This is common knowledge/old news for people who keep up with productivity articles so I apologize if this initial message is insulting.
It's just that I don't keep up with productivity blogs and even I have heard of this "slow" concept so I'm trying to downplay it here.
For some "catch up" reference, check out The Slow Movement and blogs like Zen Habits.
Instead I'm posting this because I just happened to watched "Pirates Who Don't Do Anything" via HBO just now and I absolutely had zero idea what VeggieTales was unitl I finished watching it, loved it and looked it up in IMDB and ended up finding this article.
We Americans love to be ranked. People magazine keeps track of our “50 Most Beautiful People.” Forbes tracks the “400 Wealthiest Americans” and the “200 Highest-Paid Entertainers.” Not to be outdone, every year Inc. magazine puts out a list of the 500 fastest growing private companies in America. These companies tend to be on the small side, but for whatever reason, they're growing like gangbusters. Inc. tracks and ranks them all, and then the entrepreneurs behind each company can hang the magazine cover in their conference room and beam like proud parents when their friends notice their amazing fast-growing-ness.Big Hairy and Audacious
If I had put a lot of value on such lists or if Inc. magazine had noticed us, it's fairly likely Big Idea would have made the list a year or two. Between 1996 and 1999 our revenue grew by 3300%, from $1.3 million to $44 million. Pretty impressive by anyone's standards. But by early 2000, just as Jonah was headed into production, the company was in serious financial trouble. How could that be, you ask? Let me tell you.
It's interesting to note that only one-out-of-three companies that make the Inc. list repeat their appearance the following year. What happens to the rest? Many see their growth stall, never to fully recover. Others simply cease to exist. Vanish. You see, when a small company experiences extremely rapid growth, it soon ceases to be a “small company.” Yet just because it no longer qualifies as “small” doesn't necessarily mean it is now “big.” In other words, just because you're no longer “Tim's Software Hut” doesn't necessarily mean you're “Microsoft.” And somewhere in the middle, many, many companies fail.
Inc. magazine noticed this dynamic and had several business researchers look into it. What emerged was a picture of a treacherous period in any business's growth when a company finds itself “too big to be small yet too small to be big.” The researchers dubbed it “No Man's Land.”
The year was 1997. VeggieTales was booming in a big way, and I was taken off guard by the success. Frankly, I thought 1996 was amazing, yet here was 1997 making 1996 look like… well, 1995! Every year since 1993 every VeggieTales video had sold more than the year before, and the trend seemed to be continuing. I could remember the days when Christian publishers wouldn't return my calls, and now the Wall Street Journal was calling for an interview!Needs
In the midst of this mayhem, I read the book Built to Last, a classic business study of what makes great companies great. The analysis of the Walt Disney Company struck me as particularly relevant, and I found myself asking the question, “Do I just want to make a few films to leave behind when I'm gone, or do I want to build a company that can keep making great films for the next 100 years?” The answer seemed obvious. I wanted to build the next Disney.
By the time I finished the book I had a new vision for Big Idea. We would attract top artists from all over the country. We would build a culture of biblical values and great storytelling. And then, the big one: The book said you needed to pick a “Big, Hairy Audacious Goal,” or a “BHAG” in Built to Lastparlance. Golly gosh… what was my “BHAG?” Hmm. I wasn't sure. I had always felt that God wanted me to tell the stories and teach the lessons he laid on my heart, but he hadn't given me any particular big, hairy audacious goal. But the book said I needed one to inspire and focus my employees. Okay… deep breath… “We will build a top-four family media brand within 20 years!” Huh? Where did that come from? I had no idea. All I knew was that now I had my “BHAG.” And if it was going to come true, we were going to have to get a lot bigger. What I didn't know was that my new path would take us right smack through “No Man's Land.” (Cue sinister score here.)
BHAG in hand, I entered 1998 on a mission. No longer would Big Idea be simply Phil's film company making Phil's films. I would proactively grow it to the point where it could encompass the work of multiple storytellers working in film, TV, publishing, and whatever else we could think of. I was particularly driven by the impact I saw the Disney Company and Nickelodeon having on kids across America. Coming out of nowhere in the early 1990's, Nickelodeon had grown so large by the end of the decade that half of all kids watching commercial television at any given time were watching Nickelodeon. Since the average American kid was watching more than three hours of television per day, the impact Nickelodeon's programming and intentionally subversive attitude (Nick marketers freely admitted that their strategy was to position themselves as a kids “true ally” and to exclude parents from the conversation) drove me to do as much as I could, as quickly as I could. In my mind, Big Idea couldn't be built fast enough. America's kids needed it that badly.Lack of Experience; Lack of Help
I was aware, however, that I was a bit skinny on business experience. If Big Idea was to have the impact I hoped for, I needed serious help. So over the course of 1998, I assembled a group of experienced business folks to help. I didn't have the industry connections or the money or prestige to pull people from Hollywood to suburban Chicago, so most of our executives were from the Chicago region and came primarily from large financial services and packaged goods companies like Kraft, Coca-Cola, Motorola, GE Capital and Price Waterhouse. It really was a pretty impressive group with tons of business experience. While they lacked traditional entertainment experience, the fact that VeggieTales was a product sold from store shelves made us all believe packaged goods experience would be just as valuable. (In fact, the growth in importance of Wal-Mart at that time had inspired even giant studios like Disney and Warner Brothers to hire packaged goods experts from places like Proctor & Gamble and Kraft to help shape their strategies.)By the end of 1998, things looked promising for the “new” Big Idea. We had a hit product. We had an experienced, fired-up leadership team. We had a mission, and a big, hairy, audacious goal. What we were missing was a plan.
“No Man's Land” threat number one, according to Inc.'s experts: Small companies, experiencing rapid initial growth, attempt to make the leap to being “big” without having a clear plan for sustaining that growth. What got you to $10 million in sales won't necessarily take you to $100 million.Duke Nukem Forever Redux
We sold something like seven million VeggieTales videos in 1998. Unable to imagine selling more than that, I assumed future growth would need to come from other areas like television and feature films. Unfortunately, the executive team I put together had no experience in television or feature films. Rather than wade into unknown waters, they figured future growth would come from selling even more VeggieTales videos using marketing techniques they had learned in the world of packaged goods. The team quickly discovered through research that even though we had sold seven million videos that year, only one-quarter of American mothers of young children had even heard of VeggieTales So, they reasoned, growing awareness would result in increased sales.
Enter 1999. I began the year investigating the TV and feature film businesses, looking for points of entry for Big Idea. I was working on these efforts more or less alone, though, as my executive team was busy building a large marketing group to launch an even larger VeggieTales awareness campaign. Between 1998 and 2000 our marketing department grew from 1 person to 30 people. We gave away 400,000 VeggieTales videos at the grand openings of malls and Target stores and took out two-page ads in People magazine to introduce America to the concept of VeggieTales. As a result, our marketing expense grew from $3 million in 1998 to $13 million in 2000. No problem, though, since the team estimated the increased awareness would double our sales within 24 months.
Except for one thing: The projected sales growth never happened. After 1998's amazing 7 million video mark, sales actually declined in 1999 and 2000. Our marketing costs exploded, but our sales didn't. That was a bit of a problem.
Meanwhile, I wasn't having much more luck getting us into new businesses. Intrigued by the strategic possibilities of having a home in television, I began talking with the newly launched family network Pax TV about taking over their entire Saturday morning block. They seemed genuinely interested, given VeggieTales' huge success. I spent time crunching numbers and identifying other shows that could fill out a block alongside VeggieTales and be introduced by Bob & Larry. The pieces were falling into place, when suddenly Pax announced they weren't interested in a Big Idea Saturday morning block, but would much rather we supply them with an hour of programming for prime time. Since none of the shows I had been considering for Saturday morning would work well in prime time, I was back to square one.
As a hedge against the possibility that a TV strategy might not pan out, I was also trying to chart a course to take our animation studio toward feature film production. In late 1998 we put Larry-Boy and the Rumor Weed into production, our most cinematic half-hour video yet. It was my plan, in fact, that it would be our last half-hour video. With that in mind, I had already put Mike to work on an elaborate 45-minute script based on a classic Bible story that would take us one step closer to the world of feature films. The story was Jonah and the Whale.
So what happened? How did Jonah wind up on the bigscreen? That would be my doing. As Rumor Weed headed into production, Mike and I worked out an outline for a 44-minute Jonah. It was at this point that we decided to “bookend” the biblical story within a modern-day setup/wrap-up involving Bob, Dad Asparagus and a van full of veggie kids on their way to a Twippo concert. (Although technically, Mike first had them heading to a “Tweezerman” concert. Why “Tweezerman?” Like many of his ideas, Mike could never really articulate where the name came from. We changed the name during the film's production when someone noticed that “Tweezerman” was the registered trademark of a company that makes – you guessed it – tweezers. Mike then proposed “Twippo.” Where'd that one come from? Again, he had no idea.) So Mike started writing the setup as I was directing Rumor Weed. As brilliantly funny as he is, Mike isn't always the most disciplined of writers, and seventeen pages into his script he was still in the modern-day setup. He was just having too much fun with a van fulla veggies and a weird old seafood restaurant. My first thought was, “Well, he'll just have to throw it away and start over again.” But when I read it, I really liked it. It was fun stuff. So here's where I made a large mistake: I let my fondness of Mike's pages overrule my business conviction that we were NOT ready to make a movie. Instead, a little voice in my head was whispering, “Well, maybe just a little movie…”
I ran some numbers. The recently released Christian film “The Omega Code” had surprised everyone by grossing $13 million at the US box office with a tiny marketing budget of less than $2 million. Using “The Omega Code” as a model, I estimated a small VeggieTales film with a $7 million production budget and a $7 million marketing budget needed to do $18.5 million at the box office and sell 3 million videos and DVDs. I figured the 3 million video mark was achievable since our relatively low-budget half-hour VeggieTales Christmas video had already passed the 2 million unit mark. As for the $18.5 million figure, it was only 40% more than The Omega Code and our film had a larger built-in audience and would launch with a much larger marketing budget. The great thing was that if we hit these numbers, not only would our investment be returned, we'd also make about half the money needed to fund our second movie. Looking at the numbers, it seemed like a no-brainer. Write on, Mike! Write on! We're gonna make a movie!Management
As small companies grow, the experts at Inc. magazine observed, their need for top-notch management often arrives years before their ability to attract or even afford top-notch management. Many small companies fail to survive “No Man's Land” because they either never find the management talent they need to make the leap from “small” to “big,” or even worse, they bring in the wrong management.
In 1999, as I pointed the company towards our first feature film, no one was running the animation studio. The last head of the studio had departed in 1998, and as Jonah rolled into development, we were in the midst of a search for his replacement. The world in 1998 was not awash with seasoned CGI animation studio chiefs. The pool of those willing to relocate to Chicago to make Christian films was even smaller. Pathetically small. In lieu of a production head, the studio was being managed by a committee composed of the studio's team leaders, most of whom were quite young and only one of whom had any previous management experience. The process at times resembled “The Lord of the Flies” more than “The Art of Management.” In the end, the studio would go “headless” for more than a year as our recruiter scoured Hollywood for the right person and Jonah barreled towards production like a runaway locomotive.Gulp!
Our search finally ended in 2000 with the arrival of two seasoned industry veterans from Dreamworks Feature Animation. One would act as Jonah's producer while the other ran the studio. Given that the new studio head had never actually run an entire studio before, and the producer had only worked on traditionally animated films (and never in the role of overall producer), both faced a steep learning curve. Jonah would be well into production before the two had enough of a grasp of our unique production system to assemble a budget for the project. They were inheriting a process and a crew that had been built and rebuilt over the years by a series of managers.
On top of that, a fair amount of hiring had already taken place with Jonah in mind. Some department leaders had carefully thought through their own plans for Jonah and had begun hiring accordingly. Others later admitted they started hiring simply “because everyone else was.” The first budget forecast came in at $10 million. I gulped. Not the $7 million I was hoping for, but – heh, heh – it could be worse.MisCommunication/Groupthink
Within a few months, it would be.
Back in Chicago, I told my new president I needed some time off. We agreed that I would take the month of October off to rest and recuperate. The team was in place. They could manage the business without me. October came, and Lisa and I headed to Hawaii for a week of rest. I had intended to spend the rest of the month playing with my kids, taking pictures and studying the Bible. The distance from Big Idea, though, gave me ample time and space to think things through and I began to doubt that things were going as well as I had thought. One clue that perhaps they weren't came as I returned from Hawaii and was called in because my new president and executive vice president, locked in a dispute over their stock awards, were no longer speaking to one another. Over the rest of month I noticed more and more concerning issues. So many, in fact, that upon my return, I called all the leaders together and laid out my concerns about our direction one by one, in front of the entire team. Wanna See a Joke?
The reactions were swift and strong. Several leaders were embarrassed that I had mentioned concerns about their areas in front of their peers. Another leader called it “the most important meeting he had ever attended.” Our brand new head of human resources said it was “exactly what he expected Big Idea to be like.” My president, however, wouldn't speak to me for two days. When he finally did, he declared it “the biggest leadership disaster he had ever seen.” The next day he instructed our new head of HR to help me write a full retraction and apology. Boy was I confused. I finally felt like I was leading boldly, but the man I had hired to help me lead described my bold leadership as a "disaster." I agreed to apologize for any embarrassment I had caused by addressing concerns so publicly, but stopped short of issuing the full retraction my president had demanded. It was clear the two of us didn't see eye-to-eye, and our relationship would be strained from here on out.
Christmas, 1999. Due to the rapid growth and hiring, we were a little short on cash. So our annual Christmas party was held at Big Idea's new temporary offices in Lombard, Illinois. Near the end of the evening, a good friend of mine and fellow senior leadership team member pulled me into his office and said, “Wanna see a joke?” He dropped a thick, 3-ring binder on the table in front of me. The cover read, “Big Idea Productions – 2000 Budget.” Up to this point, Big Idea's growth had been so unexpected and chaotic that we had never successfully put together an annual budget or sales forecast. Now that the leadership team was in place, though, it was time to start running things like a “real company.” So while I was taking October off, the team had started a budget process that had produced the tome sitting in front of me.Stop meddling, we're professionals
As soon as we returned from the holidays, I called the leaders together and posed a simple question: “What exactly are we building here?” We were proposing to triple our expenses, while only doubling our sales. More concerning, we were proposing to double our staff size, without increasing our ability to produce films. Of the 165 hires being requested, only a handful were in the animation studio. Ninety percent were in finance, HR, marketing, licensing and design. So at 315 people we would be able to produce no more videos per year than we had produced five years earlier with a staff of 10. The meeting ended with no answers and very little real discussion. It was as if most of the leaders just wanted me to go write the next video and leave the business up to them. Stop meddling, we're professionals. My president assured me the budget wasn't yet approved and we wouldn't be hiring anywhere near that many people. Don't worry. We know what we're doing.
A few weeks later the sales results for the month of January came in. The team missed the number they had forecast in the 2000 budget by 80%. Not by 20%… by 80%.When Charismatic Bad Leaders Undermine Good Apples...err...Advise
It was clear to me that changes needed to be made to my leadership team. Though they were all good people that I liked very much, their lack of experience in the entertainment business, coupled with my lack of experience in the entertainment business, was not going to get the company through this crisis. Nervously, I asked several key members to step down. Several others left in protest. (They had, by now, become a fairly tight bunch.) By the end of 2000, my president, CFO, marketing chief and licensing chief were all gone. Only my executive vice president and head of human resources remained. My EVP and I quickly brought in a freelance CFO to keep the bank from panicking and shutting down the company. We then went on a tear, trying to raise $30 million in less than 120 days. We sent out information packets and visited with wealthy VeggieTales fans across the country. The reaction was not good. Though they loved the company and the films, the financial situation Big Idea now faced did not inspire confidence. One potential investor, after reviewing the company's financials, shook his head in disbelief and muttered, “What did you do to VeggieTales?!?”Funeral
In April of 2001 we met an experienced Christian executive from Hollywood who wanted to help. Clearly in dire need of someone who really knew the entertainment business, I hopped on a plane to Los Angeles and offered him Big Idea's presidency. He hit the ground running. Sharing an office in the basement of our old Woolworth space in Lombard with our freelance CFO, the new president soon discovered that the situation was worse than we had thought. According to their new forecast, the company would run out of cash and be forced to shut its doors by the middle of June, just 60 days away.Double Edged Passion
It was clear drastic steps were needed. The new president recommended immediately cutting staff to preserve cash. Though I absolutely despised the thought of laying people off, it was clear that Big Idea was horribly overstaffed given our actual sales level. Many of our leaders had built their teams based on sales forecasts that simply never came to pass. The unthinkable was now the only way out.
In early May of 2001 I stood before the entire company and explained the choices we were forced to make. What began as a typically upbeat all company meeting soon turned into a funeral. The whole room wilted in front of me as I explained that it would be the last day at Big Idea for some of those gathered there. Some burst into tears. Others sat in stunned disbelief, or hardened into anger. For everyone, a part of Big Idea died that day. A part of me died, too, as I found myself overwhelmed with the feeling I had let everyone down. After the meeting I drove to a nearby park, sat on a park bench and cried.
30 really great people lost their jobs that day. My president and CFO had a sinking feeling it wasn't enough – that we hadn't cut deeply enough. I sure hoped they were wrong.
At this point, we really had just two options. The first was to press ahead with the current plan – to raise enough money to complete Jonah and hope that this film about a waterlogged prophet would bring in enough money to keep Big Idea's own leaky boat afloat. The second was to radically cut back. Stop production on Jonah, shut down the animation studio and outsource future animation to Canada or Japan, cut the company down from 200 to a core team of 30-40 people, and go back to producing just one or two VeggieTales videos per year. Both my new president and our freelance CFO recommended this second, more radical option. Frankly, it was the option most likely to save the company. At least what would be left of it. But I couldn't do it. To pull the plug on Jonah and shutter the animation studio – the animation studio we'd been building for 9 years – seemed like a decision I would make out of a lack of faith. Surely God was pleased with the impact we were having. Surely he was pleased by our efforts to have even more impact. Surely he could use Jonah to cover up the mistakes of our past, erase our fiscal shortcomings and set us on the road to renewed health and ministry. The way I saw it, to choose the second option was to lose faith in God. I wouldn't do it."Everything Did Not Work"
That decision made, we needed to come up with a bunch of money very quickly. My new president knew it would be impossible to raise the money we needed from investors in 90 days. We all knew raising money directly for Jonah's production wouldn't work, since the amount of money we needed far exceeded Jonah's production budget. (Wanna look like a fool in Hollywood? Tell people you need to raise $20 million to produce a $10 million film.) The only potential source for the money, my president reckoned, was our distributors. VeggieTales videos were still among the best-selling kids videos in the world. Retailers wanted more. Distributors wanted more. The market's desire for more of our product appeared to be the only asset we had left.
The details are too long for a synopsis so you'll have to check the full article. It involves the failure of the cartoon and Live version as well as a lot of other business fall-outs between those events.Epilogue
It's sort of like when your house is on fire and the only escape route is to jump out the window into your neighbor's yard, but you know your neighbor has a rather ill-tempered Pit Bull. The hotter it gets, the more likely you are to say, “Let's solve the fire thing first, and worry about the Pit Bull later.” It isn't a perfect plan, but if it's the only plan you've got…
When you own an animation studio, lacking the money for your movie really means you lack the money for your animation studio. It isn't a good position to find yourself in. The next choice became painfully clear, and painfully, well, painful.
In late summer of 2002, just a few weeks before Jonah's release date, we had a premier event just for the company and production crew. The film was done. It looked great. Even many of the freelancers flew in to see the finished product and attend the wrap party on a boat in Lake Michigan the next night. We rented the “big room” at the McClurg Court theaters for our premier – the room that had been set up for digital projection by George Lucas's company for one of their own events. The film looked and sounded amazing. The crowd was thrilled, and thunderous applause followed the credits. But I barely made it through my speech thanking everyone for their work, because I knew, along with just a few other leaders in the room that night, that the next morning we would announce that the wrap party was cancelled, the Bob & Larry Movie was postponed indefinitely, and more than half the studio would be laid off. For those of us who knew what was about to happen, it was the most bittersweet night imaginable.
The next morning Big Idea's nine-year effort to build a feature animation studio ended. Worst of all, the folks who got laid off were many of those who had worked the hardest on Jonah. People who had put their lives on hold to help launch Big Idea into the world of feature films, who had just fallen across the finish line in exhaustion, found themselves rewarded with… pinkslips. Many were understandably angry. One artist sent out an email to the whole company as he was packing his things saying simply, “Has anyone seen my copy of ‘Where's God When I'm F-f-fired?!?'” Another said he would never again work so hard for an employer. But others were remarkably gracious, pointing out to their peers the friendships that were forged at Big Idea during Jonah's production. I honestly wondered if keeping the company alive was worth the emotional toll on those let go as we tried to save it. But throughout, I clung to hope. “If Jonah works,” I thought, “I'll bring them all back.”Silence of the Heavens
Friday, October 4, 2002. Jonah's release date. It's amazing to find yourself in a position where 3 years of hard work will be justified – or not – in one day. While opening day box office doesn't necessarily tell you exactly how a film will perform, it tells you a lot. For Jonah to pay back its production and marketing costs and have any hope of returning additional monies to stabilize Big Idea, we figured we needed at least an $8 million opening weekend. Given that our film was only going out on 800 screens (as opposed to the 3000+ of major family films), an $8 million gross was aggressive, though theoretically achievable. More importantly, that kind of gross would get noticed by the newspapers, which would get people talking, which could lead to the kind of buzz that can boost a film to a whole different level. Suffice it to say, we were all a little tense.
The first call from Artisan came in at about 2pm central time, just a few hours after the film had opened on the East coast and in the Midwest. 3 or 4 of us huddled in a marketing room to listen. The numbers were off the chart. Huge. Moms with preschoolers were evidently turning out in droves – selling out afternoon screenings. We were so happy we felt like crying. And dancing. If those numbers held up, we could be looking at a $10+ million opening weekend which would place Jonah in the top 2 or 3 films that week and earn us lots of free press in newspapers across America. Perhaps God was going to use Jonah to save Big Idea after all.
The second call came at 4pm. Something had changed. The numbers now didn't look nearly as good as just two hours earlier. While some theaters were selling out, others appeared to be half empty. The first numbers from our 120 screens in Canada were horrid. Our visions of a $10 million opening weekend melted. $8 million didn't look very likely either. Artisan believed we were headed somewhere in the vicinity of $6 million. We deflated. While respectable, $6 million probably wouldn't put the film on track to recoup its investment, much less bail out the rest of the company. In just two hours we had gone from euphoria to deflation - an emotional swing so powerful that even 2 1/2 years later, it feels like it happened yesterday.
The final number for opening weekend was $6.5 million, below the $8 million we were hoping for but enough to earn Artisan congratulatory calls from competing studios. Conventional wisdom in Hollywood had Jonah opening at about $3 million. Artisan was thrilled, and immediately requested approval to spend another $3 million on TV ads to keep the momentum going. Perhaps Jonah would have the “legs” of a “My Big Fat Greek Wedding,” they reasoned. Additional ads could carry quotes from the generally positive reviews we were receiving. While I had serious misgivings about spending any more money on the film, I couldn't help but wonder if an extra boost at this critical moment might be the thing that would push Jonah over the proverbial hump. Maybe that $3 million would mean the difference between a $20 million gross and a $40 million gross. Maybe that $3 million would save the company. I approved the additional spend.
In the end, Jonah grossed just over $25 million at the domestic box office. Since half of that money stays with the theaters, Artisan received a little more than $12 million, which wasn't enough to recoup the $15 million they had spent marketing the film. (Artisan wasn't worried, though, since they would continue recouping their money from the home video release.) On the one hand, $25 million was a lot more than the $18 million I had originally projected. Jonah was the 6th highest grossing movie in America on opening weekend (bumped out of the top 5 by the surprise success of the urban comedy “Barbershop”) and the number two film in America in terms of gross per theater. Virtually everyone in Hollywood was surprised by our performance, which would help us immensely in trying to put together subsequent films. But the reality was clear that Jonah was unlikely to return its own investment, much less fund the rest of Big Idea.
“Well,” I thought, “maybe if the home video doesreally, really well…”
I was beginning to sound like a Cubs fan.
The winter of 2002 was a difficult time at Big Idea. Not that any time in the prior 2 years had been particularly chipper, but things were really glum now. With Jonah's theatrical release behind us, we nervously awaited the home video launch in March. Spirits aboard the good ship Veggie were sinking rapidly. The Lyrick lawsuit had already cost us $2 million in legal fees, and the bills kept coming. 3-2-1 Penguins and "Larryboy 2D" were shut down. "The Bob & Larry Movie" was indefinitely postponed. Two more rounds of layoffs rocked the company as we desperately tried to preserve cash. Noticing the water rising in the hold, artists started jumping ship. Blue Sky Studios in New York was just starting production on “Robots,” their follow-up to the surprise CGI hit “Ice Age.” One Big Idea artist left for Blue Sky, and several others immediately followed. Eventually so many Big Idea artists jumped at the project that we began referring to any studio sick days as “Blue Flu.”
Since any effort to raise or borrow additional money was precluded by the unresolved lawsuit with Lyrick, settling the suit became our top priority. Lyrick's new owners at HIT wouldn't budge, though. As a last resort, we explained our financial situation to HIT's CEO. We had $500,000 set aside to try the case in court. We offered HIT that money as a last ditch settlement offer, confessing that if the suit went to court and we lost, we would be forced into bankruptcy and Lyrick would have to get in line with the other creditors. We were out of money. HIT still refused to settle and the case was scheduled for April in Dallas federal court.
Tensions were also rising higher internally as we searched for new ways to cut costs. My president in LA thought our Chicago operations could be cut back significantly. Given the death of 3-2-1 Penguins and Larryboy 2D, I wondered why we still needed the staff in LA hired to oversee their development. He wanted to shut down the animation studio in Chicago. I wanted to curtail his development efforts in LA. Unable to resolve our differences, we parted company. The LA office closed shortly thereafter.
The changes saved us some money, but now I was the only one left at the company with enough knowledge of our distribution experience to represent Big Idea at the Lyrick trial. Our Dallas attorneys flew to Chicago to prepare me for my first experience in big time litigation. Bob the Tomato and Barney the Dinosaur were about to mix it up in front of a jury of their peers.
Meanwhile, back in the world of retail, the Jonah home video and DVD hit stores March 4, 2003. Like the film in theaters, it performed solidly if not spectacularly, selling about 2.5 million copies. I had hoped for 3 million, but the four years since I had made my original projection had seen a steady weakening in VeggieTales' sales. Every property has a “life cycle,” and Jonah, conceived at VeggieTales' peak, was hitting home video about 2 years late. Even worse, my original forecast was ignorant of the fact that Jonah's two-disc format and shiny “holofoil” packaging, plus Artisan's use of Fox Home Video for certain fulfillment services would add an extra $1.50 or more to the cost of each DVD. The result was much less money coming back to recoup Artisan's marketing expenditure and, ultimately, our investment. In the end we sold 2.5 million copies of Jonah on VHS and DVD and didn't see a single penny of revenue. Our $14 million investment ($12.5 million for production plus another $1.5 million for computer gear we assumed we'd use on future movies as well) was completely lost.
By early April 2003 only 65 people remained at Big Idea, down from 210 just 6 months earlier. Thirteen of us gathered for an evening prayer meeting just a few days before I was to head down to Dallas for the trial, and prayed earnestly for the survival of Big Idea. The next week I walked to a department store across the mall from our offices and picked out a suit to get me through the projected 2-3 weeks of sitting in court. I called it my “law suit.” I arrived in Dallas and checked into the Hampton Inn across from the Federal building. It had been fourteen years since I started GRAFx Studios, initiating my quest to tell stories and make a difference in the world. Now it appeared it would all be decided by nine strangers sitting under cold fluorescent lights in a courtroom that, combined with the Texas accents of most of the participants, made me wonder if I had just woken up in a bad episode of "Matlock."
The first day was jury selection. Two women quickly identified themselves as huge VeggieTales fans and confessed that they couldn't possibly imagine Big Idea doing any wrong. They were quickly excused from the room, never to be seen again. (No doubt eaten in the parking lot by an angry purple dinosaur.) At lunch our lawyer told me to try to look more “interested” in the jury selection process. As if wearing a suit every day wasn't punishment enough! It's not that I wasn't interested, mind you. It was just that after 4 or 5 hours of listening to lawyers ask truck drivers if they had any strong preconceived notions about Christians, Texas or Barney the Dinosaur, one's mind can wander. I tried harder.
Over the next week I would be asked not to look around the room casually. Not to bounce my knee. Not to exhibit excessive interest in the light fixtures overhead. I was beginning to think I might not be cut out for this line of work. The court proceedings themselves vacillated between painfully boring and extremely aggravating. Lyrick's lawyer at times made me so angry I wanted to jump up and yell, “That's ridiculous!” But by then I had learned that my job was to sit still and look interested. Nothing more, nothing less. So on the outside I appeared interested. But on the inside I was asking God to cut the power to the Federal building so we could all go home.
In the end, Lyrick's argument boiled down to this: Even though a contract had never been signed nor even fully agreed on, and acknowledging that copyright law precludes the transfer of any rights without a signed document, they insisted there was a binding agreement between Lyrick and Big Idea based on the original offer letter that bore their president's signature and a return correspondence from one of my employees that carried his signature on a fax cover sheet. Even though their president's letter clearly stated that there would be no “binding relationship” until a formal agreement was signed by both parties, Lyrick argued that this letter and our fax cover sheet constituted the binding relationship.
Furthermore, they argued, even though the unsigned draft agreement clearly stated that we could walk away if we did not approve of a new owner or replacement for Dick Leach, Lyrick's lawyer pointed out that they had added the wording “approval which Big Idea will not unreasonably withhold.” We pointed out that we had never agreed to such a vague phrase (which, in fact, was one of the reasons the agreement was still unsigned and under negotiation). Now Lyrick went for broke. Big Idea didn't walk away because we didn't like HIT Entertainment, they argued. HIT Entertainment was a perfectly acceptable partner. We didn't walk away because HIT Chairman Peter Orton wasn't an acceptable replacement for Dick Leach. Dick Leach was hardly active in the business any more. No, Big Idea walked away because we wanted more money. Lots more money. Big Idea didn't walk away because of philosophical convictions, Lyrick explained to the jury. We walked away because we were greedy for money. And that was not a “reasonable” reason to walk away. Yes, Big Idea had the right to approve of HIT's purchase of Lyrick. But we “unreasonably withheld that approval.” I looked at the jury. Could they possibly be buying this?
Finally, recognizing that VHS sales were declining rapidly and damages from lost VHS sales would be minimal, Lyrick argued that we had given them DVD rights to all our films, even though the draft contract clearly stated “videocassette” only. Their evidence: the two films we had allowed them to release on DVD to test audience interest in the new format. Lyrick's lawyer showed the two DVD cases to the jury, highlighting the Lyrick logos on the back corner. “See? They gave us DVD rights.” This argument struck me as particularly preposterous. "They'll never go for that logic," I chuckled to myself.
The jury was sent away with four questions to answer - questions that would determine the fate of everything we'd built in 14 years. The next week we returned to court to hear the conclusions. Did Lyrick Studios and Big Idea have a binding agreement? "Yes," the lead juror responded. Did Big Idea have the right to walk away if they didn't approve of the sale of the company? Again, "Yes." Did Big Idea 'unreasonably withhold' that approval? "Yes." And finally, did Lyrick have the rights to VeggieTales DVDs? "Yes."
The gavel came down awarding Lyrick $11 million in damages. All their legal fees, plus every penny they estimated they would have made selling VeggieTales DVD's over the remainder of the term stated in our unsigned draft agreement. Lyrick's lawyers were ecstatic. Big Idea's lawyers were flabberghasted. Our lead lawyer, a great guy who was shocked by the loss, drove me to the airport for a long, painful flight back to Chicago. Big Idea Productions was dead. It was over.
Joe Maloney said: Responsibility
January 11th, 2007 at 12:50 am
As a lawyer, I’d like to comment on Phil’s account of the trial in his book. I was impressed at Phil’s ability to understand the other side’s arguments. Most persons in his position are so focused on their own perspective they cannot grasp the other side’s arguments; but Phil fully understood Hit’s legal/factual case. So he was all the more credible in explaining why those arguments were completely, totally, wrong.
The court of appeal decision, which reversed the jury’s verdict, did so for just the reasons Phil articulated. It’s a very rare thing for a court of appeal to reverse a jury verdict. In his book, Phil gives what may be the most likely explanation for how it was that the jury got it wrong: God blinded them, because God wanted Big Idea Inc. to fail, so Phil could be Phil. A lawyer would provide another explanation, though: the trial court judge should never have let that case go to the jury.
Finally, I was moved by Phil’s gracious words about the lawyer who lost the case; and admire his restraint in speaking about the lawyers for Hit Entertainment.
Good luck, Phil.
A dream is a powerful thing. There is little more thrilling than seeing a dream come to life. And little more heartbreaking than watching it die.
Shortly after Jonah hit theaters, I got a letter from a fan in the Midwest with a two-page critique of the film. It hadn't done as well as it could have, he explained, because of serious flaws in its story structure. He went on to explain Jonah's flaws at great length. While some of his points were certainly well taken, what struck me more about the letter was the emotion behind it. He was angry. Really angry. He closed with the interesting statement that if I didn't respond to his criticism, he would send his letter to major Christian magazines and “expose” our creative shortcomings to the entire Christian world.
A dream is a powerful thing. Letters like his made me realize just how much emotion people had invested in my dream. Not just the artists, designers and business people who had moved their families across the country to actively join the effort, but also the fans. This fellow, like many others, was so excited about my dream of a “Christian Disney” that my failure to deliver on that dream struck him much more deeply than you would expect. Big Idea had become his dream, too, and now that his dream was failing, he was angry.
When we lose something, be it a job, a relationship, or a dream, we want to know why. Whose fault was it? Who should I be mad at, because I really want to be mad at someone! So it was with Big Idea.
So the members of that first executive team are the villains! You could probably come to that conclusion, but I don't think so. I mean, can I really blame packaged goods executives for attempting to use packaged goods marketing techniques to sell films that ultimately show up on store shelves as – packaged goods? And VeggieTales success itself had become a huge challenge. Whenever you have an unprecedented hit, future planning becomes extraordinarily difficult simply because there are no precedents. There were no comparables for VeggieTales. Our sales had skyrocketed 3300% in four years! Against that backdrop, how do you project the future? More skyrocketing? Was our growth almost done, or just getting started? Look at another example: Between Christmas 2003 and Christmas 2004, sales of Apple's iPod increased by a staggering 500%. A huge success, but also a huge challenge. How many iPods do you make for Christmas 2005? 500% more than 2004? 100% more? 10% less? Unprecedented success is extremely difficult to manage simply because it is unprecedented. Every year is a big ol' guess. Guess wrong one way and you'll choke your success by running out of product or not having enough man-power to support the demand. Guess wrong the other way, and you could crash and burn right in the midst of your success. As wrong as the forecasts my team made in 1999 ended up being, I honestly believe they did the best they could with the information and the experience they had.
Ultimately, of course, I could have overruled them at any point. I could have stopped the hiring. Cut staff. Decreased the forecasts. Redirected the strategies. As controlling shareholder, CEO and sole boardmember (building a board of directors was something we often discussed but never got around to actually doing), I had the final word on everything. So who is ultimately to blame for the collapse of Big Idea. Well, me, of course. Sure, I could blame the guy who engineered the distribution moves that sparked the lawsuit, but he wouldn't have had to do that if I hadn't allowed the company to become so huge and indebted. I could blame our production management for not sticking to my original plan for Jonah, but then I have to remind myself that when the film went into production, wehad no production management. And I could blame the first executive team for making the company so huge, but then I have to remember that one of the things that attracted them to Big Idea in the first place was a line I put into our mission statement way back in 1997 – something about building “a top 4 family media brand within 20 years.” A statement that sounded an awful lot like we were supposed to get really big. A statement that, even at the time, I was pretty sure had emanated suspiciously from my own noggin in response to a business book exercise, as opposed to from God after much prayer and reflection.
So there you have it. The real culprit is Jim Collins, author of the book Built to Last. Oh, if only it were that easy. I have seen the enemy, and he is me. My strengths built Big Idea, and my weaknesses brought it down. Throughout Big Idea's history, my business instincts were generally quite good. But I had no experience managing people or leading teams to accomplish goals. I had, after all, spent my high school years in the basement experimenting with film cameras and computers. I was a shy kid who would rather read Starlog Magazine or build a rudimentary optical printer out of cannibalized 8mm projectors than show up at the prom or run for student government. As VeggieTales took off, I became terrified that my business inexperience and lack of people skills would result in Big Idea's failure. So, in a panic, I brought in others to help, often spending far too little time getting to know them before or after the hire. I then backed down from my own convictions, assuming that an executive with an impressive resume surely knew better than a Bible college dropout. And I launched projects like Jonah before we were really ready to handle them, assuming we'd figure things out on the fly as I had done in the basement and with the very first VeggieTales episode. The result was some amazingly rabid fans, and absolute organizational chaos. The result was the rise – and fall – of Big Idea.Apology
For the record, I'm sorry. A lot of wonderful people brought their dreams to Big Idea. And almost all of them were deeply affected both by the persistent organizational chaos and by the trauma of the slow, painful collapse. The ultimate responsibility for both lie with me. And I'm really, really sorry. Just as Big Idea really wasn't ready to tackle the production challenge of Jonah, I really wasn't ready to tackle the management challenge of Big Idea.For (IMO) the opposite perspective in which a pioneer was too aggressive, you can read the Wired Article of Duke Nukem which mouser posted in this DC Link.Testimonials
Steve Black said:
September 17th, 2006 at 1:50 am
WOW! What a great, and tragic, story. I was saddened to hear of the crash of Big Idea - but had not idea of what happened behind the scenes.
Regardless of all the legal issues, bitter former employees, poor decisions and risks - you created a great product. Your hard work and even mistakes are an ispiration to others to push the envelope. You scratched the surface of a market that is longing for fun entertainment without a “heavy” message. This allows the mainstreem to accept it - when they might run from a full out Christian theme.
For what it is worth - my kids don’t know or understand business. What they know is - the love Bob and Larry. They still sing the silly songs.
Disney lost his first creations through poor legal decisions. If he didn’t take that hit - he never would have gone back to the drawing board and created a mouse.
Get back on the horse. Create again.
Ron Yamauchi said:
September 20th, 2006 at 10:06 pm P.S. I haven't actually viewed and downloaded these torrents and I did zero research on the series so I don't even know how complete these collections are but to save anyone's time searching, these two torrent urls seems to host a semi-complete collection.This one seems to be the public torrent with the most seedersThis one seems to have the largest overall GBBe warned though that these are monova links and while it is also a popular service, it isn't up there with Isohunt, BTJunkie, (old) Piratebay and (old) Mininova in terms of popularity so I'd at least suggest scanning it with a good anti-malware just in case.
A fascinating story. Thanks for posting this, Mr. Vischer.
As a film critic and a somewhat reluctant atheist, I’m not one of your natural allies, but I honestly can say that Jonah is a terrific movie that my kids and I have watched many many times. They even play the computer game.
The big idea behind Big Idea — children’s entertainment with solid family values — is still extremely needed in the market and in our homes. Please continue your excellent work.
Did I say work? I mean, your excellent goofy humour, singable songs, out-of-left-field wit, and general shenanigans!
« Last Edit: December 30, 2009, 04:12 AM by Paul Keith »