CAA (with Michael Ovitz)

Transcript from https://podmenti.com/t/8f8abf3896f4bb81

I was watching you at Bill Murray at the Ninety Second Street Y. How great is Bill, right? He's like the worst interviewer.
Ever. But he's hilarious. He's Bill Murray We'll let you talk more than Bill did.
Who got the truth?
Is it you, is it you, is it you Who got the truth now?
Is it you, is it you, is it you?
Me down, say it straight.
Another story

Welcome to season nine, episode eight.
The season finale of Acquired, the podcast about great technology companies and the stories and playbooks behind them.
I'm Ben Gilbert, and I'm the co-founder and managing director of Seattle based Pioneer Square Labs and our venture fund, PSL Ventures. And I'm David Rosenthal, and I'm an angel investor based

And we
Are your hosts.
He was the most powerful man in Hollywood for two decades.
He is responsible for movies and TV shows you love, like Late Night with David Letterman.
Jurassic Park, Back to the Future, Rain Man, good fellas.
And literally hundreds of others.
We are here today with Michael Ovitz to tell the story of Creative Artists Agency.
CAA, the legendary talent agency he founded in nineteen seventy five.
that changed the power structure in Hollywood forever.
And not just Hollywood.
As many of you probably know from our earlier episode this season, Michael and CAA inspired none other than Mark Andreessen and Ben Horowitz to similarly change the power structure of Silicon Valley.
Boy did he ever Ugh.
What a great
way to end the season. I am so pumped.
All right listeners.
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Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client.
If your legal team wants to check it out, whether you're a law firm or you're in house at a company.
You can learn more at Lagora.com slash acquired
And just tell'em that Ben and David sent you.
Listeners, before we dive in.
Many of you already know this. A ton of you have already subscribed, but the LP show is now publicly available in all podcast players for free.
So only the uh first two weeks of brand new episodes are in the private feed. Everything else, you can go search acquired LP show in the podcast player of your choice.
And get all those episodes.
Now
Without further ado.
our conversation with Michael Ovitz.
Michael
Welcome to Acquired.
Thank you very much. It is so great.
To have you here with us.
So we're thinking
Of course.
Like any good.
Creative artists.
We're gonna steal.
from your book. And we're gonna start in media stress.
And then rewind.
Just to set the stage.
For what's to come.
Just don't ask me any hard questions.
Well, I think you'll enjoy telling this story.
Can you tell us the Jurassic Park story?
You must be like me and like dinosaurs.
Well, that was the key to all of it, right? Everybody likes dinosaurs.
I think that's accurate. That's what got that movie made, basically.
So
You had a pre existing relationship with Michael Crichton, but he hadn't produced any new material in a while, is that right?
So Michael was a client of mine
Starting in
The late seventies?
And
We developed an extraordinarily close
personal relationship that went way beyond
Our professional relationship.
And I literally talked to him.
Every day of the week. And I did that
Not because he was a client.
Partially because he was a friend.
But mostly because he was one of the
smartest and most interesting people.
He was really like a Leonardo Da Vinci type, right?
He was amazing. Here's a guy who was a medical doctor.
Screenwriter, director, travel writer.
Short story writer.
Novelist.
And just
was probably
The greatest guest to ever have at a dinner party.
Because
He could talk about anything.
with an extraordinary depth of knowledge.
And
It's fascinating to me because later we'll talk
About another friend of mine who
I
love putting together and that's Mark Andreessen.
The two of those guys
probably suck ninety percent
Of the brain power that God gave away in their birth years.
They're just extraordinary.
But Michael ran into a very
Tough patch.
Really tough patch.
And a lot of writers and creative people
And you've probably heard the expression writer's block.
You know, they
Occasionally just
It doesn't flow.
Artists have it as well. I have a friend who's a phenomenal
Painter and she
Just couldn't get it together for six months.
It just wasn't coming out.
And
I think that Michael was in a position
Well
He was going on a couple years and he just wasn't
Happy with what was
Coming to him and
I used to have lunch with him once a week, and
And
I would push him.
Constantly
At the lunches to try to see
If I could ignite a small spark.
And at one of the lunches when things seemed the bleakest
He said to me, What do you think?
Of
Three people
age younger and maybe one little older person
Stranded in an amusement park.
Off the coast of South America
And the core of the amusement park.
or prehistoric
Animals.
And
I looked at him and I said, Wow.
My young son likes
Dinosaurs.
I like dinosaurs.
And my dad likes dinosaurs.
This is really an extraordinarily interesting idea.
And we then talked for almost three hours.
About paleontology and
about is it possible you could breed
these type of beings
In the twentieth century
Could it be made real?
Is it possible with
In those days
with the kind of technical know how
that was available in the nineties to do it.
And we
Came to the conclusion that it was worth him sitting down.
And trying to write it.
Lo and behold he sat down and five months later he
He called me up, he said I'm sending you
A draft of a book about what we talked about.
And he sent it over, and I remember sitting down
Around six o'clock in the evening, six thirty I had something to eat.
I had left the office early and I just
Started reading typewritten manuscript pages.
And I didn't
finish until around three in the morning.
And I
called him at seven AM and I said
This is the best thing you've written in
Ten years.
And I said I just couldn't stop turning the pages just as an aside.
One of the
Great tests of whether something works or not.
Is how quick you turn the page.
And you know from reading just
recreationally.
If you turn the page you like the book.
And I just devoured this book.
And I said to him, I said, look
This is brilliant.
It'll make an amazing book. It'll make an amazing movie.
And I said, There's only one guy in my mind that can make this movie.
They're not two guys or three guys or four guys.
There's one guy and if we don't get him
I would be worried about what this movie looked like. And he said who? And I said, Steven
And in our world
There are certain people that have single names.
There's Madonna, there's Cher.
And there's Steven Of course Steven Spielberg, who was also the one director.
Who is not your client.
He was not my client and I wanted him to be a client very badly.
So my brain started to work on overtime.
And basically I said, Michael, I'm gonna call Steven.
So at nine AM I called Steven, we talked and I said I've got
Something I want to send you.
And I know you don't read at night.
So I'm gonna call your wife Kate Capshaw.
And I'm gonna ask her permission for you
To disappear tonight and read. This is like a classic agent trick, right?
Call somebody spouse.
I had no choice. Because I had to create a sense of urgency around this.
But also I didn't want to over sell
And I didn't want to under sell.
So he agreed. He said, Call her. I did. She agreed.
Sent him the book. He said, How much time do I have?
I said you've got
Today and tomorrow.
And lo and behold, the next morning
At seven thirty in the morning my phone rang.
And it was Steven, he said, This just
knocked my socks off. He said, I couldn't believe this book. He said, I'm making this movie.
And what year was this?
So this was about a year before the movie was made?
Ninety one, ninety two.
It's very unusual to begin
This level of
pre-production on a movie even before the book is published. I mean, this is on the first version of the manuscript, right?
Yeah, this is highly unusual. What's even more unusual
Is I asked Stephen to commit to the movie.
subject to a budget and we had no distributor
And no financing.
And Steven was the most
sought after director in the business.
And to his credit.
He said okay.
And I called
His producer
Kathy Kennedy.
Who oddly her husband
Frank Marshall was my college roommate.
Whoa, no way. So I had a little credibility there. And Kathy runs Lucasfilm now, right?
Or no credibility, David, depending on how you look at it.
And
I said, Can we get a budget on this book?
He said, Sure.
He said, But do you have a script? I said, No.
So I sent him the book.
Sent her the book. They both read it.
We did a rough budget.
And Michael decided to write the script.
subsequently brought in some help.
And basically I went to
Universal, which was where Steven was housed.
And I called the head of the company, Sid Scheinberg.
And
It was kind of a famous
saying at the moment, but I said, Sid, we got good news and bad news.
He said, Great, what's the good news? I said we've got a
Michael Crichton book, Michael Crichton screenplay.
Steven Spielberg's committed to direct. Kathy Kennedy's gonna produce
And I said
And it's about
Dinosaurs, which we all love.
It's three people trapped.
In an amusement park gone awry loaded.
With prehistoric.
Animals.
And Sid of course is the number two to
Lou Wasserman.
Who we're gonna talk about in a minute.
So Sid says, Okay, that sounds amazing. What's the bad news?
I said, Sid, the bad news is you don't own it and we do.
And I said so Steven doesn't control it.
Which means your first look with him.
Disappears.
But Steven wants to make the movie at Universal.
And he said, How much time do I have? I said, Twenty four hours.
And he asked what the deal was. I told him the deal
That we were gonna be partners with Universal.
Dollar for dollar.
And he got back to me about
Twelve hours later said we're in.
So this was all done.
Under the
Tutelage of CAA.
With
Crichton and Spielberg and Kennedy.
And Frank Marshall, who helped us with the budget.
And it was one of the premier packages we ever put together.
And we're gonna talk.
A lot more about.
Packages and everything you pioneered, but
In the old world.
The old Hollywood.
All these people would have been under contract with the studio and just paid employees.
Paid labor.
Jurassic Park went on to gross a billion dollars.
So actually if you add all of them together.
It's much more than that.
Wow.
And
Your team.
The creative team.
N C A.
Kept fifty percent of that.
billion plus.
Well, the creative people had fifty, which means we had five.
Right,'cause you had ten percent.
Yeah.
Even though everyone
Chided us saying we never took ten percent, but
They were all wrong.
So is my math right then that Steven had about fifty percent of that and Michael had about fifty percent of that? So each of them ended up with
A quarter billion dollars from this franchise.
I don't know what they ended up with. They didn't have an equal split. Okay.
Steven add more'cause as a director you command more.
But they both did very well.
And as David brought up
If this
was done under the old studio system.
All of them would have been under contract to a different studio.
And the odds of loaning them out
We're nil.
And then
The odds of getting this made
outside the system would have been almost impossible.
Before we dive into this old system that David's

I just wanna
Point out how unusual it is
I mean, you represented Michael and for years, you know, he's sitting there with writer's block and you're just getting lunch with him every week, like coaxing him along, trying to figure out what that next big thing is.
Even though
Yeah, he's your client and you're spending all this time and attention, but the agency business model is to get ten percent of what
actors, directors, writers are creating. And if he's not creating anything, you're spending a ton of time with him as obviously client, friend, and as your belief.
in his future.
That sort of made this all possible.
Well that's true, but
I will say one thing about the agency business.
that is really not
Well known.
Agents are depicted
as money grubbing as
Not loyal.
aggressive
Short sighted sometimes.
But you know the reality of it is
I don't know many agents like that.
The agents that I dealt with at CA, the agents that I competed against
were vigorously
and ferociously loyal to their clients.
A lot of them were in the same position I was with Crichton.
There is zero chance that I would have let that guy down.
None.
And
I knew he was having a tough time.
And it was my job to be there for him.
Carry it.
Not a discussable issue.
На чось.
Not an option.
I had to be there.
And I will tell you, I tried some hokey things
to get'em stimulated, you know, I brought'em other people's ideas.
Sometimes I'd bring him an idea so bad
To try to get a chuckle out of'em where he'd look at it.
Say what are you thinking?
And I said, Well I'm
Thinking
that maybe you'll think this is so bad that you could do something just uh
Little bit better.
And frankly, the agency
To their credit.
went around telling everyone that Crichton was working on an original.
And by the way,
That was unequivocally untrue.
He was working on nothing.
I mean he could barely get out of bed in the morning. He was really wiped out.
He felt he had just
spent all this creative currency.
So
My job was to just
Back him up and
stimulate him into thinking that he could do it again.
You know, back when all these folks were
Under contract. And really I mean
Reading about
Old Hollywood and learning how the old studio system worked.
To me it's like a sports league.
There were
Five teams, the major studios, and then a couple
Independents, a couple of major minors.
They were all a sports team that had the owners back in New York.
And
had the GM and the manager, those were the studio bosses, and then all the actors, directors, writers, they were
Players. They were like
LeBron James, they might be you know paid well, that's a bad example'cause the players make so much more money now, but
It's like a N F L player in the seventies.
Yeah, they played for the team and if they didn't go out and play
They would get suspended.
I think that you could
Safely compare
the studio system to today's NFL.
And they had people that made a lot of money.
They had artists that were getting
in their time substantial sums of money.
You know, the Douglas Fairbanks, the Mary Pickfords.
Then if you moved into the next era.
The contract players, the Clark Gables, the Jimmy Stewart's
The carry grants.
They were paid.
In those days.
Money that was unthinkable.
even for the folks where it was a large amount, it was committed up front, right? They didn't get
a share of the proceeds until
Who was the first to really get a gross proceeds deal?
Well the first is the famous story
Of the movie Winchester Seventy Three.
Where Lou went into the studio and
suggested a lesser front money payment for
A piece of the back end prior to that.
Artists were paid what's called flats.
Which is a flat fee.
And they didn't get
A basic
Participation.
And
I think
That what he did is he changed the entire
fabric of the business.
And so that was Jimmy Stewart.
in Winchester seventy three. And Lou
was his agent.
Yes.
Was his agent.
Which is funny'cause then Lou went to the other side.
And
If you go all the way up to Jurassic Park.
You know, he got stuck with
Participations. I had a similar issue with Lou.
And sit over back to the future.
Where they were running the studio.
And by this point in history.
Lou's original trick of hey
Let's get Jimmy Stewart.
cut in on the back end. He's a partner in this movie. He's gonna participate from the upside.
You would
take what he did and what CAA really did was
multiply that over and over and over again such that the talent was really participating in the upside. So then by the time you bring Jurassic and you bring
Back to the future to Lou when he's a studio head at Universal.
That's gotta be kind of a wild full turn of events to really get the better of that deal.
Well, it was interesting. One of the things I said to Lou
When
Our director, Bob Zemeckis, who's a brilliant director.
was going back for Back to the Future two and Three and I wanted a
Larger participation for him.
my opening line to Lou was, You cause this problem.
It didn't go over very well, by the way.
Who was Lou?'Cause from the outsider's perspective, like here's how I sort of see things.
Lou.
was an agent.
He was like Anakin Skywalker, right? Like he was like fighting for the artists.
To get
Way more the upside.
But then
He went to the dark side and he stopped being an agent and M CA, his agency bought Universal and all of a sudden he's on the other side of the table as a studio boss. Now from your perspective trying to stiff the artists.
How did this happen?
He made a decision first he bought the pre nineteen forty eight
Paramount Library.
for universal and he made a decision.
Basically that it was better economics on the other side of the deal.
Why take ten percent when you can have ninety?
First.
He bought review television.
Then he bought Universal.
For a period, by the way, Lou was still an agent while he owned Review Television. Oh my goodness. So he had the ultimate monopoly. He's on both sides of the transaction. Yeah.
You know, I've always felt and I still do
I'm really interested in dealing with conflicted people.
Because
If you have a conflict
In essence, you want it to work out on both sides.
So a lot of times I'll go to someone with a heavy
conflict to this day to work out a problem.
I'm thinking of
Lou and M C A as sort of
Opening up a seam.
For
Artists.
But then closing it again, but maybe that's not totally accurate.
How would you characterize Lou then and what he did?
With universal.
They gave participations out.
They didn't stop it.
They negotiated hard and tough.
On their side.
No different than we did on our side.
But they were sympathetic too.
They didn't just say, look, we're not doing this, we're reversing it all.
And frankly
As CA gained momentum in the
eighties and early nineties.
They didn't have a lot of choice because
Of the fifty top grossing directors.
For example in ninety
CA represented like forty five of them.
So
It was impossible.
You couldn't say no.
I remember when we signed Mike Nichols, may he rest in peace, a great director.
I'll never forget a call he made to me.
He was getting two and a half million to direct.
And when he became a client of ours.
we went to make a deal for him, I called him up and I got him five million.
And he said, I don't understand. That's not my price.
And I said, Well, it is in the context of being a CAA client.
Because five million was what the top directors made
At that point in time.
So I said Mike, you're a top director.
I said if you want, I'm happy to take
Two and a half of it and donate it to charity.
At the time I was raising money for the UCLA
hospital, we were gonna rebuild it.
So I said I'd be very happy to take that.
Two and a half million for the hospital.
And
He said, I'd love to do that, but I'm very
Please to have a
The full amount.
Did he make a donation to the hospital at least? He did. He made a small donation. It was not two and a half million.
But he was very generous. He was a great man.
And a great director.
All right, so let's go back to this era before you got into the business here. You mentioned Lou bought this pre nineteen forty eight catalog, which was a genius move'cause you could then
run these films on television, which was rapidly sort of uh
proliferating around the US and make all this money on owning the rights to this catalog that are playing
Meanwhile.
MCA buys universal. So you have one company there that's both an agency
And a studio.
Well
Washington D C of course doesn't like this and they use the same word that you did, which was monopoly.
So the hammer comes down and my understanding is MCA couldn't function as an agency anymore, right? That MCA Universal turned into a pure studio. Let me give you
A sidebar rumor. Oh.

Most of us that were in the business would bet on as a fact.
Lou was the chief.
Fundraiser for the Democratic Party.
In West LA.
You know

Glore.
That Lou called
One of the Kennedy brothers.
And suggested that
MCA be broken up as a monopoly.
Why would he do that?
Well, it was really if it's true and it makes a lot of sense'cause it's brilliant.
Because what Lou didn't want
Was MCA to stay together as an agency?
And leverage him at universal.
So by breaking up MCA
that whole company went into a group of
Tiny agencies.
None of which
could give him a problem until we came along.
We were his worst nightmare.
Because
We created MCA on steroids.
And
We
would never sell.
Any idea or client.
Unpacked.
Or naked to a studio ever.
Ever.
So anything we did
was pre packaged where we
controlled all the elements.
And our clients control their own destiny.
By controlled all the elements you mean the script, the director, the stars.
Everything. Everything.
It was in our clients' best interest.
For us to go with a package to negotiate.
Because the
Counterparty.
They had no choice, so we could dictate terms.
So frankly, we legally
Set prices.
Even though you're not supposed to price that, we basically did it.
Because you owned the scarce commodity, which was the complete package, and no one else had access to that, and then you would just go sell that one package.
That's right.
So
If you had
stripes or ghostbusters or Gandhi or
twins or kindergarten cop.
or any of the three hundred and fifty films
That we packaged.
Tootsie Rain Man.
go down a forever list.
You had a choice. You'd buy the package.
Or we
sell it to somebody else because
We viewed the studios
as distribution entities.
Period.
We didn't need them to tell our clients
How to make the films.
Now we did need them to distribute and market. They were great at that.
We never sold a single piece of materia.
On its own.
Ever.
It all came wrapped up.
With elements.
Where did that insight come from? Because I know in the sort of pre-CAA studio world, you know, the talent agencies would represent the talent and then the studios would do development. You know, they would buy the script and they would attach a director and they would
turn it into a film and then they would go cast the
the actors, how did you sort of get the idea of
Oh, we could do that.
Well
The idea was
Pretty
Simple, frankly.
In that when we started
In seventy four.
We didn't have any clients.
So all we had were relationships.
So all we could do is put elements together.
And try to
Attach ourselves and hang on.
to a bucking bronco.
And by doing that, and if we can hang on
It developed that as we took clients in
We'd surround them with elements.
Because it became very clear to us that clients
Were the creative force.
And they were the ones that were gonna dictate
What was going to happen?
Was kinda the same reason that I encouraged
Everyone at the agency to read a lot of magazines.
Now you can't think of magazines today the way we did.
'Cause in the seventies, eighties, nineties.
In early two thousand.
Magazines were vital part of the culture of the country.
They were the internet.
It's correct. Pre internet.
My thesis was
That
Art directors of magazines and editors.
We're always six months ahead.
They had to be because it took three months
To get a magazine out in a month to let it sit on a newsstand.
So they ought to think six months in advance.
So I urged everyone at the agency
To read.
We had a list of
A hundred titles.
that they needed to look through every month.
I subscribe to two hundred magazines.
And I didn't read them all, but I would sit and thumb through them.
While I was on the phone, so
You know, I would read
Things like
Golf digest.
Motor Trend Automobile Carn Driver.
Why did I read those? Well I'll tell you why.
When I met Paul Newman
I actually had something to talk to him about because
Paul Newman loved
Cars.
Now
Could I talk for days? No.
But I had enough to get through an hour.
So whatever we read current events
You know, we read women's magazines like McCall's and Red Book and
Vogue and Marie Clare.
Why did we look at these?
Wanted to see what fashion like.
If you wanna talk to an actress, you gotta
Have some insight into look and feel and what.
People are thinking.
Doesn't mean it was always right, but it gave us a firm
Overview.
Of
editorial process
by people whose job it was
Was to predict the future.
You're in the business of being able to relate to people and quickly build strong trusted relationships.
And also get a sense of where culture is going.
You know, we got
The account.
To do all the advertising for Coca-Cola.
Because we
were really culture mavens.
We really had a sense.
of what the audiences wanted to see.
And before we did this there was this
Kind of unwritten rule that only buyers could do that.
you know, studio executives, network executives.
And my thesis was
I had a partner named Bill Haber who was head of our television department.
He was one of your founding partners, right?
Yeah, Bill Haber could read a screenplay, a teleplay.
And give as good a notes as any executive at any television company. As a matter of fact
I could probably make an argument he could probably do it better.
He was really good at it.
We put together Shogun.
As a mini series, everyone said Bill and I were crazy.
That we'd lost our minds.
Who cares about the Far East?
And how do you make a
T V series about
A bunch of Asians
And one an anglo.
Well
It was our point of view from everything we were reading.
That Asia was becoming a very hot commodity.
in the seventies and eighties, people were really interested
And what was going on
The rise of electronics and electronic companies
Like Sony and Matsushta?
Panasonic national
These were
major players in our business.
Developing hardware.
for all of the software that our clients were creating.
And those are the kinds of things we would think about, but moving back
To Coca Cola.
We weren't in the ad business, but we
Had a sense
So I was at a
Allen and Company conference.
And
Herb Allen was on the board of Coca Cola and of course
The CEO and president of Coke were at the conference and
We're having a coffee out on Herb's porch.
And the
Both guys said to me
We're getting
Hurt by PepsiCola.
And bear in mind in the eighties and nineties
There was a book written called The Cola Wars.
Where these guys
We're fighting like
Cats and dogs.
For market sure.
We talked about all this on our
Berkshire series. This is of course Roberto Coisetta and Don Quixote that you were talking with, right?
Yeah.
So I said to Don Keel and Roberto Goizetta.
Look.
I think you guys are making a mistake with your advertising.
And they said, Why? And I said, Well you're doing
Six or seven commercials a year.
I said, How do you run the same commercial on Seinfeld?
That you run on daytime and that you're run on
you know, late night I said, They're all different demographics. What are you doing?
They said, Wow, that's interesting.
Said, could you come to Atlanta with some of your people?
I said yeah, if you send a plane for us. And Coca-Cola historically is one of the most sought after
advertising accounts in America. I mean McCann Erickson, you know, had this account, had it unlocked for
decades and decades and decades, they sell a pure commodity product that's differentiated by brand. They pour a ton of money into brand advertising.
Yeah, they were running
A business that spent five to six hundred million a year on advertising worldwide.
So
I gathered ten of our agents.
And I took them from different demographics
In different departments. I had men, I had women.
I had music agents, film agents, TV agents.
I had a personal appearance agent. I had a
book agent and I
They did send the airplane.
And we flew to Atlanta and they brought in
All twelve of their worldwide geographic
Division heads.
They got'em all there for an all day.
Meeting.
What do you your staff think when you told'em, like, Hey, we're gonna go
Do an ad pitch to Coca-Cola.
Well, I'll tell you what they thought.
Most of them thought I'd taken leave of my senses. How could we be in the advertising business?
And a couple of them
Looked at me and said, Wow.
We can do this.
Why can't we do it?
But my point of view, eighty percent of our company
Thought.
There was something wrong with me that I
Probably had
food poisoning or something that went to my head.
'Cause it just didn't seem to
equate to them.
But to me it did because what do we do? We
Read material and try to tell a client.
Like Michael Crichton and Steven Spielberg, do you make a movie about dinosaurs?
Can we recommend that?
to Dustin Hoffman, can you make a movie
We think you should make a movie about an autistic guy.
And Tom Cruise should be your brother.
We took to the same positions that a buyer took.
No one owns
Creative thought or opinion.
Look, you two guys look at something on T V tonight.
You have an opinion about it.
When you're right more than you're wrong, that opinion's a trusted opinion.
And we were right more than we were wrong collectively as a group.
So we flew to Atlanta, we sat
We looked at every single commercial they'd ever done.
We listen to the complaints of the department heads.
Geographically?
And I said to them, Give us
Ninety days and we'll be back to you.
And I knew it would take us two weeks'cause I already had the idea.
That I thought was gonna work.
But I never like to over promise.
And under deliver.
I like to underpromise and overdeliver.
So about two weeks later I called
Don Keel.
I said we're coming back to Atlanta.
You're gonna pitch your idea?
He said, You said you needed three months. I said, Well
We kind of accelerated it. We got so excited and
We drank a lot of Coca Cola. Oh, you're good.
Which cracked him up.
So we flew in three weeks to the day after we met the first time.
And we pitched a simple idea. We said look for the same
Money you're spending.
We're gonna do thirty to forty commercials a year. They're all gonna be
For different demographics.
It'll cost you the same as your seven commercials.
We're gonna do a mascot for you.
Which turned out to be the polar bears.
Still running twenty five years later,
We are going to
run your commercials like a relay race.
So first of the year we're gonna do hopefulness.
February we're gonna go into Valentine's Day and Love.
Easter family summer refreshment.
fall back to school Thanksgiving
Family again.
Christmas.
Polar bears.
And
They said
How do we know that's gonna work?
And I said you don't.
'Cause we didn't
They didn't. We just said.
We believe it.
Let us try one flight of commercials.
And they said, How many do you want to do? I said, Forty.
And they said, You're crazy?
But if you want to do forty for the seven
The budget for seven.
You got it.
So they asked us, then they called back and
Backtrack.
'Cause been their agency for
Forty years.
And they said, Will you come do what's called a shoot out?
And I shoot out is where you come in.
And all the ad agencies pitch
to the executives. And I said, We will do a shoot out.
If Don and Roberto attended
the CFO Doug Ivester attends because he
Is the keeper of the money.
Your head of marketing Peter Seeley attends.
And three or four of your other key executives attend.
And we'll do it.
And they said okay, and they set the date.
Was set, I'll never forget this for eleven o'clock on a weekday.
And I flew our team of five people in.
The night before
We checked out the room we were gonna do it in.
We rehearsed what we were gonna pitch.
And we
Went for a very nice dinner.
I bought everybody new Armani clothes.
And we got up the next morning.
Never forget this. We went to the gym.
We had a nice breakfast.
And we walked in at a quarter to eleven and sat down.
And we looked the part.
One would say it's a show of strength.
And at five to eleven
The McCann people, there were thirty five of them drifted in having just gotten off a six A. flight from New York.
And I'll tell you they looked like they were all in a blunder.
They kinda look like
Live smoothies.
They were wrinkled and ratty and all screwed up, and nice people too, but
Whoever said of them to fly in the morning made a critical error.
Anyways, they flipped a coin and they said
They won.
And
We
We're hopful.
That they would say
What we thought they would, which is they'd go second.'Cause we wanted to go first and blow their doors off.
And we did.
They won and they said
We'll go second.
And I said
Great.
We'll go first.
And we went in and we presented thirty
Five.
Ideas.
And we acted them all out.
And each one ran thirty seconds.
And we did it crisp and clean with music.
With expression, with enthusiasm.
I started it.
A guy who just passed away named Len Fink and Shelley Hochran.
Who worked with us.
went in and helped us. Len, I remember, did a commercial about a
dog and he barked like a dog, he got on the ground. And we had these guys
And I will never forget I was sitting
Next to Bill Haber, but next to me was John Dooner.
from McCann Ericsson and then a guy
Who had been friends with Don Keo for thirty five years, they were drinking buddies.
And this guy wrote Dooner a note.
And I saw it.
By accident, it said.
We're screwed.
And sure enough
We finished.
And then they came up
They were so bad that after seven or eight minutes of presentation
They sat down.
We got awarded the account.
And of the thirty five commercials we presented
They approved every single one.
Wow. And these commercials, am I understanding right that coming into this
You know, you didn't have big name actors wanting to do commercials. You didn't have movie caliber directors doing commercials.
But one of your aces in the whole was not only are we gonna come up with these great concepts
But we're gonna go get
our A-less CAA talent to do this.
And we did.
We got a lot of our top directors
Who were between movies to do the commercials?
Paid them well.
Coke did great.
Everybody was happy.
But more importantly.
You know, it's funny, our competitors put out all this press
CA is gonna
use their clients to make commercials.
How stupid, blah blah blah.
I'll never forget one of our clients, Dick Donner, who did Superman.
called me up laughing. He said I just read this article on Variety that we're all stupid for doing these
He said, I just cashed my check. He says, I'm between movies, I couldn't be happier. I just want you to know that.
We thought out of the box, nobody else did.
And
When we
Did the commercials I said the Roberto
I want you to premier them like a movie.
Invite the press
And run them all, because thirty five thirty second commercials
Is less than twenty minutes.
And he ran'em.
For the press and
The press we got was insane. We got the cover of Time Magazine.
Which was important at the time.
We got a love letter in the New York Times.
We got unbelievable press, except for
The advertising journals. Who said we were
Robber Barons and I'm shocked. Shocked. Yeah, we were ruining the business.
But here's the factoid that is
Fascinating.
This is prior to people
Knowing the word or its meaning outsourcing.
McCann Erickson
Three hundred human beings.
Working on the Coke account.
We had six.
And we edited everything. We just didn't make them.
But we hired
A company called Rhythm and Hughes to do the animation.
They weren't on our payroll.
But they did a great job.
Right, those polar bears cost a lot less than Tom Cruise.
Put it that way.
The polar bears
We did very reasonably.
And we delivered.
Thirty five commercials for the cost of seven, one quick sidebar.
Then we'll move on.
We sent the bills to the CFO, who was a friend of mine at the time.
Name Doug Ivester and
We sent a bill for a commercial called Timeline.
That we made on an Apple two E computer in black and white.
And it just showed the timeline of Coca Cola.
At various times in history.
And we sent a bill
I think for
As I recall for like
thirty five thousand dollars for a thirty second spot.
And that was
Probably more than it actually
really cost on that computer.
So they sent us a check for three and a half million dollars?
And I called up.
I said, What is the three and a half million for? It's a bonus. He says, No, we thought you made a mistake.
On the invoice.
No one's ever done a commercial for us.
for anything less than three and a half million. So we just
We didn't want you to run out of money'cause we were a little shop.
I said, Doug, I hate to tell you this.
I'm not gonna cash the check, but it was thirty five grand for the commercial.
He said, I can't believe you did that.
That's the kind of stuff we did.
That's wild.
So we're talking about this point in history where you had already become this big successful agency. You were already representing these people branching out into things like trying to take on Koch's advertising.
Can we hear the entrepreneurial story from you?
of how CAA came to be in the first place'cause you really started with
Nothing, like zero.
It's actually pretty simple. I'll try to
Give you the highlights.
A group of us there were probably
Fifteen young agents at William Morris?
Maybe twenty.
All in our twenties.
And I was the assistant to the president of the time.
Bill Haber ran the
T V talent department. Ron Meyer was a
First class talent agent.
Roland was a
And Mike Rosenville were T V packaging agents?
And basically
We noticed
A disagreement
philosophically with where they were taking the business.
And
Crazy as it sounds.
CA was born
out of a bad staff meeting at William Morris.
Where the guy worked for her.
who was head of the television department. His name was Sam Weisport.
Announced with great pride and passion.
That he had signed Anne Miller.
Which will mean nothing to you two young guys, but
She was a fifties song and dance queen.
And a Broadway star.
We said in a staff meeting we all sat in the back. We weren't allowed to
To sit at the table because we weren't senior enough.
And one of us got up and said, Look.
Anne Miller's a talented lady.
But we should be signing
Bob Redford and Paul Newman and
Dustin Hoffman and Sean Connery.
And Sidney Poitier and
We should be signing
Those people
Not Ann Miller. This is William Morris.
We've been around
Since eighteen ninety eight.
We're on the wrong track. Well
The older guys went
Ballistic.
You then saw a division at William Morris.
That never healed.
And then they made a cardinal tactical error.
The head of the training department that trained all of us.
was the former roommate of the president Sam Weisberg, his name was Phil Weltman.
And he was a tough ex Marine drill sergeant.
And he trained everybody.
And bottom line, they fired him.
And
He called us down and he
was almost in tears.
This was a guy that used to get up on the top of his desk screaming at us.
At the top of his lungs.
This was before people were woke.
You know.
This was like
We were trained the old fashioned way.
And we felt my God, we were embarrassed.
It was debilitating to watch this. This guy was
Destroyed.
That was the beginning of the end. We started talking all of us.
Narrowed it down to
Five people.
That we wanted to be in business together.
And we made a decision to leave and set up our own business and do it our way.
That's it.
No more, no less.
Complicated than that.
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That Ben and David sent you.
To my mind.
looking from the outside at you all in the beginning of CA and then
Everything it would become.
No doubt.
Mm.
Absolutely essential and probably the primary ingredient was just
All of your collectively and you personally just your like raw
Ambition.
Certainly, and lots has been written about that.
I'm wondering though too, is it also fair to say that your
background because most, if not all, of you came from television.
Was that kind of a secret weapon? Because packaging was more common in television, A
And B television was still relatively new. I'm imagining most of the old people at
W M A and and then also in you know the studio business just weren't
Tuned into this new world, right?
No, actually if it's a good question, but let me correct something.
William Morris was the top television packaging agency.
And we all knew how to package television, but it's very different.
Than packaging movies.
Because in television the producer
is a key element and in movies it's the director.
And the director actor.
And actors are cast in television.
Prior to the eighties when
Fading movie stars were brought into television.
But the thing about William Morris is they bifurcated T V and movies.
at a time when they were starting to come together.
And that was a thesis that we didn't agree with.
So that helped us leave.
But
It was a different business at the time.
And William Morris
wanted to keep them separate and we
We're asking the head of William Moore's picture department.
And television partner to run joint meetings.
Because people could work in both areas and they refuse to do it.
That was another nail in their coffin.
So when we started
We made a conscious decision to be TV only.
Because by
SAG rules they had to pay every Thursday?
And we started our business on a hundred thousand dollars.
And we never went into debt beyond that, paid that debt off in six months.
And never carry ten cents a debt.
Ever.
And the reason we didn't is our T V clients got paid every Thursday.
So we took our commission.
But
In nineteen seventy eight, we made a decision
That we needed to be in the movie business then the only way we could do that.
was to dedicate agents to the movie business. So
We made a decision that I would start the movie business in seventy nine.
And the rest of the guys would stay on television, but that Mike Rosenfeld
who was in the movie division at William Morris.
with me would start a movie division at CA.
That's a great insight because you could cash flow the business if
your customers, your clients were getting paid every week.
But it's pretty hard to run a business when you have no you haven't raised any money if you're waiting one, two, three years for film projects to come together and then get paid on the back end after it gets made.
Correct.
Can I ask what was it like to get your first big star? And what's the story of CAA sort of
actually building a sort of reputable, envyable talent roster.
So there was a lawyer in
Century City named Gary Handler?
And we moved into Century City.
Very early on,
And I noticed his name on the
Placard in the lobby.
Did a little homework and discovered that he quietly
had a tax practice
And
He represented every major movie star in the business.
So I decided to sign him as a client.
You signed the lawyer.
A tax lawyer. Yep. He was gonna be my client.
So I went up
Knocked on his door, introduced myself.
Learned everything that I could about him.
And then proceeded
to become
Close friends with him.
And he delivered Sean Connery to me.
Wow. Amazing. And
I will never forget talking to Sean,
Nineteen seventy nine.
I grew up on Bond.
I
Remember a call being said.
I didn't have a clue what to say to him.
And
I was struggling for words.
But I should have gotten Academy Award for Best Actor for that call.
'Cause I actually sounded like I knew what I was talking about, but I didn't.
But I learned I learned on the job.
I'm sure Sean's
Not a dumb guy and he'd been in
the business forever at that well, why'd he go with you? Like i there must have been some rational reason for doing that.
He went with us for only one reason.
Gary Hemler told him we were young and
Агреси
Hot and had good taste.
And
Gary Hemer proved to be right.

We did an amazing job for Connery. He had come off three
Really
Low grossing, not so good movies.
And we turned his career upside down.
But after him, Dustin Hoffman signed with us.
And just
One after the other. I will tell you a funny story.
There was a literary agency
Top literary agency named Adams Ray and Rosenberg.
They had about four hundred of the greatest writers in television.
Few feature writers, but mostly TV.
And
Rick Ray was best friends.
With Mike Rosenfeld, one of our partners.
And Mike was desperate to merge with them and I said, I'm happy to entertain it.
So we had this meeting with the three Adams Ray Rosenberg partners
Sam Adams, Rick Ray and
I think his name was Lee Rosenberg.
And the five of us and we sat in a little conference room in our
Crummy little Beverly Hills office.
Which by the way was rated by SAG because
The people that we leased it from were running a

And the screen actors guild
Was gonna yank our license, little did we know.
So we got out of that mess and we were sitting in the conference room and
I will never forget this. Rosenberg said
You know, we're gonna have the best television agency in history.
'Cause we're never gonna sign Robert Redford or Dustin Hoffman or any of these people.
And this was before we signed Sean Connery.
And Ron Meyer and I looked at each other and Mike Rosenville and we looked at them and I said, Well, that's not true. We're gonna sign
All those people. Yeah.
And they said
You're nuts. You're not gonna sign any of'em.
So I said, Well, we plan on signing every single one of them.
'Cause we want a monopoly on talent.
To give us leverage.
to turn the paradigm around against the distributors.
And they said, That'll never happen. I said, Thank you, meeting's over.
We're never gonna merge.
And about six months later we signed Connery and then every week
We signed a famous movie star after that.
And didn't you take out an ad in Variety announcing it?
Yeah.
Thanks for reminding me, Ben. We took out these
Giant red ads and variety every Friday.
And the Hollywood reporter on Monday.
And it said CAA is pleased to announce the worldwide representation of
Robert Redford, Sean Connery, Dustin Hoffman, Sidney Poittier.
And we just
went on and on. And
Every time we ran an ad, I ripped one out of the
Variety.
Folded up and mailed it to Adam's Rain Rosenberg.
And
It got to be a stale joke after a couple of years.
Well, this feels like a huge principle of yours in CAA, which was really strength leads to strength. It seems like you were always looking around and identifying what's the new way that we've become more valuable and how do we leverage that.
into the next thing. Can you talk about that and some of the other ways that you just
By sheer force of will or by counter positioning against other agencies, how you were able to be different than everyone else around you and win.
Well, we were different for one solid basic reason.
Which is that we basically worked as a team.
So if the two of you were clients of ours
You didn't have one agent.
What we resented at William Morris is that
One agent coveted one client.
And you couldn't go anywhere.
With that because
human nature is such that eventually
There's a relationship problem.
It just is. The longer
You're around someone the more there's a relationship problem.
So
We went ahead
And
Put teams on people.
We had some clients that burn through three, four, five agents.
But they never left us.
As a matter of fact.
In a twenty five year period, I think we lost
under five or six clients. We never lost clients.
Because we
had teams of people on them that they could relate to.
No actor ever had a literary agent.
We'd have a literary agent on an actor.
Well why would we do that?
Well
It would be stupid not to. Why wouldn't we?
What does an actor do all they do is read scripts to see what they wanna do.
What does a literary agent do? All they do is read scripts.
To see what actors' roles are available.
So we were in a state of shock.
That actors didn't have literary agents. When we looked into it, we were saying
Wow.
Are we stupid?
Or is everyone else stupid?
I mean obviously you all were young
and aggressive and willing to think differently.
But why was the competition so
Weak.
I don't think they were weak. I think they were very comfortable in the old shoes.
They liked the one on one. They coveted representation.
There
Meal ticket was their individual clients.
At CA, your meal ticket was how well the whole company did.
If the company didn't do well as a group
Every individual suffered.
Who owned these?
Competitors.
Like you said, you know, when CAA did well
Y'all did well. Like it was partnership.
How were economics structured at other agencies?
They just made what they called market deals.
So if you wanted to hire an agent
You try to pay them whatever they asked that was a market deal.
And we did just the opposite.
We paid very small front money.
And said at the end of the year
If we do great.
We're gonna overpay you.
We're gonna pay you more than you can get elsewhere.
You know, we had a agent who was
Cohead of our movie department get offered a job
by Jeff Berg at ICM, who was a very good agent.
And Jeff invited him to a meeting and the guy came in to see me.
And he said
What should I do? I'm just gonna turn it down.
I said, absolutely not, go take the meeting.
Now I had two things in my head when I told him that.
One.
I wanted to know
What they were gonna
And what their own.
thought process was going forward and I
I knew that he'd get that out of them, but two
I knew they'd under offer him.
And
I wanted him to see what he could get elsewhere.
No, I didn't tell that to him.
So he went and took the meeting and they were having a
Jolly time and
Until it came to comp.
And I had instructed our guy to ask for what he'd get paid.
So
The answer came
I'm gonna pay you more than I'm making.
So the question is, what are you making?
And so Jeff said I'm gonna pay it like
You know, a million a year or something.
And the guy who took the meeting looked at him and said, That's
Very generous, but I'd have to be taking.
A seventy five percent pay cut to do that.
And that worked for me at every level.
One, it was
Good for my guy to hear.
What he was worth in a competitor.
Two
I love the competitor knowing that a guy way beneath his station.
He's making four times what he's making.
And three
It created a
A loyalty factor for me.
And why were you able to just make
so much at CAA and frankly just overpay to keep people there. Like what was it?
structurally about CIA where you were able to just run this incredible cash flowing business.
Well, first of all, we were accused constantly
Of taking
Cut commissions.
And finally people realized
We couldn't be paying what we're paying to people.
If we were cutting commissions. Secondly
We had a monopoly on the
high end T V and film business.
So we were minting
money and we just paid it out to our executives.
Period.
And as you're talking about all this
Of course a team oriented approach makes more sense than this individual lone wolf thing.
But there are tradeoffs involved in every decision, and the trade off involved in
showing up to every meeting with five people and having a network of people surrounding every client is that you need just way more communication and way more structure and way more systems.
What are some of the examples of the things that you put in place to actually make this work? Cause I'm imagining you probably talked to like fifty people a day for
Fifteen years.
Well, you're off by about a factor of five.
So
An average agent at our place would run.
two hundred to two hundred and fifty phone calls a day.
Some were fifteen or twenty seconds.
So you gotta bifurcate this.
Into pre internet and post internet.
So pre email we had a system that we developed.
There was fail safe.
One
Return all internal clients first to
You don't go home at night without
returning every call and three
We had a b what's called a buck slip system.
Which was everyone had buck slips which were these pieces of
Kinda heavy paper?
That had your name on it.
And you'd write a note to an associate.
And I would say Ben
spoke to Scorsese.
Recommended good fellows.
Call me.
If questions.
That would get sent from my office to that person's office.
To your office.
In real time.
It was our form of email.
Then he had to answer me.
That he had read it.
So he
Strike it out.
And answer it.
Send it right back to me.
So when Scorsese called him
Which he did.
He'd say, Fantastic, Marty, I heard
that Michael talked about good fellows couldn't be
happier about the decision.
And then Marty goes, Wow, these guys
Or on their business.
Is there an archive of all these somewhere? No, they're all trashed.
Oddly.
We locked up our trash every night.
Just so you know.
'Cause we found someone going through our trash.
And that was really
Scared me to death, if you want to know the truth.
This adds some color as to why the mailroom was so important when people say it started in the mailroom at CAA.
You are an essential part of the fabric of
The system.
Oh the mail room.
at our place was
a fast track to a career.
If you could make it through the mailroom.
And the way we handed down clients
So if you guys were agents with us
And if we signed
A giant star.
We brought you in as part of the team.
And if you were good, you made your own relationship.
Well that's the benefit of the team approach too, right? Is
You could go out and sign.
I don't know, X Y Z, let's say Scorsese.
But then you could bring Ben and me.
In
And then that probably let you go sign a lot more
Scorsese, right?
Well, David, time was our enemy.
So I needed a way to loosen myself up.
So how would I do that? Well I'd have people behind me
Working with clients.
That I signed.
So
We signed Hoffman, Pacino, and De Niro.
Which had never been done in
History. And they're known as leading men at the time, right? They were sort of competing leading men.
Well, my thesis was they weren't competing.
If they were with us.
I said to Dustin Hoffman, help me get
De Niro.
He said, Why?
I said,'Cause wouldn't you rather I told you what he's doing than me not knowing.
He said, Wow, that makes sense.
So
We got De Niro.
You know.
And then when I got both of them, I said to both of them, I wanna sign out.
And
Of course they looked at me, what are you crazy?
You got the two of us and I said, No, I'm not. You can work with each other.
And on top of it
We'll all know everything and you're not really competing'cause at the end of the day
The director makes the decision, the agent doesn't make a decision.
But we packaged
De Niro and Pacino with Michael Mann.
Called it heat.
Yeah.
You build all this up and then you make the pie bigger for everybody by packaging.
Well that would have never happened.
Would have never happened.
In untouchables.
They would have never gotten Costner and Connery in the same
And Andy Garcia in the same movie.
They were all clients of ours.
And
We wanted them to work together.
We were a very family oriented business.
We wanted our clients to work together.
And it worked for us economically and it worked for them.
You took an aspect that people thought was a zero sum game.
And you made it a positive sum game.
Our job was to
Create product.
For our clients.
Period.
We have people dedicated
That had no clients that were only involved.
In creating product.
That was their job.
No agency did that.
We also had fifteen readers on staff.
Michael, can you take us toward the last few years of your

Yes.
period where it you're signing your first clients.
You went on to represent forty five of the top fifty in Hollywood, talked about
You know, your foray into advertising with Coca Cola.
There's sort of two little pieces of this
Chapter.
Remaining.
One
Is
you kind of getting into investment banking and maybe I should pull kind of there, you definitely turned CAA into an investment bank and I think you were the top grossing investment banker in the world.
the year that you did your first deal.
And then the second I want to talk about
When you explore
universal and potentially becoming a studio head yourself.
So
The first
was a natural evolution of what we were doing.
The studios were in trouble financially.
And
it became very clear to me.
that they were gonna need financing and traditional financing wasn't gonna work.
Universal was under siege.
People were taking stock positions.
Corporate Raiders out of New York.
Columbia was in trouble.
MGM was in trouble.
Warner's, believe it or not, was in trouble.
So I was very friendly with a brilliant guy named Herbert Allen.
And Herb was an investment banker.
taught me a lot about the business. We used to spend a ton of time together.
And I got this idea that we could

To save our marketplace because frankly
If any of those companies went out of business, so did we.
I couldn't afford for Universal or Columbia or MGM or Warner's
To shut down or
To reduce the scope.
Of their budget. CAA couldn't put up a hundred million dollar budget for a movie. You needed a studio to finance it.
Well, it was worse than that, then we weren't allowed to produce.
I had a white paper written by a
The most prominent entertainment lawyer in the business at the time was
Frank Rothman, who's passed away, great guy.
And he wrote a ten page opinion that we couldn't produce.
Because I wanted to go into that business
With our directors.
create a director's company.
But we didn't want to take on the guilds. Plus
The writer's guild and directors guild were run by CA clients. Right, you'd be pissing off your
Clients.
And we were settling strikes
Bill Haber and I settled one of the writer strikes in the eighties.
We couldn't afford that.
So back to the studios being in financial trouble.
Literally you have the reverse problem of
Lou Wasserman back in the day of
You now have the power on the sell side.
You need fragmented
Buyers.
I needed people that are buyers with money.
Period.
So I started
Building relationships.
In Japan.
First relationship I built
was with a division of Matsusta Electric.
And
I hoped
That I would
be good enough in the meeting that they
Division would recommend
to Matsushta that they meet with me.
But before
I got to that
I was representing
People
that were involved with Sony.
And
I got involved
In the sale of CBS records to Sony.
And build a relationship.
With Noria Oga who was the
Number two at Sony.
Who ultimately introduced me to Acio Marita.
And I became Morita's and Oga's consultant.
We consulted on the sale.
Of CBS records.
And then Mr. Marita came to see me.
And wanted to buy
Get into owning
Content because
He was upset.
that beta max, which was a superior
technology to VHS.
was losing the VHS.
He wanted to own a studio, so I
Started
Calling
Different entities that I thought made sense.
and brought Marita into meetings. And the first entity I called
Was Kirk Kirkorian who owned MGM.
And I had a meeting at my home one morning.
Late morning.
pre lunch with Accio Marita.
Kirk Kirk Orion and myself.
To discuss selling MGM.
To Sony.
And Mr. Morita was a very clever guy, and we were a great team.
He came with a box.
And he stuck it in the middle of the table.
And Kirk couldn't get his eye off that box.
And halfway into the meeting, Marito opened the box and he pulled it out.
And it was a tiny little video camera which was a prototype.
For a
Videotape recorder.
Camera.
And
Kirk was
Blown away by the fact that
When Marita would take
Video of us in the room with natural light.
And play it back through our TV set. Kirk went nuts.
the equivalent of Steve Jobs putting an iPhone on the table in two thousand five.
So
Morita.
Just kept talking and then
Kirk said how do you wanna
Pay for this.
And
Morita said, you know, we would finance it.
through Sony and we have the cash.
And then
As the meeting ended,
I could see that Kirk
was lusting after this camera. Marita packed it up, put it under his arm and left.
Power move.
And that was how we ended the meeting.
Subsequently I couldn't get traction with Kirk.
So Herb and I started working
On
Columbia which Coca-Cola owned.
And the rest is history. We work the deal.
And through a long process
Arranged to sell Columbia and Tri Star.
Two Sony.
And that became Sony Pictures Entertainment.
Yes.
And Herb and I did that deal.
With no one else, just the two of us.
And
It became a template that he and I then did over and over again.
What do the economics look like when you arrange a deal of that magnitude?
Do you agree up front to a fee? Do you say, hey, let's figure it out later? Do you agree to a fixed price?
So I did something in those days that
Cannot be done today.
And let's bear in mind, guys, this is
Thirty five years ago.
I worked my tail off to understand Japanese culture.
And I read everything that was published.
I studied the language, I studied
the culture, I studied the art, I studied
How they treated people.
I read everything under the sun that wasn't tacked down.
There was a Japanese American bookstore in Rock Center.
I was their biggest customer. Love it. And
I took a shot at something which paid off for me.
In multiples.
So
All of the banks, excluding Allen and Company.
And me.
Asked for a fee letter up front.
We asked for nothing.
We said look.
If we do a good job.
You can
Pay us
An obscene sum of money.
If we do a bad job, pay us our expenses and
We're all good.
You didn't specify what the obscene sum of money was.
No, I remember in a meeting at Matsushta in Hawaii
They said what
Feed you want.
I said, if I'm not successful, I just want my expenses.
If I'm successful, I want you to load up a Brink truck.
And back it up to my uh house.
They got the picture. By saying that we're saying look
We wanna exceed all fees ever paid. Right.
But we never put a number on the table.
Do you know I never once had a discussion with any of them about money.
And I was paid f handsomely by everybody.
So
Okay, we gotta know what does the Brink's truck end up looking like for the Sony deal and then for later the Matsusta deal?
I don't remember exactly what I got paid on the Sony deal, but I got paid twice.
'Cause I got paid for the record deal and then for the studio deal.
On the Matsushta deal.
They gave me one hundred and twenty million dollars to pass out,
to all of the consultants.
And I passed out money to everybody generously.
Because we had
Washington lobbyists, we had PR people.
Ed Allen and Company.
And this is to buy universal. Yeah.
Was to buy MCA Universal.
Which by the way, I tried to
By for Sony, but Lou turned me down.
Said he'd never sell to the Japanese.
But when his stock went from sixty five to twenty
He changed his tune.
And so Matsushta is the parent company of Panasonic, is that right? The brand that Americans would know.
And they ended up owning
Universal for
Was it ten years before it sold to Seagrams, then Vivendi, then NBC?
They had a very bad experience with Universal. Mm.
So when
I brought
the CEO of Matsushta to the Universal Lot.
After the deal was consummated, I had had lunch with
With Lou the day before.
And I said to him, I said, Lou
You are the greatest executive in our business.
But once you sell this company
They're paying me to consult.
And I want you to feel free to use me'cause I understand their mentality.
And their culture.
And I said with all due respect you don't.
And I said, I'm here for you.
And a very apocryphal thing happened when I
Brought these guys to the gate.
I drop them off.
And Lou looked at me, shook their hands, and turned his back on me.
And didn't invite me in.
Hm.
And that was the beginning of the end for him.
Because he didn't understand them.
And
They
Couldn't communicate with him.
He didn't understand how to deal with them.
And
four or five years afterwards they called up
And his contract was up.
And he and Sid ran Universal like they
Didn't have owners.
But they did.
And they're smart guys, but they couldn't make the transition
And they didn't make the transition.
Well clearly
I mean having read about him and
Even going back to the Sony court chip.
Clearly.
Lou and Sid didn't want to be owned.
They didn't want to be owned. They took the deal out of
Fear of losing the company.
The value of the universal real estate.
was probably eighteen bucks a share and their stock was
Going down to twenty.
Wow. So it was a no brainer.
A no brainer for private equity firm.
And when these situations come up, it's just gotta be hard to go from
entrepreneur, mogul, self-employed, king of the world to being an employee.
It just has to be an
Unbelievably hard transition.
I can't imagine how they did it. I was always shocked that they were gonna do it, but I knew
They didn't have any choice.
But Matsushta didn't want to
Ruffle loose feathers,'cause one thing the Japanese companies
are always ultra sensitive to as politics.
And Lou was still very connected politically.
One of the guys on the MCA board was a guy named Bob Strauss, who was head of the
Democratic National Committee.
They didn't want to mess around with this, so they called Herb and I up.
Sit.
We'd like to
Solve a company.
That was all they said.
And the reason was they didn't want to try to negotiate with Lou.
They just
Put up the company for sale and
Herb and I were working with Edgar Brofman, frankly, on trying to
Take over Warner Brothers?
This was before the Warner Brothers and Time Inc. merger?
This was before.

And we had quietly accumulated
Fourteen percent of the stock through Allen and company.
For the Braffman family.
And I met with Steve Ross three weeks before he passed away. He was one of the greatest
Guys in history of the business.
Yeah.
He gave me three hours of his time.
Where I came to him and said
Then
Segrum would put up six billion of cash.
With a standstill.
And Steve assigned the deal to his
Dealmaker.
And then as he got sicker and passed away it all fell apart.
Well, Michael, as we come up toward the end of your tenure here at CAA
Can you talk us through
the generational transfer.
and the sale of the business to the next generation, the young Turks
And then
your time at Disney after that. How did that all come to be?
So
I was pretty much hitting the end of my
useful life as an agent. I was about to turn fifty.
I'd been working since I'm sixteen in the entertainment business. First for Lou, right?
Was my first job.
Tour guide at Universal Studios.
And I just
didn't want to be in service anymore.
Want to try to run a public company for five years and then frankly
thought about going into public service.
Not
Private.
Service.
And I was very friendly with Michael Eisner. He was one of my closest friends.
He had a heart attack and a quadruple bypass, but
Two of the board members started talking to me.
And
I spent a year talking to them.
On and off, on and off.
And then Ron Meyer blew up
He just lost it.
He just couldn't be in service anymore. He just
He was over fifty, he had hit
A point where he just couldn't talk.
To clients.
I will never forget this. He had a conversation on a Sunday
that probably lasted six or seven hours with one of his clients. It was Sylvester Stallone.
And
He finished the conversation and tried to have a
Rest of his Sunday and sly called back.
Want to start the conversation all over again.
And that's
A little unusual, but not completely unusual. That's within the realms of reality for an agent.
Yeah, in the entertainment business it is, yeah.
Look, actors are gypsi. They have no one to talk to except their agent.
So
Ron
Just couldn't deal.
And also
I had thought about going to MCA and at the very last minute.
they tried to change the deal and it became clear to me that Edgar wasn't in charge and
Just too many signs as a deal maker said to me, This isn't gonna work.
Now that was before Ron decided to quit.
So I figured I'd stick it out another year.
And then afterwards Ron
had already made up his mind to leave, and I should have realized he had two feet out the door.
When he left
It just
made me take the Disney conversation more seriously.
The board members that were
friendly with me. One of the board members owned a boat with me. We were
Really tight.
And he said, We want you to come over and create the culture here.
That you had it see.
And Michael was sick. He wasn't supposed to work every day. I always like to say
I am the greatest cure for heart disease.
Because when I came over, I was working seven days a week, fourteen hours a day and
He was supposed to work two days a week and
He started working a little harder and harder and his doctor was telling him not to and
It just was very clear from the beginning. It just it wasn't gonna be a team effort.
For whatever reason I threatened him, which shouldn't have because I didn't want his job.
I had a game plan for myself.
I didn't want to die at Disney.
I didn't want to die at CAA. I wanted
Try different things with my life.
Like what I'm doing now. I love what I'm doing now and
All of the
training I had as an agent has led me
To a career.
in the digital world that's fantastic because what am I doing? I'm packaging.
I'm putting young founders together with money and distribution.
And
It'n nothing different than I did for
Thirty five years. It's all the same.
Except I'm doing it with smarter people.
And I really enjoy it.
But when I got to Disney it was very clear there was a
Head to head conflict and
Michael undercut me every chance he could.
And
After a couple of years.
I
Just didn't want to deal with it anymore and it's
Was one of those things.
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If
The universal
Job had worked out if you had gone to Universal.
Do you think things would have played out differently? I mean, Universal is a very different company than
Disney, much more pure play.
Focused on.
Content.
At the time.
Than Disney was.
Would that have been
Better or different?
You know, David, I'm gonna tell you two things that both conflict with each other.
'Cause he asked a really smart question.
Part of me thinks that I would have done an amazing job.
at building that business because when I went to Disney
I put together seven initiatives.
That I wrote about in the book.
That would have made Disney a fortune, starting with buying Yahoo.
Buying CBS records for two billion dollars.
Which is worth ten times, twenty times that right now.
Buying
A publishing company instead of throwing money at a
crappy publishing company that they had.
I had a chance to buy from Universal
Penguin Putnum.
Which is now the biggest publishing company in the world.
I would have done that at MCA.
Those other part of me said I would have failed at MCA too.
Because the Bronfman family would have never given me a free reign.
And frankly
I'm not a very good employee. You and Lou Wasserman both.
Yeah, I mean I shared that with Lou.
My critique of Lou goes for me.
I'm a terrible employee.
I like to swing for the fence and I like to have autonomy.
And I don't like to answer to anybody.
And I was too thick headed.
To see that clearly.
And only saw it in retrospect.
But I did the same thing Lou did.
And
I should have been more self actualized.
to understand that I'm not a
Follower.
I'm just not good at it.
And
I have no problem admitting that now.
But you know, hindsight is twenty twenty vision.
And it's always easy to be a Monday morning quarterback.
in the height of transitioning from CA to Disney.
I actually thought I made the right decision. I was going to a place
where the board solicited me. I'd had a year's
Worth the conversations I
My best friend running it who had a heart attack.
To me, it was a no brainer five years there.
Then I go into public service.
I actually was on the Council of Foreign Relations and was
Really interested in working at the State Department in some way, shape, or form.
And I had a whole game plan.
But you know
The best plans of mice and men.
And reflecting back on that
having one of the world's best deal makers, both in Hollywood and then proven in the corporate environment.
It seems like a natural fit for the State Department.
I felt really good about going into
government service. I really did. And whether it was the State Department
Or something else.
I would have felt
Really strong.
About doing that.
But look, I made a game plan for myself just like I used to make for my clients.
And I made a mistake.
And
I didn't
Take into consideration.
certain things that I should have.
But at the end of the day it worked out fine.
I made a good settlement at Disney.
Made me comfortable.
I took some time off.
Then went right back to work and
A guy named Mark Andreessen and his partner Ben Horowitz kinda
Saved my
Skin, you know.
They asked me to be on their board in ninety nine. They gave me
A roadmap.
At Loud Cloud, right?
Yes, at Loud Cloud. They gave me uh
Roadmap to a new career.
And
They're two of my favorite human beings on the planet.
They're smart as hell, they rival Crichton in intellect.
They are
Loyal.
They are smart.
They are wise.
And they are true, true friends.
And
They
Beat me up pretty good.
Which is hard to do.
And they did it brilliantly.
And set a path for me.
That changed my life yet again. I had a
Third career.
So
You want to talk about luckiest guy on the planet.
You're talking to him.
If you were to ask me
In ninety seven.
If I was a lucky guy, I would tell you I was pretty stupid.
But
By ninety nine.
These two guys came to the rescue.
And showed me another way.
To use my skill set.
Which I do every day now.
And
Weirdly, it's how I got to you guys. You got to me.
Through
mutuality of interest in the
world of the internet.
Can we ask you what
Playbook.
from CAA, you learned that you brought to technology.
What are some things that
You're doing the same or lessons you learned.
You know it's funny, I had this conversation with a founder yesterday, young founder.
That I'm investing in.
I do not do one thing different today than I did thirty years ago. Not one thing.
I talk to guys your age
That are the talent.
And I put them together.
With financing?
So they're the buyer.
And then I help them market
monetize and strategize.
Their product.
It's the same thing I did. So
If Dustin Hoffman says to me
I've got this idea.
I wanna play a woman in a dress
Who s's life
As a man through a woman's eyes.
And he's the motor, he's the talent.
It's my job to surround'em with more talent, get'em money.
Help them market.
Strategize how to do it.
And then monetize it so he makes some money doing it.
I'm not doing anything different today, but
It's just
The companies come out public, but they don't come out on the film.
No different.
None zero.
After you left CAA.
The era was over. It ended up getting bought by private equity.
The
agency business, at least to our eyes from the outside.
has been remade with WME and Ari Emanuel and Patrick Whitesell.
If you had stayed.
That's yeah.
What would you have done there?
What could have made CAA an enduring franchise that became a gigantic force?
Rather than sort of
Apexing.
As you exited.
So
You know, it's funny, I had dinner with Ari a couple of weeks ago and we were you know, he was a trainee at the agency and one of the best
We ever had.
Fantastic job.
At building his business and diversifying it.
I spent a lot of time, which very few people know, looking into.
How I could diversify CA? Could I run it public?
Could I sell it to private equity?
Could I
buy an ad agency. And I looked at buying Jay Walter Thompson. I looked at
bringing in private equity and at the end of the day
I didn't know how to
not divided up amongst the players.
I couldn't figure out how to get it.
Transitioned.
to a bigger entity.
And Ari said, Well yeah, Michael, you could have bought an ad agency and blown the company up.
But I said I said already, this was
Thirty years ago.
Economics were different.
Public
Entities were different.
Private equity was different.
It just wasn't like it is today.
And I couldn't figure out how to keep my core group.
And compensate them all.
And I decided it was better to make a clean break.
And try to do it on my own.
in a different field.
So how could it have been? Yeah.
I could have bought Jay Walter Thompson.
I would have gone into debt.
I wouldn't have known how to give options in what
to so many people at the agency'cause how do you tell
A group.
That's all for one, one for all, and we're splitting all the proceeds.
And then
go through what all these companies go through is
How do you give options out to everybody? Right. Cause it was you and your founding partners primarily that owned ninety plus percent.
Of CIA. No, we owned a hundred percent. Okay.
But there was no way to make everybody
Happy.
And all I could see, frankly.
Was the agency disintegrating?
And I like to think I made the right decision.
'Cause unlike the decision Lou made where MCA disintegrated
CA is still going strong today.
They've done a great job in the core agency business.
They didn't expand it beyond that, but that's okay.
That's their prerogative.
But I think the guys have done a pretty good job.
It's not what I would have done, but it doesn't matter. It's not my company.
But I'm still take pride that forty five years later.
Still in business.
Good for them.
I can't think of any other companies we've covered on this show in the
Two hundred plus.
That you really were.
a true family business. I mean it was a partnership. It was an LLC.
Believe me, if I could have split up the business
And made it bigger, I would have done it.
R he said, Well you could have been a
The biggest investment banker, his biggest Goldman Sachs.
And I reminded him I couldn't have been
'Cause they I'd have to compete with them.
And B, they're in a fee driven business.
And that was the business I was looking to get out of.
And by the way, at that moment I'll give you the kicker.
Which I've never said to anybody the thought
of being in the client service business to big
corporate clients
was boy that sourred my stomach.
'Cause I had had enough of service.
One thing about going to Disney that I will say was positive
Man, it's easier to be a buyer.
'Cause you just everyone's calling you.
It's easier to be a buyer.
Yeah.
You
created a lot of value and captured a lot of value in other scenarios and at other points of CAA's life.
You created a lot of value at the end.
And
made a pretty sweetheart deal for the next generation that you sold the firm to. And a at least my research found that
You sold all of CAA to the next generation for two hundred million, which of course they didn't have in cash.
and they were able to pay you with the profits over the next, I don't know, five or so years on an interest free loan.
that you effectively made them.
And keep in mind, this is the business that has a enduring revenue stream of Jurassic Park and all these other franchises that have recurring revenue associated with it.
I only cared about the business staying alive, and I felt
That if I didn't do that.
twenty people would peel off and do their own business.
And I wanted the franchise to stay alive.
Frankly, I didn't care.
If I got paid.
Immediately or five years down the road, it made no difference to me.
It wasn't about that for me.
I was very lucky. I made quite a bit of money as an agent.
It wasn't a driving force for me.
And I knew I had the Disney thing lined up.
'Cause that discussion contrary to what people realize
had been going on for a year.
It wasn't fresh.
So I knew I had that and I was gonna get paid.
handsomely to go there'cause they had outlined a deal to me.
Before Frank Wells died, he tried to get me to come over.
I was closer to Frank Wells than Michael Eisner was. Oh wow.
Frank Wells.
Was part of a trifecta at Warner's.
was Frank Wills, John Kelly and Ted Ashley.
So Wells and Eisner
Wells wanted me to come and be the third
part of the trifecta because that worked for him for twenty years.
So I knew what I was getting into and I knew money wasn't gonna be a problem.
Well, Michael, that's it for our storytelling and our analysis sections. Thank you so much for being here with us today.
My pleasure was really great. I appreciate the time.
I appreciate your homework.
And I appreciate
Just being a part of what you're doing. I like what you're doing. I'm glad to be a part of it.
Oh thank you, Michael. Thank you.
I'll be shortly sending David a contract.
With my fee structure. The Brink's truck is en route.
All right, guys. Take care of yourselves.
All right, Michael. Thank you so much.
Bye bye.
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Ugh so fun.
Listeners.
Thank you for joining us.
for the whole season, but
My gosh, what a privilege to have Michael Lovitz on the show.
I wish we could have made this like a a five hour episode. Well does it we gotta get Michael back.
For sure. Oh, we have to. We also have to do some kind of like acquired bingo where there's an Allen and company conference square and we figure out how many episodes that's come up on. All right. Here's the thing though.
When are we gonna do a live show?
At Sun Valley.
That does feel like that's the cake topper.
I think let's make it happen in twenty twenty two.
All right.
New goal.
All right.
Allen and company, if you're listening.
Let's make it happen.
Listeners, we want to wish you
Happy holidays. We wanna say thank you for being with us this season. Thanks to the
close to a hundred thousand who joined this year, or maybe over a hundred thousand of you who joined this year.
Thanks to all the new folks who signed up for the LP feed.
L Ps, of course we love our LPs. They make the show possible.
I'm saying this before the Zoom call, but I'm sure we've had a great LP Zoom call for uh everyone who could join before we left for the holidays.
And uh we'll be dropping some more fun, exclusive LP only content.
In the future.
For now, if you want to check out all 50 plus LP episodes that we've done, that back catalog is public. So go check it out. Search acquired LP show.
in any podcast player, you can join the Slack at acquire.fm slash Slack. You can get your dream job at acquire.fm slash jobs.
David, there's so many slashes. You're like the creative artist agency of tech podcasts. Start doing some packaging.
Well, Michael would say we would probably be stepping on his territory, but
Package some startups in the acquired community. It's happened.
It happens in the acquired Slack all the time. It totally has happened. People have met co founders in the Slack.
I know people have raised money in the slack too. A hundred percent.
It's pretty cool.
With that listeners, thank you.
We'll see you next year.
We'll see you.
Next year.
Who got the truth?
Is it you, is it you, is it you Who got the truth now