Friend of mine wants to build a next-generation film finance company

Hi guys, so this is my second post so far, and I'm thoroughly enjoying the feedback I've been getting from ya'll (especially from @DickFuld"). This particular subject involves entrepreneurship, so I decided that posting this in the VC section would be best.

So I've come to ask your opinion about a friend's future business plan. He's currently enrolled in a top-ranking community college in SoCal; he plans to transfer to a state business school (the school is among the top twenty business schools in the U.S.) that happens to have strong connections with all four of the Big 4 firms. He wants to work at a Big 4 and then go into UCLA Anderson to get an MBA in entertainment after spending a few years in TS/M&A (at one of the firms). I've told him that he's going to be fighting an uphill battle all along the way (beginning with the community college part), but he's undeterred. I've honestly gotten sort of fed up with him talking to me about his business plans, primarily because I think he's being unrealistic. However, his enthusiasm and persona sort of reminds me of some of these young, super-entrepreneurs that are rising these days. I don't want to quench a growing flame. So I've posted his business plan here (with his permission), and I hope to use this as a learning opportunity for me as well. He let me copy his "career plan" draft so it's written in first person. Please be frank about what you think about this business plan. It's fairly broad at this point...and honestly seems a bit overambitious to me. That's why I hope to check this in with some more experienced minds who've been there and done that already in the world of finance etc.

THE PLAN:
- At age 28 (upon graduation from my MBA), I will launch a next-generation entertainment finance company with several powerful investors. I will spend these years financing and producing numerous viral movies, TV shows, and music that heavily use the New Platform (the Internet). I will be visiting many investors and pitching my ideas to them as I lay the foundation for my business. I will make a profit from the sleeper hits I release, from the entertainment events I host, from the co-financing deals I sign with other producers, and from the investments in various other entertainment ventures.​

  • By age 30, I will have my next-generation multimedia company up and running with full power. We will have 250 employees and will operate on a firm structure (where every employee owns a share of the company). ​

  • My company will specialize in innovative entertainment financing agreements. Besides that, we will be fully-fledged film and television production company, with most of our focus on content that can be streamed on the Internet. However, we will help co-finance many high-profile box office successes. ​

  • I will develop an entertainment business consulting/financial advisory side of my firm with the goal of helping up-and-coming media companies set strong foundations, and for the purpose of creating new clients and business partners for the future of my company.​

  • I will develop the artist launching side of company, which will focus on finding young, promising artists and launching them via my company's artist development program. Through my program, these artists will find the mentorship and the connections that will enable them to expand their careers rapidly.​

  • At age 31, I will invest in the creation of a new, next-generation, online media streaming service that will offer all the perks of Rhapsody, Spotify, and Google Play at varying subscription prices (from free to luxury). This service will also develop what I call the "4th dimension" of entertainment: fan to artist interaction. The service will work in co-op with my artist development program. I intend to compete with the major streaming services and achieve industry dominance within 5 years of the service's founding.​

-From ages 31-34, I will continue to hone my business strategies and build my company steadily. I will not take on credit in order to expand my company. Everything will be financed from my company's operational income, investment income, and co-financing plans.​
By age 35, my company will hit $1 billion in annual revenue. ​

  • (Further plans pending development)

So what is your opinion of this plan? I know many of you on this forum are established finance and business experts, so I'm sure this isn't the first time you've seen something like this. Do you think my friend is totally arrogant and crazy, or is he really onto something? Thank you for your feedback!

 
Best Response
  1. Why would those so-called "power investors" have any need for your friend? Will he actually have something to bring to the table that they don't already have?

  2. This is the first time I've ever heard someone predict how many employees they will need at a given time.

  3. How does one willfully create a sleeper hit, if not by luck?

  4. How much is this all going to cost again?

  5. If this company is successful, it will be the first to launch simultaneously into 10 industries at the same time in history. Or maybe it's 15? I don't know, I'm confused.

  6. Where and how does he plan on launching artists? Into space by tagging them along SpaceX rockets?

  7. Wait, how much again will this cost?

  8. He specifies having "innovative entertainment financing agreements." What exactly does this mean?

  9. Media streaming is by and large a sucker's game.

  10. Hold on, how much will he need for this?

  11. "Achieve industry dominance within 5 years of the service's founding". See point 9.

  12. If he is still honing his business strategies 3-6 years into launching this business, he will be fucked.

  13. The "I will not take on any debt and finance everything with my company's income" spiel has been said millions of times before. Not only is a stupid idea to take this route, it's usually impossible to grow without some measure of debt.

  14. What are the hard stats supporting $1 billion in revenue within 7 years of his company's founding?

  15. I think I've finally answered the question of how much money... oh wait, my calculator ran out of space.

Overall rating of business plan: 10/10, count me in as an investor.

 
Origin:

............

-From ages 31-34, I will continue to hone my business strategies lol and build my company steadily. I will not take on credit in order to expand my company. Everything will be financed from my company's operational income, investment income, and co-financing plans.
By age 35, my company will hit $1 billion in annual revenue. Lmao

- (Further plans pending development)

Thanks for making my day!
Origin:
So what is your opinion of this plan?
You're either trolling or incredibly naive. Good luck if its the latter because this "plan" is god awful.
 

I used to work for a major VC player as an analyst. Honestly, you lost me at 'at age 28, I plan to graduate from UCLA.' So, what you're telling me is, he's going to WAIT to launch his brilliant idea until... What? He gets money? Connections? Industry knowledge?

There are also a lot of 'I wills,' meaning, 'I will be successful in this project, then another, then another, oh, and this success will come after I am successful at CC.

He's way to broad in scope. You know who the greatest entrepreneurs were? Problem solvers. This guy isn't solving a problem, he's trying to 'fix' the entertainment industry in a decade.

Questions: What if you don't get into UCLA? What if you don't create 'sleeper hits?' Hell, what if Netflix gets wind of your ideas and beats you to the punch?

And these are just raised in my mind at the first step. But, hey, I'll give you an example of an entrepreneur who's succeeded in your industry: Walt Disney. He didn't start out to create the worlds largest multi media conglomerate. He created cartoons, had a mental breakdown after his ONLY (marginal) hit was seized in his bankruptcy, and took time off to recover. He later came back and created Mickey Mouse in a last ditch attempt at creating a cartoon. The rest is history. But, he didn't start out thinking 'in 5 years, I'll own a theme park, and I'll have 250 employees who will have part ownership.'

Some advice to your entrepreneur friend: 1) Find a problem you care about and fix it. 2) Give the people what they want.

Good lord, if starting a billion dollar company were so easy, anyone would do it. Kudos if he succeeds, but I doubt it with this list.

This isn't a plan, it's a list of intentions.

 

Yikes, I think he has a better chance of being struck by lighting 2 or 3 times than this to all happen this way.

On a more practical level, it's a grand scheme and sounds pretty cool but it sounds like you basically want to be the next Sony Media. Granted I'm not the most knowledgeable about about media companies but that many product build outs over such a short period of time is extremely ambitious, at the least, and ludicrous. You're going to launch, finance, and produce a bunch of movies in 2 years? I could be ooon your ff but it takes a long time to build that reputation of being a good producer or you'll have to pay someone A LOT to take a chance on this unknown player.

Step one should be choosing whether you want to produce or finance. Then making contacts with both worlds.

Step two is to intimately know how to finance a media project. I'm sure it took minutes to finance Jurassic World but IIRC it took a long time to finance The Hurt Locker.

Viral short films are great but it's going to have to be like the level of quality/awesomeness or the Power Rangers short with James van Der Beek from earlier this year. And then you'll have to produce a longer, just as great version to get the staying power needed.

Good luck, this sounds awesome but fantastical. I'm not saying it's impossible, but you should know that it may feel like it at times.

PM me if you want to hear a story about a friend who had an outrageous business idea that happened.

 

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