YouTube stars Rhett and Link explain how algorithm changes supercharged their business to an estimated $17.5 million in yearly income

• YouTube stars Rhett McLaughlin, 42, and Link Neal, 41, started posting videos on YouTube back in 2006 and gained early fame and income from the platform.
• But it took nearly a decade of making videos, and a favorable change to YouTube's algorithm that rewarded longer videos, for the pair's business to kick into overdrive.
• Now with 80 employees, Rhett & Link's Mythical Entertainment is a YouTube powerhouse with enough cash to make 8-figure acquisitions.
• Click here for more BI Prime stories.

YouTube stars Rhett McLaughlin and Link Neal began their streaming careers back in 2006 by filming themselves throwing a boulder off the wall of the Cherokee Dam in eastern Tennessee.

But despite gaining early fame and revenue on the platform, and their first branded content deal in 2007, their business didn't kick into overdrive until a nearly a decade later.

The pair, who were making an estimated $17.5 million per year (as of June 2019) according to Forbes, said everything changed for them in 2015, when YouTube shifted its algorithm to reward long-form videos.

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"That's really when it started to blow up as a combination of the product we were creating and YouTube rewarding longer watch time," McLaughlin said. "Every day you can kind of get pulled into - I'll call it an upward spiral - of content binge-watching of all the episodes of 'Good Mythical Morning' [a daily talk show launched in 2012] that we had released for years at that time. So the algorithm worked well with the way that we were producing our content."

"Good Mythical Morning" now has 16 million subscribers and more than 6 billion views. The show typically runs between 10 and 15 minutes per episode.

By investing their profits into strategic hires over the years, Mythical Entertainment has now grown into an 80-person business built on advertising, branded integrations, touring, publishing, merchandise, and soon-to-be developed scripted and unscripted content for what the company's chief operating officer Brian Flanagan calls the "traditional TV world."

Mythical Entertainment acquired the YouTube property Smosh from defunct Defy Media for $10 million last year, bringing the well-known YouTube comedy group into their 17,000 square-foot production facility in Burbank, California.

Here's an inside look at Mythical Entertainment.

YouTube is still No. 1 when it comes to Mythical's content strategy

"YouTube is our principal platform," Flanagan said. "That's where we're strongest in audience size and multi-viewership. We have a growing, not insignificant business on Facebook, which I'm sure you've heard from some other creators can be lucrative."

Flanagan said 55% of Mythical's revenue comes from advertising and branded integrations, with the remaining income drawn from touring, ecommerce, and merchandise sold on Mythical.com and Amazon, a subscription-based fan club called the Mythical Society, and publishing (McLaughlin and Neal have two New York Times best-selling books).

Monitoring YouTube's content recommendation algorithm is an ongoing project

Because YouTube continues to be central to Mythical's growth strategy, the team pays close attention to any shifts in the platform's algorithm.

"We're constantly evaluating our performance, constantly optimizing our thumbnails and titles," said Stevie Wynne Levine, the company's chief creative officer. "It's something that we do not only every day, but three, four times a day. We analyze each video that we've put out for that day and how we can improve impressions and views. So definitely not something that we set it and forget it, because it's constantly evolving."

Cold-calling brands helped Rhett and Link on the path to a sustainable business

Mythical's branded content business grew from humble origins. McLaughlin and Neal scored their first sponsorship deal with an Ohio-based bean-bag toss company, AJJ Cornhole, in 2007.

"From the very first days of YouTube, we were actually conceptualizing videos and songs and then cold-calling sponsors - potential sponsors - and trying to get them to buy into the idea of sponsoring one of our videos," McLaughlin said. "We made a song about cornhole and we featured their products, and somehow they agreed to pay us."

"When we started, we already had kids and mouths to feed," Neal said. "We were a little bit - or maybe a lot bit - older than the typical person who was forging a career on this thing called YouTube. We tried to take a more responsible approach to not just do what we wanted to do and have fun, but to actually build a business and end up building a studio where we can continue to create projects," he said.

Giving up creative control was key for the pair to avoid 'creator burnout'

For McLaughlin and Neal, handing off work to production staff, writers, and editors has been key for avoiding creator burnout.

"Link and I really do our best to hire people who can worry about the details that will inevitably take away our creative energy," McLaughlin told Business Insider.

One key hire for Neal and McLaughlin was Mythical's chief creative officer, Levine, who joined the team in 2012 to build out a production and writing team that has enabled the show's hosts to focus on their on-screen performances and avoid many behind-the-scenes tasks.

Mythical has a handful of full-time writers who pitch content for "Good Mythical Morning" and the company's new food channel, "Mythical Kitchen," which already has more than one million followers less than a year after launch.

"People talk about YouTube burnout a lot and it's a real thing," Levine said. "Creators are putting so much pressure on themselves to maintain this consistency on the platform and they feel like they need to do it all by themselves. We would definitely not be in the place that we are now unless we had a team of people that we've trained and trust to carry out the vision. There's just no way to sustain a happy, healthy lifestyle without trusting other people to make your content."

For more on how to become a successful YouTube creator, check out these Business Insider Prime posts:

• How much money do YouTube stars earn in a year? 4 creators reveal what the platform paid them in 2019: We spoke with four YouTube creators - Shelby Church, Kevin David, Sienna Santer, and Andrei Jikh - who broke down how much money YouTube paid them.
• How much YouTube pays influencers for 100,000, 1 million, and 150 million views, according to top creators: We spoke with creators on YouTube who broke down how much money they've made on a single video from Google.
• A personal-finance influencer earned over $100,000 in his first year from YouTube. He shared his strategy and what he made each month: YouTube creator Andrei Jikh broke down how much money he earned on YouTube each month in 2019 and what he learned along the way.