6 Lessons Hollywood Is Learning From Silicon Valley

NoCal to SoCal: Cash and talent are nothing compared to equity and IP; corner offices do not equal happiness; and get off that damn phone!

The differences between Northern and Southern California have long formed the basis for a competitive relationship, with Southern Californians thinking of their northern neighbors as self-righteous tree-huggers and NoCal-ers writing off Angelenos as superficial flakes with surgically enhanced body parts. The same culture clash exists in business, where it’s Silicon Valley and the land of hoodie-wearing tech geeks selling a breakthrough app for a billion versus Hollywood slicksters making yet another blow-up movie for $300 million.

But lately, there has been a less snide, more earnest exchange when it comes to business models. For the first time, those Hollywood slicksters are genuinely interested in learning something from the hoodied geeks, who, it’s become pretty obvious in recent years, have created some impressively nimble and profitable companies. And as Hollywood’s traditional models struggle to adapt to the tech tsunami that has overtaken the entertainment industry, NoCal’s business culture and practices look all the more alluring.

Herewith are 6 lessons that Hollywood is learning from Silicon Valley.

1. Take Equity Over Cash

Hollywood has always been about the quick and dirty cash deal. Get in and get out quick, is the idea, before the movie that everyone’s been touting as the next Avatar ends up being the next Ishtar. But real, long-term wealth is in equity--something the digital world has long known. Lately, Hollywood has been catching on, investing small stakes in tech startups--from Uber to TheAudience--that it prays will be the next Instagram.

2. Iterate, Iterate, Iterate

It’s not a word you hear much in Hollywood because it is entirely antithetical to how the entertainment business works. Movies and TV shows, after all, are labored on for months and years in order to be crafted into flawless, technical (if not artistic) perfection. And performance is judged at the outset--whether it’s opening weekend at the box office, or the ratings for a TV show’s premiere--and that’s it. Game over. But Hollywood is starting to see the wisdom in getting a product out fast and then making necessary tweaks based on consumer response. “We’re looking very closely at how consumers actually find and use our content and trying to build new software very quickly and very integratively,” says Thomas Gewecke, president of digital distribution at Warner Brothers. “The team launches offerings and then looks and sees what works and what doesn’t work. We iterate on top of that very rapidly, and create a much better product as a result.”

3. Chase IP, Not Talent

The name of the game in Hollywood has always been “talent.” But these days talent is a far less lucrative business. Only a handful of stars (such as Johnny Depp and Angelina Jolie) command $20 million paydays, and there is not a reliable stable of young leading movie stars as there was back in the Tom Cruise, Brad Pitt heyday. (See Taylor Kitsch.) But what is reliable, and ultimately far more valuable, is intellectual property, which can be repurposed ad infinitim. Hence a growing number of Hollywood players, including Ben Stiller and Sarah Silverman, are focusing on creating original digital content that starts out, say, on YouTube, and then migrates downstream to TV or film.

4. Treat YouTube As The Next Cable TV

Speaking of YouTube, as the site has matured from a chaotic collection of cat-on-skateboard videos into a more traditional viewing experience, Hollywood sees it as the next cable TV. And as with the birth of cable, everyone wants to get in early in order to reap the profits later by setting up YouTube channels. As Jason Nadler, a former UTA agent who cofounded the new media company Serious Business, puts it: “People are trying to make a tremendous land grab because that land is valuable. It’s just like westward expansion in America. You’ve got to till the soil with your one ox for a little while. But soon you’re going to be Archer Daniels Midland.”

5. Lose The Corner Office

Silicon Valley has long known that creative, happy employees are kept creative and happy--and productive--by working in open spaces that maximize communication and idea-sharing. It’s a notion that is totally foreign in Hollywood, where corner offices and raised desks have been declaring the VIP status of their occupiers since the beginning of time. But as Hollywood institutions start adopting more of the Valley’s ways, office feng shui is something they’re taking note of. When DreamWorks created its own startup, the video-creating app Ptch, the company set up shop not in a cushy suite, but in basement storage space.

6. Get Off The Phone

A Silicon Valley veteran who frequently does business with Hollywood once complained to me that people in Hollywood spend too much time on the phone. It’s true. Even in the age of Gchat and Skype, the phone is still the primary way that deals get made here. Hollywood likes it that way because there’s less traceability. And it’s easier to verbally throttle someone into backing down on a deal point through an audible device than through writing. But it’s not always easy to reach people on the phone, and issues that could be resolved in seconds over email end up taking days and many rounds of phone tag. The Silicon Valley guy’s advice: Hang up. Dial up. And get the deal done.

[Hanging Phones: Dragon_fang via Shutterstock]

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