Zach Blume — Co-Founder of Portal A on 2006 Web Series, the Wheelhouse Investment, and Building with Your Childhood Friends

This interview features Zach Blume, Co-Founder and President of Portal A.  We discuss how he built a 360 monetization strategy for an early Internet video series, launching one of the first branded content studios with his childhood friends, creating one of the most well-known and longest-running digital formats in YouTube Rewind, how Portal A ended up selling a minority stake to Brett Montgomery's Wheelhouse, why feeling like outsiders is central to their identity, and what's up next for the Portal A team.

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Interview Transcript

The interview was lightly edited for clarity.

Chris Erwin:

Hi, I'm Chris Erwin. Welcome to the Come Up, a podcast that interviews entrepreneurs and leaders.

Zach Blume:

We built a business model around it that included merchandise, ad revenue share, ticketed events, and sponsorships. And so we actually ran that show at a profit, even though it was early internet video web series. And the idea was to build an entertainment property on the web that could become multi-season, could eventually travel to TV, which it did. It later became a TV series called White Collar Brawlers. It was super experimental, and I would say, looking back on a fairly innovative for three guys who had really no idea what we were doing and had no training in any of this, we built an entertainment property on the internet that was profitable.

Chris Erwin:

This week's episode featured Zach Blume, Co-Founder and President of Portal A. So Zach grew up in Berkeley and had a self-described normal suburban life of sports and friends. Zach then went to University of Oregon to study political science and pursued an early career running local political campaigns in California. But an opportune moment reunited Zach, with his two childhood friends to create one of the internet's earliest digital series White Collar Brawlers.

After some unexpected success, the friend trio then became the founding team for Portal A, an award-winning digital and branded content company. Some highlights of our chat include his 360 monetization strategy for one of the earliest internet video brands, what it takes to co-found a successful company with your friends, how they landed a strategic investment from Wheelhouse, why feeling like an outsider is central to their identity, and how they're building towards the next massive creator opportunity. 

All right, let's get to it. Zach, thanks for being on the Come Up podcast.

Zach Blume:

It's a pleasure to be here.

Chris Erwin:

From our conversation yesterday, amazingly, I believe this is your first podcast interview ever. Is that right?

Zach Blume:

It's true. A lot of interviews over the years. Some predating the podcast era, some during the podcast era, but I'm honored to be invited onto yours. I've listened to a bunch of episodes, and we'll see how it goes.

Chris Erwin:

Awesome. All right, so as is typical, let's rewind a bit before we get into the whole Portal A story, although it actually starts pretty early on. So why don't you tell us about where you grew up and what your childhood was like?

Zach Blume:

Yeah, I grew up in Berkeley, California, the son of two die-hard New Yorkers who had moved out to California. My dad was born in the Bronx. My mom was from Manhattan. They were part of the New York exodus to California, and I was the first kid in my family who grew up in California and, of all places, Berkeley, childhood filled with lots of sports and playing in the street and all that good stuff. And the really interesting tie to the Portal A story, obviously, is that I met my two co-founders when we were somewhere between four and five years old. The stories differ, but we met in kindergarten, and we're close friends basically since we were little kids and played a lot of basketball together growing up. And the court that we played basketball in was called Portal A, which eventually became the name of our company 25 years later. The founder story of Portal A is very tied up in the childhood story of all for all three of us. I live in Oakland now, so I didn't stray too far from home.

Chris Erwin:

Got it. I remember in doing a little bit of research for this episode, I was trying to look up Portal A parks around the US, and I kept finding some in Orange County, so I thought you were an NorC kid, but No, you're a NorCal kid.

Zach Blume:

I mean, I think if there's an opposite of Orange County, it would probably be Berkeley.

Chris Erwin:

That's probably right.

Zach Blume:

But the court was actually an El Cerrito, which is an adjacent town to Berkeley, and it still exists. It's still around, and we should probably go play some hoops over there, but we haven't for years.

Chris Erwin:

Yeah, that'd be fun. So I have to ask, what did your parents do?

Zach Blume:

My dad has a business background. He runs and, up until actually six months ago, ran an investment advisory firm helping individuals manage their investments. It was a small company, five to six employees, just a great business, really community based, all about relationships and helping people manage their life and their money. And yeah, it's taught me a lot about business growing up, for sure.

My mom was a therapist. She's retired now. She was a private practice in Berkeley. They've known each other since they were 20. They actually both went to the Wright Institute, which was a psychology graduate school in Berkeley. My dad was a psychologist briefly for about six months before he went back into business. And my mom was a therapist for 25 years. It was an interesting mix of business and psychology growing up, for sure.

Chris Erwin:

Got it. And were there any siblings?

Zach Blume:

No siblings? I'm the only one and-

Chris Erwin:

Oh, only child. Okay.

Zach Blume:

Yeah, interestingly, five of my closest friends, all groomsmen at my wedding, were from that same kindergarten class where I met Nate and Kai, my two co-founders. So there's definitely been a brotherly nature of those relationships. And at this point, I kind of consider Nate and Kai almost like brothers. We've known each other for 35 years, and we've been in business together for over 12 years, so it's pretty deep. Those relationships run pretty deep.

Chris Erwin:

Was there a part of you early on where you thought you might go into business and finance or become an investment manager like your father?

Zach Blume:

So there was also a lot of political kind of conversation and learning in my house. I remember from a very early age, my dad, when I was like eight, he would try to sit me down and read the Sunday Weekend Review in the New York Times. And it was like torture for me. But I think it got in there somewhere.

In college, I actually studied political science and, for years, worked in the political world after I graduated from school. And I really thought that was my path, and it was for many years. I worked on campaigns. I started managing campaigns. I worked for political communication shop in San Francisco for years. I kind of burned out on the world of politics. I've since been re-engaged in a lot of different ways. But when I burned out on politics, that's when I thought I was going to go into business.

I left the political world, was studying to go to business school, doing all the GMAT prep, and that's when Nate and Kai came to me and said, "We should make a web series together." Because I had a three-month gap, and it sounded so fun. We had made some stuff together just for fun earlier on. And so, while I was studying for the GMAT, I joined Nate and Kai to make this web series in the early days of internet video. And that's kind of the origin story of where we are today is that that web series, it was called White Collar Brawler. It was totally weird and crazy and awesome, and it started us on our journey to where we are today.

Chris Erwin:

Got it. So going back even a bit further, I'm just curious because you met your co-founders, Nate and Kai, back when you were in kindergarten, as you said, four to five years old, when you were in middle school, or when you in high school, were you guys part of the theater club? Were you creating any types of videos for your classes? There's something about meeting people early in your childhood, particularly in digital media, that I think blossoms into different relationships. So was there any kind of through line early on where you were interested in media entertainment before getting into PoliSci, which as part of your early career?

Zach Blume:

Yeah, I think there definitely was for Nate and Kai. There was less so for me. So Nate and Kai started making, maybe not in high school, but in their college years, they both went to school on the East Coast. This is like 2003, 2004, 2005. They started making internet, video, and web series when they were in college. And Kai was a film major, so he had some training, and they started just playing a lot of comedic stuff earliest day pre-YouTube, so quick time player-type stuff.

So yeah, high school, I'm not so sure college for sure for them, at least it started building. And then, right after college, the three of us, plus another friend, grabbed a flight to Hanoi, bought motorcycles in Vietnam, and traveled across the country, and we made a web series called Huge In Asia.

So it was like a 30-episode comedy travel web series, kind of just chronicling our journey across Vietnam. And then, they went on, I had to come back to the States for some work, but they went on to Mongolia, China, Laos, all sorts of different countries across Asia. That's where it really started for us the idea that you could not be in the formal, either entertainment industry or advertising industry. You could buy a pretty shitty camera, have an idea, start producing content and build an audience. And that was 2006. So the interest in internet video as a medium really started there.

Then we all went our separate ways, and all did kind of normal early career professional stuff, but that Huge in Asia as an idea and an adventure was really the starting point for us. So yeah, so I would say the interest in video and film and just the distribution of it online started college years, and then the year after, we went to Asia.

Chris Erwin:

Got it. So just to add some context here, because I think YouTube was founded around 2004, and then it was bought by Google around '05, '06 pretty shortly after founding. So when you're coming out of college, I think this is around a 2006 timeframe, as you noted, when you guys decided to go to Asia and to do this motorcycle tour, was there a goal of, "Hey, there's an explosion in internet video, we have a chance to build an audience and make money off of this?" Or was it just, "Hey, this seems like a really fun thing to do. We're just coming out of college, we're kind of this in this exploratory phase, we like spending time with one another, let's go do this and see what happens." When you were thinking from the beginning, what was the end goal of that project?

Zach Blume:

Much more the latter. I mean, it was purely experimental. It was all about the adventure. I think there was a sense that we were at the dawn of something new, and I think that YouTube, Vimeo, I mean all the other platforms in the investment of history at this point, but there was an explosion of internet video technology that was enabling people like us to start making stuff. So I think there was like a sense that something was happening. It definitely was not a money-making endeavor. In fact, it was the opposite. And it was really just to experiment and play and see where it took us.

Looking back on it, 15 years later, 18 years later, whatever it is, I think it's 100% served its purpose. We got our feet wet. We started experimenting. We started learning what worked, what didn't work, what audiences responded to, what made us happy. It kind of gelled our relationship as young adults versus as kids. And we never would've known at the time, but it did 100% lead to Portal A, and that's to where we are now.

Chris Erwin:

Okay, yeah, I hear you. I think, looking back in retrospect, it was definitely a catalyst to the forming of Portal A and where you got to where you are today, but it wasn't because when you came back from that trip, it wasn't like, "Oh, let's found Portal A and let's get going." You actually entered into the political realm for two to three years before founding Portal A, right?

Zach Blume:

Yep. That was always my plan, and that was the career I was going to pursue for sure.

Chris Erwin:

So, but the seed had been planted, but yeah, in '06, for the next two years, you become a political campaign manager. What campaigns were you working on?

Zach Blume:

First campaign was a Congressional campaign in Southern California. That was actually my first job out of college. We got trounced by 22 points in a very heavily Republican district by Mary Bono, who was Sonny Bono's widow. We had a candidate that we really liked, and it was the 2006 election, so it was kind of the midway point or the later stages of, I guess, Bush's first term. And there was a ground swell of just whenever there's a presidential election, two years later, the other party is the one that's like kind of getting their grassroots organizing on.

So it was definitely an exciting time. It was an exciting election year. I happened to work on a campaign that was in a... It was Palm Springs. It was like that area, heavily Republican area, but I learned so much, and I was running a third of the district, and I loved it. I loved organizing. I felt like I was on the right side of history and doing the right thing.

That then led to this fellowship that I did called The Coro Fellowship. I met one of my best friends on the campaign who had done the Coro Fellowship, and it was a year-long fellowship in political and public affairs. Everybody listening to this podcast will never have heard of Coro, but in the political and policy world, it's well-known and well-regarded, and that was a great experience. I got exposure across a bunch of different sectors, including government, labor unions, business, nonprofits, et cetera.

Out of that, I started managing a campaign for the California State Assembly in Richmond, California, with a candidate, Tony Thurmond, who is now the Superintendent of Public Education in California. So he's gone on to do pretty big things. He's an amazing guy.

And that led me to work at Storefront Political Media, which was a political media and communication shop in San Francisco that, at the time, ran all of Gavin Newsom's campaigns. He was then the mayor of San Francisco, obviously, is now the governor of California.

I ran the mayor's race in Houston, of all places, elected Annise Parker, who was the first lesbian mayor of a major American city. And she was a fantastic executive out in Houston and then had a bunch of different clients, including firefighters unions, individual candidates. Ultimately, I was working for a client that was leading initiatives that didn't necessarily align with my own political values. And that was part of what led me to say I was ready to move on from the world of politics. So it was a fantastic experience, I learned so much, but that's what kind of prompted me to want to go to business school, which is what I was going to do until Nate and Kai came along and said, "Let's make a web series."

Chris Erwin:

Yeah. When you were working on these political campaigns and also working with Storefront Political Media, which is a national communication media and PR firm, were you bringing some of your grassroots internet video tactics to help build community, to help build influence and sway some of these elections? Was that part of kind of some of the unique flavor that you brought to these teams?

Zach Blume:

For sure, I was definitely the internet guy at that shop. I mean, there were a couple of us, there was a couple of coworkers who were of my generation. This was just when kind of Facebook was becoming a powerful tool for communications pre-Instagram, pre all those other platforms we're familiar with now. I definitely brought my expertise in video and the distribution of content online to that work. It was an interesting time politically. It was just at the advent of the internet as a powerful communications tool for campaigns.

Chris Erwin:

So then you're considering going to business school, you take the GMAT.

Zach Blume:

I got halfway through the class, and White Collar Brawler, that series, came calling. It was all-consuming. It was so fun. And we produced the hell out of that show, and it got a lot of notoriety. We got a big write-up in the New York Times, like big-

Chris Erwin:

Give us the context for White Collar Brawler again. What exactly was that project, and what were you supporting?

Zach Blume:

The log line was basically what happens when you take office workers whose muscles have become dilapidated by sitting in front of a computer all day long and train them to become amateur boxers. It just so happened that the two White Collar workers that were the stars of the show were Nate and Kai. So it was very, kind of like meta, we were the creators, and Nate and Kai were also the stars.

The experimental part of it was shooting and producing the series in real-time. So there was an experiential element to the show, meaning as Nate and Kai were training to become boxers, fans of the show could actually come out and train with them, run on the beach in San Francisco or go to a training session with a boxing coach. We had events happening throughout the course of the show. It eventually culminated in an actual fight, a licensed fight in Berkeley between Nate and Kai for the Crown. And we had, I think, 1500 people showed up to that site and paid tickets-

Chris Erwin:

Was it boxing, mixed martial arts? What was the actual thoughts?

Zach Blume:

No, just old-school boxing.

Chris Erwin:

Okay.

Zach Blume:

It was the real deal. And-

Chris Erwin:

I may have missed this in the beginning. Who funded this? What was the purpose of it?

Zach Blume:

It was partially self-funded. It was partially funded by a friend of ours who had sold, in the early internet days, had sold his tech company to Google in one of the early Google acquisitions. So he just privately financed, I mean, we're not talking about big dollars here, and we built a business model around it that included merchandise, ad revenue share, events, ticketed events, and sponsorships, which I was in charge of in addition to other things.

And so we actually ran that show at a profit, even though it was just an early internet video web series. It was actually a profitable property, and the idea was to build an entertainment property on the web that could become multi-season, could eventually travel to TV, which it did. It later became a TV series called White Collar Brawlers. And so it was actually super experimental, and I would say, looking back on it, fairly innovative in terms of for three guys who had really no idea what we were doing and had no training in any of this, we built an entertainment property on the internet that was profitable.

Back to the question, I mean, that's what distracted me from going to business school because I felt like, first of all, I was learning so much, I was having so much fun creating content with two friends, and you just had a feeling that we were onto something and we didn't know what that thing was. We thought we were going to be an original entertainment company that would just make shows like White Collar Brawler, but we knew there was something. We knew there was a lot of activity and interest in this space. And so that took up all my attention and then took up my attention for the next 12 years.

Chris Erwin:

I will say from personal experience it saved you a couple of hundred thousand dollars and a lot of agony of actually taking that test.

Zach Blume:

Right, exactly.

Chris Erwin:

And being two years out of the workforce, speaking from personal experience.

Zach Blume:

Right. I know, I know.

Chris Erwin:

So, okay. And look, this is interesting to think about how you guys, as a founding team, were gelling and coming together. When you guys started talking, "Let's do this White Collar Brawler show as a team," what was your specific role, Zach? What was it like? What are you going to focus on?

Zach Blume:

Yeah, I mean, it actually reflects the role that I now play and ended up playing when we turned White Collar Brawler into a business. So Nate and Kai are more on the creative side, the creative and production side, both had experience. They had both actually before me had left their kind of "normal jobs," moved to LA, and started making internet video with a vision for again, "We don't know what it is, but there's something going on here, and we want to be a part of it."

They had background as almost as creators themselves and also some training, actually with the physical act of production. So Nate and Kai were always much more on the creative side and the production side. And then my role was kind of capital B business. I was responsible for sponsorships. I was responsible for the operations of the show. I was responsible for where we were going to have office space, all that type of stuff. Basically the business side of creativity, and that's the same today. I mean, it's kind of like, it was just a foreshadow of the roles that we ended up playing as we were growing Portal A. And we've always had a super clear and complementary division of labor.

I would say when looking for business partners, I think that might be, I mean, your rapport and your ability to communicate is lots of things are really important, but making sure that each person, each principal has a clear role and that they actually like that role and can succeed in that role is I think one of the keys to business success. So we've always had very clear roles. We've always liked our roles and felt like we belonged where we were. That's how it started with White Collar Brawler.

Chris Erwin:

That's awesome. Yeah, I have to give you some real kudos because you take very early on in your career, and in the digital entertainment ecosystem, you take an IP concept, and you create a diversified, sustainable business model around it where you have revenue coming in from advertising, sponsorships, merch, ticket sales, that's what many different IP properties want to figure out today. And many struggle to do that.

Zach Blume:

The only we could've described it back then as well as you described it now, but yes, that's basically what it was.

Chris Erwin:

Yeah, you look around at one another, you have this culmination in a ticketed event where there's over 1500 people pay to see the fight between Nate and Kai. And so you guys look around at one another and say, "Hey, we got something here." Is the next step? Let's found a business, call it Portal A and start doing this at scale. Or did it kind of just naturally happen, saying, "All right, let's find the next project and see where it goes from there."

Zach Blume:

It was much more, again, the latter. I mean, we did know that there was something brewing; I gave ourselves, at the very least credit for that. Did not have a business model. We did not have a plan. We had a kind of a concept and an idea and a good partnership. And I think that was really important too, is just how well we worked together.

When we came out of White Collar Brawler, we had this idea credit to Kai. I believe we really wanted to do a show about whiskey, that that was going to be our next piece of IP that we wanted to develop and the concept behind the show, again because we didn't want, we were just going to be doing original series built for internet video was basically a distillery tour type show, but with a twist where there would be a membership model involved. And for anybody who was in a... 99% of viewers would just watch the show for the entertainment value, any type of good travel show that built that type of audience. But 1% of viewers would subscribe to the show and get a drum of whiskey. For each distillery that we were visiting as part of the show, they would actually get samples in the mail, and it would be kind of a whiskey of the month model married to an entertainment property.

And we were coming out of White Collar Brawlers, we were visiting distilleries, getting drunk, trying to figure out this model. And we were super hyped on it. We thought it was a really interesting way to monetize internet video through subscriptions. And we even got into the logistics of shipping, and we were really going down that path, and in the meantime, we were broke, we were like 25 years old and-

Chris Erwin:

That was my next question. How are you funding all of this?

Zach Blume:

Well, we paid ourselves an extremely nominal salary. I would call it a stipend when we were making White Collar Brawler enough to survive. And then, coming out of that, we were trying to do our whiskey show, but that stipend went away. So we were without income, really. I mean, I remember going to Bank of America at some point, and there was so little... This is one of our funny stories that we tell each other. I remember this parking lot moment where the three of us had gone to Bank of America, where we had this White Collar Brawler account, or maybe it's a Portal A account. I'm not sure. And there was, I think, less than $1000 in there, and it was one of those like, oh, shit-type moments, and I remember going out to the parking lot and being like to Nate and Kai because I was always kind of the rah-rah guy of the three of us. And just, I remember basically having to give a motivational speech about that we were going to be okay, that this is going to be okay, despite the fact that we had absolutely zero money in the bank.

That was where we were at that point. We were trying to figure out this whiskey idea, and then all of a sudden, because of the popularity of White Collar Brawler and some big YouTube videos we had made to promote the series, we started getting some inbound interest from brands. And that was never in the plan. We would think about sponsorships on our original series from brands, but never creative service worked directly to brands, and our first phone call was-

Chris Erwin:

Explain that difference for the listeners. I think that's a good nuance.

Zach Blume:

Yeah, I mean, if there was a business model, the business model we were considering was building properties like White Collar Brawler that could be sponsored by, in the best-case scenario, Nike or by Everlast, the boxing company, or by Gatorade or that's who we were pursuing for what-

Chris Erwin:

So think of title cards and brought to you by et cetera.

Zach Blume:

Exactly. Or like sponsoring events or merchandise or all that type of stuff. And we had some success, not from the big brands, but we had some success on White Collar Brawler with sponsorships from more regional brands, or like there were some beer companies and some smaller merchandising startups that were part of the sponsorship mix.

I will say that we sent out about 500 to 1000 sponsorship emails and got about five sponsors. So we worked hard at it. And so that was the model we were going to pursue even for something like the whiskey show. We were going to look for sponsors and brand sponsors in that way. We never thought we were going to build a creative services company, meaning brands, an advertising company effectively, like brands hiring us as a service provider to create content. That was never, ever something we thought about.

We started getting these phone calls. I remember being in a car one time, and I got this random call from a number I did not know, and it turned out to be a marketing manager at the Gap. Her name was Sue Kwon. Shout out, Sue Kwon, if you're out there. She was our first real client after White Collar Brawler. And we started making videos for the Gap, as kind of like a little agency production company.

Then we got some more calls. There was a Tequila company that wanted us to make a web series called Tres Agaves Tequila. They wanted us to make a web series shot in Mexico about the origins of Tequila. Then we got a call from Jawbone, which was a hot Bluetooth speaker company at the time-based in the Bay Area. They wanted us to make a music video featuring a bunch of early YouTube influencers or creators.

So we started getting these, we called them gigs at the time because literally all we were trying to do is pay our rent and so we could make the whiskey shows. We were just trying to get a little bit of income coming in so we could actually go out and make our dream whiskey show. And there were fun projects, and we weren't making advertising. We were making content, and that was a big difference for us. We weren't making pre-roll ads or 30-second ads. We were making web series for brands and music videos for brands and all that type of stuff. And without knowing it, we kind of stumbled across an area that was in high demand, which was brands trying to figure out what to do on platforms like YouTube and social media with video. We had established ourselves as understanding that world.

So that's the origin of our branded content business which became the core of our business for many, many years was just one-off phone calls, unexpected phone calls, taking projects as gigs to pay the bills, and just kind of doing our best and seeing where it led.

Chris Erwin:

Hey listeners, this is Chris Erwin, your host of the Come Up. I have a quick ask for you if you dig what we're putting down. If you like the show, if you like our guests, it would really mean a lot if you can give us a rating wherever you listen to our show, it helps other people discover our work, and it also really supports what we do here. All right, that's it, everybody. Let's get back to the interview.

What was the moment where you felt it evolved from, "Hey, it's the three of us rotating between gigs, hiring freelancers as need be, to what became a business, which is called a systematized and efficient way to deliver consistent quality around a good or service."

Zach Blume:

I think the first year was the gig model. It was just a patchwork of projects in order to generate some form of income. The second year it started to feel real. There started to be a fairly steady flow of inbound interests, and then a kind of something we be started to become known for a type of content. It was kind of humorous, entertaining, felt like it was native to the internet and to YouTube.

I think in that second year was when it started to feel like a business, and then some light clicked for me that we actually needed to do some business planning and thinking, and I had no idea what I was doing. I mean zero, negative. Negative idea what I was doing. But I had grown up where my dad was a small business owner, so I had some exposure, but I just remember being it was just like a vast sea of unknown principles and requirements that I had to navigate.

Chris Erwin:

How did you figure that out? Did you put together an advisory board? Did you call your dad? Were you calling some other friends in business?

Zach Blume:

One of our earliest advisors was not a business advisor. He was our sensei in some forms in the earliest days. And this is another shout-out to Steve Wolf, who you may know, who was on the executive team of Blip, which was one of those many early internet video platforms. He really helped us understand the space.

We did not have a formal advisory board. We did not have a board. And it was truly trial and error. That's the best way I can describe it. It was just using our brains and figuring things out through mistakes and successes. It is a total blur looking back on it, but I think we were a good partnership. We had our heads screwed on straight, and we kind of learned how to operate.

Chris Erwin:

Another important part, too, is, like you said, when you all looked at your bank account, and everyone's face went white, but you were the rah-rah guy, which is like, "Hey, guys, we're going to figure this out. Where there's a will, there's a way." And I think that's a very important role. Shout to Steve Wolf. He was one of the execs that oversaw the AwesomenessTV network when I was there in 2014, 2015 timeframe. Super sharp guy, OG in the digital space. So not surprised to hear that he was a valuable advisor to you.

All right, so then I think there's another pretty big moment where your business takes an even bigger step up. And I think this has to do with becoming the official partner for the YouTube Rewind project. The moment where you felt, "Okay, we're really onto something here."

Zach Blume:

Yeah, it was coincidental. We were introduced to somebody at YouTube in 2011 as a three-person team that was making internet video content and mostly on YouTube. And Rewind was just a twinkle of an idea. I mean, it was like there was a minor budget. It was basically a countdown of the top videos of the year. The budget was, I think, $20,000 in the first year to make Rewind. And we shot it in a small studio location. It was one of our earliest projects, and it was before Rewind became Rewind, the big thing that many of us are familiar with. It was a major validator for us to start working with YouTube directly as a client. And Rewind eventually became a project that defined our growth for many, many years to come. But it started very, very small.

Chris Erwin:

From that project. You've been around for now for 12 years, being founded around 2010. What did the growth in scaling part of your business looks like? With YouTube Rewind and other marquee projects, you're starting to get a sense of what are we actually building towards. Was there a point of view there or like, "Hey, we have inbound interests, we're working with brands and advertisers," all of a sudden we're working with publishers, and were you just kind of being more reactive or was it a mix of being reactive and proactive?

Zach Blume:

The best analogy I can draw is to kind of riding a wave. This may resonate with you, but I don't think we knew what was around the next corner or what the next thing was going to look like. We were just building momentum in those early years and taking each project as it came. We knew we had something. We knew we had a good partnership. We knew we were starting to bring some really interesting, smart people to the team, clients that were really willing to push some boundaries. And I was learning as I went along how to run a business, and Kai was learning, and Nate was learning how to create amazing content, and there was not a lot of foresight. It was mostly about riding a wave and seeing where the wave took us. Then doing a really good job. That was really important because every project, the success or not success for the project kind of dictated what the next chapter was going to look like.

So we just focused on trying to build some good fundamentals for the business, trying to make sure we were profitable because we had to be and just making work that we were proud of. That's the extent of our planning, I think, was just what did the next three months look like and how do we keep riding this wave?

Chris Erwin:

Yeah, and that's something I think worth emphasizing for the listeners where it's, so often people will say you have to be super strategic in planning every single move and where is their white space and how are you going to beat out your competitors to get it? But I think when you are building a small business, and this is something that I reeducate myself on consistently with RockWater, it's really about the basics, which is know your core service offering and nail it and delight clients, from there, that's really the core foundation from where you grow and where other things can emerge. And I think that's a testament to really what you guys have done for well over a decade is you know your lane, and you operate so effectively within it that is now, over the past few years, created some other really exciting opportunities for you, your success in your lane led to the investment by Wheelhouse a couple of years back. So how did that come to be? Because I think that's a pretty big moment for the company.

Zach Blume:

That fast-forward a bit over years of misery and happiness and everything in between. We threw ourselves entirely into growing Portal A for the bulk of our 20s. It was all-encompassing, tons of sacrifices that were made to other parts of our lives, which I'm okay with looking back. I do think that 20s are a good time to throw yourself and just be completely focused and passionate about something like this. And we built that branded business. We diversified the type of clients we were working with. Projects got bigger and bigger, Rewind got bigger, and all the rest of our projects got bigger.

Starting around 2016, we wanted very badly to return to the original thesis of Portal A, which was creating an original entertainment properties for the web. That's where it all started. And we had spent so many years working with brands, and it was fantastic, and it was a good business, and we got to make really cool stuff. But we had this hunger to return to the kind of to our entertainment roots in some ways. And we're not talking at that point about TV shows on broadcast, but about entertainment that was built for internet consumption.

So we started taking steps back in that direction. As we were continuing to grow the branded business and expand in that area, we were committing ourselves to the original entertainment dream and started making shows horribly oversimplified what it took to actually start doing that again. But we started making shows again. We kept the branded business running and growing. And-

Chris Erwin:

When you started making shows, were you deficit-financing these yourself? So you were developing them internally and then taking them out as a slate to pitch and sell? Or were these being funded by other digital and streaming platforms that were going to put this content on their channels?

Zach Blume:

We were developing them internally, as a kind of a traditional development arm, and then taking them out to streaming and digital buyers. We were not doing the White Collar Brawler model, where we were building properties completely independently. So we did kind of slot in a little bit more into back into the entertainment ecosystem versus building our own properties, which that could be a whole separate conversation about the drawbacks and the benefits of that.

So we were finding our way to making original series, again, we hired ahead of originals a guy named Evan Bregman, who's now at Rooster Teeth who's a good friend. And we started kind of trying to build that business again, and eventually, we started to feel like the branded business was running really well and growing year over year. We felt in order to take the next step forward on the entertainment side of our business. We needed a partner.

So we had been a completely independent entire course of our trajectory. We were running a really good business at the time. It was very profitable, and the growth trajectory was really attractive, I think to outsiders. And so we started taking meetings with potential partners with the idea of strategically aligning ourselves to somebody who could level us up. We weren't looking for a sale. We were looking for truly a strategic partner.

Chris Erwin:

Were you running a formal process here where there was a mandate of, "We seek a strategic partner, we're going to take meetings over the next two months?" Or was it, "Hey, these relationships that we create in the industry, we got some inbounds, let's take these meetings with perhaps a little bit more intent than we would've a couple of years ago."

Zach Blume:

It was not a formal process in the sense that we had a banker or some advisor who was guiding us through it. But it was a process in that it was fairly intentional. Remember sitting down with Nate and Kai and listing out the players in the original entertainment world, whether that was individuals or production companies, mostly who we think would be good partners for us, and starting to navigate through our network to see who would be interested in talking. And the thing that I've found, especially in that period, which was 2017, '18 was when we were starting to have those conversations, it was a pretty hot period for digital media. I think there was a lot of consolidation going on. Our experience was once we started having a couple of those conversations, and people started to see our numbers and see the fact that we were running an actually profitable business that was growing year over year.

It just like word got out, and it was a little bit of a domino. And so I just remember over the course of 2017, 2018, we took like 15 or 20 strategic meetings with potential strategic partners. Again, not running it through a banker or anything like that, but just kind of word of mouth. And it was a really interesting experience, and learned a lot about ourselves and about the space. And we just really clicked with Brent Montgomery and Ed Simpson, who were, at the time they, had sold their TV production company to ITV and they were working at ITV at the time but starting to think about what their post-ITV move was going to be, which would eventually become Wheelhouse and just to immediate connection with both of them on a personal and kind of business level.

To them, we looked like a really smart partner. They felt like a really smart partner to us. And that's how that started. And there were other conversations going on at the time, but Brent and Ed and eventually Wheelhouse always felt like the right fit for us.

Chris Erwin:

From that first meeting with Wheelhouse, did they indicate in the room, "Hey, we want to do a deal, we're going to make an offer," or did it take a while to get there?

Zach Blume:

Well, this story I always tell about Ed, who everybody should know, Ed Simpson, he's an amazing guy, is that within five minutes of our first meeting he asked us, "Are you Butellas?" And I was floored. I was like-

Chris Erwin:

Gets right to the point.

Zach Blume:

I was like, we just shook hands. We were just getting to know each other, but I think honestly it's a testament to directness, and I think that actually really helped was kind of just getting our cards on the table from early days. And I think from the beginning. It was clear that Ed and Brent were looking for their first partners. Brent is also like no BS. He knows what he wants, he goes out and gets it, and the intent for an investment, a partnership of some sort, was clear from the very beginning. The eventual process took very long.

Chris Erwin:

How long was that process?

Zach Blume:

I think the timeframe from offer letter or LOI to signed paperwork was about a year. But I think there was a six-month or eight-month, even maybe even a full-year courtship before that. So the whole process from first meeting with Ed, where he asked us what our EBITDA was after shaking his hand, to signing paperwork and then collapsing on the floor because we were so exhausted was maybe year and a half, two years.

Chris Erwin:

Yeah. It always takes longer than people expect.

Zach Blume:

Yeah. It's incredible. And there were multiple points where that deal almost fell completely apart. In fact, I was sure it was done. It was toast. And what I've learned from other founders that I've talked to that have done deals, whether it's a sale or a minority investment or some sort of strategic partnership like this, is every time there's a deal, it almost fails twice or three times or more.

It's just in the nature of things when there's two negotiators that there's going to be some moments of staring into the abyss. And I actually haven't heard of a deal that hasn't had that. So I learned that, in retrospect, at the time, they were hugely existential moments because we had put so much time and energy, and money into making this happen and having the deal almost fell apart multiple times was, it was really intense.

Chris Erwin:

Yeah. After having been a part of many M&A and capital raising processes throughout my career before RockWater when I was a banker, and then also at Big Frame, where I hired my old investment bank to represent us in a sale to Awesomeness backed by DreamWorks. And then at RockWater now, there's so many variables. You have different business models, you have different team cultures, you have leadership, you have investors, and to align on, are we working towards the same mission? Do we want the same thing in the future? Do we want the same thing now when we integrate? Where are we complementary? Will we actually succeed combined, or there alternative ways to do this? And I think it really is a special thing. We read a lot of deal headlines in the trade, so everyone thinks like, "Oh, deals get done all the time, it's easy."

For all those headlines of the success, there's many, many more instances where deals have fallen apart that we don't hear about. I think the best thing that you guys had, Zach, was your BATNA, your Best Alternative to a Negotiated Agreement, but also your leverage. You had a profitable independent business. It was you, Zach, and Kai as the founders. You were growing, and you were profitable, and you could sustain with a partner or without a partner. And essentially, that led to a great deal for you guys. So it's awesome to say.

Zach Blume:

Yeah, it's true. I mean, we were not trying to parachute at our business in any stretch. We weren't trying to sell to then do an arm out to then leave. We were trying to level up, and I agree it was our ability to walk was good leverage for us, but we really wanted to do it because we really had committed ourselves to making this type of strategic move. I think it's very different when you're trying to capitalize on a moment in exit versus when you're trying to make an actual partnership to take the next step up in a business. And we just weren't ready to, and we still aren't ready to sunset Portal A.

This is becoming our life's work. We are committed. We are always kind of doubling down on our commitment. Sometimes I can't believe I've been doing this for 12 years. It's unbelievable. And I hope that we do it for many, many, many, many, many more years.

Chris Erwin:

You found your magnum opus in the first company that you founded pretty rare and pretty incredible, right?

Zach Blume:

Yeah. I mean it's amazing, but it also puts a lot of pressure on that to fulfill a lot of parts of your being and or your professional desires. When you're focused on one thing for so long, as opposed to a lot of entrepreneurs who kind of jump or leapfrog from one thing to the next. We've had to come to grips with the fact that this is our baby, and it's continuing to be our baby. And it's a long play. It's a long run.

Chris Erwin:

This is actually a good segue to think about how this business is fulfilling to you, kind of over the past couple of years, some key changes that you've made of, how you're rewarding some of your most prominent team members, elevating them to partner and then thinking about what you want to grow into. So let's get into that. I look at your business. In your 20s, it was kind of the freshman segment of Portal A really starting to become into a real business. Then in your 30s, it's kind of like the sophomore years where you're starting to scale up and start to realize some pretty incredible success. And now you've got this incredible foundation.

So not to aid you in front of everyone, but I think you and the founding team are entering your 40s over the next year or two years or so, entering the junior and senior years of your business. And for you guys to continue to be excited and fulfilled, tell us about some of the recent moves that you've made at the company and then where you want to go. What does that look like?

Zach Blume:

It's a great question. I wonder what happens after the junior and senior year sets. We're definitely at a different life stage, just on a personal level, then we were when we were on the treadmill moving 100 miles per hour in our 20s and in the kind of like the first half of Portal A and the deal with Wheelhouse was definitely like a marker, or maybe it was the dividing line between the freshman and sophomore era as you put it.

First of all, I mean the last couple of years have been crazy, the pandemic, the election in 2020, there's been a lot of volatility in the world over the last few years, but what we're trying to do in the face of that volatility and kind of coming out of the Wheelhouse partnership, which again marked a new chapter for us is, create A on the business side sustainability and kind of consistency. And we've been able to do that. I mean, we've been profitable, consistent from a numbers perspective for many years, but it definitely felt for many years, we were running on a treadmill trying to keep up.

And over the last several years, we've been trying to do as we enter into new periods of our lives personally, as we bring other people into the business as partners is create a business that doesn't feel like you're about to gasp for air and collapse at the end of every year, but actually create something that's sustainable and supports other parts of our lives that are really important to us. Family, having kids, all that type of stuff.

I think on the business side, it's like, and I think we've done this over the last several years, but how do we move from sprinting to running at a good pace and building something that feels sustainable over the course of the next chapter of our lives as our lives change. And that's been really important, and you mentioned this, but bringing, we brought four new partners into the business. Our head of production, our head of business operations, our managing director, and our head of talent partnerships all had been with us for five to seven years each. And we made them partners a couple of years ago.

We've invested in our team in a way that we always try to take care of people, but we truly doubled down on that over the last several years so that people feel like they're working at a place that they can work at for many years and feel very taken care of and part of a community, et cetera.

Chris Erwin:

Quick question on partnership front. So when you elevate these individuals to partners, does that mean there's a compensation bump but is also a bigger voice at the table for bigger strategic decisions for the company? What is the value exchange for that?

Zach Blume:

They went from kind of executives to partners. I mean, they're always executives, and I think what a partnership means is they participate in the profitability of the company. They participate in an exit. If there is a future, another deal on the horizon, they would have a stake in that. And then they have visibility into all aspects of the business and a seat at the table for really important business decisions around the type of work we take on, the type of things we invest in, the vision that we lay out for the company, the priorities for the year or for the next few years, et cetera.

So it's been incredible, and I think it was a big moment. It was always Nate, Kai, and I sitting in a room, staring at each other's faces and trying to figure things out. And to bring in Robyn, Emma, Elyse, and Brittani, they're all so incredibly smart and powerful in their own ways, and it's just made our decision-making much more thoughtful, multifaceted, strategic, and I think intelligent, that group of three became a group of seven. That's been a major milestone and moment for us.

So that was a big part of things. And investing in our team and doubling down on the team's wellness and creating a pace of work that was sustainable, not working over Thanksgiving, all that type, taking long breaks, giving days, all sorts of steps we've taken over the last several years to make Portal A sustainable business entity over many years.

So that's number one in terms of what this chapter looks like. And I think number two is we just want to make good shit. At the end of the day, when we put ourselves in the future and try to look back on what will feel most valuable about this whole experience, what we make because we are a creative company is at the top of the list. So investing in the quality of the work that we do, investing in projects that may not be the most profitable or they may even not be profitable at all, but that are important to us creatively experimenting in new content formats, longer form, feature-length type stuff, short film, all sorts of getting back to kind of our roots in some ways as experimental content producers and investing in the quality of the work that we're making either on the original side of the business or on the brand side of the business that has become kind of central to our whole vision and identity is just this relentless commitment to quality.

Chris Erwin:

I want to touch on that because when we were preparing for this interview, something that we spoke about was, yeah, your commitment to creative quality and craft. Sometimes that is undervalued, sometimes that feels like it's going against the grain, and like you said, Zach, maybe there's a near-term impact where these new IP concepts, they're not profitable immediately, but there's actually long-term value to it where adherence to that mission keeps the leadership and founding team galvanized and fulfilled. It also keeps your business exciting for new team members that you want to recruit, building towards future opportunity where there can be much more meaningful revenues to generate in the future.

So that's hard to do when you face kind of the near-term headwinds of those decisions, but you got to be steadfast in that it's clearly worked for you guys for over 12 years, and I think that that's just an important reminder that this is a founding value of our company and that's what's going to continue to drive long term success for the next 10, 20 plus years.

Zach Blume:

Everything you just said, I would like you to come speak to our company, and we can all talk about it together. I mean, that's exactly where we are at. What we'll define the next five, 10, however many years of this adventure will be the quality of the work that we're making. I don't want to speak too soon, and I'm going to knock on wood, but I feel like we've cracked the code on how to run this business well and how to find good people, take care of our people, take care of ourselves, find our lane and operate really well in our lane. And what's going to define the next chapter is how good is the stuff we're making. Is it something we're proud of? And that's both from a kind of, almost like, a spiritual or existential level, but it does layer back to business because we believe what will differentiate us is the quality of the work that we're creating. And so it will lead to new opportunity and new horizons when we're making really good stuff.

Chris Erwin:

Last one or two questions before we get into rapid fire and we close out here is, are there any current projects that you're working on or things that you're thinking about that maybe are good signals to the listeners of the type of things that you're going to be doing more of going forward?

Zach Blume:

One really interesting one is completely different from a lot of the work that people may know us for, but my partner Nate is developing a feature documentary. We've done one feature-length documentary, we did it with YouTube original called State of Pride, all about the origins and the genesis of Pride festivals across the country. And it's a beautiful film called State of Pride. It's on YouTube. Nate did a really cool, together with Portal A, did a really cool 30-minute documentary in 2020 about the response from the Trump administration to the first year of COVID.

So we've definitely played with longer-form documentary projects. This project is called Fault Lines, and it is a longer-formed feature documentary about housing in America and about the shortage of housing in America, which is driving up housing costs for everybody. Kind of like the deep backstory on where that all comes from.

No brands associated with that project. It's going to be financed by foundations and private funders, but we're really excited about it, and it's that kind of getting back to telling interesting stories, experimenting with new formats. It's not going to be the core of our business for the next several years, but we are going to be investing in those types of projects where we can kind of make a name for ourselves in new spaces.

And then, of course, we're doing all sorts of cool stuff with our brand partners like big, splashy campaigns that are coming out later this year that I shouldn't talk about yet, but doing a lot of work with Target and Google and we have long-standing partners at Lenovo, the computer maker and all sorts of cool branded stuff. We have original shows in the pipeline.

So I think the business mix for us is branded content. Again, nothing that we make should ever feel like a commercial, and if it does, we've failed ourselves and our partners. So content that is made in partnership with brands feels like something you'd actually want to watch. That's one pillar. The second pillar is original series. We just released Level Up, which is a show on Snapchat starting Stephen Curry mentoring a new generation of athletes. So there's all sorts of series like that that we're working on.

Then this new area, which is short films, documentary feature films that we're investing in as a loss leader, like truly a loss leader, but as a way to diversify the type of content we're making and invest in quality like I was just talking about.

Chris Erwin:

That's great. You guys are doing a lot. Last quick question before rapid fire, how would you succinctly describe how your leadership philosophy has evolved now, being, call it 12 years into the Portal A business?

Zach Blume:

When you're building something, especially for us, we started from zero. We didn't come from the space. We didn't have any relationships. It was completely homegrown and organic. When you're building something, it's like you're captaining a tiny little ship in very rocky waters, and it is survival in some ways. I mean, it's both like I'm just picturing someone on the deck of a little dinghy in the middle of the ocean, just like yelling and surviving and getting thrown all over the place, and you're just trying to survive and make it through the first few years. And I think that was in many ways what leadership, just getting through the choppy waters and trying to grow and survive, was what it looked like for many years in the early days of growing our company.

I think now that we've made it through those choppy waters and kind of established ourselves and built something that has a foundation underneath it. I really focus on sustainability and vision. And so that means creating an environment where people can be fulfilled creatively in terms of the people that they work with in terms of the pace of the work, both for the team that works with us and also for us, for ourselves. So creating that kind of a rhythm that feels not like you're like a tiny boat in a gigantic ocean and just trying to survive, but that feels steady and sustainable and solid. So creating that kind of consistency and strength, and that's one side of it. And then, for many years, it was just eat what you killed. And that was so many years of growing the company.

Now it's like, "Okay, who do we want to be and who are we and who do we want to be?" And I think I spend so much time thinking about that and then communicating that back to the team and then repeating it over and over and over and over again and giving people something that they can understand and hold onto and feel like they're working toward a common cause has become so much more important now than it was when we were just basically in survival mode. So I think, yeah, sustainability and vision have become the most important pieces.

Chris Erwin:

I love that. Very well said, Zach. All right, so last segment from me giving you a bit of kudos at the end of this interview. Look, a lot of the people that I interview on the show, I've known for years, if not decades or more. I've actually interviewed people that I've known for over 30 years on this show. I've really only gotten to know you over the past. I think like two to three months through a handful of conversations. But I will say some of the kudos is it feels like I've known you a lot longer than that. I think we have a really shared sensibility, and I think that that's a testament to in this space.

What I really like about being at the intersection of digital and entertainment is that there's just some really good people in it. And I think that's not the same from a lot of other industries that I've worked in. And I think you really embody that spirit. I think you really care about your people. I think you really care about your clients and your team and your partners, and that's really valuable. And I can even sense that in what the audience isn't hearing in between these segments is I really just love that note, how you are like the rah-rah spirit for your team. You've even been that for me, talking me up about me as a podcast host and supporting our content work where I'm going through a bit of my own existential crisis with RockWater on, I can feel that very positive energy from you, and I think that makes you a very, very, very compelling leader.

Lastly, just to reiterate one of the points I made earlier, you have t