The Economics of Motion Design with TJ Kearney

Executive Producer and Oddfellows Co-Founder TJ Kearney shares how much it costs to run a studio at the highest level of motion design.

Motion Design is an extremely creative field, and most of us get into it for that reason... we like to create. We like designing, animating, and solving problems visually. But, it's also a business. In order to keep doing Motion Design, especially at the studio level, you have to run a profitable business. Which is not something that most of us are trained to do. If you're a freelancer used to charging $500 a day, do you just charge a little more when you become a "studio"?It's a tough question, so to help us understand what the transition between artist and studio looks like TJ Kearney volunteered to be on the podcast and shed some light on the subject. TJ is currently an Executive Producer at Instrument, a VERY cool digital agency out in Portland, Oregon. Prior to that he was EP and co-founder at a studio called... Oddfellows, yes, THAT Oddfellows. Before that he worked in ad agencies, big post-houses, and everything in between.

His experience in this industry has given him an incredible perspective on the economics of Motion Design. He's been on the client side, hiring studios, and he's also been on the vendor side, trying to woo and work with agencies and clients. In this conversation, TJ gets extremely specific with the economics involved at the studio level. If you've ever wondered how much overhead costs and how much you probably need to charge at various studio sizes... you should take notes.

TJ KEARNEY SHOW NOTES

TJ Kearney

ARTISTS/STUDIOS

• Oddfellows
• Tom DeLonge
• Adam Patch
• Devin Whetstone
• Spy Post
• Goodby, Silverstein & Partners
• Chris Kelly
• Colin Trenter
• Conrad Mcleod
• Buck
• The Mill
• Psyop
• Giant Ant
• Gunner
• Jay Grandin
• Goldenwolf
• Tendril
• Ryan Honey
• Arnold
• Chris Do

PIECES

• Good Books

RESOURCES

• Flame
• Shake
• Master Service Agreement
• Statement of Work
• Freelance Manifesto
• Chris Do Podcast Interview
• Motion Hatch Podcast
• Joey’s Motionographer Article

TJ KEARNEY INTERVIEW TRANSCRIPT

TJ: When people come to me and say, "I want to start a studio," my first question is, "Why?" Why would you want to do that? Most of them, it comes back to, "I want to create the work I want to make. I want to work with the people I want to work with," and almost none of them come back to, "Well, I really want to be an entrepreneur and want to focus on business and sales." I really try to, to be honest, scare them into realizing your day to day is going to be entirely opposite of what it is you're looking for. So, if what you're looking for in your career right now is, "I want to be a creative lead on an amazing project," focus on getting a job at one of these top studios you love as a creative director, as an art director, as a design director, because you'll get to just focus on the craft, but if you think you want to own a studio, I think you have to want to do the business end.

Joey: Motion design is an extremely creative field and most of us get into it for that reason. We like to create. We like designing, animating and solving problems visually, but it's also a business. In order to keep doing motion design, especially at the studio level, you have to run a profitable business, and that's not something that most of us are trained to do. I mean, how are you supposed to know how much to charge? If you're a freelancer used to charging $500 a day, do you just charge a little more when you become a, quote, "studio"? These are tough questions, and to answer them, we have TJ Kearney on the podcast today.

Joey: TJ is currently an executive producer at Instrument, a very cool digital agency out in Portland, Oregon. Prior to that, he was EP and co-founder at a studio called Oddfellows. Yes, that Oddfellows, and before that, he worked in ad agencies, big post houses and everything in between. His experience in this industry has given him an incredible perspective on the economics of motion design. He's been on the client's side hiring studios and he's also been on the vendor's side, trying to woo and work with agencies and clients. In this conversation, TJ gets extremely specific with the economics involved at the studio level. If you've ever wondered how much overhead costs and how much you probably need to charge at various studio sizes, you should take notes.

Joey: This episode is a long, dense one, so buckle up and really fast, let's hear from one of our incredible School of Motion alumni.

Patrick Butler: My name is Patrick Butler. I'm from San Diego, California, and I've taken the animation bootcamp course with School of Motion. I've gotten a lot from this course. I gained a lot of confidence that I didn't have before. I thought I was really good and I thought I knew what I was doing with motion graphics, but there was so many little details that I completely missed being self taught. I cut a demo reel I was really proud of a few months prior to animation bootcamp and immediately following the course, I looked at it and I was like, "This does not represent what I'm capable of." That's how much my skills improved. It just improved immediately. I felt the difference. I would recommend animation bootcamp to anybody who is looking to learn some fundamentals and really fill in the gaps that you may have missed if you're self taught. My name is Patrick Butler and I'm a School of Motion graduate.

Joey: TJ, it is awesome to have you on the podcast, man. Thank you so much for doing this.

TJ: Yeah, thank you so much for having me. I'm super honored to be here.

Joey: Right on, man. So, I figured we'd start just by getting into your background a little bit, because currently as of this recording, you're the executive producer at a really cool agency in Portland called Instrument, and so I'm wondering just for the listeners who maybe aren't familiar with you, maybe you can talk about how you ended up here. What was your path into the industry? How did you become sort of a producer and then an executive producer?

TJ: Yeah, totally. It's a long, windy road but we can ... I'll give the Cliff notes version.

Joey: Right on.

TJ: So, I originally actually started kind of in the music scene. I really wanted to be in a band, and it turns out you have to have rhythm to be in a band.

Joey: It helps.

TJ: I didn't have a whole lot of success on the musician front, but I had a lot of friends that were kind of in bands that were taking off at the time. I grew up in San Diego. It was like the late '90s or early 2000s and kind of found ... At the same time, my mom was a professional photographer so I had access to a lot of equipment and this was before digital, so I had professional cameras that kind of nobody else had access to, so I was going around and kind of managing bands, helping them line up shows and stuff, but then using that opportunity to do marketing materials and just do photo shoots and kind of put all that stuff out there. Through that, I met this guy, Justin [Puda 00:05:01], who was Blink 182's personal photographer. They were kind of like ... Internet was picking up and they needed to get video content online and that just wasn't a passion of his.

TJ: Again, I had a video camera, so he was like, "You want to do it?" I was like, "Sure." So that led to a lot of opportunities for Tom DeLonge from Blink 182 on to a parent company that had a bunch of clothing brands and stuff. So, I kind of came on and did a lot of marketing for them and kind of built my first production company. This was when I was still in college and I was working with Adam Pax, who's a director and another animator in the industry and then Devin Whetstone at the time who's gone on to be one of my favorite DPs out there, but we had a small production company that kind of carried us through college.

TJ: Through that, we were going to a post house to get all our stuff color corrected and finished in San Francisco called Spy Post, and they did a lot of commercial work and also feature visual effects. I was kind of coming to the end of my time in college and they offered me a job to produce there, so I kind of did that. I was still running a production company on the side and started taking a full time job there as a producer. That actually took me to where I ultimately thought I wanted to go, which was in features. So I spent some time really focused on feature visual effects and worked on the first Iron Man and a little bit on Avatar and a bunch of other really bad movies I don't want to mention.

TJ: I kind of explored that world, and it was cool because I was getting to see both ends. It was a post house, post facility that was getting to see feature visual effects, but also the commercial world, because we had a bunch of flame artists, so we're doing a bunch of finishing, and we had the only telecine in town, so we were getting to do a lot of color correction. I just got to see all sides of what you could do in this industry, and realized the money was in advertising, so I kind of chased that for a little bit and went and became the executive producer at Goodby, Silverstein and Partners in San Francisco, which is actually how I met the other original founders of Oddfellows, Chris Kelly, Colin Trenter and Conrad McLeod.

TJ: I went there and kind of started ... I originally went there to run ... They had an internal production company basically and then they were looking to ramp up the post into that. Got some really cool opportunities. Got to do some Super Bowl ads there and stuff, but kind of the best part there was there was a need to pull in all sprint production, which at the time had been ... previous to that had been the Superfad and the agency was really trying to reign things in and trying to make everything themselves for better or worse. So kind of my job was to build that team, and that's when I brought Chris and Colin and Conrad on.

TJ: We got to do that for a while. We spent about a year and a half, two years as a full blown animation studio within the agency. We were kind of independent of all the other production pieces in there, but the agency world's pretty tough. There was a lot of not going home for long periods of time, had a lot of my freelancers break down in tears because they had been working so many hours. It's a tough world, especially the old ad agency kind of world, and so I needed to jump ship around the same time Chris and Colin and Conrad were also jumping ship and we were all just kind of like, "What are we gonna do next? We didn't really want to go. There was nowhere else in San Francisco at the time that we really wanted to work for.

TJ: Nobody was really making the caliber of work we wanted to get to, but we also didn't want to move to New York or LA at the time, so Oddfellows was kind of born at that point out of necessity. We weren't seeing the opportunities, so we're like, "Well I guess we'll just kind of freelance together and see if we can make this work." Then Oddfellows was born and did that for the last five and a half, six years, and then I had an opportunity to come on here at Instrument last November and here I am.

Joey: Wow, okay. I was like taking notes as you were talking. There were so many things in there that I want to dig into in this conversation, but I want to start with Tom DeLonge. Do you still keep in touch with him?

TJ: I do not.

Joey: Because he's doing some pretty interesting things now. Anyone listening, you can Google him and see what he's up to. It's not what you would expect from the guitar player from Blink 182.

TJ: No.

Joey: [crosstalk 00:09:35]

TJ: He was definitely still doing that stuff back then. He's a big UFO [conspirast 00:09:42] and ...

Joey: Yeah.

TJ: Actually I wrote a treatment for ... This was a long time ago. I wrote a treatment for him where ... Kind of a joke commercial where he got abducted by aliens and he did not find it funny whatsoever.

Joey: He couldn't see the irony in that? It's funny.

TJ: He didn't appreciate it, but no, I don't talk to him anymore, but he was great to work with. He was a super nice dude and opened up opportunities for me.

Joey: A good songwriter too. So, I want to hear a little bit more about when you were working on the visual effects side. So, were you always sort of on the production planning end or did you ever get your hands dirty and do some [roto 00:10:26], do some comping? Were you ever on that side?

TJ: Yeah, totally. No, I actually went to school to be an editor. When I met Adam Patch and Devin Whetstone, they taught me After Effects. My school didn't really teach animation at that level at the time, at least not for commercial animation. They taught traditional animation but no one was really diving into After Effects at the time, and so no, I was in it. I was editing stuff. I was animating in After Effects. When I went to the feature visual effects side, they taught me flame and Shake and some of the other tools at the time and yeah, it was really hands on. It was kind of the same thing as the bands. It was like, "Hey, I really want to do this thing. I'm not that great at it, but I'm really good at bringing the good people together," and so it kind of was born out of trial and error, you know? Just kind of realizing that my real strength was in bringing in the right pieces together and building those top tier teams and identifying who those people were and figuring out those dynamics and supporting those people.

TJ: I was offering more to the projects by doing that project management end of things than I was as I was on the box, so I definitely ... I think that's kind of something unique to me that I would love to see more and all producers, is just a bit more hands on learning of the tools you're asking people to use. I think that's helped me a lot in my career where I have been an editor with clients in the room. I've been an animator with clients in the room. I've been finishing in [inaudible 00:12:03] with clients. It's like when I ask an animator or an artist to do something, I kind of have a pretty decent hands on experience sense of what I'm asking from them.

Joey: That's an amazing kind of superpower for a producer to have, because you have that empathy for what you're actually asking for, because I've worked with both kinds of producers, producers who really know the technical side too and they understand what they're asking for, and then there's always those producers and most of the ones I've worked with that didn't really know how hard things were, how long things took actually were ad agency producers because I feel like the system that brings up producers, like if you're just in that ad agency world, you're not ... I don't know, I guess you're just not exposed to the kind of information that you need to be.

TJ: 100%. Yeah, and I think the ad agencies are unique too, in that if your whole producer trajectory has come up in the ad agency where agencies kind of get what they want because they can afford to just pay people overtime or whatever, they're not really taught to push back on the client at all. I don't know that appreciation is really built into their learning process. So, I think they all have the best intentions and I think there's some amazing agency producers that have always been on the agency side, but at the same time they just don't quite have the full perspective.

Joey: Yeah, of course. You can't paint any industry with a broad brush like that. I mean, there are amazing people I've worked with at ad agencies and there's also people who have brought me down to the seventh circle of hell, which I'm sure you've been there too. So, your title is executive producer and at a studio, most of the studios I've worked for and my own studio that I ran for a while, the executive producer was really doing a lot of sales. Bigger studios may have a business development person but in the agency side, what does an executive producer do? What's the difference between executive producer and just plain old producer?

TJ: On the agency side specifically?

Joey: Yeah, on the agency side.

TJ: Sure. So, it's a lot of what you just said. A lot of my day to day is sales. I focus on ... So, I work on a team ... I'm an executive producer within Instrument. I'm not the ... We have quite a few of them.

Joey: Yep.

TJ: They kind of focus on different skill sets, and so I particularly work on content creation and then creating content creation opportunities both within the agency for existing clients but also kind of searching for our own clients and our own opportunities and ways to push our own team to deliver a new level. So, I do a lot of that, but then the difference between the two is a producer's gonna be somebody that's really in the weeds, on the ground, running a project and be like the day to day point person for a client. I'm gonna be the person who's in that initial sales meeting who helps lock in the contracts and running the MSAs and the SOWs.

TJ: I'm the one who gets kind of brought in if the heavy hitters need it because things are getting off the rails, but really, I'm focused on the negotiations, the building opportunity and then kind of almost like an account level of making sure that we're looking at that client, not just for delivering the single project but looking at the trajectory of the relationship, and forecasting for the future and building a long term established relationship between us and them and making sure that we've got the right people on staff to do so.

Joey: Cool. Could you just really quickly define MSA and SOW in case someone doesn't know what those ...

TJ: Yeah, sorry. MSA is a master service agreement. It's kind of the umbrella contract that you sign. Both studios and ... Mid to high level studios and agencies are gonna sign these ... They're kind of like long term engagement policies, so that no matter what, you've kind of established the baseline for your relationship. Then an SOW comes on a per project basis following an MSA and that's a statement of work. It kind of clearly defines your timeline, your deliverables, your agreed upon process and all that fun stuff.

Joey: Awesome. Okay, cool, so yeah, the MSA is sort of "this is how our two companies will work together moving forward." The SOW is for this particular project. Here are the parameters. This is the budget. All that kind of stuff. Okay, cool.

TJ: [crosstalk 00:16:32]

Joey: Well that kind of segues very nicely into I guess the biggest thing I want to talk to you about, which is just sort of the economics of motion design as it stands right now. I have experience on the freelance side and on the small studio side, and I'm really curious what it looks like now, because I've been sort of out of the day to day client world for about four years now and also what does it look like as you scale up? So, why don't we just start with sort of the small studio?

Joey: I'm guessing that when you co-founded Oddfellows, you started at this size. There were three or four co-founders and I'm guessing that was it, and so why don't we just sort of start the conversation there? What does it look like when you have a small three to four person studio? What are the economics of that? Like, how much money does that studio need to make to be in the black? What kind of budgets do you look for? How much is everyone making?

TJ: Totally. Yeah, I think I was trying to figure out how to answer a small studio approach because there's the way everybody does it and then there's the way everybody should do it, and so when we started, we were four, like you said, and basically we spent a year as like more like a collective than anything else. We were still freelancing to pay the bills. I was in a fortress situation at the time where we were living as a family. I didn't really need to make income, so we could take a ... It was kind of getting paid as the project landed and taking, just bidding projects in between, not worrying about getting a paycheck. It's a really hard way for most people to start out but I just had the fortune to do it at the time.

TJ: We had no overhead because everybody was working from home. We had just left the agency at Goodby at the time and they were super supportive and gave us machines and space as we needed it. Like if we did land a project, they would let us kind of go work out of there for a little bit. So, what's kind of the pros of this size are you basically have little to no overhead. Your startup fees, getting your name and all that kind of stuff, but it's a really minimal investment to get started at this size. What's cool about that, and kind of what's fun about that time is you're really nimble, you get ... You have a lot more control over what you take on at that size.

TJ: On one hand, you're kind of trying to take everything because you're trying to ramp up and build. On the other hand, if you're smart about it, it's like, well now we're so light that we can be picky and choosy about which things we invest our time in, but again, that's kind of functioning at like a collective level. So, in retrospect, I actually think two to five people is not a bad size if you're thinking like a medium size studio and presenting yourself at the same level as a medium size studio, because what you can do is kind of like the [Chris Doe 00:19:46] approach where I'm gonna land a project and then I'm gonna have a team of freelancers that comes in and does the project, and then I'm gonna make a mark up over the top of that, but I think what most people do at this size is they really minimally budget themselves out.

TJ: So, they'll say, "I see a $5,000 opportunity. I can do that by myself and I'm gonna stretch myself thin over this. I'll bid out the exact amount of days I'm gonna have," and they've built in no mark up. They've built in no additional support for themselves. They've built in no pad for when things go off the rails, and they're still positioning themselves as like a small boutique studio and they're not really competing at that high or mid sized level, and so I think that's the missed opportunity for most of the studios I talk to on a pretty regular basis. This is the question I get the most. It's like how do we grow? How big do we need to get? And what should we be bidding at?

TJ: I guess my response to that is just that the small studios, just because you're two to three people doesn't mean you should present yourself as such and it doesn't mean you should be bidding so astronomically lower than the other studios are, because I think it's a really short run and I thin it's a really hard place to get into. You're basically in a turn and burn situation where you have to land project constantly because you're basically just a glorified freelancer at that level if you haven't built in that pad.

Joey: Right. That's really interesting. So, I've kind of taken that approach in the past as a freelancer too. It's helped me get really much bigger budgets than probably most freelancers are used to simply because I was used to running a studio and so I sort of knew what the budgets were like. When an agency would come to me as a freelancer, I knew that if they didn't come to me, they'd go to the studio who would charge $25, $30,000 or whatever. You kind of even hinted at this, that, like, if you're two to three or four people running a small studio, that word "collective" kind of gets bandied about a lot, and so there's like this gray area where you're a group of freelancers. You're also kind of a studio and what do you think is the differentiator? What makes something feel like a studio from the point of view of a client, where now they're willing to pay a premium because, well, it's not just three freelancers with a shared Dropbox. It's actually a studio. I'm gonna get something more than the sum of its parts.

TJ: Yeah. I think it's infrastructure. It's having a producer. It's having a bit more stability, so if I'm the client and I know I'm going to a collective of, to your point, two to three freelancers who share an inbox, I know I'm running a certain level of risk and I know that because if I go to a bigger studio, I know they have additional resources to fill in if things get off the rail and I know if I'm going directly to a freelancer or a small group of freelancers, they might not.

TJ: I think that's the biggest differentiator for me as I'm approaching one or the other. I think the other thing, from the inside, if you're on the collective side of things, it's the difference between a group of people who takes freelance jobs and occasionally has time in their schedule where they don't overlap and they can take on a project together, but they're not so linked together that they're always gonna be available for each other, and I think that's really crucial if you're gonna try to move into that next level of kind of a bigger, more established studio.

TJ: The other thing with a studio versus a collective is just that. It's like availability. It's like I know as a client if I go to an established studio, they're gonna kind of ... If I have a real project, they're gonna make time for it where a collective is maybe more like a director where it's like harder to get kind of on their slot, and then I'm really probably not gonna wait for them. I'm just gonna move down the line and find the next group.

Joey: Yeah, I want to point out something you just said, which I've never heard it put this way, and I think it's really smart and everyone should remember this. You just said the word "risk" and from the client's perspective, going with a smaller studio and even maybe if you're not even sure if it's really a studio or if it's a collective, that you feel like, "I'm taking a risk by giving them this budget. Even if they have amazing work on their portfolio, what if all of the sudden the scope increases and they don't have the bandwidth to handle that." I'm wondering if you could just talk a little bit more about that, because that's something that I think most motion designers, especially if you've never run a studio, that doesn't even occur to you. That you're asking the client to take a chance on you as a small studio.

TJ: Yeah, I think that's one of the biggest things that's maybe lost at the designer animator level is we work in an interesting industry where we work with artists but we're also technically a service provider.

Joey: Right.

TJ: So that's like a really delicate balance of, "Well, you need to let me do my art," but at the same time, this person's like, "I'm giving you money. You need to give me the thing I need." Their job ... I think what we miss a lot of the time is that that person that's giving you money, even if you think it's a little bit less than it should be or whatever the case, their job's on the line. They're taking the risk by saying, "I'm trusting this company to execute for my bosses and ultimately my client." I have seen a lot of times and I've been on this side too, where it's like I get really frustrated with decisions that are made on a client's side probably because I don't have a full perspective of what led up to this decision being made, but it's like, "Well, if you just let us do it, we'll make the animation 20% better," but maybe that goes against what the client ultimately needs.

TJ: What we don't realize is we kind of have ... Like let's say we landed a project for even a $100,000 project. So, we, being the vendor, the animation studio, have $100,000 on the line, and that seems astronomical, right? That's huge, but maybe what we're not fully seeing is, well, if we screw up this one opportunity for this agency or even for the client themselves, they're potentially, one, if they're internal, they're putting their job on the line, but if they're an agency, they're putting millions of dollars on the line, because they can ruin a relationship with an ongoing retainer client.

TJ: So, I think that's kind of the misconception or the disconnect a lot of people have, but yeah, I think that's the biggest thing, is when you're choosing what size studio or who to go with, you're gonna go with a mix of your personal relationships, your past history and who you feel is the least risk for you to move forward with. I think I've seen this time and time again where I've seen smaller studios outgun Buck but the client [inaudible 00:26:52] is like, "Well, yeah, but I know Buck will get it done at the highest level no matter what." So, that's something a lot of us just can't compete with us. The Bucks, the mills, the Psy Ops. They've been around so long and they're so established and they have such depth in their bench that the client knows, no matter what happens in the scale of this project, they've got me covered. That's kind of the difference between the several tiers of studios we go through.

Joey: Yeah, it's a really amazing perspective to have. Thank you for bringing that up. So, let's talk about some of the numbers. Maybe you can even use some of the early days of Oddfellows as sort of a ballpark. Like, you know, if you're trying to build a studio and you start small and you're nimble and you're able to pick your projects, what sort of budgets are you hoping to get because, you know, when you're a freelancer, typically if you're going to a studio, you're getting a day rate. Maybe if you're going direct to a client or if you're doing a bigger job, there's a project rate, but you're probably used to a much smaller number than a studio really needs to be able to not just survive but also grow, which means it has to be profitable. So, what were the sorts of budgets that you've heard small studios like that going after?

TJ: Yeah, totally. I talk to a lot of studios that are starting right now and kind of get a perspective on what they're doing, and I obviously have perspective on what we had in the early days of Oddfellows, but I think what the common mistake is, is when you're just starting out, you want to take everything just to get in with the client, and so maybe your average budgets are ranging between $5,000 to $20,000 and maybe your sweet spot is like a 15K budget. When you're first starting out, maybe that feels really good, but it's really shortsighted and like I said, it's not very sustainable.

TJ: You can't do much with that. That's really just covering what it costs you to make something, to pay people their day rates and get it done. You're basically not building any profit into that. You're not building any forecasting and kind of buffer in your bank account so that you can continue to build a studio. It also changes the perspective from the client's side on who you are as a studio. So, if I'm a client or I'm an agency and I've got a studio who tells me this project would cost them $10,000 when a bigger studio would say it's $50 or $60,000. I know, again I'm gonna take that risk, but maybe this one's not as important to me, so I have ... it's fine to take a risk on it. I can make additional profit and now I'm thinking of that studio. For the rest of my knowledge of that studio, they're the $10,000 studio.

TJ: I think what most new studios are doing is, like, "Well, I just need to get in with a client and then they'll see how good we are and then our rates will go up." So, what happened with Oddfellows is when we realized we needed to increase our rates, it wasn't like all of our clients all of a sudden paid us more money. We basically fired all of our clients. We basically told them, "This is how much we cost now and we totally understand if that's too much, but this is what it costs us to do business right and we need to price accordingly," and we lost most of those clients, but we unlocked new clients at a much higher level who saw us at a higher value because they saw us align budget-wise with these bigger studios that they were familiar with and it was almost like an automatic class shift where it was like, "Oh, you're that much? You must be worth it."

TJ: Now you have to deliver. Like, if you're gonna do that, you have to actually be able to execute at that level, so ... I also want to caveat ... We're talking about one very specific type of animation within a very specific type of industry. So, this is gonna be vastly different for ... depending on what realm you're in, but for the type of work Oddfellows did, the [Ginance 00:30:59], the Gunner, stuff like that. You know, the Bucks and [inaudible 00:31:02]. This is kind of the process we went through.

Joey: Yeah. I hope everyone listening is like taking this to heart because it's something that's, I think, kind of counterintuitive, really. You know, there's the idea that a first impression's hard to break, and so if your first impression of a studio is, "Oh, they're the cheaper alternative to Buck, right?" Then that is very hard to break. Then the counterintuitive part is the more you charge, there's the psychological effect to your client where it's like, "Ooh, wow, they're expensive. They must be really good." Then you have to live up to that, of course, which Oddfellows does in spades, but you kind of have to take that leap first. Have you seen, TJ, like ... It seems like most small studios probably start the way you described, where you're charging enough where you feel like you're making money and, wow, $15,000? That's a bigger budget than I ever saw as a freelancer.

Joey: This is great, but then to get to that next level, now you've basically built a giant brick wall you have to climb over. Is that kind of just the way you've seen it happen or are there studios out there that have the foresight to say, "All right, there's three of us, but we're gonna ask for $50,000 because we know that when there's 10 of us, that's what we're gonna need."

TJ: Yeah, I think a mix of both, you know? I think this is what I see happen time and time again but I do think there's a select few that do it really well. I don't want to call any of them out because I don't want to blow up their spot for being smaller, but there's some studios out there that are killing it right now that are actually incredibly small, maybe two to three people, but are landing huge accounts with Facebook and the like because they know how to present themselves. They've done the legwork and I think if anyone hasn't listened to your podcast with Chris Doe, I think that's an amazing place to start, and reading your book. I think that's super important to ... I don't think enough studios realize how much work they need to put into the business end leading up to starting the studio. I think a lot of people just jump the wall and go for it and then have a really hard time working backwards to make up for all the stuff they didn't know on the business side.

TJ: So, number one piece of advice is if you're gonna do this, learn the business end backwards and forwards and come up with a roadmap for the future before you get started, because it's a lot easier to do it that way than it is the other way.

Joey: Yeah, preach, man. I've talked to a lot of studio owners lately and that's just the most common thing that comes up, is that once they grow to a certain size, let's say eight to 10 people, the overhead ... I mean, the overhead scales up way faster than the amount of work that you get, because you get to a certain size and you need an office and then you have to start buying new computers for everybody and paying health insurance and things like that. It gets very, very expensive, and you really need someone who knows how to go out and get work. Typically most of the studios that I've talked to, they're started by creatives who are in it to make the cool work, but they're not in it to cold call and cold email and take clients out to lunch and all that kind of stuff.

Joey: So, why don't we move on to the medium size studio? I was sort of thinking it's like you get to about eight to 10 people, maybe up to like 15, where you now have a pretty solid roster. Maybe you've got a cell animator on staff. Maybe you've got a 3D wizard on staff. You can kind of take any kind of job, and at that point you've also probably got one or more producers on staff and maybe even a biz dev person. I imagine, maybe I'm wrong, you can correct me, but I think that oddfellows grew to this size while you were there. So, can you talk a little bit about what does that look like from the inside? What are the pain points that pop up there?

TJ: Totally. So, we talked a little bit about the small studios and how you basically have really low to no overhead. If you're doing it right, you should keep that overhead as tiny as possible, but to your point, once you hit the 10 to 15 staff employee size, your overhead goes to over 100K a month, and I don't think people fully realize that.

Joey: Wow, yeah, let that sink in for a minute.

TJ: Yeah, because let's talk about why that is. So, you've got staff that you're paying now and that's 10 to 20 staff members that you're paying, and even if you're getting them at a ... I think the other misconception here is like, well, once I've hired staff, I'm saving so much money by not paying freelance rates. That is great, but I don't think people fully realize when they first start out, all the additional fees associated with bringing on a staff member. So, you've got their rate, which maybe it's half or a third of what it would cost to pay somebody's day rate, but then you make up for that because you have to pay payroll, paid time off, healthcare, overhead, 401(K). If you take a [inaudible 00:36:11], like let's say you don't land any work for four to six weeks, you're still paying all those people to sit there idly and wait for something to come in.

TJ: Then you've got machines you have to buy. You have your rent for your space. At a 10 to 15 size, you have to have a studio. You can't any longer ask people to work from home or anything. You have to have a physical space where people can come in, and you're starting to land budgets where clients may want to come sit with you. So, suddenly you've got that end of spending that you have to factor in on top of everybody else's rates. So, yeah, I don't think people fully comprehend how quickly your overhead can scale.

TJ: Now, there's some amazing new ... I think Gunner is killing it, right? To open up in Detroit in a sub-market and to crush it is just so fun to watch and they're doing so, so well. I don't have an insight of their overhead rates, but they have to be so much lower than anybody else is paying in, say, LA, San Francisco, New York. They've got an amazing space where everybody's having fun and they're able to invest that money rather than in cool furniture, they're able to invest it in cool artists and getting more people to work with and making their work that much better.

TJ: So, I do think there's a trend where we're getting away from the need for so much to be spent on the physical space, but still, you've got a pretty healthy nugget you have to cover every single month, and so it changes your ... If you're gonna own the studio, at the two to five range, maybe you're still an artist. Maybe you're still ... I don't mean to insinuate that people who own bigger studios aren't artists, but their day to day, as you grow, is gonna shift far more into the business end than it is into the making end. I think this is the biggest ...

TJ: When people come to me and say, "I want to start a studio," my first question is, "Why? Why would you want to do that?" Most of them, it comes back to, "Well, I want to create the work I want to make. I want to work with the people I want to work with," and almost none of them come back to, "Well, I really want to be an entrepreneur and want to focus on business and sales." I really try to, to be honest, scare them into realizing your day to day is going to be entirely opposite of what it is you're looking for.

TJ: So, if what you're looking for in your career right now is like, "I want to be a creative lead on an amazing project," focus on getting a job at one of these top studios you love as a creative director, as an art director, as a design director, because you'll get to just focus on the craft, but if you think you want to own a studio, I think you have to want to do the business end, and I just don't think enough people realize that until it's too late. It's like they kind of go all in on a studio. Maybe they've done it for one to two years. It's kind of gotten rolling. Now they're in it and they don't love the business end, but that's what they have to do now, and now they have people dependent on them and whatnot.

TJ: So, not to scare everybody off, but I think it's really important to have a holistic view of what you're getting yourself into before you start the process and because that nugget is so much higher every month, your need to sell is tenfold. I mean, you have to be landing multiple work streams on a constant basis. Every day that you don't have your entire team working is literally taking money out of your pocket. So, your objective, not just for you to make money but to actually support the people who have trusted you, who have taken a position at your company, who their rent, their healthcare, everything is dependent on you, you've kind of put that on your shoulders as the business owner to make sure you can constantly keep them busy.

TJ: That's a tough place to be in. Some of that is out of your control. There's some industry lulls that happen every year. There's unforeseen factors. There's clients that will suddenly not pay you, and that's all your responsibility to take care of once you've kind of reached the size. So, yeah.

Joey: Dude, that was like an episode of Scared Straight right there. Yeah, I wanted to call out a couple things. So, one thing, when we started hiring, I think my accountant or my bookkeeper, he said there's kind of this rule of thumb that whatever someone's salary is, you're basically paying that plus 30% for all the taxes and all the stuff. So, if someone listening has never hired before, if you hire someone for 70K, you're actually probably gonna end up paying like 90K plus for all the taxes and things you owe, in the US anyway.

TJ: I think it's 1.25 to 1.4 depending on where you are.

Joey: Exactly, yeah, yeah. You guys were in ... There was an office in San Francisco, which it's definitely more towards that 1.4.

TJ: Yeah. I mean, and we hired a lot of senior level people, right? It's like it's a tough time to be hiring top tier talent, because there's so much opportunity. It's a great time to be a freelancer. I'll say that. There's so much more opportunity now than there was when I started out. There's so many good studios. There's so many really high paid internal opportunities, but for the studios to compete on those rates is really tough.

Joey: Yeah, and we're gonna get into that in a few minutes, because I've heard a lot of grumblings, especially on the West Coast where all the big tech companies live, that that's a big problem. Okay, so your studio, your small studio is successful and you're getting more work than you can take on so you hire and all the sudden your monthly nut is 100,000 bucks a month, which is a real number, and again, I want everyone to let that sink in. You're taking that on to grow a studio to that size. So, what are the kinds of budgets that you need at that level and what kinds of clients have those budgets?

TJ: Yeah, so let's say at the small level we were saying you're taking on these under 25K jobs. Suddenly you reach this level of 10 to 15 and really your threshold should be like probably 60K is kind of one of the lowest ends you're gonna take on. Your range healthy range is probably gonna be 80 to 100, maybe 120K of each project you're able to take on. There's smaller end cards and stuff you can throw in there if you have to, but for the most part, those are like the chunks, and then you'll get the opportunity at this level to compete on even higher, so 90% of your work will be in that 60 to 100K range, and then occasionally, maybe a handful of times a year you'll get a crack at a pitch that gets you in that 250 to 500K range, but those are becoming really rare.

Joey: Right.

TJ: The reason for that is industry's shifted. There's less money on the table, and so suddenly jobs that maybe Buck or The Mill or Psy Op wouldn't have bid on in the past or pitched against in the past. Suddenly they're going for it, and so at 10 to 15 people, you're competing with Buck, who has ... I don't even know what their staff is at this point, but infinite depth level and coiffeurs to be able to invest in these pitches. But, where you need to be is in that ... Ideally you're making 80 to 100K on a project and I think Jay from [Jynet 00:43:55] had given me a while back like a really good just base level. It's like, try to make 1,000 to 2,500 per second on a project. Really, it should be in the 15 to 2,000 range, is kind of like the sweet spot.

Joey: Interesting.

TJ: Yeah, if you're taking on a 60 second spot, try to hit ... What is that, 90K?

Joey: Yeah.

TJ: That would feel good, and I think the other difference between a medium size and a small studio, something I went through anyways, is when you're small, you're like, "This is what we do. We're designers and we're animators. We don't touch anything else." What you're missing the opportunity on is running full end to end soup to nuts production for these people. So, yeah, we can absolutely hire you a writer because, one, it'll give us more creative control over the project, but two, we're gonna hire that writer and then we're gonna have mark up on top of that writer's rate and we're gonna make an additional profit for having them. We're gonna coordinate getting you a VO talent.

TJ: This was something that I didn't know how to do really early on in my career and I was just scared because it was just so foreign to me, and then I did it and it's the easiest thing in the world. Literally you just submit online and somebody sends you a track. It couldn't be easier. It costs you pennies and you can mark that up and make additional profit there. Then you work in music and sound design and everything, and the more that you can handle a production, soup to nuts, the more the client is gonna be able to hand over of their budget.

TJ: So, if they're responsible for still producing, you're just taking care of the visuals and you're just taking care of the animation, but they're still responsible for all the audio needs and the VO talent and all that stuff, what they're gonna do is build in those rates plus like a slush fund and pad to make sure that they're covered, which means they're gonna offer way less to you because they need to make sure they have their ass covered if anything goes wrong, but if they give everything to you up front, if you say, "We can take everything," then they're gonna hand over 90 plus percent of their budget to you and just keep a really small amount to themselves for safety.

Joey: It sounds like that also, if you're able to do that, then that builds that trust that we talked about. Now it doesn't feel like as much of a risk because we can just go to Oddfellows and we know that we don't have to really think too hard about this. They'll just get it done and it'll be awesome.

TJ: Totally.

Joey: Yeah. You talked about ... You used the word "coiffeurs," which I love. You know, at that size, how much money needs to be in the bank where the owners of that studio can sleep at night knowing that if it slows down for two months, they don't have to lay off half the staff?

TJ: Studio owners never sleep at night, first of all. There's always something, but my ... I used to think three months was good until I hit a five month wall, and so I would say six months. I would say six months is enough of a road to build for yourselves, where that should be healthy, but I think the other thing learning that I went through was what you should do is do really well in billings, right? Kind of build it up. Get a lot of income ... You have to do this at your peak, so get a lot of savings put away in the business account specifically. Get a lot of outbound invoices that are coming in and then go apply for a line of credit when you don't need it. That way you've got money in the bank and you've got a line of credit that's just open and available if anything goes wrong.

TJ: If things go wrong and then you try to open a line of credit when your bank account is nearing empty, you're not gonna get it. It's just not gonna happen. So, that line of credit isn't easy to get. I think you have to be in business for two years and show your P and Ls for two years and I think like I said, you have to hit it at that exact moment where things are looking the best, but once you're in that moment, it's the time you're not thinking about it that you really need to move forward and get that line of credit open so that you're covered across the board. I would say your goal, and it's not an easily achievable one, but should be to put six months worth of overhead away so that no matter what you've got ... money in the bank and you've got the road ahead of you to be able to make adjustments on your team or in your company decisions to start lightening the load if you have to.

Joey: Yeah, that's incredible advice. I actually got the exact same advice from our bookkeeper. When School of Motion started to grow, he said, "Go to the bank now and get a line of credit. You never know if you'll need it," and if anyone's listening and doesn't know really what a line of credit is, it's basically a guarantee that the bank will give you money when you need it and you pay it back sort of like any other loan. A monthly kind of payment.

Joey: That kind of reminded me, TJ, of something else that we haven't talked about yet, which is cash flow and specifically freelancers especially are used to sort of net 30 terms, but I know that when you get into these bigger budgets, net 30, they might just laugh at you, so what's the typical turnaround if you have 100K budget? Are you getting that check 30 days after you submit the invoice?

TJ: So, I'm pretty stingy with my contracts and I always push for that net 30, but it doesn't mean they're actually gonna send me a check on 30 days, and so what I build into contracts is net 30 plus a penalty for a small amount for any time after that, but yeah, what's different on the studio end versus the freelancer end is like the studio still owes those freelancers within 30 days, whether the client pays them or not. Now, there's some studios that I disagree with that make up a policy, like if we don't get paid, you don't get paid til we do. I think that's a good way to not get good artists to work for you. It's a double negative, but yeah.

TJ: You know, it's a good way for ... When we first started Oddfellows, my objective was pay our artists the fastest. Take care of people so that they want to take care of you. I think that should be your number one goal as a studio owner, is to put your people first, and that doesn't just mean your staff. That means anyone that's part of your team as a freelancer or otherwise. But you're right, what happens at a larger level is some of these huge organizations have built in, "Well, we pay net 90 or we pay net 45." If anybody doesn't know what that means, it's just 30 days, 45 days, 90 days to pay you. You can do kind of two things. If you're getting in that net 90 realm, what I usually do is change my invoicing policy, so my standard would bet net 30, 50/50. So, 50% on the day I sign a contract and 50% when we deliver you the final files.

TJ: You can break that down for some clients more granular, like to hit milestones and get paid throughout the process, but it gets a little convoluted and messy, but if I'm saying, "Well, I'm gonna take this project on, but you're gonna pay me net 90," then I need you to pay me 75 to 80% the day of signing so that we've got the bulk of the budget in our bank account, as we're delivering the project to you, knowing the last little bit will come in. Theoretically that last 20% is just your profit margin anyway, so at least you've covered all your hard costs in that 80% you're asking them to invoice up front.

TJ: That is gonna get easier to negotiate the more established that your studio is. Not all clients are gonna go for it right off the bat. It's a tough discussion to have. It's another reason you really need to have a solid business person or EP or what have you that can have those kind of tough conversations with people who probably outgun them on the legal side, right? You're having this conversation with lawyers, so you kind of have to be able to stand up toe to toe.

Joey: Yeah, that's a really good trick though, to just ask for more up front. I always did 50/50 if the budget was big enough. I mean, there weren't that many clients that we would work with that had net 90 ... I mean, there are clients with net 120 terms. Typically these really gigantic, like car manufacturers, stuff like that, but yeah, I love that trick. So, let's talk about the next level. I have no experience working at a place like The Mill or a Buck. Like a really big legacy studio, but I know you've talked to a lot of the people that work there and maybe even some of the owners. When you get to that level of now you've got 30 to 50 people on staff. You've got a 20,000 square foot office, a full time probably IT person. You're at just a whole different level. What does it look like there? What does it look like from the owner's standpoint? What does the monthly nut get up to? What are the budgets that you're kind of looking for?

TJ: Yeah, totally. We talked about a small to medium size were at like 100,000 so you can imagine once you've grown to this size how big your overhead gets. Especially at this size, you're probably running multiple offices, so you've got to multiply that overhead. So, we're talking hundreds of thousands of dollars a month just to cover your base, just to cover your out of pocket from day one. So, the projects you take on have to massively shift. Your average budget when you're a studio of this size is probably gonna be 2 to 500K for you to get involved. Now, what's different for these studios is they build deeper, longer relationships with their clients than a studio at a medium level.

TJ: So, at that mid level, you're basically a vendor, right? It's like hey, we've already established that we need a video. We need one or we need three of them or whatever it is, but we're coming to you for that one ask. Now, what a Buck or The Mill or these guys are doing is they're saying, "Cool, but let's package that up into a retainer system," or "let's look at an annuity based account with you guys where we're kind of lumping a bunch of those together to unlock a bigger budget but to guarantee that you have the team available as you need them." So, there's economies of scale there that work in the client and the studio's favor, but to your point, it's like you're at this level. You've hired people to understand how to have that conversation and how to build that strategy and how to sell it to the client. That's just something that at a 10 person scale it's tough to have that person on staff. I think there's a couple studios that do it great, but it's really until you get to these big studios that you'll see it a lot more.

TJ: What they're doing too is they're not selling you one service. At this size, they're definitely diversified. They're offering strategy. They're basically like ... They're bigger than an animation studio. They're somewhat of a production company, somewhat of an agency. They're offering full holistic partnership with the client. Maybe they have dev on their team so they can actually produce digital as well, and what's cool for them is like they've reached a size and a notoriety where their need to pitch is far lower than a medium size studio. They get to be a little pickier and choosier when, because everyone wants to work with them. If they've reached this size, it means they're one of the top shops who ... Most of them are the people who've been around for a long time, so like the Bucks, the Mills, the Psy Ops, kind of the newer coming up, I would say is Golden Wolf has done an amazing job of kind of building themselves to that level, but it's like a really hard place to get to, and then a much bigger nugget to support every month once you get there.

Joey: Yeah, it seems like sort of what I've seen and from talking to people, the best of the best and the names that you're kind of rattling off there, the Psy Ops, the Bucks, the Mills, that's the top of the top of the top, and it seems like there's always going to be clients in a market for working with the best in the world. So, those companies are safe at that size. I recently had the amazing privilege to go visit Buck's office in New York. It was like a bucket list thing and looking at the kind of work that they're doing now, I mean, I can't talk about specifics, but really big, gigantic clients, and they're basically inventing new techniques to be able to do the type of work that these clients are asking for, and they're on the cutting edge.

Joey: They're sort of moving the goalposts as they work, and The Mill's another example of a studio doing this where they've invented this car rig to shoot car commercials and basically in real time see what the car is gonna look like, but be able to swap out with a different chassis, a different model, and so that's kind of what the best of the best are able to do, but there's also a lot of legacy studios that grew to 30 to 50 people and even bigger in the late '90s and in the early 2000s that now are really starting to collapse, and there's a couple that are kind of on death's door. So, I'm just curious, do you think that that big studio size is getting less tenable unless you're just, you know, the best of the best?

TJ: Yes and no. So, what I would call out there is you really highlighted why those studios have done so well compared to the others. So, Buck and The Mill, Psy Op, Tendril, companies like this have pivoted and had the foresight to kind of get ahead of what was happening in the industry to diversity their offerings and to use their skillset to unlock new opportunities where some of the studios that maybe match that size but haven't had as much success in staying afloat is simply because they didn't pivot, you know? It's like they offered one thing really well but that one thing is no longer in favor, and so ... Or they overly invested in ... You know, it's like I said, when I started out, it was all flame. You saw all these studios just go all in on flame and how many times do you see a flame now? It's like there are still a few out there, but they're few and far between.

TJ: I know some amazing flame artists who used to get top tier work and they were just batting down jobs and now they're struggling to get any work and they never learned After Effects. So, I think what you're seeing is the need for, and I think this isn't just specific to the animation. I think it's to the industry as a whole and the agency side and all. If you want to stay afloat, if you want to stay relevant, you have to be able to diversify and to find other opportunities to use your skills to offer your clients, put more on the table.

Joey: Yeah, that's absolutely true and that kind of leads me into the next question. So, in order to pivot and to kind of be forward leaning and always looking out for what's on the horizon, you need bandwidth, and so you need someone sort of at the top kind of pivoting their head left and right and looking at what's coming, but you also need capital to do that stuff, and that comes from the profit that you're earning on your product, which in this case is motion design. So, this is kind of a weird concept, I think, especially for freelancers who ... When I was freelance basically, my salary was however much I got from clients. I never really looked at it like, well, this is my profit margin, but as a studio owner, all the sudden you have to think that way, so what is a health profit margin on motion design?

TJ: Yeah, and I think it scales and kind of speaks to what you're saying too. You'll see it scale as the size of the studio scales, and not that it should. It's just that's kind of what I see everybody doing, so at that really small studio level, they're either not making in a profit or they're doing it super minimally because they're too scared to ask for it. At the medium size level, you're gonna average out about 20 to 25% of what's shown in terms of profit, but you hit these big companies and their minimum, they're making 30%, but they're probably making like 50% profit if not more, and they're doing that by a mix of presenting profit but baking into their rates and padding their rates a bit to make sure they always hit that threshold.

TJ: You can go either way on how you feel about that, but it's just kind of the reason they're able to use that money to invest in the bigger opportunities is because they've been smart enough to get that in there and to be able to sell it through. It's the reason ... I think Ryan Honey at one of the Blend conferences said something like, "Only 10% of the work you see on Buck's site is what they actually do and the other 80 to 90% is the stuff that pays the bills," and so they take on a lot of work that maybe isn't as sexy to look at as what is on their reel and everything, but it kind of builds up that profit. They make their money on these end cards and what not, so that they can reinvest that money into over-delivering and over-revving on some of the cooler opportunities that will get them the notoriety.

TJ: It's basically like a sales loop. It's like we're gonna invest in that so that everybody sees how good we are and then they're gonna come back to us for the stuff that actually makes money.

Joey: Yeah. I was on stage with Ryan when he said that and my jaw fell on the floor. I think he said it was like 92% or something of what they do doesn't end up on the site. It's funny because you kind of hinted, like some people, I think, may feel even a little uncomfortable with the fact that you're making 50% mark up? Oh my gosh, you're greedy or something. You greedy capitalist, but I actually talk a lot to freelancers about doing this exact thing because there are jobs that you're not gonna put on your reel that really are just there ... They need to be done, they need to be done right, but they're keeping your lights on. No one really wakes up thinking, "I can't wait to do 100 Western Union end tags today." But, doing that makes you enough money and enough profit where now you can take a month and work on some amazing studio project that ... Buck's done that fairly consistently.

Joey: You know, the Good Book's piece that kind of really elevated them to the next level, I can't imagine what that cost them to do. They definitely did not make money on it, but the only reason they were able to do it was because of that profit margin, so that's good to hear. I actually think that that makes a ton of sense.

TJ: Yeah, and I think it's important for the people who are starting out or are new to the profit margin idea, you've got to value yourself. You've got to value what you're bringing to the table, and I think that's the hardest thing for people to understand, is like there's your freelance rate, which is great. If you're a freelancer, go just make your rate and keep increasing your rate until you kind of hit the wall, but if you're taking on more than an individual freelance ... Value what you're putting into it. It's like I'm adding the stress, I'm adding the client management, but also the staff management, and bringing all these pieces together for you ... You know, there's added value there beyond what you just need to make to cover what you're doing for the day, and so that 20% mark up isn't like just an extra "stick it to you." One, is to value yourself and two to invest in yourself for the future.

Joey: Yeah. That's really good advice. So, let me ask you about ... Like now that we're talking about profit margins and we've talked about the need to, even at a medium size studio level, you need to have hundreds of thousands of dollars in the bank to really be safe and to invest and do these things, and as a studio owner or a co-owner, now you're in this situation where you have a studio with assets. You have a bank account with hundreds of thousands, maybe millions of dollars in the bank. How does that trickle down to the owner's compensation? How do most studio owners get paid? Do they have a salary and then some sort of bonus or is the company bank account like a slush fund for the owner? Like how does that normally work?

TJ: Basically all that'll be predetermined when you're starting out your partnership. You'll write a contract together and kind of all decide collectively how you want to do it, but the typical way is you'll take a base salary rate. That rate will be not as high as people probably think. You're probably trying to keep a rate that's balanced between making a decent salary but not so high that you're getting overly taxed on it, and then taking up the rest in profit sharing at the end of the year. So, you might get less month to month than some people think, but it kind of evens out once you get profit sharing at the end of the fiscal.

TJ: What that profit sharing looks like is completely unique to every partnership and how they set themselves up. There could be a 50/50 partnership in terms of there's two owners but maybe one has other endeavors they're doing and they actually only own 10 to 20% of the company versus somebody who owns 80%, so even though there's two heads of the company, maybe it doesn't necessarily mean that they take an even cut. Then in terms of how much of a profit they pull out of the company is really dependent on what they decide at the end of the year and what the bookkeeper thinks is smart, because you're, again, trying to find that balance of keeping enough in the bank to make sure you're secure as the new fiscal is starting and to get yourself up and running again at the beginning of each year, but at the same time, not trying to hold on to so much profit that you're losing a ton of that in taxes for the company. That's all smarter than me and stuff you should pay somebody that's really good at that stuff to figure out.

Joey: Exactly. Yeah, I can tell you, the way that I've seen it done and similar to the way we did it at toil was at the end of the year, you can look at the amount of profit that the company made and there's usually, like you earmark a certain percentage of that for the profit sharing, so let's say that it's 10% of profit or 20% and then you say, "Okay, well we made $200,000 in profit this year, so we're gonna take, let's say, 20,000 of that and we'll distribute that to the owners based on the percentage of the company that they own." That's a pretty standard way to do it, but I didn't know if there were other methods, but that makes a lot of sense.

TJ: No. NO, that's pretty much the way I see it everywhere else.

Joey: I want to ask about something said, I think on the Motion Hatch Podcast, another incredible podcast, you were talking about how you typically would do a bid for a job and I think what you said is that you sort of put the profit right in the bid so the client sees it as opposed to baking the profit into the rate. So, for example, the way my studio did it is we would say, "Okay, the actual cost of one hour or one day of design is this. We're gonna double that," and that's what the client will see, and that way the profit's just baked into it. They don't know how much percentage of this is profit." Is that how you did it? Or no.

TJ: A mix of both. The way I usually would bid out a project would say ... Let's say I have a team of five animators that I'm gonna put on this project and I know that it's all After Effects artists. I know my most expensive potential freelancer is gonna be, say, $800 a day, but maybe the rest of them are like $500 a day. So, I would mark everybody up to at least the 800 level if not ... 800, do it somewhere in the 800 to 1,000 range so that there was a little bit of buffer there to make sure, like let's say I planned on my staff doing the work and suddenly my entire staff is sick and the only people available are top tier After Effects artists. No matter what, I know I'm at least covered, so I think that's important, and then on top of that, I would put a base level mark up of 25% and so that 25% is called out specifically to give you kind of a place to negotiate a bit that's really ... It's easier to come down there than it is to augment your team.

TJ: Let's say I'm saying it's five animators because I really think if I want to do this really well, I want to keep those five animators in the bid and rather than like a client trying to nickel and dime me on how many people they think it should take to do the job, I'm giving them a different place to kind of put their attention, but what I was talking about I think at that point in baking it, what I don't like seeing, and I usually just see this kind of at the older studios, but there was a trend for a long time to, like ... If you want a QuickTime, it's $150 per QuickTime that we upload for you. Clients aren't dumb. They know it didn't cost you $150 to drag that file onto Dropbox for them. So, that level of granularity is where I personally am not a big fan, but there's still a bunch of places that do that.

Joey: Yeah, I've seen that before too. The way that we used to do it, and I even did this as a freelancer, was I would sort of, I guess, do a combo. Like you pad the rate a little bit, like your hourly rate, for say animation, you paid it a little bit to get a good profit margin, but then I would also put stuff in there, really like broad stroke stuff, like if it was a heavy 3D job, I might put like a render farm fee or something in there.

TJ: Oh yeah. I think that's super important to touch on really quick. Sorry, that's not ... In my mind, that's not baking in profit margin, that's really accounting for everything that could potentially come up, because what you don't want to do is be right at the end of a project and say, "Oh, you know what? We're gonna have to use a render farm. We have to hit you with an overage for this," because you should have already accounted for that. So, if you don't need that render farm, that's additional profit for you that has already been agreed to, and in the client's mind, that was always needed, but you don't want to not put that in, because you might not need it. So, that level, I absolutely agree with. It's more just like I said, the small extra fees that are kind of bogus.

Joey: The nickel and dimes, yeah, and also, having fees like that, like a render farm fee, it is a great negotiating tool because my business partners always said you never want to cut your rate to get the budget to fit what the client's expecting because then they're gonna expect that lower rate every time, so if you put in these line items that ... They're real, you need them, but they're padded pretty heavily. Then it gives you a place to cut where you're not shooting yourself in the foot the next time you work with a client.

TJ: Yep, totally.

Joey: Yep. So, you mentioned some freelance rates, and so why don't we talk about that a little bit. What is the state of the union for freelance rates these days? Like what are you seeing for the range and kind of what do you expect at each level?

TJ: Yeah, it hasn't changed much, which is strange. People are certainly getting more money and maybe focusing more on the top end, but we're still in the 450 to 800 range, which has kind of been the case for a while now. Anybody over 800, you're gonna run into some ... At an agency level, you might run into cost consultants not allowing you to hire an animator over 800, or you might not ... the client you're working with might have a cost consultant involved as well that can kind of push back on that. Now, if you're a specialist, that's a little different. If you're highly skilled in one particular thing, you can charge more and that can get into up to $2,000 a day, but the need for those people is so much lower that it's a lot harder for them to get work, so for a generalist, for a typical After Effects animator, you're probably in that 450 to 800 range, and then it gets a little interesting when you start to work with designers.

TJ: There's like the designers that come in and design with you, are still gonna be probably at the top end of that. You know, 5 to $1,000 a day, but then there's some designers that just work off project basis or licensing fees and stuff, and that gets a little more in the weeds, but in terms of the general ... If anybody's lower than 450 a day, I automatically assume they're too junior. They haven't realized ... they're not there yet, and anybody over 800 a day, take pause because, well, is what they're bringing so astronomically better than what I can get for somebody else who's gonna be in the 6 to $800 range and is this project really in need of that level of seniority? 80% of the time, it's probably not gonna be, and so anything beyond 800 starts to get in that threshold of we might look elsewhere before we bring that person on.

Joey: You know, we talked a little bit earlier about how as a studio, if you charge too little, then it kind of sets up this bad first impression. The client might think, "Oh, they're new. They're not as good because they don't charge as much." Does it work that way on the freelance level too?

TJ: Yeah. Yeah, it does. For better or worse, it doesn't matter how good your work is. If you've lowered your rate so low, there's just this question in the back of the hiring producer creator's mind of, like, "Well, they must not have the experience to know what they're worth, so what risk am I running by hiring them?" That's maybe not always valid, but it is the initial takeaway. So, if, say, somebody came to me and they wanted $250 a day, I'm automatically assuming they're gonna require more management, may not deliver at a level that's good enough. Like, they might require more oversight, which actually costs me more, because it would require more of my creative director's time or more of my senior animator's time, so I'll just move on and that added value of $200 a day isn't worth me taking the risk.

Joey: Yep. Yeah, I usually advise people to start at 500. I mean, that's where I started and that was a long time ago now, too, so it is kind of interesting that the rates haven't increased that much. I mean, charging 800 bucks a day, that's higher than my day rate ever got. I think by the time I was done freelancing, 700 was like a really high day rate, at least in Boston, and maybe it was different in New York and LA, but that's really good advice for anyone listening who's a freelancer. Now you know, that's kind of where it is. I'm sure every ... One thing I was gonna ask was every freelancer listening is thinking, "How do I get to that $800 a day rate?" I'm curious, what makes someone worth that much?

TJ: Yeah, it's interesting. It's a double-edged sword. It's a really good time to be a freelancer because there's so many opportunities. On the other hand, there is so much young talent coming out right now. Like, when I started out, there was very few shops and very few people that did this, so it was kind of hard to get into from that sense, but there wasn't a whole lot of competition necessarily. Now, it's completely flipped, where there's so much ... We're almost oversaturated with After Effects generalists, right? When there's so many of them out there that at a base level, good animation is kind of just expected. You have to be a good animator. You have to be a good artist. Just to get your foot in the door, you have to be good at your craft.

TJ: So, I don't look at that first. I just assume that everybody should have that base level of quality, and for me, it becomes, especially because ... Probably because I'm a producer and I'm looking at the studio health as a whole. Personality trumps everything else. It's like someone who maybe is 80% of the artist but 120% of like the personality of the studio and that can do attitude and whatnot, like that person will get my vote nine times out of ten. I would rather deal with somebody who maybe will require a little bit extra to get their work to the top level we want, but is excited and happy and adds value to the team as a whole, than I would bring on somebody who maybe is like a complete crusher but kills the vibe in the studio.

Joey: Do you feel that same sense ... You know, we talked about risk earlier, in hiring a small studio. Does that play into it too? Would you rather pay someone who's more expensive, maybe not as good, but you just know they're gonna get it done. You're not gonna have to babysit them. You can sleep like a baby.

TJ: Yeah, yeah. I think exactly that. It's like I feel more confident moving forward with that person knowing that they're gonna have a great attitude and help get it done than I do with ... Somebody who's like a top tier person might bring kind of an air of, "I know what I'm doing and you kind of need to let me do my thing," and maybe that thing, maybe they're right to a certain degree, but that thing isn't what's needed in the project at this stage or maybe that friction creates breakdowns in process down the road for the rest of the team and adds some risk in that sense.

Joey: Yeah. Before we move on, I wanted to ask you one thing because this is something that ... Every once in a while, I'll hear about some freelancer, like they're so talented but they're very difficult to work with because they push back, you know? From your perspective, what is it ... If you ask a freelancer to make a change that objectively is gonna make the animation less cool and it's not gonna look as nice on their reel, and they push back saying, "No, that's a bad note. That's not gonna be cool," what does that do in your mind?

TJ: I don't necessarily ... So, for me, it's more about knowing when to push and when not to push, and I think part of that is on the studio and the producer who've hired the freelancer. I think what happens a lot of time is from the studio end, they're not communicating with that freelancer. Like, they feel like, "I hired you to do a job, just do the job," but at that level, it's like what they're bringing to the table, like I said, might be right. Like, maybe hey, this isn't great. Like, what's the reason behind this?

TJ: So I think the transparency actually helps a lot between the two, and so if you're a really transparent producer and creative director who are like, "Hey, we know this is gonna kind of hurt the quality of that transition but here's why and here's why we have to do it," and/or like, "Hey, we're gonna do this because the client's really adamant about it, but we're gonna make a director's cut version where you'll still get to do that shot the right way," or finding other ways to have that conversation, but then there are a few ... I think we work in a really great industry where everyone, for the most part, is amazing to work with, but there are a few out there who are like, "No, then I'm not doing it." Those people just won't get returned businesses often. You know? It's like, "Why would I hire that person again if I know they're gonna be that difficult?"

Joey: Yeah, I can see why you're such a good producer, TJ, because the way you answered that was really perfect. "Maybe they're right. Let's be transparent about it," and all of that stuff. So, let's talk about your unique experience both being on the studio side, on the vendor side, but then also on the client's side. It seems like in your career, you've kind of jumped back and forth a few times, which is really kind of cool. The first thing I want to ask is, what do you see the average motion designer having the wrong perception about? I mean, sometimes especially on social media there can sort of be this "us versus them" mentality where we're the studio or we're the freelancer, we're the artist, right? Then we've got the client and we've just got to put up with them. Are there things that from the client's side, you think would surprise someone with that attitude?

TJ: Yeah, I think ... I don't know what would surprise people, but I guess what I would say to that is I definitely been on the vendor's side where I'm like, "These clients are idiots. That is such a terrible, ugly idea," and I think that's a pretty common ... To your point, it's like an "us versus them." It's like, "Why won't the client let us make the thing," you know? "They hired us to make the thing, so let us do it." Just leave us alone and we're gonna make it great, and I think there's a time and place for that to a certain degree, but I think what you lose on the vendor's side is, like I said earlier, you've been hired for one project, and so you've been hired for maybe say six to eight weeks on the healthy end to partner on this thing, right?

TJ: You're talking to an agency who's been integrated with that client for six months to multiple years and someone who holistically can see where this particular asset lives in the ecosystem of the entire campaign or just the needs of the client and what they're up to with this, and so while, yes, maybe changing that line is a real pain in the ass for the animators and messes up a transition or something. Maybe that's really solving the true ask that the client's looking to solve and the vendor, who's just been on-ramped a couple weeks earlier just doesn't have visibility to that, and so I think that's part of it.

TJ: I think the other part is I don't think as a vendor you get to see how often the agency might actually be fighting for you. Not all agencies. There's some that will just use you as vendors to do their bidding and basically become button pushers, but a lot of times there's creatives who have sat in meetings, like really fighting to get the thing that you want, but you're not part of that conversation, so you don't have visibility to it, and so I think that's the other misconception. I think creatives come to motion studios because they're fans of their work and they're excited to get to work with them and do everything they can to get that studio to be able to do what they do best.

TJ: On the vendor's side, you don't see that, and especially on the artist's side, right? Maybe the EP on the vendor's side gets to see that, or maybe the creative director, but a lot of times, the actual animators and designers doing the work are even farther removed from that conversation, so they're just literally told to do this thing that seems so counterintuitive with no context for why they ended up there.

Joey: Yeah, that's really good perspective. What I've found is generally everybody wants to make something really cool, especially when you're like a junior artist early in your career. I mean, that's what it's all about. You're certainly not doing it for the money at that point and on the client's side, typically that's what they want too, but there's just so many forces at play, especially when you get big brands involved. There's just so many stakeholders. So, I want to talk about a trend that has been happening for a while now. I mean, maybe even like a couple of decades, but it's really started to ramp up, I think, with a lot of the tech companies.

Joey: That's this trend of ad agencies, but also even product companies. You know, Google and Apple and Facebook are building their own in house teams as opposed to going out of house to a studio. So I'm wondering if you could just talk about what is sort of driving that. Is it just money?

TJ: Yeah, I mean, it's money. I mean, it's ... Well, it's money and efficiency, right? On one hand, it's pretty simple economics, right? You're paying ... You know you're overpaying for artists compared to what you can get for a local freelancer. You know you're paying this additional mark up and you know you're paying for additional producer and production and overhead fees and all that stuff, so yeah, it's far more lucrative to bring all of that internal than it is to send that money in house, but on the efficiency side, there's also like you're on-ramping a new team constantly, right? Every new project means you're kind of trying to catch up a vendor on the background and why you ended up here and what you need done and all that stuff.

TJ: Some vendors will get it and some won't. The more vendors you get involved, the more opportunity there is for misalignment on visual direction and storytelling and all that stuff, so by building an internal team, you're really making an efficient team who knows the client inside and out because they live it, breathe it, they're sitting there with the people that are making those decisions, and then they can on-ramp them instantly instead of taking the time to bid it out to multiple companies and wait a week or two for the pitches to come back and all that stuff. You've got a team that can turn key the next day.

TJ: So, it's an interesting time, because it used to be, when I was starting out, you never wanted to work with the internal team because the real talent was at all the big studios, but now actually the companies are paying more than most of the studios, so you've got the same talent that used to be at Buck that's now sitting internally at your disposal.

Joey: Yeah. It is a really interesting time. I mean, from the perspective of, let's just say, an ad agency, there's these obvious pros to having your own in house team, and I think the second one that you talked about, this idea that the person that you're working with, they know the brand. They've worked on five other projects and they know your agency sensibilities and they've probably worked with the same art director and copywriter before. That's an incredibly ... just makes everything faster, more efficient. Are there any cons to that? For example, I've freelanced internally at agencies before and talked to the staff artist there. Again, there's kind of this perception thing, like, "Well, the in house team isn't quite as good as if we go out to this studio, so when we have a bigger budget, we're gonna go out of house." Does that still exist?

TJ: So yeah. I think that perception still persists. It's getting better for sure because suddenly you're getting such high level talent. I think you're getting ... This is a dangerous thing to say, but I think you're getting some of that talent more on the client's side than you are on the agency's side. I think the agency's side might still be struggling to pull the same caliber of talent that a big studio would, but I do think on the client's side, especially in the tech industry that you're suddenly getting access to a lot of high level talent that wasn't there before. On the agency side, in terms of working with an internal team, Instrument's actually really unique. I haven't perceived it here, but when I was at Goodby and the other places, the internal creatives hated working with the internal motion team or editorial or anything even though they were delivering at the same caliber as a big studio.

TJ: It took me a while to figure that out when I was starting out until I realized I was kind of working on the broadcast producer's side for a while and what happens is let's say I'm running a big national spot, right? We're getting to animate and finish and do all this big stuff, and you have two things. One, you said it in another podcast and there's not a great term for it, but the star fucking thing of, "I have the money? Hell yeah, I want to work with Buck. They're gonna make me cool shit and I've always wanted to work them, so I'm gonna spend the money there," versus, "I'm gonna work in the basement with my internal animators that I see at lunch every day." You know?

TJ: It's like you can't compete on that level but then even further than that, and this is shifting as budgets are shifting, but especially back then when that was kind of like the end of the hey day of the ad world, you also had broadcast producers who are working constantly and creatives who are working around the clock who can stay at their desk and get put on multiple projects and get a sandwich down the street versus, "Hey, I'm gonna go work in LA for three weeks. I'm gonna stay at Shutter's for three weeks. I'm gonna get lobster rolls every day. I'm gonna get a personal driver to take me around." So, which one would you prefer to work with, you know?

Joey: Exactly.

TJ: I struggled with this when I switched actually from my original post house job at Spy and I was kind of doing some sales there too, and I was trying to figure out why ... I'm two blocks away from the agency. Why can't I get more of the work? Why is it still going to LA? We're doing such great work. Why aren't they coming here? Then I switched to the agency side and it was like, "Oh, this is why. I can't compete with that. There's nothing I can do to compete with that level of pampering that you get when you get to travel for work." So, that's kind of like the ... Does that answer your question?

Joey: Yeah. I'm glad you told that story, because I had the exact same experience and for me it was working in Boston. Literally our office was across the street from Arnold Worldwide, and we would do everything in our power to get them to bring us work because the stuff we were doing and a lot of the stuff they were doing, they didn't need to go to New York. They didn't need to go to LA, but then finally somebody filled me in and they said, "Well, listen. When they go to New York they get to stay in a nice hotel. They get to go to Peter Luger's and the head of the studio takes them out and there's a beer fridge there." It seems so shallow when you're a young artist trying to make your mark, but then ... I think it's actually smart to have some empathy for the people in house at ad agencies that live that life.

Joey: You talked about it a little bit at the beginning. You know, in Boston when I was sort of at the peak of my career running a studio, that mentality and that lifestyle was still very much prevalent. The creative director who never goes home and has a bottle of bourbon in the desk and yells at everybody and freelancers leaving in tears and stuff like that, is that still the case at agencies that you've seen or is that starting to change a little bit?

TJ: That's a great question and I'm probably a few years removed from it. So, when I left my agency position, yes, it was still very prevalent, and I think there's some old school agencies that are still afloat that haven't really adjusted their process. Those places, it's just like expected, if you want to be in this industry, you've got to give it 100%, seven days a week. The reason I left the agency world at the time was there was basically like a three month period I didn't see my wife. I was getting home at 3:00 AM and I was leaving by 7:00 AM. Like I said, I literally had multiple editors break down in tears because we would get ... It'd bee 6:00 o'clock and we'd get feedback that meant we had to work all night long for a 9:00 AM presentation and there was ... If you said no, then you probably wouldn't get hired here again. It's like, no just wasn't an option at the time.

TJ: There's still some places that are like that. Yeah, there absolutely are and I think it depends on your market that you're in. I think that has a lot to do with it, and the type of agency you work for, but I do think there are newer agencies who are trying to make adjustments there and I do think the internal teams on the client's side are doing a much better job of managing their time and staying closer to real hours. I'm not gonna say that they're true business hours. I think a lot of those places still put in a lot of overtime but certainly better than it used to be.

Joey: Sure. Yeah, so that brings up something I've been hearing from a few people recently that ... You said this earlier. It's harder and harder to hire sort of experienced, high end talent at a studio and I'm sure also on the agency's side and part of that is because you can now go work for Google and have a pretty incredible ... a giant salary and incredible benefits and a more balanced kind of work life thing. I'm curious, A, has the effect of those tech companies, and their infinitely deep pockets, has that made it more difficult for agencies and for studios to hire talent and what can agencies and studios do to hire and retain talent when they can't compete with salaries?

TJ: Yes, it's had a massive effect on the level of talent that's out there and what they want their rates to be and what not. So, just to give a polarizing example, I've known multiple freelancers who've taken like six month contracts at Google for over 200,000 in six months. It's like, so they can ... They know, like, "Hey, I might not want this long term, but if I can suck it up for six months and make a couple hundred grand and then take some time off ..." So, there's a lot of money on the table that, especially studios, can't compete with.

TJ: Agencies are ... It depends on the size of the agency. They might want to invest in that or not. I feel like agencies have a little bit less of a leg to stand on because of what we talked about before. It's like well, we're probably gonna pay you better than a studio but still less than you can make on the client's side, and when it comes to actual work that's gonna go out into the world, you're probably gonna pre-visit and help us out, look and everything but we're probably gonna go out of house to actually execute it. So, you're not even getting necessarily the cool work to pay off, whereas studio, what they have going for them is like diversity in clients, diversity in types of animations that you'll get to work on and then like also just the culture, right?

TJ: To a certain degree, no matter what you do, if you're in house on the client's side, it just feels corporate, no matter what. You're in a big, giant corporation versus like a smaller studio where you just get to hang out with your friends and make cool animations all day.

Joey: So, for a studio, it's really the key is ... I visited Gunner last year and just the vibe in there, you just want to hang out, you know? Because everyone's cool and it's fun and you look to your left and there's this amazing 3D thing. You look to your right and there's cell animation going on, and so that's kind of the carrot to attract talent there. It's an interesting problem, I think, because I always looked at it like at Motion Design Studio, their product is animation and they have to make a profit on that, whereas Google, their product is so far removed from the actual animation that it's almost a different budget, I would imagine, you know?

Joey: You've got companies using their marketing budgets to pay a studio but then Google can use their product budget which is 100 times the size to pay someone 200,000 bucks for six months.

TJ: Totally, and that 200,000 for a person is pennies to a company of that size and also makes them far more profit to pay that one or two individuals versus how many projects they would have to unlock with an outside studio. So, even though this 200,000 sounds like a large number, it's saving them a ton of money in the long run, so it makes sense for them.

Joey: Do you get any sense in the industry that ... This is something I kind of hinted at in the Motionographer article I wrote. Like, that the companies that have the deepest pockets and are able to ... I mean, I'm sure they're also paying studios really gigantic sums of money to do work. Some of those companies have been in the news lately for sort of shady things and there's a lot of ethical questions. Is any of that percolating throughout the industry? Should we really be using our talents to promote this thing?

TJ: I think that question's being asked but I don't think a whole lot's being done about it, and I think the truth of the matter is ... I'm gonna be careful not to name any of those companies.

Joey: Sure.

TJ: You might not want to take that internal job because of those reasons, but you might go work for a studio that accepts that job anyways, and you're stuck working on the same thing, because a lot of those tech companies are the ones that are paying the highest for the animation studios, so the animation studios aren't really in a place to say no to those opportunities. Now, there's some really gross ones. There's like ... at Oddfellows we had a line in the sand. We're not gonna take on Big Pharma. We're not gonna take on oil. Stuff like that. Cigarettes and all that stuff. That's just stuff we didn't believe in, we weren't gonna support, but you start getting in the tech side and it gets a little bit grayer, a little bit more ambiguous and are we okay with this? I don't know. I don't like that thing they're doing, but they're 80% of our work stream, so can we really afford to say no to them moving forward? It becomes a harder decision to make.

Joey: Yeah. I think that's gonna be a big question over the next decade or two. It's kind of part of a much bigger question about just the concentration of influence and power and wealth in the hands of a few tech giants, but it's interesting how it's affecting our little motion design industry. Kind of starting to grapple with these things. So, I have a couple more questions for you. You know, so you were a co-founder of Oddfellows. Like, one of the best studios in the world. Incredible work, incredible talent. There's lots of amazing talent coming out of Oddfellows and going freelance and stuff, and now you're back on the agency side. I'm just curious if you could talk about what led to you leaving the studio to go back to an agency.

TJ: Yeah, totally. To be honest, it was less about leaving Oddfellows and more about seeing an opportunity with Instrument. I was super impressed and blown away by the leadership at Instrument and it was really aligned with kind of where my hopes and dreams were for starting Oddfellows in the first place just in terms of the way they treat their staff, the work life balance that you see ... Even though we're a couple hundred person strong agency, the place is empty at like 5:30. It's like the people really value their personal life here and the clients they were taking on and the opportunities they were doing, stuff for the big, organizational change and just stuff that was improving the world.

TJ: I was really impressed by that, and it also kind of came back to ... To be totally honest, I just never set out to work in the animation industry. I love the animation industry now, but that was never my ambition when I got started. It's just kind of where I ended up, and so I had a bit of a ... I was missing some of the openness to approaching a problem a client had with the open ended nature of this could be anything. So when you're building a studio and when you're looking at an ask, a brief that comes in, you're looking at, like, how do we play this to our strengths? How do we make this a cool cell animation or what have you, instead of should it even be a cell animation? Should it even be an animation at all? Like, should we do a social campaign for them? Should we do an installation piece somewhere?

TJ: It could be a little bit more open ended, and that was such like an organizational shift that they still might ... may or may not do. I'm not really privy to their future plans, but it was just like ... It felt like such a huge change was still needed to be made and I didn't know that, to be totally honest, I had it in me personally to ... Starting a studio is a huge emotional and personal investment, and this was almost like starting over again in that sense. It was like, man, we've got to make some big changes to get to that level. Do I really want to do that? Versus connecting really deeply with the owners here at instrument, where they're already there and they're doing some amazing future stuff that it just blows my mind.

TJ: I can't really talk about the projects [inaudible 01:42:06] but one really cool example is when I'm running an animation project here, I also have developers sitting next to the animators and we're seeing prototypes get made in real time, and that level of kind of future thinking is really fun, and then also just having the infrastructure of an agency. It's like when you're at that 10 to 15 size, like I was saying, especially at the EP level, you're kind of like a lone island. You're kind of wearing all the hats. You're the HR. You're the new business development. You're the marketing guy. You're everything, every day. You just kind of have to come in and say, "What am I gonna do today?"

TJ: Where here, if I want to put an initiative in place, I have a full team that can actually make that thing happen and I have the capital to make it happen. So, that was some of the things I was missing on being within a smaller studio. That said, being on the back end of it, I still deeply miss my team and having that comradery of such a close knit group that kind of built something together from the ground up.

Joey: Yeah. You just touched on so many things that are ... I can relate to, I'm sure a lot of people can relate to, and I think a good takeaway from this is that you sort of ... You got a little older, you got a little more experience and you got some perspective on what's actually important to you. One of the things that I think anyone listening to this should take away is that it's okay to go after something and get it and then realize it's not actually what you wanted and then to change and do something else. Studios come and go and co-founders come and go and I went through something very similar, TJ, and it's good. It sounds like you're now in a place that's like it just fits you better, you know?

TJ: Yeah, 100%, and I think it was the right move for everybody involved. It's just I think it got to a point where you could feel like I ... Not that I wasn't invested, but certainly that I had other ambitions or what have you, and I felt that wasn't fair to them or to the staff or anything, and I think it was super important that everybody followed their own story and own path, and I think it's actually worked out incredibly well. We're all really good friends still and I think it's worked out really well for them and for me.

Joey: That's awesome.

TJ: Yeah.

Joey: Oddfellows is still killing it.

TJ: Oh, they're crushing it.

Joey: [crosstalk 01:44:29]

TJ: They're releasing so much good work right now. Yeah, they're killing it.

Joey: Yeah, still at the top. My last question, this was ... I've got to say, I learned a ton talking to you about all of this stuff. This was so much fun for me. I hope everybody took notes and learned a lot. The first part of this was probably a little bit scary to listen to for those young artists out there thinking, "My dream is to open a studio," and you kind of gave a dose of hard reality, but if there's still somebody out there listening, thinking, "You know what? I think I've got what it takes. I do want to open a studio," what advice would you give them to try and help them avoid having their soul crushed at some point?

TJ: Yeah, I think ... What would it be? It would be making sure that you realize it's a really collaborative community and it's okay to ask questions. While you might want to fake it til you make it with your clients, you don't have to fake it til you make it with the other studios out there. I regularly talk to Gunner. I talk to [inaudible 01:45:34] from Golden Wolf. I talk to Jay from Giant Ant, Seth ... For all these places, it's like everyone's just super collaborative and willing and wanting to help. So, step one, start asking questions. Step two, don't just quit your job and go for it one day. Have a plan. Really, like I said earlier, you need to realize that your position is gonna be more on the business end and you probably didn't go to school for business as an animator. You probably went to school being a designer or an animator, so that's totally fine, but go fill that gap and go read all the books you can, you know?

TJ: Like I said, get your book. Go check out Chris Doe's videos and all his stuff. Chris Doe has ... What do you call him? A mentor or a ...

Joey: A business coach?

TJ: Business coach that he works with, [Kier 01:46:27] McClaren, that I worked with for a bit too. Find people like him and hire them and invest in yourself moving forward. I think that's the hardest part when you're first starting out, is it costs a lot to invest in yourself, but it's gonna save you in the long run and it's hard to see that trajectory from day one, where I don't want to spend $300 now to get this thing, but ultimately it's gonna save you thousands or tens of thousands in the long run, because you're gonna speak to people who have run that same road and know the pitfalls to watch out for, and then I think the other thing is, like I said before, just be really honest with yourself.

TJ: What is it I want to get out of this situation? Because I think people get so excited about the idea of a studio that they don't fully communicate with themselves internally on what it is they're hoping this ends up being, and then using that information and that learning to really write out clear mission statement, clear goals for the next five years, and keeping themselves accountable to that. I think that's really important.

Joey: I really gotta thank TJ for being so generous with his time. Seriously, he spent like two hours talking to me, and also being generous with his experience, and for being completely transparent with these numbers. Often times in this industry we call for more transparency but we don't really go all in with it, and TJ is doing everybody an incredible service by speaking publicly about this stuff. He's also very approachable on social media, so if you have any questions, you can find him on Twitter at TJ_Kearney, and I'll link to that plus everything else we talked about in the show notes on SchoolOfMotion.com.

Joey: I hope this one was an eye opener for you, because it definitely was for me, and if you like this episode, if this podcast helps you get through your day and keep on top of the industry, it would mean the world if you took a minute to go rate and review on your podcast platform of choice. iTunes, Stitcher, Google Play. It really helps us spread the word about School of Motion and it just means the world to us. That's it. Until next time, later.

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