolute crap. So, we have around 50,000 products now on the site. I think we might've hit that the last few days. So, obviously the vast, vast majority of content comes from the creators.
Henning:But a difference between creators, at least between most of the creators and what we're doing is that we're actually professionals at creating content. And I don't mean that as in the content is necessarily better, or like they are amateurs in a more like technical sense. They're not making a living out of their content. So, the advantage we have is that we just made a lot more content. We were faster at making content and it's more refined and we know all the pitfalls to avoid.
Henning:So, can also, because of that, we also obviously have more Like people trust us more than like a random creator for that. So, we basically separate it into our own stuff we're doing. And we can hire freelancers for that as well. But a lot of this is stuff that we made ourselves. And then we have the third parties as well.
Henning:And we're promoting it equally, right? And probably most of the products are from They're the ones who are promoting ours from our creators. So, we really promote those as well. Ideally, obviously, we want all the earnings to come from creator products. Like, that's what I was talking about in the beginning with the passivity of it.
Henning:You want it to be more passive so that, you know, we can focus on growing it, focus on the strategy instead of focusing on just me. Like, I'm sitting right now making like monster Alphas, right, for like monster brushes for kaiju's, right? Like it's cool, but it's obviously not more of a scalable approach. But what we did to acquire these creators is we went to different marketplaces and we found some really good ones. We emailed them and we asked them to come on the site and a lot of them want to join us.
Henning:And again, because a lot of people knew who we were, it was a lot easier because it wasn't like a fully cold email. It was more like a lukewarm email. And some people needed a bit of a convincing, some people are just straight up no, and a lot of people were interested in joining. And then this snowball starts rolling from there, but we're still doing this. We're still doing the outreach.
Henning:But at this point, I feel like we have a lot of the really good ones because like that was an issue at the beginning that a lot of the creators that exist today just straight up didn't exist in 2018, right? There were just new creators. You have three d artists who were junior artists or in school back then that are now like seniors or supervisors today, right? It's been seven years. So a lot of those have just become active creators since then, but we have a few competitors, notable competitors out there, but a lot of the creators sell in all different marketplaces.
Henning:So the way you grow that today is almost like just needs to be more creators out there. So, that's something we've been doing as well. We spent a fair bit of time creating documentation on And YouTube videos as well, like both our help docs and YouTube videos. And how to create high quality tutorials. This is something I've been doing for such a long time.
Henning:My tutorials are not fancy. They're not flashy. They don't have fancy editing or motion graphics or anything. They're just simple. They're simple in terms of their editing style and how we talk about things and people seem to really enjoy that.
Henning:So, I'm basically teaching people how to do these things, essentially distilling the like what twelve, thirteen, fourteen years of experience we have making tutorials into like a few simple tips. For instance, when you're starting off making tutorials, you're gonna time lapse everything, right? It's a two hour video, it's a half an hour video now. People hate that. That's not obvious that people hate that.
Henning:There's no way for you as a creator to know that you should absolutely not time lapse this, but we know. So, if we're working with somebody, I'm helping someone make a tutorial, but it's like, do not on any circumstances time lapse your videos, because you are gonna have refund requests for this at the end of the day. Like, at the very core, you will just make less money from this. So, this is kind of stuff that we've been trying to help out with as well, giving we made like a four part video some like a year or two ago where we just go through straight of recording tips, which microphone, like people are watching on video. Now we can see I have a pretty decent microphone set up here.
Henning:Which one Like, how do you avoid getting bad artifacts in the recording? How do you even speak effectively? I'm not a native English speaker. I had to learn this language, right? So, it's all about these little tips and tricks as well, how to sound natural and how to just be engaging when it comes to creating content.
Henning:So, we're doing a fair bit of that as well, which hopefully inspires new creators to join the game. Because if you're sitting there and you're trying to make a tutorial, man, that's a lot of work. That's really difficult because you have to sit down and like, all right, cool, where do I get started? And you have to go, how do I record a video? And there are 200 different software for recording video.
Henning:All it's OBS. How do I use OBS? Which microphone do I use? How do I connect it up? How do I edit my videos?
Henning:And we just go through it and showing the ropes of how to do that. So, I think that's been pretty helpful. It's also been helpful for me to make these kind of videos because it helps me every time I'm teaching something, I'm learning something more and I have to refine my process for it. Because a lot of what I'm doing is kinda silly. Like you do stuff the way somebody taught you ten years ago and you haven't questioned it.
Henning:Then the moment you make a video about it, you're like, oh crap, I can't just show with it my method because it might be deranged what I'm doing. So instead, what you have to do is go through it, refine your workflow, and then you end up with a really solid and systematic way of of doing it.
Charlie:I love how many nuances there are to this industry, to creating the content for it, to even the business model. And there's something that I really like about marketplaces as well is that there's quite a few different options for how you can actually make money, you know, so you could charge the demand sides, the supply side, both, you can have this plus some kind of value added services or subscription. What is the kind of model you have at the moment in terms of who gets charged and how much? And what was the kind of learning process that got you to the final result?
Henning:Well, if I understand the question correctly, it's it's actual products are very simple. It's a product on the site. People buy the products. The person who owns the product get the money. So, if it's a creator, they get a 75% split of that.
Henning:And then we get the 25% or of course fees like Stripe fees and fees like that for like in general. I mean, it's very simple like that really. We don't really have any value added on top. There isn't really an additional subscription service or anything, which is also one of the challenging parts, right? It's when people are asking, Oh, what is your MRR?
Henning:Well, we don't have one. It's just R, right? Revenue. It's There is no recurring here whatsoever. I wish we had that.
Henning:I really wish we had a subscription service, but at the same time, I had a feeling that, like we were talking about building that during COVID. If we put all our money into that, I have a feeling that service might've been really nuked during the last few years, because obviously there is, like me, the developer land as well, there's a big recession. There's a lot of jobs going down now. A A lot of people being fired in the creative industry. This is a bad time to be looking for a job in the creative industry, games and film particularly, due to like macroeconomic factors, but also just local events like the Hollywood strikes, the writer strikes there.
Henning:So, right now it's a simple business model that people buy a product, people get paid for that product. And then we're trying to advertise the best products on our social media. And we have a quite large following. We have around 150,000 followers on Instagram. We have quite large on Twitter, LinkedIn, maybe Facebook.
Henning:I have no idea about Facebook anymore, if anyone even uses that apart from grammar bots or something. But at least we have a pretty good organic reach when it comes to that. So, newsletters as well, of course. We focus we focus a lot on that.
Charlie:Just doing some quick napkin math. So if you make roughly $700,000 in the past year, in terms of your revenue that goes to you, and that's from a 25% cut from the demand side buying the assets, and you take 25% of that. Does that mean 4x that, so your gross merchandise volume is about $2,800,000 per year around that figure?
Henning:No, this is the revenue of the site. So this the whole revenue. The revenue of the site was $7.20 last year. So in 2024.
Charlie:Then you take 25% of that goes to YouTube?
Henning:Yeah. So, of, because I remember the exact numbers, but it's been traditional, like half half between the sales. 50% have been FlipNormals exclusives and the rest have been the creators. So, for the exclusives, we obviously make like not fully a 100, but we make basically all the money minus fees there. The math is better than it looks as well, just because we have our own exclusive, which is also why we keep doing those, because we need to We wouldn't be particularly profitable today if it was only the creator products.
Charlie:How do you typically conduct user research? You are obviously your of your own user to a lot of an extent. So you maybe you do dog food. Saw a really good post by Lenny, but just recently about the power of people who actually use their own products regularly, and are that core user. But do you have any kind of process, whether it's informal or more formal of how you gather user feedback and then kind of understand what their needs are?
Henning:Yeah, it's pretty informal, to be honest, meaning we do our own customer support. So all the customer support is done by the two of us. We have a third employee as well, Emilia, and she's helping a bit with that, but it's mostly Morten and myself who's doing the customer support, which means that we have the finger on the pulse. We know when something breaks, we don't have to talk to somebody and do a formal interview about like, does the uploading process bother you? And we like, the moment we see that the uploading process bothers, people are pissed, right?
Henning:We fix that. But also we upload our own products as well. So, I get pissed if something doesn't work. So, we get feedback both from ourselves because we know what needs work because we use the platform. We use the platform.
Henning:I mean, when I'm working on the characters here, I'm using footnomials to find tutorials to learn from and to find resources and three d models and such in my own work. So, I get to find that, like his filtering system sucks. We're like, man, gotta redo the filtering system. It's really bad. And if we have some notorious bugs, they affect us as well.
Henning:But then also we do talk to people on, particularly through support when they're reaching out to us as well. But yeah, it's more of an informal process. We don't have a three step plan on how to conduct a user interviews. And I mean, it seems to work pretty well, like our more informal approach. The whole thing is informed, Charlie, right?
Henning:The whole thing is just, we're a few people with a fairly decent intuition about this stuff. And we've been doing this, we've been live for quite a few years now. So, least maybe there are ways to optimize this kind of stuff, but at least we're onto something, right?
Charlie:Definitely. Of course you are. Of course you are. And something that's interesting is you publish if this was popular at a policy where you do not accept AI images or AI assets to your marketplace. So AI is obviously something that's had not just a big impact on the sort of technology industry, but also the creative industries in all sorts of ways.
Charlie:But I'd love to hear from you at creative, who was at the forefront of this as to what was the thought process behind that? Were you seeing a lot of AI stuff uploaded? How has it been received as well as policy?
Henning:Yeah, so there are basically two parts to the AI question in our industry, because obviously a lot of people use AI for different things. This can be a fantastic tool for productivity. But the first one is that honestly, a lot of artists are really suffering because of AI. A lot of people have spent twenty five years becoming absolute top of the line illustrators, book covers or movie posters, and all sorts of illustrations. And that stuff got nuked with my journey, right?
Henning:Like to the point that I'd never seen as many unemployed artists as I have now. It's absolutely gut wrenching seeing that. And if you're an illustrator, you can't just easily retrain, right, into something else. There is some solidarity that because, I I'm an artist. I know a lot of people who are really directly affected by this.
Henning:So, it's a nice way to show solidarity, which I think is really important that we really feel with these people. At the same time, it's a response to a really practical problem, a really immediate problem, because honestly, nearly all the AI stuff created in the art field now that people are trying to sell is absolute box. Like it's complete crap. It's not even like, is it ethical or not? That's obviously a question about, did they just scrape all the books in the world?
Henning:Like Zuckerberg is just having a good time with millions of books. That's all fine. That's a different question. This is just like if somebody's uploading a reference pack. So, a reference pack is a series of images that people have taken off a model.
Henning:It's basically like going to live drawing and you have 3,000 images of a person that people can use for reference for drawing and three d models and such. It's a fantastic resource. If you need to model something and you need a warrior reference, you can't Google that. There just aren't enough high quality pictures. And now you suddenly have a three sixty turntable of a warrior in a pose in an authentic costume.
Henning:And that's amazing. The problem is the AI images, they're complete crap because might look good. They might visually look good. But the moment you start to use them for anything practical, they fall apart like crazy. So, first off, they're obviously not sourced from anything that's real.
Henning:They're just an amalgamation of everything, right? Like it's not gonna be anything. Like it's not gonna be historically accurate in any way. It's all sorts of stuff. Vikings with horns on their helmets, right?
Henning:All this kind of stuff. So, the art you're making then is then basically a copy of copy instead of a copy of something that exists in the real world. So, we started seeing that a lot of people started uploading these reference packs, illustration packs. And when they upload this, it's not a single pack. It's not like there are three images.
Henning:It might be thousands and thousands of products to the point that the marketplaces that haven't had this policy, they're drowning in absolute crap to the point that what's even the point of having them there because nobody's gonna buy them because they're not useful in any way. They have literally zero value. It's like it were to be like buying a programming script that's busted. You can't use it for anything. So, we just have to get rid of that.
Henning:So, our policy is basically, if it's generated just by AI as an image or reference pack or illustration or something like that, fully banned. Also because copyright reasons and all that. There's also an issue for art, right? Since this can't be copyrighted, it's also a real, real liability for studios to use it as well. So, they're not gonna buy it even if it looks good because you can't copyright it.
Henning:Suddenly the character design you thought is original isn't copyrightable. And suddenly the latest Sonic movie is in massive trouble. But yeah, it's just that stuff just isn't at the core, just genuinely isn't good enough. So if generated by AI to be the final result, it's not allowed. But we allow tools that help artists.
Henning:At the very core, we're just pro artists. So, if there is a script for like Maya or Blender and Python that genuinely helps speed up the work of an artist, fantastic, right? If it's written by a human or written by AI and it helps you select 4,000 objects and saves you two hours. At the end of the day, the code is the same, right? So, it means that the artists will just save a crap ton of time, meaning they can spend more time making the world more colorful and beautiful and make more interesting video games and movies and all that stuff.
Henning:So, that's what we allow. So, if it's a tool that helps artists, we do allow it. If it's a final product which replaces an artist, it's not allowed. But also we built this policy with the community in mind. Like this is one of those areas we were actually pretty formal with it.
Henning:We had a pretty good idea what we're going to do, but we sent out an email to our news list and this is what we're thinking of doing. This is what we're proposing. Give us your notes on this. What do you think we should allow? Is this sensible?
Henning:And most people were like, what you're proposing is actually great. We really like this. And that's what we ended up doing, right? What I just mentioned. Final images not allowed, tools to help people are allowed.
Henning:And the community response has been really positive towards that as well. So, for us, it's definitely something we have to keep doing because like, again, from a real practical point of view, our marketplace will get nuked if not, and we can't have that. And also like there is something to it, right? I want stuff to be made by people. Like, I don't want just a bot army to just create content.
Henning:I want it to be made with some care and precision. Like the stuff I'm doing now, like the brushes I'm using for characters, it's made with intent in mind. It's not gonna be Like the most popular product on FlipNormals is actually a brush pack, which I made years ago. It's called the FlipNormals skin kit. And it's for making really high quality skin for characters.
Henning:And it contains only like 40 brushes and an AI kit will contain a thousand, but maybe like three of them would be good. You might as well just make those three by hand initially, right? So, that's what we're doing. We're just making high quality, basically artisan goods in a way. And making sure that it's of high quality, which obviously also means that people like commercially, people will actually buy the high quality stuff as well.
Henning:But yeah, there is something to it. People are feeling really threatened by AI in our industry for for good reason. Right?
Charlie:You said from the beginning that you've had quality control over who can upload content there, the type of content uploaded. So you're really continuing that policy. Are there any new challenges with recognizing what stuff is AI that's been uploaded?
Henning:Yeah. We were looking through it, and we're trying our best, but man, sometimes it slips through. Sometimes it's really obvious what's AI, but sometimes somebody slips through where they're making something that maybe it's actually a tool for it. Like maybe it's some brushes or something that could Let's say it's Photoshop brushes, and maybe they're made with AI. Well, if it helps somebody paint better in Photoshop, we actually allow that as a product.
Henning:But then they might actually being like, yeah, I'm also creating reference packs and also creating three d models, which are made with AI. And then that can slip through the cracks because they were automatically Every product is automatically approved. But we go through it and we delete stuff like that. An issue we're having is that some products are Let's say it's a three d model of a person. They might actually be taking that three d model into My Journey and the prompt is something like improve it, make it more realistic.
Henning:And then they use that for marketing. And that stuff, we just have zero patience for that because then you're selling something that's not real. That's, again, ethical concerns of AI. This is a different thing. This is misrepresentation of what the product is.
Henning:You're buying a dress in a store and it's a different color. It's the same thing. So, in that sense, that stuff needs to go. But I mean, there's definitely AR products off the phones. We're trying to nuke them, right?
Henning:But it's hard to find them because there isn't an automatic way to detect them. We looked into that, right? But it's like with piracy, man, you're not gonna catch all of it. You can do the best you can, but at the end of the day, there is not really an automatic way to get rid of this.
Charlie:Especially as the models improve, I guess as well. The early ones, there's probably a few more telltale signs, I imagine. But yeah, some of the new ones seems to be getting a little more sophisticated. And what do you see as the future for flip normals and you over the next few years? What are your main priorities for that?
Henning:Yeah. That's that's a good question. So it depends a bit on, honestly, the overall macroeconomic situation as well, right? Like during COVID, everything went crazy. We doubled our income from March to May 2020.
Henning:We'll be awesome if that'll happen again. Now, it seems like that might be going more the opposite way because there's a real depression in the creative industry. But we're trying some new things right now. One thing we've been doing, we've been partnering with Humble Bundle to get some of our products as bundles there as well, which has been quite profitable as well. And we might be doing something related to that in the future ourselves.
Henning:But right now, we're focusing a lot on organic reach as well. Like, I'm doing YouTube videos. We're focusing on just improving the site and adding stability to it and just adding some missing features that we had because we're still having features to it. We just added wishlists on the platform. A bit slow and steady.
Henning:We have some stuff that we're working on that we can announce once it's live in a few months, so we can talk more about that then. But we have some interesting things in development that's hopefully gonna make a difference as well, but we can talk about that in a future episode.
Charlie:Yeah, looking forward to that. And just a final question. What's some kind of key advice you'd give to yourself starting out just from what you learn on this journey that you think will be helpful with some people just starting out?
Henning:Two things. First, development is really, really expensive. If you want proper developers and you're paying proper market rates for that, it's slow and it's extremely time consuming. Go through all the briefs, simplify them down to basically the most basic version of the functionality. Otherwise, it's difficult to build and it's really, really expensive as well.
Henning:When you have working with developers, also don't trust them. Like, if you're working with agencies, stay on top of the agency a lot more than you think because they might be pulling some shenanigans here. They're always gonna be worse than what you assume. They're always gonna be presenting their best face to you. So, working with agencies and programmers, you gotta stay a 100% top on that and it's always gonna be a lot more expensive.
Henning:The second thing, this is a piece of advice I think I got from Adam Grant TED Talk like years ago. This is one of things that really helped me. If you're trying to do anything creative, you need stability in one part of your life. I think the whole thing you've been seeing, I call it the Facebook effect. Just like quit your job, drop out of school and just build something.
Henning:I personally think that's terrible advice. The whole talk we had now is everything is built around a solid foundation. Then you have no foundation, you have potentially no money, you have no product, that's really bad. And what you're trying to do is you're always, when you're building a company, always trying to do something creative, right? You're always trying to do something that either hasn't been done before or something that has been done before, but you're doing it better, which is also really hard.
Henning:So, in order to do that, you need stability in one part of your life. And if you're struggling financially and you're doing that, that stuff is really, really, really difficult. So, what we did is four day weeks, meaning you have three full days to do something yourself, but at the same time, also have some financial stability. So, it's more like, maybe not advice from self, but other people would really be, get really good at the thing you're doing and be conservative with quitting your job because you hear about all success stories out there, but you have a lot of really sad stories as well. And for us, our approach has honestly been a conservative one.
Henning:Also because had to, because we're not developers, we can't just do a start 12 startups in twelve months kind of thing, right? Like that's not where our expertise is. I can do 12 monsters in twelve months, right? But that's a bit of a different thing. So, have stability in one part of your life if you want to do something creative.
Henning:I'm sure people would disagree vehemently with that one. But the thing about advice is it's all context dependent. There is no universal good advice for anything. This was a good advice for our situation. It's terrible advice for other people.
Henning:But yeah, have stability. And then you can do something genuinely creative with that stability.
Charlie:Love that. Also, still thinking about twelve months is in twelve months, I think we should start as a new challenge at some point, or maybe you should actually do that as a piece of content for your audience.
Henning:We love that twelve months or twelve days rather than than than we're talking.
Charlie:Awesome. Thanks, Henning. Really enjoyed this. Loads of amazing nuggets and stories for the listeners. So where can people find you online?
Henning:Yeah. They can find me on Twitter, Henning Son, or on Instagram, Henning Son, or flicknormal.com, or YouTube for just search for flipnormal, and you'll find all our cool stuff there.
Charlie:Perfect. So, we'll add these to the show notes as well. Thanks a lot, Henning, and enjoy the rest of your day.
Henning:Thank you. You too.
Charlie:Thanks, man.
