Feb. 28, 2023

How a 26-Year-Old With Autism Built a $10 Million Samurai Sword Business

How a 26-Year-Old With Autism Built a $10 Million Samurai Sword Business

Episode 27: In this episode, Alex Lieberman (@businessbarista) and Jesse Pujji (@jspujji) are sitting down with Isaac Medeiros. He’s the founder of MiniKatana, a product company that is wildly successful because of its…content? That’s right. MiniKatana goes beyond building products. In fact, they see themselves as a media company that creates viral videos, attracting 300m views a month. Isaac shares his journey of finally starting a successful business after seven failed attempts. 




#TheCrazyOnes #Startups #Entrepreneur

Listen to The Crazy Ones here: https://link.chtbl.com/OV4W93_W

Watch The Crazy Ones here: https://www.youtube.com/@TheCrazyOnesPod 


Subscribe to Morning Brew!

Sign up for free today:  https://bit.ly/morningbrewyt

Follow The Brew!

Instagram - https://www.instagram.com/morningbrew/

Twitter - https://twitter.com/MorningBrew

Tik Tok - https://www.tiktok.com/@morningbrew


Follow Our Hosts!

Alex Lieberman (@businessbarista)

Jesse Pujji (@jspujji)


Learn more about Electric here: https://electric.ai/crazyones 

Learn more about ADP here: https://adp.com/thecrazyones

Learn more about MailChimp here: https://mailchimp.com/guesswork/

Disclaimer - MailChimp sponsored this segment of the podcast. MailChimp is not affiliated with any other products, brands or companies featured or mentioned in this podcast.


Isaac Medeiros: I'm bad at the social stuff, but my brain is just critical thinking. That's all it's built for. That's how I'll describe it. About 12 hours a day, I'm spending my time just critically thinking about everything. And it's not exhausting, it's not tiring, and there's generally things I'm obsessed with. And that's how we're able to find all these unique strategies and keep going relentlessly. And that's why I tried eight businesses, because it's very easy for me to come up with these new ideas.

Alex Lieberman: What's up, everyone? I'm Alex Lieberman.

Jesse Pujji: Yo, this is Jesse Pujji.

Alex Lieberman: And this is The Crazy Ones. What's up, Misfits? Welcome back to another episode of The Crazy Ones. Now, before I talk about today's show, I have one small housekeeping item. Jesse and I are drowning, absolutely drowning in emails from listeners, and we love it. So I just want to keep us drowning. Shoot us an email saying "Hi." Two letters, H-I, to thecrazyones@morningbrew.com. It will take 15 seconds, and Jesse and I will 100% get back to you. We've had so many cool conversations with hundreds of listeners at this point.

Now, let me talk about today's guest. We have an incredible founder on the show today, and I was irrationally pumped to do this episode, because this founder has such a dynamic story. We talked to Isaac Medeiros, founder of MiniKatana Store. Isaac has built a $10 million-a-year business selling samurai swords, and he's done it by building a content empire on TikTok and YouTube. MiniKatana Store has 2 million subscribers, gets 300 million views per month, and its most viewed video ever shows a jacked samurai cutting a bullet in mid-air. On top of that, we talked to Isaac about what it was like failing seven times in business before having the win with MiniKatana. We talked to him about living with autism and how he leans into his unique strengths, why he bought sworddaddy.com and what he plans to do with it, and why virtual YouTubers or VTubers are a trend that any entrepreneurial mind should be paying attention to. Let's do this thing.

Isaac Medeiros, welcome to the podcast.

Isaac Medeiros: Thank you for having me. It's an honor and a pleasure.

Alex Lieberman: So I think I first found out about you when it was either a thread you did or someone else did, and it was about how your YouTube was growing 200,000 plus subscribers a month, you were getting 300 million views a month, and then I found out also it was all about katanas, which for those of you listening who don't know what katanas are, what's the best way to describe them? Samurai swords?

Isaac Medeiros: Yeah. They're Japanese samurai swords.

Alex Lieberman: Yeah. So that's how I first found out about you. And then I started digging more into your story, and you just have such a fascinating, dynamic story to tell. And before we talk about everything related to your business and to YouTube, I want to start early on, because I think your early story is also as interesting. Tell me about your journey of coming to the US. You talk about your mom working really hard to get you here, and what just growing up was like for you.

Isaac Medeiros: Sure. So I was born in Brazil. My mom knew...Brazil's great if you're rich or your family has connections, but if you're a nobody who can't afford things, it kind of sucks. So my mom always knew, let me give my kid the best possible future, let's get him to the US. So she managed to get me to the US when I was eight, and then she met my stepdad, and my stepdad was running an agency, and that was my first exposure to entrepreneurship. So from a very early age, just all I wanted to do, just be an entrepreneur. I remember being 14 or 15 and seeing a Mark Cuban interview, and he was just talking about all his failures. Because Mark Cuban is honest about his journey, and he's like, yeah, if you try hard enough, you can always make it work.

So I ended up basically dropping out of school, military boarding school, high school, and I just went straight into it. This is actually my eighth try at business, and it's the only successful one. But I think the success was super-sized just because I basically knew what to do. After every attempt, I would just take every key lesson and apply it to the next one. And it was kind of methodical too...

Jesse Pujji: You just didn't do anything that you did in those first seven ones, basically.

Isaac Medeiros: Yeah, exactly.

Jesse Pujji: You eliminated all potential of...

Isaac Medeiros: Yeah. And it's funny that the weirdest one ended up succeeding, right? 

Alex Lieberman: What were the other ones, by the way? What were the seven other businesses?

Isaac Medeiros: Sure. So I did an e-commerce store where we put your dog's face all over these pajamas, and that was called Pups N' PJs. And that just did not work for Facebook Ads, and I did not know what I was doing. Another one was a social media app called Gaggle, and it just died because of the pandemic. Because we were using college campuses to market it, it barely launched; two months in the pandemic hits, everything closes, and I can't market it anymore, and I need to give up. I've done a fintech app that just failed. I've tried everything I could think of, and the average lifespan was always eight months. So even today in my business, we find these things that produce hyper-sized outcomes, because we're willing to try everything. And as soon as it feels like this is not gonna work or it's too hard, we move on to the next thing.

Alex Lieberman: Yeah. So you have no shame just calling it quits on something if you know that the opportunity's not there. And at no point in this, obviously, have you lost faith in your ability to build a business.

Isaac Medeiros: Yeah. I mean, look: You need to believe in yourself. That's the first requirement as an entrepreneur. But it's just statistics. It's hard to build a business, and you're not gonna succeed on the first try.

Jesse Pujji: Do you think the eight months is more a business-related thing, or more an Isaac-related thing? That's...go ahead.

Isaac Medeiros: Yeah. I think because it takes a few months to build the thing, and then a few months to try it out. So in my experience, it might take me like a quarter or three months to actually build whatever it is, because you need to develop a product or whatever you're doing, an MVP. And then four months after that I'm just testing different ways to scale it or approach it. 

Alex Lieberman: So in these seven businesses that you started prior to the current one, what are some of the lessons or the fuck-ups that you have, that now you can name and just know you're not gonna do these things for your current business?

Isaac Medeiros: The biggest lesson was, a lot of my previous businesses required fundraising. And if you're a nobody, it's really hard to fundraise. You need some sort of credential, whether that's college...there's VCs out there that are like, "Yeah, we invest in dropouts." They don't actually invest in dropouts. They're all lying. So that was actually the biggest lesson and the reason why I went back into e-commerce, because I was like, what is the easiest possible, lowest capital thing I can possibly do? And the answer is actually the oldest business on the planet, which is selling physical things that people want. So that's why I went back into e-commerce. I can go over more lessons, but I think that's the really important one.

Jesse Pujji: Yeah. What are the other ones? What was the most devastating failure?

Isaac Medeiros: It was the fintech one. It took me like $60k of savings to build, and it's just like...that was personal money that I...

Jesse Pujji: What was the idea? What was the business?

Isaac Medeiros: It was actually pretty dumb, when I think about it. It was payment processing, and then we would use the payment processing to pick up data on customers and the stores for small businesses, and then we'd do loyalty programs based on the cards. So they automatically enrolled with the cards. And it was just like, I underestimated how complicated that industry is. I think you guys know how complicated it is. We actually launched successfully. It's just, I could not fundraise to properly scale the thing.

Alex Lieberman: Super interesting. And so one other thing I want to just ask about...let's call it two things: pre-MiniKatana Store and post-MiniKatana Store. The other thing, you wrote this really, I would just say, amazing and vulnerable thread about yourself about a month ago, it was like middle of January. It was, you got to 7,000 followers on Twitter, you wrote "Seven things you probably don't know about me." We'll link to it in the show notes, because I loved it. The third thing you shared is you said, "I have autism. When I was young, I struggled a lot. But after learning my weaknesses and strengths, I've been able to really lean into what I'm good at. The difference is a part of the reason why I'm able to find strategies that are so unique for my business." Just expand on what growing up with autism was like, and how it was difficult for you. And then today, as you fast forward and you think about, in your maturity and more tools that you've gained as an entrepreneur, how you actually leverage it as an advantage.

Isaac Medeiros: Yeah. It's little things, like I had a lisp. So people might actually catch onto that as I'm talking. It's still like very small way there. Or if it's a large group of people, it's a large gathering, I have a very hard time understanding what everyone's intuitively feeling just based on their face. That doesn't mean I don't care, it's just it's a hard time.

But the other side of that is, I was very obsessed with the things I was obsessed with. So one of my biggest obsessions growing up, top three, is easily anime and Japanese culture. And what I mean by that, when I say, "Hey, this lets me build unfair advantages," is I've recognized the opportunity in the anime industry when nobody else did. And the sword business is actually just an extension of me knowing that customer base very, very intimately, more so than almost anyone I encounter, even other people who are obsessed with it. So all the products we build today are just following that passion and understanding what my people will buy. I think it's a billion-dollar opportunity; it's just a matter of extending there.

Alex Lieberman: How many hours of anime content have you consumed, do you think, in your life?

Isaac Medeiros: I mean, tens of thousands. I've watched One Piece, which has like 1,300 episodes, three times.

Alex Lieberman: Wow.

Isaac Medeiros: Yeah. I'm a mega nerd.

Alex Lieberman: Yeah. No, it's amazing. And so...yeah, Jesse. Go ahead.

Jesse Pujji: Talk about autism a little bit more for people who are listening to it, and what does it mean? It sounds like you turned it into a superpower in different ways, but I'm curious, just for those who aren't that familiar with it, what exactly is it? What are the challenges that it creates for someone like yourself and others? And then if you have one or two anecdotes for either how it's really been a challenge or really been a positive, that would be awesome.

Isaac Medeiros: Sure. I would say it just means my brain is wired a little bit differently, on a high level. And what that means is, I'm just worse with understanding what people are basically...like if you react a certain way, I won't understand it intuitively, like most people. It's built on logic almost, just through experience. So as a kid, you really struggle because you don't have any of that experience. And that's why high-functioning people with autism, when they're adults, you might not even notice it, because they have had 10 years, 20 years of experience just interacting with people, and now they know what to expect. So that's the first thing. My interactions with people are built on expectations and experience, and it's not necessarily intuitive.

The second thing is that I'm bad at the social stuff, but my brain is just critical thinking. That's all it's built for. That's how I'll describe it. About 12 hours a day, I'm spending my time just critically thinking about everything. And it's not exhausting, it's not tiring, and there's generally things I'm obsessed with. And that's how we're able to find all these unique strategies and keep going relentlessly. And that's why I tried eight businesses, because it's very easy for me to come up with these new ideas.

I will say anecdotally, as an example of how this plays out, this was recent, where I got into an Uber with my girlfriend, and the Uber driver was playing a joke where he was like, "I know you're going somewhere, but let's pick up a Starbucks real quick." And he was saying it in a joking tone, but I didn't recognize it. I didn't recognize the joking tone. I got pissed at him and I was like, "No, we're not going to Starbucks. That's stupid. We're paying you." And my girlfriend was like, "Isaac, Isaac, he's joking." And the Uber driver was like, "Yeah, I'm joking." But that still happens. That'll always happen. But that's where I struggle.

Jesse Pujji: Do you feel less emotions yourself? Do you yourself...

Isaac Medeiros: No, but I don't understand them. So if I'm really overwhelmed, it's like, why am I overwhelmed? It could be as simple as me being hungry, and I just won't understand that, and it'll take me a few more hours to process that than somebody else. All the bad things in my life are a result of me not understanding myself, or other people, what they're thinking.

Alex Lieberman: So it sounds like it's very clear in your business where this can serve you, which is, it sounds like you can have an abundance of ideas, you can have an obsession around the thing that you're doing. So you have an obsession with MiniKatana Store right now. You had an obsession with anime for your whole life, other things as well. And I can imagine in critically thinking about just your business, how to have a sound business, I could imagine you being really strong at that.

Where I could see it obviously becoming difficult is, you know, we were going back and forth on Twitter, and I think I'd asked you how many folks are on your team, and I think you told me 11 full time, 16 scriptwriters. You have people, a lot of people in your business now. I could imagine that becoming more and more difficult in terms of managing people effectively, understanding the way you need to communicate to them such that they're the most motivated and feel good about working with you. How have you tried to...what tools have you established to try to at least make that weakness or blind spot for you not weak enough where it can really hinder the business?

Isaac Medeiros: Sure. So I want to start off by saying, I think because I don't understand people intuitively, I am forced to think about people more than somebody normal would. I spend a lot of time thinking about how people are feeling about me or...some experiences 10 years ago, I still think about, like "I could have done this a lot differently." And you'll find a lot of people with autism have the same issue, where they overthink situations, just because they didn't understand them at the time.

But what I've really done is I try to hire the best people to manage the people, and I put a lot of faith and trust in my team. So one of these people is Carly. I brought her on two months ago. I convinced her to leave her agency somehow, which she owned, and come work for us. And she's just quickly taken over a lot of the support and marketing departments on my team. And it's very hands-off for me, and now I can focus on the things I'm strong at. And that's what I've always done. I try to hand over leadership responsibility, because I know I'm gonna be weak there.

Jesse Pujji: Yeah. I want to back up a little bit. Alex mentioned some stuff to me, but what's the "eighth time's the charm" story here? What actually happened? How did you succeed after...what is the business? What does it do? How do you make money? Just tell us all about it.

Isaac Medeiros: Sure. So the MiniKatana founding story goes, I found this samurai-themed letter opener at a gift shop. And I was really excited about it, because I had never seen something like that. It was 50 bucks, and I bought it and brought it home, and it fell apart. It sucked. But I've recognized, this is actually a pretty cool product. Let's just make a better version of it. And that's actually a pretty common thread with all entrepreneurs that own large businesses. They've just made a slightly better version of something. So that was my first product. And I tried Facebook...

Jesse Pujji: And when is this? What year is this?

Isaac Medeiros: This was...oh man, it's been such a blur. Super-late 2020, like December, November.

Jesse Pujji: Got it. So you were 23 at the time.

Isaac Medeiros: Yeah. And so I tried Facebook Ads, and I get like a 3 ROAS out the gate or something crazy. And I was just like, I don't know anything about ads, but I know I'm getting a return on my money, and it looks really good when I show it to other people. So I had a good product.

Jesse Pujji: Some people don't know what ROAS is. Tell us, what does that mean? What does ROAS mean, and what were the actual numbers, if you can share them?

Isaac Medeiros: Yeah, it's return on ad spend. So for every dollar I spent, I got like three bucks back.

Alex Lieberman: And just to be clear, the product, was it the exact...was it the opener? The envelope opener?

Isaac Medeiros: Yeah.

Alex Lieberman: Okay. That was your first product.

Isaac Medeiros: It was just a better version. And that product, it was basically a success. But Facebook Ads banned us, because it was a weapon. And there's no way to reach out to somebody at Meta. And I think that's Meta's biggest problem. It doesn't care about advertisers, even though it's their business.

Jesse Pujji: Hold on. Did you source this? Did you try to sell it before you had the product? Tell us the real inner...what were the specifics of that story?

Isaac Medeiros: Sure. When I found the product, I just went...I didn't know how to manufacture anything, but I watched some YouTube videos, and I think they were drop shippers. That's what I was watching, because that's what you encounter first. But I went on Alibaba and I just started messaging every manufacturer, until one of them was willing to make it, like small unit count, for like $5,000. And I maxed out my credit card to do that. And I basically remember lying. I was like, "We're really big and we can get 10,000 units of this. I just need a few hundred samples to make sure the quality is there." And that's how I managed to get a manufacturer to do it and take it seriously.

Jesse Pujji: Genius.

Isaac Medeiros: But I launched with Facebook Ads, and it worked. So I was like, "Yes, we have a business." But the ban was devastating. I remember the journal entry about it. I was like, if this doesn't work, I'm going to give up and I'm going to go get a job. And I tried Pinterest ads, Twitter ads, everything I could think of after that. Snapchat broke even. But what ended up working was a TikTok video. And not the first one. It was the second one, and we got 4,000 views and one sale. But that's all I need.

Alex Lieberman: And what was the video?

Isaac Medeiros: It was just unboxing a big katana with my mini katana. That was the concept. It was just a really good hook. It's an interesting hook.

Alex Lieberman: And so at this point, by the way, you've gone into other products now, because you just said like mini katana and big katana, but...

Isaac Medeiros: Just to clarify, I bought this big katana for the video.

Alex Lieberman: Got it.

Isaac Medeiros: From Amazon or something. I may be skipping a few steps here.

Alex Lieberman: No, it's all good.

Isaac Medeiros: But I posted this video, I got a sale, and then I posted more videos, and then New Year's, I sold out of the letter openers, because one of them just blew up, got 100,000 views. And that's the business. Everything we do today is just a very extreme version of that.

Alex Lieberman: And were you banned from every advertising platform, or just Facebook?

Isaac Medeiros: Just Facebook. And to anyone out there, Snapchat is desperate for your dollars; they'll be more friendly. Twitter is more desperate for your dollars; they're more friendly. It's just Facebook is...

Jesse Pujji: By the way, Isaac, why didn't you give up? This was your eighth business. Were you eight months in, around when the Facebook ban happened?

Isaac Medeiros: No, this was like three months in, or four months in.

Jesse Pujji: Okay, so you weren't at your eight month mark yet. So you had... 

Isaac Medeiros: But also I maxed out my credit card for $5,000, and I had... 

Jesse Pujji: So you were like, I gotta sell these swords one way or the other.

Isaac Medeiros: Yeah.

Jesse Pujji: This is going to be Alex in six months with The Plunge.

Alex Lieberman: With my plungers, exactly.

Jesse Pujji: He's gonna get banned from something, the park's gonna throw him out, and then he's gonna have to run around selling his Plunge game.

Isaac Medeiros: I think that Plunge is the perfect viral product, and that's gonna be your main channel if you can crack it.

Alex Lieberman: That's the hope.

Jesse Pujji: All right. So you see the TikTok gold, then what happens?

Isaac Medeiros: I run out of stock. The manufacturer is pissed at me because I don't reorder enough to justify their costs of building it. So I just go in Alibaba, and I pivot to keychains, because keychains are really cheap to manufacture, and you can find way more people to make that for you. So we started the keychain line. I sold that for three months until we started introducing the big swords into the picture. And that changed...

Jesse Pujji: But how are you selling...these are just making TikTok videos and then that's driving traffic?

Isaac Medeiros: Yeah. I would air freight things into my small apartment, which was turned into a warehouse at that point, make a TikTok, it would sell out. And that was really valuable at first, because it provided a feedback loop, which just perfects your craft. Because you'd see the sales directly from the video. And I got good very quickly at creating perfect [inaudible], going viral every single time, and selling out every single time.

Jesse Pujji: And what does "sell out" mean? What kind of volume of dollars are we talking?

Isaac Medeiros: Our first month we did like $50k in revenue.

Jesse Pujji: But that's huge, isn't it? That's bigger than anything you had done up until that point.

Isaac Medeiros: Yeah. No, I was freaking out the whole...I didn't think it was real. I was like, I encountered a scam. I don't know. I felt guilty.

Alex Lieberman: Yeah. You found a hack in the Matrix.

Jesse Pujji: It feels like magic. I don't know if you felt that too, Alex, but the first month we ever made money in business, I thought it was like magic. I was pinching myself, thinking, this can't be real.

Alex Lieberman: Yeah. 100%.

Isaac Medeiros: Yeah. Like a dream come true. It was amazing.

Alex Lieberman: Okay. So to me there's a very big step-wise change in making a physical product, when you go from letter opener and keychain, which you could buy off of Alibaba, and they have these already existing, to making full fucking swords. What was the process of...because also I feel like something that you placed a ton of emphasis on is quality. I know you've talked about color of the swords. How the hell did you set up the supply chain to make exceptional, sharp katanas?

Isaac Medeiros: Yeah. That was really hard. I started selling my first swords by just sourcing them from a wholesaler, and they weren't quality, honestly.

Alex Lieberman: So that means the sword already existed; you didn't have to really change much about it. But that was...

Jesse Pujji: We got to get Alex on AliExpress. Alex, your mind will explode. When I was starting the Gateway X stuff, dude, the shit around my house, my wife is like...I have a bunch of really sharp knives. I have random...it's unbelievable the amount of really random things that are kind of interesting and cool that you can source on AliExpress. And then you just...

Isaac Medeiros: Yeah. There's still opportunities on there. There's tons of niches that are fully unbranded, for people listening. You just need to take a lot of time to research.

Jesse Pujji: Like those thumper things.

Alex Lieberman: What thumper?

Jesse Pujji: Like the Hyperices. The Hyperices.

Alex Lieberman: Yeah, yeah, of course. Yeah. For your muscles.

Jesse Pujji: Yeah. You can get an off-brand one for like 10 bucks, and you could call it the Morning Brew and sell it for $50. And dude, you gotta get...AliExpress, I was living on that app for a good three months.

Alex Lieberman: I'll check it out.

Jesse Pujji: It's unbelievable.

Isaac Medeiros: And drop shippers do that, but their mistake is, no, contact the manufacturer, make it slightly different, then you have a real brand.

Jesse Pujji: Totally.

Isaac Medeiros: And improve it a little bit. So I had to end up getting...I contacted a lot of companies in China. I eventually found an agent who visited a bunch of factories, and we just sampled relentlessly. I think I went through 50 to 100 samples.

Alex Lieberman: Oh my god. 

Jesse Pujji: What scale was the business at this point, though? You must have been big enough.

Isaac Medeiros: It was like $100k, $200k a month.

Jesse Pujji: And what's the bottom line in that? So you make 100 grand, I don't know if you're willing to share that stuff, but what are gross margins? What's the EBITDA?

Isaac Medeiros: I'll say that our margin, our net is over 20%. It's always been over 20%. That's why we've been able to afford to grow fast and be stupid over cash, and get onto all these product lines very fast. I think in general though, for e-commerce now, you have to have really fat margins to exist and to survive. Anybody with under 70% is gonna...they might die.

Alex Lieberman: You're saying under 70% gross margins?

Isaac Medeiros: Yeah. It's bad out there right now.

Jesse Pujji: I agree.

Alex Lieberman: We'll talk about it in a minute, because you've said this before, and I don't want to divert from talking about where the business is today, but I just want to remind myself, let's talk about just your view on DTC. Because I know you have a pretty morbid view on most DTC brands and why it's going to be very hard for them to survive, especially if they're not creating organic content. So we'll talk about that in a minute. So you went from wholesaler, worked with sourcing agent who was working with the factories to make your own swords. And then basically, when was the massive inflection point in the business? When did that happen?

Isaac Medeiros: Basically I did something very sneaky. When you're growing really fast, you don't have cash. And if you're a nobody like me, nobody's going to give you cash. So I had this massive issue where I needed to fund swords, custom swords, which are really expensive to make, without having any product. So what I did is I made one, a single one, after...the happiest sample I got was the one sample I used. And I presold it. I presold 300 units for like 150 bucks or something. And I included a free item in there, just as a gift for the presale. My customers waited four months for me to have a product, but I managed to fund the entire first purchase order with that. And that's what really changed my business. So instead of borrowing money from high-risk lenders or whoever, that's what I ended up doing.

Alex Lieberman: And were you doing YouTube yet, or no?

Isaac Medeiros: No. YouTube was last year.

Jesse Pujji: So this is all TikTok still. This is all, you get a shipment, you make a bunch of TikToks, they go viral. And you'd gotten this down to a science, it sounds like.

Isaac Medeiros: Yeah. And I was still the only person in the company, except two packers and one CX person.

Jesse Pujji: And what was the science...I want you to tell us two things, because I think this is the thing very few people, even in my company, misunderstand. First talk about the process, the sweat and the blood that go into actually figuring out, and then tell us, if you're willing, what that formula is.

Isaac Medeiros: For the videos?

Jesse Pujji: Yeah, for the videos. How do...I think a lot of people think, you wanna go viral on TikTok? Here, just take a video. Or people on Twitter on me are like, just write the thread. And it's like, well, no, hold on. There's a lot that goes on underneath there that people don't appreciate.

Isaac Medeiros: I think I spent like eight hours a day on TikTok, just trying to make videos for the first year, and then another four hours doing shipping stuff and buying stuff from China.

Jesse Pujji: And what'd you do in those eight hours?

Isaac Medeiros: So a lot of it is research, and just knowing what works on TikTok is being a user on the app, honestly. But after that, I would post three or four videos a day.

Alex Lieberman: That's wild.

Isaac Medeiros: And each video would take about an average of an hour to record, because I'll do a lot of takes, I'll do a lot of voiceovers, and test different things.

Alex Lieberman: Would you edit them, or you had an editor?

Isaac Medeiros: I edited it. I did it all myself. So I was the creator at this point. And what ended up happening is, a lot of videos failed, but that kind of volume made it so it was like...it's like MrBeast says. It takes 1,000 videos to make one good one. That's what everyone misses out on as a creator.

Alex Lieberman: It's wild.

Jesse Pujji: And what'd you learn then? What became the formula that tended to work?

Isaac Medeiros: Yeah. So I'll say about 80% through 70% of the video is just the hook, which is the first three seconds. If you're an email marketer, it's like the subject line is the most important thing of the email. Every marketing form has that thing. So it's the first three seconds, your job is to give people a reason to watch. You have to make the video worth watching, because otherwise they'll scroll away.

Alex Lieberman: So what's your favorite few hooks in videos that you've made?

Isaac Medeiros: Yeah, sure. So I've done stuff that's ridiculous, like "Did you know that if your katana arrives broken, we will give you our firstborn child?" And that video got 10 million views. And we explained our CX process... 

Alex Lieberman: And now you don't have your firstborn child anymore.

Isaac Medeiros: Yeah. But it's so ridiculous. People are like, they sell swords and they're talking about firstborn children? I'm gonna watch this. It could be as simple as unboxing a product, because our product is so visually interesting that that's a hook. For Plunge, you might want to do "man on the street" style where you go around and just like, "100 bucks if you can beat me at this game, or 100 bucks if you can throw a plunger into the center." That's a hook, because people like watching the challenge.

Alex Lieberman: We did that yesterday.

Isaac Medeiros: Yeah. There you go. So there's a lot of ways to approach it. The things I...

Jesse Pujji: I'm curious, Isaac. One thing that I believe, and you can tell me your version of this. I started writing threads on Twitter. And in the early days of Facebook, we would make ads that were targeting people who loved music, and saying, "Kanye West says to get a music degree," or something like...and anyone who's done that, and it sounds like all three of us have done versions of it, you did 60-Second Startup, Alex. By the time the thing makes its way to a best practice hook, it's basically too late, right? I mean, by the time someone says, "Three things that changed my life, you should do that with your TikToks," it can still work, I think, but it's not the same as spending eight hours a day and actually experimenting to the point where you come up with what will become the hooks people will write about in six months.

Alex Lieberman: Isaac, I feel like that was your tweet from the other day. Didn't you have that tweet about Alex Hormozi, where you were...wasn't that you? Who had someone...

Isaac Medeiros: Yeah.

Alex Lieberman: Yeah. Where you had the tweet where you were like, even Hormozi, who's built a massive audience in the last 12 months, if you look at his views on TikTok, the talking head style, that style is very much tough to get views with now.

Isaac Medeiros: Yeah. Because his editor went around and sold it to other people, and then other people saw it and they started emulating it with other editors, and now everyone does it. But that's what we did. We just came up with original stuff. But my three things were "shock, educate, and entertain." And it's very easy to hook people in with controversy, which is what a lot of the drop shippers do on TikTok, where they're like...I've seen really stupid stuff. Like there's a cockroach, a fake cockroach crawling in the background of the video, and that's a hook. Because guess what? Everyone sees the cockroach and they won't shut up about it in the comments.

Alex Lieberman: Totally. I think to even what you're saying, it is just...at the end of the day, is it unexpected? Is it novel? Does it basically have you squinting your eyebrows a little bit, or your jaw's on the floor? And to what Jesse was saying, oftentimes formats that are novel, there's a half-life on the novelty, because people pick up on what is currently novel. So I think that makes a ton of sense. 

Okay. So let's fast forward to today. Today, give the summary on the business. How big is the business? What are you hoping topline will be for the business in 2023? How big is the team? And how big is your YouTube now?

Isaac Medeiros: Sure. So let's start with the views. Last month we did 300 million views. We added about, give or take, 200,000 net new subs across our platforms. And our big achievement, our second YouTube channel finally got to 100,000 subs. So that's fun.

Alex Lieberman: That's awesome.

Isaac Medeiros: Yeah. Revenue's not our number one target. It's always views and followers. And what we really look at is how many followers we're getting for those views, because that means people are really committed to you now as a creator. So that's starting off there. And then for revenue, our target for this year is $15m. We're barely above $10m, just so everyone out there knows. We're not huge. I think there's a real cap to our market, though, because we're a niche business no matter what we do. So our job is...

Alex Lieberman: How big do you think the katana business, without your other products, how big do you think that line can get?

Isaac Medeiros: Probably $15m to $20m. We'll see it this year, because we just have so much awareness.

Jesse Pujji: Sorry, you said 300 million views a month, or a year?

Isaac Medeiros: Yeah. A month.

Jesse Pujji: Holy shit.

Isaac Medeiros: Yeah. I think by the...

Jesse Pujji: Isaac, you're in the wrong business, dude.

Isaac Medeiros: What do you mean?

Jesse Pujji: You're getting 300 million views. If I had a website that was getting 300 million views, 300 million hits a month...

Alex Lieberman: No, dude, he thinks of his business as a media company. He said it, their three metrics are subscribers, views, then revenue. If that's how you're ordering it, you're... 

Jesse Pujji: Yeah, but here's the math we should do, Isaac. What's the CPM you're generating, effectively? The whole internet trades on RPM and CPM, or RPC and CPC. The whole internet. The whole internet is based on an arbitrage between revenue per impression and cost per impression, or revenue per click and cost per click. For anyone listening, that's how the whole internet works. And so in your case, you're saying you get 300 million views, and let's say $15 million bucks. What's the math on that?

Alex Lieberman: You're basically saying, how much can he generate in advertising on all those views?

Jesse Pujji: That's the way to normalize the whole internet, is basically to do the math on...so that's 300,000. 300,000? Yeah.

Isaac Medeiros: So it's 300 million views in a month. And then this year we'll do $50 million topline. So we get way more views than revenue. We're actually a horrible product category when you think about it like that.

Alex Lieberman: And Jesse, you're basically saying...I don't know what the average RPM on YouTube would be for katana businesses, but you're basically just saying, let's just say it was a $7 RPM and you get 300 million views a month. That's $2.1 million in AdSense you could get.

Jesse Pujji: I'm doing the math. Wait, hold on. I wanna make sure...

Isaac Medeiros: It's Shorts-heavy videos, so the RPMs are really low. Shorts Fund just rolled out. It's going to increase over time. But we're looking at sponsored videos.

Jesse Pujji: But actually this math is right, dude, you're actually doing quite well. Because I did $15 million over 300 million. That means you're making, on average, a nickel a view, which if you multiply that by a thousand, that means you're making a $50 CPM.

Alex Lieberman: But also, remember, it's not a zero sum game. I think, Isaac, you told me you're going to do a good amount in advertising revenue this year, right?

Isaac Medeiros: Yeah, hopefully. I'm hoping that RPM goes up because it's brand new. There's not a lot of brands on Shorts right now paying for ads. But we're doing other things. We're trying to get sponsors for videos, which is a new initiative. We're also doing collabs, which we have a lot of reach, so if your brand wants to work with us...we're also launching a newsletter, and we want to make it the biggest anime newsletter in the world, which we think we can do because of our reach, and that will have sponsors as well. So we're acting like a media company.

Jesse Pujji: Yeah. I think that's right. I think this can be a media business. I'd say, also think about what you're best in the world at, which clearly...maybe you make a really great katana sword, I don't know anything about them, but that's probably not what you're best in the world at. You're best in the world at making amazing content that's engaging, that shocks, educates, and entertains.

Isaac Medeiros: What we have is distribution. That's our model. We didn't get distribution from Meta, we didn't pay for it, we just made it up ourselves with good content.

Alex Lieberman: I love it. I want to ask you, when we come back from the break, about your most viewed Short ever, which currently stands at 149 million views. It's a YouTube Short of a man slicing a bullet using his katana. But first, a quick break. Okay. So I was on your YouTube today, and most popular video is this jacked guy, no shirt on, slicing a bullet in mid-air with a katana. How do you think of this idea, or how did someone on your team think of this idea, and did you know it would crush before you posted it?

Isaac Medeiros: Yeah. So this has been done before. There's a guy in Japan that did this, so we're not original here. We just, I think, filmed it better. So that video, we knew it would do well, we wouldn't know it would do that well. We never know how well a video's gonna do. That's hard to figure out. It's all just rolling the dice. But I will say that video was also kind of a negative video, and that always shocks people, because what ended up happening is we got record views that month, for that year, but also we got record low conversions. Because that video is too low intent. It's severely low intent, and it crowds out every other video that's high intent.

Alex Lieberman: When you say it crowds it out, what does that mean?

Isaac Medeiros: YouTube starts favoring it so much that it will just push that one instead of anything else.

Alex Lieberman: That's interesting. So it's like this very happy medium where you want your channel to continue to grow, you want to get a ton of views, but you actually don't want to be too viral, if it's too low intent of a video that's not educating nearly enough about your product.

Isaac Medeiros: So what we're doing is we're going to get to a billion views a month this year, but we're optimizing that to be converting views. If we wanted to go really full aggro with Shorts, we could probably do 500 million views next month, but with all ridiculous videos. But if that doesn't make me money, then I'm not doing that.

Jesse Pujji: Yeah. It's the same thing in paid media. You're basically looking at your view to conversion...the same thing happens in Facebook Ads, by the way. If you have an ad that gets a ton of clicks and engagement, it takes up all your budget, and it might not be driving the conversions downstream. And so you actually don't want it, you want to get rid of it. It sounds very similar.

Alex Lieberman: Totally. In the remaining time we have, I want to ask you a few more questions more related to business-building and how you think about things as a founder. And then actually, the last topic I want to talk about is, you had done a thread on VTubers, and I want to just get your view on that, because I think it's fascinating what's going on. First of all, you're a solo founder, right?

Isaac Medeiros: Yeah.

Alex Lieberman: Are you a solo founder by choice? Do you prefer being a solo founder? And what do you view as the pros and cons of doing this whole journey by yourself, on your own?

Isaac Medeiros: I think the biggest con is, sometimes you feel like you're insane, because nobody's gonna get you. It's a lot easier to be a co-founder. That's a very point blank accurate statement, I think, for everyone that's done this solo will agree with. I think the biggest benefit is I get to do whatever I want, and I don't have to argue with somebody about it. But it was also twice as hard. And I remember, end of last year, I almost broke down. I was packing stuff at the warehouse because we did too many sales. We were sold out for two months. This year, we've actually been sold out until today; we did a restock today. And I just remember being like, "This is too much. I wish I had help. Maybe I should get help. Can I..." And that's when I started looking for heavy-hitter hires, basically. That's what triggered it. And I think, at first it's really hard, but as soon as you get to a bigger size where you can afford the six-figure hires, it becomes a lot easier.

Alex Lieberman: And so would you recommend others to be a solo founder?

Isaac Medeiros: I don't think I can say one way or the other. I think entrepreneurship is not...there's no one path. I'm selling swords. Who thought a sword business would get this big? Just do whatever works.

Alex Lieberman: Yeah.

Jesse Pujji: Have you taken any money out of the business, Isaac? Like have you been able to enjoy it at all?

Isaac Medeiros: Yeah. I'm doing okay, but it's mostly reinvested back in. We're still bootstrapped.

Jesse Pujji: Yeah, I think finding that balance is important. I meet some founders who pay themselves $40,000 a year and they grind through it, keep putting all the money back in the business, versus you gotta enjoy the fruits a little bit as you go.

Isaac Medeiros: I had a thing last year where I was like, if this business gets to over $2 million, I'll grow a Jewfro. And I remember I had to do it. I had a big Jewfro for most of the year.

Alex Lieberman: I love that. I'm pissed that you cut it. I would've loved to see that.

Isaac Medeiros: My mom was like, "This is enough. Please." Then she staged an intervention.

Alex Lieberman: So recently, you guys introduced a second category of product, right? You've gotten into pens. Talk about the decision of when to introduce a second product category. So how did you know it was the right time without losing focus or diluting your business, and why did you choose pens?

Isaac Medeiros: I think it's the right time when you feel like you've reached a cap for your acquisition channel for your current category. And you should start anticipating that. I was talking earlier in the podcast that we're probably gonna hit our cap sometime this year, or early next year. And I'm anticipating that, so that's why we're rolling out new product categories. We're doing pens, we're doing apparel soon, and we're also gonna try other experiments, like limited drops in other categories, just for fun. But if they work really well, we might do it as a real category.

I also think we're at the size where it can't dilute our business, because we have people in the right places handling all the right priorities. I went into pens because pens are potentially a nine-figure category, and that fixes the small market size of the sword problem. The real play with the pens is they're actually an ad spend product. So I'm trying to acquire a new acquisition channel for my customers, if that makes sense.

Alex Lieberman: So you're basically trying to get people that aren't finding your swords via, say, YouTube, but are potentially interested in katanas, but you haven't been able to advertise them because you've been banned from Facebook advertising.

Isaac Medeiros: Yeah. And we're doing it successfully. We launched the pens last month, and we've been running ads, and I think it's gonna be a low-seven-figure category this year for us.

Alex Lieberman: Two more questions for you, and then let's talk about VTubers. The first is, you bought sworddaddy.com. Why did you make this decision?

Isaac Medeiros: It's funny?

Alex Lieberman: Have you decided what you're gonna do with it yet?

Isaac Medeiros: Probably personal brand, but half the reason why I do things is because it's funny.

Alex Lieberman: It's a generally good rule of thumb.

Isaac Medeiros: That's how I've grown on Twitter, is just be a little funny. Be yourself. You'll have a lot more friends in life and you'll enjoy it a lot more if you are yourself.

Alex Lieberman: I love it. And then the last question for you around the business is...one thing, you alluded to it earlier, you're investing more heavily in email because you really think you can build the go-to email for anime, which I think, as an email geek, I think is such an exciting place to create content. The other place you're investing a lot is Discord. Talk about why and how you're leveraging Discord as a powerful channel for the business.

Isaac Medeiros: So I've seen other brands try to use Discord, and there's no brands really using Discord. I'm now convinced of that. Which makes it a very attractive channel for me, because when I started on TikTok, there were almost no brands on TikTok. I think if your audience aligns with it, I think a lot of people are gonna figure out that Discord is a seriously powerful channel, because it's community, and community is a moat, and it insulates you from everything else. I think this year our Discord is going to be at a quarter-million members. That's the goal.

Alex Lieberman: That's wild. Wait, what is it at right now?

Isaac Medeiros: It's at 30,000, and we launched it back in early November or October.

Alex Lieberman: And you're just getting people from a button on your website and in your email?

Isaac Medeiros: Yeah. It was very casual and we ran one giveaway. One giveaway that was very mediocre drove like 15,000 new people. So the 250,000 number...

Jesse Pujji: Are they talking about swords? What's the conversations about?

Isaac Medeiros: It's like swords, anime. They all have the sword thing in common, so they have a lifestyle in common.

Alex Lieberman: So interesting. And do you think ultimately, do you view Discord as a marketing and monetization tool, or primarily as just a community tool, that if you have people in this conversation around this type of content, they'll be more likely to purchase goods from you?

Isaac Medeiros: It's definitely a monetization tool. So when you talk to other brands that don't have access to community or reach, and I say, "We have a quarter-million Discord members here; let's do a collab, and also you have to pay us," that's a good opportunity for other brands to reach new people that are all in a niche. I'll also say, one of the most interesting use cases for Discord is not even monetization or community—it's first party data. What I mean by that is, how did I know pens were a good category? I asked. I asked. I talk to them daily. And because of that, I know exactly what my customers want and what they're thinking.

Alex Lieberman: So interesting. And just the last point on that, do you have a full-time community manager? How are you keeping it somewhat organized and not turning it into full anarchy as...if you try to get to 250,000 members, there's a shit-ton of organization that has to happen there.

Isaac Medeiros: We have a mix of...we have moderators that are mostly super fans of the brand, and they're mostly just volunteering on their time.

Alex Lieberman: That's awesome.

Isaac Medeiros: But we're bringing on a really serious community manager soon here, I think, and that's gonna be a key part of our marketing mix.

Alex Lieberman: Love it. Last question for you, and then we're going to do a Startup AMA at the end. It's where we take one of our listener's questions and we can all just go around the horn. You wrote a thread about VTubing. Explain what VTubing is and why you think it is something that people should pay attention to.

Isaac Medeiros: Sure. So I discovered VTubing ages ago. I just want to tell this story, if that's okay. It's just wild.

Alex Lieberman: Yeah. Yeah.

Isaac Medeiros: And then I go to Anime Expo. I think this was two years ago, or I don't know when it was, but I went there, and there was a line of 200 people for an iPad. And I'm like, what's going on here? And it turns out there was a VTuber on that iPad, and it was a meet and greet, and they all paid like 30 bucks for it.

Alex Lieberman: Oh, like the actual virtual...the avatar was on the iPad?

Isaac Medeiros: Yeah. It was livestreaming on the iPad, and people were lined up to meet her. And actually I saw it taken to the next level in the next event, where they hooked her up to a virtual signature machine that copied her hand movements, and she was doing signatures while livestreaming from the iPad. And I was just like, I don't know whether this is dystopian, or I don't know what to think right now, but it's really interesting.

So VTubing is when you take a cartoon character, or not a cartoon character, you take an avatar, whether that's an anime avatar or whatever theme, and you hook it up to your face tracking, and you livestream with that avatar on a platform like YouTube or TikTok or whatever. Or not just livestream, video. And you create an online persona without using your actual likeness. So think of it like anime, but livestreaming. So you can watch your favorite anime girl on livestream. And it's interesting, because it gives companies the opportunity to build IP that they own, that's basically a person that can build a parasocial relationship with millions of people. So it hasn't happened yet, but I'm willing to bet that somebody will get to like 10% of MrBeast's level as a virtual character, and that a company owns, which is insane.

Alex Lieberman: I mean it's basically, it's no different than Disney, just built on the rails of the internet.

Isaac Medeiros: Yeah. Actually, that's even smarter than what I said.

Alex Lieberman: And also, just to give some perspective here, because this is very much early days and it's on the upswing, but in your thread, you called out a few of these VTubers, and they have very significant scale. There's one that has...Gawr Gura, which has 4.28 million subscribers. Another one has 2.19 million subscribers. And to your point, it's like when a virtual avatar is the personality, all of a sudden you've taken out personality risk. The old adage about Disney is like, Mickey Mouse isn't gonna do contract negotiations with you.

Isaac Medeiros: Yeah. You did an episode about MrBeast, and you guys talked about how he has key man risk. Yeah. That was the big point of the episode. Yeah. This removes that.

Alex Lieberman: So interesting.

Jesse Pujji: Amazing. Let's do the AMA.

Alex Lieberman: Okay. Yeah. Let's do it. So for the Startup AMA, we have a question from a listener, and this is a question I've gotten a lot, which is, "Yes or no on family working together in business?" What do you guys think?

Isaac Medeiros: I've had to fire my mom, so no.

Alex Lieberman: What was she doing for you?

Isaac Medeiros: She was just picking and packing at the warehouse, because we needed extra help, honestly. I was pretty desperate.

Alex Lieberman: Damn. Isaac is ruthless over here.

Isaac Medeiros: I mean, I really didn't want to do it, but...

Alex Lieberman: Had to be done.

Isaac Medeiros: Had to be done. It's business first, man. You can't feed your family without your business making money.

Alex Lieberman: Yep. Jesse, what do you think?

Jesse Pujji: I think if I had a gun to my head and I have to give one answer, it's no, as a general rule. I think it obviously depends on the personalities, the age differences. My brother interned for me. In general, again, I would try to avoid it because it's just...you can't fire your family. You can fire them from your business, but you still have to hang out with them and see them. And it's like classic...the businessman in me would just say, it has low to medium upside and lots of downside. And so just as a simple thing, why would you do that?

Alex Lieberman: Yeah. I agree with that statement. As I also say, my mom's been my executive assistant for the last five years. But I generally agree with that, if gun to my head, I'd say no. I think at the end of the day, the downside is huge, which is, you lose relationships with the most important people in your life. It can work, but also it can work having someone who's not your family member, building a great business with them.

Isaac Medeiros: I mean, I'll support my mom without her working. That's what I want to do with my success.

Alex Lieberman: Totally. 100%. Well, this was awesome. Isaac from MiniKatana Store, thank you so much for joining The Crazy Ones.

Isaac Medeiros: Thank you for having me.

Jesse Pujji: Incredible story.