Ten ways in which startups are like movies

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

1. Many are made, few succeed

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

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

2. Special investors

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

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

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

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

3. Talented team + visionary leader are key

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

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

4. Money does not equal success

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

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

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

5. Distribution is key

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

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

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

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

6. Pushing boundaries

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

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

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

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

7. A slew of imitators

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

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

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

8. Cultural impact

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

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

9. Success is not a straight line

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

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

10. Past is not future

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

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

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

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