Podcast: Don't Kill the Messenger with Movie Research Expert Kevin Goetz
Guests: Jeff Annison and Paul Scanlan

Interview Transcript:

Announcer (00:00:03):

From script to screen, every film is brought to life by visionary creatives and executives, all sharing one mission to captivate the audience. Hosted by award-winning movie strategist Kevin Goetz, our podcast, Don't Kill the Messenger, offers a filmmaking masterclass through intimate conversations with Hollywood's most influential voices. And now, your host, Kevin Goetz.

Kevin Goetz (00:00:29):

Hollywood is changing, listeners. For over a century, the film business has been driven by a relatively small group of decision makers, studios, financiers, and gatekeepers determining what gets made and what reaches audiences. But now the model is shifting. My guests today are redefining and have redefined the audience's role in Hollywood. Jeff Annison and Paul Scanlan come from the world of tech and digital media. We're building communities and scaling platforms is second nature and they're now applying that thinking to the film business. They're the Emmy winning pioneers and co-founders of Legion M, a company at the forefront of a growing movement where fans can invest in, support, and help bring movies and TV series to life. They've restructured the relationship between the audience and Hollywood, giving fans a real sense of ownership. And that's where I come in because I am completely enamored with this model.

(00:01:34):

Jeff and Paul, welcome to my show.

Paul Scanlan (00:01:36):

Thank you.

Jeff Annison (00:01:36):

Thank you so much for having us. Thank you for having

Kevin Goetz (00:01:39):

Us. This is amazing. I'd like to start with Paul and ask you what got you interested in the first place in this crazy business that we work in? <laugh>

Paul Scanlan (00:01:48):

It's a ... Well, it's a good question. I mean, my interest in film started when I was young. I mean, I've always been fascinated

Kevin Goetz (00:01:54):

By film. Where are you

Paul Scanlan (00:01:55):

From? I'm from outside Chicago. I was born in Boston but grew up outside of Chicago, pretty far away from Hollywood, but I studied film in college at- Where? University of Wisconsin in Madison. Still a pretty far distance from Hollywood, but had an absolutely amazing experience there actually researching and learning about film, but also producing film. This was back when we were editing physical film. Then Jeff and I started a company together a little over 20 years ago.

Kevin Goetz (00:02:23):

So you learned editing on like a moviola?

Paul Scanlan (00:02:25):

Yeah, Steinbeck, actually.

Kevin Goetz (00:02:27):

Even before Avid.

Paul Scanlan (00:02:28):

Avid existed, but the professor still wanted us to understand the act of physically cutting film.

Kevin Goetz (00:02:35):

Did you ever imagine when you were on those editing machines that- Yeah. ... we would be evolved to this place 20 something years later?

Paul Scanlan (00:02:43):

To be honest, no. I maybe dared to, like, dream about it every once in a while and I do have some friends that I studied with at that time that all kind of came out here right after college and have had success. But for me, it was more indulging my passion and learning something that I thought would be creative and exciting to learn and to be excited about learning it, but then I assumed that I would stay in Chicago and work in advertising or marketing. I mean, that was always my passion.

Kevin Goetz (00:03:11):

It was? So we- Yeah,

Paul Scanlan (00:03:12):

I was already interning at advertising agencies and that was the first part of my career was in marketing and advertising.

Kevin Goetz (00:03:17):

Did you have an early influence in film, whether it was a film or a person?

Paul Scanlan (00:03:22):

Well, I had a really poignant experience with the film, actually two. One was seeing Jaws for the first time. In a theater, I'm the youngest of five kids and my parents made the ill-fated decision to take the whole family, including me, who was probably-

Kevin Goetz (00:03:37):

Nice day for summer. ... four or

Paul Scanlan (00:03:38):

Five years old.

Kevin Goetz (00:03:39):

Outing.

Paul Scanlan (00:03:39):

We were in Cape Cod on vacation, summer vacation. They took the whole family to go see Jaws, because there was a big summer blockbuster that everyone was taking their families to go see. And my brother, like, he had nightmares every night, wouldn't sleep. No one went near the ocean. How old were you? It totally ruined our vacation. Five years old?

Kevin Goetz (00:03:59):

It's unbelievable how the movie holds up. Yes. And how this one particular story, I believe it's in my first book, Audienceology, I tell how Steven changed a particular moment with the head coming into frame- Oh, yeah. ... to scare the audience. Yeah. And they had to, like, re-shoot that. Yeah. And I waited for that moment, waited for the moment, and as soon as that moment came on, and they always- Is that the

Paul Scanlan (00:04:20):

Opening of the film?

Kevin Goetz (00:04:20):

No, no. Oh. It's not the opening.

Jeff Annison (00:04:22):

It's when he's diving in the

Kevin Goetz (00:04:24):

Book- Correc- Red. ... comes through.

Jeff Annison (00:04:27):

And they filmed it in a pool. Yeah. I know that from your book.

Paul Scanlan (00:04:29):

Yeah, yeah.

Kevin Goetz (00:04:29):

Exactly. In Verna Fields, the editor's pool in Van Nuys- Yeah. ... and they put some milk in the water to make it murky and- Seemed marky. ... and they shot it, but the audience jumped. Yeah. And I was like, yes, yes, yes. Yeah. How about you, Jeff?

Jeff Annison (00:04:45):

I actually came to this very circuituitously in that I was a mechanical engineer in college at UCLA and I ended up taking a number of screenwriting classes just on a lark because I've always enjoyed writing and I just absolutely fell in love with it. And I was about three years into my mechanical engineering degree and I distinctly remember having a conversation with my parents where I'm like, "Hey, I'm thinking of changing my career, you know, changing my mutual."

Kevin Goetz (00:05:14):

That always goes over well.

Jeff Annison (00:05:15):

<laugh> From mechanical engineering to screenwriting and they gave me latitude to do whatever I wanted and I think fortunately I had the good luck probably more than the good sense to recognize that it's always easier to be a mechanical engineer by day and write by night than vice versa.

Kevin Goetz (00:05:32):

<laugh> Did you have a defining moment as well, like a Jaws moment?

Jeff Annison (00:05:36):

For me, it would have been going to see Empire Strikes Back. I was in elementary school at the time and she took me out of school so that we could go see the movie on like a Monday or Tuesday.

Kevin Goetz (00:05:46):

'Cause you were hounding her?

Jeff Annison (00:05:48):

I think I was too young to be hounding her, but I think it was just something that she wanted to share with me. And so it's a really treasured memory that I have because of that. 

Kevin Goetz (00:05:56):

That's a great memory. And you had one other one you said.

Paul Scanlan (00:05:59):

Oh, I have many, but one other one that just kind of came to me as Jeff was talking is my family, the, you know, seven people in our family, we would religiously watch the Godfather movies together as a family. That was something that my dad really wanted us- 

Kevin Goetz (00:06:15):

Did you have nightmares over those?

Paul Scanlan (00:06:17):

No, because I was older when he introduced that to me. So my brother had the nightmares related to Jaws. My nightmares were related to Halloween, which my parents had nothing to do with

Kevin Goetz (00:06:27):

The first time I watched it.

Paul Scanlan (00:06:28):

The movie Halloween.

Kevin Goetz (00:06:29):

Oh Michael Myers. Yeah. Oh my God. No,

Paul Scanlan (00:06:30):

That would be- 

Kevin Goetz (00:06:30):

That was terrifying.

Paul Scanlan (00:06:32):

Yeah, that terrified me. Yeah.

Kevin Goetz (00:06:34):

It's still, I worked on the last one and- Yeah. ... it still terrified me. In fact, I think it terrified me more- Yeah. ... because of all of that pent up what was gonna happen- Oh yeah. Oh my God, he's so formidable and they open it with, he's in this prison yard chained. Yeah. And you're like, "Oh my God, what are we in store for? " Yeah. Yeah. 

Paul Scanlan (00:06:52):

But these experiences, I mean, they're so emotional and it's just incredible to me what-

Kevin Goetz (00:06:57):

Absolutely. ...

Paul Scanlan (00:06:58):

A movie can draw out, you know?

Kevin Goetz (00:06:59):

100%. Now, how did you boys find each other?

Jeff Annison (00:07:02):

We met in 1999 when Paul was working in marketing. I was working at a toy company

Kevin Goetz (00:07:08):

Design-

Jeff Annison (00:07:09):

Hasbro. Hasbro.

Kevin Goetz (00:07:10):

We do our research here.

Jeff Annison (00:07:11):

I'm impressed.

Kevin Goetz (00:07:12):

Yeah. Of course, I would only be able to say Hasbro Mattel, basically.

Jeff Annison (00:07:16):

<laugh> Y- you had a fifty fifty shot.

Kevin Goetz (00:07:17):

Exactly.

Jeff Annison (00:07:18):

But a good friend of ours pulled us together and he was starting a company and- Why? It was kind of ... He was a technical genius that had invented some new technology. It was this little micro display technology. Paul was the marketing guy that understood marketing and branding and I was-

Paul Scanlan (00:07:35):

And I played ice hockey together, so I'd, I'd known him for a few years. 

Kevin Goetz (00:07:38):

I knew never knew you played ice hockey.

Paul Scanlan (00:07:39):

Yeah. 

Kevin Goetz (00:07:40):

You still play?

Paul Scanlan (00:07:40):

I still play. Yeah. I played three

Kevin Goetz (00:07:41):

Times a week. You don't play who loves is Jerry Bruckheimer. Listeners, this is a fascinating subject on so many levels because A, it's about two people who are entrepreneurs who came together to start a business, a new TV kind of platform- mm-hmm. ... if you will, called MobiTV.

Paul Scanlan (00:07:59):

Yeah, that was what Philip brought us all together. We had a few ideas for companies. One was gonna be high tech toys for kids. The other was gonna be like an acceleration proxy for mobile internet access to mobile phones. So

Kevin Goetz (00:08:12):

What was Mobi? <laugh> Tell us

Paul Scanlan (00:08:14):

What Mobi was. Well, MobiTV ended up becoming the first company to put TV on phones. And so we got there by starting with this acceleration proxy. It's a little bit like if you watch Silicon Valley-

Kevin Goetz (00:08:25):

About literally pre-YouTube.

Jeff Annison (00:08:27):

This is back in the day- Oh yeah. ... where the only place that you could watch television was on a television that was either connected to a satellite dish or a cable.

Kevin Goetz (00:08:34):

Did you have patents on this stuff?

Paul Scanlan (00:08:37):

We ended up having a whole bunch of patents. Yeah.

Kevin Goetz (00:08:40):

Did you sell the company?

Paul Scanlan (00:08:41):

It ended up selling, like we had many offers including NewsCorp tried to buy us at one point to turn-

Kevin Goetz (00:08:46):

But they bought MySpace instead.

Paul Scanlan (00:08:48):

Yeah, they, well, they had just bought MySpace and then we were gonna be the second acquisition, Peter Chernan, Mike Lang, you know, they came in and so we like to say that all of our rich friends sold their companies too early. <laugh> So we held on. Our investors wanted to hold out. I mean, the company grew to almost a billion dollar valuation at one point in time and Tivo owns it and now it's the new TiVo platform because we eventually built a whole cloud-based DVR and all the functionality. Got it. We were the market leader in mobile television.

Kevin Goetz (00:09:17):

Jeff, what made you see the white space?

*Jeff Annison (00:09:20):

It's funny because when we developed the very first prototype, it was live streaming television, but the streaming was on frame every three seconds and a continuous audio stream on a flip phone. But in 2003, it was the coolest thing that you could do on your cell phone. Sure. And one of the things that we learned was that as long as you had a good audio stream, you could live with watching one frame every three seconds for a lot of content. Like it doesn't work for basketball, but if you're watching a newscast and the newscaster's head is only updating once every three seconds, that's fine. If you're watching Discovery Channel, which was a big one that we had, it really worked. And so we had one of those classic startup moments where it was on sale on Sprint on one flip phone. These were the very first phones that had any sort of apps on them and we got our first sale and everybody's all excited and we got our second sale, then it starts going da, da, da, da, da, da, da, da.

Paul Scanlan (00:10:20):

We had a ticker that we could all watch that showed up how many new subscribers we were getting. We were charging $10 a month and the next highest revenue product in those decks back then was like a $5 ringtone or a game. Nothing was recurring yet, not many things. So we were 2X the price in recurring.

Kevin Goetz (00:10:39):

Were you on Apple as well?

Paul Scanlan (00:10:40):

Eventually, yeah. When the iPhone came out, MobiTV for one year was a number one revenue generating application on iPhone. So we did a MobiTV, which was kind of the classic version of mobile television. We had like a miniature cable lineup, you know, a bunch of channels. We charge $10 a month. As Jeff mentioned, that slideshow TV lasted like two years.

Kevin Goetz (00:11:02):

Who was like really up your ass at that moment in those two years? Like you had to watch your back at every moment.

Paul Scanlan (00:11:07):

The cable companies.

Kevin Goetz (00:11:09):

Yet you get an Emmy award. Yeah, we- Which is ironic. <laugh> When do you get the Emmy, by the way?

Jeff Annison (00:11:13):

I wanna say it was 2003.

Kevin Goetz (00:11:16):

So you had already evolved sort of a normal stream. 

Jeff Annison (00:11:19):

Yeah. By that time it was, uh, more in line with what we would consider streaming today, nowhere near the quality, but it's like you asked what the white space was, it was recognizing that even though when we launched, the only thing the phones could support was one frame every three seconds, like that was a temporary technological limitation. All of us could see. So when we took it to Hollywood, we met with some really big people and we showed it to them.

Paul Scanlan (00:11:45):

So we had Discovery, TLC, A&E, and

Kevin Goetz (00:11:47):

They all bought into it?

*Paul Scanlan (00:11:48):

At this time, the live channels were the Crown Jewels. That's where most of the viewing was. We hadn't started doing primetime episodes on demand. None of that existed yet. So this is 2001, 2002. I remember a meeting, there was one of the Disney's execs the first time we met him we were sharing it with them and he was running ABC and had ABC News and he's a friend of ours now. So when we first showed it to him, we're like, "Yeah, check this out. " We had arranged a meeting and he was kind of grumpy. He's like, "Why am I meeting with you guys? What do you want? " And we're like, "Oh, we're introducing this new service." And we show it to him and he's like, "That's never gonna go anywhere. No one's gonna watch TV on their cell phone." He literally said to me, "That is the stupidest thing I've ever seen in my life." But four months later, we're about to launch, he calls me, he's like, "What's going on?

I haven't heard back from you guys." And we said, "Well, we didn't think you wanted to come in. " And he said, "Well, did you get any channels? I'm assuming it's going nowhere.”

Kevin Goetz (00:12:44):

We have everyone but you.

Paul Scanlan (00:12:45):

And I was like, "Oh yeah, we've got 13 channels or whatever." 

Kevin Goetz (00:12:48):

Did you have CBS and NBC?

Paul Scanlan (00:12:50):

We had CNBC,

Jeff Annison (00:12:52):

Discovery,

Paul Scanlan (00:12:53):

Discovery, TLC-

Jeff Annison (00:12:55):

We programmed a channel using public domain Warner Brothers cartoons. 

Paul Scanlan (00:12:59):

Cartoon channel. So we had all these channels lined up. Everyone was trading papers back and forth, but no one would sign. And one of the things that we realized is that no one wanted to be the only company- 

Kevin Goetz (00:13:12):

Of course.

Paul Scanlan (00:13:13):

And so they wanted to make sure that there was safety in numbers and that there would be others. And so probably a few weeks away from launching, we went back to them and we said, "Look, I think we understand why you're all talking to us but not signing." 'Cause I think it was A&E, Alana Sofko asked me, she said, "Well, who else is in? Our team wants to know-

Kevin Goetz (00:13:32):

They all wanna know that.

*Paul Scanlan (00:13:33):

Yeah. And I said, well, you know, here's who's lined up." And she said, "Well, who's signed?" And I said, "Look, if that's what makes a difference, why don't we add a contingency that we won't launch your channel until we've signed with other channels that are on your level." And so we went back, we added that term and we got everybody to sign. And then ABC comes calling wondering like, "What's going on? " I tell him, and he's like, "Holy shit, you can't launch without us." <laugh> He's like, "This is gona be huge." I'm like, "Weren't you the guy that said that this was the dumbest thing?"

Kevin Goetz (00:14:01):

Of course he was. Yeah. And he was. And in fairness, no one wants to be the first. No. Yeah. But who was, give me a name because this is gonna be a good thing for them. Who saw your vision and who was like, "This is cutting edge."

Paul Scanlan (00:14:14):

So Lil Dolvey was who we did the agreement with at NBC. It had to go, I mean, this was a big enough deal that they had to get it approved.

Kevin Goetz (00:14:22):

I can't believe what you guys did with this. Like, and it's so germane to what's happening now, as you know, and you were so lovely to compliment me on both the books and the podcast and I appreciate it so very much. What I've noticed in researching all the stuff that I do and continue to do because I have to keep on top of everything is these disruptions. Yeah. And the fact that we are living in such a disruptive environment and the cynicism, the fear- 

Paul Scanlan (00:14:49):

Yeah.

Kevin Goetz (00:14:50):

That is pervasive right now- mm-hmm. ... is very real and no one knows what's gona happen. Yeah. There are some of us who see that as pure opportunity and others who see it as what the F am I gonna do. Yeah. Yeah. And I don't even need to ask you which side of the eye- We, we're 100%. We're

Jeff Annison (00:15:07):

100%. Yeah. Like this has traditionally been one of the most difficult industries to try and break into.

Kevin Goetz (00:15:13):

You know what? I wanna say every industry is difficult to break into. Yeah. But you're probably right because it's such a fun industry. It's so creative. So it attracts a lot of people. Yeah. You're right. But I do wanna really pivot the second half of this conversation about the creator economy and that real shift into why Legion M and why now.

Paul Scanlan (00:15:36):

Yeah.

Kevin Goetz (00:15:37):

So you sell the company to whom again?

Paul Scanlan (00:15:40):

Tivo. Tivo owns it.

Kevin Goetz (00:15:41):

You sell to TiVo.

Paul Scanlan (00:15:43):

Yeah. We had left by the time that happened

Kevin Goetz (00:15:45):

Oh, you did. You had. 

Paul Scanlan (00:15:46):

Yeah. We had already started Legion M well before that.

Kevin Goetz (00:15:48):

And I hope you did okay as the exit of that.

Jeff Annison (00:15:52):

We did less well than if we had sold before.

Kevin Goetz (00:15:54):

You made that point with your, if you had sold-

Paul Scanlan (00:15:56):

Yeah. It's a News Corp. They would have turned it into Hulu. This was, their aspirations were Hulu and so we basically-

Kevin Goetz (00:16:02):

Well, they might have. Who knows? Yeah. Yeah. You know, I mean, what are they, they have too many- Well,

Paul Scanlan (00:16:06):

That's what they've told us. Yeah.

Kevin Goetz (00:16:07):

Was it a more of a freemium model?

Jeff Annison (00:16:09):

I mean, it was circa 2006 probably. 2011.

Kevin Goetz (00:16:13):

So we still, they were paying for, but would you ever think about going ad supported?

Jeff Annison (00:16:17):

We had some- We had some, we had some ad support.

Kevin Goetz (00:16:20):

Yeah. Yeah. So what excites me about you both is you're embracing of the audience and adding the audience is a huge component into what your next evolution was going to be. Yeah. So I really wanna understand what happens after you leave the company- Yeah. ... and you start Legion M. Did it take a matter of days, months, years to get to the idea of that?

Jeff Annison (00:16:44):

So I left MobiTV back in 2009 and I had a company that I was running with Paul.

Kevin Goetz (00:16:52):

Oh, another company in between.

Jeff Annison (00:16:53):

Yes.

Jeff Annison (00:16:55):

That we spun out of MobiTV.

Kevin Goetz (00:16:55):

Jeff ran.

Jeff Annison (00:16:56):

It was called Underground Labs and we had a product called the New York Rock Exchange. <laugh> And the idea was, this was back in 2012, what if you could buy stock in a rockstar? And we literally set out to say like, "Okay, well, can you buy stock in a rockstar?" And found out that no, you couldn't because of securities laws.

Kevin Goetz (00:17:13):

What do you mean investing in a rock star? What does that even mean?

Jeff Annison (00:17:15):

What if you could buy stock in a rock star? What if you could hear- Or buy it in a royalty store. 

Kevin Goetz (00:17:17):

But what are you buying? Like what's, what are the success metrics and-

Jeff Annison (00:17:21):

Well, I mean, yeah, what if you finance their next record or what if you literally could buy a piece of their career? There's a number of companies that have done it with athletes at one point where literally these athletes were effectively going public.

Kevin Goetz (00:17:32):

But the rock stars in your company had to comply.

Jeff Annison (00:17:35):

Well, we decided that that wasn't a viable model.

Kevin Goetz (00:17:37):

Got it.

Jeff Annison (00:17:38):

So what we ended up with after looking at, can we simulate it? Like what if it's just a big game and you simulate- That's, that's where

Kevin Goetz (00:17:45):

I was going with this.

Jeff Annison (00:17:46):

Yeah. Well, it turns out that's gambling and at the time that was also not legal. And again, things have changed since then with prediction markets now, but also fantasy sports and so there's new ways to kind of do it. Where we eventually settled was the idea that you could buy a piece of a rock star and what that meant was that you were literally buying a piece of the royalty on the song. So we worked with Rodney Atkins, we worked with the zombies, we worked with Testament and you literally, if you bought one of these shares, you owned a piece of the royalty, not in a financial way, like it wasn't like you were gonna get a lot of money, but you could literally look somebody in the eye and say, "I'm a part owner of the royalty." The same way that the Green Bay Packers issue shares in the team.

(00:18:31):

And when you did that, you would get this beautiful certificate with a unique serial number on it that you could then use that serial number to identify yourself as a shareholder that got you access to maybe special recordings or an online shareholder call with the Rockstar.

Paul Scanlan (00:18:48):

This was sort of like a practice run at something and then as the rules were adopted. So in 2012, part of the reason why the New York Rock Exchange was such a strong initiative from us is that the bill to enable all these things was actually passed by Congres in 2012. So in 2015, I was getting ready to leave MobiTV. I moved over to London. I was running our international business. 

Kevin Goetz (00:19:12):

You married yet at this point?

Paul Scanlan (00:19:12):

Yeah. Yeah. Over in London with my family.

Kevin Goetz (00:19:14):

So you brought kids, yeah.

Paul Scanlan (00:19:15):

Yeah, yeah. We had an amazing experience and at that point the company had filed to go public. We had a lot of opportunity in front of us still, but I was ready to leave. I was moving back from London- was

Kevin Goetz (00:19:26):

What was your job there? 

Paul Scanlan (00:19:28):

I was president of the company

Kevin Goetz (00:19:29):

And, and

Paul Scanlan (00:19:29):

Running-

Kevin Goetz (00:19:30):

Was there someone, was there a CEO? 

Paul Scanlan (00:19:32):

Yeah, we had a CEO. Yeah. We brought in a seasoned CEO, a guy named Charlie Nooney to take the company public. He was a senior guy at Disney.

Kevin Goetz (00:19:39):

Did you want to go public?

Paul Scanlan (00:19:41):

We were ready to sell. We were growing. We're on our way to 100 million in annual revenues. We had offices around the world. It was ridiculous.

Kevin Goetz (00:19:48):

Okay. So in 2015, you leave.

Paul Scanlan (00:19:50):

I leave. Yep. I'm ready to leave. Charlie's got the company. I stayed on the board, but I'm excited to go build something again. And Jeff and I had been talking and so based on the experience that we had had with New York Rock Exchange, we decided now the rules are actually coming.

Jeff Annison (00:20:06):

So we launched the very first equity crowdfunding campaign in the United States on May 16th, 2016 at 90 AM, the day the reg CF of the Jobs Act

Paul Scanlan (00:20:16):

Went into- Yep, that was Legion M.

Jeff Annison (00:20:18):

That was Legion M.

Paul Scanlan (00:20:19):

We had announced Legion M- Wow. ... like two months earlier and said we were doing this so that we could build up some kind of excitement for it and then we were literally the very first company to use the new rules.

Kevin Goetz (00:20:31):

And so- And we blew it out. How did you get the word out?

Paul Scanlan (00:20:34):

We had some partners. We teamed up with Seth Green and the team at Stupid Buddy Studios. They were one of our partners. Robot Chicken. Tim League. Yeah. Yeah. Robot Chicken. Yeah. We had Tim League, you know, the founder of Alamo Drafthouse and we had a few other- 

Kevin Goetz (00:20:46):

How much did you raise initially?

Jeff Annison (00:20:48):

The first round- The maximum. ... we were limited by law. We could only raise a million dollars and we raised a million dollars. Yeah. Just based on the idea.

Kevin Goetz (00:20:56):

So people were calling you left, right inside. Is that when I invested in a full disclosure? 

Paul Scanlan (00:20:59):

I think so. I think it was either that round or the next round. We can look it up. Thank you for that investment. Yeah, you helped make this happen.

Kevin Goetz (00:21:06):

Oh my God. Yeah. <laugh> But was I part of that initial million?

Jeff Annison (00:21:10):

I don't know. We'd have to go back and check and see.

Paul Scanlan (00:21:11):

I think so. You were very early. Yeah.

Kevin Goetz (00:21:13):

Because here's-

Paul Scanlan (00:21:13):

And we did get a lot of press, like because there was-

Kevin Goetz (00:21:15):

You got a lot of press. 

Paul Scanlan (00:21:16):

You know, it was the same thing the first time we put TV on cell phones, we were shocked at how much press.

Kevin Goetz (00:21:21):

But listeners, I wanna make sure you understand that. I didn't invest because I thought they were brilliant. I invested because I was nervous and wanted to say, "What are they doing with audiences? This is very intriguing." Yeah. I like these guys. I like how they're thinking. I agree with how they're thinking. So I wanted to make sure that I was gonna be let in on inside information. Yeah, you wanna see it from the inside. And I wanted to learn. Yeah. You know? Yeah. I just, when I wanted to just learn about verticals, I went out and made a vertical. Yeah. When I wanted to learn how to do a documentary, I just produced my first documentary. Like I'm- Yeah. I like to learn how to do it. Yeah. And I also usually don't necessarily need to go back.

Paul Scanlan (00:22:00):

Yeah. 

Kevin Goetz (00:22:01):

But I, you know- 

Paul Scanlan (00:22:01):

Well, we like to talk about what we're doing too. So we're pretty-

Kevin Goetz (00:22:04):

Well, you were pretty transparent, which I also appreciated. Yeah. Okay. When we come back- Yeah. ... we are going to really unpack and we got, it took a while to get there, but we did it. <laugh> Legion M and the beginning of crowdsourcing and the beginning of bringing the audience into having their own agency, we'll be back in a moment. Listeners, the Motion Picture and Television Fund is a nonprofit charitable organization that supports working and retired members of the entertainment community. This wonderfully run organization offers assistance for living and aging with dignity and purpose in the areas of health and social services, including temporary financial assistance, case management, and residential living, and has been a crucial lifeline to thousands during and beyond critical times that our industry continues to experience. To learn more, visit mptf.com. Please join me in helping others in our industry during times of need.

(00:23:11):

There are so many ways to offer support and get involved. Thank you. We're back with Paul Scanlan and Jeff Annison. And guys, I wanna talk about the formation of Legion M, how it came to be, how you were the first crowdsourcing, successful company in entertainment and what your goal was, what was your mission out of the gate?

Jeff Annison (00:23:40):

We saw these laws changing with the Jobs Act. It was changing securities laws that had been on the book since the Great Depression.

Kevin Goetz (00:23:47):

Which allowed you to collect money from people.

Jeff Annison (00:23:49):

Yeah. What the laws changed was non-accredited investors, which means roughly 97% of the population for the first time were allowed to invest in a company prior to an IPO. Before these laws, the only way if you wanted to invest in us, our company or our film or whatever, you could only do it if you met certain wealth requirements that were set by the SEC, which was effectively the wealthiest few percent of the population.

Kevin Goetz (00:24:17):

Wow.

Jeff Annison (00:24:17):

And so we saw this changing, like a fundamental shift on laws that had been on the book since the Great Depression.

Kevin Goetz (00:24:24):

And we all want a piece of it. Yeah.

Jeff Annison (00:24:25):

And we said this is a once in a lifetime opportunity to build a type of studio that has never been able to exist before.

Paul Scanlan (00:24:33):

I mean, to be honest, if you think about it, America, we pride ourselves on how entrepreneurial we are and wh- how- Exactly. ... all these new ventures. And it was kind of shocking to us that we were lagging behind the rest of the world and so this was a way for entrepreneurs and new companies to be started by uniting-

Kevin Goetz (00:24:54):

And still in all, it was only a million bucks was the limit. Yeah.

Paul Scanlan (00:24:56):

Well- That you could raise. Well, that was the start of it. It's now been raised to five million to do this. It, there are still rules around it. So the SEC, it's not a free for all. You still have to register and file with the SEC, let them know what you're doing. They do bad actor checks. There are limits in how much people can invest- 

Kevin Goetz (00:25:13):

An individual can invest.

Paul Scanlan (00:25:14):

Uh, how much an individual can- What is that number?

Jeff Annison (00:25:16):

It depends. It's a percentage of your income. Yeah. And it's actually a complex formula, but generally it's high enough that most people can invest. 

Kevin Goetz (00:25:23):

Okay. You raise a million bucks, which really is not anything. Nothing. No, it's not. Yeah. Just start a company. Yeah.

Jeff Annison (00:25:29):

We had 3,500 investors, so we had a legion of 3,500 people at

Kevin Goetz (00:25:33):

The time. Okay. Got it.

Jeff Annison (00:25:34):

And we said, "What can we do with this? " And the first opportunity that came along was an opportunity to make a small P&A investment with this brand new distributor called Neon in the movie Colossal.

Kevin Goetz (00:25:47):

So tell me, how did it work with Neon?

*Paul Scanlan (00:25:49):

So, well, we were friendly with Tim and Tom and Christian Parks, who's the CMO who's now with Clockwork, Warner Brothers. So we were all, like, really close. Once we had announced and we had met with Tim, they liked our model. They thought it had a lot of potential. So when they went to Tiff that year, we told them, "Hey, think of us as like the kid in your shopping cart." 'Cause they said, "We're going to Tiff, we're going to find a movie and we're going to do a release." And so they came back with Colossal and said, "We have a movie that we think is perfect for you. "

Kevin Goetz (00:26:22):

How big was their acquisition of it?

Paul Scanlan (00:26:23):

I don't remember offhand their acquisition. It was a few million, I think.

Kevin Goetz (00:26:27):

Okay. But they

Paul Scanlan (00:26:27):

Were going to put it into theaters and, you know, they'd spent almost 15 million dollars on the

Kevin Goetz (00:26:31):

Movie. So how much were they looking for? Like five million? 10 million?

Paul Scanlan (00:26:34):

It was probably about five million, I think. Right. I don't remember offhand. I think the money that we were putting in wasn't really that important to Neon. It was more the fact that we were gonna- Proof of concept. ... wrap our arms around the film and help them release it. And we did. We had screenings, we did meetups-

Kevin Goetz (00:26:51):

You mean with your 3,400 people?

Paul Scanlan (00:26:53):

Yeah. And it was amazing, actually, you know?

Kevin Goetz (00:26:55):

What was amazing about it? What did you do?

*Paul Scanlan (00:26:57):

It was amazing to see how the community came together and how they would organize screenings and invite their friends and it was a small release. It wasn't like a-

Kevin Goetz (00:27:08):

It was a grassroots marketing

Paul Scanlan (00:27:09):

Thing. Yeah, it was grassroots marketing and it really made a difference.

Kevin Goetz (00:27:12):

People that were part of that influencer group, you provided like collateral material or something?

Jeff Annison (00:27:15):

Not, again, this was very early days for us. Yeah. It was the first time that we'd been involved with the release, but we coordinated some meetups. We made costumes, kaiju heads that you could wear. Yeah. We made two of them with a special effects house, Fawn Davis, so that we could just go and have fun with it.

Paul Scanlan (00:27:33):

We had a guy on our team who was 6'8", so we'd send him to the screening.

Kevin Goetz (00:27:37):

But why would the, one of the 3,400 investors care about Colossal? And what would they get out of it?

*Paul Scanlan (00:27:43):

Here's the thing that Colossal was so important to us- Yes. ... is that it was described by critics as wildly original and it is. It's actually, I mean, we're really proud of that movie because in a lot of ways it was the perfect movie for Legion M to come out with because our community, we're uniting this vibrant and engaged community of entertainment fans, not just so we can make money, but we're uniting with a purpose. And our purpose is to bring wildly original creative ideas to the marketplace. And instead of going out and finding an audience, starting with the start of an audience and having that audience, because if you look at the industry as a whole, we do a lot of reboots and sequels and retreading of existing franchises because that's what makes sense. You're starting with the built-in audience and we wanted to prove that if you start with the built-in audience, you can take more chances and we can bring things to the market that maybe otherwise might be challenging to bring to the market.

Kevin Goetz (00:28:49):

That makes sense, but I want to go back to this question. Yeah. I'm an investor and you say to me, "Guess what? We are a minority or investor in the P&A fund of Colossal." Yeah. What do I get out of that as a person who's an investor?

Jeff Annison (00:29:03):

So when you invest in Legion M-

Kevin Goetz (00:29:05):

Yes.

Jeff Annison (00:29:05):

... you own stock in the company.

Kevin Goetz (00:29:08):

Correct.

*Jeff Annison (00:29:08):

So we tell people it's like if you were one of the early investors in Disney, your stock would be worth a mint. Like it's not necessarily the fact that you're gonna get dividends. You don't get royalties from the movie, but our goal as a company is to IPO and to make your shares liquid. And so if you could imagine if you were an early investor in Netflix, an early investor in Disney, it's like you're investing effectively like a venture capitalist where you're trying-

Kevin Goetz (00:29:32):

Right. So you don't get to take the money out. Correct. You gotta wait until there's a capital event.

Paul Scanlan (00:29:36):

Yes, that's true. As we'll talk about later, we do have some other ways to invest in Legion M that do return capital in

Kevin Goetz (00:29:42):

That. I forgot how you guys set that up, but that makes sense. Yeah. Yeah. So now you've got people saying, "Oh, we're invested in this company success." Not in an individual movie, that's the answer to my question, right? Right, yes. But rather, we want Legion M to be successful.

*Paul Scanlan (00:29:54):

They’re our community, they’re our secret sauce, if you will. They’re our built-in audience for everything we do. And as you know, we genuinely listen to them. Like this is something that we think is really important is that we're not out there finding movies and saying, "Hey, you gotta like this now." We're actually trying to flip the script in a way instead of going out and finding movies that we think our community alike is talking to our community about what they want and understanding what they want.

Kevin Goetz (00:30:24):

Well, let's talk about that. Yeah. Before I do, was Colossal successful?

Jeff Annison (00:30:28):

Well, for us, yes.

Kevin Goetz (00:30:29):

That's what I mean. Yeah.

*Jeff Annison (00:30:30):

So, but not because of the fact that we got a good ROI on the investment. The amount of money that we invested, it was very small. We didn't make money on that investment, but what we got out of it was far more important, because flashback to your earlier question, we had raised a million dollars. We had 3,500 people. Everybody was like, "What are you gonna do with a million dollars? You're gonna make fan films." Yeah. "You're gonna make small micro budget movies." And we said, "No, we're gonna work on movies like Colossal, and we're gonna own a little tiny piece of an Anne Hathaway Jason Sudeikis movie that's in theaters- Yeah. ... and is wildly original." That's what Legion M is about. And so for us, when we signed the deal, we had no idea if we were gonna get any money. We were so green in the industry frankly, that we had no basis for being able to say there's a good ROI, but we knew we'd already won, because even if we didn't get a penny back, the signal that it sent and the way that it then allowed us to grow from 3,500 to now over 60,000 today.

Kevin Goetz (00:31:33):

But when did you grow into 60,000? If you come back and say to people, "Well, we didn't really make money on Colossal," how did you keep that marketing positive momentum going?

Paul Scanlan (00:31:44):

Well, I think it's a big part of when you're starting something, you know, you don't ... Romans have built overnight. Yeah,

Kevin Goetz (00:31:49):

Yeah,

Paul Scanlan (00:31:50):

Yeah. And we wanted people to understand that, look, we had something that we had outlined to our community, as you've seen, we're very transparent and upfront with them that we called the method to the madness. And we shared with them a phased approach into how we were gonna not only enter the market because we had experience in the entertainment space with MobiTV, but we weren't necessarily like existing insiders. So we were insiders with an outsider's perspective and that's really important. We wanna kind of maintain that outsider's perspective because we like trying different things and to challenge the norms and the traditions that the industry seems to be- Is

Kevin Goetz (00:32:27):

This a viable business?

Paul Scanlan (00:32:28):

Yes, 100%. So when we outlined that plan, that was a phased approach of us making small minority investments that mattered to us whether we made money, but it was immaterial because these were a means to an end. This was our ability to build up our reputation and our credibility to get in so that we could ultimately be developing, financing, producing and distributing films. And that's what we're doing today.

Kevin Goetz (00:32:55):

So not your credibility in making money, but your credibility in getting involved in projects- Yeah. ... just to be fully transparent, right? Because-

Paul Scanlan (00:33:02):

Well, I think now we're doing both. And so this was 2018, we had a Nick Cage movie, Mandy, that performed really well. Yeah, did really well. Like, we still are getting checks from Mandy. We also had the merch rights for that film. That was part of what we got.

Kevin Goetz (00:33:17):

I see. I wanna be really clear. Yeah. This is very interesting. People are investing in Legion M. Yeah. They're not investing in a project. Yeah. Unlike Angel Studios, right?

Paul Scanlan (00:33:24):

Well, Angel has the opportunity to invest in Angel as well, right?

Kevin Goetz (00:33:28):

Well, but by and large, people are investing in a philosophy, first off. Yeah. Yeah. Like you guys, I suppose. Yep. But theirs is more faith friendly in nature. Yeah. They followed you, didn't they? They did.

Paul Scanlan (00:33:39):

They

Jeff Annison (00:33:39):

Did. Yeah. They came out after. And it's worth noting, like, Angel Studios is obviously such an amazing example of the power of fans and of the power of the audience.

Kevin Goetz (00:33:49):

Yeah. 100%. Yeah. How do you feel about them, by the way, before we go on?

Jeff Annison (00:33:52):

We share a lot of DNA with them. When I see half the stuff they've done, I'm like, oh my God, they stole our idea. And then I see another one. I'm like, "Oh my God, I'm totally gona steal that idea." Right? Yeah. Like it's, we share a lot of DNA, but because our content is so divergent, like we don't feel like they're a competitor. There's room

Kevin Goetz (00:34:08):

For both of

Jeff Annison (00:34:08):

You. Yeah.

Kevin Goetz (00:34:09):

Yeah.

Jeff Annison (00:34:09):

It's almost like a sister

Kevin Goetz (00:34:10):

Company. But are you the same model essentially?

Jeff Annison (00:34:12):

No, I- I

Paul Scanlan (00:34:13):

Would say we share a lot of DNA, but we're a very different approach, not just in the content, like the- How would you differ? ... same with the content.

Jeff Annison (00:34:21):

I would say this, right? Angel Studios has done some crowdfunding. Legion M has been entirely crowdfunded from the ground up.

Kevin Goetz (00:34:30):

Talking about the company itself.

Jeff Annison (00:34:32):

Yeah. So Angel Studios raised, I think it was 40, 45 million dollars in venture capital and they allowed people to invest in some of their movies. I, I don't think they even do that anymore. What they've transitioned to is a subscription model. Last number I heard was over a million guild members, but these are people that are paying, it's basically like Netflix, where they're paying $13 a month or $15 a month.

Kevin Goetz (00:34:57):

To get the kind of content that they would like to see. That they want. And where

Jeff Annison (00:35:00):

I think that we-

Kevin Goetz (00:35:00):

But they do vote on it, right?

Jeff Annison (00:35:01):

They do. And that's where we share a lot of DNA is at the end of the day we are driven, we are owned by our investors.

Kevin Goetz (00:35:09):

So Colossal was brought to your whole network at that point and to make decision or not?

Jeff Annison (00:35:14):

Most everything that we do-

Kevin Goetz (00:35:16):

Is? ... we

Jeff Annison (00:35:16):

Put in front of them in some way. Yeah. And it's not necessarily an up or down vote on like, are we gonna do this or not?

Kevin Goetz (00:35:23):

Can you unpack that since where I was saying we wanted to go?

*Paul Scanlan (00:35:25):

Yeah, we have- How does it work? Couple of examples. So there are things like we have a new movie that we're announcing that our community knows about it, but we didn't ask them about it before we got involved because we knew they would wanna be involved. In fact, before we got involved, we had people in our community saying, "Hey, is this something we could get involved in? This is the Coyote versus Acme project, which is just a no-brainer for us.

Kevin Goetz (00:35:52):

I think it's a no-brainer too. What happened to that?

Paul Scanlan (00:35:54):

It's so surprising- It's gone through so many hands. And in a lot of ways it's very meta because it represents exactly what Legion M was created to do. This was something where a major studio was willing to take the right down on-

Kevin Goetz (00:36:10):

Was Warner's.

Paul Scanlan (00:36:11):

Yeah, it was Warner Brothers.

Kevin Goetz (00:36:12):

Was David Zazra. Zazlof,

Paul Scanlan (00:36:14):

Yeah. It comes full circle. But Ketchup Entertainment, who we're friendly with, ended up buying the rights and getting the rights. And now we will hopefully have announced this by- Oh,

Kevin Goetz (00:36:24):

So you're working with the guy from Ketchup?

Paul Scanlan (00:36:26):

Yeah, Gareth West is a good friend. And so we've been in touch with them. And so he wants us involved because this is a perfect project to get the Legion wrapping its arms around and we want to get involved because it's the perfect project that our community wants to do. We want to be-

Kevin Goetz (00:36:42):

So you picked it up for a couple million bucks.

Paul Scanlan (00:36:45):

Well, he picked it up. Garrett did. So Garrett did. We're participating-

Jeff Annison (00:36:48):

Reportedly for 50 million. Now we're

Paul Scanlan (00:36:50):

Going to write it off for 30 million. Now they've got 50 million. So Warner Brothers is happy. Everyone involved in the film, including the talent, Will Forte and John Cena is happy because the movie's going to get a high quality release. We're coming in with the distribution with the P&A Plus investment.

Kevin Goetz (00:37:09):

Who's distributing it for you?

Paul Scanlan (00:37:10):

Catch up entertainment.

Kevin Goetz (00:37:11):

They have their own-

Paul Scanlan (00:37:12):

They're a distributor.

Kevin Goetz (00:37:13):

They have actual infrastructure on the ground?

Paul Scanlan (00:37:15):

Yeah.

Jeff Annison (00:37:16):

Yeah. Yeah, yeah. One of the films that they did last year was another Looney Tunes movie. I think that's actually how they convinced Warner Brothers to give them the rights was seeing how well they performed on the day the Earth blew up, which was a much smaller, much different movie.

Paul Scanlan (00:37:30):

Have you seen the trailer for Coyote versus- I haven't. It, it-

Kevin Goetz (00:37:34):

Is it

Paul Scanlan (00:37:34):

Great? First of all, they put it out. It's breaking records for a film like this. It's fantastic, you guys. Yeah. It's over 50 million views already. The fans want this movie.

Kevin Goetz (00:37:44):

Tell me how you know that, because you do know it. So how do you, tell me what you did to get that information.

Jeff Annison (00:37:50):

It's honestly just completely organic.

Kevin Goetz (00:37:52):

Just listening to chatter with- It's social

Jeff Annison (00:37:54):

Media groups, right? Yeah. People posting in the Legion M Members only.

Kevin Goetz (00:37:57):

Do you ask them questions and do poe-

Jeff Annison (00:38:00):

No, we do. We do very much. Yeah. We have a- We never pulled them on this particular idea. Oh, yeah. But we've had enough people reach out to us. Every time we send an email, anytime you get, if you want to reach us, literally just reply to that email. They all come back. We read all the stuff. Yeah. And I mean, the amount of buzz that we're able to pick up, just pure organic gave us the confidence to sign that deal and know that our community would like it.

Kevin Goetz (00:38:23):

Why don't you ... I'm just asking the question. Why don't you poll like Angel does?

Paul Scanlan (00:38:27):

We do. That's what I was gonna say. Yeah. So in this case, we did a soft poll actually. We had done a poll to like a subset of our community based on all the organic stuff. But at that point, we knew this was a no-brainer, time was tight, let's go do it. We sent one email to our community saying, "Hey, we've got an allocation. We're gonna put money into this project if you wanna participate in this. " So this is where things change a little bit. So this is only going to people that are Legion M investors. They own the company and we're saying there's a new opportunity. It's gonna be part of the film fund. It'll be our third project in the film fund. We'll talk about the other two in a minute. But we've made a commitment, if you wanna participate, you can.

(00:39:10):

And with on email, we completely sold out the allocation in two days. We announced something we call the Film Fund, which is now our P&A fund, which is a companion thing because Legion M is now in the distribution game. Our first project that we co-distributed with Bleaker Street is a film called Facam Hall. I don't know if you've heard about it. It's an absolutely insane fun, hilarious-

Jeff Annison (00:39:34):

It's the parody of Downton Abbey. It's Downton Abbey Meets Airplane. Damien Lewis is the lead. Tom Felton and it's- How funny is that? No, it's really worth it. Yeah. It's on HBO.

Kevin Goetz (00:39:45):

If you haven't seen it, you shouldwatch

Jeff Annison (00:39:46):

It.

Kevin Goetz (00:39:47):

Oh, it is on HBO.

Paul Scanlan (00:39:48):

Super well for us. So as a first film in our film fund, we're already telling our community, "Okay, that really worked. Thank you. Our community helped make it work and now we've got funds coming back that'll go into the second project, which is another project."

Kevin Goetz (00:40:06):

How many, you have about 60,000 people in your network right now? What do you know about your 60,000? Enough?

Paul Scanlan (00:40:12):

We know a lot,

Kevin Goetz (00:40:13):

Actually.

Paul Scanlan (00:40:13):

Yes. Yeah.

Jeff Annison (00:40:14):

<laugh> Yeah. Well, these are 60,000 people that, I mean, you have to give your social security number to invest. It's a high bar, first of all, which I think is really challenging for us, right? Yeah. And if you want to invest in Legion M, generally you gotta go to the site, you've got to make an investment, turn over all this information. Even in the film fund? Mm-hmm. Even in the film fund. You still have to do that. Because it's, it's all regulated by the SEC. So it's kind of like setting up a brokerage account someplace. It'd be

Paul Scanlan (00:40:40):

Easier to donate to the company than it is because it's shared and it's legit. Yeah. Like these people are going in our cap table and we're SEC regulated.

Jeff Annison (00:40:47):

I mean, we need your social security numbers so that we could pay you if we have an IPO. <laugh>

Kevin Goetz (00:40:51):

On these one-offs though, that's outside of the IPO offering. Yes. Yeah. On the one-offs, that's like for that particular movie, you're gonna get a check.

Jeff Annison (00:41:00):

It's a litle bit more than that. Is that true? No. It's, it's-

Kevin Goetz (00:41:03):

Well,

Paul Scanlan (00:41:04):

Yes, it can be.

Jeff Annison (00:41:05):

So the way that it works is you're putting your money into the film fund. The returns when they come back in automatically roll over to the next project. So if you do nothing, they'll just roll over from movie to movie to movie and in all of these, they're all P&A or distribution, it's last money in, first money out, conservative, but it is also liquid. So at any point you

Kevin Goetz (00:41:28):

Can- I was just gonna say, so why would I want to keep my money in there because it's sort of also like-

Jeff Annison (00:41:31):

Yeah, it also- You can elect to draw that. So you can elect to cash out and at that point we'll, we'll send you the money that we've got and if there's money still at work on a movie as that comes in, we'll send it to you.

Paul Scanlan (00:41:41):

Yeah. But the whole idea is to have compounding. So like, you know, the first project, we're gonna have about half of the money back from the first project in time to go in the second project within 12 months. And so, you know, ul- ultimately we'll have, you know, build this film fund up to be a kind of- See,

Kevin Goetz (00:41:59):

We need that. Yeah. And here's what I wanna- Yeah. I sort of for the third act of this- Yeah. ... podcast, I wanna kinda- Yeah. ... get into, which is the business has shifted so much from this small number of, of studios calling the shots- mm-hmm. ... very few decision makers in our business. Yeah. And then there's you guys who are the future, which is the creator economy- mm-hmm. ... which is people, normal the democratization of movies, of television, of entertainment in general, of gamification, all of it, YouTube channels, et cetera, need a platform or help to know what to do once they've made something.

Paul Scanlan (00:42:44):

Mm-hmm.

Kevin Goetz (00:42:44):

Because they're not getting it from those few people anymore. That's where people get nervous going back to the fear and the cynicism and the skepticism. People are nervous as, "What am I gonna do with my project? How am I gonna get it seen?" Yeah. "How am I gonna get it shown? How am I gona get money to finish it? How am I gonna get initial money?" So before we go on, in this creator economy, what do we tell the young filmmaker right now that is wanting to get into our business, wanting to market their movie that they've already made, that they don't already know?

*Jeff Annison (00:43:22):

You've gotta start with the end in mind. I, I'm always shocked at how many times people come in with something where they're viewing the industry strictly as art and I totally respect that. It is art and that's wonderful and people- But it's only part of the opening. Amazing stories, but you can't expect that the commercial part of the business is going to care about the artistic part. And so I think really it's understanding when I read scripts, it used to be that I would imagine like the key scene or something like that or now I think of the trailer because as someone that has experienced just how hard it is to get somebody's attention or get them to care at all about your story, being able to communicate that story in a brief period is I think one of the differences between success and failure when it comes to the commercial part of it.

Kevin Goetz (00:44:25):

Excellent advice, Paul, for you.

*Paul Scanlan (00:44:27):

I would be transparent with them and honest in saying that the industry is a lot more entrepreneurial than you think it is and that if your goal is to sell something to a major studio, be prepared to be let down. But if your goal and you have the wherewithal to, in a very entrepreneurial way, make shit happen. We met with Guillermo Del Toro when we started this company and I'll never forget, he left us with some parting wisdom when we were leaving. We were at his, his, uh-

Kevin Goetz (00:44:59):

What did Guillermo Del Toro say?

Paul Scanlan (00:44:59):

He's amazing. His bleak house, you know, where he writes and he's got all his- Where he's got all of his- Movie paraphernalia.

Jeff Annison (00:45:08):

His separate house from where he lives- Yeah. ...

Paul Scanlan (00:45:09):

Where he

Jeff Annison (00:45:10):

Keeps his collection.

*Paul Scanlan (00:45:10):

We spent a few hours with him on a Sunday afternoon. Before we were leaving, he said, "Guys, can I just give you one piece of advice, just one thing to know about this industry? You know, I love what you're doing. I think this is really positive and something that the industry needs." He said, "Just remember one thing," and then paused for like dramatic effect and he said, "Nothing happens." And we were like, "What? Like, what, what do you mean?" He said, "Nothing happens. Just know that in this industry, the tendency is nothing will happen." This was before Shape of Water, but he was still a very accomplished director. And he said, "You probably think it's easy for me to get movies made." Nope, it's a sheer act of will every time I have to make it happen. Nothing happens in this industry without people making it happen.

(00:45:58):

And I think that's true. You know, you need to have perseverance, you need to be-

Kevin Goetz (00:46:02):

Lawrence Olivier said to actors, "It's not enough to have talent." Yeah. "You must have a talent for talent." That is where I'm going to ask you to both just sort of comment as to the future of why Legion M is so important in this evolving world.

*Paul Scanlan (00:46:23):

So I did a TEDx talk on this and when we started Legion M, as I mentioned, we had a purpose and our purpose is to democratize entertainment. And I think as a society, a lot of us kind of underestimate the impact that having so much of our entertainment content, we all think of, oh, we have so much variety to choose from. But what we don't recognize is how narrow that band of decision makers is that are choosing what content gets made. And I believe, we believe that a community is something that is really, really valuable, not just in kind of democratizing entertainment, but making sure that entertainment is a reflection of society and not a molder of society.

Kevin Goetz (00:47:16):

You're so wise to say the word community. You need to engage people at the earliest stages. They need to feel ownership in something. Rick Roman Wad was a guest of mine here and he's been such a maverick in doing his own stuff and we talked about this idea of the, before you shoot a frame of film, getting community involved in your casting decisions in the look and style so that they become passionate advocates or evangelists early on. I always like to say, you can buy awareness. Yeah. You can't buy interest.

Paul Scanlan (00:47:51):

Exactly. Exactly.

Kevin Goetz (00:47:53):

Interest is- That's

Paul Scanlan (00:47:54):

100% right.

Kevin Goetz (00:47:54):

... organic and earned and can't be manufactured.

Paul Scanlan (00:47:57):

And if you're authentically listening to the community, this is one of the things that I think, you know, Jeff and I are a little bit surprised at the distance that the decision makers in Hollywood keep from the fans, you know? And everyone says they wanna understand the community and they wanna know where the fans are going, but very few companies genuinely engage those fans and try to, like, learn something-

Kevin Goetz (00:48:21):

How do you mostly engage them? Jeff, how do you mostly engage your f- your community?

Jeff Annison (00:48:26):

It starts with being transparent with them. It starts with treating them as partners as opposed to consumers. It involves giving them a seat at the table.

Kevin Goetz (00:48:37):

What does that actually mean?

*Jeff Annison (00:48:38):

So we do, we have countless tools that we've used over the years to try engage sentiment and to choose our projects. Mm-hmm. So when it comes to ... We talked about Coyote and that was an outlier because it's one of the very few projects that we didn't run an impulse survey for, but we're constantly surveying people. "Here are, here are 20 log lines and tell us what you think. Rate them from one to five and tell us, you know, dig deeper on this. "And it, it, it's, it's, within those 20 log lines, there's probably three or four of them are actual projects that we're considering and the rest of them are just control group. We're doing the same thing with directors and with talent and we have a, we have a, an app called Film Scout that we use to help us navigate films at a film festival.

Kevin Goetz (00:49:26):

I have a product just, you know, called Fest Eval, like Festival. Oh, yeah. Fest Eval. And it in advance pulls 1,000, 2,000 people about the concepts- Yeah. ... of these movies that will be on the schedule at Sundance South by Southwest. I'll sell it to an executive going to a festival when they can only see eight or nine films. Yeah, right. That's a fundamental challenge. And we could say these are the ones that have the most what we call capability- Yeah, exactly. ... the ones that will resonate most with an audience. Yeah. Yep. Therefore, put your energy on. Genius.

Paul Scanlan (00:49:58):

Yes. You are a

Kevin Goetz (00:49:59):

Genius. It is genius.

Jeff Annison (00:50:00):

Well, so- No, true. What we did with ours is we've gamified it because we ask people two questions. The first one is we ask you, what do you think of these movies? Then we ask you, what do you think everybody else is going to think of these movies? And so it's interesting because the first question, your opinion is just as valid as my opinion and that's data. But asking you to predict what do you think everybody else is interesting because we all think that we have our opinions, but it stands to reason that some people have their finger on the pulse. And so we have, at the end of the festival, we release a leaderboard that tells you how good you were at predicting-

Kevin Goetz (00:50:37):

One of the entertainment trades does a poll of, what do you think this movie's going to open in the rain? Yeah, it's Sean McDonald. It's Sean McMillan. Oh, Shawn, yeah. He's very smart to do that. Yeah. What have you, Jeff, what have you learned about grassroots marketing that traditional studios may have overlooked or are overlooking?

*Jeff Annison (00:50:55):

It's a great question. After reading your books, I feel a little unqualified to answer that because I've never worked in a major studio and I want to assume what they're doing. But I think to me, one of the biggest reasons why people go see a movie, like you think of like, oh my gosh, it's the Odyssey. I've got to see that on the biggest screen available and with the sound, and everybody gets that. But I think one of the biggest things is you go see it because that's what your friends are going to see. I grew up in an era where we went to the movies every Friday night and it wasn't because of the fact that we needed to see this movie on the big screen. That's what we did on a Friday night.

Paul Scanlan (00:51:31):

Part of your behavior.

*Jeff Annison (00:51:32):

And I think there's so much opportunity to build theatrical events around community where people are showing up at a certain night or whatever to go see movie, not because they need to see the movie. We're all surrounded by content. We can see the content whenever we want, but because that's where our friends are and that's where the games are and that's where I'm just going to have a good night out with people.

Kevin Goetz (00:51:59):

Do you think the studio model is going to continue the way it is?

Paul Scanlan (00:52:02):

I think it's going to evolve and one of the areas that I think there's a kind of aggressive need to evolve is, and I think Kevin Smith was famously quoted as saying, you know, the most expensive part of releasing a movie is not producing the movie, it's marketing the movie. And I feel like there's a lot of waste in marketing today, you know, and most of these films do the best job that they can in marketing and finding people and building that awareness, but a lot of that money is wasted.

Kevin Goetz (00:52:34):

Can this model scale up to a studio?

Paul Scanlan (00:52:36):

I think it can, yeah. So our goal, it's built into our logo, which is M with the bar over it. That's the Roman numeral for one million. Our goal is to unite one million entertainment fans to co-own the company and even at 100,000 or 300,000, I mean, you see what Angel Studios is able to do. We have a pretty good idea of what our impact is on a project and it's really valuable today. It's the reason why Coyote wants us involved in their project. It's the reason why Bleecker Street wants us in on Facham Hall. If we can multiply that and we know it does grow with scale as we continue to grow and at some point we're going to take the company public and our shareholder base is going to grow exponentially. That impact is so essential because if you get to a point where you can drive millions of dollars in box office without spending a dime on marketing, right?

(00:53:26):

For us to communicate to our community doesn't cost us a thing. We send them emails, we post on our social media, we interact with

Kevin Goetz (00:53:34):

Them- And they're essentially doing the work for you.

Paul Scanlan (00:53:36):

Well, but they wanna know what- What coming up? What can I go see? Yes. Yeah. They're gonna go see, they're gonna gather their friends, they're gonna, you know, see the movie and if that, if that's five million or 10 million dollars, you, you've done two things. Number one, you've absolutely, absolutely fundamentally changed the downside risk. And this is one of the things in Hollywood, right? You've increased the upside scenario for sure, but most people like when a film hits, yeah, if you could get an extra five or 10 million dollars, that's really important. But when a film doesn't hit, that's when it's really important to like have that, that downside scenario. And I think, you know, we're, we're more excited

Kevin Goetz (00:54:19):

Than- I call it thing really risk mitigation.

Paul Scanlan (00:54:21):

Yeah. That's what it is.

Kevin Goetz (00:54:22):

Yeah. It's risk mitigation and understanding your audience at the- Yes. ... at the, before you go get involved in anything. Yeah. Yeah. And that's where we really share DNA. Yes. I think that's the reason ... I know it's the reason why I invited you onto the podcast- Yeah. ... is because we do share that. We share respect for the audience and knowing that if you can identify the size of the audience and the intensity of interest in something- Yep. ... you can comp better. Right. You can make better business decisions. Last couple of questions, Jeff, what keeps you up at night? <laugh>

*Jeff Annison (00:54:54):

Yeah. The fact that we're a small startup company that didn't raise 50 million dollars in venture capital, I mean, I think you mentioned earlier how much anxiety there is today about the future of the industry and like that's everybody feels that and it's, it's not just this industry, it's everything with AI, like nobody knows what's, where we're gonna be- No one knows. ... three or five years from now. Yeah. But I think aside from that, the, the thing that gives me comfort in the middle of the night is this belief in the power of the audience because at the end of the day, we work in this crazy messed up industry, but it is entirely powered by you and me and the people that buy the tickets and decide what to watch full stop. And so we believe that someday AI is gonna maybe write all the s- content and it's gonna be piped directly into our brains, but even if that happens and even if robots someday make all the movies, only human beings pay to watch movies. And we think that if you can build a company, if you can be on the side of that audience, it's the most defensible place that you could ever be.

Kevin Goetz (00:56:05):

That's a genius crystallization, I think, which is at the end of the day and people smell authenticity, they smell humanity, they smell the reality of it. You can't manufacture that, right? Mm-hmm. That's really smart. Paul, last question for you is, if this works the way you envision it- mm-hmm. ... what does Hollywood look like 10 years from now?

Paul Scanlan (00:56:27):

First of all, we're very confident we're gona make Legion M work. You know, like, I mean, we're entrepreneurs, so we're

Kevin Goetz (00:56:33):

Always optimistic. Oh, has it been now?

Paul Scanlan (00:56:34):

It's been 10 years.

Kevin Goetz (00:56:35):

You know, you get over your first year, then the first three years, then the five. After that, you're pretty much made it work and so it's like, how do I evolve it, right?

*Paul Scanlan (00:56:44):

Now it's, now it's how do we, how do we kind of confirm that it works? You know, we started it as an experiment and then confirmed that it can work and now we're consistently proving over and over that it continues to work and we wanna scale it. I think how Hollywood looks, I think it's impossible to tell what AI's impact is gonna be on the industry, but like Jeff said, we don't chase trends. We try to be ahead of the curve and kind of thinking through the next evolution and I believe that we're not the only company that's gona do this. I think Legion M is gonna be one of the leaders, but I think 10 years from now, there'll be many companies doing what we're doing. It's kinda like when we first introduced MobiTV and people were like, "Oh yeah, this is a cute little part of the industry and now it's everywhere." And I think it's gonna be the same way. I think even the major studios will probably wake up to this and start realizing that like, "Oh, wow, you know what? We should be more fully engaged in understanding what the community wants and maybe even giving them an opportunity to invest."

Kevin Goetz (00:57:53):

In my book How to Score in Hollywood- Yes. ... I do have a theory, of course, and I just wanna get your final opinion on it, which is every movie, if made and marketed- Should make money. ... for the right price should make money. You believe that?

Paul Scanlan (00:58:03):

In theory, I do. Yeah. And I, I love that model. Like this is one of the things that, that Jeff and I, kind of what I was describing earlier, which is, you know, yeah, of course we believe in the upside and we wanna have as many hits as possible, but we also don't believe that we need to factor in many flops and a few winners, that we believe with the community that we have that everything can work and then some things will really work like-

Kevin Goetz (00:58:31):

That's how I feel. Yeah. Especially with what you have. Yeah. I think that my theory works particularly well with your business- Yeah. ... because there should be no reason- Right. ... why you lose anything if you're listening to your audience. Yeah. Jeff, Paul, thank you so much for joining me today. This has been a really enlightening discussion and a very much in the weeds conversation. Mm-hmm. And I've gone pretty long here today because it's not a superficial sort of thing to unpack- mm-hmm. ... and I want people to really get a sense of just how important what you're doing is and, and h- what visionaries you are. So thank you so much. 

Paul Scanlan (00:59:11):

Oh, thank you.

Jeff Annison (00:59:11):

Thank you for having us.

Paul Scanlan (00:59:13):

We feel the same way about you, Kevin. We're really big fans and, you know, your, your books and your podcasts are an inspiration to us and like-

Jeff Annison (00:59:20):

My, my only criticism of your book is that you didn't write it 10 years ago. <laugh> So we could've read it when we started the company. Yeah, exactly. <laugh> We would've saved a lot of painful lessons.

Kevin Goetz (00:59:30):

I'll one up you on that. <laugh> I wish I wrote it 20 years ago- Yeah. ... when I was coming up in my business. Yeah. And I tell people that, like, even if you're not in the movie business, it just makes intuitive sense. It's like, you know, snap out of it for Moonstruck. Right. Yeah. Right? Yeah. Listen to your audience. Yeah. Thanks, guys. Thank you.

Paul Scanlan (00:59:48):

Thank you.

Kevin Goetz (00:59:51):

To our listeners, I hope you enjoyed this conversation. For more insights into filmmaking, audience testing, and the business of Hollywood, I invite you to check out my books, Audienceology, and How to Score in Hollywood at Amazon or through my website at KevinGoetz360.com. You can also follow me on my social media. Next time on Don't Kill the Messenger, I'll be joined by veteran studio executive and producer, and a truly important figure in our industry, Sid Ganis. Until then, I'm Kevin Goetz and to you, our listeners, I appreciate you being part of the movie making process. Your opinions matter.

Host: Kevin Goetz
Guests: Jeff Annison and Paul Scanlan
Producer: Kari Campano
Writers: Kevin Goetz, Darlene Hayman, and Kari Campano
Audio Engineer: Gary Forbes (DG Entertainment)