The Medium Rules Episode 8: Innovators, Disruptors and Rewriters – Leonard Brody, Co-Founder of Creative Labs and Host of The Great Rewrite
How can we define and identify seismic-grade disruption? Is this recognizable contemporaneously, or only with the benefit of hindsight? And if there is some kind of taxonomy of disruption, some kind of map or workflow template we can apply, can we convert these insights into actionable mandates across both investing, startups and organizational behavior generally?
On this episode of The Medium Rules, Alan is joined in the HBA podcast studio by Leonard Brody, an award-winning entrepreneur, venture capitalist, public speaker and best-selling author. Len is currently the co-founder and Executive Chairman of Creative Labs, a joint venture with the Creative Artists’ Agency, where Len oversees the building of new ventures for some of the most well-known celebrities, athletes and political leaders globally. In addition, Len is authoring a new book in partnership with Forbes entitled “The Great Re-Write” based on the successful documentary series (4 million views) of the same name which Len produced in partnership with Forbes. Len is also a highly-sought after public speaker, lecturing at institutions such as the G8 and The United Nations. We hope you enjoy this thoroughly entertaining, lively and very warm conversation covering some of the “big” questions in tech.
LEARN MORE ABOUT LEONARD AND HIS PROJECTS:
Alan BALDACHIN: I’m thrilled to have Len Brody in the HBA Podcast studio today for his discussion focused on individuals and companies. Len has coined “re-writer”, or what I might call ‘Super Disruptors.’ Len’s credentials and accolades are much too long for this podcast intro, and we’re going to link to Len’s bio on Soundcloud and on our website, but I’ll do a quick summary.
Len is an award winning entrepreneur, venture capitalist, bestselling author and two time Emmy nominated media visionary. Starting in the 90s with a company called Anvea, which ultimately went public in early 2000 and a very high profile way, Len has raised hundreds of millions of dollars in venture capital for multiple startups and he’s been involved in multiple exits. Len is a highly sought after public speaker and is delivered keynotes at such organizations, which you may have heard of is the GA and the United Nations.
Currently Len is the co founder and executive chairman of Creative Labs, the joint venture with creative artists agency. He is also in the process of coauthoring a new book in partnership with Forbes entitled The Great Rewrite, which is based on the successful documentary series of the same name in partnership with Forbes and KPMG.
Finally, in a point of personal pride, Len and I share the same Alma Mater, Queens University in Kingston, Ontario — little known fact, also the alma mater of Elon Musk.
So with that, let’s get started. Len, thanks very much for being on The Medium Rules, and looking forward to a great conversation.
BRODY: Thank you, Mr. Baldachin, good to be here.
BALDACHIN: Great. So let’s kick off by talking a little bit about your, sort of, I guess classifications are or your way of understanding distinctions that you’ve drawn, I think interestingly and compellingly between innovators, disrupters and rewriting.
BRODY: Yeah, I mean I think and have thought for a very long time that innovation is a useless paradigm and term; it doesn’t really mean anything. It had meaning 15 years ago. 15 years ago, it had a technological meaning, it had an inbuilt corporate meaning. Today, it feels it’s just like incrementalism.
Innovation is something that other people did before, you know, in a corporation or an adventure environment. It was what other people did. You had an innovation department, you had a research lab, you had tech guys and VCs.
I think now innovation is in the water, it’s what everybody does. It’s today’s incrementalism and it’s part of everybody’s responsibility, so it feels like a weak and dated paradigm. I also think it’s weak and dated because it predominantly really dealt with two concepts. It dealt with technology predominantly and business models. And the truth is, I believe that this era historically we’re going through is something functionally very different, similar to arrows that we’ve been through before, but the tech and the business model stories, not the whole story. There is a deep human story to this behaviorally, physically that doesn’t get captured by innovation.
So to me, innovation is just an outdated paradigm. We’re living in a post innovation era. It’s a word. It’s like love. I always say this “Love is one of the defaults of the English language. It’s a problem because, you know, you’ve been dating someone for a year and you can’t keep saying, I really like you, so inevitably you got to say, I love you or I looove you. There’s no in-between, right? There’s no like DEFCON 1 and like DEFCON 3, like you got to go straight to the nuclear option. And I think innovation is the same, there’s just no – you can’t figure out the word to get to what you really want to say. And so we overuse and tend to use the paradigm in the wrong way.
Disruption to me is a very calculated specific thought, and that is a real easy to understand paradigm, and the best definition is the sort of Clay Christiansen definition of disruption, which I think is in my view, the standard for that today, and it makes sense.
BALDACHIN: Why don’t you say what that is because not everyone may be familiar with it?
BRODY: Well, I would have have to read it in order to know that.
BALDACHIN: That would be useful, yes.
BRODY: I think a professor Christensen’s definition is really that you tend to have the classic dilemma, which is companies are focused on what they’re focused on, and this disruption happens at the fringe and it happens at high volume, low cost, so they tend to move in a volume way at the bottom of the pyramid; low cost, high volume, deep entry points, and they tend to just eat their way up the food chain.
And so that is a sort of classic disruption pyramid that I think Clay Christiansen would define and others would sort of see disruption that way.
BALDACHIN: I understand, yeah.
BRODY: When I talk about this sort of paradigm of a rewrite, the argument is something different. I’m not talking about technology and disruption and innovation in the traditional context, I’m talking about a deep sociological and geopolitical change that’s going on in the planet, which is we are in a stage of the equivalent of pressing the reset on earth. This is a very different moment historically for all kinds of reasons, but the biggest driver is a human driver which gets left out of those other two paradigms quite commonly, you know, those are more technological discussions or business model discussions. Do you regret asking me questions now?
BALDACHIN: [laughs] I’m starting to, but let me pursue this thread and say, if you had to pinpoint, what about this moment is creating this kind of more seismic rewrite that you’re identifying, what would that be? Or what would some of those elements be that we might recognize? Or are they recognizable?
BRODY: I think they are, and I think this answer is going to be grotesquely disappointing, but, but I think the answer goes back to the late 90s and the arrival of html. I think that you are, to me html combined with cloud computing fundamentally changed the world. Sorry, let me restate that. It’s not just cloud computing. It’s html combined with cheap storage and computing power has really fundamentally changed it, but the one ingredient that is completely necessary for this whole process was html. Why?
If you go back and ask why the Internet was important, it wasn’t just important because it was a great way to get cheap stuff from Amazon and a great way to get news content delivered a Netflix; it was critically important societaly, because prior to, call it 1996, 1995, human communication was heavily blockaded.
So as a society, if you think about the history of mass communication of our species, go back to the Gutenberg moment and movable type right up to television. They were identical, so they were one to one or one to many. They were broadcast in nature, incredibly expensive, so you couldn’t just set up your own cable head or your radio station.
And thirdly and most importantly, they were all regulated by government. So the base source of mass human communication was government regulated.
And when you fast forward to the rise of the Internet, all of a sudden for the first time in the history of our species, you have a many to many vehicle where millions of people can speak to millions of other people with virtually no cost to their disposable income, no increase or change, and impossible for governments to regulate, as much as they try.
BALDACHIN: As much as they try. And we’ve seen that obviously.
BRODY: And the reality is, what has happened because of that is for the first time, to the best of my knowledge in our species, humans own their own communication at mass scale on a global level.
BALDACHIN: And low cost.
BRODY: Yeah. And so when you, when you own your own communication at scale globally, it fundamentally changes the power structures on the planet. It changes your institutions, it changes transparency in everything from consumer products to religion. And so I think that is the defining moment. If you drew your physics equation on the board, it would be something to the effect of html plus cheap storage, cheap computing power equals societal change. And I think that’s what we’re seeing.
BALDACHIN: And in your view is that creating an anxiety? How is that manifesting that societal changes that will…? What’s that shift look like from a human perspective, from a media consumption perspective, etc?
BRODY: Yeah. Well, first of all, I think it’s creating several forms of anxiety; I think there is human versus institutional anxiety – I think those are two different things I think there’s deep institutional anxiety because I think for the last 25 years we’ve been telling a corporations and institutions the most annoying message of all time, which is “Innovate or die,” like if you had a nickel for every time somebody told you that we wouldn’t be sitting here.
BALDACHIN: It’s an article of faith virtually.
BRODY: And so I think there is now a much more dysthymic recognition in all institutions that he bell is tolling, like they will be affected. Now, I don’t think everyone knows how they’re going to be effective, but they are much more willing to have that conversation than they were a decade ago. So I think there is institutional anxiety clearly. On the human anxiety front, I think that falls into two very different buckets. I think one is you have a human anxiety that is a general. I don’t understand where the world is going because I understand that…And humans are horrible at historical context. We are borderline moronic when it comes to history. So because we’re only alive on this planet for 80 or 85 years on average in the western world, what we think of as normal is not historically normal at all. So when you start to see the world changing around you, you get flipped. So there’s that anxiety.
The other form of anxiety, which I think is a directly correlated to the time is the anxiety that I think kids born 1997 and after. You see incredible rates and anxiety and depression in kids born into the generation here they were attached or tethered to a device. And we see that statistically. I mean you can see very clearly that depression, anxiety and isolation or are on the rise. Now, there’s lots of positives that are also on the rise with that.
So yes, I think there’s institutional anxiety, I think there is a general low-grade human anxiety and I think there is a deep generational and demographic anxiety that we’re experiencing.
BALDACHIN: Interesting about the kids attached to devices. I was anecdotally just having this conversation with a friend in Toronto who was talking about the rates of suicide among college kids and that’s a serious issue. That’s finally being addressed, but it’s at the fringes and it’s a hard one to discuss and there’s no question that it ties into this anxiety that you’re describing, which is a tough, tough subject to cover.
How did you, sort of take these observations and, and, and take this perspective that you’ve developed over your career which is involved, you know, disruption, starting companies, investing in companies. How did you kind of synthesize that into this concept of The Rewrite? And you’re really putting a lot of time and effort into sort of creating content and promulgating this concept. How did that come about? What’s the story of how you sort of hooked up with Forbes and develop this program to kind of put out into the world? And is it educational? Is there a ground game there? Give me a little bit of that story.
BRODY: Yeah. So I was co founder of a business in the media space in 2004 and we ended up selling that business in 2009 to the Anschutz Group in Denver and LA. And Anschutz is a very large live sport and entertainment empire, great company, great people. But the live entertainment business and the sport business, is it pretty traditional business in context. You know, it’s about physical people in physical places and entertainment…
BALDACHIN: And media.
BRODY: Yeah, it’s a pretty physical business and I think it was, I was heading up the digital lead innovation kind of operations there and I was trying to think of a way to explain to a group of folks that frankly weren’t that tapped in or seeing a sense of urgency about the need for this kind of change.
And part of that was, I think a lot of people, when they have these conversations at a corporate level, they get stuck in the mud on the technological piece. And it’s very difficult to have technological conversations with people who aren’t technologists or people who just don’t care or see it as frightening and it’s easy to avoid and ignore.
BALDACHIN: We see that with crypto right now; very similar 100 percent, 100 percent. Well, crypto is complex; Blockchain complex.
BRODY: Blockchain is incredibly complex. So, what I did was we had a corporate retreat, uh, for Anschutz and AEG, and I was trying to figure out a paradigm to sort of bring this up a little bit and say, “Look, this isn’t about the technology, this is about the people walking on this planet are different than the people who walked here 30 to 100 years ago. Forget this whole discussion about what tech you need and start thinking about the planetary change that is going on around you; the human change, the institutional change, the rise of things like east boards where 30 years ago trying to explain to somebody that people are going to be sitting and watching people play video games would have seemed a foolish at best.”
So I tried to develop a paradigm, a framework where they could look at it and say, “Okay, I may not understand the tech piece, but I can buy into the human change piece.” And I was trying to just come up with a terminology for it and I just kept going back to the same a structure which was we are really rewriting and resetting the planet.
And by the way, this isn’t the first time we’ve done this. Historically, we’ve been through many resets of the planet before. This is a different version, will have different implications, but this is not a new phenomenon historically.
And so we just came up with the term, The Great Rewrite, and then there’s a old friend who was at the time the Chief Product Officer at Forbes Lewis, and Lewis I were talking a lot about this concept – and I can’t remember if we were just talking about it randomly or he saw me speak, I don’t remember the story, I just remember seeing him in his office and he said, “You know, look, we’d love to do something with you about this. We think it’s interesting and perhaps we could build a franchise around it.”
And that was three years ago, and The Rewrite has become one of the larger and certainly most award winning content marketing partnerships that Forbes has ever done. So it’s viewed, I think now over 5 million times and grown significantly. So it’s a kind of a weird content marketing partnership that was never intended to be but resulted in that.
BALDACHIN: Yeah. They’re excellent. I would recommend them to anyone listening. They’re well worth your time. They’re really well done. They’re highly produced. They’re intelligent, and they don’t last that long so it’s snackable. One more question there; in terms of that content marketing piece, the companies that you profile as case studies, how do you find them? How do you kind of discover them and are they involved or…?
BRODY: Yeah, so there was an incredible writer that worked on the project with us named Don Steinberg, and he is a very astute researcher. So we would as a group figure out the chapters that we were working on and the subject matter and we would just try to find the best stories that we could find that really idealized and captured what we were trying to say.
So the most recent chapter in the series was around digital disruption. And really what that was about was like show people the path of companies that were really stoic and old and traditional that survived. And so when we did the research and Don was incredible in doing that. We came up with two stories that we loved. And one story was John Deere, which is like the oldest of the oldest. When you really dig into the weeds about John Deere, it’s an incredible story…
BALDACHIN: No pun intended.
BRODY: No pun intended. The company was a hand tilling company when they started and then they got introduced to the combustion engine, adopted the combustion engine, built the tractor, and now one of the truly only autonomous vehicles that is actually working today are tractors.
So ironically, John Deere is kind of ahead of Tesla in the sense that they are out in the field working with autonomous vehicles, working with an incredible amount of AI and lidar equipment on their farm equipment.
And so you see this transition from a company that was literally people with hand telling to autonomous foreign vehicles and you realize the challenge that they’re under, which is we are about to go from seven and a billion people to ten and a bit, billion people over the next 15, 20 years – and pretty unclear how we’re going to feed everyone.
And so that science, that whole piece of AG tech becomes really interesting, so that’s how we ended up with John Deere. And then the Princeton Library, which was, you know, just Princeton, New Jersey’s library, it was just a super interesting story about like how you take a space that was known for a product that is kind of like mentally questionable as to whether you need it or don’t need it and how do you completely rewrite that experience?
And the Princeton library’s done this incredible job. It’s the kind of went from the library where it was like, shit, it was all quiet. There’s only a few places in that library where you’re quiet now. The rest of your parts of co-working space, parts of thinking studio, parts of recording studio, podcast facilities. They just kind of rewrote the story of what a library was as a community asset.
BALDACHIN: That’s a great story. I mean, you know, on that note anecdotally again, when I started law school at University of Toronto, believe it or not, I play one on TV, they were in the middle of building what was the Bora Laskin Law Library, which was a very expensive, big project. Five years ago they ripped it down, literally ripped it down and built something that’s not a library. It’s classroom…
BRODY: The Bora Laskin cafeteria.
BALDACHIN: The Bora Laskin coffee shop, actually. And Bora actually will get you your cup of a hologram Bora – will actually be there for you.
BRODY: Should we do a whole episode on Bora Laskin?
BALDACHIN: We should. Maybe we’ll hologram Trudeau in there while we’re at it.
BALDACHIN: We have some Canadian references for those of you who were interested. And I slipped in a Woody Allen reference there, I don’t know if you noticed.
BRODY: I did. You’re a genius.
BALDACHIN: Thank you. We’ve talked a little bit about some of your experiences and some of your background, but to take us through, you know, you’ve done a bunch of Ted Talks; you’re very in demand public speaker. I think knowing you, I’ve seen that path track. I think coming to you now in your career, how do you become Len Brody? Take us through some of the stops on the Via De la Rosa of your career to get to the point where you really are coming up with some extremely, you know, kind of big ideas to tell. Tell us a little bit about that.
BRODY: Well, the first question is, why the hell would you want to be Leonard Brody? It’s not that interesting nor that fun, quite truthfully.
My journey started as very simply, which I think a lot of people does. So I grew up in sort of reasonable economic hardship. And I think when you grow up in economic hardship, it affects people differently. Some people get really motivated by money, some people get really motivated by family life; I was really motivated by freedom and so I never attached freedom to any particular one path. There was money was an element of freedom, jobs, skillsets were an element of freedom. Relationships were an element of freedom. I was just really motivated by the concept of freedom. And when I was in law school I knew very early on I was not interested in being a lawyer and when I articled…
BALDACHIN: Did you tell that to the folks that you articled with?
BRODY: Yes. They should have known that. You know, it was interesting. My story is as an, you know, in Canada you have to article before you become a lawyer.
BALDACHIN: Form of servitude for you?
BRODY: Yes. And I did something which was quite unprecedented, which was, I had started…
BALDACHIN: You build no time in one year.
BRODY: That’s right. I slept for six hours a day under my desk. What I did was I had built a practice representing professional soccer players as an agent and I was billing time. I actually had a bit of a business at the firm and I remember one of the firms managing partners, to be unnamed, sat me down and said, do you want to be a lawyer or a businessman?
And I remember thinking to myself, I don’t totally understand the distinction. I mean I get it I guess at some level, but those two things shouldn’t be separate. And really what he was asking me was he was asking me are you prepared to follow and toe the line? That’s what he was asking, are you preparing…It takes x number of years to be a partner, are you prepared to do that? And my answer was no. And I just said it very clearly and so I kind of pulled my name out of consideration for higher back as a lawyer and I’d been with the firm for a long time. I started right after first year law school, and I just knew very early on that I was not interested in a job.
But the concept of a job still to this day doesn’t make sense to me. I don’t mean to sound flippant about it, but there are two things that don’t make sense to me, jobs and vacations, they just don’t register. I genuinely don’t understand jobs. I don’t understand how people who work who aren’t founders, what drives them and motivates them.
I think it’s that lack of understanding that ideally, hopefully makes me a better manager because I am consistently in pursuit of the understanding of what motivates people to show up at work every day and to understand that and to understand what they care about and why they do that because my brain isn’t wired that way. I don’t understand why, you know, it’s better to sort of understand it from that perspective then sort of get it yourself because I really don’t. And it’s the same with vacations for me. Like when people say I’m going on vacation, I don’t – “what are you going to like and what are you going to do there? Sleep all day.” Like I just, I don’t get it.
BALDACHIN: Spoken by a man who has no children.
BRODY: That is true. That is true. That is true. But it just didn’t work for me. So I had to define my own path and I got involved in all kinds of crazy stuff we built. I’ve been involved in lots of companies that were successful, lots of companies that were complete and utter failures. I have had more regrets by noon on a Wednesday than many people have or will admit to in their lifetime.
So it’s just a bumpy road of figuring out what you care about. And I cared about freedom. The speaking stuff is really a sidecar for me. I have a sort of love-hate relationship with the speaking stuff. Like if I wasn’t doing what I was doing, I would probably be enjoy being a prof or a teacher. So I liked that component of it. But I definitely, my road had to be an entrepreneurial road because…
BALDACHIN: You had no choice? I can relate.
BRODY: I really didn’t have a choice and I’m unemployable so it just didn’t make sense. And I associated work in the traditional context with a restriction on freedom.
BALDACHIN: Let me touch on Anvea, because I, and many people who were involved in Dotcom 1.0 at the time, and I was back at that time at Wilson Sonsini in Palo Alto. And I remember we spoke on the phone and I was like, blown away by this IPO. Talk a little bit about that company and what that experience was like and how things have changed since then, and maybe not changed.
BRODY: Yeah. So I was not the founder of that business, I was part of the founding executive, meaning I came on. It was founded really by a…
BALDACHIN: It’s a Vancouver based company? Am I right about that?
BRODY: Yes, Vancouver and Seattle. So it started in Vancouver. It was started by a guy who I learned a lot from, a guy name Glenn Bowman who is still an entrepreneur today doing lots of, lots of stuff. I mean, we’re not in touch necessarily, but learned a shit ton from Glenn. Glenn was the founder and then he sort of brought kind of support team around him of, you know, somewhere between I would say 15 and 20 people that ended up kind of being like the…
BRODY: …Founding glue core of the team, and I would consider myself part of that. The business was really an ecommerce business that had a major pivot. It started as a company called mega depot, which was in those days supposed to be a window into the warehouses of the world, in other words, like a version of what Amazon is today, ironically, and ended up becoming more of an Amazon for small businesses. So it was really targeted at the SME market.
The company raised a lot of money, grew very quickly, and had real markers. It had real revenue, real success, real clients, and a road map. Went public in March of 2000, had a very large IPO, and it was affected like everyone else was affected. The good news was it was well cashed up, so it had time to sort of break…
BALDACHIN: Affected by the bust, meaning the massive decline…
BRODY: Yeah. So like any of those stories, it was affected, but it had enough cash and enough smarts in the business that it wrote it down, and it’s still publicly traded today. It is a bit of a different business than when we were over there.
BALDACHIN: What is the business today?
BRODY: They sell ping-pong balls online. I’m a huge ping-pong fan. I mean, you’d be surprised how many ping-pong balls you can do.
BALDACHIN: They should acquire Paddle Panels.
BRODY: That’s a different business. I think that they focus more on connecting small businesses to government RFPs now, which was an element of our business before, but not our whole business. And I think they really focused on that and, and became sort of us leaders in doing that. So great story. It was interesting.
The biggest lesson from all of that was the same thing that I sort of said at the beginning, which is history comes round, you know. And it’s easy to look back Dotcom era and think, “Oh my god, that was ridiculous.” And the reality was elements of it were ridiculous. And like every period of mass paradigm or computer – if you take a platform shift, when you look at the internet as a platform and you start to throw…You’e seeing it exactly happening at crypto now it’s literally the mirror image of what happened.
BALDACHIN: We’ve talked about that a lot on this podcast.
BRODY: What happens is you get a cycle, you know, Carlotta Perez, who’s an amazing economists and theorists around innovation talks about this in her work a lot, which is you have a new platform, you have infrastructure building phase, you have kind of really platform a adoption phase. Then you have kind of application phase, then you have total meltdown, then you have rebuilt. And I think the phase that we were living through in the first iteration of Web 1.0 was really the platform layer, it was the applications that we were putting onto it.
And at the end of the day, honestly, there are lots of things that made no sense. And there are a lot of things that you would probably do exactly the same today and see today and other markets. And it just, you know, you’re going to be a good student of timing and history to sort of understand, how do you be on the right side of that fence versus the wrong side of that fence.
BALDACHIN: I mean, the reality is you cannot remove human agency from any of these massive innovation cycles and platform shifts to your word. These people are out there trying to get their buck, and that drives those bubbles and that drives that cycle. You have massive entrance going in, and that’s the story of crypto, you know?
BRODY: I think what you experience now is a phenomena that ties back to many other platform shifts. Like you saw it in the tulip flower market, you saw it in the Industrial Revolution; you’re just seeing it and a much more affordable and accessible scale today than you were ever seen it before. So I agree with you, the human agency piece is a part of that. And in some respects that is how we progress and how we move forward.
BALDACHIN: Yes, exactly. That’s the point I’m making. You can’t separate them out and say one’s bad and one’s good, they go together 100 percent.
BRODY: And timing is about understanding – like this is not my particular thought, I am completely stealing the words of Ben Horowitz from Andreessen Horowitz. When you look at a platform shift, generally speaking, the new platform is not as good as the platform you’ve got now.
So it’s difficult to sort of consistently look at it and say we’re going in that direction. Like it’s difficult to make a use case today for a bunch of decentralized apps because the centralized stuff kind of works pretty well and the centralized internet works pretty well…
BALDACHIN: Facebook being a prime example of that, it’s difficult to.
BRODY: Yeah, Blockchain is just not technologically at the place we would all want it to be today, but it will be. And so the question is how you factor in, what is the nuance and the difference of the new platform?
The one little thing that makes it different and better, and in the case of the, of the block, it’s trust. It’s an incredible ability to maintain digital forms of trust that transforms a lot of transactional stuff that we do every day. But is it better than the system we have today? Probably not, but I think that’s – the issue is we just have to be in all contexts better students historically of like stopping and saying, “Okay, wait a second, we’ve been here, we see it. Who went through this before? What did it look like? What are the similarities, the dissimilarities? How do we lead our way through this?” And you can draw those maps and those connections and almost every sector mean you really can.
BALDACHIN: Great segue because I’d love to hear about what you’re doing with Creative Labs. You’ve partnered with CAA; everyone knows who they are. Talk a little bit about this project and what you guys are doing bulk onto deals you’re looking at, and how this sort of fits into your overall kind of worldview as it pertains to rewrites and disruptors and you know.
BRODY: Yeah. So, CAA is simply in my view the best brand in talent representation and pop culture representations in the world. And when you looked at what I was trying to do in my life, I was trying to really get ahead of building new direct to consumer brands.
I’m quite fascinated by the direct to consumer market, and there was just a confluence of events that occurred where CAA had done an amazing job of building their own direct to consumer businesses. Instead of putting a deal together, they would actually make it to themselves. A great example of that is Funny Or Die with Will Ferrell, which was, which was created and built within the walls of a ca and by the teams there. And I think they had a desire to try to do this more systematically rather than kind of one offs and built a studio around that and I really was interested in the same thing.
So we partnered, created a joint venture, which they are a shareholder in. It’s an independent company, it’s called Creative Labs. It’s a independent of CAA, but works very closely with CAA. And our job is to try to identify new digital forms of commerce transactions, B to C brands that we think we can research and scale and get to market quickly and use some of the advantages, the end of the unfair advantages that we have, which has really distribution and intelligence. And that’s effectively the whole model. And there’s lots of other great startup studios that exist: Atomic and Expo and Beta Works and Science, and they’re all amazing at what they do.
BALDACHIN: Human ventures.
BRODY: And I think inevitably, you know, I haven’t run all the numbers, but my gut would tell me that if you’ve mapped up the startup studios against traditional funds, startup studios probably end up giving pretty good if not better returns. And so partially it’s because you own and hold that cap table a little bit longer, it’s a lot more work, it’s a lot more difficult, but that was the model.
And so we’ve been at it about a year and a half. We have great outside shareholders, great partnership with CAA and we’re kind of just beginning and part of it is kind of drinking from a fire hose and figuring out, how do you build, what sectors the building in where, where’s the market going and how do you take a limited amount of resource and time and turn those into companies that we can really be proud of?
BALDACHIN: So are these companies that are media focused, are they talent focused? Are they built around CAA clients? Are they principally leveraging CAA data analytics? What is the unfair advantage that that let’s say CAA brings to the table that that would sort of drive some of these opportunities?
BRODY: Yeah. I think the businesses that we are building start with a couple foundations. So one foundation is a, do we look at the research and the intelligence to see that there’s growth and a and a white space or in a niche of an opportunity that we can engage in that we think is interesting and unique,and that’s number one. Those are particularly demographic driven, I think.
And then secondly, it does not need to involve talent. In fact, we have several of our projects don’t involve talent at all. So when it’s right and it’s the right fit and it’s a product that we think talent’s should be attached to and we’re both passionate about the project together because this is not about endorsements, that’s not what we do. This is about building and being passionate about stuff. So we have to find the right fit.
So when it suits, talent will get involved…
BALDACHIN: And that’s a built-in advantage, obviously, that you can them on the cap table and presumably…
BRODY: Yeah, although I don’t think I… I think there’s this assumption that simply because you put someone with deep reach in a market that therefore you have a great business, and you don’t because I think you have to – at the end of the day, product wins and so you got to have a great product and you really have to have a frictionless experience that people understand why they’re there.
I am a huge believer that the companies that are going to win in the next era are the companies that are solving very clear problems that are frictionless experiences. The ride-sharing example was a great example of that. It was a problem that lots of people clearly had and they created an incredible frictionless experience.
Now, would that company have grown faster or done better with a celebrity attached as a founder or shareholder? And there are shareholders of it that are celebrities. I don’t think that would’ve made a difference.
BALDACHIN: I think you’re right.
BRODY: I think if we build products that people care about and they are frictionless and great experiences, having talent who’s passionate about that same issue gives you a leg up out of the gate. But if it’s not good and it’s not working and it’s not a good experience, it doesn’t matter who’s involved, the company is going to die. So we work with talent. We also do stuff without talent; it’s completely dependent on the product.
BALDACHIN: Do you have a use case? Do you have a company you can talk about a little bit that’s come out of this partnership?
BRODY: Yeah, sure. We’ve built a four or five to date. An example of one that we’re super proud of is a company called Blue Line Studios. So Blue Line is in the mobile game space. And so mobile games is a tough space because…
BALDACHIN: Hit oriented, I guess.
BRODY: Well it has an element of that for sure. There is a hit element to it. I think there’s also an element of people not quite understanding how the sausage is made in that sector. And so lots of people have had bad experiences in mobile.
So when we looked at mobile games, we had to take a really serious look at it. And for us it was a bit of a perfect storm. We have this amazing team, Dean Richards, Pauline Molar. Dean was instrumental in a lot of the building at EA Sports that happened, and GMed many of the multi-billion franchises at EA. Pauline was the COO of EA Sports and then became the COO of Zynga.
And so we have this incredible team and they had a really, really clear vision which was, if you look at – and this is a great example of how Creative Labs works, which is looking at the numbers, looking at the white space and navigating our way through it. And this is an example of a company that really wasn’t talent or celebrity driven. And we just realized that the biggest category in mobile games is really puzzling arcade big games, big categories, native to mobile, understandable to mobile users.
BALDACHIN: Somebody’s already done pong, by the way, you guys realized that that’s taken much.
BRODY: I gotta make a call, hang on. No, if you think about puzzling arcade games, they’re growing rapidly because they’re native to a mobile device. They’re easy to play, but the heavy users, the heavy buyers of games and the super users were really sports fans and those two worlds have not been merged. So when they looked at that, they said, “Well, let’s do what we couldn’t do at EA. Let’s build a platform, a single platform where we can launch games quickly to market on the same platform within two months and let’s bridge sports and puzzles and make them into a franchise.
And so first game has launched in trial in Canada. The numbers are amazing. It looks like a winner. It just looks like it looks like the numbers were. So it’s a great use case of how we found an amazing team. Worked them, you know, Dean was a first time entrepreneur, Pauline wasn’t, and we identified some white space and we built around it. And we built it in a contrarian way because most people would have looked at that and said, “Nah, we’re not doing mobile. We’re not doing mobile games. It’s not a thing we’re interested in.”
BALDACHIN: It’s so difficult too. It really is lightening in a bottle that you could hit on her miss on. I’m sure it’s more data driven than that. And I’m not a mobile game developer, but uh, yeah, I mean, let look at it another way. I was saying this to one of our investors the other day. Take the mobile games companies that are generating revenue and put them up against the AI companies that are generating revenue today and see what the numbers look like.
BALDACHIN: I’ll take the mobile game.
BRODY: Yeah, a hundred percent.
BALDACHIN: You’ve got games that are…
BRODY: So it isn’t in effect to hit based business, but like any consumer market, there’s a tail and there’s a lot of money to be made in the middle of that curve.
BALDACHIN: That’s fair.
BRODY: And I think that’s where you want to live in the middle of that curve, producing really good niche, a quality product that consistently spits out revenue and cash. And the nice thing about sports, the reason we love sports is because it’s green field so you can do puzzle hockey 2018, puzzle hockey 2019, puzzle basketball 2020. So we’re pretty good.
BALDACHIN: What you really want to do is addict the kids. That’s the goal. It’s a good model.
BALDACHIN: Sort of segueing and maybe, you know, just getting to sort of some final thoughts here. Len Brody gets teleported 20 years into the future, what do you think blows your mind?
BRODY: Am I taller in the future?
BALDACHIN: You’re the same guy.
BRODY: I don’t care. I don’t care. Teleported 20 years in the future – do I get to see me 20 years in the future or it’s outside of myself?
BALDACHIN: Outside of yourself. It’s a fair question.
BALDACHIN: Let me give you a little more meat on the bone, and really what I’m getting at is these tectonic platform shifts – and you’ve talked in your lecturers you talk about how much change has occurred even in the last 15 years and how time is getting shorter and how things are accelerating.
BALDACHIN: So given that, one would expect that that teleporting 20 years in the future, we would see a lot of change and it would really look much more different than we might anticipate because you might say; 20 years? That’s two decades. I remember, it’s 2018, I remember 1998, we had Napster or we had Internet Explorer. Change is accelerating. I think we all agree on that.
BRODY: Yeah. So it’s 20 years the future, you’ve got your own show on whatever replaces CNN.
BALDACHIN: Yes, It’s in development.
BRODY: The Baldachin News Network.
BALDACHIN: Yes. Fake news 24/7.
BRODY: I think the biggest thing you’ll notice in 20 years is deep transportational shifts, so I think in 20 years, you will be deep into the autonomous vehicle era. So not to say that everything will be autonomous, but it’ll be much more commonplace than it is now, and I think you will have much more optionality between do I want to drive or not drive. And that has deep impacts on the way we design cities…
BALDACHIN: Major secondary effects.
BRODY: Yeah, huge secondary effects. So I think that that’s one thing that’s going to be very clear. In 20 years, we are going to be deep into the AV era. I think the other thing that will be clear is you will have sorted in 20 years a better sense of how machine learning environments are going to affect particular job categories. And I think we have, like it’s the same mass paranoia people had every single time there was a major technological evolution. We have no historical precedent of a massive technological shift accompanied by mass unemployment. It just doesn’t exist historically, and it will be no different this time around. If it is, it will be a redeployment and a redefinition of employment, but it’s not going to be, you know, suddenly everyone’s out of work because of AI and robotics, but I do think in 20 years you’ll have a settling out of what your doctor visit looks like differently in 20 years because of AI, what your visit to a lawyers office looks like, how your children are educated, decisions around how products are served to you from a CPG perspective.
So I think the two big things for me, you’re going to be deep enough into the AI environment that we’re gonna see the world significantly shifted around how we live our lives today. And I think AV is will be a big part of our lives. I think those would be two big, big, big things.
And I do think also by the way, we are at risk over the next two decades of deep geopolitical troubles, deep issues.
BALDACHIN: That’s another podcast altogether, but sadly I am as concerned by that topic as you sound like you are. Listen, I want to thank you so much, Len.
BRODY: Thank you.
BALDACHIN: I hope you’ll come back, and… Done, okay.
BRODY: This is it buddy. [laughs]
BALDACHIN: This was my one shot. Listen, thank you so much for coming. It really is a thrill. It’s been a great conversation and hopefully look forward to more. Thanks a lot.
BRODY: Thanks bro.
That’s a wrap on this episode of The Medium Rules with Alan Baldachin. For more information, go to our website at www.hballp.com. You can also follow us on Instagram, Twitter, and Facebook, and don’t forget to rate us on Apple Podcasts.