I'm Tim O'Reilly.
I'm the founder and CEO
of O'Reilly Media.
I'm a conference producer and
book publisher and I've been
involved in a number of the
revolutions in technology
in Silicon Valley.
I was -- I created the first
commercial website back in
1993, first ad-supported site.
I organized the meeting where
the term "open source software"
was adopted by a collection
of free software leaders.
And I sort of popularized the
term "Web 2.0," when everybody
was down in the dumps
after the dot com bust.
And right now I'm involved in
promoting this new revolution
that's happening at the
intersection of sensors and
robotics and smart
manufacturing called
the Maker Movement.
We had an event in San Mateo
this last spring that drew
80,000 people playing with
stuff." Smart stuff and dumb
stuff made with smart tools.
John Markov said it was the
closest thing he'd seen since
the West Coast Computer Fair
which started the personal
computer revolution.
And I'm here to tell you that
innovation does not begin
with entrepreneurs.
It begins with
people having fun.
And that doesn't mean that you
can't make money, that you
can't figure out how
to get a profit.
What it does mean is that the
innovation engine has a number
cylinders and they have to
fire in the right order.
If you go after the money
first, your engine misfires.
So when you think about it, you
know, the Wright Brothers,
they didn't want to build an
airline; they wanted to fly!
You know, when those guys got
together the Homebrew Computer
Club, they had no idea --
maybe a couple of them did.
I don't know about Bill
Gates and Steve Jobs.
But so many of them, they
just wanted to have a
computer for their own.
When we were first playing with
the World Wide Web, it was
just because it was so cool.
And after while, you get a
sense of the possibility of
what excites you, and then you
start thinking about changing
the world and you start
having a really big idea.
You know, a computer on every
desk and in every home.
Or access to all the
world's information.
Or the end of malaria.
These are big ideas.
You want to change the world.
That's the second
cylinder of the engine.
Because when you have a
really big vision, it
keeps you on track.
It lets you try things.
Because you know that you're
trying to go somewhere.
The third cylinder is where
the entrepreneur comes in.
That's when you realize that
you actually have to have a
business model, you have to
have customers, you have to
figure out how to get other
people to help you build your
vision, and you start to build
that team, that company.
But it doesn't start there.
And then the fourth -- and I
think in many ways, the most
important -- cylinder in this
engine -- and I'm sorry, it's
just a four-cylinder engine;
maybe somebody has an eight- or
twelve-cylinder -- is the idea
that you create more value than
you capture for yourself.
One of the things that has gone
very, very wrong in our economy
is that we have company after
company that is trying to take
more out of the system
than they create.
Innovation is about creating
value, and what you see in
great companies is that
they built a platform that
builds value for others.
If you look at the personal
computer or the World Wide Web
or what's happening now on
smartphones, you know,
the money isn't being
made by one company.
It's being made
by an ecosystem.
And the people who build those
platforms are, in fact,
creating and nurturing
that ecosystem.
They're creating way more
value than they capture.
This is also one
of my passions.
I'm trying to teach government
how to think like a
platform provider.
Now, right now we have this
government model that's a
little bit like a
vending machine.
We pay in our taxes and we get
out services and the government
thinks they've got to, you
know, fill the vending machine.
And instead, if you look at the
great government successes like
the Internet or like the GPS
system, it's building some kind
of platform capability that
society then expands on, uses
the platform and creates value.
So I like to say that Ronald
Reagan is the father of
Foursquare because it was in
1983 that it was a U.S.
airliner that strayed into
North Korean airspace and was
shot down and he said, "Whoa.
When this GPS thing you Air
Force guys are working on is
finished, please, you know,
let's open it up for
civilian use."
Didn't happen for
another 17 years, but
eventually it happened.
And, you know, we've seen the
explosion of location-based
services as a result.
So this idea of platforms
and of creating more value
than you capture for
yourself is so central.
And so I urge all of you, in
your thinking about the
companies that you build, look
for excitement, look for fun,
and then you will start to find
things that really matter.
Because what -- we are all
hungry for meaning, and the
things that do excite us and
that fill us with joy are
usually things that
have big impact.
And so you follow that --
that joy, that bliss.
You try to create
value for the world.
And then you build business
as a natural outcome
of what you started.
And so that's my framework for
thinking about innovation
and we're going to have a
conversation here with three
people who I think have built
businesses in that spirit.
And we're going to start with
someone who, like me, remembers
just the sheer joy of the early
World Wide Web, before it
became commonplace and
accepted, but he also took that
joy and he figured out what it
took to build one of the
net's great businesses.
Please welcome Jerry Yang, the
founder and chief Yahoo --
cofounder, chief Yahoo.
[Applause]
Jerry Yang: Thanks, Tim.
Well, I have to say, Tim,
you're -- at one of the prep
sessions, Tim reminded me that
I'm probably one of the
dinosaurs of the Internet
business, and I can't believe
I'm one of the old
guys, you know.
Tim O'Reilly: I know.
It's friggin' weird, isn't it?
Jerry Yang: Well, thank God
you're still a little more
senior than me, but...
Tim O'Reilly: Yeah.
Yeah.
Jerry Yang: But I have to say
you're one of my heroes and
you've been -- ever since even
when we started, we looked to
O'Reilly, and every time we get
together you're always on that
next edge, and I'm fascinated
and obviously thank you
for, you know, having
this conversation.
But I just think it's so
fabulous of you trying to
change our government.
But I have to say I always feel
like every time I go into D.C.,
I feel like I have to come back
west and feels like whatever it
is away from D.C. gets done
faster, better, and --
Tim O'Reilly: Yeah.
Well, I think in general one of
the things that is true in our
society is that competition
really does create innovation,
and governments don't have much
competition, and we have to
figure out, you know, how to
route around them and how to
actually create some
of the services --
Jerry Yang: Yeah.
Tim O'Reilly: -- that, you
know, we used to think that
government had to provide.
But I want to kind of --
Jerry Yang: And they probably
don't have much fun.
Tim O'Reilly: No.
Jerry Yang: I'm sorry.
I'm sure there are --
Tim O'Reilly: But actually,
I will say this: People
in government are
incredibly passionate.
By the way, I'm supposed to
be interviewing you, Jerry.
[Laughter]
Although we agreed beforehand
we would just have a
conversation, and Jerry kind
of took me seriously on that.
[Laughter]
Jerry Yang: I don't know what
you're going to ask me so I'm
going to take the offense.
Tim O'Reilly: Yeah.
Well, take the offense here.
I want to start -- because
Jerry and I really started
in the same place.
You know, we were running,
in some sense, competing
services early on.
Jerry Yang: Right.
Tim O'Reilly: I sold mine to
AOL and that was the end of
that, and you went on to
build a huge company.
So you clearly know something
about taking a company from
innovation to scale
that I don't know.
So how did you do that?
I mean, what was the -- you
know, how did you go from that
"This is just so cool" stage
to, you know, building a
multibillion dollar company?
What was the turning point?
Jerry Yang: Well, I think
that's probably the hardest
thing, and certainly I think
for any company that has any
scale, it's still the hardest
thing is to take great ideas
and put them into
the marketplace.
But at least for Yahoo! and
certainly in the early days,
the formula was sort of simple.
We just tried to get things out
as quickly as possible and
then tried to iterate.
Tim O'Reilly: And that was
the whole methodology
about that, the whole
lean startup movement --
Tim O'Reilly: -- trying
to systematize that.
Jerry Yang: Right.
And I actually think -- and one
of the things I do now is, I do
see a lot of startups and I do
talk to a lot of entrepreneurs
and they have it so easy now.
Tim O'Reilly: Uh-huh.
Jerry Yang: You know, it's
so easy to have that
lean and mean --
Tim O'Reilly: We had so much to
invent back then, it was like
"What do you mean, advertising
on the Internet?"
Jerry Yang: Exactly.
But I also think, Tim, one of
the things that -- and I use
this as sort of my measure of
entrepreneurs and innovators
is, you know, David Filo and I
started Yahoo!, Larry and
Sergey started Google.
There's a lot of companies that
started with a couple people.
Now if you look at startups,
especially in the valley and
especially doing -- you know,
leveraging all the
infrastructure that's out
there, what two people can do
in a unit of time -- six
months, nine months, a year --
it blows you away.
Tim O'Reilly: Yeah.
Jerry Yang: Versus what we had
to go through, or probably
what Larry and Sergey
had to go through.
So I just think the pace of
enabling innovation -- and
obviously I totally agree with
your notion of fun, but clearly
having fun at the speed of what
they can do now, it's -- it's a
lot more fun than 15 years ago.
Tim O'Reilly: Yeah.
Yeah.
So I mean in terms of the
technology that you think is
most transformative in
termination of the speed of
innovation, do you have
any thoughts of...
Jerry Yang: Well, you know, you
and I talk about this platform
ecosystem, open and closed, a
lot, and I probably learn more
from you than you realize, but
I certainly think that the --
what's happening with cloud and
what's happening with
infrastructure being
completely, you know, on-demand
is -- is revolutionizing not
only corporate businesses and
governments and everything
else, but what is really making
the impact is, I think, the
very small- to medium-size
developers, and that's
obviously creating a
whole new set of tools.
And what a lot of them are
doing, to your point of, you
know, putting back into the
system as much as you're taking
out, or less than you're -- you
know, more than -- putting more
back into the system than
you're taking out, a lot of
them are putting back tools and
infrastructure back into the
system to enable the next ones.
Tim O'Reilly: Right.
Jerry Yang: The pace of
applications being written on
cloud now, I think, is quickly
growing, whether it's for the
web or for the social web or
for mobile devices, but it's
incredible the speed and the
level of creativity that's
happening over a bit of
a cloud infrastructure.
So I'm probably not saying
anything that's new here, but
having witnessed it firsthand,
it's truly amazing.
Tim O'Reilly: So one of the
things that I've been obsessed
with for years is the idea that
on the web you get data at
scale as the next source of
lock-in, and, you know,
effectively we're building an
Internet operating system where
the subsystems are data.
And, you know, Yahoo! obviously
has huge collections of all
kinds of data, but you also
have made some efforts to make
sure that the tools for
managing large amounts
of data are open.
You've done a lot with open
APIs, but you've also, for
example, been a big supporter
of Hadoop for, you know,
processing at scale
in the cloud.
Can you talk to us a little bit
about how you think about that?
Jerry Yang: Well, I think a lot
of people say, "Well, how's
cloud different from any
previous versions of client
server or, you know, services
or whatever?" And I think the
biggest service is that in the
cloud, there is a new business
model being developed around
leveraging the data and the
analytics that's available and
the compute power that's
available in the cloud and
using that as a way to
drive new business models.
Whether that's driving
targeting, driving intent,
driving commerce, or
driving advertising --
Tim O'Reilly: Or driving
relevance in mobile.
I mean, when you pull out your
mobile phone and, you know, it
knows where you are and you're
able to do various local
relevance, you forget that's
not happening on your phone.
Jerry Yang: Right.
Tim O'Reilly: You know?
Jerry Yang: Well, and I think
that's -- it boils down to sort
of the notion of relevance, and
I think, you know, if you look
at Yahoo!, we have to be as
relevant as possible to our
users and if we can achieve
that, you know, it doesn't
matter -- and the same
thing for all the --
I think anybody out there today
that's leveraging this cloud,
if you're just using it for
compute or storage, then
you're not really leveraging
the entire capability.
Tim O'Reilly: Yeah.
Jerry Yang: And before, the
cloud was not -- the client
server was not very
knowledgeable.
You knew what you had on the
client server and that was it.
Now, I think you have this
complete paradigm shift in,
okay, how do you have analytic
tools, how do you have things
like Hadoop that you can push
out computing and allow
optimization to be done at
a level that nobody
before couldn't do.
I mean, this is the stuff when
I was at school and tried to
learn how to do computer
science, machine learning was
this fantasy and now it's, I
think, a core part of
business innovation.
Tim O'Reilly: I think that's
a really important point.
You know, machine
learning is --
Jerry Yang: Right.
Tim O'Reilly: --
the new HTML --
[Laughter]
Tim O'Reilly: -- in some ways.
Jerry Yang: Well, and we're not
cranking as many Ph.D.s as we
need in our school systems for
this stuff, so you have
this shortage in demand
and supply, but --
Tim O'Reilly: So
that's a good segue.
You know, you're on
the board of Alibaba.
You spend a lot of
time in China.
Jerry Yang: Right.
Tim O'Reilly: You know, we're
always beating ourselves up
about that we're not producing
enough Ph.D.s over here.
What's your take on the
innovation gap, the education
gap, the sort of science
and engineering gap?
Jerry Yang: Well, I'm also on
the board of Stanford
University, and where I -- what
I see there is the best of the
world still comes to the United
States to get educated,
and there we have --
Tim O'Reilly: Then
we send them home.
Jerry Yang: Well, there
we have an advantage.
And we won't get into politics
here, but to me, by and large,
most of them want to stay here.
Tim O'Reilly: What do you think
of the startup visa proposal?
Are you for that?
Jerry Yang: Well, I think
it's -- well, I don't
know exactly --
Tim O'Reilly: The
idea is that --
Jerry Yang: Any idea of
generating jobs, we should
keep -- if they're
generating jobs --
Tim O'Reilly: John Doerr said
give every Ph.D., a green card.
But the startup visa guys are
literally saying "We need a
visa that says if somebody
comes here with a startup idea
and is able to get it funded,
you give them a visa."
Jerry Yang: Yeah.
And, you know, it doesn't
matter if they're Canadian
or Paraguayan or whatever.
To me, it's a really
fascinating thing.
But to your point, I do think
that there is -- I'm an
optimist for America.
I'm an American.
What I do is not possible
without being in America.
But I also think that the
systems are developing in
different parts of the world,
whether it's India or China or
whatever, you know, China
being an interesting example.
But I would say that when
America's firing on all
cylinders -- and I think our
collective challenge as a
society in America is to fire
on all cylinders, but if a
we're firing on all cylinders,
to use your analogy, we're
really hard to catch.
Tim O'Reilly: Yeah.
Jerry Yang: Because this notion
of innovation and
entrepreneurism -- and I'll
take Silicon Valley as my sort
of little microcosm
-- it's infectious.
The incubator -- you know, Y
Combinator is a popular one,
but there's tons of these where
now entrepreneurs, innovators
are completely sharing
best practices.
And so again, to the point of
the two entrepreneurs who've
got a year under the belt, not
only do they have
infrastructures and advisors,
but their ability to know
mistakes that, you know, people
like me made over the years,
it's incredible how fast that
knowledge is accruing
and building.
And I would say a typical
one-year entrepreneur who has
never done it before -- I mean,
Dennis, maybe you can talk
about this when you come up,
but, you know, it's clear that
their knowledge -- now whether
they can actually have the guts
and courage and everything else
it takes to build a business is
a separate thing, but --
Tim O'Reilly: Yeah.
People always see the winners
and they forget the losers.
It takes guts to do it because,
you know, you have that
opportunity of losing
at any point.
Jerry Yang: Right.
But to your point, I'm an
optimist around the system
that exists in the U.S.
I do think, you know, this
rapid innovation around data
and the cloud, you're seeing,
you know, China -- Chinese
companies and Chinese
government trying to
build their own cloud.
I -- you know, it's a question
of how open they're going to
get it in terms of consumption
of that data, but they have a
tremendous amount of talent,
they have people who are
passionate, and they can
certainly turn around
things pretty quickly.
So it's an interesting
place to watch.
Tim O'Reilly: Yeah.
So changing to another topic,
you know, Yahoo! grew up as a
business around free
ad-supported content
on the net.
Jerry Yang: Right.
Tim O'Reilly: Now, we've seen
with, you know, the iPhone, the
iPad, everybody is going "Wow,
we're going back
to paid content.
How cool." You know,
all the media people.
What do you think about the --
you know, have we really seen
the end of "free," or is it
just we're getting more
arrows in the quiver?
Jerry Yang: I certainly
think it's that free
is not going away.
I do think -- and especially as
you look at the value system
around the content creation,
you always are going to have
sort of the top of the pyramid
in the premium content, whether
it's the storytelling or the
high-production-value stuff,
but the tail is becoming
bigger rather than smaller.
Content is getting
more fragmented.
And in fact, I think one of the
notions of innovation -- you
know, we started with, you
know, 15 to 20 years ago where
people who had the knowledge of
creating a computer site or a
computer platform had the
ability to create content or
create interesting software.
Now that capability of creating
interesting content,
interesting software is down
not only to the individual, but
any individual with a device,
and so -- because so much of
that content is in the cloud.
Tim O'Reilly: Right.
Jerry Yang: So I think all
those people who are producing
reasonably good content that
might be interesting to
somebody either socially around
them or by location or however
you define it, people are
willing to give that
away for free.
Tim O'Reilly: Yeah.
Jerry Yang: So it's sort of
people like Yahoo!'s job or
other's job to sort of
create the relevance of
that content and --
Tim O'Reilly: It's
kind of interesting.
This is a little bit of history
between us, and it relates
to this paid content thing.
We had the thesis, as a
publisher, when we did GNN, the
Global Network Navigator, which
was this first web portal, that
selection really mattered.
Tim O'Reilly: Right.
Tim O'Reilly: And Yahoo!
listed everything.
Jerry Yang: Yeah.
Tim O'Reilly: And it's pretty
clear that you guys won, apart
from the fact that
we sold to AOL.
[Laughter]
But, you know, it really did
matter that people wanted
access to everything and not
just the curated set, and
the long tail really was
the winning strategy in
more and more of that
user-generated content.
Jerry Yang: And I think the
long tail is going to its next
phase through social, through
crowdsourcing, through all the
-- all the phenomena where the
tools of creating this stuff
and leveraging what's in the
cloud is actually being passed
to the last individual, rather
than to companies or to small
companies that have
the know-how.
I mean everybody who has a
phone, who have these powerful
computing devices can create
content, can generate content,
can socialize around content.
And so --
Tim O'Reilly: And
not just content.
They create intelligence.
Jerry Yang: Yes.
Tim O'Reilly: I think that's
a really important point.
Because we're all contributing
metadata as well as content.
Jerry Yang: That's right.
And that's the key.
Tim O'Reilly: And the service
-- the machine learning
actually makes our services
smarter, if we're
doing it right.
Jerry Yang: And, you know,
we keep thinking that's
got to be the end, right?
But probably not.
Probably something
else will come along.
But certainly I think to the
point of free or not free,
I think, you know -- and
certainly from my perspective,
as long as the amount of free
content is getting more, more
pervasive, more local, more
interesting, more real-time, I
think free will have a good --
you know, sort of good path.
I do think there is a -- a huge
amount of content -- and the
next panel will talk about
this, I'm sure -- that does
require a different business
model, and I think that paid is
a great -- also a great way.
I mean, if you're a developer
and you can develop an app
and get paid for it --
Tim O'Reilly: Yeah.
Jerry Yang: -- that's great.
Tim O'Reilly: I mean, the fact
is that the more business
models, the better.
Jerry Yang: Yeah.
Absolutely.
Tim O'Reilly: Hey listen, we
should probably wrap up.
Because I want to invite
up our other guests.
And then we're going continue
the conversation after we've
had a brief conversation
with them.
So one of the hot areas right
now, obviously, is mobile
location-based services.
And I think the guy who's
really the poster child for
location-based services,
because he's been at it so long
and with so much intensity and
infectious enthusiasm and
because he's got the hot
company of the moment is Dennis
Crowley, cofounder
of Foursquare.
[Applause]
So, Dennis, please join us.
Tim O'Reilly: And the final
guest for this panel is the
president and CEO of a company
that I think has absolutely
revolutionary potential is at
the intersection of more trends
than you can count and
is setting out to
change the world.
I'd like you to welcome Steve
Cousins, who is the president
and CEO of Willow Garage.
And you'll learn from
Steve what he does.
[Applause]
So let's start with you,
Dennis How many of you
here use Foursquare?
Oh, wow.
Not enough of you.
Not enough check-ins here.
Dennis Crowley: Working on it.
Tim O'Reilly: So maybe then I
should ask you just to tell us
the story of Foursquare, how
you happened to come to it,
what you're trying
to accomplish.
Dennis Crowley: Do people
know what Foursquare is?
That's good.
I used to give these talks,
and no one would know.
And it would take me a
half an hour to describe
the whole thing.
But the gist of it is we built
this platform from mobile
phones that enables people to
check in to places and share
the places that you go to and
share the places that you
like with your social crowd.
So we've been doing
this for a while.
I used to have another
startup called Dodgeball.
And I've been experimenting
in the space since,
like, 2001 or so.
Initially, it was all
about knowing where
your friends were.
I live in New York, and it's
all about trying to make New
York more efficient and make,
like, cities easier to use.
And, if you have this general
awareness of where your friends
are, this imagined map of where
they happen to be, it makes it
easier to meet up with them.
That was the general idea
behind a lot of this stuff.
But then as we started getting
people checking in, you know,
one day at a time or couple
times a day or a couple
times a week, you start
amassing all this data.
And the data is
really interesting.
It's like who is hanging out
with what people over time?
And you can start using --
Tim O'Reilly: And where
are they hanging out?
Dennis Crowley: People go to
this coffee shop, people shop
at these places, people
like to go to these places
with their friends or got
to these places alone.
You can cut that data up
to do really fascinating
things with it.
Tim O'Reilly: Yeah.
So -- actually, I'll
come back to a question
for you in a minute.
Let's get Steve introduced.
Steve, tell us a little
about what do you at
Willow Garage and why.
Steve Cousins: So we're a
robotics company, and we're
about four years old.
And we've, basically, set out
to try to bring automation out
of factories where it's been
very effective over the last 20
years and out into
the real world.
So you can see one of our
robots, the PR2, out
here on display.
Eric and Keenan, who designed
that robot, are here and doing
a great job of showing off
their vision of getting from a
prototype at Stanford to a --
we've got now 11 robots that
we've given away into
the world, and we're
starting to sell them.
You say what are these
robots good for?
And we're looking at a time
frame that's longer than a
typical Internet startup.
In fact, we're not a
typical startup at all.
If I go back a little bit,
we're set out to do impact.
And we believe that having
impact -- and our funders
believe -- that having impact
is more important than
return on capital.
Return on capital
becomes a second goal.
An impact -- the best way we
can think of to have impact,
being software guys, Scott
Hassan, who founded the
company, and myself, is either
software or automation, in
general, is a huge lever.
So, if you pour money into
that and you're doing it in
a good thing, you can cause
more impact to happen.
So that was kind
of the premise.
And we started off playing in
the robotics space a little
bit in autonomous cars.
There's a DARPA Challenge and
a DARPA Grand Challenge.
And we played around with
his autonomous boat that
was supposed to sail
around the world.
And then we discovered Eric and
Keenan at Stanford who were
building this prototype of a
robot that's like Rosie
from the Jetsons but
without the attitude.
It's got two arms; it can move
around; prepare your breakfast,
push a vacuum cleaner,
help somebody out in
a factory situation.
It's really a way to,
again, automate.
And it's a little bit early
days for that kind of
robots for a few reasons.
One of the things we liked
about their project was that
they had identified a way
to make the arms safer.
If you look at industrial robot
arm, if you work for Toyota,
there's a red line in the
factory or, basically, a cage.
If you go inside the cage
without all the safeties
disabled, you're fired,
that's the rule.
End of story.
It's just too dangerous.
Toyota doesn't want
somebody killed by a
robot inside their plant.
If you're going to have robots
going around the home,
you need a completely
different situation.
So the robots become
designed differently.
But we're not quite ready
to put those robots
out in the world.
It's a 10- or 15-year process
before they're ready.
So the question is how do you
get the technology -- how do
you work on a problem that
far out in a startup?
So, if you have the funding,
that's a good start.
And then if you have -- if you
want to really take off --
and we talked about being a
catalyst in the last session.
If you really want to be a
catalyst for an industry to get
started -- and that's really
what we're going for -- the way
you do that and the way
we found to do that is
just go open source.
So we, basically, built a
community of all the best
robotics people around the
world who are all now working
on a common software platform
that came out of this robot
development project.
We've given away 11 of those
robots to the best universities
that we can find.
They all have them now.
And we're getting to the point
where there can be kind
of a robot app store.
Now, it's on a much,
much smaller scale than
the iPhone, right?
There's 11 of them.
We have 10.
So there's 20 in the
world. not like iPhones.
[ Laughter ]
But, nevertheless, you know,
understand that in robotics the
way things were before we got
started was we'd go to a
conference and you'd show
somebody a video of what
you made your robot do.
You know, if you go to
the conferences, they
only did it once.
Right?
All the other times
are not on the video.
You don't have outtakes,
typically, at the conference.
I show you my video; you
show me your video.
And we go, "Oh, my video
is cooler" and you can
argue about it, right?
That's not really science.
Science is about repeatability
of experiments.
So, if you get to a point where
you have a common hardware
platform and software platform
and you can say, I packaged up
my application and somebody at
University of Pennsylvania was
able to run it, then they
can actually do the
experiment over again.
And that is a huge change.
So we've done this sort of open
source operating system that
runs on lots of robots plus
this robot that has a lot of
capability and put all those
things together to really
try to transform the
field of robotics.
Tim O'Reilly: All fright.
You might ask we've got the
original web entrepreneur.
We've got the guy who's the
cutting edge of location-based
services on mobile and a
robotics guy, what do these
guys have in common?
What do you see as
a common thread?
I see you've got a big vision.
You started before there was
anybody else really trying to
make a -- you're not
"me too" companies.
Everybody else is "me,
too'ing" after you.
And you are, in fact,
changing the world.
Dennis Crowley: I love the
story you're telling, and
I'm like that's crazy.
That's the position that
we've all been in.
We've told the Foursquare
story 100 times over
the last two years.
Started off with "This
is never going to work.
You guys are crazy" to hey, we
get to sit up on these panels
with all these amazing people.
I have a feeling you're
probably in the same spot.
You tell the stories over and
over again and people think
you're crazy until you
manage to prove them wrong.
Tim O'Reilly: Dennis, one of
the things you've done a lot
with Foursquare is you've done
some pretty clever social
engineering of the friend
network that has been built up.
Can you talk a little bit
about how you think about
encouraging user behavior?
Dennis Crowley: Yeah.
So it's funny, like, for those
of you who have used Foursquare
and heard about it, there's
a game component behind it.
It's not a game.
But what we're trying to do is
make the tools that we use all
the time, you know, like the
social graph and maps and city
guides, those things
should be playful.
Going out with your friends
and finding restaurants,
those are fun behaviors.
So a lot of our thinking was
not just how do you make the
city easier to use from a
utility perspective, but how do
you make the tools we use all
the time, how do you
make them more fun?
And how do you make your
Saturday nights more fun?
That's where a lot of
the ideas came from.
Let's turn life into a game.
Let's look at a Saturday
night as a leaderboard.
How do I compete with my
friends and see who is going
out and doing the most
adventurous things.
We found the game mechanics on
Foursquare work really great
at motivating people to do
more interesting things.
We make these little badges
and we reward people with
these little badges--
Tim O'Reilly: Gym
rat, for example.
Dennis Crowley: Yeah.
Go to the gym 10 times and
get the gym rat badge.
Go hike 10 mountains and you
get the great outdoors badge.
Some people get so nutty over
the badges and wanting to
collect them all, like
Pokemon, that they go
out and do these things.
They'll go to 10 different
pizza places or 10
different art galleries.
It's like this idea of using
software to change the way that
people experience the real
world and encourage people to
do stuff they wouldn't normally
do, there's something very
powerful about that.
Tim O'Reilly: That's right.
That idea is spreading.
Michelle Obama has been behind
the idea of can we come up with
games to get kids to do
more healthy behavior?
A great example, I think,
inspired in part by
what you've done.
Dennis Crowley: Yeah, yeah.
Tim O'Reilly: So let me
talk a little bit about
crowdsourcing again.
Jerry, we started
talking about it.
But I think each of you
has an interesting
crowdsourcing story.
In any order.
Steve Cousins: I'll
give you an example.
Not exactly crowdsources
because, again, it's on a
much, much smaller scale.
But we asked for people
to do just a cool video.
So we tried to do things
really fast because robotics
typically takes a long time.
It's really hard.
You have to build the hardware.
You have to build the software.
You have to integrate
it all together.
It's electronics.
So we asked people just put
together a video of the
robot doing something cool.
This is to the 11 places.
You have six weeks.
That's it.
Six weeks.
Some people didn't realize
there was a contest until
two days before, and they
put it together anyway.
You can do things really fast.
And, when the robot is
actually manipulating
the world, it's cool.
So the number one application,
the one we judged the
winner, is sock pairing.
So it takes a sock and
turns it inside out.
Tim O'Reilly: That
assumes you can actually
find the other sock.
Steve Cousins: There's
two socks on the table.
Tim O'Reilly: That's
cheating, if you give
the robot the socks.
Steve Cousins: One
is inside out.
It's, like, fascinating
to watch something
work autonomously.
If you see the video on towel
folding that Berkeley did.
You know, it's fascinating.
It picks them up.
It did 50 towels in a row.
There's a stack of 50 towels.
Picks them up, shakes it out,
folds it up using a table.
Smoothing out.
That smoothing action is
really great on the video.
Looks so great, right?
And come up with a
stack of towels.
That's amazing.
How can you deal with that when
industrial robots are like I
can get to this millimeter
position and go to that
position and everything's
very precise.
And this is just the opposite.
And the thing -- it's just
so much fun to watch.
One of the teams did
a playing a band.
So they had a keyboard and a
drum over here, and they had
their robot playing songs.
They feed it Beatle music.
And they did this over a
weekend at the University
of Pennsylvania.
And they're playing
Beatles songs and things.
Just feeding it in, and
they're playing the drums.
It's really cool.
Tim O'Reilly: This goes back to
the robot app store. what you
have in the app store is
behaviors, effectively.
Steve Cousins: The
theme is fun.
That's the common theme.
It's fun.
Tim O'Reilly: But in some
sense they're being shared.
The robot becomes more capable
because somebody is saying I
built a behavior for the robot.
Here it is.
You can have this
behavior, too.
So the robots are going to get
smarter over time as more and
more people start building
behaviors for them.
Steve Cousins: And before
anyone says it, and not
take over the world.
Tim O'Reilly: That's right.
Sarah Connor is gunning
for you at some point.
Jerry Yang: In our
example, at least Yahoo!
Flicker was one of the first
versions of crowdsourcing.
We didn't know it then,
But I think it was that.
But right now whether it's --
you know, we bought a company
called Associated Content.
And they have people who are
contributing content of all
forms on a part-time basis,
on the demand basis.
You know, we would put out,
you know, a request to have
something written about the
5th anniversary of Katrina.
And we would get back
firsthand accounts.
And what I think is happening
with crowdsourcing in general,
not only around content but
around, you know, sales forces
or anything else, policing
or sort of protecting the
communities, there's this
notion that, hey, if you can
figure out how to drive some
quality, drive some relevance,
whether it's algorithmic or
human produced, and try to
create a marketplace where
people who are participating in
these crowdsourcing exercises
are compensated through the
right licensing or however you
do it, it's really powerful.
And, actually, it goes to the
notion of innovation to the end
to the individual where we
need to give them the tools.
We need to open up the code.
We need to open up the
infrastructure to them
to be able to do it.
But I think people inherently
want to be productive, want to
have fun, to Dennis's point.
If you can make it into more
of a game rather than a
chore, you'll get more
productivity out of them.
So these things
are all related.
And I love the
robotics example.
If I can get a towel
folding robot, I will
be a hero at home.
[Laughter]
Tim O'Reilly: So innovation,
actually, can come
from crowdsourcing.
I think I'd love to have you,
Dennis, talk a little bit
about, again, I don't know how
far along you are with
developing the Foursquare
business model.
But it seems to me like some
of your participants in your
ecosystem invented your
business model, as
far as I can tell.
Dennis Crowley: We've been
crowdsourcing pretty
much everything.
When we would launch city by
city, we'd turn on Vancouver
and there would be no bars and
restaurants in the system.
Nothing to check into.
And 24 hours later there's
2500 places to check into.
Users create the
content for us.
That's amazing.
It happened all over the world.
There's 8 million -- between 6
and 8 million Foursquare venues
now created by people all over
the world using the service.
Tim O'Reilly: People
adding tips also.
Dennis Crowley:
People adding tips.
People adding venues.
Random things.
There's a whole bunch of 9/11
memorials popped up as venues.
But, you know, we really see a
lot of innovation coming from
the people who use
the products.
It's not just the users,
the people checking in.
It's the venues, the people
that see the people checking
in to their places.
And so, you know, what's
starting to become our business
model, like offering specials
to merchants and to local
users, depending on who is
the mayor of a place, who's
been there 10 times -- we
didn't invent that stuff.
That stuff came
from the venues.
Last summer, summer before, we,
you know, as Foursquare was
just starting to pick up, we
saw coffee shops in San
Francisco hanging flyers
around the neighborhood
like: "Come here.
Show us you checked in on
Foursquare, and we'll
give you a discount."
We're like, wow, that's
kind of a great usage.
We reached out.
We talked to some
of the merchants.
We realized a whole bunch of
people were doing this, doing
the ad hoc flyer stuff.
And we talked to those folks.
And we ended up building
a product around it.
Now we're seeing our mission is
to try to bring that product to
millions of businesses across
the U.S. And it's the users
that are doing that.
We get these smart ass
users that are awesome.
They go into coffee shops and
say, "I'm the mayor here.
I've been here 10 times.
What do I get for free?"
And they're like, "I don't
know what Foursquare is.
I don't know what it
means to be the mayor."
Tim O'Reilly: I bet a bunch of
people in the audience don't
know what it means to
be the mayor either.
Dennis Crowley: If you're the
mayor of a place on Foursquare,
it means you've been there
more than anyone else.
So people fight over being
mayor of the park or their
office or the coffee sop.
There are these big things,
these big mayor battles.
They get written up in papers,
people make flyers, and people
go nuts over this stuff.
But this happens all the time.
We hear the story, "I'm the
mayor of my pizza place.
What do I get?"
And the pizza place is
like, "I have no idea what
you're talking about."
And it happens four or five
times, people are saying, "What
is this foursquare thing?"
And it's the users teaching
the venues that the venues
should be on Foursquare.
So we're crowdsourcing a
sales force, in a sense.
We're in the very early days of
figuring out how that works.
But it's worked for everything
else we're doing, so why
wouldn't it work for that?
Tim O'Reilly: I think
it's really interesting.
Because it really does suggest
that, when you have a
technology transition, you end
up with new business models
that come out of left field.
You know?
When we started with the web,
it was my first idea of web
advertising was influenced by
those bingo cards you used to
have in industry publications.
Some of you probably
remember those.
It was like, oh, wow we can do
Web sites that will be the
destination for what used
to be a bingo card.
And you'll be able
to have a catalog.
And people will go
look at stuff online.
You know?
And then along came all the
other forms of advertising.
But it was key word advertising
on a search engine that really
sort of ignited this
next big phase.
But nobody thought of
that in the beginning.
But we're seeing that now
as we are starting to
embrace location-based
services on mobile.
And there's a lot of sort of
thinking about what will the
advertising model look like?
What will the business
model look like?
I think we're going
to be surprised.
And I think what's happening
organically with Foursquare is
a great example of the market
teaching us where that
business model might be.
But I'd love any thoughts that
you have, Jerry, on that, if
you've been thinking about --
Jerry Yang: I think you're
exactly right in that probably
the best business models
haven't been figured out yet.
And consumers -- I know A.G.
Lafley talked about
that this morning.
But consumers, ultimately, are
going to tell us where to go.
Even at Yahoo!, when we force a
business model that doesn't
quite work with consumers,
it never really works.
And so you have to ultimately
trade that balance between do
you monetize early or do you
go where the consumer is?
Especially this day and age,
being able to really leverage
where the consumer wants to go
and make the monetization with
that seamless is
really critical.
But in a different way I think
people who are getting what
they want are willing
to pay a lot more.
So you have this almost bimodal
where, if you're happy with
something, you're going to pay
a lot more to that place.
And, if you're unhappy, you
want to do everything you
can to get away from it.
So I think consumers are
becoming a lot more
intelligent as well.
Tim O'Reilly: So another
aspect of crowdsourcing
is open source.
Gary, you've been a big
open source -- not Gary.
Gary works with you.
Gary Bradski wrote "Open CV,"
which is this fabulous machine
learning package for computer
vision and works on this.
One of the really fascinating
things we were talking -- Jerry
and I were talking earlier
about machine learning is that
computer vision and a lot of
stuff that's happening on the
web actually use the
same algorithms.
And that's really
worth thinking about.
But sorry, a little
aside there.
I just sort of want to ask, you
know, how much do you think
open source drives innovation?
Steve Cousins: It's
pretty interesting.
Open source -- to
me IP is friction.
Right?
So friction.
Friction isn't all bad.
Right?
I was coming down the mountain
this morning, and without
friction it was going
to be really bad.
But it's not all good either.
Right?
And IP, when you open things
up, things change dramatically.
So, for example, we give away
the software and completely
open BSD license so anyone can
use it for commercial
or noncommercial.
And suddenly, because it's
not ours, because it's
a community thing.
And we actually put it on our
robotics.org site instead
of willowgarage.com.
Because it's on a dot org site,
because it's everybody's, all
these different robotics people
are willing to contribute in
a way that they wouldn't be
willing to if it was our code.
Right?
So, even though it's open
source, it's not just
that it's open source.
It's open source, and you
can take it and form
a company on it.
We're not the ones that are
going to commercialize it and
you're doing slave labor.
That makes a huge
difference to people.
And there's definitely a place
for companies to take off.
But, you know, one of the
companies that has a
PR2 robot now is Bosch.
And Bosch, the reason that we
gave them one in our beta
program was because they
committed to open source.
And think about a company the
size of Bosch, which makes
auto parts and drills
and things and all kinds
of different products.
They're a worldwide
conglomerate.
A company of that size deciding
that they're going to do open
source is really surprising.
It doesn't happen that often.
Intel has done it.
To some extent, they're
the ones who originally
supported Open CV.
IBM has talked about it
and done it in some ways.
But it's very unusual.
The reason that they do it
is because we have a very
clear business model.
Robots could take off in 10
years, and we're going to be
the robots parts makers.
So we can give away software
all we want because we're never
going to be a software company.
So let's contribute to this
open source software and
become part of the community.
And it really makes
a difference.
Tim O'Reilly: Okay.
It goes back to that create
more value than you capture?
Steve Cousins: Yeah, exactly.
Tim O'Reilly: Be part
of building something.
So if -- I just wanted to
open this up to questions
from the audience.
If anybody wants to ask any
of us here a question, feel
free to go to the mics.
Lacking that, I'm going to
ask you guys, you guys
think about the future.
You've got to.
So when you think about the
future, what's going to
surprise us the most over
the next few years?
Steve Cousins: For
me that's easy.
It's what application will
come out of robotics.
People ask me all the time,
What are you going to do
with these robots, right?
It is not just folding towels.
You can do lots and
lots of stuff.
But what's the really
important thing?
And the answer is you can't
even think about that
until you have robots.
Once you have robots, then
you can go out and build it.
The spreadsheet didn't
come out until there were
PCs readily available.
And we don't actually in
robotics say "killer
application" because it has
a different meaning there.
[ Laughter ]
But what is the equivalent of
a spreadsheet for robotics?
Tim O'Reilly: Yeah, yeah.
Jerry Yang: I think with all
the opportunity we're talking
about here and obviously all
the stuff that's going on in
our world, I do think there is
a -- how do I say this without
being negative about it?
I do think that there is going
to be more challenges around
how we govern and how do we
make sure that -- assuming
this trend continues where
everybody, every individual can
be part of a creative or
innovative process, I think in
some way that's really good.
I also think that that may mean
that other people with the
same tools can do bad.
And I think how do we create a
system where this stuff is
sustainable is a really
critical question that we
should think upfront.
It's not that robots or
location services or Yahoo! by
itself could be part of that,
but I do think the more you
empower individuals, the more
you do things, the one person,
the one entity could do
some damage in a system.
And I'm really struck by this
notion of, you know, how do we
-- how do we create impact but
for our next generation, you
know -- I was saying
to Tim earlier.
I'm sort of living through my
kids' eyes, seeing the world
through my kids' eyes and there
is nothing in my mind more
special but also more worrisome
about seeing the world
through a 6-year-old's eyes.
The question she would ask me
really worries me about the
future, whether it is on the
energy, environment side,
whether it is on the biology
side, whether it is
in the robotic side.
And I think to me doing good is
not just giving money away.
It is about solving some of
these problems that we have the
technology, and I think we
have the brains to do it now.
And it is something I hope we
all take away and think about.
Tim O'Reilly: They are
giving us the red light.
So I think that means
we've got to wrap?
Do you have something
quick to add?
Dennis Crowley: Well,
yours is really deep.
We always talk about the stuff
we are building is, like,
technology that facilitates
serendipity or makes
these little chance
encounters happen.
And so whether it is a room of
people that don't know each
other that have information to
share, whether you are walking
down the street in a strange
city, like, those are, like,
situations that present
problems that could be solved
with some of the stuff
that we're doing.
I desperately want the
application on my phone that
scans for everyone here and
tells me the ten people
I need to talk to
before I leave today.
And when I have two hours to
kill down in Phoenix before my
flight, I want to go to my
social graph and tell me what
are the five things I got to do
if I have two hours to kill.
So that's the type of stuff
that we are trying to solve.
We are getting to the
point where the phones
are smart enough.
The graph is out there.
The geotools and the
social tools are there.
It is putting all the pieces
together, just making
that stuff happen.
Tim O'Reilly: All right.
Sounds awesome.
Thank you very much.
[ Applause ]
So we've been talking about
technology innovation.
And we're now going to switch
to innovation in media
and entertainment.
Andy Serwer, who is the
managing editor of "Fortune" is
going to bring up Thomas Tull,
who is the chairman and CEO of
the Legendary Pictures.
These guys have made some
of the most amazing
movies of recent years.
They are going to talk
about what's the future
of entertainment.
Please welcome Andy and Tom.
[ Applause ]
ANDY SERWER: I
have the glasses.
I'm going to engage in a couple
of conversations -- Hollywood
conversations, which is why
I'm wearing these glasses.
And, also, Thomas requested
that I keep them on so I'm
going to make him happy.
Before I get to you, just sort
of generally, I want to sort of
lay the foundation of these two
conversations we are going to
have with some of the leading
lights of Hollywood,
including Thomas.
And that is that, you know,
Hollywood and entertainment
have had a long-standing and
dynamic relationship
with technology.
If you think about it, go back
to the printing press in
Gutenberg and exhibits in
film and TV and radio.
Obviously, things change
and, of course, none of the
older technologies go away.
They all get stacked up.
And, of course, what's going on
now not only are media and
content people trying to
understand how to create
content for the Web, of course,
but also how to integrate the
content with the distribution
for all of the legacy pieces of
the distribution as well,
which is to say print and
film and TV and radio.
So that's sort of the
foundation of this
conversation.
And as Tim said, Thomas Tull is
the CEO of Legendary Pictures
which you may not have heard of
but I know you have heard of
many, many of his movies which
include "Dark Knight,"
"Inception," the "300"
and "The Hangover."
Before we begin, I think an
extra round of applause for
anyone who anything to
do with "The Hangover."
Can you join me please?
[ Applause ]
I mean, holy smoke, right?
Because that was just a
fine, fine motion picture.
I don't care how that thing was
distributed, I enjoyed the
hell out of that thing.
So thank you very much
for bringing that to us.
Now, you know, we are talking
about innovation here.
And so we want to kind of
bring it back to that
theme a little bit.
One thing that's kind of
interesting, I think,
about your story,
Thomas, is your story.
And there's so many people in
the world and in America who
would like to do what you have
done, which is to say, you know
-- here's a kid from upstate
New York, from modest
circumstances,
Hamilton College.
He goes to Hollywood.
And all of a sudden, you know,
you are in the movie business.
And, you know, I guess to
me what I would like to
understand is what is the
innovation part of that?
Because you had to have done
something different from
other people to succeed.
And now you have got,
what, a 40-picture deal
with Warner Brothers?
How did that happen?
What's the innovation part?
Thomas Tull: You know, I mean,
part of it was -- I was
actually at a dinner party, I
think, in 2003 and the
then-vice chairman of MGM was
sitting next to me and was
talking about all the problems
in the movie business.
And I had both an entertainment
as well as a private
equity background.
And, you know, I'm sure started
pontificating about how you
could build a new system that
was private-equity backed
because they had raised
all this money.
And he sort of said to me,
"Well, if you are so smart
you should do that."
And so I wrote a plan.
I talked to a couple of the
studios and, you know, was very
fortunate to -- Our success
starts and ends with
Warner Brothers.
They are a fantastic partner,
best studio in the world.
We were able to raise a very
large amount of capital and
our first movie was "Batman
Begins." Our second movie was
"Superman Returns." The idea
really -- I'm embarrassed to
share the stage with Nobel
Prize winners and folks that
are truly changing the world.
I'm like the "Batman" guy.
That's great.
Andy Serwer: It is pretty
important, too, though.
Thomas Tull: Yeah, well, we
wanted to make sure that we
made -- on the financial
side, make sure that we
made responsible decisions.
But then on the other side, I
make movies I want to see.
And, you know, when that
stops working, then I'll
try to do something else.
But very, very fortunate to
do something that I love.
Andy Serwer: There's some
people who have written that
you guys have a formula, kind
of a black box, when you are
looking to make a movie.
Is that true?
Is this sort of just looking
at, you know, kind of an
algorithm-based system?
Isn't that what's wrong
with Hollywood, all the
formulas and stuff?
Thomas Tull: If you find that
black box, I would love for you
to call Patrick and Ari and let
them know and we
will get it in.
I haven't seen it.
I mean, again, we are a very
director-driven company.
That's a very big thing to us.
You know, the directors have
had the privilege of working
with Chris Nolan now three
times, Zack Snyder three times,
Bryan Singer, Sam Raimi, Todd
Phillips on comedy who did
"The Hangover" for us.
And these guys and these folks
that have that vision, our
job is to empower that.
And then, you know, Warner
Brothers has their machine
on the marketing and
distribution side.
You know, that's -- but
there's really no black box.
Because at the end of the day,
with all the new innovation and
technology and 3D, we are in
the story-telling business.
And if the story is interesting
and you can capture the
imagination of the public --
for two hours I can go in to a
darkened room and the lights go
down and I get to kind of
escape for a while, you
know, that's our job.
Andy Serwer: How do you tell?
I mean, "The Hangover"
is just amazing to me.
Again, it is like some guy
walked in your office and said,
I got this idea to make a movie
about a couple guys who go to
Las Vegas and get hammered.
Now, you know, I mean, that
to me sounds like the most
rote, overdone story.
I mean, I couldn't imagine if I
was in your position green
lighting something like that
because it just sounds like it
has just been done
a million times.
Thomas Tull: I would agree.
But if that person is Todd
Phillips who made "Old School,"
then it is kind of like,
You know what, Todd?
That's pretty cool.
[ Laughter ]
Andy Serwer: There you go.
True that.
What does it mean -- you
just said you believe
in strong directors.
What does that mean?
Thomas Tull: You know, well,
for us, these folks just
have an incredible vision.
Right off the bat, you know,
when the first time read the
"Inception" script and Chris
had all the models and
everything laid out and we
walked around the room, it was
just clear as day that he had
this -- you know, this vision.
And I think the word "genius"
gets thrown around way too much
in our business in Hollywood.
He -- I think, he has
sincerely earned it.
And I think, you know, the
directors that absolutely have
a vision and a plan and the
confidence to go out on a limb
like that and execute it, you
know, that's our job, again, is
to empower that and to make
sure that we're constantly
looking for the next directors.
"300" is a great example.
Zack Snyder, who is an amazing
filmmaker, had made one
small horror remake.
And when he pitched me the
"300," he just almost stood
up and acted it out.
He was just so
passionate about it.
And I think that's one of the
keys that I'm not sure you
can -- you just kind of have
to feel your way through.
Andy Serwer: Right.
Obviously, we have
an I.T. crowd here.
When you are talking about
something like "Inception,"
what are all the different I.T.
pieces of that, from CGI
production, distribution?
I mean, how are you even
thinking about that stuff
these days, Thomas?
Thomas Tull: Well, you surround
yourself with a great staff
that has expertise in
each of these areas.
And, frankly, making a movie
these days, there is so much
technology from sound design,
from how the editing is
done to how everything
is done, motion capture.
I mean, there is some
unbelievably just cutting-edge
pieces that are put together
in all of these things.
And with distribution these
days, going digital, the
innovation going on with 3D,
both on the camera side,
what James Cameron is
doing, there's a lot.
So for the I.T. crowd, you
know, we want you to forget
about it, at least I do.
If you are sitting around
thinking like, "Wow, they
really pulled that shot off,"
then we haven't done our
job because we want you to
be completely immersed.
But it's -- it's really pretty
staggering when you start with
a pitch and stack of papers
with a script and you sit back
at the premier and say,
you know, There it is.
It is really special.
Andy Serwer: Do you still focus
primarily on theatrical
distribution, or are you
thinking about having your
pictures distributed
on the Web?
Thomas Tull: No.
We're focused on all aspects.
And the interesting thing to me
about the movie business is if
you go back and look at it,
putting movies on television 40
years ago was going to
kill the business.
Then HBO.
Well, now you can actually
say curse words on TV
and see the whole thing.
That was going to
kill the business.
VHS, DVD.
I mean, the tombstone has been
written for this business
many, many times.
And it just has
this resiliency.
So we're concerned with making
sure if we make a great movie
and then go through however you
want to view it, you know,
we're concerned with all of it.
But I will say that for me I
also think that theatrical is
still very, very important.
I mean, Friday and Saturday
nights, it is part of
our cultural fabric.
And I still -- you know,
my wife and I still go to
the movies all the time.
I don't think that's going
away any time soon either.
Andy Serwer: So you don't see a
point in the near future where
you're releasing films online
simultaneously or even with
a window after theatrical?
Thomas Tull: There is all kinds
of things going on in terms of
looking at the business model
and saying, What's the best
way to maximize this?
At the end of the day,
especially a comedy or a horror
movie or something like that,
seeing -- you know, seeing a
comedy with a crowd is
different, it just is, than
sitting in your living room.
I can only speak as a fan.
And the theatrical exhibitor
has been very, very good to us.
So we will continue to look at
all kinds of business models,
but that one is still
important to us.
Andy Serwer: I read somewhere
that you said that you don't
like to be associated with
movies that "wink"
at the camera.
What does that mean?
Thomas Tull: Again, it's
just a personal preference.
We talk about being "all
in" on our movies.
If we make a movie about
Batman, there is a respect as a
full-blown comic book geek,
there is a reason people have
liked Batman for years.
Instead of doing the campy
version of the versions
like, all right, look, we
know we are in tights.
We know we are making
a superhero movie.
It's taking it very seriously
bringing a great filmmaker in,
taking the time to have a great
script and tell a story and not
have the escape patch that,
hey, we are really not
taking this very seriously.
It doesn't mean you don't
have light moments and
can't have fun with it.
But these are subjects and
properties that we love, and
so we want to treat them
with the right respect.
Andy Serwer: We talked
a lot about hits you
have had, Thomas.
You have had some movies
that bombed, right?
That flopped?
That didn't do well?
Thomas Tull: Right.
We the glasses back on.
Andy Serwer: That weren't
critically acclaimed.
[ Laughter ]
What do you learn
from the mistakes?
I mean, do they get you down?
Does that just bum you out
when something just bombs?
Thomas Tull: You know, one of
the things that's important
to us, a lot of people in
the movie business don't
care about their brand.
We actually do.
And if you go to the bingo
parlor on Friday nights and
wear your Legendary Pictures
T-shirt, nobody is going
to say something to you.
If you go to Comic-Con, you
will get a different reaction.
So it is our job to make sure
that every time that logo goes
up, that we try to do something
great and it doesn't
always work that way.
And the take-away, you know,
to me is: Did you have a
clear vision going in?
Did you all agree on what
the story was going to be?
Any time somebody tells me,
"don't worry about the script,
we will fix it on the
fly," wrong idea.
And, again, I would keep going
back to it, if you stick with
top-tier directors, you know,
that has to me more to do with
the outcome than anything else.
So you try to learn
from each one.
But, frankly, it is so hard to
make a movie, any movie, that I
have a greater appreciation --
you know -- before I was in the
movie business, you would go,
you would pay your ten bucks
and you were like, "Wow,
that was really awful."
Now, sometimes I'll sit back
and I am like, "They got it
made" because it
is so difficult.
[ Laughter ]
Andy Serwer: All right.
Looking forward to "Legends of
the Guardians," that could
be my favorite coming.
Nevermind.
We're halfway there.
Thomas Tull: Not our
movie but that's okay.
Andy Serwer: Haven't
seen that one?
That's my company.
We're almost out of time here.
I just want to ask you, you
know, about your genre which,
I guess, is kind of action,
adventure, comic books.
You know, is that
really innovation?
I mean, is that really
something new under the sun?
Thomas Tull: I think it depends
on how you look at it.
You know, we certainly don't
want to be in the business of
just retreading things, where
you really don't have
anything new to say.
But, you know, to me the reason
we're incredibly proud of
something like "Batman" is
there has been a number of
movies done but not
with Chris' vision.
It is not to say anything bad
against the other ones, we
were just really excited
about his vision.
I think as long as you have
something fresh to say, you
can bring that to the
screen, then I don't
know if it's innovative.
But it is a hell of a
lot of fun for us.
As long as people keep going
and don't throw us out,
we'll keep doing them.
Andy Serwer: Great.
Well, you have been pretty
successful so far.
So congratulations to you.
Thomas Tull: Thank you.
Andy Serwer: Thank you,
Thomas Tull, please.
[ Applause ]
All right.
Continuing our Hollywood theme
here, I would like to bring up
our next two guests and they
are Ari Emanuel and Patrick
Whitesell, the co-CEOs
of WME Entertainment.
[ Applause ]
Good to see you.
Thanks a lot, guys, for
coming and for patiently
waiting in the wings.
You probably know
who these guys are.
They run, you know, what's
likely the most powerful agency
in Hollywood or the world.
It is an incredibly dynamic
place with a client list
that blows me away.
I mean, Patrick --
Patrick Whitesell:
You're one of them.
Andy Serwer: That's true.
I should disclose that.
Boy, I forgot about that.
That's a real conflict of
interest here, isn't it?
Ariel Emanuel: Depending
on the questions.
Andy Serwer: I'm not a
very good client, am I?
No, you're good.
Andy Serwer: That's right.
Anyway, can you mention some
of your clients, you guys?
Because it is a
pretty awesome list.
Ariel Emanuel: It is Larry
David, Marty Scorsese, Michael
Moore, Sacha Baron Cohen, Adam
Sandler, Matt Damon, Lady Gaga.
You want to keep on going?
Patrick Whitesell: In the movie
business we have, I don't know,
probably a good majority of --
good chunk of the movie stars
that you have seen are the
people behind the cameras, as
Thomas was talking about.
And in television, I think the
majority part of the shows
people watch in this
room, I think --
Ariel Emanuel: If
they watch TV here.
Patrick Whitesell: -- are "30
Rock," "The Office," and
"Entourage." So, we have a
real dominant kind of
television business.
In the touring business, we
book about 25,000 tours a year.
It is all types of music from
Lady Gaga to country western
music, Braid Paisley,
or hip-hop.
So it is a real cutting
big cross-section.
Andy Serwer: Right.
You guys merged Endeavor
with William Morris
about 15 months ago.
Ari, I want to
throw this to you.
Let me just ask you: What
was the point of the deal?
What were you trying to do?
And how's it going?
Ariel Emanuel: Well, as you
guys have -- in this crowd have
all ruined our lives a little
bit, Patrick and I probably
about seven years ago looked at
the world and said, There's
going to be -- when we had
Endeavor, there's going to be
more distribution than ever.
And that if we believe that
content is king when we were
at Endeavor, we had
two big pockets.
We had the television business
and the movie business.
And the premise was that we
needed more content as the
world expanded on the
distribution side and that
our leverage inside that
conversation would become
greater as the world kept
on expanding on the
distribution side.
If you just took television, in
'95 when we started endeavor,
there was four networks.
If you look at it now, it's an
ungodly amount of television
being consumed and even greater
amounts of television
being consumed.
So when we looked at it, we
could add a publishing -- an
author business, a theater
business, a lecture business
and a music business.
And then as we pushed in on the
conversation as relates to
distribution, we would have a
different seat at the table.
And then off of that as
distribution changes, whether
it be in social media, et
cetera, how we used our branded
content and how we had the
conversation in the traditional
manner into the expanding kind
of world of content and how you
define content gave
us more leverage.
So that was the basis for it.
Andy Serwer: So, Patrick, how's
it going with the new model?
You hear a lot of people saying
that, Oh, you know, the old
Hollywood model, the whole
Hollywood agent model is dead.
What does that mean?
And what are you guys doing
to get out of that trap?
Patrick Whitesell: Well, first
of all, I don't think the old
model, if that's what
you call it, is dead.
We are probably doing
more television.
Our traditional businesses,
we're doing probably more
television work than
we have ever done.
The movie business is, as Tom
mentioned, is not going away.
There's 1.3 billion tickets
sold ten years ago.
There will probably be 1.3
billion sold in ten more years.
So the film and television
business -- And music actually,
the byproduct of the changes
there, acts have to tour more.
Our core business and what we
have done for a long time
hasn't changed a lot.
I think where you are seeing
the biggest change is
the type of people we
represent has expanded.
The people that are going to
come up here -- the people that
are clients of ours.
You know, the idea that you can
take a company like Hasbro that
is a toy manufacturer and they
can become intellectual
property and creators of movies
and also own a television
channel or cable channel,
that can happen, right?
And I think as you will see the
next phase, which Ari is
talking to, is as the economics
start making people that we
represent incentivized to do
branded content for the Web,
you will see that content
get really good.
So as you start seeing the
marriage of our people with
people like Demand Media and
Richard or Anthony Borges and
Grab and social gaming and you
start seeing the people we
represent starting to play in
those areas, then you will see
the content and how -- and the
spike of the quality
of content go up.
So what Ari and I are trying
to do with the company is to
position ourselves and our
clients for those
opportunities.
And I think that is a
kind of new model.
Ariel Emanuel: I mean, one of
the things we have to do kind
of going into the future -- and
I think for everybody, it's a
requirement -- is the
definition of "content." What I
defined it as 20 years
ago, 15 years ago, has
completely shifted.
So that what Patrick says, you
know, what Demand Media is
doing or anybody else is doing
as it relates to content,
that is a form of content.
What we're doing with LinkedIn
and a bunch of our authors --
right? -- and what we've talked
to you about, that is
a form of content.
The important thing for people
on our side of the business is,
one, we have to stay curious
and we have to kind of keep on
changing as the needs for
content and the different forms
of content start to change, and
then utilize what we believe
are people that actually know
how to tell stories and know
how to express themselves that
other people are interested in
and find distribution for them.
That will be our task
into the future.
I don't know if you can write
an algorithm for that, but I do
think there's a place for it,
and, you know, the big question
and the push/pull in this
environment is how people
remain -- enable people on our
side of the ledger to get paid
while permitting an open
source to everything.
And I think it's incumbent on
the two kind of areas of
California to get to that
conversation so that there can
be expansion in their -- in
their business model but it
can't erode our business model,
and I think that's a very big
issue that we're getting
to, we're -- you know,
everybody's discussing.
I don't think the answer
is there yet, though.
Andrew Serwer: Yeah.
It sounds like -- I don't
know if I'd hear Ari Gold
talk about this, right?
I don't think he's
quite up to this.
Ariel Emanuel: Well, I mean, as
somebody said, you know,
there's a lot of four-syllable
words here and there hasn't
been any four-letter
words here?
There will be on this panel.
Andrew Serwer: Right.
We'll separate the television
personality from --
You know, it's interesting
because when you talk about the
two Californias, you know, I've
seen that a lot and that's also
sort of the New York versus San
Francisco and L.A. versus San
Francisco content versus
distribution and technology.
Hollywood has -- what I was
talking about in the beginning
-- I think has always followed,
you know -- you know, we talked
about the film, TV, and radio,
but, you know, you're seeing,
you know, the Ashton
Kutcher people laughed.
It's for real.
You know, what he does.
I think Will Farrell.
You saw what Matt Damon and Ben
Affleck have been trying to do,
and now what you guys
are trying to do.
Is there a new feeling in
Hollywood that you guys aren't
just sitting there and waiting
for stuff to hit you, that you
guys are getting to be more
proactive with technology?
Do you think, Patrick?
Patrick Whitesell: Well, I
think the one thing that most
of our clients are talking
about and what we spend a lot
of time talking about the
answer to is, you know, they
drive a lot of this activity on
Twitter or on Facebook, and
mostly it's disruptive
to their lives.
There's a few people who
embrace it, you know, and
relish it, but a lot of people
-- and with "Us Weekly" or
whatever it is, most of it is
invasive, but it drives all
these economics for other
people, not themselves.
And so we spend a lot of
time -- we know what their
value is to consumers.
We know what they are
to the advertisers.
So we're -- the next step for
us is, okay, how can they
economically benefit from
those things that are out
there and are happening.
And I think that's probably
the biggest thing that
comes up for us right now.
And then secondly, how do you
take all of that information
and activity and drive it
back to their movies and
to their properties.
And those two things, and our
ability to kind of -- you know,
kind of figure that out with
the advertisers, I think
is going to be a real
big business for us.
Andrew Serwer: Right.
Do you guys like to talk to
people like Dennis, you know,
at Foursquare and, you know,
how can you bring entertainment
ideas to Foursquare?
I mean, that must be a really
cool brainstorming conversation
when you're talking about --
Ariel Emanuel: Well, we just
had a pretty big and a
continuous conversation
with LinkedIn.
We're doing it with other
people, as Patrick pointed out.
So from our perspective, you
know, there's some content --
you know, there was that big
article today in the "New York
Times" and I think in "Wired"
this week about, you know, is
it an apt world or, you know --
we're constantly in
this conversation.
There are some clients that
need to be in that
conversation, and then there
are some clients that just
-- Larry David could
give a ____, right?
He's making "Curb," that's
what he's doing, and it
doesn't matter to him.
There's other people like the
Lady Gagas and other clients
that that is an important
conversation that they
want to explore.
From our perspective, as
Patrick said, we think we have
clients that move product and
move economics, and how we
monetize their relationship
with the consumer through
distribution is going to be
where we think there's going to
be innovation for a bunch of
our clients and where there's a
monetization formula for a
bunch of clients -- a bunch of
distribution that might not
have economics underneath them
that kind of work right now.
Andrew Serwer: You and I were
talking about that story you
mentioned in the "New
York Times" today.
I think it was an excerpt from
-- a book, I believe, that Nick
Bilton is -- the two-four-ten?
Did you all see that?
About how content will be
consumed from two feet,
four feet, and --
Ariel Emanuel: Search
it on Google.
[Laughter]
Andrew Serwer: Right.
And -- yes.
Nicely played.
And that, you know, your mobile
is your two feet, your computer
screen is four feet, and
your TV is ten feet.
And of course, you know,
they're not going to all drive
each other out of existence and
you have to play across
all the platforms.
Ariel Emanuel: Right.
I think it was a
pretty good article.
Andrew Serwer: What about,
you know -- about live, live
events on the Internet?
I mean, are you guys -- is that
ever going to happen, and -- or
having on-demand on the
Internet or live events
on the Internet?
We were talking about
that as Patrick.
That seems to be
kind of far off.
Is that something, you
know, you consider at all?
Patrick Whitesell: I
think that is far off.
You know, I don't think that's
an immediate -- like I don't
think the economics around
that are immediate.
I think what you are seeing,
just as an example I just came
from the Toronto Film Festival,
and, you know, up there what's
been dying is the independent
movies that have had a hard
time getting out there
and being seen.
Because in the old model, with
all the windows taking so long,
the marketing dollars, and to
try to find an audience, is
getting harder and harder.
And actually cable television
has really hurt it, because a
lot of great dramas are on
television, so people -- it's
eroded the movie-going
audience.
But what you're seeing now
is that the VOD model for
independent film is a great
thing, because what's happened
is it allows the economics
of guaranteeing someone
distribution and advancing them
some money against a theatrical
distribution as long as there's
a quick window into the VOD.
It allows more people to see
it, everybody to make more
money, and therefore, you're
seeing, consequently, in
Toronto we just sold two movies
that probably wouldn't -- well,
they may have been sold but
they certainly wouldn't
have been sold at what
they got sold for.
So I think in some ways you're
going to see, you know, kind
of this -- you know, the
collapsing of windows, and in
the big movies, it's going to
be longer and it shouldn't be.
But I think a lot of the more
niche film, I think it's going
to be a good thing and you're
starting to see that, and I
think that's -- I think
that's going to be the most
fascinating to me when I look
at the four studios, four
primary studios of Newscorp and
Disney and now Comcast
and -- who did I miss?
Ariel Emanuel: Warner.
Patrick Whitesell: Warner.
Yeah.
Of course.
But they all have slightly
different kind of agendas, but
I think that you're going to
see them all kind of play
around with this windowing, and
I think that will
be a good thing.
Andrew Serwer: Talking about
products, we have to talk
about product placement and
that's kind of a, you know,
big topic these days.
You know, I was looking at
"Wall Street: Money Never
Sleeps," the second iteration
of "Wall Street," and I think
they're in a bar and, what's
it, Gekko asks him, "Would you
like a Heineken," you know, and
Shia says "Yes," and it's just,
you know, pretty blatant.
I mean, are you guys doing
more and more of those
kind of conversations --
Ariel Emanuel: Television --
in fact, on television it
is happening more and more.
So we're having conversations
with the WPPs.
I mean, our business -- in our
business model, we have a whole
marketing/advertising business
that, as we see the business,
that coupled with marketing
is going to be a very
important relationship.
How we handle the big
advertising agencies I think is
-- you know, they built a
distribution model that they
have to execute, but we're
having more and more
conversations with advertisers
every day, whether it be the
P&Gs, the GMs of the world.
Almost on a daily basis
now you're having
those conversations.
You know, in the television
business, in cable, in 2007
there was 30 scripted shows.
Now there's 130, right?
So it's not like it's --
that window is closing.
It's expanding.
There's more television
being watched.
The economics behind it are --
on the network side are
stressed a little bit, but only
-- and, you know, during the
recession, the -- you know, the
ad rates were down, even
though CPMs were going up.
So I think the advertisers are
going to be the bigger players
in this conversation and
they're pushing in on the
relationship with the
distribution model in
the core business.
So yes.
Andrew Serwer: Are you guys
surprised that there isn't
actually more interactivity
between television and the web?
Because, you know, I remember
talking to Ben Affleck
and Matt Damon.
They had this show call showed
"The Runner" that they pitched.
Patrick Whitesell:
A Foursquare show.
Ariel Emanuel: Great
show for Foursquare.
Andrew Serwer: Yeah.
Exactly.
That was Foursquare before
there was Foursquare.
There was a guy set
loose in a --
Ariel Emanuel: Rights
are available.
Talk to me about it.
Andrew Serwer: And I don't know
if you heard about this --
Ariel Emanuel: We'll just
charge you 50, okay?
Andrew Serwer: That's
good for him.
And they turn this guy
loose in America and
you had to find him.
And the show would run once a
week, I guess -- I'm kind of
getting this maybe not so right
-- and then -- but then you
could keep following the show
online and he would appear in
a doughnut shop in Paducah
and then people would go.
And I believe that ABC
said they would do it
but their lawyers --
Ariel Emanuel: After
9/11, it got cancelled.
Andrew Serwer: -- nixed
it because -- right.
Because -- so there were
security concerns or people --
people were also scared they
were going to shoot the guy
when they found him to get a
prize, and it sort of had
some problems, but --
[Laughter]
-- anyway, you could see the
potential to do these things.
And I think "Lost," you know,
has done some of this stuff
where, you know, you could
crowdsource plot changes.
I'm just surprised that there's
not more of that going on.
Is that something you
guys think about?
Patrick Whitesell: I don't
think -- I think now is
actually -- I think you can
for the first time to really
have the conversation.
I think "The Runner" was a
little bit ahead of its time.
It was a great idea but I don't
think you could actually
execute it the way
you could now.
But I think you will see more
of that and I think you're
going to see it in social
gaming particularly.
You know, I think that's an
area where whether it's woven
into the narrative of a
television show or if it's just
your celebrities driving
traffic to that and
participating and coming in and
out of the game with you, I
think that's going to be an
exciting place, too.
Andrew Serwer: Yeah.
Does anyone have any questions?
I've got a bunch more to ask
these guys, but if anyone
wants to, just maybe
pop up to the mic.
There, we've got -- we have a
brave soul making his way over.
You go.
A lot of news about "The LeBron
Show" that you guys packaged.
Maybe you want to talk to us
a little bit about that and
implications going forward.
Ariel Emanuel: I have no
implications going forward.
I mean, you know, it came
out of sitting at the
game with his manager.
And I think they're probably
going to win down in Miami.
How about that?
That's a prediction for you.
[Laughter]
Andrew Serwer: What
the hell was that?
Very good.
Ariel Emanuel: I mean, you
know, I sold the show.
Andrew Serwer: That's good.
Yeah.
All right.
Talk it up a little bit.
Patrick Whitesell:
Advertisers are happy.
Ariel Emanuel: Advertisers
are very happy.
Andrew Serwer: Let me ask you
about another thing that you
may be involved with a little
bit that might be --
Andrew Serwer: ESPN
is happy too.
No.
Andrew Serwer: -- just as
interesting or maybe even more
interesting to this audience
which is "The Social Network,"
the movie about Facebook, and I
believe Mr. Sorkin is a client
of yours, so can you talk a
little bit more about that?
[Laughter]
Ariel Emanuel: Um...
Andrew Serwer: Because
that seems kind of --
Ariel Emanuel: It opens
at the New York Film
Festival on the 23rd.
I think the movie is -- I'm
hoping the studio doesn't do
any advertising because I
think it's just going
to work on its own.
And I think probably
the people at Facebook
are a little nervous.
[Laughter]
Ariel Emanuel: How about that?
Andrew Serwer: That was good.
What's that?
(Speaker is off microphone).
Ariel Emanuel: I
don't think so.
I think the movie is -- listen,
I'm a character on a show.
It's been pretty good for me.
I think it's going to be
pretty good for them.
[Laughter]
Ariel Emanuel: Huh?
Yeah, you want me here.
Andrew Serwer: That's
the Ari we know.
Now we got Ari going.
All right.
How do you put up
with this, Patrick?
Ariel Emanuel: It's
hard for him.
Patrick Whitesell: 12 years.
Ariel Emanuel: 12 years.
Andrew Serwer: That's good.
Nicely done.
Okay.
Good.
So I wanted to ask you -- I
was talking to you about
this earlier, about --
Any more questions, please
feel free to just pop up.
Ariel Emanuel: I dare you.
No, go on.
Andrew Serwer: I don't know,
it was pretty brutal.
You got no one after that.
It was, like, quiet.
The global nature of what you
do, are you surprised that the
-- is the movie business or the
entertainment business more or
less global than you would have
thought, say, 10 years prior?
If you -- if I had asked you in
2000 or nineteen ninety- --
Patrick Whitesell: Oh, it's
definitely, definitely more.
It's only -- but I don't think
10 years ago you saw it coming.
You know, the international
marketplace in the film
business is bigger than the
domestic, so that's
not a surprise.
I think what you're now seeing,
though, is actually studio --
there's film finance companies
all over the world that now we
actually cover like we do
Warner Brothers or Universal,
and we go to them to kind
of make -- and that never
would have happened, one.
Also, two is, it used to be
that you would always take your
best content or your best ideas
always to the studios first,
and now you still obviously
will do that a lot of times,
but weirdly enough as -- if you
want to bifurcate rights and
hold back more of the control,
when you're really hot, you
actually want to take it to the
studio last, which we talk to
Thomas about a lot, where you
would maybe partner with
someone and then go to them
at the very end just for
domestic distribution.
So that part of it has changed
and the -- and there's a lot of
-- you know, more people
wanting to get into
the movie business.
I think it's smarter money,
though, and it used to be a lot
of people would get into the
film business, particularly
just for vanity reasons, and
now people, you know, more and
more are serious about making
money and making -- building
a proper business model.
And so yeah, I'd say
it's definitely --
Ariel Emanuel: Internationally
also, like in France, they're
making English movies but
they're paying for them
just for their market.
It's -- it's great right now.
Andrew Serwer: Some of those
French banks have had some bank
experiences in Hollywood,
if we can think back a bit.
Ariel Emanuel: Yes, they have.
Andrew Serwer: Yeah.
Let me just follow up a little
bit and talk about the two --
two of the biggest markets in
the world which are equally --
you know, they're interesting
but both problematic for
different reasons, which
are India and China.
Do you guys do a lot
of business in China?
Is it -- I mean you -- it's
such a difficult place to
do IP work, though, right?
I mean, I know our company,
Time Warner, has a
very difficult time
conducting business.
You know, our films just get
pirated right away and we just
kind of say, "You know what?
We're just not going there."
What do you guys think?
Ariel Emanuel: Well, there's
some -- in India, a lot of the
animation -- also in China --
kind of coming out of their
innovation and production
houses, a lot of the studios
have moved -- Sony, Fox -- on
the television side there and
making some local movies.
I think there's probably some
constraints on the economics as
it relates to getting money out
of China, but they're all
trying to figure that out.
So...
Andrew Serwer: Can you
do stuff in India?
I mean, we hear about Bollywood
but as far as I can tell
there's like Bollywood
and Hollywood.
You know, one or two huge
movies being exceptions, but
is there anything -- is there
any connectivity there?
Not so much?
Patrick Whitesell:
Not so much really.
You know, there was a big
announcement about all
these deals they made with
talent a few years back.
Andrew Serwer: Right.
Patrick Whitesell: They made
kind of production deals.
But in Hollywood, there are
what are called second-look
deals, so what happens is if
you're a producer in Hollywood
and you have a deal with a
studio, you make what's called
a first-look deal or an
exclusive deal, but normally a
first-look deal, where they'll
pay you some overhead and your
only obligation is you got to
bring them all your ideas there
first, and then if they don't
want them, they pass on
them, you can take them to
everyone else in town.
They made -- most of those
deals were second-look deals.
So a second-look deal doesn't
really have a lot of teeth in
it because usually if something
is really great, it's usually
been sold the first time, and
if your only obligation is to
take them to a second time --
So it was a big announcement
but I don't think a lot of
movies have come out
of it yet because it
doesn't, you know --
Ariel Emanuel: How many people
in Silicon Valley would
do second-look deals?
Not a lot, so...
Andrew Serwer: Interesting.
Yeah.
Good point.
Why is it that people --
and we got to wrap things
up here in a minute.
Why is it that people are
always saying, you know, "The
Hollywood studios are dead,"
"Oh, you know, they're
dinosaurs," and yet, you
know, they keep -- they
keep lingering on.
I mean, they seem more
powerful than ever.
You know, we always hear about
independent -- the wave of
independent studios, and those
actually are the ones that
ended up, I think, kind of
getting killed over the
past 10 years, right?
I mean, how does that whole --
Patrick Whitesell: Well, I
think the studios are not
-- I mean, the film side,
they certainly aren't
dead, by any means.
I think that the biggest
challenge they've had is the
variety of types -- the variety
of movies they can make
has been challenged.
I think if you're Warner
Brothers, you know -- and Tom
works for them, but they are --
you know, they were making two
Temple movies a year, now they
make eight, I think, right?
And that's where they make the
lion's share of their money.
Or if you're Disney, you want a
movie that kind of you can --
you can monetize throughout all
your platforms, the theme
parks, the merchandising,
ESPN, whatever it is.
So that constraint causes a lot
bit of a challenge for them
because everybody has this
idea that people who work at
studios don't want to make
creative, original movies.
They do.
It's just the economics get
so expensive that it puts
them in somewhat of a box.
Ariel Emanuel: I mean, you're
sitting there -- you know,
everybody thinks a movie
is the movie business.
The movie business is
the DVD business.
You know, with Netflix and
their economics and then the
economic downturn and what
happened at Walmarts of
the world, the economic
underpinnings of the business
kind of started to implode, so
that's why they reduced.
I do think, though, technology
is going to -- and as Patrick
said, on the independent side,
those two elements and how you
deal with the Netflix issue as
it relates to DVDs -- when
Warner Brothers held back "26
Days," you saw the
DVD numbers spike.
So when you look at the
movie business, the movie
business is a DVD business.
It's not -- I mean, theatrical
drives it, but it really is the
economics behind the business
is there, and that is
challenged right now.
Until those things kind of --
VOD, Blu-ray, all those things
start coming back in the
economy, I think they're still
going to be challenged
for a while.
Andrew Serwer: And
it's interesting.
You know, we hadn't talked
about Netflix, an amazingly
successful and adaptive
company, right?
I mean, so how are they being
so successful right now if
that business is so weak?
Ariel Emanuel: Well, because
it's a subscription
business --
Andrew Serwer: Right.
Ariel Emanuel: -- right?
And then they're building out
other models on the VOD side
and on the pay side, so...
Patrick Whitesell: And
the business isn't weak.
Here's the thing, is that what
happened was when a studio
would make a movie and they'd
underwrite their costs, they
would budget in what
they thought it would
do on a DVD sale.
And so when you -- when you
have a movie, you would
much rather have someone
buy it than rent it.
At least currently, in
the current model.
Netflix doesn't
care about that.
They're not underwriting the
model, so they're just in the
rental business, and what they
did was they got aggressive
about online and taking kind of
their mail system online
in some kind of --
moved there faster.
They've just done a
great job of that.
But I think, you know, you may
read somewhere Netflix has
a ton of rental sales.
That may or may not be
great news to the studio.
Andrew Serwer: Right.
And it's interesting.
We were talking about, you
know, TV and the Internet and I
was saying, you know, we're
still a long way from
being able to watch live
TV on the Internet.
There are people in this room I
know who are going to disagree
with me but for the average
consumer especially with
sports, they're sitting there
at home without a TV, it's hard
to watch an NFL game or an NCAA
college football game still on
TV, so there's still a
ways to go with that.
Just last question, Ariel,
just about a TV question.
So do you see TV -- people who
make independent television
production companies, are they
thinking about making shows for
the web the same way they are
about making shows
for television?
Ariel Emanuel: Well, there's no
independent scripted business.
The really independent business
is in the reality side and I
think it will be the kind of
driver that you have multiple
plays on it -- right? -- where
a story line is -- can end up
on the web and come back
to the reality show.
So I think that's where
it will start and that's
where it will happen.
Eventually, there will be a --
a scripted show that really
kind of incorporates all the
elements of what's great about
-- about the web or apps or
games or whatever, and the
normal scripted story line.
Andrew Serwer: Right.
I mean, you see people trying
it like there are --
Ariel Emanuel: I think it's
going to, but I think
it's first going to
start on reality.
Andrew Serwer: Right.
Okay.
We're going to have
to leave it at that.
Please join me in thanking
Patrick Whitesell
and Ari Emanuel.
[Applause]
