Hello! Who are you, and what business did you start?
Hi everyone, my name is Eddie Castillo. I’m the Co-founder of Altered State Productions, a full-service digital marketing agency dedicated to helping businesses and brands shop for marketing services.
With a wide range of services, including branding, art design, email marketing, video production, distribution, retailing, e-commerce, immersive commerce, digital marketing, SEO, advertising, and affiliate marketing, Altered State Productions is a one-stop marketing shop.
Our team of marketing experts creates engaging brand media that resonates with audiences and delivers results for our clients. At Altered State Productions, we have a wealth of experience serving clients in various industries, from startups to Fortune 500 companies.
Our most popular service is video media for e-commerce brands to distribute on paid media. Our creative media is best utilized for paid channels like CTV, OOH, and social media. We serve B2B and B2C clients nationwide, focusing on the expert service areas of Dallas, Los Angeles, Las Vegas, and New York.
Our customers are established business-minded professionals and startups looking to produce content and marketing services in any industry and business.
Altered State Production’s success as a creative leader has been bolstered by excellent collaborations with distinguished clients like New York Style Fashion Week, Dallas Blends, Samsung, Welks Resorts, and Valyou Furniture. The results are the growth of those businesses and increased demand for the agency's incredible services.
What's your backstory and how did you come up with the idea?
As a child, I was always fascinated with media placements and commercials. I would watch the Super Bowl just to see the new commercials and go to the theater early to watch the trailers. I would also look at billboards on long drives and find myself testing demo video cameras.
At ten years old, I used our family's first VHS video camera to make short films with my brother and record improv skits, often using pre-recorded tapes that I wasn't supposed to use.
This experience taught me that nothing is given and everything must be earned, including the skills and tools needed to pursue my passions. I learned the value of investing in my instincts and have carried this mindset throughout my life.
My media interest led me to be at the top of my class in school, serve on the student council, manage a job, earn the rank of Eagle Scout, and attend Texas Tech University. This same mindset has helped me stand out in my community and industry and ensured that I deliver the best results to my clients while maintaining their budgets
After working in commercial print companies for major liquor vendors and doing freelance work, I realized that business owners spend a lot of time and resources on finding new service providers. This would typically include a discovery call, a proposal, a quote, and a ton of back and forth.
My business partner, a serial entrepreneur, and the other half of my brain saw this as a chance to make collaborating with other companies easier. We wanted shopping for marketing services to be quick and easy, like ride shares, online retailers, and other online services.
We developed a Service-as-a-Product (SaaP) model that allows businesses to see what media services we offer, get all the information they need to make a decision, and select precisely what they need with just a few clicks.
Our SaaP model is transparent, with exact figures on our website that let clients know what to expect in terms of price, the scope of work, timeline, and return on investment.
Take us through the process of building the first version of your product.
After years of freelancing, I had a portfolio, and I knew it would be my biggest asset.
I first defined my target market and identified their needs and pain points to build the first version of my Service as a Product model. I then researched my competition to understand the market and identify opportunities for differentiation.
I determined my operating costs and developed my product offerings, creating detailed descriptions of each product and what was included in the final delivery. I set my prices, considering my operating costs and the value I was providing to my customers. I communicated my expenses and what was included in each product on my product pages.
Finally, I tested and refined my pricing and product offerings, gathering feedback and making any necessary adjustments to ensure that I was meeting the needs of my customers and running a sustainable business.
Our initial prototype was a very manual process that still exists to this day for most production companies. A face-to-face meeting, a shoot day where I would meet the talent, and a 30-day turnaround time to edit where we sent the order via Google Drive link.
When building the first version of the business, we needed a portfolio. After years of freelancing, I had a portfolio, and I knew it would be my biggest asset.
So I began by gathering my best work. I added to areas I didn’t yet have as much familiarity with by providing the service for free to gain experience and learn about the process.
I never had even media as a line of expertise, so I scouted a couple of artists and asked them to collaborate. This allowed me to build my portfolio and gain field experience in how we would manage the discovery, production, and distribution of the entire project.
We manually created our first quote and offered it as a 100% free service for their first gig.
We had to break down everything and itemize everything inside of standard commercial production, from a videographer and sound engineer to editing to exports. Developing the pricing structure was exhausting and challenging as we wanted to be competitive.
A quick event promo took a whole day of video work and a week of editing to get it down for the portfolio showcasing jazz artists in Dallas. In the meantime, we were putting together a website to showcase our online portfolio and used a simple splash page with contact information to start gaining leads.
Our exports were 3 minutes long, and we slowly realized that cutting them into 30-second bites would allow a more robust package of content. We created a PDF menu to enable the audience to pick from a wide range and variety of exports. Now, our most popular service is an exported 15-second video ad for seven channels.
We captured lightning in a bottle, provided this service going forward on our website, and saved so much time and money by customizing the checkout experience. Clients were presented with a selection of video media to choose from, an addon for export options, and other services such as influencers and media buying. We also made sure to keep them in one place by providing a member portal to always refer to and browse for related services in marketing versus outsourcing multiple vendors.
Because we didn’t have any venture capital at the time, the entire operation, including equipment, website, and marketing, was funded by our savings. We landed our first couple of orders within the first two months.
Equipment: We knew that we would need to invest in high-quality cameras, lenses, lighting, and audio equipment to produce professional-grade video content. This was easily the biggest expense right away, as we upgraded our equipment to have a DSLR and mirrorless cameras starting with the Sony A7siii, BlackMagic, Canon Mark DS, and Mavic Air Drone. We upgraded to a variety of native lenses, from 18mm, 35mm, to 75mm lenses.
Tracking and stabilizing equipment such as tripods and a Ronin Gimbal were purchased. We acquired audio equipment, including boom mics and wireless Tascams. Led lighting and color lighting were additional expenses.
We invested in Predator Editing Computers to edit and store video media. We also needed miscellaneous items and accessories such as camera bags, spare batteries, memory cards, and filters. Total Equipment Startup Costs - $35,000
Software: SAAS, Editing, and post-production software can be expensive, but it was an important investment for us at that time. Investing in SEMRush, Adobe Creative Suite, Quickbooks, and Davinci Resolve color grading was a no-brainer. Total SAAS Startup Costs - $5,000
Production and post-production: This included expenses such as travel, location fees, props, talent fees, cloud storage prints, and freelancer fees. Equipment rentals such as green screens or renting specialized equipment for specific projects, such as slow motion cameras and outsourcing studio time. Total Production Startup Costs - $8,000
Marketing and business development: Luckily, we didn’t have to market our business as 90% of our clientele came from referral and returning customers. In Q4 of 2022, we decided to slowly start marketing via paid media and google. Total Marketing Costs - $2,000
Salaries, Insurance. We didn’t have any benefits, healthcare, or retirement plans but made sure to pay ourselves a livable wage. Total Salaries Costs - $150,000
Describe the process of launching the business.
To launch our business, we focused on building a solid team of talented marketers, creatives, and technicians who could collaborate with us to deliver high-quality marketing services. We also teamed up with Dallas' finest producers to bring a layer of creativity to our team and establish ourselves as a leader in the industry.
Look for people who share your vision and values and who have skills that you aren’t as strong in
In building our team, we also established our brand by choosing a business name, creating a logo and website, and setting up social media accounts. We started as DTX Creative Solutions, and it soon became an umbrella for other businesses. We wanted to establish credibility and reach potential clients, and a robust online presence was vital to achieving this.
To finance the business, we combined our savings and reinvested 80% of all revenue from the current gigs into the agency. We carefully calculated our costs and ensured that we had a solid financial plan before launching.
We also considered using crowdfunding platforms like Kickstarter to raise additional funds and get our product in front of a wider audience. Still, we ultimately decided not to pursue this strategy for this particular business.
To ensure that our e-commerce platform was intuitive and user-friendly, we focused on creating a clear and logical layout that made it easy for customers to browse and purchase products. We also ensured that our platform was mobile responsive and looked great on all devices as more and more people shop on their smartphones and tablets.
We developed a pricing structure and determined how we would charge for our services, offering a range of rate sheets and package options for potential clients. To ensure our customers knew exactly what to expect, we outlined all the key performance indicators and deliverables in our services and provided a high-quality portfolio to reference.
To ensure customer satisfaction and success, we implemented a member portal through tech integration that held sensitive customer information and was protected by SSL encryption. We also partnered with an executive assistance company with over a decade of experience working with c-level professionals to support our members.
We made it easy for customers to get in touch with us for any questions or concerns. We had a system to handle inquiries and changes in their business as we were in production. We also offer a 100% guarantee, and we're committed to editing a project until it is perfect for our customers.
During the launch process, we learned several valuable lessons. One of the biggest was the importance of having a strong online presence and making it easy for customers to purchase our products. We also learned the value of building a network of supportive partners and advisors who could offer guidance.
We wanted to offer a range of payment options, including credit and debit cards, as well as popular alternative payment methods such as PayPal and Apple Pay. We are currently exploring financing options such as Klarna and Afterpay for marketing services.
At launch, most of our clients came to us through referrals. Brands and business owners we'd worked with individuals in the past made up the foundation of our customer base. As our brand grew, we continued to see more and more referrals from our new clients.
We've been expanding steadily since launch. I attribute this to an always-learning, always-improving mindset. Our entire business revolves around what our customers need. So we're constantly optimizing our services, our support, and our tools to make the experience better for business owners.
Since launch, what has worked to attract and retain customers?
Our company is proud to have a high percentage (80%) of our business come from returning customers with a 100% retention rate. This indicates the high-quality products and services we offer, as well as our firm commitment to customer satisfaction. Delivering exceptional value to our clients is key to building long-term relationships, and we make it a priority to consistently exceed their expectations.
One of the ways we have maintained such a high retention rate is by offering a 100% guarantee on our services. We understand that our clients work with us because they trust that we will treat their business like it is our own and that our success is closely tied to their success. If they grow, we grow, and vice versa.
This approach helps build trust and confidence in our work for our clients, and we see ourselves as a valuable asset to their success. Several of our team members have even become shareholders in the businesses we partner with due to our shared commitment to success.
One of the ways we do this is by delivering more than what our clients expect. For example, when clients order a 30-second video ad, we don't just stop there. We go the extra mile by creating multiple versions of the ad with different sets and talents and even build a full campaign around it, including UGC, graphics, industry research, and more.
This dedication to our clients is one of the reasons why we have a 100% retention rate. We are passionate about helping our clients succeed, and when they do, it reflects well on our business as well. Always in demand, we have the privilege of selecting the clients we are most enthusiastic about from a large list of prospective customers.
In addition to referrals, 10% of our new business comes from organic search. We prioritize both offline and online SEO as it targets those who are actively searching for what we offer.
To improve our visibility and ranking on search engines like Google, we use a long-term strategy of optimizing our website and creating content that will attract referring domains and backlinks.
This helps improve our ranking in search results and increase our visibility to potential customers actively searching for what we offer. The strategy involves using relevant keywords in the website's content and making sure that the website is mobile-friendly. Additionally, we'll typically send a product release through a press release to land on News or even a Starter Story piece on our business.
Partnership marketing with secondary markets has contributed to 5% of our business. By collaborating with tech and modeling agencies, we have been able to white-label services and cross-promote each other's offerings, helping us reach new audiences and drive new business. In addition, we have shared resources such as equipment and expertise with these partners, which has helped us save time and money while working on projects.
The remainder of our business (5% and less) comes from others, including PR, listicles, email marketing, advertising, and social media. We haven’t grown rapidly in those areas yet, but it is a source area we will be focusing more on in 2023.
We didn’t start posting on social media until after we built a successful business; there were just too many other, better marketing options for us. Once we were ready to use social media for a clear purpose, it finally made sense to allocate time and money to it. Although we love to participate, our business does not rely on social media or traffic to generate new business. While we use social media to build engagement and communication with our audience, we focus on other marketing strategies such as referrals, organic search, and partnership marketing to attract new customers. We believe it is essential to have a diverse marketing strategy that includes a mix of online and offline tactics.
Overall, retaining customers is a top priority for our business. We are proud to have a 100% retention rate thanks to our commitment to growing with our customer's success in the market.
How are you doing today and what does the future look like?
Our operating income for the quarter increased 30% year-over-year, driven by strong gross margin performance, including a 5% increase in gross profit to 15%.
The company's resulting operating margin was a record high, reflecting our continued efforts to maximize efficiency. The rise in revenue was achieved despite a decrease in orders, offset by the Average Order Value, an increase of 40% from the previous year.
Since its founding nearly four years ago, Altered State Productions has become renowned throughout the industry for its captivating designs, polished branding, daring creatives, and expert media marketing. With each year, the agency’s reach only continues to expand, cultivating relationships with multiple affiliates and providing productive online sales for startups and emerging talent.
With the recent launch of a new marketing e-commerce store, customers can purchase services a-la-carte, similar to ordering on “Uber Eats.” Altered State Productions’ transparent and intuitive approach to service-browsing enables customers to discern pricing, duration, the scope of services, and guaranteed quality. We have has generated a quarter billion dollars for brands and partners worldwide.
Through starting the business, have you learned anything particularly helpful or advantageous?
Through starting a business, I have learned the importance of managing my finances and building my life around my business. I consider my current situation and long-term goals when making decisions about expenses. I have created a budget to track my spending. I also educate myself on good money habits and investments to make informed decisions for my financial well-being.
My personal financial decisions are entirely driven by my business. This has enabled me to be more flexible with related costs. For instance, I'll live in an Airbnb when I need to be in a city for an extended period. Being flexible about where I live also saves me from needing to invest in a personal vehicle. Then, I can use this money to purchase equipment or software that further benefits my business. I ditched my personal belongings and just said yes to an opportunity. Since then, I’ve lived in San Diego, Hawaii, Guatemala, Los Angeles, and Las Vegas.
I'm huge on planning. I plan a year and can guarantee that by organizing well rather than waiting until the last minute and trying to rush things. If you tend to procrastinate or get overwhelmed, consider using project management tools like Trello to help you stay on track and ensure everything is in order. A good tip I like to do when it feels like I'm suffocating in tasks is to throw everything on a task list and practice the 4 D’s. Do it, delete it, defer it, or delegate it.
One poor decision I made was allowing my work to consume too much of my time and energy. I often put my business before my personal life, and this has caused me to feel a constant weight of guilt and regret. I am known for ignoring my phone, and this tendency came back to haunt me in a particularly tragic way.
During a photo shoot in 2020, I received a call from my dad, but I was so focused on my work that I forgot to call him back. A week later, I received another call, but it wasn't my dad this time. It was my brother telling me that our father had passed away from COVID. The fact that I had missed my dad's call and failed to call him back weighed heavily on me, especially when I learned of his passing.
I was devastated and regretful that I had allowed my work to come before my family. I knew that my dad was always proud of me and my accomplishments, but at that moment, I could only think about how I had let him down by not making more time for him. I placed the photos from the shoot next to where he was laid to rest, hoping that he could see them and be proud of me from wherever he was.
This experience taught me a valuable lesson about the importance of balancing my work and personal life. I learned to prioritize my relationships and make sure that I make time for the people who matter most to me. I realized that my loved ones are the most essential thing in my life, and I cannot take them for granted.
A great decision I made was becoming a certified agency partner with SEMRush, a leading digital marketing platform that helps businesses and agencies improve their online presence. As a partner, we have access to a wide range of tools and resources that allow us to effectively reach and engage with potential clients.
One of the things that set SEMRush apart is its ability to provide high-quality leads with clear purchase intent. This means that the prospects we receive through our partnership with SEMRush are more likely to be interested in our services and ready to take action. This has proven to be incredibly valuable for our agency as it allows us to focus on converting leads rather than wasting time on unqualified prospects. Overall, our partnership with SEMRush has played a significant role in our success, and I am proud to be associated with such a reputable and respected company.
Another great decision I made was hiring an Assistant, which I feared would be a frivolous expense. Still, it saved me mentally and allowed me to scale and hire six talented marketers in one year, who, to this day, feel like family and inspire me every day.
They support my madness and are always there to test how wild an idea might be. The most amazing ideas take risks and often have a touch of madness or absurdity behind them. If you want to make a big impact, consider pushing the boundaries and presenting bold, unconventional Ones. Even if they seem a bit "mad," they may be the ones that truly stand out and make a lasting impression on your audience.
One risk I took was running a Snapchat campaign for a furniture company. I originally thought that Snapchat was not suitable for high-average-order-value brands, but I quickly realized how profitable it could be. Snapchat is the only social media platform that allows consumers to make purchases directly through their Visa accounts. This unique feature makes it a valuable tool for reaching potential customers and increasing sales.
Even though it wasn't seen as the most conventional approach, it worked. It worked so well that Snapchat did a case study on the campaign's performance.
What platform/tools do you use for your business?
SEO Tools: SEMRush, Ahrefs, Moz. SEMrush is by far my favorite tool because it provides a wealth of data and insights that can help businesses understand their competitors, identify opportunities for improvement, and track their performance over time. In our industry, this is vital
I prefer the Microsoft Outlook desktop app as my favorite productivity app. I use it to manage more than 10 emails and create batch rules. It also has task management and delegation features which I find very useful for working with my team. I find that it integrates seamlessly with Microsoft Teams, which we use for internal communication.
Production Tools: Adobe Creative Suite, Davinci Resolve, Figma, Backstage Casting, Production Beast, Studio Binder, Peerspace. I use Adobe Creative Suite religiously because it provides a wide range of design, web, video, and photo editing tools in one place.
Social Media and Video Player: Later, Facebook, Instagram, LinkedIn, Pinterest, SnapChat, TikTok, Twitter, Vimeo, and Youtube. Vimeo is my go-to for the distribution of content because of its custom video player feature. You can personalize the appearance of the player and add your branding, making it easy to integrate video content into your website and marketing efforts.
Additionally, I’ve been exploring its ability to overlay product integration with platforms like Shopify, which is a fantastic way to engage viewers and drive sales. Overall, Vimeo is a powerful platform for businesses like ours looking to effectively manage, share, and promote their video content.
Affiliate Marketing: Shareasale, Impact Radius, GoAppFlow
Impact Radius has been my personal favorite performance marketing platform that provides tools and services for affiliates and advertisers. I’ve seen incredible ROI ( 1 to 84 on average ) by using its advanced tracking and reporting capabilities. It’s like Google Analytics on steroids and allows you to connect with a wide range of advertising partners, such as Forbes, Vice Media, and more, to customize commission structures based on click models.
Email Marketing: Klayvio, Omniscend, MailChimp. Klayvio is a marketing automation platform that provides tools and services for email marketing, SMS marketing, and other forms of digital communication. Some potential benefits of using Klayvio include Integration with other platforms, such as CRM systems and social media networks, which can help businesses streamline their marketing efforts.
Billing: PayPal, Quickbooks, Upwork
What have been the most influential books, podcasts, or other resources?
The book A Universe from Nothing by Lawrence Krauss stands out as remarkably cerebral. While researching the dark matter and the future of humanity, a quantum physicist does a deep dive into cosmology. Books like this remind us of how minor our issues and concerns are in the grand scheme of things and how incredibly fortunate and privileged we all are to be here, so never take it for granted.
The Joe Rogan Podcast correlates with my business because it emphasizes the importance of acquiring specific knowledge and skills to stand out and be valuable to others. The message is to follow one's natural curiosity and innate talents to build a strong foundation of knowledge and not be afraid to venture into unfamiliar territory and make mistakes along the way. The podcast also encourages having a positive attitude, the humility to admit when one is wrong, and the courage to improve.
Advice for other entrepreneurs who want to get started or are just starting out?
I started my own business a few years ago, and it was both exhilarating and intimidating. One of the things that helped me the most was seeking out resources and support from other entrepreneurs and business experts. I joined a startup accelerator and found a mentor who was able to offer guidance and advice as I navigated the challenges of starting and growing a business.
Another thing that was important for me was to stay flexible and adaptable. My business is in the tech industry, and things change quickly in this space. I had to learn to be comfortable with uncertainty and to be ready to pivot if needed.
Starting a business can be a rollercoaster ride, but it's also incredibly rewarding. It's been a lot of hard work, but I've learned so much, and I'm proud of what I've been able to accomplish. My advice to other entrepreneurs is to be persistent and stay focused on their goals. It won't always be easy, but it will be worth it in the end.
As an aspiring founder, there are a few critical pieces of advice that I would recommend based on what I've learned in my journey as a business owner:
Believe in your vision. Starting a business is never easy, and there will be plenty of challenges and setbacks along the way. It's essential to stay focused on your vision and not let these setbacks deter you. Your intuition is always right.
Surround yourself with a strong team. Building a strong and supportive team is crucial to the success of any business. Look for people who share your vision and values and who have skills that you aren’t as strong in.
Stay agile and adaptable. The business world is constantly changing, so it's important to stay agile and flexible. Be open to new ideas and approaches and be willing to pivot if necessary. As a founder, you should always continue learning and growing. Seek out new opportunities to learn and develop your skills, and be open to feedback and constructive criticism
Prioritize customer satisfaction. Your customers are the lifeblood of your business, so it's essential to focus on providing them with an excellent experience. To do this, you should be willing to go above and beyond to meet their needs, including being responsive to their inquiries on weekends and late at night. You should also avoid being pushy when it comes to sales and instead focus on finding ways to reduce costs and improve the overall experience for your customers. By prioritizing customer satisfaction, you can build long-term relationships and ensure the success of your business.
Where can we go to learn more?
Hey! 👋 I'm Pat Walls, the founder of Starter Story.
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