Nothing is more important to U.S. consumers than their entertainment choices, but are movies and broadcast TV even relevant in the new world of entertainment?
Or will the convergence of content, internet, mobile applications, games and social media be the onrushing asteroids that will soon destroy the movie dinosaurs?
Is it a 3-year fad, or will new technologies like 3-D keep going to the movies from being relegated to the dustbin of history like Vaudeville, the afternoon newspaper, the evening news, the variety show, and the compact-disc?
Has the U.S. movie box office - traditionally the holy grail of movie industry metrics -- become increasingly irrelevant?
What is the future of Pay-Per-View/Video-on-Demand (PPV and VOD)?
Video-on-demand alone is estimated to grow from a $1.1 billion dollar business this year to $5 billion by 2012, taking market share away from DVD retailers and intensifying the carriers' ambition to bid for the best (and first run) titles.
How about Internet Video?
Annual U.S. revenues from internet video services spanning user-generated content to television shows and movies will exceed $7 billion this year.
And this business is becoming LESS advertising driven -- transitioning from today's model of more than 85% of revenue being ad-based to less than 60% and trending down with the balance being generated by content payments, either for one-time viewings or via subscriptions.
What do these new realities mean for the content creators of new media and for traditional studios, filmmakers, producers, and distributors?
What is the future for good-old fashioned DVD rentals and sales?
Get The Answers
I am very excited to share with you the opportunity to meet the Managing Director of Growthink's new media and entertainment practice, Mr. Lee Muhl.
Lee, quite simply, has forgotten WAY more about the entertainment business than most of will ever know (see his biography below).
And he has graciously agreed to give us the answers to the above questions, which winning business models to run with, which losers to run from, and much, much more!
Best regards, and look forward to your attendance and feedback.
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Biography of Mr. Lee Muhl, Managing Director, Growthink's New Media and Entertainment Practice
Lee Muhl heads Growthink's entertainment-media vertical, encompassing the making and distribution of films, television programming, games, new media content and numerous related distribution platforms, technologies and methodologies including theatrical exhibition, DVD, PPV-VOD, mobile applications, internet/IPTV, and a variety of new content modalities (digital theater conversion, advertainment, infotainment, advergaming), and related investment, banking and funding issues.
To date, Lee has overseen the successful conclusion of more than 100 Growthink engagements for funding plans and sophisticated media financial models, including film projects ranging from the production of numerous independent films and major studio productions to scores of angel and seed development fundings - overall, production funds generated are well in excess of $100MM.
Originally trained in transactional entertainment law and the representation of above-line talent, Lee worked with a number of well-known writer-director-producers in both traditional studio/network deals and in arranging non-studio financing for independent film production including such classics as Bladerunner. In 1999, Lee joined the Silicon Valley new media content contingent as an Internet-company CEO, and has since founded two innovative Los Angeles media companies. With Growthink, Lee has continued his deep involvement with film, digital media, content delivery protocols, gaming technologies and sports initiatives.
A former partner in two leading Los Angeles media law firms, Lee holds a J.D. from the UCLA School of Law where he also served as Chief Comment Editor of the UCLA Law Review, and earned his B.A. in History from UCLA. He is a current member of the California State Bar, and the Hollywood Writers Guild.
As is well-reported, childhood obesity in America is an epidemic. According to multiple studies by the U.S. Centers for Disease Control and Prevention, by the American Diabetes Association, and by the American Academy of Child Psychiatry, close to 33% of American children are now classified as clinically obese.
In addition to the massive additional burden to the U.S. healthcare system this will cause, childhood obesity is a moral crisis. Quite simply, we are letting down the next generation of Americans. And we can and will do better.
And like almost all of the great problems and challenges of the 21st century, the solutions to it will be found not by government nor even by well-meaning non-profits, but by savvy and hard-working entrepreneurs.
An Entrepreneurial Team We Love
Dr. Sears Family Essentials - a children's natural foods company inspired and branded by the author of one of the best-selling child-rearing books of all time (The Baby Book) - is a classic "doing good while doing well" business model and opportunity.
They provide children a foundation of lifelong health via offering exceptional and exceptionally well-marketed functional food and beverages, and supplements.
And guess what? As the company helps more and more kids eat better, it will grow its revenues and profits very, very fast.
This, folks, is the classic entrepreneurial win - win.
Meet the CEO
I am very excited to share with you the opportunity to meet the CEO of Dr. Sears - Mr. Tom Hicks.
Tom is uniquely credentialed to both lead Dr. Sears and to advise on the factors that separate the successful consumer products company from the unsuccessful.
Why? Because he has done it before.
Before Dr. Sears, Tom was President of Naked Juice and led their growth from $80 million to $200 million in revenues and a sale to PepsiCo in 2007 for 30 times earnings.
And he was Co-Founder and President of Fantasia Fresh Juice - leading them from startup to $15 million in sales in 3 years. And he is a former sales and marketing executive at both Frito-Lay and Proctor & Gamble.
Quite simply, Tom gets what works and what doesn't work when it comes to launching and growing consumer products brands.
And we're VERY excited to have him share his wisdom with us regarding:
- When and When NOT to place your product in the "Big Boxes" - Wal-Mart, Costco, Target
- How to utilize the power of the Internet to quickly and cheaply conduct high-quality consumer research
- How to and how NOT to utilize social networking strategies to build brand and product awareness
- And perhaps most excitingly, Tom will share his "pyramid to brand growth" - the interplay between brand-building, community-building, retail partnerships, and innovation
Best regards, and look forward to your attendance and feedback.
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P.S. I know too many otherwise intelligent businessmen and women who have been listening to all of the negative drivel that passes as business news out there.
Invest time out in your day to learn from someone who is doing something about a big problem facing our country and not just talking about it.
Medtronic. Cardinal Health. Guidant. Becton, Dickinson. St. Jude Medical. Hospira. Fresenius. Varian Medical.
All of these medical device manufacturers had greater than ONE BILLION DOLLARS in sales last year.
Sector Funding Activity Remains Strong
While overall venture investment is down substantially, funding in the medical device sector remains strong.
For the fourth quarter of 2009, venture capital investments into medical device companies increased 13 percent in dollars and 18 percent in deals (quarter over quarter), with over $719 million in fresh capital invested into 87 deals.
Amazingly, investments in biotechnology and medical device companies accounted for 34 percent of all venture capital dollars invested in 2009.
Merger and Acquisition Activity Also Vibrant
Are there exits happening in the sector - even in this tough economy? You bet your life there is.
Sector merger and acquisition activity leaped by 154% in the third quarter of 2009 to $5.6 billion, and the trend-line for 2010 is strong.
Some sample 2009 deals:
* Danahers acquiring Analytical Technologies for $650 million
* Thermo Fisher acquiring B.R.A.H.M.S. for $470 million
* Abbott Laboratories acquiring Evalve for $410 million
* Nipro Corp acquiring Home Diagnostics for $190 million
* Quidel Corp. acquiring Diagnostic HYBRIDS for $130 million
Who Will Be Next?
If you're like me, there's one thing you probably take for granted.
Interestingly, this one thing is something you can't live without. At least not for long.
But fortunately, there are some cutting-edge entrepreneurs working wonders on solving the challenges of this one thing.
What is it?
All around the world water shortages long ago crossed the crisis threshold.
In California. Arizona. New Mexico. Georgia and Florida. The Middle East. China.
Too many years of antiquated public policy, population and economic growth, climate change, and unsustainable agriculture have strained water resources in all of these places to and beyond the breaking point.
The American Entrepreneur to the Rescue
The greater the adversity, the greater the opportunity. And in the dynamic technology landscape of "new water," American entrepreneurs are leading the way.
A select cadre of under-the-radar water startups are developing game-changing technologies to develop, purify, store, convey, and conserve water.
Who Are They?
I would like to invite you to an exclusive opportunity to learn who these startups are and what their technologies do - distributed desalination, reverse osmosis membranes, nanoscale materials and nanoceramics, among others.
And as importantly, we will share who stands to profit from the $6 billion still slated from the federal stimulus package last year for water infrastructure investments.
Best regards, and look forward to connecting.
P.S. To survive in the new economic world order, it is imperative to focus on businesses that have strong, blended public and private sector revenue models.
You can search the whole world round and not find a sector that better fits this description than water.
Never in my lifetime have I seen Americans as mad with the "system" as they are right now.
And never have more Americans agreed on what that "system" is:
1. It is Washington. The "out to lunch and out of touch" tone and policy responses from both Democrats and so-called free market Republicans to the historical economic crisis facing American families and small businesses.
2. It is Wall Street. It is beyond galling that the most highly compensated roles in our economy over the past year have been exactly those people most responsible for the crisis!
Bankers and hedge fund managers.
This just doesn't sit right with anyone, not even the bankers and hedge fund managers themselves!
So what to do?
Neither I nor my Growthink colleagues are ranters nor end-of-worlders. Far from it. Rather, we side with those so eloquently described by the President in his inaugural: "The risk-takers, the doers, the makers of things -- some celebrated, but more often men and women obscure in their labor -- who have carried us up the long, rugged path towards prosperity and freedom."
We call this "Entrepreneurial Capitalism" -- the core ideal that financial rewards should go more to the creators of value and less to the speculators on value.
A strong corollary to this ideal is a wholesale rejection of the nauseating spectacle of pork and favoritism masquerading as fiscal stimulus.
So come on America, we're better than this. Let's start showing it.
Let's incentivize the scientists and the engineers and the operators of successful companies, not bankers and political and union hacks.
Let's offer the 495,000 Americans that start a new business every month tax breaks and credits and regulatory relief.
And most importantly, let's give them REAL ACCESS to capital. In turn:
1. They Will Offer Investors By Far The Best Return on Capital Out There. Over the past 10 years the "entrepreneurial sector" was the ONLY asset class other than gold to outpace inflation, with a 10-year return average greater than 30%.
2. And They Will Save The Country and Save The World. From the brave group of new companies will emerge the "chosen ones" - superstar entrepreneurs that create the "gazelle" growth companies that create the jobs and prosperity to overcome ALL of our economic challenges.
Let's run with these gazelles.
In 2010, this means emerging technology. Internet & Software, Digital Media & Entertainment, Healthcare & Biotechnology, and Green & Alternative Energy companies.
Find them. Back them. Win with them.
They are cure for what ails us - as individuals and as a nation.
An absolutely incredible and little-noted essay last week in the Wall Street Journal - Understanding the Terror Threat by Paul Campos – should be required reading for anyone in a position of authority in this great country of ours.
Campos main point: - in both business and politics we have become a nation of “irrational cowards," and of Chicken Little "sky is falling" doomsdayers.
And in so doing, we have done a grave dishonor to the sacred heritage of our country. A country built by risk-taking immigrants, by pioneers and action-driven leaders like George Washington, Teddy Roosevelt, and Martin Luther King.
Campos makes his point via citing the actual statistical probability of being a victim of an act of terrorism:
• In the decade of the 2000's, only one out of approximately 25 million passengers was killed in a terror attack aboard an American commercial airliner (all on 9/11)
• To put this in perspective, a person has about a one in 500,000 chance each year of being struck by lightning.
• Deaths from terrorism on airlines were at least five times less common in the 2000s than in any decade from the 1940s through the 1980s.
Campos does point to the one exception in the back of everyone's mind - the threat of nuclear terrorism. He agrees that this is a statistically real serious threat to which an intense, global policy response is very warranted.
Beyond this, though? Fuggedaboutit! The probability of any of us being the victim of a "terrorist attack" is for all practical purposes zero.
Now the pure flip side of fretting over terrorism is, as Teddy Roosevelt so famously said, is to be “in the arena,” to be a "doer of deeds" and to spend oneself in a worthy cause.
And in 21st Century America, it is our nation’s entrepreneurs who are most purely in the arena. It is they that are most courageously pursuing the opportunities that make America fly and thrive.
And you know what else? In terms of public perception, entrepreneurs suffer the opposite problem from terrorists. People think the odds of bad things happening to them (failure, bankruptcy, etc.) are worse than they really are.
For example, while most people think that 9 out of 10 businesses fail within one year, the real statistic is that only 1 out of 2 actually do.
Or while the media portrayal of entrepreneurs and small business is usually one of too much work and too little reward, less reported is how on almost all career satisfaction rankings being an entrepreneur ranks at the top of the list.
Or my favorite – most people consider investing in start-ups and small companies as the riskiest class of equity investing out there. This is anecdotally true but by no means collectively true.
As I pointed out in a recent blog post, over the past 10 years early-stage private company investing was the ONLY asset class other than gold to outpace inflation.
My favorite line from Mr. Campos' essay - Cowardice is among the most shameful of vices.
Washington and Roosevelt and King (to say nothing of the Wright Brothers) would turn over in their graves at the sight and sounds of the irrational fear-mongering that passes as public discourse in this great country of ours.
His advice and mine: Fight back.
In ways large and small, a good place to start is by learning the real odds.
And when you do, you will sleep easier on that next red-eye to JFK.
Of all of the variables to evaluate in handicapping the likelihood of success of a business, by far the most important is its "human DNA" - that killer combination of people smarts, vision, creativity, integrity and work ethic present in all great companies.
Here are 7 qualities to look for in a management team worth backing:
#7. They Are, In Fact, A Team. Great companies are not simply the byproduct of a visionary and/or charismatic founder and chief executive, but rather of a multi-disciplinary, multi-faceted, and well-meshed leadership team.
Great companies have cultures of achievement.
The tone of this culture might be, and usually is, set by a charismatic founder. But its enduring success is dependent on how it can replicate and maintain that culture as the company grows, and as its founder's role becomes less pronounced.
#6. It Is Clear Who Is In Charge. This may seem contradictory to the above, but all well led companies have clear and final points of decision making. There are many effective styles of leadership, from greatly autocratic to fundamentally consensual, but all of them share the fact that in them there is one person at whose desk the "buck" truly stops.
#5. They Have Small Business Discipline. To paraphrase Guy Kawasaki -- the worst folks to run a start-up or an emerging company are a group of ex-Microsoft executives. Entrepreneurial companies are first and foremost small businesses. As such, their management must a) fervently guard cash flow and manage it with a cult-like intensity and b) always make decisions with the mindset that they only have so many "arrows in the quiver" in terms of time and capital to pursue initiatives.
#4. They Are Risk-Takers. The proper goal of an entrepreneur with outside investors is not to run a small business in the common sense of the term. With the fear of sounding harsh, the best managers are minimally concerned with protecting their own "middle-class" lifestyles. Rather, they understand that to achieve greatly requires daring greatly.
For investors, a flame-out failure is not the only bad outcome. As damaging is "a muddling along" driven by too conservative decision making influenced by the desire to "protect hides."
Companies that run this way, in fact usually require MORE money, and counter-intuitively can often be riskier than their harder-charging brethren.
#3. They Are "Goldilocks-ish." While there are certainly outliers in this regard, the significant majority of the best entrepreneurial managers are not "too hot" nor "too cold." Again, not a hard and fast rule, but look for leaders where the key people are between the ages of 30 and 50 have had a few past successes and maybe a failure or two.
They are now in that sweet spot between youthful hunger and middle age wisdom. They know what they know, yet they still have the intellectual and emotional flexibility and curiosity to change and grow.
#2. They Are Technologists. All successful 21st businesses are, at their essence, technology businesses. This does not mean that they all would be considered classic "emerging technology" companies (though the majority of them, in fact, are).
Rather, well-run modern companies leverage technology -- from CRM and ERP to SEO and SEM to scenario-planning and simulation to "best practice" their business models. Their managers understand that information technology is not just the domain of a geeky guy to call when computers can't boot up, but is rather the drumbeat of their business.
#1. Their Work Ethic is Off The Charts. More than anything else, successful entrepreneurs work hard. As in very, very, very, very hard. They work nights. They work weekends. They take short vacations, if any. They work when they're sick. They work when they're tired. They work and work and work and then to paraphrase the great (and famously hard-working) golfer Gary Player, "The harder they work, the luckier they get."
Look for this quality above all else. It is almost always the best predictor of success.
Look to the right for a fantastic chart that tracks investment returns for various asset classes over the past 10 and 20 years.
A few points immediately jump off the page:
So that is past. What will the next 10 years hold? Here are three predictions:
My answer - yes but. Yes - because the 2 key factors that drive angel investing outperformance remain the same. One, returns have to be very high as compensation for illiquidity - most angel investments are in private-held, small companies years away from a sale or an IPO. And two, returns are high as compensation for the EXTREME variance of the asset class.
Now for the but. While the asset class returned an average of 30%+, it was attained via the sum of a very, very few winners (aka Google), and lots and lots of losers.
Quite simply, a few investors made a killing, and a giant many got killed.
But here is where it gets interesting. The one thing that has and will continue to drive angel investing returns - namely technology advancements - now allows investors, for the first time, access to smoothed-out returns (i.e. higher likelhood of hitting the 30% average versus the extreme highs and lows).
Barring a massive rally between now and the end of the year, the "00's" will be the worst decade in the history of the stock market.
As reported in the Wall Street Journal today, since the end of 1999 stocks traded on the New York Stock Exchange have lost an average of 0.5% per year.
Let's put this in historical perspective.
The 1990's were the best calendar decade in history for stocks, with an average investment return of 17.6% per year.
Even in the 1930's - the era of the Great Depression and usually considered the gold standard (pardon the pun) for bad markets, investors did better - with stocks "only" losing 0.2% per year.
And, as the Journal goes on, the news is even worst when we take into account inflation. Since 1999, on a inflation-adjusted basis, the S & P 500 has lost an average of 3.3% per year.
How bad is this? Given that the 1930's was a period of deflation, stock actually gained, in real terms, 1.8% per year during that decade. Even the 1970's - a period of both a bear market AND inflation, did better than this last decade, with stocks only losing 1.4% after inflation.
So before moving to the "what does this mean" and "what do we do now" discussion, let's take a moment of pause to reflect on just how tough an investing decade this has been
Very, very tough. Trillions lost. Retirement plans delayed. Heartache and heartbreak.
Perhaps most gallingly, while most suffered, there were those that did very well while really having no business doing so. Hedge fund managers. Derivatives traders. Bank executives.
I think we can all agree on a hope for the new decade - that the financial rewards in the next 10 years go more to the creators of value and less to the speculators on value.
Here are three more:
1. May Venture Capital Rise Again. Venture capital firms, for the first time in their history, lost money over a decade-long period.
Given the amazing and world-changing advances in human productivity and connectivity over the last 10 years, may the venture capital industry, and correspondingly the world of emerging technology - re-find its return footing.
2. May, on December 31, 2019, The NASDAQ and Dow be trading at, respectively, above 10,000 and above 30,000. Even getting to these levels will mean a return of less than 5% annually from 1999 to 2019.
This falls into the category of the equity markets being "due" for a big returns decade. A simple, but defensible premise.
3. May The Nation's Entrepreneurs Lead The Way. Never has there been more productive, focused, mature, and cause-driven entrepreneurs alive in the world than there are today.
Take a look at the below list of the top performing stocks of the past 10 year (1999-2008):
Symbol Company 10 Yr. Cum. Return
GMCR..............Green Mountain Coffee Roasters................7,895.4%
As Tim Hanson points out, these companies have three qualities in common - they were mostly ignored and obscure when they began their meteoric rise, and they were SMALL.
And you know what? Come 2019 there will be TEN DIFFERENT obscure and small companies that will make this list.
Noone knows who these companies will be. But to attain alpha, you MUST find them.
One thing is for sure - a few investors WILL find them.
The more interesting question of course is - will you be one of them?
I look forward to your attendance and feedback.