In the years since they merged their Endeavor agency with the century-old William Morris in 2009, the co-CEOs of William Morris Endeavor (WME) have aggressively reimagined the concept of a talent agency for the digital age. Contributing writer Nicole LaPorte sat down to discuss Hollywood's digital reboot with Ari Emanuel, whose larger-than-life reputation for charm, bullying, and profane outbursts was fictionalized by Jeremy Piven's Ari Gold character in Entourage, and Patrick Whitesell, who plays the affable superego to Emanuel's raging id.
Fast Company: There have been a few digital waves to sweep through Hollywood since the dawn of the Internet. Is this one more real than the ones that came before?
Ari Emanuel: I don't know if it's more real. There's more opportunity, more creative freedom, and clients are willing to take more risk.
Patrick Whitesell: What didn't happen in 2001, and is happening now, is that Amazon and Netflix are buyers of original content. In our business, that is a very powerful thing.
Is part of it also the shrinkage of traditional media?
Emanuel: Traditional media is not shrinking.
Whitesell: Yeah, what do you mean by that?
Emanuel: Let's make a pact: Let's not generalize. The movie business internationally is expanding in an unbelievable way. You've never made the money you've made out of China, Russia, South America. Blu-ray and video on demand are growing. Yes, DVD sales are no longer what they were. And I think the studios would like to say that it's a gloomy business, but it's not as bad as...
But what about star salaries? If the agencies could go back to whatever year it was, 1997, when Jim Carrey and whoever else were getting $20 million deals, wouldn't you go back to that time? Wasn't that an easier or better time to be an agent?
Whitesell: We would not go back and here's why. Movie stars still make $20 million. Mark Wahlberg is getting paid. Denzel Washington is getting paid. The middle, however, they used to make more. So if an actor made $3 million then, he may make $1 million now. That's where actors got hurt. The big thing for us, which is the thesis that Ari and I talked about 10 years ago...
Emanuel: That we took into this merger...
Whitesell: ... was that content is coming back. All this disruption to distribution is good for us, because content matters more, and therefore as agents we have more power.
Emanuel: We define content very broadly. Representing chefs, designers, makeup artists—it's all important. How do you think about their business in multiple distribution platforms? Do you need Vogue? Could you have a makeup artist and a fashion person and a thing that's taking care of the technology to create opportunity for clients in a different way? That's the kind of thing we think about all day.
Is the technological change what led to the Silver Lake deal? [Last May, WME sold a 31% stake in the agency to Silicon Valley-based private-equity firm Silver Lake Partners.]
Whitesell: With the world changing fast, we needed capital for investments. There's only so much bandwidth in your own balance sheet. We'd been approached by a lot of the media private-equity people, and we didn't think any of them added strategic value. Silver Lake had a tech expertise that we didn't have. We have all these authors that we represent: What are the opportunities for them to do e-books? Should they self-publish?
Emanuel: Should we buy a company that does that for them? Should we build one? We recently looked at a publishing platform. Our initial instinct was to buy it. But once we put it on the whiteboard, it was very obvious that this was a nonstarter.
Whitesell: We go to these meetings with Silver Lake and they'll say, "That platform is faulty, or that platform will hold up that way." These are things that Ari and I could never assess.
How big a piece of WME is digital?
Whitesell: Our core businesses are still the lion's share of revenues, but [digital] is growing every year, and it's gonna grow more.
Emanuel: It's about 5% of our profits, though, now.
Every agency is embracing all this digital disruption. How are you guys different? What's the pitch?
Whitesell: We can't tell you everything we're doing, but look at some of the companies we can talk about. Red Interactive, the digital advertising agency, is a real, systemic kind of business, as opposed to a one-off thing. We can help advertisers frustrated by old media find clients they can work with.
Emanuel: When everyone has Internet-connected televisions, it's gonna be the Wild, Wild West. Is there going to be a Coke app then? Is Coke gonna then have some of its own original stuff? Will they buy that stuff? Music? Will Coke come to us? Will they do it themselves? Will there be a Rihanna channel, like there is right now? That's why we've created theAudience [a social media management firm]. How is all of this going to be discovered? Platforms like Path, which we're an investor in, and Facebook, Google+, and Tumblr enable discovery through social. But we are not going to pick a horse right now. We want to see how it evolves. The great thing is that the "dying" business, this traditional business that we're all in? It's pretty fuckin' good. Right? Right?
Emanuel: It's great, and it's still going. We have 49 pilots out of 90. It's a great business. And we're one of the very few creating content that advertisers want to be associated with. (Not that cats online are not important!) Between Red, theAudience, and a bunch of other [investments], we see intel that gives us insight into which clients we should go after and what we should be doing with existing clients that we're not doing.
Why are you guys in the apps business?
Emanuel: Because of our relationships and what we can do across the company, we can help them grow.
Can you give me an example?
Emanuel: Uber is an incredible product. They wanted some client endorsements, so we helped them with that. But we think we can do a reality show like Taxicab Confessions.
Is part of the appeal having equity? The possibility for a big payoff, as opposed to just an up-front fee?
Emanuel: Are you asking if we like money? Is that the question? Are you in Hollywood? [Laughter]
Whitesell: We're in the service business by nature, but when we can transition that into ownership things, we love it. Our clients love it, too. We get deluged with offers to get involved with this or that. Silver Lake helps us funnel those opportunities.
What's your appetite for failure?
Whitesell: You had a great line the other day. Remember?
Whitesell: You said, "Failure is a good thing." First, you've got to take the risk to fail, and then if you do, you usually learn something that leads you to something else. That's been our experience.
Angry Birds was Rovio's 52nd game. You'll be okay if the first 51 WME startups don't succeed?
Whitesell: Hopefully not 51.
Emanuel: We're pretty comfortable with failure.
Whitesell: Every day, we call and get rejected. Every day you call: "I think you should hire so-and-so." And they don't want to sign with you. You get kinda used to it.
Airtime [the much-hyped video-chat network], which you invested in, is something many people consider a failure at this point. The launch was a disaster.
Emanuel: Yes, it was. You want to know the philosophy behind that?
What did you guys learn from that launch?
Emanuel: We had a long-standing relationship with Sean [Parker].
Is he a client?
Emanuel: No. I like Sean. And he helped us get theAudience funded, and he helped us raise money for the Raine Group [an investment bank started by WME to invest in companies such as Zumba Fitness and Vice]. He presented it properly, and said, "I need you to do this."
In other words, give me these stars? [Joel McHale, Alicia Keys, Olivia Munn, Ed Helms, and Jim Carrey appeared as part of the press launch.]
Emanuel: I need it, he said. You do that for friends.
Whitesell: We backed him. Hindsight is 20/20, but we said, "Okay, we'll back you."
Emanuel: He's a friend.
Whitesell: In general, we're trying to just hit things that we know we can really impact. That'll probably be the lesson from that.
Chill, another startup you invested in, started as a "Pinterest for video" and just changed direction to help filmmakers and comedians sell direct to fans. Did you have anything to do with that?
Emanuel: Yeah. We came to them and said, "We want to figure out if we can do, for lack of a better way to say it, this Glenn Beck model for our clients." That helped their thought process as they pivoted.
Chill's pivot was driven by you guys?
Emanuel: Yeah. Well, I don't know. We all came to this conclusion at a couple of meetings.
In the tech world, iteration is in the business plan—
Emanuel: You've gotta adapt.
—and it's the antithesis of Hollywood, where you work for 5 or 10 years on a movie, and then that's it, it's done.
Emanuel: She's gonna drive me crazy with that! You're defining Hollywood as the movie business! We sit in the entertainment business, and that goes from Chill and Uber all the way up to the movies.
Do you guys disagree on anything in the digital space?
Whitesell: Never. [Laughter]
Is one of you guys the right brain and one the left brain?
Emanuel: If you're talking about hemispheres, he's the right brain and I'm the wrong brain. [Laughter] Let me say something. We've known each other for...
Emanuel: Twenty years, maybe more.
Whitesell: More. Twenty-three years.
Emanuel: Twenty-three years, right? And he was in the mailroom, I was an asshole junior baby agent. I was an asshole to him.
Whitesell: He was.
Emanuel: It's truly what junior Ari Gold would be, right?
Whitesell: It was just, junior Ari Gold. [Laughter]
Emanuel: We have gotten along for way too long for a minor investment one way or the other to affect our lives. The good thing is we don't have an ego about it.
How do you use technology in your daily lives? Ari, you're blogging on LinkedIn?
Emanuel: I only did that because [LinkedIn CEO] Jeff Weiner said, "Can you please do that?" [Laughter] That's the real answer. He's a friend, you know?
Are either of you on Facebook?
Whitesell: I'm on Facebook anonymously. I wanted to see how people use it, what's going on there, but I personally didn't want to be on it because everybody in the world tries to get to you with scripts. My son, who's on it under his real name, gets hammered all the time with, "Can you give this to your dad?" It's crazy.
Emanuel: I'm on it tracking my kids. They don't know it. I really don't want them on there.
Whitesell: I'm on Twitter that way. I love Twitter.
Ari, are you on Twitter?
You'd be great on Twitter.
Emanuel: I'm on Instagram.
One hundred forty characters might not be enough room for you.
Emanuel: No, four letters is all I need.
[Photo by Michael Schmelling]
A version of this article appeared in the April 2013 issue of Fast Company magazine.