Manage episode 182674784 series 1294651
David Noël-Romas: Welcome to the Manitoba Business Podcast, featuring interviews with business leaders and entrepreneurs based right here in Manitoba. I’m David Noël-Romas.
This episode is brought to you by my small business, Black Chair Consulting. We use social media to help businesses sell more. To find out about Black Chair, visit www.blackchair.net.
Today’s guest is phenomenal. He and his business partners developed one of the most important companies in our local film production industry, and eventually established offices through North America with hundreds of employees. He’s got some really great advice on how business leaders need to position themselves relative to their competition. I hope you enjoy our conversation.
If you do, please tell your friends about the show. The show is available on all your favourite podcast platforms, including iTunes, and a transcript of every episode is also available on our website at www.manitobabusinesspodcast.com
Now, without further ado, here is Jamie Brown:
[to Jamie] So, Jamie, thanks so much for taking the time.
Jamie Brown: My pleasure.
David: How about we start by having you tell us a little bit about who you are and what you do?
Jamie: Sure. My name’s Jamie Brown and I’m the CEO and Executive Producer of Frantic Films. We are a producer of film and television shows out of offices in Winnipeg and Toronto.
David: Awesome. How long have you been doing that?
Jamie: I have been here at Frantic for 17 years. I was an entertainment lawyer for about seven years before that. And that’s how I ended up in the industry.
David: Cool. So rewinding then a little bit because I think Frantic has been around for…like you weren’t here right when it started, right?
Jamie: Correct, yeah.
David: So tell me a little bit about how Frantic started and then I’ll be curious to know how you kinda got into it.
Jamie: Sure. Chris Bond and Ken Zorniak were high school friends and had an interest in computer-generated images, CGI, which are the things you see, of course, in various iterations, TV commercials that have graphics, digital effects in movies and television. And when they started, it was really just the two of them and grew to have a few guys working out of a small office doing local TV commercials. And I met them because I was working at a company called Credo that wanted to acquire Frantic. So they sent me over to…I was a younger person in the day back at Credo. And Ken and Chris were closer to my age and went over and talked to them about that and learned about their business. And I thought they were doing some fantastic things and they were trying to grow their business. And they felt I would be a great addition to the company. So I joined when we were quite small and we had quite a ride as the company grew from that handful to over 200 employees over the coming years.
David: Wow. Doing a bit of research, I learned that in your first year as CEO, you more than tripled the profits of Frantic. What happened there?
Jamie: Well, there was a couple things. I brought the television production side to the business. And the revenues on that, in that side of the business were significantly higher. So that alone, just bringing…I had done a show called “Pioneer Quest” at Credo. And it was successful and the network ordered a second show called “Quest for the Bay.” And it had about $1.5 million budget. Frantic was at about $500,000 in revenue at the time. And then there were some great synergies that existed. And that was part of what we thought we could do together is I could bring television projects and other shows that needed visual effects. They could provide amazing visual effects to the shows we were doing and enhance what we were trying to do. The product cycles–or project cycles, rather–for digital effects are different than for TV production. TV production could go over about a year for our “Quest” shows. A visual effects project might be a few weeks. So it helped level out the kind of ups and downs of the revenues coming into the company, as well. So it was sort of some nice synergies that helped grow things, as well.
David: Interesting. How does that work? I mean, I guess I have some questions about the business model in general, just for my sake. You know, I don’t understand. I’m not part of the industry at all. So with the TV production revenues, the networks are paying a producer to put together…like how…who’s paying for what and what are the different roles?
Jamie: Right. Well, when we have an idea for a television show, we’ll pitch a network and hope that they think it would be a good fit for Food, HGTV, CBC, or whoever it is we are pitching the idea to. If they like it, they will license the show for a number of years. And the license fee can range anywhere from 30 to 60% of the budget. And then it’s up to us to go out and put the rest of the money together. That might be another sale to a US network. So HGTV US might come into the picture as well. It could be a distributor of television programs who thinks they can sell them around the world and will advance us a bit of money on that. It’s called a distribution advance. That can go in a finance structure. There are federal and provincial tax credits. If the project is eligible, that can fill it. There’s some discretionary funds that you can apply to. So a lot of television production is being creative in putting together the financing…
Jamie: …from various sources.
David: Okay. Cool. And my understanding is that you also do…in addition to producing shows, you produce other kinds of content, right, like branded content and stuff like that?
David: How does that fit into the business model at Frantic?
Jamie: Well, at our core we’re content creators. It’s sounds a bit silly to say storytellers but that kind of is what you wind up doing in most forms of audio/visual content that we’re working on. So if, as an example, we would…we did a documentary about the return of the Winnipeg Jets, which was a fantastic opportunity. It was a great story. It was for CBC and for national broadcast. But Jeff Peeler, our President of Production here, who had came from a commercial background was asked by Cadbury to do a one-hour documentary about a bike program they have where they get used bikes from Canada and send them to Africa in some of the communities they work with there. And bikes are really important as transportation and to allow people to work. So they wanted to do a documentary about that story. So that was fully funded by Cadbury. So that would be a branded content.
David: I see.
Jamie: It initially wasn’t going to be broadcast. It was going to be used for Cadbury’s purposes worldwide. And they would own it, that would be their piece of content. So we’ve done things with Coke and we’ve done things with Proctor & Gamble that are shorter where companies are, of course, always have the 30-second ad that they can do. And we’ve done some of those over the years. But as people skip ads and PVR and look for content on other platforms, companies have wanted different ways to get their message across. And they have come to people like Frantic to say, “Well, you do a good job telling a story on television. Why don’t you help us tell a story or find a creative way to get our brand out there without people saying, ‘Oh, it’s just a commercial, I’ll skip it.’?”
So brand integration or creating an event…we did something with a Coca-Cola drink called NOS where they got young people to customize golf carts, supermach them and race them around. And it was an energy drink. It was targeted at a young demographic. So rather than an ad that just kind of, you know, sent their message across directly, they wanted to create something that could go viral, that people in that demo would actually watch and might enhance how they thought about that brand.
David: Right. Cool. Okay. I want to rewind a little bit to sort of the beginning then. So you came in as CEO. And you had some television work that you brought into the company which helped with revenues and profits. What were kind of the next steps? What were your initial focuses in those few years, the first few?
Jamie: Well, the big thing for us was to get out and market the skills of the company. And primarily to get to the US. Ken and Chris really wanted to do feature film digital effects. That was what their interest was and their passion. And both of them are highly, highly talented guys. And Chris Bond was out on chat groups in visual effects worldwide and had a very positive reputation because he was so smart that he, and so good at what he was doing. And people were like, “Who is this guy? And where is he?”
And visual effects is a very global business and we had lower costs in Manitoba. We had a lower dollar at the time. It’s since went up and gone back down but it was about $.70 when were out there. So we felt we had a real value proposition. We had the talent and we could do it at a lower price. So the next step was to get on planes, fly out to LA a lot. All three of us spent a lot of time going down and trying to convince them that they could trust us to do the work.
And part of my role was Ken and Chris were a little younger than me and Chris is an artist. So going into Warner Brothers and meeting with the senior executive there, who’s wearing a suit and tie, Chris is wearing a hoodie and jeans…
David: So you had to be the suit.
Jaime: …and Ken was somewhere else. So I had to be the suit. Yeah, I had to be the guy that they could say, “Well, we’ll give you a couple million dollars. And we’ll trust you guys to do a good job,” but definitely, you know, Ken’s a smart business person as well, very organized and helped get the teams in place, the computers we needed, the software we needed. So it was a really good partnership to work together. We also benefitted from a technologic change. And that was part of what made me decide to join Frantic.
It was a high-risk proposition. My wife and I had two of our three sons, a big mortgage, a bunch of student loans. And going into a small company that didn’t have a lot of revenues and didn’t make any profit was…my wife was not entirely sold on the idea at the time but thankfully trusted me on it. But what was happening was visual effects are done on computers. As we all know, computers become more powerful and decrease in price. And that was especially the case 20 years ago.
So what they were doing is at that time, visual effects were done on million dollar machines called Flames or Infernos. So you needed a lot of capital to be in that business. But what they were doing to simplify things is sequencing two or three personal computers like Volkswagens being hooked up to become a Ferrari for a fraction of the cost. So I saw what they were doing putting these together. They were buying computers off the internet, which was completely foreign to me at the time, that you could buy anything. So they were already advanced in thinking that way. They had the technological capability to put these together. So, you know, so I said, “What would it cost you to do what a Flame or Inferno would do?” And they were like, “Well, under $1,000.”
Jamie: Yeah. That’s what I said.
David: Orders of magnitude difference.
Jamie: Wow. Wow. So now we’ve got the Ferrari. Now we just need a driver. So do we have people who can use this? And the software that was being used is off-the-shelf software, Flame and Inferno with the machines but Maya and 3D Studio Max and these other pieces of software that I’m sure anybody listening to this who’s in the visual effects business is gonna say, “He’s been out of this for a long time,” because I’m sure those are out-of-date. But that’s what they were at the time. So you had the software, you had the hardware and the capability.
And Winnipeg is full of phenomenal artists and creative people. And because the software was evolving as well, an 18-year-old with a passion for visual effects who opened the box of Maya, stuck it in the machine, and started learning it and working through all the tools could become as capable on that software as a 50-year-old guy who started back in the day. And that again allowed us to be competitive to do the work with the team that we had available in Winnipeg.
David: Cool. So you were flying around Los Angeles. You had this technological advancement that enabled you to get an edge in the pitches. And you got some work, obviously. What did it look like…as someone on the team, what was the, you know…it sounds like you were kinda focused on scaling then for the next several years. What kind of growing pains did that introduce?
Jamie: The big one was cash flow. And I knew well enough from, you know, my background and from reading…I studied a lot about how to grow a small business and the things you have to be careful of and how to hire and how to do HR policies. And I tried to…I was the CEO from day one so I was responsible for that. And you know that cash can kill a company, a fast-growing company. So…and we had a small line of credit. The bank wouldn’t give us a bigger line. And as you grow and you need to, you know, take more office space and more desks, even if the computers are relatively inexpensive, there’s a lot of capital costs. Plus you get more people on the payroll. And every two weeks you gotta come up with $50,000, then it’s $100,000, then it’s $150,000. And you have a couple of near-death experiences where a studio’s accountant who’s supposed to sign the check is away on vacation for two weeks and you’re not getting the money you need. And all of a sudden, you’re in a real bind. And you’re running around figuring out how you can pay your bills on time. So the first thing we did is I went out and did a mezzanine debt deal with…
David: Oh, interesting.
Jamie: …for $2 million too which is a kind of, you know, a loan with a warrant attached. It’s a bit of a hot [inaudible].
David: So it’s kinda mixed between a debt and equity financing, right?
Jamie: Yes, and a bit of a warrant kicker on the loan. The interest rate is a little higher than you’d get on a line but it wasn’t too bad. And that gave us $2 million to manage for a period of time. But of course, we kept growing. And then we realized we needed another…we opened an office in LA and we opened an office in Vancouver. We were in Toronto and, you know, we’re building and growing. So then I went out and raised $5 million in private equity from a Toronto private equity group called Privek, who were fantastic partners to the company, great people. And that gave us the ability to focus on doing the work and moving forward as a company and not panicking, our poor CFO panicking about, you know, how we were going to get somebody to pay us faster so that we can keep everybody happy here.
So it was, that was a real challenge. We had to…at the same time, no business is gonna grow unless you’re doing quality work. So we had to make sure that we did everything we could to, you know, delivery absolutely fantastic work. And Ken and Chris had worked on a Stephen King TV project called “Storm of the Century.” Ironically, they did CGI snow. I mean, Winnipeg company, figured we’d get that right. And the visual effects were nominated for an Emmy.
David: Oh wow.
Jaime: So that was great for us but also the visual effects supervisor, a guy named Boyd Shermis, his next project was visual effects for a movie called “Swordfish” with John Travolta and Haley Berry. And it was a Warner Brothers movie, very high budget. And they had an opening visual effects scene, which became quite famous, certainly at the time because it was quite ground-breaking. And it was 42 seconds of spectacular visual effects. And Boyd gave us that shot because we were the only way he could do it for the budget he had. Even on those big-budget shows, the studio set limits. And so that basically, just doing that 42 seconds, took the entire company a full year to do the work.
So and we did…we, they I would say because I was not sitting at a computer creating, they did a spectacular job. They really just over-delivered hugely. And we knew we needed to. It was our first big feature. We had to…it wasn’t about the money, it was about doing phenomenal work. And that gave us the reel to show to other networks or other studios and say, “Look at what we can do.” And no one could then deny that we had the ability. So that really launched things.
And we ended up going onto, of course, X-Man movies and “Paycheck” and all kinds of major studios. We had the premature of Warner Brother saying, “Yeah, these guys are approved suppliers. They did a phenomenal job.” And you can just show them the work. And, you know, we said, “You bid for the work.” And, you know, we had an advantage. We were here and our costs were less, so we could be very competitive in that area.
David: Would you say that that kind of approach of taking a hit on the first one and just knocking it out of the park, that seems kinda like a pretty important piece to me of any business. And a lot of businesses shy away from that. They want to be…they want to make sure that they’re being profitable right away, they want to be conservative. Would you say that that’s kinda like, you kinda have to do that if you want to really be successful down the road?
Jamie: I think it’s really critical to do it, that the fortunate thing for us was we over-delivered with a budget that still allowed us to pay everybody and make a little bit of money.
David: So you didn’t actually take a loss on it.
Jamie: We didn’t take a loss. Probably if you added up the hours Ken, Chris, and I put in, had we actually been on an hourly, we would have gone backward.
David: Right, but you were work 100 hour weeks.
Jamie: Right. Exactly, so, but it was…and we were very excited about it. We were really…
David: Of course.
Jamie: …pleased with what we were doing. And we knew it could open doors. But you’re right. I mean, I think that especially when you are…somebody’s taking a chance on you and with your new business, whether you’re providing a photocopier or paper or a delivery service, they’re taking a chance on you. You’re not a brand yet. They don’t know you. You may present well, you may have a good pitch. But you’ve gotta prove you can do it well, gain their confidence and trust. And that is the number one thing. So not delivering and apologizing means you probably won’t get the business again, especially when you’re new. And that’s fatal to a business that’s starting up when…and especially now in…you know, even if you’re in a retail business where you don’t rely on a fewer number of big clients, social media, word-of-mouth, you know, Yelp, another rating. You know, that kind of thing can really hurt you.
So yeah, I think you just…you need to be responsible and make sure you are paying your staff and complying with the Employment Standards Act, which we did. We made sure everybody got paid for the time they had properly. But it’s not about profit margin. It’s not about wowing somebody with, “Look how much money we made in this first year.” Breaking even’s fantastic.
David: Right. At a tactical level, what were you doing to get those early pitches with the studios and the networks when you didn’t have a brand? And then once you did establish a brand, how do you maintain those relationships?
Jamie: Mm-hmm. Well, the first part was just hustle. It was just calling…
David: Calling up and [inaudible].
Jamie: Calling, calling, calling, showing up, asking for the meeting, you know, tolerating that your meeting got postponed, canceled. You flew all the way to LA and they canceled the meeting. So, you know, you feel kinda like, “Wow. That was lousy to do that,” but, you know, you just suck it up and you get to the next meeting. And when you get in the room with them, you know, we had to make sure we were really clear on our pitch and our value-added. And, you know, there was somebody in our team at the time who, we were talking about our value proposition. It was said, “Well, we’re the best.” And I said, “Well, we’re not the best.” And they were kinda offended that I would suggest that.
And I said, “Well, we’re not. George Lucas has ILN. They’ve got 1,000 people working there. We’re not them. We’ve got 80 people,” or whatever it was at the time. “And we’ve done some good work. That’s not the pitch. The pitch is we’re good. We’ve even very good.” That’s great and they could see that and I think that was true. But, “What else are doing here? Why us over the guy down the street?” And that was price. We could offer more, we could do more. And whether it was we’ll lower the price to do the same job of whether we’ll do it for a little bit less but do a lot more for you because we think…and that’s where Chris was great.
Another thing that helps a lot in Hollywood is confidence. And even though Chris was probably 27 years old, he knew so much about visual effects, he would say to a studio, for example, I remember one time we were at a meeting. And the person, the executive there, was talking about how they were going to do the visual effects. And Chris said, “You know, that’s totally wrong. That is totally the wrong way to do it.” And, you know, you have that momentary like heart attack where you’re like, “[Inaudible].” And this guy was taken aback. And he’s like, “Well, what are you talking about?” And Chris told him why he was wrong. And he was like, “Yeah, you’re right actually. You’re right. That is how we should do it.” Well, those kinds of moments can turn the whole dynamic, right?
So it wasn’t that we didn’t know what we were doing. And it wasn’t that we were very good. But we could also say to that executive, “Look, we bring more.” And Chris said, “Look, if you do it this way, I can make it look spectacular, not just good. This will look okay but this could look amazing. And we could do that for, you know, 10% more.” I’m making up what the number was, “But spend a little more. And you could have something fantastic here.” So it was a combination of things.
David: Hmm. Very cool. Once those relationships were established, what was…I mean, you mentioned setting up an office in Los Angeles. I assume you had sort of some account people that were just responsible for bettering those relationships or what…how did that work?
Jamie: Well, what we realized early on was that, you know, nobody could represent us as well as the partners could. And we had the passion and we understood the business and we knew all of the elements. And we didn’t have a lot of money to hire a senior sophisticated person who could deliver like we could. So that just meant that for the first while, among the three of us, we were down there a lot. We also did a little…I think enough years have passed that they wouldn’t be upset but we did a little slight of hand in that we…I had the idea…because if you’re not local in Hollywood, they’re kinda like, “Who are you? Where are you from?” And 310 is the area code in L.A.
And so what we did is we got a phone…all of our business cards had a 310 phone number on them. And…but we didn’t have an office. So we had a number that automatically forwarded to Winnipeg. So when the agent wanted to phone us, he dialed a local number. It would ring here in Winnipeg. The receptionist or whoever would pick up and say, “Frantic Films,” not, “Frantic Films, Winnipeg, Manitoba.” So from their perspective, we were local. And if they ever said, “Well, can we meet in like, I don’t know, like a couple of days?” we wouldn’t go, “Oh, you know, I’m in Winnipeg. I wasn’t planning to be down for another three weeks. Could we do it then?” We would just get on a plane and go immediately and say, “Sure. Thursday, Friday, Monday, whatever, I’m there.”
And so we did a lot of that. And then as we got busier and busier and we’re traveling more and more and we had…we were running out of artists in Winnipeg. We decided to open the L.A. office and Chris Bond decided to move there. So he ran the L.A. office, he was on the ground. We had one of our key people who really knew and was totally vested in the company. And that was Rick Simms. We ended up with about 30 employees in L.A. and still more expensive there, no tax credits. And…but we had a local operation and a lot of the work could still be done here. But if a director or visual effects producer wanted to come down and see it, sit over the shoulder of the artist, they could. And they could see what we were doing.
David: What was the timeline for that? When did you guys open the L.A. office?
Jamie: Well, I’m so bad at our own…our website has our whole history and all the chapters set up. But it was maybe four or five years after I joined I think.
David: Okay. So around 2004, 2005.
Jamie: I’m guessing, yeah. I’ll fact check and it will be wrong, but…
David: I know that in 2007 some big stuff happened. You guys sold off a chunk of the company. What was that all about?
Jamie: Once we got over 200 people in digital effects, we got into kind of a no man’s land in the visual effects world. We were not nimble and small anymore. So we could take on a small part of the movie and the visual effects and price really aggressively. And we weren’t big enough to take on an entire movie or a huge number of the visual effects shot. And we were competing with, at the time, Rhythm & Hues, Digital Domain, IOM, who all had between 700 and 1,500 employees. So we were kind of at the 200 and some. And it was causing a lot of problems for us. And there was a recent Freakonomics podcast just in the last few weeks about why Rhythm & Hues went bankrupt and why Digital Domain went bankrupt…
David: How interesting.
Jamie: …and why digital effects is such a terrible business in many ways. Well, we were living that at the time. And it’s an excellent podcast because it is absolutely correct in what…how it works and why it was so difficult to make a viable business. So what happened was we were put in a position where we either had to put all the chips on visual effects and if it didn’t work, we would go down or go back to being a boutique. So close the offices, lay off 150 people. And neither of those were very attractive options for us.
David: Of course.
Jamie: And the way life goes sometimes, while we were doing our deliberations and trying to model how we could make this work better, we got a phone call from a company called Prime Focus. They were the biggest post-house in India. I think they still are. They had just bought three visual effects companies in London, England, in Soho. They wanted presence in North America, they wanted somebody who had worked on big movies and done great visual effects. They wanted someone, a company that could work remotely. They wanted a company with an L.A. office right in…so we checked all the boxes.
Jamie: So they solved a number of problems for us simultaneously. All our staff kept their jobs, all of them got new opportunities. Their acquisition allowed the whole visual effects operation to be more competitive because they had artists in India and L.A. and Winnipeg and Vancouver. They also bought our software that we had developed. Our private equity guys got some money. Ken, Chris, and I got some money at the time, which was great. Everybody kept their job. And the company was much more stable.
So it was a nice solution for everybody and it left Frantic with a TV commercial and a television business. And not that film and television is the greatest business in the world. I just saw Chorus’ financials this morning and I’d rather own channels than be making the shows for the channels. I’ll just leave it at that. But it was the TV business was a better business than the visual effects business. So we then were able to focus our energies on building our TV business, which we did. We went out and acquired a library of shows, we went and acquired another production company in Toronto and grew the business. And just recently, Frantic was sold to a company called Q Media just in the last few weeks.
David: Oh, wow.
Jamie: So that’s kind of now the end of that chapter.
Jamie: We’re now part of a larger, publicly-traded company, part of kind of a number of deals that came together.
David: Very cool.
Jamie: And Frantic will continue as a subsidiary of Q Media as is. There’s no change to management, there’s no change to our mandate. And, you know, again, no jobs being lost, which is always important to me when these things happen. And again, strategically it’s great for us because the TV business has always been an international business but for a number of reasons I can elaborate on but suffice to say, the networks are paying less for shows, it’s tougher than it was 10 years ago. And the benefits of being part of a larger international entertainment company makes Frantic a stronger competitor in the marketplace.
David: Very cool. I want to get back to that acquisition. It’s interesting. It’s something I missed out entirely on in my research but in terms of right now, Frantic itself, what’s the size on the employees, offices, etc?
Jamie: Two offices, Toronto and Winnipeg. We have about 100 or so people working for us right now. But it really varies because a lot of the people who work are directors, editors, camera people…
David: Oh, okay. So then it’s very much contractor-project based.
Jamie: …but our shows…like a series might shoot for six, eight months. And if it’s renewed, then it just keeps on going. And so our “Still-Standing” series is starting its fourth season. “Baroness Von Sketch” is starting its third season. The Winnipeg Comedy Festival, I think we’re in our 10th season. That’s shooting this week. We’ve got a new show called “Backyard Builds.” It’s premiering tonight actually on HGTV. It’s its first season. We’re hoping it does well.
And so then your larger team of editors are always busy. We’re doing two crime recreation series here in Winnipeg of 102 episodes each. So that’s 204 episodes of television, a huge volume. We have 70 people or so just here in Winnipeg on those series and they’re gonna go for a year. So it goes…when those end, we don’t replace them. Those people will move onto the next project that they might want to work on.
David: Right. Interesting. Are Ken and Chris still involved day to day?
Jamie: Not at all. When we sold the visual effects business, they went with Prime Focus.
David: Oh, I see.
Jamie: Yeah. And Ken ran visual effects in L.A. Sorry, Chris ran in L.A., Ken ran the operation here in Vancouver. And it didn’t really make sense for them to stay. So we actually bought their shares in Frantic and they kind of went forward. And actually, another interesting story is that Chris ended up buying the software part of our business back from Prime Focus when he left. And just in the last month, he sold that software business to Amazon.
David: Oh yeah. Very cool.
Jamie: Yeah, it is cool.
David: Good for him.
Jamie: Yeah, it is good for him. And he’s a smart cookie. There’s no question.
David: Oh yeah. Wow.
Jamie: He has a very easy-going manner and a great sense of humor, but, you know, he’s also a very smart business person.
David: Okay. So back to the Q Media acquisition. How did that come about? Did they reach out to you or…
Jamie: Yeah. They reached out to us. Q is a new company. Again, I don’t know how far into the details your listeners might want me to go but they were structured as something called a SPAC, a Special Purchase Acquisition Corporation.
David: Oh, interesting.
Jamie: It’s a new way of raising money to do primarily consolidations in a certain area. So they raised $70 million to go bring some media companies together. They believe that as I was alluding to, that as a group you’ll be stronger than a series of smaller companies across Canada and internationally. So they bought a British company that in turn owns five other production companies in the U.S. and five other Canadian production companies and brought them all together under this umbrella.
One of the co-founders of Q has been on the Frantic board for nine years. So he knew our company extremely well. He knew what we were capable of and wanted us to be part of it. It was also time for our private equity guys to exit. You know, they’d come in for a while and then they gotta go. So somebody had to give them the money to go. And we thought about a management buyout. I thought about a management buyout. But a management buyout did not solve the problem of being more competitive as part of a larger group.
So it made more sense for everybody to sell to Q. And the SPAC closed. There have been a mixed bag because with this new structure, but Q has been…I think it’s fair to say the most successful SPAC so far. It closed with excess funds and brought everything together. All the companies closed. And as I said, it’s just a couple weeks old. The reason your research didn’t pick it up likely is just because it’s quite new.
Jamie: Yeah. So now we will, you know, focus on–as it is with a lot of companies–focus on delivering what we have on-the-go. And we’re super busy right now. So that, you know, requires a lot of our energy. But find ways to collaborate with our new sister companies, look for synergies. We are talking to the L.A.-based production company that does a lot of lifestyle stuff that we do. We’re talking to the UK-based distributor about some of the format ideas we have, they have, and trying to leverage these new partners we have to make Frantic stronger.
David: Right, because that’s potentially a whole bunch of new opportunities.
Jamie: Absolutely. That’s the goal, yeah.
David: Very cool.
Jamie: And, you know, to the extent that something comes along for Frantic or for all of the companies, we have access to capital where…it’s not the case but just to use a simple example, if there were an advance in editing equipment that would allow us to do everything better but we just needed across the companies to spend a few million dollars to do it and make us more competitive and effective, they could do that very easily. So hopefully we’ll be able to move quickly on opportunities, as well.
David: Yeah. How are we doing for time, by the way?
Jamie: I’m fine.
David: Okay. Cool. You mentioned a board a few minutes ago. How is your board structured? Are there shareholders? I think a lot of sort of growing companies have questions about that, how to put together a board, what the purpose of a board is, etc.
Jamie: Yeah. Well, I think…and again, I’m not saying anything that probably hasn’t been written in a hundred articles out there. But, you know, when you’re starting you need all the help you can get and you need all the advice you can get. And experienced business people have a lot of experience and a lot of knowledge. They can see some of the potholes coming down the road that you may not see. And it’s amazing how many successful business people are willing to lend their time to a board of advisors. Even if you don’t have a board of directors with an equity stake, you can…I would approach people who understand the industry who might be willing to be a part of the company.
Now, once they get to know you sometimes they want to invest, which can be great too. And, you know, business owners have to make their own decisions about that balance of when do I give up some of the ownership in business versus retaining the ownership and control. But, you know, my personal view is, you know, businesses are…the business environment is so competitive that you may think you have it all figured out. But you don’t. And you need to be resilient and anticipate some things turning against you.
And, you know, I admire the people like Bill Gates who probably has been offered 10 million times to sell his shares from the day he started that company or Mark Zuckerberg and said, “No. I’m not selling. $100 million, $500 million, $1 billion, no, I don’t want to sell.” I would have said, “Yes,” but that’s me. I have a different risk tolerance than they have. But I think at the same time, being smart about, you know, the realities of the world, to go back to the we’re the best, you’re probably not the best. And so how do you protect yourself? And having some cash is, you know…some ability to weather a storm is a smart thing, in my opinion.
David: Okay. Interesting. Did you set up a formal board when you came on right away or is that something you figured out a bit later or…
Jamie: I always wanted to have a board of advisors. And I never got around to setting them up. And that’s just, we just never got around to it. We already have three decision-makers. So I did have the three of us plus our finance person. And I would say too, you know again, stating something that’s written often. But, you know, you have…the quality of your controller, accountant, finance person, CFO, is critical in the success of your business. If you don’t know where the money is and you can’t see down the road with your cash flow to when you’re gonna have a month when that bill comes due and that check isn’t coming in the door and you’re gonna be negative $200, that’s the end of the road for you if you don’t have that money.
You may be able to figure it out with a few months’ notice but I have first-hand seen companies that have been blindsided by that occurring because their finance person just wasn’t good enough and wasn’t on top of things. But I digress for a second on that. But when Privek came in, our private equity guys came in, it was a requirement that have a board. So that was really when we established our board. It was two representatives from Privek, the three of us at the time. That was the five, and two independents.
David: I see.
Jamie: So we had an odd number. We have seven, which we liked. And it was a good mix around the table of…the two independents, of course, had lots of industry experience. One was a senior finance guy. Again, the importance of someone who really understands the finances and, in particular, of our business. And the other was Peter Sussman, who is now one of the co-founders of Q, who was one of the founders of Alliance Atlantis and had grown that business and spent 20 years or whatever in L.A. producing for all the networks and was extremely knowledgeable about, again, parts of the industry that we didn’t know as much about.
David: Cool. Coming from the sort of loss and things, how did you learn all the business side of things?
Jamie: Well, I was lucky. Again, the years as an entertainment lawyer were very valuable to me. I practiced in a big firm in Toronto for a little bit and then I was in-house at two different production companies, one…
David: Oh, so you saw a lot of this stuff when you were in-house.
Jamie: Exactly. And I think again, you know…I have three sons. My eldest is now in first year at McGill. And he foolishly expresses interest in this industry. And I do love the industry. I say that somewhat tongue-in-cheek but it’s a very tough business and going through a lot of tumult right now. But you’re wanting to have…and this is a theme. I’m accidentally coming up with a theme here but you want to have a competitive advantage. And saying, “I’m throwing up a shingle and I’m opening a production company,” what’s your advantage? Well, what I had the advantage of is I had 7 years of looking at how other companies did things and the great practices they developed over 20 years and how they went about their operations, how they staffed things, who was important, who was not, everything you could learn.
So I would say to my son, “If you were ever intending to do what I do, go work at another production company. Go work in the industry for a while and learn about the industry so that you can get to the point where you feel like, ‘I think I can do that. I know what’s involved in this. And I think I can do it. And I may even have a way I think a can do it better,’ coming from an understanding of, you know, what you’ve learned and about how it actually works, not just, ‘I think I could write a better script than what I see on television,'” which I hear all the time from…
David: Oh, I’m sure.
Jamie: …a lot of creatives.
David: Yeah, I think that’s a valuable point. And I think that in some circles, the concept of entrepreneurship and doing start-ups and stuff like that is almost becoming trendy. And, you know, people are coming out of school and trying to do that. And good for them. And obviously, you mentioned Mark Zuckerberg. And you’re like, “It can work,” but that’s a tough road. And if you’ve got some background in something, it’s probably not gonna hurt you.
Jamie: In fact, I’d even take it further. It’s critical because, you know, I had a friend who was, had an idea for an app. I think that’s the new kind of [inaudible].
David: App or software developer. So that…to me, the app idea is like the script idea.
Jamie: It is. See, there you go, bang on. And someone says, “Oh, I think it would be great to, you know, have an app where you take a picture of food and it tells you the calories. Wouldn’t that be great?”
David: I would be.
Jamie: It probably would be. But that’s…if you’re not someone like you, the person just says, “Okay. Well, now I’m rich.” Well no, you’re not rich. Is there another app that already does it? How would it work? What platforms would it be on? Do you know how long it’s gonna take to develop this? I mean, when you develop it, how do you get it out there on the Google store or wherever, the Google Play, any of these platforms? I don’t know anything about this stuff. You know, neither did he. So this fumbled along for about two years and never went anywhere. And it wasn’t the photo of the food but that’s the challenge when you’re…you may get lucky and to, you know, be able to pull it off.
But the other thing too that fits into all of this, even if you’re gonna just go for it out of the gate is to be prepared for the absolute commitment to…you mentioned 100-hour weeks before. I mean, people throw that off like a number but there were 100-hour weeks. And when you live through a 100-hour week, it’s punishing. It’s punishing. And when they come along at bad times and you have to sustain it for a while, you’re missing your mom’s birthday party, you know? You’re missing the Grey Cup party at your friend’s. You know, it’s tough. Tough.
David: Yeah. Who are some of the people that influenced you as you were coming up or that, even if you didn’t have a relationship with them, maybe people that you kind of admired from afar?
Jamie: I’ve been really lucky. I have had three key mentors in my professional life who are top-quality people and extremely good at what they did. And for whatever reason, they saw something in me and were kind to me and mentored me and have given me incredible opportunities. The first one was a guy named Michael Whitcomb, who was at McMillian, the base tree firm I started with who, out of a crop of annual, young lawyers, decided he saw something in me and would give the kid from Winnipeg a break here and there and continues to be a great friend of mine. The first in-house place I was at was Sullivan Entertainment, does “Anne of Green Gables” and all those shows. And the senior lawyer there, [inaudible], who now runs Canada’s Teletino network, a former Bay Street lawyer himself as well, taught me really everything I know about the production side of the business. And so, again, a friend today and someone I still admire greatly.
And then the chair of Privek, the head of Privek, who came and invested Brian Ashley, is the best manager I’ve ever seen anywhere. He rode with us through ups and downs and all kinds of…our business is so challenging at times. And, you know, what they’ll say to you about private equity guys is, “You know, when they’re trying to invest in your company, it’s all smiles and handshakes. But as soon as you miss a quarter or you don’t deliver on something, the nine’s come out and they’re not your friends anymore.” And Brian’s just a person of incredible integrity and rode with us up and down. And during both good and bad times showed me how to manage situations and manage me. I was responding to him as the chairman of my board. And, you know, he kept me fully engaged and motivated all the way through those times. And that was a real…I have taken a lot of what he’s taught me and tried to use it with other people as I see them going through challenges and how he…he wasn’t easy or even just give me a pass on everything. But he found a way to share what, when he was disappointed or what he hoped we could do while always making me want to do more. So very, very fortunate to have those people.
David: Cool. Final question, you mentioned earlier that especially when you were taking over as CEO here that you read a lot and that you kind of tried to teach yourself as much as you could that way. What book recommendations would you have for the listeners?
Jamie: Well, one of the things that, you know, you’re doing in almost any business is you negotiate a lot. And William Ury’s book, “Getting To Yes,” has been a great help to me. And it’s something you can read. It’s not a long book, it’s fairly straight-forward. And I actually went down to Harvard and took the course with him later on when I could afford it to try to bring it up. But, you know, I’ve read so many books. “Good To Great” is another one that sticks in my mind as resonating but what I would say is there’s a lot of business books with a lot of advice. And, you know, there are some greats out there who have created works that have stood the test of time. Kind of look for those, kind of the Porters and other who write books that people refer to years and years later. But back to “Getting To Yes,” it’s a win/win strategy. And it’s not how to fool people or how to take advantage or catch them. It’s about their interests and your interests and the positions you may take in a discussion in finding out those interests and finding out ways to get a win/win situation. We’ve never been sued. We’ve never had to sue anybody in all the years and all the things that have happened.
David: Wow. That’s actually a pretty big statement for your industry.
Jamie: It is, it is. And….because we’ve had disagreements and we’ve had problems, but, you know, we…I sleep well at night because we’ve never had to short-change anybody along the way. And we’ve also not been ripped off because being fair and kind doesn’t mean being stupid and knowing how to negotiate effectively.
David: Right. Well, Jamie, it’s really been a pleasure. Thanks so much for your time.
Jamie: My pleasure.
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