How I've Survived in Hollywood

This article was originally published on Stage 32 (stage32.com) .

In my blogs on “How We Screwed the Showbiz Culture Up” and “Why I Passed On That Screenplay", I talk a fair bit of trash about how the ethical and creative practices of Hollywood’s development process have strayed from the fundamentals that made this industry strong. By far, the most common and rational response to the ideas I’m expressing in these rants is that “THIS IS A BUSINESS.” If we get caught up in the creative - or even the ethical - needs of our projects and our community, we’re making a huge mistake at the expense of our own sustainability.

Great! Let’s talk about sustainability in Hollywood. While this seems like an important time to mention that I spent a quarter of my life working in the trenches of film finance, the truth is that the business principles I’m sharing here are more or less universally established. If any of what I’m about to tell you sounds unlikely to you, please take this article as a jumping-off point for your own research.

DISCLAIMER: Reading beyond this point means you freely acknowledge that your risks are your own, that I am not your financial advisor or lawyer, and that I have no authority to be telling you how to run your business. Taking my advice and then suing me over it will get you laughed at privately and publicly, is what I’m saying here.

THE BOTTOM LINE

In the past, I’ve said that there are really only two things a person needs to succeed in showbusiness: excellence in their craft, and strength in their community. Maintaining and expanding these two resources is really the only thing a showperson ever needs to worry about because once you look past all the financial language and all the “acts of God” that can screw up financial investment in film, there’s really only two things that can go wrong in our industry:

The film might suck.

People might not show up.

If one or both of these things happen, the movie’s in trouble. What’s more, there are all kinds of ways in which these two risks can manifest themselves. If you’ve ever read the disclaimers in a film investment contract, you’ll see that there’s literally pages and pages of the stuff. Everything there is accurate, and every one of those risk factors is important to be aware of. All I’m saying here is that every single one of those issues can be reduced to having an impact on the quality of a show, on the show’s attendance, or both. If both of those risks have been effectively managed, then it would take something extraordinary to stop a show from making money.

WHAT IF THE MOVIE SUCKS?

How do we manage the risk that a show might suck? Craft. Building the millions of little habits that keep us “doing the right thing” even when we’re distracted, tired, or out of our depth is what keeps the excellence of our work from getting derailed. Certainly, every show comes with its own, unique challenges. If we use the time and the resources we have to become people who do excellent work by sheer force of habit, then there’s only so far we can fail. Surrounding ourselves with people who pursue their craft with equal rigor is a pretty secure way of making sure that even when we do make questionable creative choices, they still “read” as worthy of an audience’s time, attention, and money. Doing things with consistent excellence, in other words, makes our mistakes forgivable, subjective, and often invisible.

Before you tell me that the excellence of your craft is secure and your “shit is handled,” let me ask you one question. Have you ever taken a gig for which there was someone more well-suited? Have you ever agreed to be in a show (meaning literally any production that was performed and presented to an audience) where there was a chance that someone better could have done the job? Even if that person is famous and prohibitively expensive, I want you to consider for a moment that you owed it to the production to help them get that person before you agreed to do the work yourself.

“But isn’t there always someone better?”

Not if your craft is “handled” the way it needs to be. Keep finding aggressive ways to study and advance your craft. Make the excellence of your work a matter of habit, and you buy yourself space and time to focus on the details that make your contributions unique - instead of struggling with the fundamentals that make your work merely acceptable. Once you possess that level of competence, mastering your unique strengths and strengthening your weaknesses will expand the range of work you can responsibly take on.

Imagine what it would feel like if everyone on a production had that level of commitment. All the great shows of history have worked on that level. Truly great movies have no weak link. Become that strong in your craft, and you’ve earned the right to work with other people who share that strength. Some of those productions may not live up to your expectations, but how many of them will suck?

Not many.

WHAT IF NOBODY SHOWS UP?

Obviously, there’s always the risk that people simply won’t turn out for a movie. For most people coming into showbusiness from more corporate fields, this has always been an easy place to shift the blame for a production’s failure. Audiences are fickle, after all. Right?

Wrong. Audiences are not markets waiting to be exploited. Audiences are members of our community. When they feel well-connected and well-served by us, they will show up and buy a ticket simply for the experience of being around us - as well as the experience of being around one another.

Most of the quaint little “traditions” we learn in a classical showbusiness upbringing are actually habits designed to master our personal responsibility for the relationships that make up our community. As showpeople, we’re not just responsible for our own relationship with our colleagues, or even just our singular relationship with the audience. Taking responsibility for the relationships between our colleagues and one another, our audience members and one another, and even the connections between our colleagues and the audience are what makes a community truly strong. When people watch one another’s backs like that, we set an example that makes people feel supported and invested in everything we do together.

Why? Because those people actually ARE supported. When we invest in our colleagues and our audience, we become necessary to them. When we need someone, and when the person we need offers us a ticket into a room that has everything they’ve got to offer us (and, by the way, a few hundred people who feel the exact same way we do), $10 isn’t such a high price to pay.

Just like the work of maintaining our craft, the work of building our community is too vast and too layered to undertake without making the vast majority of that labor into a matter of habit. Supporting the work of friends, communicating with the audience as much as possible, and doing whatever we can to make our showbusiness community stronger (LIKE WRITING THIS VERY ARTICLE) are things we should be done automatically and without resistance. Most showbusiness disciplines, including sports, music, comedy, theater, and dance, make a habit of touring so they can meet audiences (as well as new showpeople) in the cities and towns where they live. In my opinion, we should all be touring the film festival circuit as relentlessly as possible.

Personally, I can never leave a theater until the rest of the audience is gone. What if someone wants another drink? What if they want to talk, or need help getting to their car? To me, having that responsibility unfulfilled gives me a nagging sense of anxiety… but really, I know it’s just one tiny habit among thousands that got drilled into me at a young age by people who didn’t want to see me fail.

IN A PERFECT WORLD

If a show is made up entirely of people who take that level of accountability for their craft and their community, then there are only so many reasons a show will fail. Maybe the producers tried to expand the audience too quickly and spent way too much on a production. Maybe someone toxic got into the show and screwed things up. Nobody can stop things from going wrong… but on the production I’m describing here, how often will the show suck? How often will the house be empty?

Not very often, people.

Now, let’s talk about money figures in the craft/community picture. When we look at film as a risk-based investment with high returns, the production I’m describing looks like a very good investment. When managed in the manner I describe above, a film production’s likelihood of failure is low and our returns are likely to be high. For an investor, the risk of losing your money on an investment only becomes worthwhile when that investor sees the likelihood of making at least two or three times their money back. From the standpoint of return on investment, which is a term describing the money an investor makes back on the money they put in, risky investments should be making investors about 200%-300% on the money they invested. Making that your benchmark for financial success in film will probably never steer you wrong.

ON THE MONEY

Just in case nobody’s ever explained what makes film such a risky investment in the first place, let me lay things out in terms of an investor’s control of a given investment. In real estate, which is considered a very “conservative” investment that’s largely lacking in risk, you buy some land and you can more or less do what you want with it. Rent it, sell it, develop it, clean it up, bulldoze it, try to rezone it, or do any of dozens of other things to try to make that land profitable. As a landowner, you’re basically the CEO of that property.

Stocks, which are considered riskier than real estate, are investments that an investor has substantially less control over. If you buy stock, you can sell it more or less whenever you want - with some restrictions depending on the risk you’ve taken and the money you’re hoping to make. Buying and selling stock are really all the options a shareholder has available to them. When you’re buying stocks, someone else gets to be the CEO.

If you give me money to make a movie, I’m going to go and physically spend that cash on actors, sets, camera gear, post-production facilities and all kinds of other things. Asking me for that money back is pointless because it’s gone. As an investor, all you can do is sit there and wait for me to finish the movie, market the film, and start selling movie tickets.

Why would an investor ever do something so risky? Simply put, real estate will usually only make you a few percentage points a year. Making 15% a year on a stock is pretty good, generally. Risk and reward are always tied together, in business. If you want to make 200%-300% on an investment, you’re going to need to expose yourself to some intelligent risk. In a very real sense, taking on financial risk is actually the job that investors are getting paid to do.

WHERE IT ALL WENT WRONG

Make no mistake that a film investor can lose their money. Our industry’s traditional answer to that problem is that the money an investor loses on this or that bad movie will be recuperated by the overall trend of success from a particular production company. That, my friends, is how the business of showbusiness is supposed to work.

Our industry’s hunger for new sources of capital has grown so large that we’re doing business with institutional investors, namely banks, with a tolerance for risk that does not allow for the possibility of losing money. When you take out a loan, that lender isn’t interested in making a lot of money in exchange for the possibility that they may lose their investment. Instead, the lender is looking to GUARANTEE that every dollar that walks out their door is bringing some loose change home when the day is over. All that loose change adds up, and that’s how banks make their money.

So, how can we do that? How can we guarantee that a movie will make money, or at least come close enough to make our industry attractive to lenders and not just high-risk investors? Come closer, and I’ll show you...

FILM PACKAGING

Back in the 1990s, some innovative film financiers discovered that given the right cast, genre, and budget, foreign distributors are willing to extend a promise on what they will pay for the licensing rights to a movie... before the movie is even shot! In turn, those promises can be taken to a bank and presented as debt. What we now call “the pre-sales market” was, back then, a revolutionary way for banks to finally sink their teeth into the profitable world of film finance without having to face the risks of doing so.

Look at it this way: If a film is making it’s money back and establishing a return on investment BEFORE IT’S EVEN SHOT, then nobody cares if the film sucks. Nobody cares if people don’t show up. Yes, of course, there’s a moral and personal investment in the outcome of the film - but from a business standpoint, the risk has already been addressed. In the end, there’s no real motivation to do the work of managing these risks because the risks themselves have no impact on the investment.

Finally, we had a way of making the film industry safe for institutional financing. Finally, we had a work-around for “What if the show sucks” and “What if nobody shows up.” By the year 2010, packaging films for the pre-sales market had become the primary method of film finance, both at the studios and independently, in Hollywood.

DIMINISHING RETURNS

Today, the pre-sales market is only a small part of what it takes to finance a movie. These days, the money we get from foreign distributors needs to be paired with tax incentives from this or that production territory, minimum guarantees from domestic and streaming distributors, and a whole bunch of other stuff besides. What happened?

In short, our industry stopped worrying about the movies we were actually making. Twenty years after the emergence of the pre-sales market, we’ve seen two generations of Hollywood executives who literally never needed to sell a movie ticket or be accountable for quality control in the traditional sense. Our movies keep making money regardless, and the value that our industry provides to the world has atrophied.

Instead of focusing on the fundamentals of filmmaking, our creatives and executives have let themselves get distracted by more egotistical and self-serving goals. When a movie can literally be anything and still find success, the production process becomes more political and esoteric. Our interests become less focused on producing a good show, and more focused on getting our own ideas or cultural priorities out there into the mainstream. Our craft, ultimately, has gone to shit.

At the same time, we don’t have stars like Julia Roberts and George Clooney flitting around the international festivals and film markets and making sure their international communities are growing… because today’s stars simply never had to do that work. Managers and film executives assured this new generation of talent that the strength of their name would sell the movie, because that’s how things have worked for 30 years. At the same time, these younger stars never actually built any personal relationships in the international film community. As a result, our star talent doesn’t draw the money with foreign distributors that it used to. Our pre-sales market is falling apart in large part because our community building has fallen into ruin. Instead, we have to run all the way to China for money.

In the meantime, our budgets and our business plans all work under the assumption that production money will keep flowing into the industry. Today, studio films are routinely costing more than $200 million apiece. Independent films are relying on the very same sources of financing as the studios, and are selling themselves to these bankers as tools for diversification. All the while, Hollywood has less and less actual value to offer. None of us (except Disney and some independents) are taking care of the core values that make showbusiness profitable in the first place: the excellence of our craft, and the strength of our community.

THE BUBBLE

Just like the real estate market, just like the stock market, Hollywood has profoundly overextended itself and stopped addressing its core responsibilities in favor of playing games with debt. Just like those other industries, a lot of the debt Hollywood is producing is bad - because even under optimal conditions, plenty of movies will wind up flopping. When we lose our focus on the showbusiness fundamentals, our failures naturally come more and more frequently. Producers bankrupt their defunct LLC, banks sell off the bad debt… and all that crap debt still winds up out there on the financial market. Our industry is becoming a bad investment, ironically because we’ve worked so hard to make our business more appealing to banks and more compatible with them.

So, when are we going to start seeing the effects of all this?

Look around you! Our presales market is dried up, tax incentives are drying up, Hollywood is literally making films on the payroll of the Chinese government, and Disney is nearly a monopoly studio at this point. If you’re taking your future in entertainment for granted, if you think that all you need to do here is pay your dues and prove yourself, then you’re not paying attention.

A WORD ON THE MOUSE

Where the other studios have become diversified umbrella corporations, Disney has kept investing in showbusiness. Keeping up with the excellence of their craft has always been a priority at Disney, whether or not you personally agree with their decisions. When it comes to community, no company in history has ever spent more money to make sure their audiences, their stories, and their professional community can come together as a group. Disney’s theme parks are one of many ways Disney makes sure they can always sit down, talk, and hang out with their audience. If Disney is now in a position to literally buy up the rest of the entertainment industry, a century of investment in the showbusiness fundamentals is how they made that happen.

Every time Disney started taking their banking priorities more seriously than their obligations to showbusiness, they’ve had the good sense to bring in someone who knows better. When Disney animation started getting quietly complacent, Max Howard was brought on board to produce Disney’s “Silver Age” films - starting with Who Framed Roger Rabbit and The Little Mermaid. Brought in to shake up and refocus the production brand, Jerry Bruckheimer made Pirates of the Carribean. Pixar assumed the creative leadership of the company. The Muppets. Star Wars. Marvel.

As a rule, Disney anchors itself in the habits that make people successful in showbusiness. Nobody else is doing that. Of course, they bought Fox. Of course, Sony is having problems with them. Anyone who thinks Warner Brothers isn’t vulnerable to Disney is lying to themselves. For all of their monolithic policies and troubled culture, Disney never lost sight of the industry they are in. While I don’t know how Walt would feel about how “The Mouse House” is run today, I know that his legacy is still very much a force within the company.

...AND HERE WE ARE.

If you love cinema, or entertainment, or showbusiness, then now is the time to build a better Hollywood. Cashing in on the packaging process, making money off of presales films, and “playing the game” as it’s been presented to us is a question of ethics. Personally, I’ve got friends who are knee-deep in the packaging process and I want to help make them successful. My manager is an expert in foreign co-production, and I want to use her to her fullest potential. In the short term, I’m expecting to make some good money from packaged films… but believe me when I say that my plan for a secure financial future in Hollywood does not depend on my relationships with managers, executives, or Hollywood’s film development process as it exists today.

Whatever your background in showbusiness happens to be, and whatever habits have made the performers and craftspeople in your corner of the world historically successful, that will become your life raft in the new showbusiness economy. My advice is to start that transition now. Study your dramaturgy, and learn how and why showbusiness has worked for the last two thousand years. Get involved in classical performance, and put as much of that culture into your body as you can. Get your habits in order, because “that showbiz life” will not be getting any easier.

What will makes people successful in Hollywood that emerges from our impending financial collapse and consolidation will be the same things that have always made showbusiness great. Get your craft on lockdown, so the show doesn’t have to suck. Take your community under your personal leadership, so people keep showing up and buying tickets. Right now, I know it feels like we all have much better, much easier options. Please trust me when I say that everything outside of the strength of your craft and your community is a distraction.

Focus on the fundamentals. As the saying goes, “remember your training… and you will make it through alive.” Be the person who’s out there building a more sustainable model for our industry to follow, and make sure it’s tied into the habits and principles that kept showbusiness strong from before this industry got taken over by stockbrokers and advertising execs. Just a little research will show you that those are tools that have provided this industry with steady growth since ancient Athens was the center of Western Culture. Since the 1600s, that growth has been largely unbroken… until right now.

As market trends go, those are the practices that our business should be leaning on.