Palo Alto Follow Up

Just a quick blog note since I've been in a bit of radio silence since announcing we were Palo Alto Bound a couple of weeks ago.

The meeting in Silicon Valley went as well as I had hoped it would.

We have a partner. We have support from some really impressive folks.

We'll have to be generally quiet about it for a few more weeks as we cycle through the formative paperwork, but I can say, I had the experience of signing my first official piece of paper as Chief Executive Officer just a couple of days ago. It was pretty exciting, and there's lots more ahead.

I'm very much looking forward to it.

Starting Up, For Real

Two days ago I had the honor of signing my first piece of official paper for my new venture as Chief Executive Officer at 33 years old.

While we wait another week or two for the incorporation papers to be done, I'll have to keep a little mum on the venture name, but I have to say it's been an amazing experience thus far.

What's so different?

For starters, we have the support and counsel of the very best startup legal firm in the United States. Wilson Sonsini Goodrich & Rosati has taken our new venture on as a client, and taken a small stake in our startup as well.

There is no way for me to express how much confidence and motivation this gives us in our new business.

WSGR has helped over 400 startups raise more than $90b in capital since 2001. In that same timeframe, they have been counsel on over $300b in M&A.

They were the counsel on Apple's IPO in 1980.

This firm has an amazing pedigree of getting things rolling, and supporting them as they grow. They are also in a position to be picky about the businesses they take stakes in, and take on as clients.

Our new business passed that test with flying colors, and we're looking forward to making them proud to be in business with us, and we are proud to be in business with them.

Wish Us Luck

While I never really get comments here, and that's ok, I'll put it out there in the world that everyone on the 'Net wish me luck.

Monday marks the first day in many... many years I've put on a suit, and my business partner and I have our first meeting on the hallowed VC grounds of Silicon Valley.

We've managed, with one phone call, to land a meeting with the counsel that has launched a thousand startups. Er, actually, a little over 20% of the startups in the US. Ninety Billion (to put it with the zeros; $90,000,000,000 in private placement and angel fundings in the past 5 years)

FedEx Follies

6,488 miles from Shanghai to Sun Valley, CA. Time - 2 days
5 miles from Sun Valley, CA to Burbank, CA. Time - 5 days

What is wrong with this picture?

Fanboy-ism Will Have to Wait

Is it just me, or does it feel like ever since FedEx acquired Kinko's it seems like the companies collective IQ and dedication to their jobs have dropped significantly.

The computer delivery did not make it today, so my fanboy-ism will have to wait... but the details of how it didn't make it are a whole other story.

Be Good at Your Core Business

One of the most common things I've noticed at a number of companies who are expending great energies on getting into the new media business is that they don't really understand what exactly their core business is.

I think the easiest way to determine what you're supposed to be doing, is to count the number of letters in the two parts of your industry name, and see which one wins.

N-E-W = 3 letters
M-E-D-I-A = 5 letters

Media wins.

Your core business is not creating new deals, or new press releases, or new sales, it's new media.

If you're not cultivating the relationships with talented and experienced people who are given not only the responsibility but the authority to run with the ball on creating great media, you are not focused bringing success to your core business.

Have I Become a Fanboy?

FedEx is on it's way to my house, and I'm excited.

Why? My first MacBook Pro laptop is on it's way here.

I've been a PC person for a long long time, using Mac's for work when work supplied them. The biggest and possibly only thing I was really a fan of was Final Cut Pro, which I like a whole lot better than Avid, or Vegas, or Premier - all of which I've used. I've now been using a MacBook Pro for about 8 months, and have to admit, it's the best computer I've ever used.

In all my history of building my own PC's, edit systems, HTPC's, and ordering new notebooks (Win95, WinMe, WinXP, or Ubuntu) or Linux-based NAS boxes (even worse than a fanboy, I sound like a geek... er... wait, I am a geek... *sigh*), I've never really been that excited about a new computer arriving.

But I'm giddy. It should be here within the hour, according to the handy dandy FedEx tracker.

YAY!

I'm excited about the MacBook. It's a great computer.

Intellectual Capital vs. Intellectual Property

Another little gem that came out of last nights meeting, was to hear the term "Intellectual Capital" used when referring to what it is that producers invest in their projects and bring to the table.

It also opened up a whole can of worms that I think I'm going to be delving into for some time to come.

As producers, we certainly DO invest our time, energy, creative talent and specific knowledge to each of our projects. Typically, we are investing many hours, weeks, months and often years in a project without any ongoing compensation for that investment.

This is a choice we gladly make, but when thinking in terms of the investment we each make, and then thinking about the "Work For Hire" contracts we so often are forced into it seems that we knowingly allow the financiers and distributors devalue our investments dramatically.

I hope the day comes when we as producers/directors/creative owners of our Intellectual Capital can work out more reasonable terms with the corporations who want to sell our work as their Intellectual Property.

Actually, I hope the day comes where our IC *never* becomes anyone elses IP.

Following the Union Thread

So yesterday, I was blogging about non-scripted/reality programming overtaking scripted programming, and that a lot of that was driven by costs.

A lot of the rant was due to some of the arcane, ass-backwards ideas that some of the entrenched union folks have around town and how they were hanging themselves and us in the quest to try new things in our new business. That new business is not Old Media.

Coincidentally enough, there was some of that discussion among members last night at the annual Producer's Guild of America meeting. It was very interesting to me that as our membership grows rapidly at the Guild, that we are as a whole don't seem to be that interested in becoming a collective-bargaining labor union.

We are mostly entrepreneurial and for our part, seem to recognize that the downside of the collective-bargaining for us far outweighs the benefits in terms of restrictions on what we can and can't do "for" our employers.

Unionizing would automatically put us on the "victims" side of the table, and we as producers refuse to put ourselves in that position... there's no need. We are far more interested in being collaborators than anything else, and that enthusiastic "do what needs to be done" passion in our members ... well, I can't say the last time I've ever seen that kind of attitude and zeal in a union worker... can you?

And then, we were given some results of the first PGA member survey that very much supported my earlier hypothesis.

The one that really caught my ear was this set of stats:

• Members working in feature films: 30%
• Members working in non-scripted/reality television: 24%
• Members working in scripted television: 19%
• Other production: 27% (games, cross genres, etc).

That's some interesting numbers.

Talent Unions

Another sad chapter in the evolution of digital media that drives me nuts is the talent unions. AFTRA and SAG are in all ways, worse than the IRS in terms of helpfulness, or usefulness when it comes to new media.

Not only to do their rates make the minimum salaries of the "talent" far higher than anyone working on these new media shows, they exclude a giant pool of talent from taking part in cutting edge projects.

Even if I was to offer a SAG or AFTRA member gross points, where if the project makes any money, they can be paid too, the union will require that I pay a minimum for Interactive mediums that is well over $700 PER DAY. Not $200, not $300, not something that's a fair living wage, but an amount that literally guarantees that there are tens of thousands of non-union projects every year, simply because they price themselves out of the ballgame.

Now, I totally respect and understand that the unions are (in theory) there to protect their members from abuse. And I also understand that there are producers and directors who will abuse their talent (and crew, etc.). I've seen it happen, I've had it happen to me. But I'll tell you what, very very rarely is a producer fined or sanctioned for this stuff because most often, people don't want to complain about it because it's not worth the headache and BS of dealing with the labor reps, etc and what it does to the set dynamic. Especially if the shoot is only a week or so.

Is it any wonder to the unions that SO much television has gone to reality programming? A large part of the reason is because of the union workers that simply cost too much to hire. The result, we make less programming (a LOT less) that requires your union services. As a matter of fact, there is even coverage of this effect on union workers in Canada last year.

Reality TV isn't just here because people happen to watch it, it's here because it cost less... a LOT less both monetarily and in terms of fighting with intractable Union reps who still think this is the 1980's and networks are the ones funding all the programming, and "hey, they have lots of money."

So what's going to happen is that there will continue to be a shrinkage of union talent use in new media and indeed, in all productions as much as producers can.

Let me ask you this. If you are an actor or another union craft worker, would you rather:

• Be paid $400 for a 12 hour day of work OR
  
• Be paid $200 for a 12 hour day of work, and your union gets the rest?

I've actually had a number of instances and discussions where Union reps have flat out said "Pay your labor less, and pay the union."

I guess there's a good number of folks out there who don't mind pissing away their union dues and their real income in exchange for producers paying the union instead.

What really gets me at the end of the day is the incessant "us vs. them" mentality - where AFTRA and SAG believe that all the producers are simply taking advantage of the poor little talent so that we can all make off with the booty. For many new media productions, there is no booty. I can tell you that most shows I've worked on in recent years, there was maybe, MAYBE one or two people on staff who made a bit more than the talent. All the other segment producers, field directors, and crew all made significantly less than the talent. And then the union blames ME for not doing productions with higher budgets so everyone can be union.

I have a newsflash for the unions - higher budget, means NO budget, because there will be no project. That is simply the reality of a 500 channel universe. The competition to provide ever-cheaper product will continue to erode the union relevance.

I also don't understand why no one in the unions that I've seen are assessing the state of the business beyond how the union members are effected while ignoring the greater economic whole of the industry.

It's micro-economics at it's worst and most harmful in that it keeps innovative and new ways of working from ever being explored with the unions support of their members.

There's got to be a better way and the amateurs and innovators of the world will find them and simply add more nails to the union coffin.

Destiny of Failure

It never ceases to amaze me that businesses sometimes fail to understand that distribution without product = a dead business.

So does product without distribution, but one can hang on longer than the other, especially where inventory costs for the products are zero or near-zero.

It also amazes me that there are supposed "New Media" people who don't get the three key parts of the changes the digital universe creates in our world.

1. Distribution is not scarce - neither in terms of platforms to reach people, nor the specific time slots you can reach them. There are a million platforms, and the time is *anytime the user wants*
   
2. The money generated is much smaller, and only picked up over periods of time that favor revenues being generated by a long tail that does not exist in the broadcast world
3. If you're creating distribution platforms (pretty much a cheap thing to do these days), you have to have the content to fill it, keep it fresh, and keep users coming back. No new product = no new views. Period.
   

In light of these well-known facts, it would seem to be antithetical to create "programming schedules" where shows would actually be put online, *then taken offline* in an attempt to create scarcity... but at the same time forfeiting all of the long-tail ad revenues.

It would also seem that if you are opening up a big fat pipe (platform) on which to distribute (as a bit of continuation on my prior post about the digital space), if you don't have new content flowing in all the time, you're dead.

New content means fast-moving deals and production teams, along with a well-rounded acquisitions or licensing person or team that can produce fast, equitable, strategic deals with other content owners and producers who don't want to open their own platforms (which they can increasingly do without your "Big Time Hollywood" help, thank you very much).

This is not a game for the slow-moving, wishy-washy, flip-flopping, mind-muddling wanna-be-media-moguls.

They will be crushed... and part of me will enjoy watching it happen.

The rest of me sees great opportunity for people who think differently.

Palo Alto Bound!

The new super-secret venture is moving ahead!

We have our first meetings with angel & venture capital counsel a week from Monday.

Very cool. Watch this space for more info in the coming weeks.

The Field of Dreams is Just That

I've been thinking and watching and participating in building the online and digital world of established media for a while now, and there seems to be something that the big media folks (or folks who consider themselves big media), just don't seem to grasp no matter how many times I've brought it up.

You can't just "build it and they will come" anymore.

I don't really care how much "killer content" you think you have, there are invariably pieces of the puzzle that most every company that doesn't have Internet-generation leaders just don't get.

1. "Great" content is a subjective experience, and the Internet-generation hates being *told* what is cool by big companies.
   
   This means that your Creative Executives (who, by the way, should be able to do a LOT more than just be a Creative Exec in this market) have got to be better at figuring out who the given audience is and how to reach them through a natural (e.g. not a big company talking AT the audience) means of conversation. I really don't care how much you've spent on a show, or how much you got a network to pony up for your show when you made it.
   
   Especially if it's reality television, the "freshness" of the programming is largely gone, and the experience of sharing something new with friends who haven't seen it is gone too. You better be finding some other fresh content to mix in with the stale so that at least the peanuts can cover up the taste of the age-old pretzels, ya dig?
   
   
2. Do you have a good plan on exactly *how* you're going to get all you killer content off those old tapes or DVDs and onto the 'Net?
   
   I didn't think so.
   
   You've probably had a number of people around making suggestions on how to do this, and you've just ignored it. It is a massive undertaking to move a tape library into the digital world and set it up in ways that make delivery anywhere near efficient. It is also very expensive, and that cost goes up every time you sign a new distribution deal.
   
   If you haven't properly invested in the overhead and infrastructure that it takes to make this happen in ways that satisfy your distributors, you're losing ground and credibility in a hurry in the space.
   
   
3. If you're building your own broadband channels, have you considered and made decisions on how you're going to handle customer complaints, service requests, etc. from your audience. This is something that content producers have largely never had to deal with in the past, and it's not part of their core competency.
   
   
4. If you're building your own broadband channels that include user-generated content, or allows users to upload video or audio at all, there's got to be a workable plan and infrastructure for dealing with DMCA violations and takedown of inappropriate content.
   
   
5. And here's where the Field of Dreams reference comes in:
   
   You can't just "Build it and they will come."
   
   "They" won't come.
   
   You have to be able to create the right mix of great content, great community members (which begins and ends with a sites human voice and ability to carry on conversations with those visiting the site), oh, and one last thing? You have to market your site and your content.
   
   You need a marketing staff, a marketing plan, and a marketing BUDGET.
   
   All those things the networks and your distributors used to do for your shows? Those things are now in your hands, and you're going to have to figure it out.
   

None of these are insurmountable problems, but each one needs to be heard, addressed and needs to have a plan attached to how to deal with it. If any one of these issues just sits and isn't acted upon your new field of dreams web channel will be DOA.

Ah, New Media:)

It's Only a Job

I took some time today to attend of the always informative Producers Guild sessions. It was hosted by Bexel, which was very kind of them, and their tech sponsors showed off some...well, not new, but at least current gear.

What really interested me were two discussions that carried a common theme.

The first was that with HD, 2K, 4k, even 8K coming soon, the technological advances continue to move fast. Moore's law doesn't only apply to consumer computer tech, but then this has been apparent since first producing with Sony's VX1000 PAL for our groundbreaking little short "Sweet" only 6 years ago. The progression itself isn't all that terrifying, but there is definitely a lot of people in the business who are really intimidated by the rapidity of the progress. There's not a lot about filmmaking that changed from the mid-1900's all the way through to 2000ish... so there's a large number of people who still have a hard time adapting.

Then there's the second part of the conversations where those adapting, or making the appearance of adapting, are doing so only when it maintains the superiority of their knowledge. They do so by putting largely artificial limits on what "they'll allow" their teams to shoot with, or the tools they'll "allow" their creatives to use. While this conversation would, at first glance, appear to be about making sure that "quality is maintained;" in reality it's about making sure the jobs we do remain complex and costly enough that we can all keep our jobs.

Once again, we seem to forget that filmmaking as an art form is a form whose purpose is to serve a story.

How many crappy stories have we all seen that "look good," but we forget them at our earliest possible moment... or we lament the time we wasted watching garbage entertainment.

The tech must serve the story. Period.

And if you have a story you want to tell, you now have the tools to go tell it. Figure out where your technological boundaries are and work within them to craft the best story you can. If you need to expand your tech to help out, the resources are all out there, and Hollywood no longer has a corner on the knowledge market.

Therein lies the greatest conundrum of this problem. Properly exposed, properly cut and color-graded film & television are all easily quantifiable and objective ways of assessing whether or not something is "good."

Whether or not a story is good, is far more subjective. Stories that resonate aren't necessarily the mass-media phenomenon we always thought they were. Maybe your story will only resonate with a couple of hundred viewers, a million, or the blockbusters of 20 or 30 million folks (usually at that scale, it's the marketing that resonated with people, not necessarily the show itself), but story well-told all has it's place, and it is a matter of taste for many people.

At the end of the day, producing well, technically, is something producers we all have to use in our business to keep our jobs. Producing well creatively is much more of a challenge for all of us and much harder to quantify.

But either way, it's still only a job. And we can always adapt and grow into new places in our lives and careers in whichever manner we chose.

Which will lead nicely into my next post in a couple more weeks about the next big project in my own life as I prepare to leave Endemol Digital Studios in a few short weeks.