Ten ways in which startups are like movies

I was talk­ing to some friends in the movie indus­try recently and started real­iz­ing that movies, and the way they are made, are not that dif­fer­ent from the startup world. So with­out fur­ther ado, here’s my quick ten-point list on why start-ups are like movies.

1. Many are made, few succeed

Every year, tens of thou­sands of movies are made around the world. Only a small set makes it to the big screen. The rest ends up on alter­nate dis­tri­b­u­tion cir­cuits (straight-to-DVD, for example).

On the inter­net, thou­sands of star­tups are launched yearly. The vast major­ity may get a head­line or two but fail to get sub­stan­tial trac­tion. As a result, they do not get funded and live on as walk­ing zom­bies are die a quiet death.

2. Spe­cial investors

A lot of star­tups kick off with a friends and fam­ily round, get­ting friends (and fam­ily) to invest in the ini­tial devel­op­ment of a startup. Once a pro­to­type is built, they can then try to get money from angel investors, and then ven­ture capitalists.

Many inde­pen­dent movies fol­low the same line, with friends and fam­ily fund­ing some ini­tial effort (when the direc­tor is still unknown) and later fea­tures being funded by pro­duc­ers, and then move on to direct stu­dio investments.

In each case, the investor class brings more than money to the table, gen­er­ally adding some of their own valu­able net­work and knowl­edge of what works to the ven­ture, and increas­ing its chance of success.

In each case, there are par­tic­u­lar stars that one wants to asso­ciate with but those are gen­er­ally very selec­tive in who they work with and get to pick only projects that inter­est them.

3. Tal­ented team + vision­ary leader are key

Every investor will tell you that the key to a suc­cess­ful startup starts with the qual­ity of the team. They look for founders who can cover the prod­uct man­age­ment role and the tech­ni­cal role in order to define, develop, and man­age prod­ucts that are loved by cus­tomers. In many case, lead­ers with a estab­lished track record (one or more suc­cess­ful star­tups under their belt) tend to have an eas­ier time get­ting the sup­port needed to launch a new venture.

In the same way, movies gen­er­ally hap­pen because a direc­tor has the vision to put a solid story together and bring on the appro­pri­ate peo­ple to help them real­ize that vision. Pro­duc­ers look for direc­tors who can tap the zeit­geist or present a story that will res­onate with the pub­lic. For direc­tors with estab­lished track records (one or more suc­cess­ful movies under their belt), pro­duc­ers are will­ing to be more flex­i­ble and give them more control.

4. Money does not equal success

Hol­ly­wood has a long his­tory of belly-flops: some movies receive huge amounts of money to pay for stars and spe­cial effects and end up crash­ing at the box office as audi­ences reject them.

In the same way, the amount of money raised by a startup has lit­tle to do with its poten­tial suc­cess. The 1990s told us that the amount of money a com­pany raises can actu­ally have a neg­a­tive impact on its poten­tial for success.

The chal­lenge, in each case is that the higher the bud­get, the higher the expec­ta­tion of higher returns.

5. Dis­tri­b­u­tion is key

The movie indus­try talks a fair amount about dis­tri­b­u­tion, ie. what stu­dio is dis­trib­ut­ing the movie, on how many screens a movie is shown, what other dis­tri­b­u­tion chan­nels are being used (the­ater, on-demand, DVD, stream­ing, cable TV, net­work TV), etc… They work hard to pro­tect the way in which the dis­tri­b­u­tion chan­nels are set up and see that as a com­pet­i­tive advantage.

A fail­ure in one of the dis­tri­b­u­tion chan­nels can lead to reduced hopes for all the oth­ers ones, thus reduc­ing audi­ences, and there­fore revenue.

In the startup world, how one acquires cus­tomers, across which plat­form (the web, mobile, social net­works, etc…) is an essen­tial part of the suc­cess of a prod­uct. Fail to attack the appro­pri­ate dis­tri­b­u­tion chan­nels and you might fail to gain customers.

A fail­ure in one of the chan­nels can be recov­ered from but can have a sub­stan­tial neg­a­tive impact on the prod­uct, which may reduce the num­ber of cus­tomers, and there­fore revenue.

6. Push­ing boundaries

A suc­cess­ful movie rede­fines what peo­ple thing of as the movie craft. Whether it is Orson Welles’ use of pre­vi­ously unused cam­era angles in Cit­i­zen Kane, George Lucas’ use of spe­cial effects in Star Wars, the Wachowski’s broth­ers use of bul­let time in the Matrix, or James Cameron’s use of 3D in Avatar, suc­cess­ful movies can push the bound­aries of what is being done tech­ni­cally, cre­at­ing new level of expec­ta­tions from audiences.

Char­ac­ters, edit­ing, story-telling are all other com­po­nents in a director’s bag of tricks to push bound­aries. Think of any impor­tant movie in his­tory and you will find some­thing that was done in a rad­i­cally dif­fer­ent way from before (eg. use of color in the Wiz­ard of Oz, the edit­ing of the shower scene in Psy­cho, or the fre­netic pace of the car chase in The French Connection).

Suc­cess­ful star­tups, in the same way, force us to reassess how to use a piece of tech­nol­ogy. Whether it is Apple doing point and click on the first mac, Ama­zon deliv­er­ing exactly the book you wanted to your door, Google pro­vid­ing the best search results you’ve seen, or Face­book help­ing you recon­nect with your friends, any suc­cess­ful com­pany started pre­sent­ing some­thing that didn’t exist before.

The chal­lenge, of course, is to push far enough but not so far that the audi­ence does not follow.

7. A slew of imitators

When a movie is suc­cess­ful, it is gen­er­ally fol­lowed by a lot of imi­ta­tors who try to cash in on its suc­cess. For exam­ple, fol­low­ing the suc­cess of Avatar, an increas­ing amount of movies are adding 3D, hop­ing that it will help them at the box office. Another exam­ple is the slew of action films that added bul­let time scenes after the Matrix came out.

In the same way, when a startup breaks new grounds, it is fol­lowed by a slew of imi­ta­tors. So the suc­cess of Face­book led to a lot of peo­ple talk­ing about their prod­ucts being social. Or the suc­cess of GroupOn has led to many clones pop­ping up.

It’s a nor­mal part of the inno­va­tion cycle but unfor­tu­nately, few of the clones end up being as suc­cess­ful as the original.

8. Cul­tural impact

“Frankly my dear, I don’t give a damn.” “Make my day!” “These are not the droids you’ve been look­ing for.” Take the red pill or the blue pill. Each of those phrases and con­cepts started in movies and even­tu­ally moved to be short-hand in the cul­tural dis­cus­sion. Because suc­cess­ful movies are seen by the masses, and because they are inher­ently part of the cul­ture, their suc­cess impacts the cul­ture as a whole.

“Google this.” “Friend me.” “It’s like he’s the mayor of this place.” In the same way, suc­cess­ful star­tups have a social impact that goes beyond the use of the actual appli­ca­tion and turn to become defin­ing terms in them­selves. My friend Anil likes to say that his blog is about how tech­nol­ogy is mak­ing cul­ture. The only dif­fer­ence of opin­ion I have with his state­ment is that good tech­nol­ogy is about mak­ing cul­ture. And sadly, there’s also a lot of bad tech­nol­ogy out there (see point 7)

9. Suc­cess is not a straight line

James Cameron ini­tially con­ceived of Avatar in the mid-1990s but felt the tech­nol­ogy wasn’t there to do it so he went on to do other movies. Indi­ana Jones was ini­tially sup­posed to be a James Bond like char­ac­ter but evolved to what we now know over weeks and months of dis­cus­sion. In many cases, the most suc­cess­ful movies do not fol­low a straight path but go from a germ of an idea to the final prod­uct by tak­ing sev­eral shift­ing turns.

In the same way, the ini­tial Google was look­ing to sell search engines in the cor­po­rate space. Face­book was ini­tially a stu­dent direc­tory at Har­vard. But over time, they fig­ured out the appro­pri­ate busi­ness model and moved to become the lead­ers they are today.

10. Past is not future

The final sim­i­lar­ity between the two is that past suc­cess is no guar­an­tee of future results. Most suc­cess­ful movie direc­tors have, at one point or another, stum­bled, deliv­er­ing a movie that just didn’t work for the audi­ence. George Lucas direct “Howard the Duck,” which was a huge bomb at the box office. Steven Spiel­berg directed “Hook”, a Peter-pan retelling that couldn’t find an audience.

In the same way, Mark Pinkus, the founder of Zynga, had trou­ble get­ting his pre­vi­ous com­pany, Tribe, off the ground. Evan Williams, who now heads Twit­ter, pre­vi­ously ran a pod­cast­ing com­pany called Odeo that was not that successful.

In each case, though, an impor­tant fac­tor pre­vailed: whether it is in movies or in the start-up world, the founders didn’t get dis­cour­aged by the fail­ure and went back to work until they finally fig­ured out the right model. And that is what even­tu­ally made them great.