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As for Colossal, here's what I can say at the moment. Please keep in mind that we have to be very careful and deliberate about releasing financial information, as we want to make sure we're not providing any sort of misleading statements. I know just enough about GAAP accounting to know that I shouldn't be talking about any numbers before they are reviewed by accountants. :)
We haven't released any public info about Colossal yet. We're planning to provide updated midyear financials next month, and I expect there will be some updated information on our projects at that time. However, I don't expect that we'll be providing a breakdown of specific project financials. We have confidentiality clauses in many contracts, and a lot of our data is tied to information that can be very sensitive for our partners. We need to balance our desire for transparency to investors with the impact it might have on our ability to sign deals with current and future partners, including private companies that don't release financial data.
That said, I can tell you that we were VERY pleased with our investment in Colossal, and that we'd make it again in a heartbeat. We've said a number of times that the amount of money we invested was small enough that any financial ROI is DWARFED by the value we received in terms of industry recognition, establishing a real world case study for Legion M, and showing the world the type of projects we want to be involved in. A lot of people (mistakenly) assume that as a small company with limited funding we'll be limited to very low budget productions, fan films, etc. Coming out of the gate with an Anne Hathaway movie has been huge.
Here are our my thoughts on salary.
You are correct--Paul and I are both currently drawing a salary of 175K per year. As the other commenter mentioned, that's not a particularly high salary in Silicon Valley, but I believe this is an important discussion nonetheless. As a startup with limited resources, cash is king.
That said, I think you are looking at the salaries the wrong way. As an owner of a company, the question you should be asking isn't "how much am I paying" but "what am I getting for my money?", and "what gives the company the greatest chance of success?".
Imagine you own an NFL team, and you are looking for a quarterback. The current market price for a MVP caliber quarterback is $25 Million per season. Is that an exorbitant salary for a guy who throws balls for a living? Yes. Can you find somebody cheaper? Sure. But would you sign the MVP? Probably. Because as a business owner you recognize that the quarterback is the most important position on the team, and if you want to reach the Super Bowl, he's probably your best shot.
Now, what if you had the chance to get that EXACT same player for HALF of his market price. $12.5 is still a high price, but it's an amazing value, and most team owners would trade in their mothers to get that deal.
I use that analogy because both Paul and I are probably making 50% or less than we'd be making if we went elsewhere. In fact, Paul left a job that had over $500K of comp per year to start Legion M. He also worked for nearly a year for free. Both of these are documented facts--you can see the first in MobiTV's S1 filing a few years ago, and the second in Legion M's Reg A filing.
So with Paul, you've got somebody that WOULD have made close to $1MM over the first two years of Legion M, but instead earned $175K. This show a few things:.
1) As an owner of the company, you bought $1MM worth of value for $175K, which seems like a pretty good deal.
2) You've got a founder who is investing SIGNIFICANT value into this startup. One could argue that Paul's invested $825K into Legion M.
3) If you average his salary of 175K over two years, he's actually been paid 87.5K per year. So technically you don't have a problem with both founders--you only have a problem with me. :)
I understand that there is a lot of conventional wisdom from VC's re: founders salaries. However, you've got to realize a couple things.
First, the VAST majority of startups are led by 20-somethings right out of college rather than experienced, middle aged guys like Paul and I. For those people--a 100K salary is reasonable, and enough to pay the bills. For guys like Paul and I with mortgages and families living Silicon Valley, they are not. We would both LOVE to be able to work for $1 per year, but unfortunately that's not a possibility. (TBH, the only way I've been able to afford working for $175K per year is by cashing in college funds I had set aside for my children). A seasoned VC recognizes that the general guidelines they use for graduates of Y Combinator don't apply to every company. And while conserving money is very important in the early days of a startup, it's not nearly as important as having the right people in the right positions.
To give you an example, my salary in the early days of MobiTV (which was a VC funded company) was $120K (keep in mind, this was over 15 years ago). I was also 28 years old, and can tell you with certainty that that I brought a tiny fraction of the value I bring today. If you could go back in time, you might be able to get 28 year old Jeff and Paul to run Legion M at a salary you'd feel comfortable with. But I can tell you that you'd stand a MUCH, MUCH lower chance of success. As with anything, it's not simply a matter of how much you are paying for something--what matters is the value you are getting for your money.
Secondly, one of the primary reasons VC's push so hard for low CEO salaries is because the entire company's salary is often pegged to the CEO. I.e. if you you have a highly paid CEO, you'll end up paying more for your VP engineering, which means you'll have higher paid Engineering Managers managing higher paid engineers. This logic is true, but not particularly relevant to Legion M.
That's because MOST startups are built to dramatically scale their organization. I..e, If you are a tech startup, you need to hire engineers. At MobiTV, we started with 3 cofounders, but eventually grew to over 400 people--mostly in engineering. In these organizations, the costs of internal staff represent the vast majority of the monthly costs that need to be covered, and so ANYTHING you can do to reduce those salaries has a HUGE lever on the long term success of the company.
Legion M is different--the vast majority of our expenses will be the investments we make into projects, and ultimately the cost of our team should be diminutive. In that regard, we're more like a VC firm than a tech startup. If you look at the that model, you'll see while VCs push very strongly for tech CEOs to keep salaries low, VC's themselves are EXTREMELY well compensated. That's because smart investors recognize that when you have a very small group making very important decisions, you want the RIGHT people, not the CHEAPEST people.
Finally, I'd like to suggest rather than focusing on the salaries of individuals, you look at the overall burn of the company. With Legion M, we intentionally have an extremely small (but senior) staff. We do almost everything ourselves, which is an extremely powerful way to keep burn low. I.e. Paul and I built the website, Terri does most of our legal, -- our combined 40+ years in startups allows us to do almost everything ourselves instead of hiring other people to do it for us. This means that overhead costs--rent, furniture, HR, middle management, IT, etc--are almost zero. When 28 year old Paul and Jeff started MobiTV, our first 4 hires were a tech guy (to build our website), a receptionist, an office manager, and a documentation writer. Those hires, coupled with rent, were probably more than half of our burn in the early days. At Legion M, 45 year old Paul and Jeff have NONE of those expenses. We're smarter, more capable, and have taken our lumps and learned from our mistakes. Not to say that we won't make new ones, of course, but at least we got some of the big ones out of the way... :)
Finally, I'll reiterate the point that NOBODY in this company is watching our cash closer than Paul and I. If Legion M runs out of money, most of our investors will lose a couple hundred bucks. Paul and I will lose our jobs, and have serious damage done to our careers and reputations. If you don't believe we're the type of people that care about that sort of thing, then I'd HIGHLY recommend you don't invest. You should never go into business with people you don't trust.
Hope this helps! Happy to answer any followup.
So sorry about the 3 peat! The first time I posted I got an error message, so I tried again. I got an error message again, so I went back through the process from scratch. It was only after that errored out that I realized that the problem was an erroneous error message, and that I'd posted it three times!
But by then I'd hit my new member 3 post limit, and was muted. :)
I don't know if anybody has the ability to delete the redundant posts (along with this one)--I haven't been able to figure out a way.
I plan to respond to your questions tmw!
INVITATION ACCEPTED! Sorry that it's taken us so long to respond, but TBH I didn't realize this forum existed until one of our investors pointed it out to us. I'd like to go through and respond to some of the earlier and later posts, but this seemed as good a place as any to start.
First, to introduce myself, my name is Jeff Annison, and I'm one of the cofounders (along with Paul Scanlan) of Legion M. We also cofounded another company (with one other cofounder) back in 1999 called MobiTV. That company started with 3 guys working out of spare room and turned into a global leader of mobile television. We raised over 100MM in venture capital, and in 2005 won an Emmy for innovation in Television. I know we're not talking about MobiTV here--I just bring it up as a way to demonstrate that we aren't first-time entrepreneurs here.
I'd like to provide a two part answer to your question about how we make profit at Legion M.
PART 1. How do we make money?
We make money using well established business models for entertainment content. Some examples:
-We can invest in existing film, TV, and VR projects. This is what we've already done with Colossal (where we invested in P&A after the film was already completed) and Field Guide to Evil (where we invested up front in production as executive producers). The spectrum of investment terms is extremely wide--from owning equity in the project to "last money in, first money out" financing. Our goal is to develop diversified slate, which you can already see from our first two projects. Being flexible allows us to be opportunistic and get involved in projects we love (more on that in part II).
-We can develop our own projects. A great example of this is our ICONS VR Interview with Stan Lee and Kevin Smith. In this case, we conceived of the idea, signed Stan and Kevin, hired the VR studio, and shot a pilot. We own the footage outright. It's worth noting, that what we did with that project is groundbreaking--you can read more about it in this Fast Company article: https://www.fastcompany.com/3069267/with-icons-legion-m-is-creating-pop-culture-time-capsules-and-pushing-vrs-limits.
Icons is a long term investment--VR is a nascent industry today, but our footage was captured in a way designed stand the test of time. We want to give people 100 years from now the opportunity to sit face to face with an icon of our time. We believe the value of this footage will increase over time. One of the challenges we face is that no headset even exists today that can play the full quality of the footage we captured! Given that Stan is 95, it's quite possible this is the only footage of this type that ever exists. It's already the only footage of his wife. :( As I said, we view this as a long term investment.
In the case of ICONS, our goal ins't just to monetize the Stan Lee footage, but to turn it into a full series that allows people to sit down face to face with other luminaries of our time. Stephen Hawking, Paul McCartney, Warren Buffet, Mel Brooks, etc. We're very early in this process, but we have interest from distribution partners, sponsors, etc.
These are two great examples that illustrate the diversity we seek in our slate, both in terms of medium (film, TV, and VR), stage (early stage speculative vs. safer later stage), type (internal projects that require a lot of work on our part vs. more passive investments into other people's projects). I can elaborate more if you like, but hopefully this gets the point across.
Part II. Why does 1,000,000 fans matter.
The business models I describe above are used by thousands of studios/production companies in Hollywood. Anybody with money can come into Hollywood and try to make a fortune (or more often than not lose a fortune) doing this. In fact, Hollywood has a long and storied history of taking advantage of starry-eyed investors.
A lot of investors don't care--they are so excited about hanging out with stars and being a movie producer that they don't care about the ROI. Their's nothing inherently wrong with this, but it's really more akin to "buying" a once-in-a-lifetime experience rather than investing. I think a lot of Legion M investors fall into this category--especially those that have put in $100. The range of financial returns you're going to get on a $100 investment is de minimis compared to the joy you'll receive from being a part of something you love.
That said, while some of our investors may not care about a financial return, the same cannot be said of Paul and I. We care deeply. After all, we have FAR more invested in this venture than ANY of our investors. Paul went the first year without drawing any salary, an when we did start paying salaries, we're paying ourselves about HALF what we'd be making someplace else (more on this in another post). This means that we literally have hundreds of thousands of our own dollars at stake. Not to mention our jobs, careers, and reputations.
If you look at what we're doing, you'll see that while we work hard to make Legion M a fun investment (we call it Emotional ROI--meaning how much JOY you get from owning the stock), at it's core Legion M is a legitimate Facebook/Google/Tesla type swing for the fences that's being run by serious businesspeople with a track record of success. That's where the 1MM fans comes in.
Our power as a company comes from the fact that we're owned by fans. If Paul and I had come to town with a couple million $$, we would not have gotten us a seat at the table with Colossal. We wouldn't have gotten Stan Lee and Kevin Smith to do a VR shoot for no money (they were compensated with stock options). We wouldn't have received profiles on the front page of the business section of the LA Times, or made it in Variety Magazine, Nerdist, Fast Company, Forbes, or any of the hundreds of other press interviews we've done.
All of these things were made possible because we're owned by FANS. Not even that many fans yet--we had about 3K when all those deals were signed. Today we've got about double that, and it's growing fast every day. This is important, because our power grows exponentially based on the number of fans we have in the company.
To explain further, I ask you to check out the following post, that explains our master plan, and hopefully helps illustrate why 1MM fans isn't hype or BS. https://legionm.com/shareholder-updates/legion-ms-top-secret-plan
In any case sorry for the long winded response. As Mark Twain said, i'd make it shorter if I had more time. :). Please review the link I sent, and then I'd be happy to answer any other comments or questions you have. I also plan to comment on the other posts when I get a chance.
INVITATION ACCEPTED! Sorry that it's taken us so long to respond, but TBH I didn't realize this forum existed until one of our investors pointed it out to us. I'd like to go through and respond to some of the earlier and later posts, but this seemed as good a place as any to start.
First, to introduce myself, my name is Jeff Annison, and I'm one of the cofounders (along with Paul Scanlan) of Legion M. We also cofounded another company (with one other cofounder) back in 1999 called MobiTV. That company started with 3 guys working out of spare room and turned into a global leader of mobile television. We raised over 100MM in venture capital, and in 2005 won an Emmy for innovation in Television. I know we're not talking about MobiTV here--I just bring it up as a way to demonstrate that we aren't first-time entrepreneurs here.
I'd like to provide a two part answer to your question about how we make profit at Legion M.
PART 1. How do we make money?
We make money using well established business models for entertainment content. Some examples:
-We can invest in existing film, TV, and VR projects. This is what we've already done with Colossal (where we invested in P&A after the film was already completed) and Field Guide to Evil (where we invested up front in production as executive producers). The spectrum of investment terms is extremely wide--from owning equity in the project to "last money in, first money out" financing. Our goal is to develop diversified slate, which you can already see from our first two projects. Being flexible allows us to be opportunistic and get involved in projects we love (more on that in part II).
-We can develop our own projects. A great example of this is our ICONS VR Interview with Stan Lee and Kevin Smith. In this case, we conceived of the idea, signed Stan and Kevin, hired the VR studio, and shot a pilot. We own the footage outright. It's worth noting, that what we did with that project is groundbreaking--you can read more about it in this Fast Company article: https://www.fastcompany.com/3069267/with-icons-legion-m-is-creating-pop-culture-time-capsules-and-pushing-vrs-limits.
Icons is a long term investment--VR is a nascent industry today, but our footage was captured in a way designed stand the test of time. We want to give people 100 years from now the opportunity to sit face to face with an icon of our time. We believe the value of this footage will increase over time. One of the challenges we face is that no headset even exists today that can play the full quality of the footage we captured! Given that Stan is 95, it's quite possible this is the only footage of this type that ever exists. It's already the only footage of his wife. :( As I said, we view this as a long term investment.
In the case of ICONS, our goal ins't just to monetize the Stan Lee footage, but to turn it into a full series that allows people to sit down face to face with other luminaries of our time. Stephen Hawking, Paul McCartney, Warren Buffet, Mel Brooks, etc. We're very early in this process, but we have interest from distribution partners, sponsors, etc.
These are two great examples that illustrate the diversity we seek in our slate, both in terms of medium (film, TV, and VR), stage (early stage speculative vs. safer later stage), type (internal projects that require a lot of work on our part vs. more passive investments into other people's projects). I can elaborate more if you like, but hopefully this gets the point across.
Part II. Why does 1,000,000 fans matter.
The business models I describe above are used by thousands of studios/production companies in Hollywood. Anybody with money can come into Hollywood and try to make a fortune (or more often than not lose a fortune) doing this. In fact, Hollywood has a long and storied history of taking advantage of starry-eyed investors.
A lot of investors don't care--they are so excited about hanging out with stars and being a movie producer that they don't care about the ROI. Their's nothing inherently wrong with this, but it's really more akin to "buying" a once-in-a-lifetime experience rather than investing. I think a lot of Legion M investors fall into this category--especially those that have put in $100. The range of financial returns you're going to get on a $100 investment is de minimis compared to the joy you'll receive from being a part of something you love.
That said, while some of our investors may not care about a financial return, the same cannot be said of Paul and I. We care deeply. After all, we have FAR more invested in this venture than ANY of our investors. Paul went the first year without drawing any salary, an when we did start paying salaries, we're paying ourselves about HALF what we'd be making someplace else (more on this in another post). This means that we literally have hundreds of thousands of our own dollars at stake. Not to mention our jobs, careers, and reputations.
If you look at what we're doing, you'll see that while we work hard to make Legion M a fun investment (we call it Emotional ROI--meaning how much JOY you get from owning the stock), at it's core Legion M is a legitimate Facebook/Google/Tesla type swing for the fences that's being run by serious businesspeople with a track record of success. That's where the 1MM fans comes in.
Our power as a company comes from the fact that we're owned by fans. If Paul and I had come to town with a couple million $$, we would not have gotten us a seat at the table with Colossal. We wouldn't have gotten Stan Lee and Kevin Smith to do a VR shoot for no money (they were compensated with stock options). We wouldn't have received profiles on the front page of the business section of the LA Times, or made it in Variety Magazine, Nerdist, Fast Company, Forbes, or any of the hundreds of other press interviews we've done.
All of these things were made possible because we're owned by FANS. Not even that many fans yet--we had about 3K when all those deals were signed. Today we've got about double that, and it's growing fast every day. This is important, because our power grows exponentially based on the number of fans we have in the company.
To explain further, I ask you to check out the following post, that explains our master plan, and hopefully helps illustrate why 1MM fans isn't hype or BS. https://legionm.com/shareholder-updates/legion-ms-top-secret-plan
In any case sorry for the long winded response. As Mark Twain said, i'd make it shorter if I had more time. :). Please review the link I sent, and then I'd be happy to answer any other comments or questions you have. I also plan to comment on the other posts when I get a chance.
INVITATION ACCEPTED! Sorry that it's taken us so long to respond, but TBH I didn't realize this forum existed until one of our investors pointed it out to us. I'd like to go through and respond to some of the earlier and later posts, but this seemed as good a place as any to start.
First, to introduce myself, my name is Jeff Annison, and I'm one of the cofounders (along with Paul Scanlan) of Legion M. We also cofounded another company (with one other cofounder) back in 1999 called MobiTV. That company started with 3 guys working out of spare room and turned into a global leader of mobile television. We raised over 100MM in venture capital, and in 2005 won an Emmy for innovation in Television. I know we're not talking about MobiTV here--I just bring it up as a way to demonstrate that we aren't first-time entrepreneurs here.
I'd like to provide a two part answer to your question about how we make profit at Legion M.
PART 1. How do we make money?
We make money using well established business models for entertainment content. Some examples:
-We can invest in existing film, TV, and VR projects. This is what we've already done with Colossal (where we invested in P&A after the film was already completed) and Field Guide to Evil (where we invested up front in production as executive producers). The spectrum of investment terms is extremely wide--from owning equity in the project to "last money in, first money out" financing. Our goal is to develop diversified slate, which you can already see from our first two projects. Being flexible allows us to be opportunistic and get involved in projects we love (more on that in part II).
-We can develop our own projects. A great example of this is our ICONS VR Interview with Stan Lee and Kevin Smith. In this case, we conceived of the idea, signed Stan and Kevin, hired the VR studio, and shot a pilot. We own the footage outright. It's worth noting, that what we did with that project is groundbreaking--you can read more about it in this Fast Company article: https://www.fastcompany.com/3069267/with-icons-legion-m-is-creating-pop-culture-time-capsules-and-pushing-vrs-limits.
Icons is a long term investment--VR is a nascent industry today, but our footage was captured in a way designed stand the test of time. We want to give people 100 years from now the opportunity to sit face to face with an icon of our time. We believe the value of this footage will increase over time. One of the challenges we face is that no headset even exists today that can play the full quality of the footage we captured! Given that Stan is 95, it's quite possible this is the only footage of this type that ever exists. It's already the only footage of his wife. :( As I said, we view this as a long term investment.
In the case of ICONS, our goal ins't just to monetize the Stan Lee footage, but to turn it into a full series that allows people to sit down face to face with other luminaries of our time. Stephen Hawking, Paul McCartney, Warren Buffet, Mel Brooks, etc. We're very early in this process, but we have interest from distribution partners, sponsors, etc.
These are two great examples that illustrate the diversity we seek in our slate, both in terms of medium (film, TV, and VR), stage (early stage speculative vs. safer later stage), type (internal projects that require a lot of work on our part vs. more passive investments into other people's projects). I can elaborate more if you like, but hopefully this gets the point across.
Part II. Why does 1,000,000 fans matter.
The business models I describe above are used by thousands of studios/production companies in Hollywood. Anybody with money can come into Hollywood and try to make a fortune (or more often than not lose a fortune) doing this. In fact, Hollywood has a long and storied history of taking advantage of starry-eyed investors.
A lot of investors don't care--they are so excited about hanging out with stars and being a movie producer that they don't care about the ROI. Their's nothing inherently wrong with this, but it's really more akin to "buying" a once-in-a-lifetime experience rather than investing. I think a lot of Legion M investors fall into this category--especially those that have put in $100. The range of financial returns you're going to get on a $100 investment is de minimis compared to the joy you'll receive from being a part of something you love.
That said, while some of our investors may not care about a financial return, the same cannot be said of Paul and I. We care deeply. After all, we have FAR more invested in this venture than ANY of our investors. Paul went the first year without drawing any salary, an when we did start paying salaries, we're paying ourselves about HALF what we'd be making someplace else (more on this in another post). This means that we literally have hundreds of thousands of our own dollars at stake. Not to mention our jobs, careers, and reputations.
If you look at what we're doing, you'll see that while we work hard to make Legion M a fun investment (we call it Emotional ROI--meaning how much JOY you get from owning the stock), at it's core Legion M is a legitimate Facebook/Google/Tesla type swing for the fences that's being run by serious businesspeople with a track record of success. That's where the 1MM fans comes in.
Our power as a company comes from the fact that we're owned by fans. If Paul and I had come to town with a couple million $$, we would not have gotten us a seat at the table with Colossal. We wouldn't have gotten Stan Lee and Kevin Smith to do a VR shoot for no money (they were compensated with stock options). We wouldn't have received profiles on the front page of the business section of the LA Times, or made it in Variety Magazine, Nerdist, Fast Company, Forbes, or any of the hundreds of other press interviews we've done.
All of these things were made possible because we're owned by FANS. Not even that many fans yet--we had about 3K when all those deals were signed. Today we've got about double that, and it's growing fast every day. This is important, because our power grows exponentially based on the number of fans we have in the company.
To explain further, I ask you to check out the following post, that explains our master plan, and hopefully helps illustrate why 1MM fans isn't hype or BS. https://legionm.com/shareholder-updates/legion-ms-top-secret-plan
In any case sorry for the long winded response. As Mark Twain said, i'd make it shorter if I had more time. :). Please review the link I sent, and then I'd be happy to answer any other comments or questions you have. I also plan to comment on the other posts when I get a chance.