One my recent reads has been Viral Loops : From Facebook to Twitter, How Today’s Smartest Businesses Grow Themselves written by Adam Peneberg which is a compilation study of various of Silicon Valley start ups which rode the viral train to mega riches sort of. The sort of is the interesting piece as Peneberg cites the work of Susan Buice and Arin Crumley in the creation of indie based movie named Four Eyed Monster.
While the idea behind this post is not to be a critic of the movie, a little background might be helpful to fully understand the economics which is the purpose of this post. In short Buice a self described uninspired waitress & Crumley a self proclaimed computer nerd meet up over the internet. However the twist in the story line is they decide to only communicate through hand-written notes. As they progress through this courtship, they fall in love and continue to relate solely through videos, emails, drawings and physical intimacy for the next 4 months, again no speaking, cute story line right?
So now to the economic part, they then (after agreeing to speak) decide to quit their day jobs, max out 7 credit cards to buy [digital] film gear and create a documentary of their 4 month courtship. From these cards they borrowed $54,000 and invest two years of their time along with other associated people to create the product. When complete in 2005 (five years ago) it received substantial praise from the indie film community along with a bevy of awards. However with this came fame and notoriety, however no money per-say. Given the two youngsters where in debt to the sum of $54,000 at credit card rates, their financial boat was sinking faster than the Titanic!
On top of this, main stream media being threaten by a nerd and waitress with a digital video camera shunned them so no big Hollywood discovery moment (as it only happens in the movies). So one of the key lessons here is the history books are full of heroes and they are all dead. So venture forward with the understanding that the first to hit the beach, are typically the first to meet their maker and the business is world is like this too. Apple was a good example, they weren’t the first in the personal computer market, however they “drafted” the popularity of the failed Altair. Then there was Microsoft, they were not the first either as there are those [like me] out there who remember CPM-80/86. So watch those businesses that are failing today for the next “big thing” of tomorrow.
The second rule broken is the viral rule, as they expected to make money and while I don’t fault them personally as the base assumption was most likely at least enough to pay off the credit cards and cover their sacrifices for two years. However, viral aspects typically do not work when economics are upfront drivers, now this is not to say that money should never be an object, just not up front. Economic friction prevents the upfront momentum required to achieve viral standing. Remember the only time there is magic in a snow balls life is at the moment its created, gravity does the rest.
The final rule they forgot (or didn’t realize) is that costs can be viral too, so while the $54,000 grew while being compounded at 21%, they also lost 4 man years (2 years each) of earning potential at a young age which could have compounded. This does not include the time invested by the many others in the project who in turn forfeited something. Then even past production, the years spent in promotion where also losing propositions too. So it wouldn’t surprise me if the rationalized cost of this project over 7 years for both real and lost opportunity isn’t near or above the $700,000 mark.
What did they miss in this, the “venue” as when they showed the movie in a “venue” setting it sold out. As written before, the “venue” will be the economic engine for media going forward as it brings together “physical” social connectedness (which can’t be achieved online or via digital media) as well as a non-repeatable experience. As while a band may play the same song in each city they travel to, the words would be the same however the experience will be unique because of the differences induced by the attributes of the “venue”. Thus early on if our dynamic duo would have recognized this, and refocused their efforts to creating an “event” from the “message” rather than the sale of the “medium”. The economic outcome could have been wholly different.