Why Building a Startup is Like Making a Movie

Every movie is a startup, and every startup is a movie. Whether you start with a script or a business plan, you will stay on parallel tracks until you get to the finished product and try to validate your key hypothesis: that there exists a receptive audience who will love what you created. Along the way, entrepreneurs and filmmakers must contend with many of the same challenges and apply many of the same skills to succeed.

George Lucas — a great example of someone who has effectively straddled both movies and startups — has said: “The secret to the movie business, or any business, is to get a good education in a subject besides film — whether it’s history, psychology, economics, or architecture — so you have something to make a movie about. All the skill in the world isn’t going to help you unless you have something to say.” Arguably, the opposite applies just as well. Understanding the movie business empowers entrepreneurs to see their startups through a powerful new lens and to script their business story in a more compelling manner.

Every Movie is a Startup

Films and startups are both ways to get your ideas into the world and, hopefully, make the world a better place. There is a common passion and motivation that drives entrepreneurs and filmmakers — all it takes is a five-minute conversation to feel that enthusiasm, excitement, and energy that they have for their respective projects.

Many people are surprised to discover that every movie is a startup. Regardless of the budget, every film starts the same way: with typed words on a few dozen sheets of paper. That’s all you have. There is no team, no office, no business plan, no website, no marketing — just a script. Even if the script is optioned by a major movie studio with personnel, offices, soundstages, and marketing departments, none of those are specifically and exclusively dedicated to turning that script into reality.

Producers are the entrepreneurs of the movie industry and it is their job to assemble all the scaffolding necessary to transform the script into a full-fledged film. Producers are responsible for assembling the cast and crew, ensuring locations and shooting schedule, making available equipment and wardrobe, putting together post-production resources, securing distribution and marketing and, most importantly, finding capital to fund all the above. Producers may not be directly making casting decisions or scouring locations or leasing cameras, but they own the duty of making sure the right team is in place to do all those things.

Remarkably, when a film is completed the entire scaffolding is taken down. The locations are turned over, the leased equipment is returned, and the cast and crew disperse to work on other projects. The edited video is all that remains and, so long as it continues to find a willing audience, the producers, investors, and selected team members continue to receive residuals.

The audience are the consumers for a movie. Like true consumers they vote with their eyeballs, their time, and their wallets. A great movie, like a great product, gets strong word-of-mouth support, generates online buzz, and exhibits staying power well past its launch date. It provides a positive return on investment to its backers and augments the track record of all key team members. By the same token, a failed movie, like a failed product, is met with negative reviews and plays to empty seats. Sometimes, failed movies and failed products find a following years later. For example, the movie Fight Club and the product Bubble Wrap were box-office and retail failures, respectively, but went on to become massive successes years after their release.

Every movie is a startup, and the metaphor holds up remarkably well in the other direction. Building a startup is a lot like making a movie. The business plan is the script, the engineers are the crew, the salespeople are the cast, the office is the soundstage, the workstations are the equipment, and the marketing and distribution are, well, the marketing and distribution. The parallels imply that knowing what works and what doesn’t in the movie business can offer remarkable insights into the rights and wrongs of building a startup.

Scripting the Plan

The script is arguably the movie world’s most organic equivalent to a business plan. Both scripts and business plans provide a blueprint for what you are going to create, how you’re going to build it, and the contributing roles required to make it a reality. Both documents provide an overall framework and strategic direction but remain open to tactical revision and situational interpretation. Importantly, both documents require effective execution by skilled and motivated personnel in order to jump the air gap between theory and practice.

When it comes to building an effective business plan, you can learn a lot from studying successful film scripts. Most great scripts are easy to read and captivating from start to finish. They grab your attention and never release it until you arrive, with breathless excitement, at the final period on the last page. Can you craft a business plan that reads the same way? It may seem daunting, but if you are looking for investment or support, it is well worth the effort.

We know that a business plan is supposed to cover, at a minimum, the product or service, team, market, competition, business development strategy, and financial projections. By thinking about how to make each of these sections more readable and dynamic, we can ensure that our intended audience understands the full extent of our business vision. Someone who is engaged from start to finish is far more likely to give us time or wallet share than someone who is daydreaming about their favorite Netflix show by the time they get to the fourth redundant paragraph of the fourth section of our market segmentation analysis.

Many business plans exchange readability for length. This would make sense if business plans were worth their weight in paper, but it’s probably more accurate to say that business plans are worth their weight in unused paper. The best business plans are short, concise, and compelling in their punch and brevity. As noted, a business plan is intended to provide a vision and a strategic sweep while allowing for extensive tactical maneuvering. Overly verbose business plans either beat the vision to a pulp of redundancy or provide so many tactical details that the strategic contours are completely obscured.

Experienced script writers stay away from overly prescriptive tactical details. A script will indicate a general location, time, and action, but leave it to the director, cast, and crew to set, interpret, and capture. Scripts use purposefully general terms like interior and exterior or day and night to delegate the details to the production team. It is the same with great business plans — they set the strategic framework but leave the executive team plenty of elbow room to operate.

As a final point, a business plan is not intended to be a paradigm shifting document. The vast majority of businesses, like the vast majority of films, are offering a fresh take on an existing idea rather than a new concept that has never been seen before. Channeling Edison, building a business is one percent inspiration and ninety-nine percent perspiration. So, keep in mind that a business plan is not a patent application and trying too hard to inject originality into every aspect of the plan is not only unnecessary, but self-defeating.

Show investors that you are tangibly improving a proven business concept and have an effective plan to execute, and you will likely capture their interest and perhaps even support. Show investors that you are trying to not only revolutionize an industry but change the very fabric of how business is done, and you are likely to be told to stop trying to boil the ocean and sent back to the drawing board. The reasons behind this approach are well illustrated by the movie industry.

Films that changed cinematography, such as the first sound film (Jazz Singer), the first animated feature (Snow White), the first found footage film (The Connection), the first single take film (Rope), and the first 3D film (Avatar) all followed conventional storylines and storytelling techniques. At the same time, films that changed storytelling, such as the first unreliable narrator film (Cabinet of Dr. Caligari), the first multiple viewpoint film (Rashomon), and the first reverse chronology film (Happy End) all used conventional cinematographic techniques.

Note that many of the films that were firsts had limited commercial success and, in fact, are not considered the best examples of the approaches they pioneered. In addition, they each combined an innovation in one area with traditional approaches elsewhere. Finally, they are in the minority — the most commercially successful films did not fundamentally change either cinematography or storytelling but rather provided exceptional execution in both areas.

Capitalizing the Crew

Once you have a business plan or a film script, the next step is to assemble a team and raise capital, not necessarily in that order. Even if your entire script can be filmed with a single iPhone take of you in your apartment, it still requires an investment of resources, in the form of money paid for the iPhone and time invested by you to get that one take just right. Once completed, your iPhone film must be marketed and distributed to gain any type of commercial success, which requires additional resources.

Most businesses, like most films, require more people and resources than can be comfortably capitalized by the founder’s savings account. In turn, raising outside capital for both endeavors comes down to the same key themes: the vision and the story. No matter how compelling your script or your business plan, a potential investor must have an initial spark of interest to crack the title page. And piquing interest requires an effective elevator pitch.

As we have seen, most successful movies are not reinventing cinematography or storytelling. How do we pitch a movie that is not revolutionary in any way, shape, or form? We must create the feeling of something fresh and new while staying grounded in the reality of the movie business. A common approach has been to pitch a new script as a cross between two other films.

For example, consider having to pitch the script for 500 Days of Summer. Pitch one: “it’s a movie about the ups and downs of a relationship between a young man and a young woman that ultimately ends in heartbreak.” Pitch two: “it’s Annie Hall meets Memento”. Which pitch is more likely to pique a potential investor’s interest?

The power of the second pitch is that it takes two well-known, but seemingly unrelated ideas and combines them in an unexpected way. As the mind tries to figure out how those concepts can possibly be combined, the listener becomes engaged and that engagement is a key turning point when it comes to recruiting both team members and investors. It also enables you to get your target audience over the first hurdle, where they go from questioning whether a movie should be made to considering how it should be made.

The same approach works for pitching a startup. The goal is not to convert a complex business concept into a schlocky tagline, but rather to provide a clear and simple value proposition that grounds your driving idea in an accessible context. This will not only help secure initial support but also provide a guidepost for future employees, partners, and customers. In crafting your pitch, strip away everything that is nonessential and focus on answering the very basic question of why must this exist in the world. For example, the value proposition for this article could go something like this: “it helps people who love movies to be better entrepreneurs.”

Of course, a pitch is only as good as the story that follows. How many of us have been drawn into the movie theater by a trailer, only to walk out wishing we could have our ticket money and our two hours back? The story must gel and when starting a business, your story to investors and partners is not only about your business plan but also about your core team that will turn that business plan into reality.

In the movie business, savvy producers and agents package a script with a director and a star before presenting the full package to potential backers. They recognize that the package is more compelling that the script by itself. The same holds true in business. The story and team together are an easier investment than the story by itself. In addition, a great team can counterbalance the gaps in a less than stellar business story.

Having someone on your team that has been part of one or more successful startups goes a long way. Not only do they boost your credibility and provide comfort to investors, they offer your business the benefit of a seasoned executive who can minimize the amount of time spent on reinventing wheels or spinning them in place. Once you have your business plan, the best advice is to recruit a team that shares your vision while offering the skill set to make it a reality.

Framing the Leadership

Few would disagree that effective leadership is at the heart of building a successful startup. Using the metaphor of the movie business, most startup CEOs can be categorized as a Producer CEO, a Director CEO, or an Actor CEO. Which one is preferable? The answer varies based on the business and the team. Each type of CEO has a set of compelling qualities and each of these qualities offers a double-edged sword that has the potential to either turbocharge or throttle forward progress, depending on how it is wielded.

The Producer CEO is savvy and strategic with a natural propensity for negotiation and deal-making. The Producer CEO instinctively understands packaging and marketing and knows how to capitalize and resource business concepts. If you love the adventure of doing business deals, the excitement of launching ventures, and the thrill of winning negotiations, you are likely Producer CEO material.

However, it’s not all roses. Many Producer CEOs are quickly bored with tactical details and hate the minutiae of setting up policies, procedures, and operational processes. They tend to place their personal reputation above the needs of the business since it is their personal reputation that drives their deal-making ability. Consequently, they may be prone to cut and run if a venture begins to lose steam or struggles to gain traction. Many Producer CEOs have a background in finance or business development.

By contrast, the Director CEO is dedicated and determined with the ability to drive operations across every department. The Director CEO has a feel for building teams, processes, and deliverables. If you are motivated by the accomplishment of crafting new solutions, the fulfillment of overcoming hard challenges, and the gratification of effectively leading teams, you have the makings of a Director CEO. Many Director CEOs have a background in technology or operations.

Of course, Director CEOs have their blind spots as well. They can become so caught up in operational details and so committed to the established plan that they fail to see the big picture. This can result in missing key pivots, blundering by unexpected opportunities, and remaining oblivious to market feedback. Many Director CEOs are set in their ways and what they view as principled leadership can easily veer into a lack of flexibility that interferes with the company’s ability to adjust to the shifting winds of business, regulation, and technology.

Finally, Actor CEOs are charismatic personalities who have the effortless ability to attract supporters to their cause and to be liked by diverse groups of people. The Actor CEO has a natural feel for establishing rapport, generating excitement, and inspiring confidence. If you are someone who loves the spotlight and thrives in front of an audience you may have the qualities of an Actor CEO. Many Actor CEOs have a background in sales or marketing.

While Actor CEOs excel at soft skills they often struggle with hard skills. Many Actor CEOs underestimate the planning and effort required to build the infrastructure for delivering a product or service. They are often unwilling to make tough decisions, such as disappointing investors or letting go of underperformers, when those decisions are likely to dent their image or reduce their likability. They are also usually far better at inspiring people than managing people.

While the best CEOs combine the qualities of a producer, director, and actor, most tend to be far stronger in one of the three. For this reason, it is critical to have a well-rounded executive team. For example, a Producer CEO that has a strong COO with director qualities and an exceptional sales leader with actor qualities can be immensely successful. The most effective CEOs are aware of both their strengths and shortcomings and surround themselves with high performers who provide complementary skills.

Filling the Seats

In movies, as in the business world, it comes down to results. You can have a terrific plan, a great team, and a dynamic CEO, but if there is a failure to execute or the customers reject your offering then none of it matters. There are many reasons that a product or a movie can fail, but often it happens because the team becomes so attached to the idea of success that they fail to notice that they have veered far off the path leading to the reality of success.

Imagine you are making a comedic adventure movie. The director’s earlier effort was City Slickers, which was also a comedic adventure and grossed $180 million worldwide on a $27 million budget. Moreover, your cast includes such well known names as Eddie Murphy, Rosario Dawson, Alec Baldwin, Randy Quaid, Joe Pantoliano, Pam Grier, and John Cleese. Sounds like a movie like this cannot possibly miss, right? That’s exactly what its investors thought, putting up a budget of $100 million. The result was a film called The Adventures of Pluto Nash, which barely grossed $7 million and became best known for being one of the worst flops in movie history.

Now imagine it’s a year later. You have barely recovered from The Adventures of Pluto Nash when you are offered another film. This time the genre is romantic comedy, which arguably has one of the lowest floors for less than perfect scripting. You are given the director who did Beverly Hills Cop, Scent of a Woman, and Meet Joe Black along with a star-studded cast that features Ben Affleck, Jennifer Lopez, Al Pacino, and Christopher Walken. This time, the result is a film called Gigli. The good news is that the film only cost around $54 million to make. The bad news is that it did about as well as Pluto Nash, grossing just over $7 million.

Unlike movies, in most other businesses you do not have to wait until all the work is done to get a sense for whether customers love or hate your product. Unfortunately, many first-time founders are so wedded to their vision and business plan that they are unwilling to listen to negative feedback from the marketplace until it is too late. By contrast, more seasoned entrepreneurs understand the value of flexibility and the importance of strategic adjustment.

A number of incredibly successful companies were borne out of massive pivots away from the original idea. YouTube was initially a dating service; Slack and Flickr were gaming companies; Twitter was a podcasting concept, and Groupon was a social network. The executive teams running these companies had the prescience to see that they were headed toward a cliff and the presence of mind to steer in a different direction. These success stories teach us that if you find yourself in the middle of a Pluto Nash or Gigli your best move may be to repurpose the production and start working on a totally different movie.

The lesson applies not only to foundering startups but also would-be entrepreneurs that are stuck between a pair of bureaucratic guardrails. For example, in the movie The Founder we see an example of an entrepreneurial spirit landlocked in a corporate existence. Ray Kroc is best known as the fast-food tycoon who built McDonald’s from a family run business to a global empire, but his first step was shedding the existence of a corporate salesman and embracing the life of an entrepreneur.

The Founder is just one of many excellent films that bring the parallels between movies and startups full circle: a successful motion picture based on a true-to-life business story. Beyond being business successes in their own right, these movies offer something far greater — a touchstone for generations of entrepreneurs and a window for general audiences about business, whether it’s Glengarry Glen Ross for sales, Thank You for Smoking for marketing, Wall Street for finance, The Social Network for technology, Moneyball for sports, Up in the Air for consulting, Tucker for manufacturing, or Office Space for corporate life.

We can learn from these movies and, above all, we can learn from the industry that made them an overall lesson about the importance of a compelling story that is spearheaded by a dedicated leader and put together by an exceptional team. For in the end, whether in movies or in business, it is atop these three pillars that we inevitably find success.