Ashton Kutcher, Demo Videos, And Virtual Offices: Grumo Media Has It All

Miguel Hernandez has all the markings of an internet star: he’s good looking, enthusiastic, and can talk for hours about things he cares about. But instead of taking that charisma to YouTube, Miguel has focused his energy on his current company, Grumo, creating awesome demo videos for clients ranging from Microsoft to smaller internet entrepreneurs.

Launched in October 2010, Grumo started as a “company” consisting of Miguel working out of his living room, bootstrapping after a previous project failed. Almost two years later, Grumo now boasts 10 full time employees and 25 contractors working around the world.

Miguel and I chatted last week about Grumo, virtual offices, and the best methods for managing a team that exists on different continents. Check it out; he’s got a lot to offer.

Can you give me your nutshell narrative of what Grumo Media is?

I started this company over a year and a half ago. What we do is explanatory videos for startups. Most of them are in Silicon Valley but we’ve done videos for companies around the world.

We started with bigger companies like Microsoft and Walmart. What we do is basically take your product or company and explain it in less than 90 seconds in a really fun and concise way. Most of these videos end up on landing pages and they help conversion rates a lot.

That’s why they’re getting really popular, because people are realizing that these little videos can increase conversions 40 or 50% or sometimes even more. Usually what they spend creating the video they make back in a few months.

How did you get started?

The company was started in a fairly unique way. Basically in October 2010 I had zero money because I spent a year and a half trying to build an online business that didn’t go anywhere so I ran out of money. I made a lot of first time entrepreneur mistakes, like not knowing if people wanted what I was building and things like that. I was only one person trying to build too big of a company so I ran out money.

Then I found this niche of demo videos that were starting to become popular but I didn’t want to spend another year trying to figure out if this was a viable business.

So I used a strategy and I think it worked out really well. The strategy was to create a free video for a company of my choice.

I chose… They seemed to have a really good vibe but they didn’t have a demo video so I spent two weeks creating this demo video. I sent it to them for free and they loved it.

As a thank you, the marketing manager introduced me to maybe 100 startups in Silicon Valley because he’s very well connected. This is where my decision to choose this company was very smart because they have the leverage that I was looking for. I could have made this video for anybody but I chose the right company.

It was a bet, but it turned out to be a successful bet. I would have tried at least 4 or 5 other companies with the same strategy; it just happened that the first one I did was very successful.

Suddenly I had about 40 startups asking for videos and willing to pay for them and I was like, well, now I do have a viable business. Instead of building a product and trying to look for customers, I did the opposite and I spent a little time trying to validate the business and once I got the validation I was like, yes, there’s enough business here that I can start a company.

In January 2011, I was very lucky when my third video caught the eye of Ashton Kutcher and he Tweeted my video to like 6 million of his followers. Suddenly I have a lot of free exposure. Eventually I ended up meeting Ashton and his ex-wife, Demi, in Austin, Texas, and I did a video for them. (The video was for the “Real Men Don’t Buy Girls” Campaign.) That brought even more exposure.

I’ve spent zero dollars in marketing. I don’t run ads. It’s all word of mouth, social media marketing strategy and choosing the right clients at the right time that has made this business possible.

Looking at your site, it seems like you have a pretty unique “office environment.”

(laughs) Virtual office environment! I have a place here in Vancouver that we set up as a co-working space. I put that together just to meet once a month with people who are working in Vancouver with me, but most of the time people are working from where they are, from home or while traveling. For example, there’s an animator traveling through Europe with his wife and 11 month kid who is also doing animation for me. It’s really cool because people have the flexibility to be in the world.

What kind of problems do you run into with that sort of setup?

I think that the main problem now, as the company gets bigger, is establishing consistency and company culture. In order to address that I created what I call “The Grumo Bible.” It’s like an operations manual that every single person who joins Grumo needs to understand and read. It explains everything that we do, every single step that is required in the production process and also what we’re trying to accomplish, like our mission statement. Then I usually talk to them and see that they’re on the same page.

That’s the challenge, right? Usually when you have people working together in the same environment, a lot of this happens organically because people are right next to each other. If you have a question, you can ask them right away. Here it’s harder because there’s nothing that can really substitute the face-to-face interaction. That’s where tools like Skype and email come in, where you can see people’s faces and talk and then continue communication via email or instant messenger. You can get to a similar level of interaction but it’s not the same; it takes a lot more effort. If everyone was in the same office, we’d probably have to send a lot less emails but because everyone is remote there’s a lot more communication that has to happen via email or Skype.

So basically it’s a different type of management on your end.

Yeah, and I give a lot of autonomy to the guys that are product management. Once they understand what Grumo’s about, everything is so well documented that really they don’t have to ask me many questions. Most of the time once they’ve done a couple videos I don’t really have to interfere anymore.

What’s your favorite kind of video to make?

My favorite type of video? (laughs) Well, I tell my sales guys and projects managers to only work on projects that they think they are going to enjoy and that they’re going to give 100%. Which means that sometimes we say no to people. We’ve been in the situation where we’ve taken projects because they paid really well, but then they’re just a pain in the ass. Luckily, at this moment, we still have enough leads coming every day that we can say to no to the people that we believe are not going to be a good fit for the company.

I usually tell them to use two criteria to choose clients. I call it the “interest and leverage criteria.” Basically interest means if they are personally interested in the company, the product, the client and if they think it’s going to be a good fit. Leverage is how big the client is, how influential the client is.

For example, let’s say we’re not so interested in the client but it’s a very famous person who wants to pay us a lot of money. Then, depending on how business is, I might tell them, okay, maybe say yes to that product although it’s going to be a pain in the ass because if we do a really good job then this individual or company has a lot of leverage to bring us business in the future.

We balance those two and then we try to choose the ones that score the highest.

But the most fun projects are usually for smaller startups, where I get to talk to the actual CEO in person. They really feel passionate about their product.

I also really like working for companies when I really like the product and I think they could make a difference in world or in the industry. Then I’m like, “I love what you guys are doing and I want to be the one that tells the story of how your company works to the world.”

I’m assuming it’s a pretty affordable service, then, if it’s something that startups can get into.

Yeah. It depends. If they’re not funded, if they haven’t raised their first angel round or Series A, it’s a little bit expensive. The starting price right now is $7,000 per minute so some of them don’t have the cash.

For those people, I have alternatives. I have partnerships with studios who can do them cheaper but the quality isn’t as great. Also, if they have the time and patience they can take my course where they can learn how to do it themselves.

Almost 2,000 people have taken that course and most of them are company owners that want to do their own videos. A lot of the time they don’t end up doing the videos themselves but they take the course to see what it takes to do an awesome demo video and then hire some animator on elance or through craigslist to execute their vision.