This interview features Sarah Penna, Senior Manager of Creator Launch at Patreon. We discuss how a trip to India inspired her media career, being one of the youngest YouTube MCN founders, her $15 million exit to DreamWorks Animation, how she picks co-founders, marrying a YouTuber-turned Hollywood filmmaker, founding a female-forward entertainment brand, and what’s up next for Patreon.
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EPISODE TRANSCRIPT:
Chris Erwin:
Hi, I'm Chris Erwin. Welcome to The Come Up, a podcast that interviews entrepreneurs and leaders.
Sarah Penna:
We had outgrown the office. We were in the National Lampoon office. It was so janky and eventually we moved the talent team to my dining room table. I would cook dinner for the talent team. We would take talent meetings in my living room, which was just so bizarre and unprofessional but worked. My house was kind of a YouTuber hotel. It was very wholesome and very duct tape and bubble gum feeling. We were just kind of figuring it out.
Chris Erwin:
This week's episode features Sarah Penna, senior manager of Creator Launch at Patreon. So, Sarah was born in Salt Lake City, Utah. Her father was a serial entrepreneur and her mother ran the family construction business. Sarah's first foray into media began while studying abroad in India, when she became the translator for a documentary film crew. So after college, she moved to California and immersed herself in LA's up-and-coming digital media scene, which included working with OG YouTuber Phil DeFranco. Sarah rapidly became a digital expert and started her own digital talent management company in 2010, which eventually became Big Frame and was sold to AwesomenessTV and its parent, DreamWorks Animation.
Chris Erwin:
Today, Sarah runs a team that helps Patreon develop and launch premium talent partnerships, and also advises Frolic Media, a female-forward entertainment brand she co-founded in 2018. Some highlights of our chat include how we first met during an awkward interview moment with a guitar, when having 10,000 subs made you a Top 100 YouTuber, how she picks co-founders, what it's like to marry a YouTuber turned Hollywood filmmaker, and what's up next for Patreon. Now, I've known Sarah for nearly 10 years. She was actually my gateway drug into all things digital entertainment and where it not for her founding Big Frame, I would not be where I am today, and I am forever grateful to her, which makes me super pumped to share her story. All right, let's get to it. Sarah, thank you for being on The Come Up podcast.
Sarah Penna:
Thanks for having me.
Chris Erwin:
We got a little bit of history here. So, we'll see how much of that we can get through in 90 minutes before your next thing.
Sarah Penna:
Yeah, it's a lot. It's a lot to pack in.
Chris Erwin:
As always, let's rewind a bit and let's talk about where you grew up. So, my understanding is that you grew up in Salt Lake City, Utah. Your family had some land in Wyoming. I think your dad was a bit of an entrepreneur, but tell us about your upbringing.
Sarah Penna:
Yeah. I had a pretty cool childhood. I grew up in Utah. My parents were total hippies, just big personalities, did not grow up in the predominant faith of Utah. So, it was a little bit of an outlier, and my parents own a construction company together. So, a little bit of foreshadowing into how I worked with my husband at one point, but I grew up with an older sister and a younger brother. We had a menagerie of animals all the time, like goats, and my dad kept bees at one point. We always had two or three dogs and a bunch of cats and an iguana and chinchillas. We just had this kind of crazy Bohemian, bizarre, Jewish, hippie not Mormon family.
Sarah Penna:
So, my parents owned this construction company and became relatively successful with that but my dad has curse, as I do, which is, always coming up with new ideas and deciding to act upon them. He had a Japanese restaurant and he had a furniture company and he had an emergency preparedness kit company, and I-
Chris Erwin:
Would he do all of these at the same time as the construction business or would it be like stops and starts and all of that?
Sarah Penna:
No. My mom held it down. She really was the mastermind behind the construction company. She did all of the office work and made sure ... she really ran the company and then my dad was kind of the face of it. He was out at the job sites and in the early days, was actually doing the building. So, I got to see my mom be in this, talk about a male-dominated industry. She would come home so mad because she would get a piece of mail that ... her name's Paula and they would always address Paul, because they couldn't believe that a woman was running a construction company. So, I got to see this powerful woman running this super successful business in basically a hundred percent male-dominated industry.
Chris Erwin:
Sarah, I've known you for over 10 years and we worked together intimately for at least three or four of them. I had no idea about your background. I just learned more about you in two minutes. It took a podcast and a 10-year relationship to get here.
Sarah Penna:
That's totally my bad.
Chris Erwin:
All good. So, okay. As a kid, when your father dabbled in all these new business adventures, was that really exciting for you guys? Maybe frustrating for your mother, but as kids you're like, "Oh, dad's up to some cool stuff again."
Sarah Penna:
Yeah, it was fun. I was 15 when he did the Japanese restaurant and I got to work in the restaurant and just, it was cool, and I didn't realize the stress and the financial burden that it was putting on my mom and kind of how frustrating it was for her but I see that now, looking back, and she handled it amazingly. She's an incredible woman. But I'm a very early riser, and as a kid, I would ... my dad is, too. He would get up at four or five in the morning and I would, too. He would just load me up in his construction truck and we'd go get pancakes and go milk the goats and go check on his construction sites. So, I got to see the inner workings of that. Then, I love going to the office and rifling through my mom's office supplies.
Chris Erwin:
Well, I got some important Post-it notes here, got a yellow legal pad, all the things.
Sarah Penna:
It was so fun as a kid. You're like, pens and Post-it notes, and the office supply closet was just like this heaven.
Chris Erwin:
My dad, he ran a psychology business and still does for 40 years and had his own office, and then every year he hosted a conference. One of my favorite things is that he would hire his children, me and my twin brother, and we'd have to lick 500 envelopes and put stamps on them. But we got to use all of these office gear, we thought it was the coolest thing ever. Then, after a few years, we're like, "I think we're getting sick from all of this stamp-licking."
Sarah Penna:
Yeah, probably.
Chris Erwin:
But separate story.
Sarah Penna:
That's really funny.
Chris Erwin:
So, a question, watching your father's entrepreneurial endeavors and also your mother, too, running the business, did you feel like, "Hey, when I grew up, I'm going to have my own business too."
Sarah Penna:
Honestly, no. So, I was an incredibly shy child. I was very quiet. My family likes to joke that they thought I was just going to buy a cabin in the woods and just frolic in daisy fields and that would basically be all I could handle. So, to the shock of everybody, of what I wound up doing with my career, so no, I was very directionless. I went to a very intense high school that was a college prep school. There was a lot of pressure to kind of figure out what you wanted to do. Frankly, I just didn't have any passions. I wasn't thinking, "Oh, I want to take over the family business or I want to be an entrepreneur." I didn't even have that language.
Sarah Penna:
So, in a way, that was great because what I wound up doing didn't exist when I was little. If I had said, "Oh, I want to be a lawyer or an actress or what ... " something that did exist, I don't know that I would've found the path that I did find. My parents never called themselves entrepreneurs. They were just, this is what we do and this is how we do it.
Chris Erwin:
Very interesting, Sarah. So, I'm going to put the puzzle pieces together here. Let's talk about another formative event growing up. You had also mentioned that you studied abroad in India, where you actually learned to speak fluent Nepalese. So, tell us about this transformative moment for you.
Sarah Penna:
Like I said, I was a very shy child. In college, I kind of blossomed, but maybe in the wrong ways. I partied a lot and just, again, was quite directionless. I was a literature major, which is just like the lazy ... No, I love being a literature major, but it is a non-major. It doesn't really set you up for business success. Originally, actually, I was going to travel. I was going to study abroad in Italy and I had this moment where I just looked at myself and said, "You need to push yourself right now. This is a moment." My college had an incredible study abroad program in Nepal.
Sarah Penna:
Long story short, they couldn't do it in Nepal. There were some civil unrest, so they moved it to India. I went to India and I lived in a place that didn't have running water, and I did my laundry for six months in a river. I got perspective that I never would've had. During that time I met up with a documentary film, I will say, crew in quotes, because it was just two white dudes traveling around not knowing what they were doing. They were in this tiny little village that I was staying. I was living in a monastery and because I spoke the language I could just hang out with the locals. It was very funny to them that this tiny, little white girl spoke fluent Nepalese.
Chris Erwin:
Did you take Nepalese in advance of going to India at all?
Sarah Penna:
No.
Chris Erwin:
So, you just picked it up in country.
Sarah Penna:
Yeah.
Chris Erwin:
Wow.
Sarah Penna:
Writing is very hard, but the language itself is very intuitive once you fit the pieces together. So, I would help them. Tourists would come. I lived in this monastery for a couple of weeks. Tourists would come and I would help them translate and negotiate and all this stuff. So, these guys came, they were filming. I was like, "I'll join up with you guys and translate for you and help you get interviews and that kind of stuff." Because if you speak the language, it just opens more doors. So, I wound up traveling with them, and one of them I wound up dating, but that's for another story. He was going to UCLA. I was graduating. He was going to UCLA grad school.
Sarah Penna:
I was graduating college and I wound up learning about documentary film and originally thought I wanted to go into documentary filmmaking. So, 2006 is when I was in India.
Chris Erwin:
Got it. Did you have an interest in media and the arts before you met this documentary film crew/attractive young man that you wanted to date?
Sarah Penna:
No, and I didn't have any connections and I didn't have any ... but, again, I was kind of, not in a disparaging way, but I was kind of an empty vessel, right? I had no idea what I was going to do and this thing really sparked me. I loved holding the camera. I loved seeing the story come together. I moved to Venice with him, and this is way too long of a story, so I'll just make it really short through a series of very wonderful coincidences, which involved me randomly picking a documentary film at the LA Film Festival and contacting the filmmaker. I got an internship at World of Wonder and that kind of started my trajectory in media.
Chris Erwin:
This was the first time you dated a documentary filmmaker. I look at this as a warm up for Joe. We'll get into that later.
Sarah Penna:
I only dated creative people, [inaudible 00:11:39].
Chris Erwin:
Another podcast for your wild party days at Pitzer College. All right, so that led to your first work experience at World of Wonder. So, tell us about what that company was doing and what your role was there.
Sarah Penna:
World of Wonder in 2008 was probably the most amazing place to work, I have to say. It was constantly drag queens coming in the office, and parties. It was just a wild time. They were filming the first season of Million Dollar Listing, which I was an intern on. They were filming the first season of Tori and Dean: Inn Love, the Tori Spelling Show, which I was an assistant on. They were filming Porno Valley. They were filming ... I mean, it was just like a wild, wild time, incredible company. I loved it. I also recognized that reality TV wasn't really for me. While I was working there, I also was making short films and uploading them to these two new websites. One of them was called YouTube and one of them was called Current TV.
Sarah Penna:
Current TV was Al Gore's network based in San Francisco, where you would upload short documentaries and then the ones that got the most votes, they would ultimately put them onto their TV network. So, I had a couple documentaries get bought and put onto the TV network and ...
Chris Erwin:
Were you doing this independently or as part of World of Wonder?
Sarah Penna:
No, no, totally separately.
Chris Erwin:
Got it. Again, I had no idea that you did this.
Sarah Penna:
Yeah. Now, we're in 2007, the first documentary that got picked up was about me getting my medical marijuana license.
Chris Erwin:
Okay.
Sarah Penna:
It was a very new thing at that time, and so I documented the whole journey of what it was like to get a medical marijuana license and I smoked a joint on-screen. When I got hired there, it would play in the rotation, and one time Al Gore came to visit the office and they had the TVs up in the office playing Current, and my documentary came on with me smoking a joint and meeting Al Gore at the same time. It was very embarrassing.
Chris Erwin:
I'm famous/I'm super embarrassed. What a mix of emotions.
Sarah Penna:
Yes.
Chris Erwin:
So, Sarah, I have to ask, you're working at World of Wonder, you're working on these incredible programs that are probably being sold to network TV, right? Not digital outlets and streamers. What was the catalyst that you're like, "I want to put my content on YouTube and Current TV." How'd that come to be?
Sarah Penna:
I just felt something more compelling about it. It felt more free. It felt like, somebody like me coming from Utah with literally zero connections could make something and have it be put on TV within a couple of weeks. Then, on YouTube, you couldn't monetize at the time. It was very rudimentary. I don't know, I just fell in love with it.
Chris Erwin:
YouTube was founded in 2004 and then, was it bought by Google in 2006, if I remember correctly?
Sarah Penna:
I think that's right. Then, 2007 Time magazine made you, the cover and the Person of the Year was you, and it was a mirror. I was like, that to me was a moment where I said, "Okay, this is really a thing and I want to be involved in it."
Chris Erwin:
I think you start meeting some pretty important early personalities and movers and shakers within digital video. I think you met one of the founders of what eventually became Maker Studios, I think. Was it Danny Diamond or Danny Zappin? Is that the same person?
Sarah Penna:
That's the same person. His YouTube name was Danny Diamond.
Chris Erwin:
Got it. So, how'd you meet Danny?
Sarah Penna:
So, I was working at this very small web series production company which, yes, that was a thing in 2008. So, I got laid off right from Current because the financial crisis hit. They laid everyone off. They sold the network to Al Jazeera. I moved back to LA. I had been up in San Francisco, moved back to LA, started working at this web series production company, got introduced to Danny through some mutual friends. He said, "Look, I just got some money from YouTube and I'm filming this thing for this new channel that we're starting called The Station. Why don't you just come up and see what it's like?" So, I go up there and unbeknownst to me, it was every big YouTuber at the time. It was ShayCarl, and KassemG, and Shane Dawson, and Danny, and Lisa Nova, and everybody-
Chris Erwin:
OG names.
Sarah Penna:
Funnily enough, my future husband was supposed to be there, but I don't remember exactly what happened, but he wasn't there.
Chris Erwin:
Okay. So, you're doing this. Are you thinking to yourself, "Oh my God, I'm having so much fun. This is a crazy world." You're embarking on a very exciting career adventure. You're seeing this change in the media industry. Did you feel that at the time or was it more of, "This is fun. I'm meeting some cool people. Let's see where it goes."
Sarah Penna:
It was more the former. I really thought to myself, I want to be involved in this in some way, shape or form. I really don't know what this is.
Chris Erwin:
Yeah.
Sarah Penna:
Not to say that I'm a genius, but I just had something in my gut that said, you've got to be involved in this somehow. You have to make this happen.
Chris Erwin:
That instinct proved to be pretty powerful for you in starting Big Frame, which we'll get to in a little bit. So, you meet Phil DeFranco, a prominent OG YouTuber, and I think you become a producer for him and his team, right?
Sarah Penna:
Yeah. So, he hires me in November of 2009 and I worked for him. We launched a new channel, which was like a gaming channel for him. I did PR for him. I handled brand deals for him. I edited because I still knew how to edit at the time. A skill I'm very sad that I lost. That was just an amazing experience. He had split from Maker TV at that time and so, we were kind of running our own thing. I think Phil, to this day, is one of the most brilliant, genius content creators that's come out of the YouTube space. He's just continually reinvented himself and not, just kept doing what he did and stayed successful. So, that was a masterclass in how to run a successful YouTube channel.
Chris Erwin:
Got it. Also, through Phil DeFranco, you actually end up meeting your future husband, Joe. So, he actually showed up on time for production or maybe a first day that you guys had. How'd you first connect with him?
Sarah Penna:
Before Phil hired me, I got invited to a Halloween party at his house and Joe was there, and I had actually very embarrassingly seen Joe's videos before meeting him. I was producing a short film with a prominent YouTuber at that time named Olga Kay and we were just doing some fun. We actually crowdfunded it. We raised a couple thousand dollars and made this thing called Olga Kay's Circus. We wanted Joe in it because he had a lot of subscribers at the time. He had 10,000 subscribers, so he was in the Top 100 YouTubers.
Chris Erwin:
Oh, my God.
Sarah Penna:
Can you believe that 10,000 subscribers would get you there at that time? So, we wanted Joe in it and we wound up meeting at this Halloween party and then Phil connected us and match made us a little bit, and we went on our first date in January of 2010.
Chris Erwin:
Then, how soon were you married or engaged after that?
Sarah Penna:
So, we went on our first date in January 2010 and then we got engaged in September of the same year, and then we were married the next year.
Chris Erwin:
First date with Joe, January 2010. Engaged, September 2010. Married, 2011. Interesting timing because you launched your first company, Cloud Media, I think in 2010, and you're sharing production space with Joe. So, you're tripling down on the digital media space. You're literally married to a creator. You're sharing space together and you're founding your own media company. But tell us about what was the origins of Cloud Media.
Sarah Penna:
Yeah, so I basically, again, I didn't say, "Oh, I'm going to be an entrepreneur. I'm going to raise money." I didn't have a blueprint for that. I didn't know what I was doing, which I think you'll hear a lot of entrepreneurs say, that's kind of a blessing in a lot of ways. So, I did a very big brand deal for Joe. I was able to negotiate a high six-figure deal for him, and using the percentage that I took as his manager from that, I started what I called the Cloud Media. I bootstrapped that company for a year and a half and just operated it based off of the percentages that I was taking from brand deals that I was doing for influencers and YouTubers, whatever we called them at the time.
Sarah Penna:
My difference was I would start out by not doing contracts with them. We would just have a understanding, which is very common with management companies. Most managers don't have contracts, right? That's more for agents and Maker and Fullscreen at the time were insisting on contract, and Machinima. I was like, "Hey, you don't have to sign a contract with me. Let me just show you what I can do. This is my fee, and if you like it, then you can officially sign onboard and we can go from there." So, that worked really well for me. So, I started signing. I think by the time that we re-founded the company as Big Frame, I had about 30 clients.
Chris Erwin:
I remember, that was one of the things that attracted me to Big Frame. This is definitely the reputation in the space, is that you had built, Sarah, one of the most premium networks of YouTube creators that existed. Really high quality YouTubers that worked together, that worked with you, and there was really good camaraderie and trust and rapport amongst everybody, and it felt very special and different. So, it's clear that was based on these initial values of, I'm going to do good work and prove myself to you, and that's how we're going to develop a business relationship. Until I came in and then I was like, "Sarah, we need contracts."
Sarah Penna:
A big influence on those ... those are, me as a person, my core values. But DeStorm, who was my second client outside of Joe, who I just cold called and was living in New York, he really sort of guided me in how he wanted to be treated, how he felt business should be done. He really helped collaborate with me on some of those foundational core values that we carried throughout the duration of Big Frame really.
Chris Erwin:
So, speaking of that, you're literally learning from one of your clients. Were there any other mentors in the space as you're figuring ... this is the early days. We still say we're in the Wild West of the creator economy, that was the real Wild West of YouTube. So, probably, very few people to learn from. Did you have anyone that you would call on a regular basis and say, "Hey, let's just share notes."
Sarah Penna:
No, I didn't. Unfortunately, I think the space became quickly competitive. I would say at the beginning there was a little more collaboration between, let's say, like Danny and George Strompolos and myself. We would go up to YouTube and talk to them together as a group and what our needs were and share creator feedback. I think once money started pouring into the space we got a little more siloed, which is understandable, but no, I didn't. I was really out there in the woods like, "Okay, this is what we're doing now." Not really knowing what that was. Just saying, "Okay, this is how we're doing it. This is how our contracts are going to look."
Chris Erwin:
How old were you at this point?
Sarah Penna:
I was 26.
Chris Erwin:
So young. So, then, I think, well, as part of that dynamic, as the space got more competitive, George is launching Fullscreen, Danny is launching Maker, more venture capitals moving to the space. The Google Original Channels program launches, $200 million dedicated fund to help creators produce higher quality content for YouTube, which will then attract more advertisers and more revenue. So, I think at this point is when you eventually connect with Steve Raymond, the co-founder of Big Frame, which got its origins from Cloud Media, right?
Sarah Penna:
Exactly, through a mutual friend. I was on the hunt for a CEO. I recognized my limitations. I did want to raise money. I didn't know what that entailed. Frankly, I needed more of a grownup. I think my skillsets were really great on the creator side and the brand deal side but as the industry started growing up, I very quickly recognized I need someone who has a skillset that I just don't have. So, I met Steve and we hit it off, and we had a couple meetings, and he just jumped right on in. We decided to re-found the company. None of us liked the name because people thought it was like cloud computing and, which is fair, and it just made sense to start fresh. It also gave us an opportunity to have contracts with people and just structure it in a way that would allow us to raise money. So, yeah.
Chris Erwin:
Hey, listeners, this is Chris Erwin, your host of The Come Up. I have a quick ask for you. If you dig what we're putting down, if you like the show, if you like our guests, it would really mean a lot if you can give us a rating wherever you listen to our show. It helps other people discover our work and it also really supports what we do here. All right, that's it, everybody. Let's get back to the interview. I have to ask, I started the advisory firm five years ago that I have now. I started that with a co-founder and then quickly realized, "Hey, I have a certain vision and I'm going to build this in my unique way." So, restarted the advisory firm with me as the solo owner.
Chris Erwin:
I've realized bringing someone else into the mix that really gets the vision that I feel comfortable sharing this with is difficult for me. I just know my personality, and founder issues are always like the hardest things in any startup. How did you feel in terms of bringing Steve on? Did you feel comfortable? When you met him, you're like, "Hey, this guy gets it. We have shared values and sensibility." Were you able to develop a sense of trust with him pretty quickly or did that take a decent amount of time?
Sarah Penna:
I trusted him very quickly. Although, I sometimes felt like that scene in The Little Mermaid where she's like, closes her eyes and signs her voice away, I was like, "Am I doing that?" I definitely had that moment where I was like, "Am I letting somebody in I don't ... ?" We had three meetings before. I was like, "Here's a third of my company." We had another co-founder, that's it. We don't need to [inaudible 00:25:56] but basically, here's half of my company. I definitely had people who were like, "Don't think you should have done that." But to me, the value of Steve and the ability ... I did trust him. The main thing for him was, he was very clear that he didn't want to disrupt what I was doing. He was very impressed with the business that I had built on my own and he didn't want me to feel like he was coming in to change that.
Sarah Penna:
He invested some of his own money and valued the contracts that ... I was like, I don't have that money to invest, but he was like, we should value the money that's in the bank for Cloud Media and the value of the contracts or the agreements that you have with the talent. So, I was like, "Okay, that's really fair." He made it easy. That, for me, was important. I don't like complicated things. I don't like long dragged out negotiations, and I was ready to just get to work. So, he was someone who was like, "I know how to do this. I have the connections. I don't want to disrupt your work." He's a good guy, I could just tell, and we made it work.
Chris Erwin:
I love that. I know Steve very well. He was my boss for three or four years and learned an incredible amount from him. But I think you're right, Sarah, the thing that stands out about Steve was just a good guy, good moral compass, and he doesn't let great get in the way of good enough. He'll just say, "This is good. This is thoughtful. We've talked this through. Let's move forward." But like you said, he's very fair in how he wanted to value the company. I didn't know that, but it's totally on brand for him. So, curious, I joined in the summer of 2012, I was ...
Sarah Penna:
Oh, boy, what a summer that was.
Chris Erwin:
So, I went to business school after being a Wall Street banker for a few years. Then, I was in school in Chicago and I worked while I was there for Pritzker Capital, which was an early investor in the YouTube MCN ecosystem. They had invested in Big Frame. They invested in Awesomeness. We eventually joined forces, and that is how I met Steve first. I was talking to Rishi, Rishi or Matt McCall and they're like, "Yeah, when you fly out to LA for these meetings, we invested in this company called Big Frame. You should check them out." I was like, "I don't even understand this company's business model, but digital video that feels like the future. I'll take a meeting."
Chris Erwin:
I remember meeting Steve and we had lunch on the Promenade, and then I came in for my first interview. I walked into the office, this is on Sunset Boulevard in the old National Lampoon building. I walked in and I walked into a ... it feels like we were just working out of someone's semi-living/work space. I was like, is this a company? Is this like what West Coast work is like? Because I had grown up working on the East Coast. I walked into the back room and in the back room there's this little circular table. Steve's there. Grant Gibson's there. Jason [Szymanski 00:28:39] is there. Then, you're at your back desk.
Chris Erwin:
So, you're supposed to be part of this interview, your head's down on your computer. They're like, "Oh, that's Sarah over there." I looked over and I'm like, "Oh, I guess this is what founders do in digital media. They're just heads down in their computers. Maybe I'll eventually talk to her over time." That was my first introduction to Big Frame. So, I just say all of this as I was like, this is like a precursor to just wildness that ensued thereafter. We had just gotten the Google Original Channels funding, raised some venture funding on top of that, and then it was like, build these five different content verticals. I'm curious to hear from you, there are so many memories from back in the day, but as you think about some of the war stories from the trenches, what are some things that stand out?
Sarah Penna:
Oh, my God. Well, your interview definitely. Also, you failed to mention that we had two absolutely crazy wiener dogs running around the office as well. Yeah. I think we had outgrown the office. We were in the National Lampoon office. It was so janky and we ... eventually, we're on three different floors. We moved sales to an office down Sunset. We were sandwiched between a strip club and a Trader Joe's. Then, Joe and I were renting a house off of Sunset, like walking distance, and eventually, we moved the talent team to my dining room table. Joe at that time was putting two YouTube videos a week out on his MysteryGuitarMan channel, and he would stay up all night and then he would sleep until 2:00 PM and he'd come downstairs.
Sarah Penna:
It was like, Lisa, Byron, Megan, Rachel were at our dining room table, and Joe was rolling out of bed as one of our talent but also my husband. I would cook dinner for the talent team at my house. We would take talent meetings in my living room, which was just so bizarre and unprofessional, but worked. We would also throw these wild game nights, board game nights, so Settlers of Catan was very popular at that time. We would have 40 YouTubers in our house playing Settlers of Catan with multiple games going on. My house was like a YouTuber hotel. We had a guest bedroom. Jenna Marbles came and stayed. Lena came and stayed with us. DeStorm. It was very wholesome and very duct tape and bubble gum feeling. We were just kind of figuring it out.
Chris Erwin:
I remember that. I remember Steve explaining, "Oh, we're having a reorg." The reorg was like, "Okay, we're moving the talent team to Sarah's house across the street." Then, production goes upstairs into a semi-new office that we got. For us, at that size, that was like a big deal.
Sarah Penna:
It was. Yeah. Oh, man, when we moved to our Lindblade offices, was that like heaven on earth to have an actual office, but that was later. Another funny memory I had was when Max first started. He had come from a place where he was doing really, really big deals. I handed him off a brand deal opportunity for $1,500 and he went in the bathroom, which by the way was right next to everybody's desk and splashed cold water on his face. We had moved him from New York to LA and he was just like, "What am I doing?" Ultimately, Max, obviously, was an absolute rockstar and built out that sales team to just be very profitable and doing really well.
Sarah Penna:
But that first deal was $1,500, and that was just par for the course at that time. It was shocking to people coming from the outside and then once it clicked, it really clicked and you're like, "Okay, I get what we're doing here." But there was just a lot of duct tape and bubble gum.
Chris Erwin:
I think Max is going to be an interview on this podcast coming up. I have interviewed Dan Levitt. When I think of Dan, we talk about when I first interviewed him and I think he showed up in some shiny suit and Jason Szymanski in the back office is pointing. He's like, "Chris, we're launching a music vertical and we have a new interview candidate coming in." I would just look out the window and I would be like, "These characters." I was like, "I've never worked with any characters like this before." I come from Wall Street, so it's was like everyone's in a suit and tie. I see people coming in shiny suits and I'm just like, "I think this is the new world I'm in. I'm just going to roll with it."
Chris Erwin:
So, it was such a rollercoaster of fun. So, then exciting things are happening and eventually, we move into this big new office, I think on Lindblade in Culver City. We're closer to Maker. We're closer to Fullscreen. Then, we run a process to sell the company. I'm just curious to hear from you, Sarah. Bringing Steve on was probably like, that was a big decision for you, but then hiring an investment bank that's going to run a sales process, we're going to have new ownership and potential leadership. What was it like for you to make that decision?
Sarah Penna:
That was really hard. I just wanted to keep the party going. Like many young entrepreneurs, I think I tied my identity completely to this company. And my husband was in the next office, he was a client. We went home, we would talk about brand deals over dinner. My entire identity was Big Frame. All of my friends were in some way, shape or form involved in this company. My family would tease me when I'd go home for Christmas. They're like, "Are all of your friends under contract?" I was like, "Yeah, kind of."
Chris Erwin:
Maybe a nice way to go through life.
Sarah Penna:
Yeah. I mean, we know where we stand with each other. No, but I just, I was so immersed that the idea of losing control was hard. I think I also felt my limitations as a founder and that's hard to come up against when you're kind of, I don't want to say that I was arrogant, but I was really confident and I felt really good about how I was running things and running the company. Then, we got to a point where my limitations and our limitations became evident and that's hard. It was hard and it was also exciting because it is, under most circumstances, it's a great thing. I also just had never been through anything like that, so I let a lot of anxiety get to me.
Sarah Penna:
I let it completely consume me. I'll be totally transparent. I would cry on the bathroom floor, like, what am I doing? There was a lot of doubt. I think that was probably the biggest strain on Steve and I's relationship, is how to go about this and how to present in the room. That was a big source of stress for us. Who's going to present? Is it me? I've been out there kind of the face of the company. I've been doing all the panels, and the VidCons, and the press, and the creator. Or is it Steve, who is the CEO who, frankly, should be doing it?
Chris Erwin:
That was unclear. We brought in an executive coach to help us figure that out.
Sarah Penna:
We did. Ultimately, like many of these things, it just came about through relationships and less about going and pitching, and the relationship that I had kind of built and cultivated, and changing landscape. There were a lot of factors, but that was very stressful. Then, in New Year's Eve of 2013, while we were in the middle of this process, I found out I was pregnant.
Chris Erwin:
Just to pile it on.
Sarah Penna:
Just for fun. Thought that would be a great thing to add on to the plate at the time. It's so funny because I think back a lot to the moment where I told Steve that I was pregnant, I was hysterical. I couldn't even tell him. I was crying so hard. He was like, in a very nice way, "I don't understand why you're so upset. This is a good thing." I was like, "What?" I thought he was going to be so mad and that this was going to ruin everything. I tell that story only to say, I think that our culture makes young women feel like ... and I had a lot of people tell me, then opened up to me over the years, that they felt like they can't have kids because of ... that moment of, "Oh, my gosh, I have to now disclose this thing."
Sarah Penna:
Even if it's illegal to not move forward with something because someone's pregnant, you can still find other ways. So, I thought I had completely ruined everything and that was ... I'm very sad about that looking back, but Steve really was like, "This is awesome. I'm so happy for you. Don't even think about it. Nobody's going to bat an eye." That was true. I wound up giving a keynote at VidCon eight months pregnant and we sold the company, but that was very stressful. Also, I couldn't drink. It was a lot. We were celebrating and I was like, "You know what? I'm having a glass of champagne because I'm ... You all have been drinking through this very stressful process and I haven't."
Chris Erwin:
More like being pregnant was also a launching pad for you to launch the mom's vertical at Awesomeness-
Sarah Penna:
Yes.
Chris Erwin:
... which came thereafter but, yeah, just to add some context on some of the notes here. I remember in the MCN days, there was the early Awesomeness launch in 2011 and then it was sold to DreamWorks, I think, in 2012, and everyone got really excited. But then, the YouTube MCN winter hit and there was a lack of capital flowing into the space. People were saying like, "Are these businesses real? Are they viable? Are they just going to get consolidated into traditional media?" It was harder to raise capital, and there was a lot of doubt in the ecosystem. Then, in 2013, I think in the second half of the year, Disney bought Maker for $500 million. Then, we made a decision, we're like, "There's a moment in time here, let's hire an investment banker." Shout out to Brian Stengel.
Sarah Penna:
Yay, Brian.
Chris Erwin:
We kicked off a process in the second half of 2013 and sold in April of 2014 to AwesomenessTV. Look, I was very intimately involved in that process with you and Steve. I saw how hard it was on you guys. You guys were just carrying an incredible burden. I think something, too, like a theme of your career, Sarah, where you have this passion for overlooked communities. I think you getting into the digital fears, there's a way to service these new creator voices in an exciting way with new business models and new distribution models. I bet there was some fear of ... A lot of this business was your friends and your friends actually had equity in the company.
Chris Erwin:
You had given equity out to a lot of creators when you launched Cloud Media and Big Frame. What if all that was going to change with this new ownership? I think that was probably a moment that you were concerned about. I don't know if we'll ever make all these details public, but the sales process, I just remember like one week it would be super exciting. We're flying to New York for this big meeting with a traditional publisher. Conversations are going really well and then they completely flat lined and go nowhere. Then, the next week, it's like really exciting, but eventually got to a great result.
Sarah Penna:
At three in the morning, while we were all still at the Big Frame offices collapsed on the floor. Yes.
Chris Erwin:
We end up selling to AwesomenessTV. I think that was a very exciting experience for all of us. I think Awesomeness was, in a way, they were the Goldman Sachs of the YouTuber economy back then. They built an incredible team and network, and I think we all really learned a lot from Brian Robbins and Joe Davola. Just amazing creative visionaries. You also launched a mom's vertical while you're there with Snooki and JWoww, you do the corporate thing for, I think, two to three years then it's okay, what are you going to do next? I think that you start seeing another underserved community, which is the romance community, and you think about launching a company there. So, what's that quick story?
Sarah Penna:
While I was running the mom's vertical, which as you said, I think my big passion in life is finding underserved communities and overlooked communities and creating content around them. I felt at that time that the content that was out there for moms was just not great and it was a huge market. So, Brian had brought on a woman named Lisa Berger who comes from E! and has had a very long traditional media career. He brought her on to do the Go90 programming and the YouTube programming for the Awestruck, which is the mom's vertical. We hit it off and we have a great time together running this crazy thing, and we wind up optioning a romance novel and turning it into a series for Go90.
Sarah Penna:
Very, very, very long story short, we crashed Go90 because of how popular it was, despite everyone telling us it wasn't going to work. I'm a huge reader and I love romance. I was looking out at the landscape and saying, "You know what? I think romance is going to have a moment, like what Marvel did for geek culture, where now it's cool to be a geek." I think we're at this point, this is 2017. Trump is in office. Women are pissed off. We're sick of all of the stuff that we're like being disparaged. We're sick of all of the female characters in popular shows being killed off or assaulted or whatever. We just want happily ever afters. Everyone's disparaging this romance community as just sad cat ladies, single cat ladies eating bonbons.
Sarah Penna:
I was like, "We're going to go prove them wrong. Fuck this." Similar to the early days of YouTube, where I saw these influencers have a chip on their shoulder where, "Oh, you just think I am a single dude making videos in my mom's basement." There was a similar misconception about the romance novel fandom. The romance novel fandom is actually incredibly educated, diverse, not just in who they are, but where they live and their socioeconomic status. They're incredibly feminist and they know that it's fun and cheesy. They know that there's a wink and a nod. We set out to create a space to celebrate that, not make fun of it, not disparage it.
Sarah Penna:
It's a fascinating culture, a fascinating community. I was not part of it in the sense of participating in the fandom, but I've been a long time romance novel reader and I was in the closet about it because I was embarrassed. So, we banished the term guilty pleasure because we don't want anyone to feel guilty about reading romance. So, we set out and we created a digital platform and a newsletter, and then started optioning novels to turn into movies and TV shows. We got a first look deal with CBS. We have a deal with Audible and we have a deal with iHeartRadio. Our daily podcast is going to launch in February. So, really set out to just create a space where people who actually know and love romance are creating the content.
Chris Erwin:
I love that, Sarah. It's also very interesting, when you came to me and I was like, "Sarah, what are you thinking about? What's up next?" You told me about the romance community. I did a double take and I paused because I'm like, "Wait, this is such a huge community." I think in traditional media, think of all the rom-com movies, but nothing in digital. I'm like, "Yeah, this is totally overlooked. Why is no one else talking about this? This is huge." I think it's very interesting how you characterize it as ... yeah, often when I say, even to this day, "I'm going to watch a rom-com." I'm embarrassed as just an older male saying that, but why? Why do we say it's a guilty pleasure?
Chris Erwin:
Why is there any guilt about a really fun love story? When love is one of the number one drivers of happiness and a common theme that all of us talk about around the dinner table and with our friends.
Sarah Penna:
Why is being a horror fan, seeing people get murdered, why is that not looked down upon, but seeing people be happy is? Very interesting.
Chris Erwin:
Very interesting points about the romance community. So, you are at Patreon now. Are you still co-running Frolic? What is happening with Frolic Media?
Sarah Penna:
Yeah. So, Lisa has taken over and is helming Frolic. I continue to be a strategic advisor and obviously, care very deeply about the future of where that company goes, and cheerleading and championing them from the position that I am in now.
Chris Erwin:
I think it's a very exciting space. We interviewed Naomi Shah, the founder of Meet Cute on this podcast as well, which does these, call it like rom-com microcast. I started listening to those over the past six months and I absolutely love them. Bite-sized nuggets of just rom-com joy in audio form. So, I believe in it. Pay attention to RockWater's 2021 predictions about underserved communities because I think this could be ... potentially, we will publish this likely in the end of January. It could be a good cover note that you're sending to any potential investors or partners for you.
Sarah Penna:
Absolutely. Thank you.
Chris Erwin:
Believe in the thesis. Okay. So, before talking about Patreon, I just want to talk about another concurrent journey within your family in the media space, which is your husband, Joe. He's been a creator for over a decade. I think in the past few years, he was digital native on YouTube doing incredible stop motion biography, but always wanted to cross over. I think he's realized some incredible success recently. Why don't you tell us about that?
Sarah Penna:
Joe is just, I obviously am biased, but he has an incredible creative mind. He's good at everything he does, which is so annoying, but I love him for it. He is good at languages, and art, and music, and math, and all of that really combined and you can see that reflected in the fun, playful nature of MysteryGuitarMan. But like you said, ultimately, he really wanted to direct movies. When he first started down the journey, there was a trend of these influencer-helmed, one to two million dollar movies that would be VOD and make back their money. You'd put the how many subscribers that YouTuber had and how much we were going to sell it for, and set download on iTunes, and that was where his agency and his management team was kind of pushing him to.
Sarah Penna:
He said, "You know what? That's not really the path that I'm going to take," and wrote a movie called Arctic, which is a mostly silent movie helmed by a 50-something-year old Danish actor named Mads Mikkelsen. So, quite the opposite of an influencer-helmed comedy. Joe willed that movie into existence. There was every hurdle against him. He had to start from the bottom. His YouTube channel didn't help him because he wasn't doing an extension of MysteryGuitarMan. He didn't want to be in front of the camera and he did it, and that movie got into Cannes. We went to Cannes, and it premiered and got a 10-minute standing ovation.
Chris Erwin:
Whoa, I did not know that. A 10-minute standing ovation at Cannes?
Sarah Penna:
Yeah.
Chris Erwin:
Good for you guys.
Sarah Penna:
So, that was just ... walking that famous red carpet, and for me, it was wonderful because I ... He had finally gotten traditional management. I was no longer managing him. So, I actually got to go to Cannes just as his wife, as his plus one. I was not worrying about logistics and getting him to his interviews on time. I still was but I wasn't [crosstalk 00:47:45].
Chris Erwin:
It takes a village to get Joe to an interview on time.
Sarah Penna:
Truly, especially in a foreign country. That's a whole other story. So, that was just a really incredible moment to see and he, off the heels of that, they announced at Cannes his next movie, which was called Stowaway, which had Anna Kendrick and Toni Collette, and Daniel Dae Kim, and Shamier Anderson in it. It premiered on Netflix last year. Now, he is working on so many new projects and so, hopefully we'll be shooting another one this year. He's loving it. He's very good at it. He has the personality to be a director. Very in control of his set, he's very calm, creative, collaborative and it's just very, very cool to see. You know what? He went through the grieving process of letting go of that YouTube channel and he's out on the other side and making things happen.
Chris Erwin:
That's awesome. I remember when we heard that news, there was a lot of text threads amongst the Big Frame community. I remember texting with Byron and with Max, and with Steve about, "Look, how awesome is this about Joe? Have you heard?" We know that he'd been working so hard and he was just such an incredible creator from day one. So, we're pumped for him and it feels like this is just the beginning for what he's going to do. Right?
Sarah Penna:
It really feels like he's on the trajectory, for sure.
Chris Erwin:
Yeah. So, look, you and Joe, as this media power couple continue to evolve. Speaking of the most recent step in your evolution, as we work to the final segment of this interview, Sarah, you guys moved to Santa Barbara, I think during the COVID pandemic. Then, you recently, someone that we've known mutually for a while, Avi Gandhi, you started talking to him at Patreon and saw an opportunity to join the creator team over there, which is your latest creator adventure. So, tell us about what excited you about moving to Santa Barbara and your new role at Patreon, and what you're doing over there.
Sarah Penna:
Yeah. So, I wanted to move to Santa Barbara for 10 years and it never was feasible or realistic, and I, like many people during the pandemic, had a very hard year. Living in LA just became very challenging. Jonah, my son, our son is, when the pandemic started was five, and now he's seven. We just felt if we were going to do it, it was now or never because he started having his best friends and it just becomes harder as they get older. So, we just pulled the ripcord and we did it with no plan, no idea if it was going to work out and it has been just an absolute dream come true. We love it up here and was fortunate enough to be able to join this incredible company, Patreon.
Sarah Penna:
I joined in November and like many things in my career, it just felt so right that I couldn't pass it up. A big driving factor was, obviously, it's very hard to leave my start-up and to leave Frolic. I did it in the best way I could, but for me, going to a place that really shares my values in that creator space, I started seeing the creator economy and the interest in it heating up in a way that I haven't seen in a long time. Similar to when I met Danny all those years ago, and I was like, "I need to be a part of this." I felt that the train was leaving the station without me and I wanted to get back into the creator space.
Sarah Penna:
I took a lot of time looking at what is the right company for me, for my values, and for what I want to do. Patreon is kind of a unicorn, a unicorn in the sense that it's valued at a unicorn status, but also a unicorn, for me, because it hit this very narrow target of what I was looking for.
Chris Erwin:
Just remind me, how long has Patreon been around for? Because I remember Patreon, early days of when I started Big Frame in 2012. Is that right?
Sarah Penna:
Yeah, eight years.
Chris Erwin:
So, now at Patreon, what team are you running there and what are you focused on for 2022?
Sarah Penna:
I live on the creator partnerships team and I run a team called Launch. We are responsible for giving creators white glove experience for launching their Patreon pages. We have teams that are going out and sourcing those creators. Once they come to us, they are pretty excited about the platform and we help them figure out what tiers are best for them, what banner image is going to look good, and really help them drive towards their launch date. These are creators that range in all kinds of sizes and all kinds of ... I'm talking to someone who makes leather, like leather wallets and leather goods, and we're talking to big YouTube creators and celebrities, and we're talking to everybody in between.
Sarah Penna:
It's just a really exciting time to be at a company like Patreon that's been in the creator space for so long, is helmed by a creator, and is going to continue to be a real player in the creator economy as it goes forward.
Chris Erwin:
It seems that there's incredible traction for your business where I think there was a recent announcement. The team is currently 400, but you're doubling the company to 800 people this year. Is that right?
Sarah Penna:
Yes, that's what they say.
Chris Erwin:
Well, look, I think the market tailwinds are definitely behind them. I think, yeah, it's a really exciting evolution. We've written about this extensively at RockWater. YouTube created these new business models for creators, where they can publish content online and then participate in ad revenue through YouTube's AdSense program. Then, the chance to distribute content to other social platforms and participate in ad revenue there and then doing talent deals, brand integrations, and getting paid off platform. Then now, I think there's this incredible movement with all these creators, the audiences that they bring, the fandoms that they generate, the engagement that they generate on these platforms, they're the real moneymakers.
Chris Erwin:
So, how do you give them more tools though, to also not only build these platform businesses, but their own businesses? So, Patreon doing that, allowing them to have direct relationships with their fans, get access to contact information, monetize in different ways behind a paywall, different types of subscription content, whether it's video or audio, whatever else. I think what you guys are doing is a beautiful thing. We need more companies thinking like you. So, I think that you guys are really well set up for success, and I'm excited, Sarah, for the different communities of creators that you guys can represent, that have a need, that don't have the tools from other platforms that are overlooked right now yet, again, going back to what you do best.
Sarah Penna:
Thank you. I absolutely agree with all of that. I have said for years, as some people, not many, but a lot of people in the creator space, you need to own your audience. Renting your audience is not sustainable. You need to build community. You need to not just be on a conveyor belt of content, You really need, as a creator in this space, the tools are there for you to build a sustainable business and to not be tied to the whims of platforms and algorithms. There's a big conversation about creator burnout. Patreon is positioned to help creators solve some of these big issues, big and, by the way, nuanced issues. It's not just, oh, these platforms are bad and we are good at all.
Sarah Penna:
These platforms are great and you need to build up audiences on your podcast and on your social. If you are able to have ... I'm a really big a fan of Seth Godin's 1,000 true fans idea. If you can build out 1,000 true fans who are on your Patreon, you might be covering your rent. You might be covering your rent plus plus, and you might be making a really good living. That's what we want. We want to empower creators and we're really set up to do that. It's just an exciting time to join the company.
Chris Erwin:
Before we wrap this up with the closing rapid fire round, Sarah, I just got to give you some big kudos here. You legitimately changed my life. I'm trying not to become emotional here. I look back on my past career over the past 10 years and everything that I've done, being able to found RockWater is a function of you, starting Cloud Media and Big Frame, and then taking a chance on me. I had a very different background than someone that you had ever typically hired before. I'm sure that you needed some convincing from the rest of your leadership team.
Chris Erwin:
But what I have learned with you, the pedigree that I've gained and the experience has not only been so personally transformational, all these new relationships that I've built, women that I've dated and just incredible friendships and all of the above, it's really set up an exciting career for me. Something that I wake up to, excited to do every day. I see a lot of incredible potential going forward. It's a function of you taking a chance on me and getting early into the digital video MCN days. So, I am very, very thankful. I think there's many people that have very similar sentiments to what I just shared.
Chris Erwin:
So, I'm probably speaking on behalf of many. So, big kudos to you, and particularly to call out, I don't come from a creative background. When I came in and was very systematic and operational, I wanted to scale the business, it took me a while. But seeing how you ran the creative team, how you nurtured the culture, when you brought in Rachel and Megan Corbett, and Lisa Filipelli, and Byron, and people that I spent a lot of time with and really learned an incredible amount from, it really all stems from you. So, Sarah, you have been an incredible person in my life. You did incredible things for all the talent at Big Frame.
Chris Erwin:
You are now doing the game again, with Frolic and with Patreon, and I wish you the best. As you know, anytime that you need anything, sometimes we don't talk for six months or a year, but when we do, we pick up very, very quickly. I am a massive supporter of everything that you do. So, call me whenever you have a need.
Sarah Penna:
Thank you. Now I'm crying. Thank you so much, Chris. That means a lot to me.
Chris Erwin:
Very well-deserved. Okay. So, now, let's move into closing rapid fire. Six questions. The rules are, you can answer in one sentence or in one to two words. Do you understand the rules?
Sarah Penna:
Yes.
Chris Erwin:
Okay. Here we go. Proudest life moment?
Sarah Penna:
Having my son Jonah.
Chris Erwin:
What do you want to do less of in 2022?
Sarah Penna:
Less complicated.
Chris Erwin:
What do you want to do more of?
Sarah Penna:
More space in my schedule.
Chris Erwin:
I like that. Advice for media execs going into 2022?
Sarah Penna:
Don't believe all of the hype and just keep your eye on the ball.
Chris Erwin:
Any future start-up ambitions, Miss Entrepreneur?
Sarah Penna:
God, I hope not. No, not as of right now. I am very happy not running a company right now.
Chris Erwin:
Not necessarily off the table. That's basically what you're saying.
Sarah Penna:
It's never off the table with me.
Chris Erwin:
Last one. This is an easy one. How can people get in contact with you?
Sarah Penna:
Sarah@patreon.com.
Chris Erwin:
Very easy. All right, Sarah, this was a true delight. Thanks for being on the podcast.
Sarah Penna:
Thank you so much, Chris. This was so much fun for me, too.
Chris Erwin:
Wow. That interview with Sarah just flew by. I felt like there were so many more things that we could have discussed. We'll have to do another podcast together. Yeah, I admit I got a little teary-eyed at the end there just going down memory lane with her. She was really formative in my career and, yeah, that really hit me at the end. I was not expecting that. All right. So, a few quick things. Our Livestream Commerce executive dinner is coming up. The date is now March 10th. We are 98% close to confirming that with our sponsor. But if you're interested in attending, shoot us a note. You can reach us at hello@wearerockwater.com.
Chris Erwin:
Also, we are hiring. We're looking for interns, undergrad and MBA level, and also a full-time analyst. We are growing all things creator economy and we need help. If you're interested, you can apply at jobs@wearerockwater.com. Lastly, we love to hear from our listeners. If you have any feedback on the show, any ideas for guests, just reach out to us. We're at tcupod@wearerockwater.com. All right, that's it, everybody. Thanks for listening. The Come Up is written and hosted by me, Chris Erwin, and is a production of Rockwater Industries.
Chris Erwin:
Please rate and review this show on Apple podcast and remember to subscribe wherever you listen to our show. If you really dig us, feel free to forward The Come Up to a friend. You can sign up for our company newsletter at wearerockwater.com/newsletter and you could follow us on Twitter @TCUpod. The Come Up is engineered by Daniel Tureck. Music is by Devon Bryant. Logo and branding is by Kevin Zazzali. Special thanks to Alex Zirin and Eric Kenigsberg from the RockWater team.