This blog is chronicling my efforts, mostly as a record for me or the convenience of others. If you are reading it, then you are probably either a friend or interested in entrepreneurship and innovation.
I was recently asked to speak at a business planning session for film makers. While film making is a little different than a technology startup, I was happy to lend my expertise on making a great executive summary. I tailored my talk as well as my sections to filmmakers and it was well received.
Introduction
First, we must acknowledge that you only have 30 seconds to impress anyone in life. That is especially true if you are trying to pitch an investor for money. An executive summary is your written form formal pitch. Your Executive Summary is that 30 second window.
The reader in this case an investor needs to be intrigued enough by your executive summary to read on as well as meet you. Intriguing does not mean you should use your artistic talent and use fanciful story telling. The summary consists of the most salient points -- your business plan is the time to be long winded. Just give the reader the facts with no embellishment. This is a business proposal, not a script.
Here are the 7 sections your film making executive summary should have as well as 1 optional section. At the end of these sections I provide my 5 pro tips on making an executive summary for your film.
Enjoy.
Executive Summary for Filmmakers
Section 1: Strategic Opportunity (aka Overview)
What's the name of the company?
What type of film or films are you making?
Who are you?
Section 2: Management Team
Give the investor an idea of the team's experience and expertise.
Well known people should go first.
Don't list people who have not officially signed!
Note that the investor is investing in a business. The business team is very important and distinct from the artistic team.
Section 3: The Film(s)
Only the most important information about your proposed film(s).
What's the health of the film industry at the box office, ticketing, indie, mainstream?
For investors that are less savvy they will need this section to assess whether film is a good investment for them in general.
Section 4: The Market
What are the target markets for your specific film(s) and products.
Demographics and numbers around your market. Be specific.
What self marketing methods can you use and how valuable will they be?
Section 5: Distribution
Worst answer: we will get distribution.
If you have distribution already list the names, but only those that have really signed!
We have interest is good PR but bad business planning.
Describe your knowledge for how distribution will work for this specific film(s) you are making.
Give reasons and show your knowledge in the area of distribution.
Section 6: Financial Highlights
This summarizes all the financial information in your plan.
Summary of projected profit and loss over five years (especially for a multi-film plan)
Always qualify expressions of future gain with one of these words: projection, forecast, and estimate
Section 7: Investment Opportunity
Always include how much money you want -- people leave that out all to often.
Do not keep it a secret.
How will investors get their money back?
My 5 Pro Tips: #1 Don't list people who have not officially signed. Interest doesn't count either. #2 Less is more. Get it down to 1 page. #3 Do not deviate from the path of the outline you have already chosen for your full business plan. #4 Anything you say here has to appear in more detail somewhere else in the proposal. #5 Meaningless generalizations in the summary will lead investors to believe they will find them in the rest of the plan. Don't do it.
Innovation is inherently difficult because the innovations have never been made before. There's no guidebook, rulebook, or template. Organizations can only execute to determine if a solution will work or not. Most organizations are poor at innovation. Why? They usually don't have confidence in the process of grinding it out, and they are unwilling to let a project fail fast (or even accept mistakes). Without mistakes and failure nothing is learned to inform the next project or next possible solution set. Without the support and resources to make mistakes and fail, innovation will not occur. Here are some of the other reasons an "Innovation Center" (whether they be academic, corporate, or public) can easily fall short.
Legal Problems. Legal clarity is important. However, in the innovation game, there's plenty of data that shows that confidentiality agreements and onerous contracts early in the process do not protect anyone, and only waste time and energy. Furthermore, innovation departments often need to chart new paths for organizations and partners where law has not been thoroughly established. Innovation is inherently new.
Counter action:
1) Realize that it is best to look backward with legal, not forward in an innovation center.
2) Consider open sourcing all solutions and publish the results for others across the globe to use and replicate.
Fiscal Flexibility in Bureaucracies or the Public Sector. Getting bids and utilizing selection criteria that mask the traits of innovative contractors diminishes innovation center efficacy. Agility and failing fast are necessary in effective innovation offices because technology changes every three months or so. If the bidding process takes three months on average to process then everyone loses. Using small amounts of money quickly is rewarded with feedback that either signals success or failure. The ability to transfer money and make decisions quickly is tough in bureaucracies.
Counter action:
1) Generally a few methods exist to support flexibility but these will need the direct support of the head of the organization (think President).
2) No bid contracts and using public corporations or foundations (used more in public university settings) to issue money.
Placing Innovation under a Rock. Crazy. Foolish. Wasteful. Defiant. Infringing. These words will be use to describe all of the activities of innovation centers and more. Other departments and leaders in the organization will invariably not support innovation activities because innovations eventually mean change. Stopping actions in the innovation center through many methods prevents change from coming for these leaders and employees. We generally call these change prevention practices and they lead to failure of innovation centers.
Counter action:
1) The most successful innovation centers report to the CEO, Mayor, or head of the organization and him/her alone. Nesting the innovation center or having it report to two or more leaders invariable stifles innovation.
2) Normal rules cannot apply to the innovation group. By its very nature the innovation group needs to operate in an environment that has no rules. It needs to be protected to flourish – otherwise the planted seeds will be “crushed” before germination.
3) Change prevention teams work to reduce adoption of proven solutions killing the return on investment in research and development; the only counter point is the support from the head of the organization to adopt.
Coordinated or Unorganized Change Prevention Teams. Change prevention teams will be present during all phases of project development and adoption. It is very easy to say no – it means less effort and time for the department being changed or people being acted on.
Counter action:
Reward risk and provide incentives for people to change and work with the innovation department.
Adoption. When handing off a successful project, innovation departments often find that the final resting place for an innovation will resist adopting the solution because they were not included in the development of the solution. It happens a lot in major companies all the time. This kills the return on the research and development investment.
Counter action:
1) Create innovation liaisons in each department to provide input throughout the development of innovation project.
2) Create incentives for adoption.
Accepting Failure. Innovation is about taking risks and seeing the results. If failure is not an acceptable outcome, then you aren’t risking anything and you will only be making incremental changes rather than innovating. Incremental change is not innovation; it is development. To double the real successes in innovation centers, you need to double the failure rate. Furthermore, failing at a slow rate wastes time and organization money.
Counter action:
1) Rapid prototyping with constant feedback loops is the best route to success.
2) Kill bad projects early when the writing is on the wall and learn from them.
3) Give away the success and failures so that others may learn from the projects.
4) Publically acknowledge failures along sides success to support cultural change.
5) Reward good failures equal to good successes.
Not Expecting Success. Day-to-day the innovation needs to focus on how the organization will look when it gets it right. Most of this can be solved with vision. It is hard to innovate without a distinct purpose and passion.
Counter action:
1) Create an innovation agenda
2) Issue “Grand Challenges” to focus on what the future looks like when the innovation center succeeds
Disciplinary Focus. Innovations occur at the intersection of disciplines. Innovation offices need a group of innovators from all walks of life. Only having programmers or only having engineers will perpetuate incremental changes.
Counter action:
1) Interdisciplinary teams will succeed more than singularly focused teams. This means having different team members from many disciplines on the team.
2) Especially in less technologically focused organizations, select those individuals that are high on execution and have knowledge of the scientific method.
Killing Enthusiasm. Exploring the unknown is tough because more is at stake than money. Bravery, initiative, and excitement are also on the line. Capturing energy, amplifying it, and building on new ideas is the order of the day. Innovation centers that have poor morale take ideas and make them smaller, instead of making them bigger. This changes the return on investment.
Counter action:
1)Select innovators with high energy, self starting mentalities.
2) Accept that when innovators dream big they seem crazy and other leaders in the organization will treat them as such.
The Value of an Idea. There is not a shortage of ideas in innovation centers. In bad innovation centers there is a shortage of execution. Successful innovation teams build and build fast to prove something out and then go back and sort out the details and polish it up. They do not design silver bullets. They find real bullets at the end of the process and polish them up into silver bullets.
Counter action:
1) Take quick small actions early in the process on multiple fronts using an options management philosophy. This will catalyze execution early on a project.
2) Get feedback early and often during rapid prototyping stage.
Teams are not created equal. Innovation centers will often be asked to partner with another department to help it innovate. Not all departments are created equal. Innovation departments need to work with proven partners that have change momentum.
Counter action:
1) If a department is not oriented for change it is best to conclude a project early but respectfully if it does not meet a threshold of innovation culture.
2) Be mindful of resource allocation and human capital expenditure when partnering. If the contributions are not equally with the innovation center giving more, then re-evaluate the project.
Who Decides? It does not make sense to work on a line of innovation unless it is clear in advance who must say yes to adopt it. As discussed in the section change prevention teams, we know everyone can say no.
Counter action:
Innovation centers need to intentionally limit the number of people who are allowed to weigh in and are clear to themselves and their potential partners about exactly who can (and must) give the go ahead.
Not Measuring. There cannot be success without deciding how success is defined on a project-by-project basis. Each project will be different. Money is often used as a measuring tool, but in innovation departments, alternative measures need to be included as well.
Counter action:
1) When project is scoped, the innovation center needs to define the measures that can be used to determine the extent or degree of success.
2) Leaders and decision makers need to agree to the measures and communicate them to stake holders in advance.
Bad Process. Bad innovation centers waste time in endless meetings with random vendors and internal naysayers and even hassle about tiny details up front. They do not actually get things done.
Counter action:
1) Good innovation centers have an agenda and a project manager's understanding of what it means to get things done.
2) They publish the process and share it with anyone who wants to know.
Poor Context. You cannot create value in a vacuum. Yet organizations do not provide the specific context for innovation occur.
Counter action:
1) Build co-working environments and project spaces for the innovation office.
2) Avoid traditional office trappings and introduce objects that encourage “play”.
3) Silo or separate the innovation team to remove social and other pressures not to build sweeping solutions.
Investors should consider the seeding of multiple, concurrent ventures in order to take advantage of the confluence of technology and talent in their cities. Traditionally overlooked regions such as the Nashville, Memphis, or Little Rock area have a serious opportunity to seed new ventures.
How do you successfully seed multiple ventures concurrently? Work on pre-seed stage technology ventures simultaneously and rapidly incubate them. A few modest successes would have a tremendous impact and provide necessary returns to investors.
Phantom Works Method
Target Businesses The organization will be targeted towards businesses that meet the following criteria: a. Can be developed, launched and operated (at least initially) by a small team of highly capable, actively involved founders. b. Initial start-up expenditures less than $200K and likely less than that. c. Can be ramped up and brought to market quickly.
Stages of Incubation Stage 1: Proof of Concept If approved, the business team will receive a $10,000 promissory note. The funds will be used to establish the project’s viability within 4-6 weeks through refinement of the business plan, creation of a technology roadmap and the design and development of a product prototype. This first round will be structured as debt to ensure the team’s active participation in the incubation process. If the project fails to pass this stage, but the team exhibits active, good faith participation (including the project postmortem), the debt will be forgiven.
Stage 2: Viability Assessment The business plan, technology roadmap and prototype are presented to a review board for assessment. The board will review the proof of concept and ultimately decide whether or not to fund the project to the next stage.
Stage 3: Development i. Product development will proceed in quarterly funding iterations. At the beginning of each quarter, the team will receive a round of funding in exchange for a minor portion of equity, in accordance with a pre-determined funding schedule. ii. Phantom Works will provide shared office space and resources for member companies. iii. Every 14 days, the team will be required to provide a regular status update, including: 1. Live demonstration of new product development 2. Roadmap review and estimates for the next status update 3. The teams will be assessed for success, setbacks, and overcoming challenges in a timely manner.
Stage 4: Launch or Scrub i. Launch: Within a predetermined timeframe (ideally 3-6 months), the product should be released and get to dollar one. Once launched, revenue milestones will be tracked and managed accordingly. ii. Scrub: If the team is unable to successfully launch, the board will decide to scrub the project. In this event, all active members of the business team and associated mentors will be required to participate in a post-mortem activity (as required by the terms of the initial loan and subsequent funding rounds). The purpose of the postmortem will be to identify factors that contributed to the project’s failure and use the information learned to mitigate risk to future teams. Furthermore, it is designed to help the teams reform and start again on a new startup as possible, quickly.
Reason for Method The process is designed for the startups to fail fast, and build strong experienced startup teams that can be serial entrepreneurs. Unlike traditional investment banking and venture capital models, the goal is to quickly incubate lots of businesses with an expectation to get several successes. Rather than pour large sums of money into a handful of businesses in the hopes that one will be a billion-dollar lottery ticket, this model is designed to spawn many, successful businesses that can have an adequate market impact to attract either acquirers or venture investors.
Synopsis: For the cost of one job saved in Shelby County, Tennessee by the American Recovery and Reinvestment Act ($1,381,502.90), City Ventures could empower ~100 individuals to make their own creative industry job in film, music, visual art, or high growth business startup by becoming entrepreneurs.These entrepreneurs would, on average, create 4 additional jobs in each of the next 5 years as their business expands.Beyond the economic impact, the social and cultural impact for the city would be profound.Exemplars, data, and other indicators show that small investments in creatives coupled with cohort experiential programs, do far more for a city’s future than other methods. Extensive research shows that entrepreneurs are made, not born.
Description: City Ventures would be the first experimental city venturing program that focuses emerging creative talent on constructing their own economic opportunity in four areas: film, music, visual arts, or high growth business startup. Learning by doing, prototyping, and other experience-based approaches produce real returns, but are often discouraged due to fear of failure.This fear stifles innovation, entrepreneurship, and cultural activity. We can reverse this trend, embrace risk, and enable our creative citizens to build entrepreneurial ventures for the first time in their lives with an inexpensive investment of money, resources, education, and systemic accountability.The short-term return is cultural vibrancy.As creative individuals learn to monetize their creative product, the long-term outcome is economic productivity and retained talent in a city that faces creative talent erosion.
In Practice: City Ventures would employ a cohort program of industry specific milestones, mentoring, peer collaboration, culminating demonstrations and unveilings, along with entrepreneurship lessons in each of the 4 creative focus areas.The participants will make real products appropriate to their industry (i.e. filmmakers make films), while learning and implementing strategies for monetizing their products in the real world. Too often economic realities, such as paying rent, can derail entrepreneurial action. To insure that participation is unfettered by these issues, small monetary stipends or investments are coupled with the “tough love” program -- approximately $15,000 per creative venture plus a system of accountability.There are strong indicators that small investments with cohort programs act as a major catalyst in technology and arts entrepreneurship programs (TechStars, Y-Combinator, Bizdom U, CreateHere).City Ventures extends these successful models.
The Math: To run this venturing program in each of the four areas would be comparatively cheap with high economic impact:
4 Areas of Creative Entrepreneurial Action
x 10 Groups of 1-3 People per Area
x $15,000 per group
$600,000 in Total Direct Investment
+ $600,000 Program Operating Cost(Estimated)
$1,200,000 Total City Ventures Budget
or Less than the cost of one saved job in Shelby County
On average, City Ventures would impact ~100 individuals in each year of operation and empower them to “be their own boss,” while pursuing their passion.After 3 years, the ~300 creatives would have a major cultural influence, while simultaneously contributing economically.Every dollar invested is expected to return ten or more in economic impact.
“New School” Economic Policy: Economic development policy that focuses on persuading existing businesses to relocate or enticing a big studio to film in your city is good PR. However, such a policy ignores a much bigger opportunity: transforming creative talent into home-grown creative businesses/industries.Transforming existing talent into creative entrepreneurial ventures provides lasting social and cultural returns, and utilizes the human capital that is already present in our cities.
Shelby County, Tennessee has received nearly $478 million in ARRA funding. The number of jobs saved to date with this money is 346 (Memphis Business Journal). That equals $1,381,502.90 per job saved.For the cost of one job saved, City Ventures could empower approximately 100 creative, entrepreneurially minded individuals to create their own jobs and as their business grows, to create even more.
The City Ventures’ model is based on over 30 years of economic data, which proves that individuals betting on themselves, and the city in which they live, will create more jobs with remarkable efficiency, especially when public and private systems invest in individuals.Extensive research by the Kauffman Foundation has shown that entrepreneurs are in fact made, and not born.
National Facts (Kauffman Foundation)
Fact 1: Over the past 30 years, young companies (0-5 years old) have accounted for more than two-thirds of all net new jobs.
Fact 2: Each young company creates an average of 4 jobs every year.
Fact 3:Since 1977, without startup companies, net job creation for the American economy would be negative in all but a handful of years (meaning we would have lost more jobs than we created over the past 30+ years).
Memphis Facts (Smart City)
Fact 1: On average three to five 25-35 year olds including our creative talent leave Memphis each day searching for a better opportunity or lifestyle.
Fact 2: On average three middle income families leave Memphis each day as they look for cultural and economic opportunity that builds hope for all citizens.
Fact 3: Contributing to a loss of hope: 35% of Memphians are unemployed or have been without work for so long that they have stopped looking.
Fact 4: Cost of Loss of Hope: A Year in Prison ($30K+), A Year of Welfare ($20K+)
Fact 5: ~$14K: Average startup costs in film, visual arts, music, or high growth business
Why Memphis? Why Now?Every citizen desires a chance to do something great with their life, yet few cities provide outlets that empower individuals to be bold in art, film, music, or high growth business startups.The greatest economic tool ever invented is applied entrepreneurship, regardless of industry.Entrepreneurs in the creative industries don't just do it to become rich; they do it to build creative products that can influence their community and society.
Closing Summary: City Ventures will enable emerging talent to bet on themselves, their city, and their innovative ideas, without fear. Creative entrepreneurship will yield positive social, cultural, and economic returns for the city smart enough to empower its citizens.
"Why not start a city creative capital venturing fund – virtually unheard of in other cities.”
– Eric Mathews, LaunchMemphis–eric <@> launchmemphis.com
Here are the quick hit facts in the article as a teaser: Fact 1: Over the past 30 years, young companies have accounted for a massive amount of all net jobs (more than two-thirds). Fact 2: Each young company creates an average of 4 jobs every year. Fact 3: Since 1977, without startup companies, net job creation for the American economy would be negative in all but a handful of years (meaning we would have lost more jobs than we created over the past 30+ years).
Eric Mathews was featured in the Commercial Appeal this past week for his presentation at the Social Media Expedition breakfast. For entrepreneurs hoping to address the broadest marker possible, Mathews talked about light social as a pathway for 2010.
