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Film Finance

How to divide your film project: the many benefits of a 50/50 split or even partnership

How to divide your film project: the many benefits of a 50/50 split or even partnership

I am frequently asked by filmmakers: How do I split my project between me and my director/producer, directors/producers, or others who are involved heavily in the project? My answer is usually: Split things 50/50, or 1/3, 1/3, 1/3, or 25% each. The reason for this is that if you split something by any other means, someone will be angry. Someone will do more work and someone will do less work, and things might not seem equitable, and thus will likely go downhill very quickly.

Additionally, people can be paid more or less in salaries later on once a full budget is clear. This “split” is only for the backend — which, in the film business you are unlikely to see much of anyway unless you have a rare runaway hit. For example, even if you and your producer split your project 50/50, but your producer doesn’t go with you when you have to live with a Native American tribe in Northern Alaska for 2 years, you can still pay yourself a salary for the 2 years of work you have put in on top of the 50/50 split. And your producer can pay him/herself a salary for raising the budget. Again, negotiate this upfront and identify who is responsible for business and creative decisions. Also negotiate how you will resolve any impasses that may occur.

Every negotiation is a conversation. And every negotiation requires trust. If all members of the team aren’t doing top quality work, you can bet your bottom dollar that the project is unlikely to happen. So you must trust that your teammates will do an excellent job by following through with their obligations, and sometimes picking up the slack for people who don’t.

However, it should be noted that if one or more people are either paying for the project themselves, or raising the financing for the project, they may demand more ownership over the project. Depending on how badly you want this project to happen, you will have to either accept or reject this offer, or negotiate something different. Sometimes, a bad deal, or a deal you don’t think is totally fair, is better than no deal at all if it means making your project hapen.

My modest proposal for BLIND SUBMISSIONS to documentary festivals, competitions, and more!

My modest proposal for BLIND SUBMISSIONS to documentary festivals, competitions, and more!

This is a big idea, that, if implemented, may change the future of documentary for the better.

Background: I've had documentaries accepted to film festivals and pitch fests; I've had them rejected from film festivals and pitch fests.

Yet for every competitive endeavor I’ve ever applied to, I am obliged to list my name, my team’s names, and who has supported the film financially. Yet, from my perspective, this doesn’t make sense.

Imagine a world where no names or other background information were attached to competitive submissions, where work could be judged based on its own merits, where outside factors (e.g. who you know or don’t know) played zero role in the selections of projects for film festivals. This is the world I want to live in, as this is a meritocracy.

Why doesn’t such a world exist? I don’t know, but here I am, inquiring. I’m sure there are good reasons for wanting to know who is on a team (e.g. to make sure that under-represented minorities are selected) but my theory is that MORE, not fewer, underrepresented minorities will be selected for documentary film festivals if names and background information aren’t attached to competitions. This should also help early career filmmakers (of all ages) with less experience too. Let work speak for itself. Let the people who create the BEST work rise to the top. Let the characters in stories be of interest to audiences, not who the filmmakers are themselves.

Sure, I know what you may say: sometimes you can see or hear a documentary maker in his/her film. This is true. And it can warrant a special category. Most people don't appear in their films and are unrecognizable by their voices if they are heard asking questions in the background of a documentary.

I’d love for people to adopt this idea, but if they don’t do it soon, I’m happy to start a film festival myself that is based on this concept! Who out there is with me? And who disagrees? I’d love to get a conversation started!




Review of Ed Catmull's Creativity Inc.

Review of Ed Catmull's Creativity Inc.

I’m probably five years too late to this party, but it isn’t often that I read a book that profoundly affects me for good or for bad. In this case, this book, Creativity Inc. affected me negatively, in part because I had some inside knowledge that the author doesn’t know that I have.

Background: Ed Catmull is one of the founders of Pixar. He comes from a computer science background and I have no doubt he is very smart. But, because of my insider knowledge I know he can’t be trusted. Why? Because when you look at the Oscar Nominations for 1995, you’ll see that four people were nominated for the Oscar for Best Original Screenplay. Their names: Joel Cohen, Alec Sokolow, Joss Whedon, and Andrew Stanton. Yet only one person, Stanton, who has had a long career at Pixar is named in the book. Even Whedon, a talented celebrity in his own right, is not mentioned a single time.

In Catmull’s either deliberately schlocky or straight up lazy retelling of the story, he made it seem that Toy Story was his brainchild and John Lasseter’s. Catmull has the balls to not mention 3/4 of the team that created this project that took Pixar from a failing film studio to the global behemoth it is today.

My inside knowledge comes from Alec, as I was lucky enough to have him, a talented and kind working writer, as my screenwriting teacher over a decade ago at the University of Pennsylvania. Alec taught our Advanced Screenwriting class many valuable tips about the practical ins and outs of the trade, from story to character arcs to act structure, and he did this with complete humility. And, among his other stories, he told us how he and Joel Cohen, his long-time writing partner, came up with the original characters and concept for Toy Story — the same characters that have grossed Pixar billions of dollars in the past two decades.

Here’s the nitty gritty of this book; there are precisely 4 pages worth reading, and these are the tips and tricks for managing creatives on the last 4 pages of the book. The rest is a myopic retelling of stories, in 2020 hindsight (a term that, ironically, Catmull claims he loathes), that details nothing more than Catmull’s version of events of how Pixar became great. But I suspect Pixar, like Apple, became great because of Steve Jobs’ sometimes questionable leadership decisions. Jobs knew when to gamble and how to fight. Pixar could’ve been closed or sold many times in the decade prior to Toy Story, but it wasn’t. This book, save for its last 4 pages, is nothing more than a history of Pixar from one person’s perspective. It doesn’t say a thing about how to be creative if you’re a normal reader — it says things about how to be creative when you are bankrolled with hundreds of millions of dollars. Thus, young and/or aspiring creatives won’t get a thing out of reading this book.

"How I accidentally changed the way movies get made..."

"How I accidentally changed the way movies get made..."

Do you know the story of The Hollywood Blacklist? No, I’m not talking about the one from the anti-Communist era, I’m talking about the list of Hollywood scripts that don’t get made but are some of the hottest on the market. Well, if you don’t know this story, learn from it, as it shows the power of thinking differently from everyone else in the crowd.

As TedX writes, “How does Hollywood choose what stories get told on-screen? Too often, it's groupthink informed by a narrow set of ideas about what sells at the box office. As a producer, Franklin Leonard saw too many great screenplays never get made because they didn't fit the mold. So he started the Black List, an anonymous email that shared his favorite screenplays and asked: Why aren't we making these movies? Learn the origin story of some of your favorite films with this fascinating insider view of the movie business.”



NoFilmSchool Podcast: Featuring Stephen Robert Morse

NoFilmSchool Podcast: Featuring Stephen Robert Morse

I recently sat down with the wonderful Liz Nord of NoFilmSchool to discuss how to make films more efficient:

No Business School: How to Save Time and Money on Your Films

Yes, you can make great films without breaking the bank.

Stephen Robert Morse believes that the film industry is broken. Time and money are wasted at every step of the process, leaving filmmakers less with which to actually make our films. Fortunately, he also believes we can fix it. In fact, he believes this so strongly that, after producing the documentary Amanda Knox for Netflix, he went to Oxford Business School to learn how we can run our sets more like businesses and started the company Observatory to do just that.

"A lot of people think this industry is glamorous and that’s the biggest problem."

Terms like "lean principles" and "simultaneous processes" probably aren’t familiar to most filmmakers, but if you put some basic business sense into place, you can make your films a whole lot cheaper and more efficiently. And if it sounds cold and calculated, remember that ultimately, this is all in service of having your film reach the most people and have the greatest impact possible.

In this practical conversation, Stephen Morse breaks down some business school lessons that we can apply to make our films in the most efficient ways possible.

Listen to the episode by streaming or downloading from the embedded player above, or find it on iTunes here.

4 Rules That Will Change the Way You Network

4 Rules That Will Change the Way You Network

The film industry is based on teamwork, so networking is an unavoidable part of the process.

My approach to networking has changed thanks to a few simple, quite logical observations from Adam Grant that I recently read. Grant, the famed Wharton professor and organizational psychologist, stresses how important doing is to the art of networking—both on the part of the people you’re trying to network with and in your own life, as well.  (Here is the video that Grant made, but I'll summarize his three arguments and then expound.)

 

1. Ask people who are older than you for advice.

This should come as a no brainer: people love to hear themselves talk. And many people (assuming they have souls and are not horrible, which some successful people certainly are!), like to help younger people. You can also teach older people things (about technology, for example) to reciprocate for their knowledge.

It may feel intimidating to talk to more senior people or tempting to mix with people who are similar to you, but  if you seek out people who've done it before, their wisdom is valuable, and they'll help you get ahead. They're usually happy to share their experiences and may even be more likely to promote you.

 

2. People usually get where they are because of hard work.

Making films or television series is not easy. Any idiot can have an idea, but ideas are worthless unless you can execute on them. And executing is not easy: from putting together the best teams possible, to managing these teams so you can get the best out of them, to delivering final products that meet technical specifications and are also high quality is insanely challenging. It's not necessarily brain surgery, but there are a bunch of processes that must be perfectly nailed or else, well, you're screwed. And it’s well documented at this point that it takes 10,000 hours to get to a place of expertise in anything. So when you’re following point number one, respect that the people you’re networking with have likely put in those hours.

 

3. Don’t let the “haves” throw you off-track.

I’m adding this as a bit of a sidetrack from Grant’s list. Despite point number two above, some people “cut the line” and use their wealth and family connections to become filmmakers. This is because filmmaking requires not only 10,000 hours, but also considerable budgets. “Rich kids” are a reality. They're by no means bad people; they've just had advantages in their lives that not all of us started off with.

However, just because people are wealthy, doesn't mean they are intelligent, crafty, artistic, witty, or good at sales and marketing. And remember, you can use the 10,000 hours you need to become an expert to catch up with these people. Yes, you may have to slog it out in low paid film jobs (or a career in another related industry, as I did for five years in technology and three years in journalism), but you will be able to learn during this time, and arguably you will  be better off than people who've had everything handed to them on a silver platter. I say this because when the sh*t hits the fan, yes, you may be able to throw money at the problem, but oftentimes skills solve more problems than money.

What does this have to do with networking? Well, just recognize this reality and, if you end up chatting with one of these types at an event, don’t let them throw you off your game. You are on your path and will probably be better off in the end for having had to struggle and be resourceful.

 

4. You have to put in the time, too.

Networking is an utter waste of time if you have nothing cool to talk about. So do something cool and then not only will networking be more productive, but people will also come to you to network. Though this point came in last on Grant's list, it is just as important as everything else here.

Why can networking seem so horrible and so boring sometimes, even when you’re with people in the film industry—or who purport to be in the film industry? Typically, this is because the people you network with have very little to talk about. Non-scientifically, about half of the people I meet at film-related networking events are hangers on, people who may have aspirations to work in film but don't have enough drive to do anything productive. It's a sad reality, but it's the way it is in an industry that is characterized in the public opinion as sexy, cool, and glamorous (even though it is usually cool, yet neither sexy nor glamorous!)

So go out there! Do something! Intern for someone! Work as an assistant! Make a film in a weekend! Learn to edit! Create something good!

From personal experience, making Amanda Knox utterly changed my life. Now people not only take me more seriously, but they come to me with excellent projects too. To conclude, inspired by George Orwell's sentiment for his 6 Rules For Writing: Break any of these rules sooner than doing anything outright barbarous.

Berlinale 2018: Why the Blockchain Could Fundamentally Change How Business is Done in the Film Industry

Berlinale 2018: Why the Blockchain Could Fundamentally Change How Business is Done in the Film Industry

I recently wrote this piece for the film community at NoFilmSchool.com.

A new company is using the blockchain to help eliminate waste (and shady people) in the film industry.

[Author’s note: Prior to reading this article, it is advisable for readers to peruse the Wikipedia “Blockchain” entry or the briefer definition of Blockchain in Investopedia.]

Technology and the film industry have had a historically rocky relationship. 20 years ago, Blockbuster ruled the at-home video market and famously (or infamously) rejected the opportunity to purchase Netflix for a mere $50 million. Today, Netflix has a $120 billion market cap and is poised to dominate the film industry for years to come.

Yes, market leaders like Netflix and Amazon are surely experimenting with algorithmic programming and Artificial Intelligence (AI) in attempts to take humans out of the screenwriting equation to give viewers what the companies think they want. But there are other forms of technology that can help improve the independent film business and even have the possibility to revolutionize how films are made—and more importantly, how production staff from actors to directors to below the line crew are paid. 

Enter FilmChain, a project started by BigCouch co-founders Irina Albita and Maria Tanjala. The goal of FilmChain is to increase accountability and transparency in the murky independent film financing world by using blockchain, the underlying technology behind Bitcoin. However, during their presentation at the Berlinale’s European Film Market startup pitch event, the pair were quick to debunk the myth that blockchain and Bitcoin are one and the same. Let it be known, they aren’t! As an oversimplified way to distinguish them, Bitcoin is a digital cryptocurrency, and the blockchain was developed as a decentralized way to record and account for Bitcoin transactions which has now expanded to use for a variety of commercial applications.

FilmChain is a revenue collection and allocation platform operating on blockchain technology that aims to service film and digital content creators by collecting revenues and automatically distributing them to stakeholders. If successful, FilmChain will mean that one can say goodbye to loads of middlemen who take a piece of the pie during the filmmaking process. 

The benefits of the blockchain to help film distribution processes are many: global transactions are typically costly, frequently people don’t get paid for the work they do, and the accounting books on numerous independent productions either is non-existent or riddled with errors.

Manuel Badel of Badel Media in Canada discussed other strong points of how blockchain technology can improve the film business:

  • IP protection - proof of ownership
  • Digital rights management - registration, tracking, royalties
  • Contracting - automation and smart contracts between stakeholders
  • Collaboration - scriptwriting and product design
  • Micropayments - tokens, crypto, crowdfunding, royalties, recoupment
  • Content distribution - decentralization, trust, and disrupted distribution. 

Who will gain?

Who stands to benefit from this FilmChain technology? Anyone who works on a production!

What makes “smart contracts” revolutionary is that they are triggered automatically. For example, say you are a screenwriter based in America and your contract says you will get paid $10,000 on the first day of production of a film produced and set in China. Once that first day of production happens, your $10,000 will automatically be triggered and you will get paid. Contracts could be set up such that, for instance, three individuals confirming that production started on a specific day would be all that is necessary to send an instant payment halfway around the world. 

Who will lose?

And who stands to lose from blockchain technology being implemented in the film business? Shady film financiers who don’t make good on the payouts they owe, therefore stealing money from others who rightfully deserve it.

Of course, shady film financiers may never voluntarily utilize a system such as this one, but if FilmChain (or similar platforms) become the norm, then staff members on productions that do use this technology would stand to benefit. Film financiers would benefit too as the myriad bank transfers and other international payments they send would become much less expensive as the systems become automatic and tech-enabled.

FilmChain won’t be implemented overnight. But it and similar projects surely present a hopeful future. Anyone who has ever been screwed over by a shady financier or producer, or even has just waited far too long to get paid for freelance work, stands to gain if blockchain technology is implemented into the film business. 

 

 

9 questions to ask yourself to see if you should kill a film project (and how to kill them effectively)

9 questions to ask yourself to see if you should kill a film project (and how to kill them effectively)

At times it is necessary to "kill your projects" or "murder your darlings" or "trim the fat from your development slate." All three of these things mean the same thing: you've wasted time, money, and energy creating a project, and now isn't the time for it to come to fruition. I've seen too many friends get obsessed with projects that are doomed for failure. So listen to this advice!

9 questions to ask yourself to see if you should kill a film project:

1. Is the team you're working with less motivated about the project as they were on day one? If the answer is yes, consider killing the project.

2. Is your project moving along much more slowly than you had planned? If the answer is yes, consider killing the project.

3. Are you now realizing you will face several costly legal challenges to get your project off the ground? If the answer is yes, consider killing the project.

4. Did a key subject drop out of the project? If the answer is yes, consider killing the project.

5. Has the conflict eroded from your project? If the answer is yes, consider killing the project.

6. Is another team, perhaps with better access, further along on a similar or related project? If the answer is yes, consider killing the project.

7. Have you lost interest in your project? If the answer is yes, consider killing the project.

8. Has the market for your project gotten significantly smaller? If the answer is yes, consider killing the project.

9. Are you working on better/faster/stronger projects? If the answer is yes, consider killing the project

And of course, if more than one of the above questions is yes, REALLY consider killing the project.

Finally, here is a practical guide of how to kill a film project:

1. Ethically, it is proper to tell your participants you are killing the project. This may free them to work with other filmmakers. You should also let them out of any exclusivity agreements you have.

2. Pay anyone who has done work for you who you owe money to. (Write this off later.)

3. You needn't write a public obituary for your project, as you may want to revive it later on. So move on, don't kvetch about it, and know that deep down you saved yourself a heckuva lot of time, money, and energy to pursue other projects.

 

 

Assume you will never get funding for your film: my key learning from making films

Assume you will never get funding for your film: my key learning from making films

Documentary funding is scarce or non-existent in much of even the developed world. If you live in a place like Denmark, Norway, or Sweden, you're at a statistical advantage. These are countries haverelatively small populations, a ton of funding for the arts, and each country maintains its own broadcast networks that can both fund and purchase projects done within their respective languages. But most of us don't have the Nordic heritage of our lucky brethren. 

What does this mean for non-fiction filmmakers? Well, there are options depending on who you are.

1. If you're independently wealthy, you're at a statistical advantage. You can fund your own projects and forget about this blog post. If you're among the lucky 1% go make a movie like Jamie Johnson, heir to Johnson & Johnson did in 2003! 

2. If you're not independently wealthy, this is going to be painful, like, very painful. Like, extremely mind-bogglingly painful. If you want to apply for documentary funds, you can do this. But my caveat is: as both a novice and (relatively) successful filmmaker, I have tried to apply for these funds and I have never been granted a dime. Not for a commercial success like Amanda Knox, or for an insanely timely and relevant piece like EuroTrump. I have applied with teams that are made up of women, people of color,  foreign -- it doesn't matter. However, it does help to look at the kinds of films that are funded by such grants as the one by the IDA and by Sundance. (Statistically if you are going for the IDA grant you will have much-improved chances if you are a woman or a person of color, or applying with one: As Deadline reports, of the 11 projects selected, 7 are directed by women, 10 have female directors and/or producers, 7 are directed by filmmakers of color, and 8 are directed and/or produced by filmmakers of color.)

3. But I believe there is a third option for the 98% of us who want to make powerful films, aren't independently wealthy, and won't be able to win a grant from a non-profit organization. You could spend your days applying for grants that you may never receive, but you can also spend your days in the field shooting. If you are making a film in your home city, amazing. You can have a day job (or a night job) and still work on your film. If you are making a film somewhere else, you will be okay too. My advice: First, save up some money while you are doing your pre-production. Second, plan a short trip to wherever you want to go as you must make sure there is a story as compelling as the one inside your head. Third, once you know you've got your story, put your place up on Airbnb and put your job on hold. Fourth, go and shoot. It could be years before you get a grant from the IDA or Sundance. But don't look at this as discouraging. In fact, look at it as a challenge for you to overcome. You're up against thousands of qualified people, so sometimes in life, you have to be a go-getter and reach for things yourself. The money may never come, but you will always have your product --your film-- to stand by. Plus, once you get your project off the ground, crowdfunding your post-production will be way easier. 

 

How to make the kinds of documentaries that will be sold to Netflix, Amazon, Hulu, Vice, Apple, or HBO

How to make the kinds of documentaries that will be sold to Netflix, Amazon, Hulu, Vice, Apple, or HBO

This week, Variety reported that Netflix said it will raise $1.6 billion in debt to fund additional content in 2018. This means that Netflix is now projected to spend $7 to $8 billion on content next year. And with a half dozen other major competitors out there, this should be music to the ears of content creators. However, when we are looking at documentary financing, things aren't all roses for non-fiction filmmakers, especially novice ones.

First, of the $8 billion Netflix will spend on content, one can assume that no more than 3%, or $24 million, of this budget will be spent on documentaries. Yes, other non-fiction content might be highly paid, like Chris Rock's $40m comedy specials, but documentary doesn't work like this. Additionally, other than The 13th, created by an outstanding director with a strong track record, Netflix isn't funding documentary projects from start to finish. It is, inherently more risk appetite than Netflix (or other large companies, other than HBO) are willing to take on. 

Thus far, Netflix has paid $5 million for one documentary, Icarus. And they have paid around $2 million for several more. But again, these are all outliers, films that are in the top 0.1% for sales of documentary films made. You can look at the themes of these films to understand what Netflix wants: Crime (Amanda Knox, Making a Murderer), Sports (Icarus), Justice (Joshua: Teenager vs. Superpower).

And Netflix isn't alone: Amazon paid north of $2 million for City of Ghosts (about the relevant issue of the Syrian war) at Sundance last January. Ostensibly they will have paid this much for a few more films during this year, too. 

These stats beg the question, what kinds of films are you making that have the potential to be purchased for big bucks? 

Making films that can be purchased by big companies is the major goal of OBSERVATORY. That isn't to say we don't appreciate artsy films, but they have to be commercial for us to be interested. Amanda Knox, EuroTrump, and Freedom For The Wolf are all shot beautifully. But they also are stories that resonate with millions of people on a commercial level. 

Thus, if you want to make films that are bought by large companies, you need something special: access to a person who has never given access to anyone else, knowledge of a place that nobody else has, an incredible story that only you know about that should be on the front pages. You also need to be relevant. If your story was important when you started your project, but it doesn't really matter today, you're crap out of luck.

The films that are purchased by large companies do have many similarities: they feature bold and interesting characters, are shot well, and highlight some level of controversy. You learn this in screenwriting 101: controversy sells, so don't think you can make a film without this that anyone will be interested in. What you will also realize is every team that has sold a project to a major company has someone on it who knows how to sell. 

More on this in future Observations.

 

Every Film is a Startup: a look at the similarities and differences between films and startups

Every Film is a Startup: a look at the similarities and differences between films and startups

I have worked for startups (Seamless.com. Quirky.com, Skillbridge.co) and I have made films (Amanda Knox, EuroTrump, and Freedom For The Wolf). There are many similarities about these environments and many differences too. Here's some high level analysis on this topic: 

Similarities: 

1. A high failure rate: Today there are about 10,000 films made per year. Less than 10% of these films will get released in US cinemas; in 2016 the figure was 736. And about 100 of these films will be studio films from Warner Bros, Disney, Fox, Paramount, Sony and Universal. While this may seem like a lot, there are 1 million new businesses created every year. Of these businesses, about 50,000 in the United States raise funding from angel investors. But most films and most businesses will be destined to failure. In the indy film world, you are up against major odds. As Stephen Follows writes, "Over the past ten years, 74% of all the money collected at the UK box office has gone to the top 50 grossing films."

2. Dreamy-eyed people dominate the industry: In an era since Mark Zuckerberg first turned tech stars into rock stars, the tech industry has been dominated by dreamy-eyed people imagining Maseratis, private jets, bottles of Dom Perignon, and boating on the French riviera. This was already how most people felt about the film industry. As such, any industry with bling at the end of the rainbow will attract tons of hangers on, talentless people, and wannabes. 

3. You can bootstrap a startup or a film, and it's getting easier: Good news for the film world. You can buy an amazing $2,000 camera, $2,000 worth of lenses, and $500 worth of sound equipment and bing, bang, boom, you're in business to make a movie. And luckily, most Directors of Photography have already made this investment so it won't fall on you as a director or producer to make such a purchase. In the startup world, tools from Squarespace, Gmail For Work, and even Salesforce can now be modified to fit the "solopreneur" budget. 

Differences: 

1. At startups, the sky's the limit; with a film, you have limited upside: This is the most important difference between startups and films. Let's say you make an excellent indie film on a $1 million budget. You may sell it to Netflix in perpetuity (forever!) for $2 million. After you pay your sales agent (15%) of this fee, you're netting $700,000. And let's say you have you only had one private investor in this film who gets 50% of profits. That leaves you with $350,000. But let's also say you as the producer and the director are equally splitting this upside. That's $175,000 each. And finally, say sayonara to 50% of that money because it's going to the tax man. So, at the end of the day, you've netted yourself less than $100,000. However quite frequently, you will also have to pay out other investors, producers, or people working for your film who benefit from the upside. Sorry Charlie, but this is the harsh reality of indie film. 

However in the startup world, if you're decently successful you'll get acquired by a bigger company, and if you're extremely successful, you'll stay private and make a load of cash or go public and make even more cash. 

2. Startups are much more likely to attract heaps of investment: Some 50,000 startups each year receive "angel" funding in the US. This could be $50,000 or it could be $50,000. Either way, there's a heckuva lot more money being invested into independent startups than there is into independent films. 

3. In a startup you can pivot, in a film you cannot: The word "pivot," now frequently parodied on shows like Silicon Valley, is a very real thing, and startups do this frequently. For example, I have a friend who started an online retail company to compete with Etsy. After working on this for a couple of years, she realized that the advertising technology she had built was far more interesting than the store itself. 

Whether you are making a documentary or making a feature film, it is insanely challenging to make a true "pivot" once your project is underway. In a feature film, it is near impossible. And in documentary, if you are going to call it a "pivot" you might as well just say you are starting to make a film on an entirely different topic and not using any of the footage that you've already shot. This said, one example of a successful pivot in documentary is Bryan Fogel's film, Icarus, now on Netflix (an excellent watch!). In Icarus, Bryan starts off his film by trying to use illegal doping mechanisms to give himself Lance Armstrong-like superpowers. Ultimately he "pivots" and reveals a much larger cheating scandal leading all the way up to Vladimir Putin. Of course there's a bit of timing and luck involved with this pivot, but Bryan capitalized on it very well. This said, unless you "pivot" at the start of your documentary, chances are you are then wasting a ton of time that you will never get back. 

 

 

Our bold attempt to create an asset class of documentary films

Our bold attempt to create an asset class of documentary films

A year ago, my business partner Maria Springer and I wanted to do something revolutionary: we wanted to turn non-fiction filmmaking into an asset class. Of course, when you are attempting to create an asset class, there should be reasons why one doesn't exist already.

But we remained bullish that the time was right for such an asset class to be born: with Netflix spending $6 billion on content this year and up to $8 billion on content next year, one could argue that there is a gold rush now taking place as Netflix, Amazon, Youtube Red, Apple, Hulu, VICE, HBO, and traditional TV networks all compete for similar wonderful content.

However, Maria and I made assumptions in our initial analysis that were incorrect: 

1. We felt that we could drastically reduce the amount of time it took to make or finish and distribute products from years down to six months.

Yes, we made EUROTRUMP and had it air within 9 months. But for one big reason this didn't happen faster: summer vacations. It seems like the entirety of the television and film industry (especially in Europe!) is on vacation for the summer months. We would frequently call and email people and discovered so many vacation responders. This isn't a critique of the entertainment industry: when I used to work in startups, people would also say things like you have two seasons to raise money, spring and autumn, but I didn't realize howmuch this effects film/TV projects. 

What's the fix for this? Plan in autumn. Shoot in spring. And, if possible, spend your summer months editing. Many people do this as they want to hit the Sundance Film Festival deadline anyway which is in autumn. However, this likely may mean way more competition for your film projects if they fall on a similar timeline to everyone else's. The real reason this isn't a proper fix though is that documentaries frequently take more time than this to shoot. Only very specific, niche projects with clear start and end points can be completed in this strict timeline. 

2. We also assumed that when we invested to finish the projects others had created that they would be used to our grueling pace and also want to get projects out there and into the world quickly.

Unfortunately, the traditional path for independent films to get aired relies on them going on tour through festivals. Many filmmakers like getting respect in the film industry by attending these festivals, but this is a process that takes a year or more. (Again, there are few credible festivals between June and September, so this is yet another reason why summer is wiped off the filmmaking map.)

What's the fix for this? My approach has been multi-pronged. While film festivals are a lovely way to reach generally elite, liberal audiences in cities, they don't necessarily equal $$$$$. Yes, a victory at a film festival or two might boost the prospect that your film gets sold, but some films like EUROTRUMP, about a controversial politician, are going to be way too divisive to win film festival awards. Yes, my interest is in making money on film sales after films are made, because I have never been the recipient of a filmmaking grant. (Maybe one day that will change, but at this point, I've had to hustle my way through the filmmaking world!) Thus, a fix for this problem is to be selling your film while it is going to film festivals. The two are not mutually exclusive, so long as your sales agent and/or distributor is amenable to this. 

3. We didn't factor in all of the personal and personnel risks involved in filmmaking.

Any film project is going to have major risks. Even if principal photography has been completed, there are still so many decisions from who to hire as an editor, what time frame the team will complete the project in, and how the film will be prepped for sale. 

What's the fix for this? This question, I really don't have an answer to. I wonder frequently, why do some feature documentary projects get completed while others don't? Yes, I presume films that have received mega-funding from grants or donors will get finished, but there are truly a plethora of risk factors. 

What risk factors can we mitigate against? First, we can make sure a team has a strong track record of working together. Second, we can make sure the film is far along its road to being finished before we invest in it. Or, as we learned by doing, we can just create a film from start to finish ourselves. Ultimately, this latter option was the most effective way for us to fight against the team-related risks.

Conclusions

After a year of trial and error, we determined that creating a proper documentary film fund, that would get investors profitable returns, like investing in real estate, the stock market, startups, or other endeavors does not make sense for the non-fiction film industry.

Though I am happy to report that we are in the black on our film EUROTRUMP, there are, quite simply, too many risks to guarantee profits. And the dozens of potential investors we spoke to about our ideas wanted to believe in our projections, but had trouble doing so. This is fair. (And the last thing I'd ever want to do is lose an investors' money!)

This said, like in venture capital, you don't need every film you make to be a runaway success. If you make 10 films, one can be a huge success, two can pay back their costs and then some, and if you have kept your costs under control, the remaining 7 projects can be utter duds. Yes, the above information took us a year to figure out (as we felt that we had to experiment and conduct our own practical due diligence before asking others for money), but we are extremely glad we didn't raise a proper fund on the wrong terms. 

This led us to our next big idea: impact investing in non-fiction films. More on that soon. 

 

2016 and 2017: The Years When Politics Reigned King and How That Led Us To Geert Wilders

2016 and 2017: The Years When Politics Reigned King and How That Led Us To Geert Wilders

In late 2016, you didn’t have to be Albert Einstein to look around and sense that politics was the most important issue of the day: If you lived through Brexit in the United Kingdom (I did!) and the election of Donald Trump (yup, was there too!) you knew that every person you talked to had one thing on his or her mind: politics.

The reason for this was simple: though people seemed not to think about it previously, the politics of your leaders truly translates into what kind of a society you live in. Everything from climate change policies to immigration policies to whether to go to war has all to do with your elected political leaders. And with a New World Order leaning in on both the United Kingdom and the United States, the liberal democracies that we knew of since the end of the Cold War suddenly upended themselves.

You can argue for ages whether this is because of Vladimir Putin’s sly interventions or because Hillary Clinton was a weak candidate. It doesn’t matter: people care about politics now. And by simply looking at my Twitter feed, I garnered that what was once cat jokes and sports commentary had overnight become politically focused. The world was watching politics now.

I looked at Google Trends and typed in a few keywords and confirmed my suspicions. Politics was all anyone cared about in 2016. So, looking ahead into 2017, Maria, my business partner, and I decided we wanted to make this a year where we made political films.

Given that we are based in London (thanks to a prescient and precious visa sponsorship from the University of Oxford) we knew that to keep costs down we should make our next project in England or Europe.

Let's look to science when selecting a film to make

By this time, it was late November 2016, a few weeks post-Trump’s victory. We looked ahead at the election calendar for 2017 to see which European elections were coming up next. In 2017 there were due to be elections in the Netherlands, France, Germany, Norway, and Austria among others. The Netherlands was first. And upon closer inspection we saw that at that time Geert Wilders, the far right wing candidate was polling to win about 35 seats in parliament.

In this image, the grey line is how Wilders was polling (this is out of 150 not 100). If Wilders won 36 seats in parliament, he would have the option to build a coalition and form a government if he were able to attract an additional 40 parliamentarians to his team.

Wilders is the grey highlighted line on these polls. 

Wilders is the grey highlighted line on these polls. 


Thus, we decided we should reach out to Wilders and ask him if we could make a film about his campaign. When we started making our film, all of the numbers pointed to Wilders having great success in this election and he had a fighting chance of winning.

Even today, after placing 2nd in the Dutch elections (and taking the whole country to the right as our film EUROTRUMP shows), Wilders is still quite popular on Google Trends. Hence, I’m confident that we made a strong bet on politics.

Google Trends results when searching for Geert Wilders

Google Trends results when searching for Geert Wilders

As I mentioned in a previous post, we also invested in another excellent political documentary this year, FREEDOM FOR THE WOLF, that shows the global threats to “liberal” democracy, and explains how many of us really live in “illiberal” democracies. Yes, we chose to double down on investing in politics this year, because, quite simply, this is what the people wanted.

Due diligence, our thesis about why films don't get finished, and why we won't invest in your project

Due diligence, our thesis about why films don't get finished, and why we won't invest in your project

One year ago, when we were launching OBSERVATORY, Maria and I formulated our thesis as follows: There are plenty of strong documentaries that don't get finished because they run out of money during the filmmaking process. Our goal was to help get these most worthy films get finished and purchased by large distributors while they are still relevant.

However, after a year of trying to prove our thesis, I now must admit that we simplified things way too much. There are a plethora of reasons why "good" films don't get finished. We learned quite a bit about these reasons while conducting due diligence on films that we were considering investing in. Here are the five biggest problems that we encountered that prevented us from investing in otherwise "good" projects: 

1. Egos and trust. Quite frequently, I meet people who call themselves "directors" or "producers" who have egos the size of small countries. Oftentimes, such people have little to no work to show for themselves. This isn't comforting for me. For nearly six years, while I was making AMANDA KNOX, many of my closest friends didn't even know I was working on the project, as I didn't want to over-promise and under-deliver. Modesty is important for me. I know that if I invest in you I will have to work with you and everyone on your team for six months to a year. If people act liked they are Gods, this always rubs me the wrong way. 

Furthermore, I need to be able to trust people before I invest in them. For example, we invested in a project this year called FREEDOM FOR THE WOLF. The people on this team had experience in both filmmaking but more importantly, in other relevant endeavors that gave us the social proof necessary to invest in them: Director Rupert Russell and Producer Patrick Hamm both have PhDs in sociology from Harvard (a relevant discipline for this film). And Producer Camilla Hall, who first approached me about working together, was a journalist at the Financial Times and had already directed a respectable film of her own, Copwatch. These are the kinds of track records that make me want to invest in a team.

The second test that I consider before investing in a team is the McKinsey Airport Test. If I were stuck in an airport with this person or this team for 6 hours, would I be happy, meh, or would I want to run away? Of course you should never invest in a person you wouldn't be happy to be with for a long period of time, because in reality you will have to spend long periods of time with these people. 

2. No financial brains. I need to know that at least one person on a project, ideally the producer of that project, understands how film finance works. I am frequently flabbergasted when at film festivals I meet with production teams and they have 0 financial knowledge. I'm not saying you should go out and get an MBA (but it would be quite helpful!), but when I ask you about debt vs. equity financing, a very simple concept, and you tell me you don't know what that means, I am not going to invest in you, even if your film looks amazing, because I would fear losing my money and/or my investors' money. We are investing in films to make profits, not to fund your lifestyle. Remember that. 

3. The project has already taken on too many investors. Working with other investors are the bane of any new investor's existence. Sometimes, a very worthy project will present itself to us but then we will conduct our due diligence and learn that, say,  the French-German TV channel ARTE gave the film $100,000 in exchange for the right to air the film in in France and Germany. This then means that two large territories are off the table in terms of sales. It also means that the likelihood of selling the project to Netflix, Amazon, VICE or another global distributor is going to be impossible. Furthermore, the deals you likely have already procured might impact how fast and in what order we can get our money out of the project. 

4. Budgets are out of whack. Quite frequently, a producer with an $850,000 budget will come to me and say "We are 40% of the way to being financed through the generosity for 10 different individuals and organizations." Such a high budget goes against my fundamental belief that you will ever be able to pay back your investors unless you're making a film about Lady Gaga or another A list celebrity. Even if you pay your team fairly and have to travel quite a bit to get your film made, it shouldn't cost $850,000. This is where I fundamentally disagree with other investors: I have worked on excellent films that have been made for $300,00 or less. 

5. Irrelevance. All too frequently I have seen projects that might have been relevant a few years ago, but aren't necessarily relevant today. For example, if someone wanted to talk about small town government corruption in the United States before Donald Trump was elected to the presidency, the film likely would have been quite interesting. But today, in an era where there are much bigger fish to fry, that film is no longer relevant. How would I ever be able to sell a film that is irrelevant when there are likely 20 films out there that are relevant? 

More often than not, the documentary projects we came across had more than one of the above problems. You can see how such things would be paired together: e.g. No financial brains and budgets that are out of whack would go together. So would the idea of coming in contact with egomaniacs who have created projects that are utterly irrelevant. If you can solve these problems, you will quite easily take yourself to a position in the top 2% of projects that we look at. 

More observations coming soon... 

A Year in Review: Adventures in Start to Finish Filmmaking

A Year in Review: Adventures in Start to Finish Filmmaking

I cannot believe how quickly the past year has flown by. Just over a year ago, my business partner Maria Springer and I graduated from the University of Oxford with our MBAs. We felt that the staid, old, complex film industry, especially documentaries, needed further disruption, beyond what Netflix and Amazon were already doing.

Armed with the lean principles we were taught in our technology and operations course at Oxford, we set out to make films at record speeds on record low budgets. And, as we learned in business school, it gets faster to make a film every time you do it. You will learn tricks left and right.

It took over 5.5 years from the time I landed in Perugia, Italy to start doing research for AMANDA KNOX until the film was released on Netflix. For our first OBSERVATORY project, EUROTRUMP, it took 9 months from the time we conceived the project until it aired on television on VICELAND in the Netherlands and Belgium and on the Dutch national broadcaster. This is a substantial improvement but there is more work to be done. If not for minor mess-ups along the way, we could've had this film ready three months earlier. But we will live and we will learn. We will make process improvements, And we will help others along the way.

Here are the key lessons we learned from making EUROTRUMP in 9 months: 

1. Run simultaneous processes: At its simplest level, this means if you are shooting a film you should also be gearing up to sell that film at the same time. This means start making trailers for your film while you are shooting it. It might be a pain, but as they say, "Show don't tell." 

2 . No deal is a deal until it is a deal. The BBC gave us a contract for this project a few months in. We thought we were set. We thought all was good. Then, the executive we dealt with over there went on vacation and all hell seemingly broke loose inside their headquarters. Our project became too controversial for them. And ultimately it was dropped. This was BY FAR the most stressful month for us over the past year. We didn't know this rule at the time, so we started coasting, thinking the BBC was a done deal and all was good. It didn't happen that way. 

3. ALWAYS BE CLOSING. As an independent filmmaker, your job is to sell as much as it is to create. If you don't sell your project, nobody will see it. And then you'll have an audience of 1. 

4. If you make something for $100,000 and sell it for $200,000 you've made a profit. If you make something for $600,000 and sell it for $200,000 you're very deep in the hole. This sounds logical, but too often I see filmmakers who want to raise loads of money, especially for non-fiction projects. If I can make a film for well less than $100,000, then you can too.  

5. Hire slow, fire fast. During the past year, we've had hundreds of personnel working for us on different projects at OBSERVATORY. It's been a major ride. I'm grateful that so many of the people who have helped us out are super competent at their jobs. However, we have also had to get rid of a number of people throughout the year, including interns, producers, and edit staff. It is painful when a bad apple, intentionally or unintentionally, ruins the whole bunch. There were many moments when I blamed myself or other people for someone's incompetence. (For example, if you start fighting with someone you previously worked well with, you have to look around you.) I hate to say this because it lacks scientific proof, but at some point, you have to GO WITH YOUR GUT. If you feel that a person is hurting your team or your efforts to move your project forward, you've got to get rid of them. This is the most difficult but also the most necessary part of being a manager. Once you are rid of your burden, you will immediately feel free. Having nobody working for you is better than having someone work for you who is incompetent and will waste all of your time. 

More observations coming soon...