IFH 380: How to Raise Money for Your Film in TODAY’S CRAZY World with Franco Sama

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A MESSAGE TO ALL TRIBE MEMBERS: I know everyone in the world is going through a scary and tough time right now. I decided that I will continue to create content that can help you not only escape the troubles of the world for a short time but also help you move forward on your filmmaking and screenwriting path. I find myself looking for things that make me feel normal and I know Indie Film Hustle, Filmtreprerneur, and Bulletproof Screenwriting are an everyday part of the lives of many people around the world.

I will continue to release fresh content for the weeks and months to come. This event will pass and I want you to be ready for any opportunities that might come your way. Stay safe and keep on hustling!


Now let’s get into today’s AMAZING guest. We have on the show returning champion film finance expert Franco Sama. His first episode is one of the most downloaded episodes in the history of the show (Listen to that episode here). Franco and I joke that his last episode turned him into a celebrity at film markets and festivals around the world. I mean he can barely walk the halls of AFM without getting recognized.

Franco is a wealth of knowledge in the film finance space and I have learned tons from him over the years. We discuss the effect the Coronavirus is and will have on not only raising money for a film but also selling that movie to an ever-changing marketplace. Nobody knows what will happen to the industry after this virus passes. We also discuss which studios are more vulnerable than others and the dos and don ts when raising money for an indie film into today’s marketplace.

Here’s a bit about today’s guest.

Independent feature film producer Franco Sama boasts a remarkable and extensive history in public speaking, public relations, and nearly two decades of independent film development, production and financing experience.

Sama has Executive Produced and/or produced an impressive array of over twenty (20) successful independent feature films including most notably, “Guns, Girls and Gambling” starring Gary Oldman, Christian Slater, and Dane Cook which is now a cult favorite; this film was released into theatres and acquired a worldwide distribution deal from Universal Pictures.

Other films Sama has produced include; “Black Limousine” starring David Arquette and Vivica Fox, “Tooth and Nail” starring Michael Madsen and Vinnie Jones, and “Paid” starring Corbin Bernsen and Tom Conti.  Sama also serves as Executive Producer on the film festival darling “Petunia” starring Thora Birch, Brittany Snow and Academy Award winner Christine Lahti.

Alex Ferrari 3:21
So this episode, guys is epic. We have returning champion film finance expert, Franco Sama. Now Franco's first show that I did with him back in 2017. Episode 202 is one of the most downloaded episodes in the history of the show. And with good reason, the first show was called film financing and how to raise real money for your indie film. And today's episode is all about how to raise money. In today's crazy upside down world. Franco is on the front lines of film financing, how to get your films distributed, what film investors are looking for, how to approach them, how to package things for them, the whole ball of wax, and he's really heavily into education, and educating people as much as humanly possible. Because he's seen so many filmmakers fail because of just their approaches, how they package things. And also we sit down and talk about the pandemic, the crisis, the economic crisis that's happening, how this event is going to shape Hollywood, which studios are vulnerable for collapse. It's a very interesting time we're living in boys and girls very, very interesting. And Franco and I sit down and just have an epic conversation. So it is is a masterclass on what to do how to raise money in today's world. And a little bit of predictions of what will happen in the coming months and years to our industry and how we can better prepare ourselves to not only survive, but to thrive in the new film economy and the new economy in general that is coming towards us. Very, very fast. So without any further ado, please enjoy my epic conversation with Franco Sama. I'd like to welcome back to the show returning champion, Franco Sama. How are you doing, sir?

Franco Sama 5:40
I'm doing great, Alex, How about yourself?

Alex Ferrari 5:42
Um, you know, it's it's it's a weird time. The world is an interesting time in the world right now. We're all locked up here. A self quarantining ourselves. Here, it's it's a weird time, we're gonna talk a little bit about the weird time as well. But you were just talking off air. And it's been last time you were on the show was episode. I don't forget what episode it was. But it was 2017.

Franco Sama 6:06
Right.

Alex Ferrari 6:07
And it was one of the more popular episodes we've ever done. And I know you and I have joked over the course of the last two years that you are now a celebrity at a AFM, film markets and film festivals. People walk up to you and say, Are you the guy from indie film hustle podcast?

Franco Sama 6:27
And they still do. It happened two weeks ago.

Alex Ferrari 6:31
It is it is it's a new always, like I say you always give the best stories because it's never just like a guy just randomly meeting you. Like, there's always a situation, whether it's the place, or whether it's the people involved in there's always a character involved.

Franco Sama 6:49
And I gotta tell you, it really makes my life interesting. Because other than that, my life isn't that interesting. But it's so cool. Because it's so unexpected for me, you know, I've never had that my whole life like, people, you know, I've always people have known me sort of on my work. Sure. But they never known the face behind it, you know, they just know the the name or the or the company or something. But for somebody to literally walk up to me either out of market or in just the general public population and recognize me and know not only recognize me, these guys can actually quote me, like, they know some of my catchphrases, and, and it's freaky. It's almost like, I feels a little stalker, you know, it's like, how do you know so much about me? But I'm very flattered every time it happens, I really haven't. I'm very grateful that that it will, first of all, what I'm really happy about is that they are hearing the message, you know, and that they're able that they're receiving the message, because that's why I do this right? Well, isn't that why any of us do this is we you know, you to go out into the world and speak on these types of issues around our business and our industry and financing. And the whole point is to educate people to help them not make these gigantic mistakes that could potentially end their careers before they even have one to begin with. And I and I get that guy number one. And I was lucky to get out of it. And I've seen it so many times. So when I hear that, and I know that people are listening to you, and they're listening to me, and they are hearing what we have to say, and that they're actually taking that information seriously and implementing it into their into their work and into their lives. It's there's no greater compliment for me.

Alex Ferrari 8:35
You are by far the most recognizable film finance guy in LA, there's no question about it. They can't hear you. You can't even walk AFM without being being attacked three, four or five times every second

Franco Sama 8:47
At one point, it all happened at one at one time. And I'm telling you, the people that I was hanging out with, for sure, were convinced that I was wandering around handing out hundreds and colonies people to come up for 10 gig and because it was so it was so weird. It was very, very, that was a little uncomfortable. Because it literally happened like with four different people within a span of about an hour. And that was just a coincidence. But it was that was when I really opened my eyes open. I'm like, wow, this medium is so powerful. It's incredible.

Alex Ferrari 9:21
I do I do

Franco Sama 9:24
the work that you do, because it's not just you know, when I talk to people about indie film, hustle, you know, we get into these conversations about all of the work that you do and the different, you know, podcasts that they've heard and the value that they get out of that and so I'm always encouraging people number one, get on board with Alex and, and I mean it I don't just say it, because I'm so grateful for our relationship, but because it's true.

Alex Ferrari 9:49
I pray I appreciate that. Frank, I appreciate that. And you and you're, you know, you're a straight shooter. In the world of film finance, there's not many, there's not many of you out there. I call you a unicorn There's unicorns out there. There's just very special, unique, you know, limited amounts of people in certain areas of our business and you are definitely one of them. So, so let's get into it today, my friend, you know, a lot has changed since 2017. a lot. Back then, back then it's two years ago. But back then, you know, s VOD was all the rage. You know, and Ott was going to be the big thing. And now it's a VOD. And the there was, there was no Disney plus there was no HBO Max, there was no peacock, there was no, I mean to be was barely getting off the ground. Pluto was, you know, guest coming up as well. So in the current marketplace? Well, first of all, you know, we'll talk about the elephant in the room, which is, as of this recording, the virus is affecting a lot of people around the world. And is yes, I just did, and I just did an episode this week about how the Coronavirus is actually affecting our industry. And we've lost, you know, lost, I think in China, they lost $2 billion in revenue worldwide, already 4 billion in revenue. And it's no notes, no stop and cite, like literally China right now, which is I think it's the second or the first biggest market, I'm not sure now, I don't know if it overtook the US or not. But they shut down 70,000 screens and like they shut down their their box office, which is decimating a very fragile, and honestly, in my opinion, vulnerable film industry, which I feel that the China market has been propping up the losses that occurred from DVDs and all the other foreign sales and all these other things that were there before, that have been taken away over the years. And China was kind of like, bubbling it up a little bit. But then all of a sudden, it's gone. And everyone's like, Oh, crap. So how do you how do you see this affecting our marketplace moving forward in 2020?

Franco Sama 11:59
Well, I mean, absolutely. The rug has been pulled out from underneath the industry. I mean, not certainly just our industry, but every industry and worldwide. It's a it's a it's, you know, the consequences of what is occurring right now is gonna probably impact us for the next decade. That's what I believe. And I we will get past it we do we do, yes, we get thing. But it really is going to require a readjust and major readjust, almost protect, potentially a complete paradigm shift in the way we do business. I mean, the good news prior to this event of the viruses that because of all of these emerging, emerging sort of marketplaces, content is now much more valuable, right? Because I remember back, when I was first starting off, you know, you're trying to get knocked down a door to get somebody to pay attention to you, because you had something, a project that you wanted to bring in. And people would just slam the door on you and get out of here, kid, you know, those roles have reversed quite a bit now. And content is king, and there's so much space now that needs to be filled with content. So that puts the creative people in a in a better position in terms of that. But then the question is, you know, now, the throngs of possibilities, how do you penetrate that? How do you patent that, because now you've got a billion times more competition than you used to have. So even though there's more opportunity, and access, it's still sort of a funnel. And, you know, somebody's getting stuck in that, you know, there's only a few people coming through that from everybody that's pouring into it. So I think, honestly, more than ever, you know, this, this business has always been a business of relationships. And you and I are a testament to that, you know, and not just you and I, but all of the people that you and I have in common in our circle, you know, that we help each other at all the events in our little comic clan. Right, right. Well, that's the core of the independent of the independent film world, at least here in LA. And I think that especially somebody new, they have to really focus on building those internal relationships. And finding the good guys, right, because the, there's a lot of good guys out there. You know, I being able to identify those people, and stay with them and work hard to make sure that they nurture and maintain those relationships over a long period of time, because this is the long game this whole industry is about playing the long game. So if anybody's in it for a quick anything, you know, it's a quick book, or they want to get famous, you know, quickly or they want to win an Oscar in the first film. That's not of the mindset. It just isn't, you know, you're not seeing Got fa, that's can't be the mindset. You know, there's nothing wrong with having that kind of ambition and dream, but you also have to have your feet in reality and grounded. And and I think that, you know, as long as people stay close to people like us who are in it for the right reasons and have and have all of the right intentions, and like you said earlier, I'm a straight shooter. You know, I tell people, things they don't want to hear every single day. Yes. And you know, and I'm proud of that, because I know that they're going, Oh, harsh, you know, but at the end of the day, you know, I'm doing it because A, I haven't got time. For Bs, I just don't, I got 12 films in production just came out of principal photography. Got a million things going on right now. So the last thing I have time for is to babysit for somebody, right? And to hold somebody's hand, now, I am willing to take my time and work with somebody over the long haul. But they have to be doing the heavy lifting, at the end of the day, they have to make their contribution, especially if it's their their film, there's so many people that come to people like me, and they have an expectation, which is already a problem, they have an expectation that they're going to be able to hand something over to me and that I'm going to do it for them or take it from there. And it's the complete opposite. I will help empower them to do it themselves. And give them the tools and the resources and the knowledge and the information and whatever it is that they need for that. But I'm not, I don't work for them. And they don't work for me. It's a matter. That's what a collaboration. So as far as the global market is concerned, I really think it's kind of a wait and see, I think we've got to kind of wait and see how this thing flushes out. You know, with the spray example, South by Southwest being canceled was a major, major, major blow, you know, we're talking about $365 million in revenue potential is just wiped. And I'm working with a couple of organizations that I'm affiliated with, to try to help potentially screen some of these filmmakers films that would have gone they're here in LA. So that at least kind of give them a little bit of a leg up. Because I know that this must be crushed.

Alex Ferrari 17:29
I mean, can you imagine spending your whole life you like I got into South by like, I've my film got an insight and then all of a sudden, it's canceled because of a virus scare. I can't even imagine, I can't even imagine.

Franco Sama 17:43
I can't either. It's got to be gut wrenching. And, you know, it could be and for some people that could be an insurmountable problem, you know, something that they they may never recover from because they might have all their eggs in that one basket, which is another yet but um, so that's why I'm saying we're gonna try to at least do something I don't know yet. We got a couple of you know, organizations that I belong to, you know, I'm a I'm a I'm on the board of directors at New filmmakers, Los Angeles. We're partnering with some other groups here in LA, in, in combining our resources in terms of theatres and space, and being able to get some of these from shown, at least here in LA for audiences, despite the fact that they're not going to be able to compete in festival.

Alex Ferrari 18:32
Yeah, and I know our be our mutual friend Rb bado from stage 32. He's trying to do something as well to help those filmmakers as well. They'll be one of those partners that we're we'll be working with Yeah, yeah. It's It's, it's, it's, it's devastating. It's devastating. Now, I've been I've been yelling from the top of the mountain now for a while saying, Hey, guys, right now, things are getting really tight. As far as the mid level and lower level distributors, they're getting more predatory. You know, there's always good guys, but there's a lot of bad guys out there in that world. And we're in a, we were in a fairly good economic time. And I go, wait until the fit hits the Shan and all of a sudden, things start tightening. And we saw it in a way and you will go back to away you start seeing companies start falling left and right because they were fragile in this in the in the in the in the first place. Do you see you know, obviously as of this recording, the market has had one of the worst weeks few like last two weeks since 2008. A lot of people are saying that this is the first signs of something going to happen. We're do we're late. We're late for something to happen. Do you feel love to hear your opinion? Do you feel that some of the studios, and there's only a handful of big studios left but you think of the studios and also some of these larger distributors are vulnerable because they're there. They're fragile In the first place, because they're not diversified, like Disney, we're good, this is gonna be fine. You know, Warner's will probably be fine, universal will probably be fine. But they're super diversified, where some of the other studios aren't, and especially these distribution companies who are not diversified at all. And they're just, they're just making the money with distribution. If those channels start, like what we were just talking about, like China shuts down, and then all of a sudden the foreign market shuts down, all of a sudden, all this all this flow ends, do you feel that there's gonna be a reckoning, if you will, in our industry?

Franco Sama 20:32
I do. I do. And, you know, I have to say, this is a very unpopular position. But as bad as that is, and is probably going to be, the industry really needs to purge. And this might be that I believe this is the, you know, Phoenix Rising, because what's going to emerge from that catastrophic event is going to be a new perspective and a new way of doing things. Because, you know, I've been saying for a long time, I kept predicting about five years ago, I was started predicting that the overall model of the sales of more of the sales companies, as opposed to the actual distributors, right, the sort of middlemen between the from the middleman and

Alex Ferrari 21:23
the middleman and the middleman of the middlemen, right?

Franco Sama 21:27
That's where the all the breakdown is, right? I mean, you hear you have all these filmmakers, myself included, who spent, you know, years of their lives and dedicate, you know, 10s of 1000s, if not millions of dollars in getting investment, and doing everything they're supposed to do, they do it all right, not always, I mean, people make mistakes, but for those who do go down the path and and actually produce a quality film that deserves to be seen in the world, and then they go into the distribution market, and they get crushed,

Alex Ferrari 22:03
Decimated,

Franco Sama 22:05
They get crushed. And as a result of that domino effect backwards now, because the sales companies, some of them are are doing sales, recovering, proceeds and not paying, you know about that, right. And then there are others that are just in it for the, for the upfront marketing fees. And once they collect their fees, they lose interest in the film, and they move on to the next one, and then that one after that, so they're in the marketing fee collection business, as opposed to the distribution of film business. And I've been saying for five years now, that's going to implode at some point, it's going to come back and bite them. Because instead of having the mindset of well wait a minute, if we take care of these people, these talented seriously, right, if we No,

Alex Ferrari 22:57
I agree with you,

Franco Sama 22:59
These talented, young, talented, entrepreneurial filmmakers that really have their act together, and have the resources and the wherewithal to go out there and figure out how to raise 2 million bucks to make the movie in the first place. And then they make a great movie, right? Wouldn't it be who've us to, like build long term relationships with these people, and make sure that those in filmmakers are able to return those investments to their, to their investors and make with profits so that those investors will continue to keep investing in them, and we can continue to prosper and grow? Unfortunately, in the vast majority of cases, that's not the case. Because the mindset, it just isn't. I know. And, you know, like I says, I'm very unpopular position to be taking, but the mindset is more along the lines of there'll be another one right behind you. Correct, there's a long line is never gonna end. And you know, what we'll, we'll we're gonna do, we're gonna do, we're gonna get make this money and good luck on your film, and with your investors. And, unfortunately, if that falls off the wayside, there's going to be 100 more filmmakers in that line trying to get that same deal that looks on the surface, like a great opportunity, and then turns out not to be so I've been saying for a very long time that that has got that will self implode, like it can't sustain itself. It can't be sustainable. And to your point. Unfortunate, unfortunately, I think this could be a sign that, you know, those those are the most likely of people they're going to probably be the ones to fall by the wayside. And when when the dust settles in, everybody kind of comes back out of the ether and from whatever is going to be occurring over the next year or two. I think there is going to be a whole new way of looking at this thing and finding, I mean, even now some of the deals I'm working on, you know, we're working on a couple of I have a couple of film funds that I'm building in, you know, the name of a company, and, and I'm consulting on other on others. And I'm telling these people, you know that, that it, we can't go out and raise all these millions of dollars, and then dump it all handed over to some third party that's going to take the lion's share, and leave us hanging, especially now, if we're the investors and it's our money. So we're looking at ways to be able to minimize that one of those ways is to reduce that marketing fee, down to only like, about $10,000.

Alex Ferrari 25:43
Which is nothing in the grand scope of things. Yeah. But imagine, you know, taking what is traditionally a 5060, I've seen 8500 152, I've seen 200 Oh, yeah.

Franco Sama 25:56
Ridiculous. And it's, it's just wrong. It's just wrong. Just imagine if that number was kept at like, 15,000. You know. So those are the little things that, you know, we're trying to do internally here. And that's why I said goes back to my point earlier about new filmmakers, or even current filmmakers staying close to people like us who are fighting every day and working towards coming up with solutions for some of these things. So that infant when the bottom falls out of this thing, you know, they'll be a small group of people who will be able to survive it. And, and actually, you know, exceed expectations from there.

Alex Ferrari 26:38
I mean, in Oh, eight, when did Netflix start? Like the streaming side of Netflix, it was around? Oh, 8090 10, it was a matter of mistaken right. It was, that's when the beginning stages of streaming, which was horrible at the time, obviously. But that's when it started. And Netflix came out of the streaming side of Netflix came out of the Oh, eight thing and look how that completely transformed our industry. And they're there every once in a while there needs to be a purge. And I agree with you, I 100%. agree with you. I 100%. think there needs to be a wiping of the slate in many ways. If the companies are strong, and they have good business models that can sustain hits then right.

Franco Sama 27:18
Ethical and ethical. Correct. And they'll survive. Correct, survive, they have always, they have a better chance of surviving. You know, it's interesting, you bring up Netflix, because I remember, you know, in those days, me personally, my company, we made the vast majority of our money back then on DVDs,right?

Alex Ferrari 27:37
What is the What is it? What is it? What is the DVD? What do we have the flu? But anyway, coasters, like coasters, get that?

Franco Sama 27:46
Yeah, that's what they are now. That's what we use them for now. But anyway, um, yeah, we, you know, that was in the DVD days, right? When, when, as a distributor or sales company, we have these really exorbitant, exorbitant hard cost, right, because we're going to bring a film out to market who's going to go to like Walmart and all these places, but mostly in those days to blockbuster in the in an all of those 1000s and 1000s. of other chain, you know, kind of video West Coast video. Yeah. So there was the hard cost associated with that, that we had a cover while the distributor had a cover. And it was expensive, because now you have to print every one of those things, then you have to package it, you know, you have the artwork, you have the plastic, and then you have the shipping. And what a lot of people don't realize is back then, if we got an order for 20,000 DVDs, or a movie to Walmart, in 90 days, if Walmart wanted to, they could charge us back and send back 9000 of those 10,000 orders. And we'd have already cashed the check. So we have to now be on the hook for all those DVDs that they they rejected that never got sold. So that was a huge problem. So what was interesting about Netflix is you know, at the time, remember they were delivering the DVD to your home. And so it was great because you still got that thing that disk, but you didn't have to go anywhere to go get it. And from a distribution standpoint, from our standpoint, we were covering maybe the mailing costs of it because they came in a little sleeve, right. So there was a lot of that other cost was eliminated. But then when they switched over to streaming and the DVD just went out of style. That changed everything completely because now there is zero cost. There's nothing here real hard costs. There's nothing to charge back. And so now that profit margin significantly increased. And essentially we're still there today with the morphia but

Alex Ferrari 29:55
it's significantly creased, but the money that you can get for your film it Completely decreased dramatically. So the cost, so like, perfect, perfect example, though before DVD would cost you 15 bucks. Right? Yeah. We'll be right back after a word from our sponsor. And now back to the show. And now a movie cost you free. If it's on prime, yeah. Or if it's on part of your streaming service. So the devaluation as is really hurt the filmmaker in many ways, correct.

Franco Sama 30:34
100% I mean, it was five or $6, just to rent it for the night.

Alex Ferrari 30:40
And I know, even before that, the VHS Don't forget you used to get charged, if you didn't rewind, be kind rewind.

Franco Sama 30:47
It used to guitars be kind rewind. That was,

Alex Ferrari 30:53
Could you imagine I worked in the video store, I remember it was I piss people off dramatically, like, sorry, I gotta charge an extra bucks, you didn't rewind it. Ah.

Franco Sama 31:04
So I remember going out at three o'clock in the morning and stick it in that little slot they had that would drop into the trash basket. So it would be there in the morning. So I wouldn't get charged for the next day.

Alex Ferrari 31:14
It's it's I mean, we were barbarians. Let's just put it out that we were barbarians. We were just like just

Franco Sama 31:21
I was just talking to a filmmaker the other day about this and saying, look, you know, for the people coming up the young kids coming up, right? You know, today is like a such a different conversation. I mean, in terms, you know, when I started, somebody asked me, What about the origins of PMA, like, you know, why do they call it PMA. I said, Because back then when I started, the P was print. And the print was a 35 millimeter reel that was this gigantic. And you usually need a two for each film is the film didn't fit on one. And we used to have to deliver them and get into a band and bring them to the theater to bring them up into the screening room. On every theater, they have what

Alex Ferrari 32:05
was a print print, I know if I remember correctly, it would be like a $20,000 cost or $15,000 cost, right? Very expensive per print per print. Now you can literally upload it. And they can download it for free essentially, almost Yeah. Or

Franco Sama 32:24
you can you can literally walk into a theater with a USB in his mind movie. You know what I mean? But But I remember those days, I remember literally physically delivering those huge 35 mil millimeter prints really heavy and on the thick film, and it was it was a very cool thing. But yeah, we you talked about that kind of money for every single theater. It was it was just it was so hard to make money. It was you know, because that was your that was just your delivery cost to get and

Alex Ferrari 32:56
that was the cause that was you needed to get to look at the ROI and like how many how many assets and seats Could I get to recoup this cost? And then the theater was taken 50% and it was this I mean, like so it took a lot. That's what you had to pump a lot of money into advertising, and to make that money to make that money. But that's when VH like when a home video showed up. Of course the whole industry was scared to death. But then they figured out Wait a minute, we can make some money here. And all of a sudden it changed but then it's been slowly you've been seeing it from the days of 35 millimeter print all the way now to zero cost. But also really hard to generate revenue coming in from those channels. Unless you're creative. It's It's It's a very interesting journey that we've we've gone upon. Now I wanted to ask you something and and I wanted you to clear up something for me because there's a lot of you know, we have this this little group that I started on Facebook called protect yourself from predatory film distributors and aggregators, which started off as a distributor, Facebook group, and now it's become like this hub of the latest distribution techniques, who's screwing Who? Asking questions about, you know, certain distributors, or sales reps and things like that. And people just, you know, it's it's a wealth of information, I want you to clarify, and I'm not going to use the distributors name. But and when the second I give you the description, you probably don't know who it is, but I'm not gonna say it. But if a distributor is putting out 40 to 50 movies a month, a month, how much attention is going to each release. And they might be a very, very grandiose, the distribution company has, you know, this perceived value for independent filmmakers, and they're like, Hey, I'm with x company. Now, look at that I have arrived. But yet, you'll get $0 ever from that, from that situation? In many cases? What's your opinion of that scenario? And there's not there's a handful of those companies out there that just they just pump them out, and they're just throwing stuff against the wall to see what sticks essentially.

Franco Sama 34:56
Well, that was what I was gonna say. It really comes down to that right? It is it's the beginning. You know, let's say they sign up 10 films, right? in a given period of time in the in the, in the next 30 days, they they sign up 10. So that means they're finding, you know, these people that we've been talking about filmmakers who have worked hard who have, presumably, in most cases completed their film, sometimes not, but and they have to sign up this agreement. Well, we've you and I talked about this, those agreements can be 15 year commitments, you know, I mean, they tend to be five, seven or 10 years, I set them up to 25. Now they're going, they're getting so predatory, it's going up to 25. So now, because they want to lock the filmmaker in, like, literally forever, right, so that they can't go somewhere else. And the truth is, even if they don't do anything with the film, the filmmaker can't take it and go someplace else with it. So they're essentially being held hostage. So now they sign these 10 agreements. And let's say, just to use that round number, let's say that every one of those agreements, requires a $100,000 marketing fee that people should understand comes from the sales, right? I mean, it's not an upfront, we don't have to write them a check for 100,000. But the first 100,000 in sales that's generated, we are agreeing that they're going to get to keep as their quote unquote, marketing fee. Right? And that when it's legit, is fine. Because what it says to me as a filmmaker is okay, there's nine other people here I'm sharing the pot with. And so does that mean that when they go out and do the front and the back page, add of the variety and The Hollywood Reporter throughout all of AFM for that entire suite? That might my poster is going to be on there? Or it's going to be or they're going to be looping much my film on the on the on the screen? No, it doesn't mean that. It would, it means it but but I'm paying the same as everybody else, right. So now this in this scenario, this company, who shall remain nameless, has just is going to sell the shit out of that film for until they hit the $100,000. Mark, right, because that's their money. So now, they have just brought in a million dollars on 10 films, right off of the backs of the filmmaker and their investors, but then hit that plateau. And I've seen this happen to me other way. Once they hit the plateau, their commission goes from that 100% of revenue down to 20. Because that's their commission. So now they're only and that and if they do make a sale after that, that remaining 80% becomes my filmmaker, my first money, right. But now they've lost interest. And they kick the thing to the curb. However, out of those 12 to 10 films, two of them might be deforming like gangbusters. And the other ones are just kind of mediocre. But two, one or two of them might be just taken the lead without question. And for short hit. Those are the ones they're going to focus on. They're going to move the other eight aside. They're going to take those films and they're going to really push until they can squeeze every dollar out of it even at 20% now it's worth their while. And then next month, they're gonna go find 10 more filmmakers. And by the way, while we're all trying to figure out where we're going to get the money to go to can those sitting on a yacht pop in my way, hmm. $1,000 marketing fee off of my movie that I can't afford to go see at the festival.

Alex Ferrari 38:44
Now, I wanted to bring back something that's why I love having you on the show because we speak the same language. That that that's an area that you talked about the print ad in variety during AFM. Now, let's say on that print that they have 20 posters, okay, and that that ad cost 20,000 bucks, let's say right for that for that week on variety. Is it fair to say, because I've seen this happen? Is it fair to say that they're not going to cut up that 20,000 or prorate that? 20,000 per 20? They're not going to charge each filmmaker 1000 bucks in the accounting, they'll charge each filmmaker 20,000 bucks for an add. Does that make sense? Well, I've never seen that it wouldn't surprise me. Yeah, that's it. That's called it that isn't that Hollywood accounting?

Franco Sama 39:35
Well, yeah, but that's where it all goes wrong. And that's what I'm trying to say. I had gone to the executive, you know, first of all, your listeners should understand that in these agreements, the filmmaker has the right to win an audit, write it once a year at their own expense. So if you wanted to, you could go to this company after the deals done and everything's happening. You have the right to go in and audit the books and take a look at what the scenario actually is how much is being spent on what and what not. And so if that were the case, you would see what you just described. That said, you wouldn't know that it wasn't $20,000. But because in your mind you thinking I was on the cover of variety, or I was on the back cover variety. And it might make sense to a first or second time filmmaker, that it would cost 20 grand to do that, when you're right, they just made 150,000 $200,000 off of a $20,000 hat. The problem is, number one, nobody ever goes in for that audit. Nobody ever follows up on it, if they forget that,

Alex Ferrari 40:43
if it's even under contract.

Franco Sama 40:46
Right, but assuming that it is number one, you got I hate to say this, but it just it's only because I've actually experienced this, I'm speaking this way. But number one, you know, it's it's incumbent upon the filmmaker to initiate that process. Number two, it's like the IRS audit. You know, it's like, I'm sorry, you got to go to lunch. Can you come back next Tuesday? Right? So actually trying to find the time to get them to commit to letting you come in there to audit their books on your movie. Good luck. Forget about it. Right? And then even if that happens, what guarantee do we have? And I'm not accusing anybody of anything?

Alex Ferrari 41:29
You mean that there's a second set of book sir? No, no, stop it. You mean like mob style, like mob style?

Franco Sama 41:36
Like, here you go. Take a good look. Yeah, it's just and this is why I've been saying for all these years, that it's going to implode, bite them all. You know, it's got to come back. This is not sustainable. It can't be. It can't be it's no, it's no longer acceptable. The other thing, I think that's playing into this, you know, when I first started independent filmmakers, were a joke, we were considered a joke. We weren't ever taken seriously. And we, it was so easy for them to toss us aside. Like we were just a bunch of freaks, you know, until we started winning Best Picture every year.

Alex Ferrari 42:19
Right? This year, even even this year, Jesus a foreign film for the first time

Franco Sama 42:24
this year. So for like seven out of the last eight years, it's been an independent film, right? You're not seeing these big tentpole blockbuster films, when he goes picture, we're making those movies where we are making those movies, we might be distributing them through the studio system for exposures, perfect, you know, purpose, but were the ones who were making those movies, we the independent film community. So it became clear at some point that we as a community are now a force to be reckoned with. And you can't treat us the way you used to treat us back in, you know, 15 years ago when I got started. So. But the irony is that although a lot of the components of the industry have shifted and improved for us as independent filmmakers, as we've progressed, that one thing is just never changed. That distribution model of ripping off filmmakers doesn't change. And that's the reason why people are hungry for a distributor right to try to find an alternative to that they're trying to find a way to self distribute their films. And that's why people are, you know, doing it on Facebook get on whenever they can. They're looking for any means other than the traditional because that gap is starting to close.

Alex Ferrari 43:45
Right. And the thing is, unfortunately, if you have a half a million or a million dollar film, self distribution can happen. But man, you've got to be hitting it at every, every cylinder has to hit perfectly. You can't you got to know exactly what you're doing. So that's why I keep selling, if you're going to go down that road, keep the cost as low as humanly possible to be the ROI so you can get into the black faster, you know, $15,000 indie, which could be excellent, it's going to have a lot better chance than $150,000 indie to generate money back because both you and I know how difficult it is to get eyeballs to get people to look at your films. It's it's just an insane it's an insane system. It's like going back in the olden days, like how many I call it I and I've said this publicly and I have many many times. I feel what happened in the metoo movement, which was it was something that was a standard way of doing business in Hollywood like the casting couch. The casting couch was a thing from back in chaplains day everybody Oh yeah, I gotta go on the casting couch. You get that part. All of that right. And me to kind of exploded that situation and all for the better. Of course. I feel that what's happened Two filmmakers over the course of that same time, and even more. So now is a financial kind of raping of because you, you, you, you put up three 400 $500,000 of your own money or your mom's parents or whatever, or investors money. And there's literally just stealing from you stealing it legally, it's insane. So I think you're right, there is an absolute reckoning coming. And I think that the system can't keep going. I think it was easier in the 80s in the 90s. And even in the early 2000s, because the volume was a lot different, the distribution outlets were a lot different. But now because of so much, this, this system can't hold. That's why it stayed like that for what 8090 years. Because it was pretty much locked. But now it's a it's the Wild Wild West. And they can't they can't handle it anymore. They don't even know how to deal with it. So they're trying to go they're trying they're trying to use the horse and buggy on a on a Ferrari no pun intended. And it doesn't you know, the the whip on the lights trying to make the car go with the horse and whip like no dude, that that's car as an engine, it runs on gas, it's not a horse. Do you agree?

Franco Sama 46:09
100% on your say. And you know, the other aspect of this, that's this, it's already rearing its ugly head is on the investor side, you know, with what happened in the stock market just last week, week or two, you know, when they say investors, you know, when they talk about the stock market, in any other, you know, aspect. And so, we essentially are experiencing right now a freeze on investment. But nobody's The last thing somebody wants to do is talk to me right now, this moment about putting up a million dollars. Right? You know, it's getting tougher for you? Well, for everybody, because they're just trying to find a way to protect the money that they have. You know, and, you know, in some ways, it may be a good way to divert the funds and put it into something, you know, that has the potential to really grow. But he but this goes back to what we're talking about the whole time, is that one of the issues we have even with the investors that I deal with on a regular basis, is that these guys hear these horror stories. They know what's going on. And so what happens is you now I now find myself in a position where an investor might say to me, Listen, I'll put up the money for this movie, but I want a distribution deal. upfront, I want you to sign a distribution deal. And my response to that usually is that's a bad idea. Because it is because I understand Mr. investor, that this will give you a sense of security, because you've got this person's brand name attached to your film as a distributor. But let me tell you, as an experienced filmmaker with 24, or whatever films under my belt, I can tell you badly, that we are going to be better off if you just put the money up and let trust us to do our job and make a really great film. And then let us go out there and compete in the marketplace. Let us go to the film festivals, let us have you know, let's get us a bunch of distributors vying for our, for our project, let's not sell our soul to the devil today, just so that you can feel a bit more secure. Because in my opinion, you have a way better chance of not only making your money back but making a much higher upside. If you let us go make a great movie and go out and compete with it. Then if you lock us into some seven or 15 year deal with some schmuck who's never going to move, and we're gonna end up making this great movie and we can't even do anything with it. Because we already sold our soul to the devil. over what over your lack of security.

Alex Ferrari 48:50
Your insecurity?

Franco Sama 48:52
Yeah, doesn't make any sense. That's a conversation I often have to have with investors. And it's a tough conversation to have, because you're literally saying to them, you know, let's let me take the security away from you. And trust me to do what we do. And in the long run, you'll we believe that we'll be better for it. But as a person,

Alex Ferrari 49:13
but it's just a perceived security. It's not really security. It's not like you're signing with Disney or Warner's and they're giving you a massive upfront fee that's covering your budget. That's not the case. You're basically just doing it. You're just signing it up like anybody else in the Navy, if you're lucky, they give you a minimum guarantee of a quarter of the budget. And that's like amazing if they did that. But that's that's not happening. I was I was talking to a filmmaker. I was talking to filmmaker at AFM. And they were telling me like, Hey, you know, I made a movie for 150,000 there. They were from, I think South Africa or Australia as well and one of those two, and it's like we made 100 $150,000 film I'm like, and we got an mg. I'm like, Oh, great. What, you know, who did you sign with? And they told me the company I'm like, okay, that's fine. Um, what what because when I heard mg Mike, who gets it mg in today's world, like, for an independent film, how much do they do? And he's like, Oh, they gave us 30 and go 30. Okay, is that for a certain territory? He goes, No, we gave him worldwide. And I'm like, so you got 30,000 for a product that you paid 50 150,000 for, and you locked up your film for seven years. And he was just so happy that he got 30,000 ago, what other business in the world? Do you spend 150,000 to make 30,000? Like that? Doesn't? It makes no sense. But for, for filmmakers were like happy, right? And he's like, No, no, but my films gonna get out there. I'm like, dude. And I mean, I think he walked away a little deflated. I fixed boats. Like, do you realize what you just did? Like, it may I mean, if you if you're selling off one, right, or one territory for 30,000, and you still can keep going? Great. But you sold this, you sold your soul for 30? grand? Yeah, you're never gonna make your money back. It's insane.

Franco Sama 51:01
And people who have been in this business, as long as you and I have all know that mg is the kiss of death, because you'll never see another Penny, you'll get your, your the amount, you know, maybe, but but I've heard that. Even then, you know, I always tell people, you know, you got to look underneath all of this stuff, right? I have a lot of people send me contracts and agreements to take a look at, right? Because you got to really know how to how to read these things. And I had an mg once was for $400,000 is a long time ago, when they did that was for $400,000. Right. But what I didn't know, was they put in $100,000 of that mg was for producers. Now I was wanting my partner was one. So those 25 and 25. But then they put in 25,000 each for the two of them, which was the two partners at the company, right? So they're paying themselves 50,000 out of the out of the 400,000. So in real life 350 out of the 400. And it's really 300, right? And then the payout was something like $50,000. The first money didn't even hit until the year. So there was nothing upfront. And then it was like in 18 months, you get another 50 and another and then you get 100. And it was the whole thing was the most embarrassing bizarre thing I ever saw saw. And so on one hand, I was excited because I'm getting this $400,000 mg that I can get to that I could maybe go monetize, right, or I could do a lot of things. I could brag about it. But then when I looked at the thing, I literally it's interesting because that deal severed that 10 year relationship. Because what I said to them is, Are you kidding me? The fact that you would even suggest to put this in front of me means that you think I'm a chump. And we've had this relationship for 10 years. And this is such a slap in the face. And you know what their response was? Well, it was just a starting point. You know, we were we were open to negotiating. And I'm like, well go negotiate with somebody else. And I literally just tore up the document I walked away. It was horrible. And we haven't spoken since. Isn't it sad?

Alex Ferrari 53:21
Isn't it amazing? Like I met another filmmaker at AFM this year. And she was offered this is the deal that she was offered. She was offered a 20 year deal. For her thriller from Africa. It was an African thriller. And it was it was a 20 year deal with a $50,000 mg an IMG a $50,000 marketing cap. But wait, which doesn't sound with the 20 years is horrible. But the 50,000 like you know, and it see Okay, fine. I gotta kind of get it. No, no, no, no, it was 50,000 a year. A year for 20. So would have been $2 million in marketing and expenses over the course of the contract. And she even she as an experienced that she knew she was she's like this sounds a bit dodgy. So she went back to this guy. And by the way, this was a sales rep. This wasn't even a distributor, it was a sales rep. And they get a sheet like this. I don't think he's like, okay, okay, okay, Listen, why don't we just do 10 years and a $50,000 total. And he she's like, so basically you were trying to screw me? He's like, yeah, it was it was just a starting. He was a starting point. So they throw out these ridiculous deals. And by the way, that company that we were talking about earlier, the one that that is 50 or 40, or 50. They're infamous for this. I've seen the agreements, they'll they'll toss out 20 year, all the time. That's their standard practice now is 20 years. With 100,000 and then they'll and then I had a filmmaker, go back to them and go look, this sounds like all right. All right, seven. Like, I'm literally, it's like, you're gonna go buy a house and we're like, we need a million dollars. cash. I'm like, this seems a bit much. Okay. Okay. 250. Like, like, what do you? What are you doing? Are you in the car? You guys? Let me go talk to my manager, oh, the manager. And they go drink a cup of coffee and go. I think I got another live one. Yeah, yeah. All right. It's a racket. And now, I wanted to ask you because I know your budget. What did you budget ranges in the films that you work with? Generally? About a million million to three, right? Yeah. 123. Okay, so at that way, but I'm sorry, say that again. That's the sweet spot. Okay, thank you three. So you're, you're you're outside the normal independent filmmaker, because normal indepedent filmmakers in the current economic environment in the current environment and marketplace, in general, are half a million and below, once you start getting above half a million, you really need to know what you're doing is a general as a general statement. So the 123 from my experience, at least for 123, there's a smaller group of people playing in that and that sandbox. So I'm curious how you are generating your revenue? And how are you getting returns for your, for your investors? Because obviously, you've been doing this for a few years. So obviously, you're making some sort of money. So what is what are the revenue streams? And you have to give me numbers, but just curious, like, okay, I do this, I go here, I do that, how do you structure a deal? That makes sense?

Franco Sama 56:37
Well, I actually just in 2020, made a decision to get out of the under million dollar world In the end, because I've been doing it, you know, I've had a couple of these movies that are like, you know, 507 50, whatever. 600. But here's the reality today, and why I no longer do that, and why I stick to the 123. You know, part of it is because of the distribution world. And because the because the demands now are unreasonable. You know, when you talk about who, what, what level actor, these distribution people that sales companies require you to have in your film in order to, you know, even have a slight interest, or for that matter for the investors, because, you know, we run sales projections on every deal before we even think about going out to investors. And that's one of the biggest problems that a lot of filmmakers have is they're all running around trying to cast people and they've never even been running the numbers on people that they're going up against. So don't even get me started on that. But because that's a huge pet peeve of mine, because it doesn't work. And it makes no sense. But aside from that, when you're in that range, one of the things like I have finance partners that will monetize tax credits and, and presale contracts, right? Because those are hard assets, they're collateral. So there's very little risk involved. I mean, that doesn't mean that the state of Utah might go broken, or their film thing might run out of money. I mean, that that's all still possible. But for all intents and purposes, if you have a certificate from a state, you're going to be able to cash in on that and that money is coming in. So an investor feel safe doing that, because it's no, it's No, there's nothing, they're not the equity, they're not the risk taker, and then you win, then what we do is we package that with, let's say, there's a pre sale for 50 $50,000. And I have a tax credit of 200, I can take that whole 250. And I can with through my lending sources, I can lend to the filmmaker, that 250,000 put it in their bank account next to their equity, and now they have most of the money, if not all of it to go ahead and make the film. So that's kind of how that works. The problem is that even though the film itself, the budget of the film, let's say it's 375 might qualify in the state of Massachusetts for a tax 25% tax credit, it doesn't qualify for tax credit funding. Because it's too low, it's too small of an amount. And these guys apparently go do 200 do these, you know, 80,000 90,000 $100,000 loans, it's not worth it for them. So what happens is the criteria now has changed. So now the loan amount has to be 300,000. So if the loan amount is 300,000, your budget, it has to be a million dollars, and now you're qualified to us to be able to monetize that tax credit. And then if you can add a minimum guarantee, you know, or a pre sale to that we can bundle it in lended up lend out the money. So that's one of the reasons being and the other reason is in order to get a pre sale or potential mg based on what I mean if you're making a movie for $350,000, who we are going to Get in that movie that's going to justify a warrant any kind of an mg, you're not nobody. So so it just doesn't make the grade, when you get into that 1.5 2.5 range, you find yourself in a little bit better position where a, you do qualify for tax credit funding. And you might have a shot at being able to get a pre sale, or something in addition to that, that you can bundle up and input it.

Alex Ferrari 1:00:32
We'll be right back after a word from our sponsor. And now back to the show.

Franco Sama 1:00:43
And then, so that's the goal is to try to patch it that way, what I've been working on for the last year and a half. And I continue to and I hope to have done by the end of this year. And I think you know this because I think we've talked about it privately, but I'm working on putting together these phone funds, two of them, that will alleviate all of these problems by being able to advance 100% of the budget upfront for the spouse. So somebody brings in a project that gets approved through our fund. And it's $2 million, we're just going to write the check, and go make the movie and not deal with this nonsense of jumped through hoops, and figuring out textures. Now, we'll still go to want to go to a tax credit environment and and recoup that, that 25 or 30% for ourselves as the fund as part of our recruitment. But we're not required to, which means that if I want to shoot in a state, or wherever, that doesn't happen to have a tax credit, I'm not prohibited anymore, by the numbers, I can go, I got the whole money. The other benefit to that is you have the proof of funds upfront 100% of your budget. So when you are making those offers to those actors, you're now negotiating from a position of strength by saying here's my proof of funds, I have $2.5 million in the account. And here's my offer for 250. And even then I'm going to be in a position to be able to write a check for 10% of that 25,000 as a down payment towards that offer. So it elevates me and puts me in a place where I can start making stronger offers to better, you know, bigger names, which will yield, you know, better returns. And so that's why I brought everything up into that into that space. And it's a great space to be in, in terms of, for me, at least in my resources. Once you break 5 million, and you go up into the eight or 10 it comes a little bit of a black hole. And then from 10 million up. It's another whole ballgame. You know,

Alex Ferrari 1:02:37
now you spoke about pre sales. And I know that back in the day pre sales was a way to finance your whole film. Honestly, there was you know, you could literally go to all the markets pre sell all your moving. You had your budget, essentially, how is it in today's world? And I can only imagine what it's going to be like in the next four or five months, but or the rest of this year for that matter. But historically, within the like, let's say the last year, where are you getting these pre sales? Are they foreign pre sales? Are they like you? Are you carving out rights? Yeah, yeah, it's it's it's individual territories? And that's relationship that you just have?

Franco Sama 1:03:17
Yes. Yes, it's in its in its individual territories. I mean, you can go to a sales company and have them do it. But then we just said you're locked in. Right? So but there are lots of people, you know, when you're going around as long as I have that you can pick up the phone and say, Hey, Latin America, I need a sale. Here's my film. Can you get me something? Let Mary Yeah, I can get you 125k All right, I'll take it you know, because it because if you're right, in the old days, you could go theoretically, and just make your whole movie by selling off your pre sales but but at the same time, you really don't want to sell off your pre sales because it limits your your ability to earn revenue, right? Yep, sounds you make that sale. Right? It's gone. So now you're, you know, they can go exploit that phone territory, but you get nothing you get nothing out of that because you you cashed out. So you want to be strategic about you know, how where you sell those territory. So I'll get projects A lot of times, well, they want they're looking for funding, but they'll say okay, but five territories are already spoken for. And to me, that's a negative on my side, because that's five less territories I can I can work with revenue wise, but on the other side, it's very good thing because that indicates to me Well, if this if I've had territories have already purchased this thing, it must be good.

Alex Ferrari 1:04:40
So obviously has Eric Rob as Eric Roberts and Michael Madsen in it obviously so they have both that's an inside joke guys, everybody, Eric Roberts did how many movies last year 3535 movies. And I haven't done one with Eric but I've done my Michael so that's another so it was it was funny I joke about that because when I was doing posts there was a year I did three Eric Robert movies in one year I did all the posts on three Eric Robert movies and I was like, and my poor producer who spent like a lot of money to get Eric Robertson's movie was that was that was the anchor. He would go to distribution company. They're like, no, we're good. We've got three of Eric Roberts movies this year. We don't need a year. Another one. It was the diluted the market. Well,

Franco Sama 1:05:28
it's true. That's exactly what it is. It's a saturation it they get to a saturation point. And that did happen with Michael. But Michael is fine. He still makes us money.

Alex Ferrari 1:05:37
Yeah, he doesn't put 13 a movie every few years. And that brings it back up.

Franco Sama 1:05:42
Yeah, they're all gonna be fun. I mean, they're all fine. But it's true. There. There is a saturation point. And then the other thing I'd like to tell people too, because a lot of people don't understand this. And I think it's really important to understand, you know, people when people are pitching me these actors, you know, first of all, I have what I have this thing called a parenthese rule, the Privacy Rule. All right, now remember, I'm talking about international, so I'm not talking about domestic, right? Like the movie I did. Guns, girls and gambling. We had Christian Slater and Gary Oldman, right. So Christian Slater is a great domestic play. He's a great name, the United States and Canada, North America. But Gary Oldman is an international value name. Christian is not an international value name. So in a perfect world, you want both you want an actor that's going to pull your domestic audience, and then you want an actor that's going to give the buyer in Germany and UK and China a reason to want to buy your property or your rights, right, because Gary Oldman things is on the cover. Right? So that's the the kind of balancing act. But so the parenthese rule is, when people say to me and happens literally every single day of my life, they're pitching me something and they go, Oh, yeah, we got, you know, so and so. From such and such a movie, or from this TV show, she's on The CW right? She's

Alex Ferrari 1:07:02
rich, she's really hot right now. She's really hot.

Franco Sama 1:07:05
Yes. Okay, that's what I'm getting at. Right? So that may be well, true. But first of all the prints the test means if you can walk out this middle of the street, and just pull a random person and ask, give them that person's name, and have them know who they are, then they cut. It's great. If you can't, they can't they don't cut. So if I pull somebody up the street, and I go, Cameron Diaz, they go Yeah, love her.

Alex Ferrari 1:07:33
Right. Nicolas Cage, yes, again.

Franco Sama 1:07:36
Love them. Yeah, got it. But then you go, you know, Alex Ferrari, they're like, Who?

Alex Ferrari 1:07:42
First of all, I'm insulted. Sir. Secondly, I'm, I'm I am huge in Zimbabwe. I'm just saying, I'm you I can't walk the streets in Zimbabwe.

Franco Sama 1:07:53
That's like me in Japan, Japan, but but the thing I want to say about the point you made is the up and comers, right? It may be really true that they literally are on that skyrocketing trajectory. But even at close to the top of that, it takes about three years for that to translate into value on the open market takes three years. So somebody could out in this big huge movie, that's a blockbuster and everybody's crazy over them. And now they're getting parts from every single direction, and they want every movie that you go to see. But that doesn't give them that level of value in the international market, yet they have to earn that because you know, a lot of these people rise and fall.

Alex Ferrari 1:08:46
Oh, right. Oh, and in today's world,

Franco Sama 1:08:49
they do, they catapult up to a certain level, and then they just drop up, you never hear from them again. So that's not necessarily an investor, what investment you're looking for people who are going to be able to sustain that well beyond their rise period, you know, and maintain that name and face recognition. Those are the people that have value. And for that reason, it changes every year. And that's the reason why I tell these filmmakers one during through our program through the development program, we spent a lot of time researching, and figuring out making lists of actors that make sense for a given movie. Now that list down to five names for each with a casting director, and then bring that into the sales team, including the director By the way, so it could be the male lead the female lead, and then the director, we take all of that and sort of crunch the numbers with sales to figure out what kind of projections we can anticipate based on these people. And what combination of those people gives us the best numbers in the world. And then once I'm armed with those numbers, And my rule of thumb is they give you three columns, right, the low, the middle, and the hot, my rule of thumb is your low should be two times budget, one and a half to two times budget. So if you're making a movie, like I do at 2 million bucks, you want your low estimate to be at least three, between three and four, and you need the name power in order to get to that number. But now you have a strategy, because it when you do that, now you got a plan, these are the five actors, I got to go get one of these five actors. And if I don't, I, my investor can take his money back. Because I'm going to take the investment contingent upon me being able to deliver on my end, right, but I have to know what I'm delivering. So instead of just running around, talking about, oh, I want someone to be in my movie, that there's a science to this. It's not perfect. But at least it's a strategy that helps us determine, I tells filmmakers all the time. If you haven't done this work, if you don't know exactly what your budget is, and you don't know what your sales projections are, and you don't have a strategy around your cast, you do not have the right to be talking to investors, you shouldn't be doing it. If you're going out too soon, you're out there, having conversations with people with money, that you shouldn't be happening, because you're not prepared to have this conversation because you don't have the information that's required for them to be able to make a rational sound decision of whether or not you're a good investment.

Alex Ferrari 1:11:27
Now, frankly, it's your job. You're you sound very logical here, you sound like you're making sense. But I'm gonna I'm gonna play the devil's advocate here. I'm an artist, man, I am an artist, I, I just want to make a film with this actor. And I can't do it for less than 3 million, because my vision depends on $3 million. And I'm not going to worry about how to make money with the film. That's your job, not mine, as as a director and as the creative muse of this project. I don't want to get locked down with, you know, what actors are worth and what they're not worth internationally. I want the best person for the part now, but I also want the best person for the part in my opinion, who by the way, I've never made a movie before. So it that I've never made a feature, but I've seen it on TV. So it doesn't look that difficult. So I've seen a lot of behind the scenes, I could I could do what they do. I mean, it's not that hard. If there's green screen, I it's fine. So. So look I'm making I'm making a jest of this. But this conversation I'm sure you've had multiple times. I've been on the other side of this conversation earlier in my career, when I would do something I was that's that naive, let's not say that naive, that egocentric. And what I always tell people is like, Look, if you want to play in a very large sandbox, there are different rules and a larger sandbox. So like my last movie I did for the thau, a few 1000 bucks, which you saw that sandbox I have all I know you said you love that Thank you, thank you so much. I know you love the that sandbox, I can do what ever I want cast to ever I want to whatever story I want not worry about international sales, not worry about my cast, I could cast whoever I want. Because the VAT the cost is very low. It's kind of like building a shed in the back, or $10 million mansion. You could do whatever you want with that shit, that's going to cost you five grand of your own money. But when you're asking for 10 million to build that mansion, that by the way, you've never built a mansion before. It doesn't work. Is that a fair assessment?

Franco Sama 1:13:48
Yeah, well, that's exactly and you're right. I hear that all the time. And, you know, you're right Is it is it is is a vast difference? Because the question becomes at that point, well, what's at stake in your, in your scenario with your 3000 $5,000 film, that's what's at stake, right? That's, that's your world, that's you want to grieve that world. And as a filmmaker, I encourage people to do that, because that's when you learn how to do all of this, right? Because the process that you'd have to wait that you went through for a $5,000 film is no different than the $5 million, we're still gonna go through the same process. The difference is that the stakes are higher. Right. And now, in your scenario, a you're the only person person that you're accountable to, or the few people that might have helped you, financially to get to them. In my world, you got investors who are going to be breathing down your back, and they're not only going to be breathing down your back, but you know, you if you if you mess up on a two or $3,000 film, you can recover from that and go make another $5,000 film and then 10,000 if you mess up, especially if it's your first one, if you miss up on a two and a half million dollar film and you can only recover $250,000

Alex Ferrari 1:15:00
You're not making that mansion, you're in

Franco Sama 1:15:02
your deep, deep trouble number one and number two. Now, what inevitably happens is that same filmmaker Gets a bright vision for the next film. And they're, they want to go embark on getting number two done, right. And they, and they're so buried in number one, that there are a million and a half dollars behind. Right. And then on top of it, you got the whole distribution thing that happens on top of that, so. So where I'm coming from is this is what I tell people, there's sort of two paths you can take, when it comes to this business. There's what I call the pitching, sell. And then there's the DIY, right? The pitch and sell. I know writers that are great writers that just want to write it just want to write, write, write, write, write, and they write really well. And they're out asking people like me, hey, do you want to buy my script? Right? No, I don't want to buy your script. Because I don't, I don't buy scripts, I make movies. Like there's a difference, right? So if but there are people who do buy scripts, and you can make a living, and I know lots of folks are doing probably due to that make a living writing scripts for other people to go knock yourself up. And once that check clears, they're good, they don't care what happens to that project. And they'll because they got 10 more behind it, or 20 more behind it. So that's one avenue, the world that I live in, is to produce your own material, and maintain both the creative control over it, because you'll lose that the heartbeat. Otherwise, maintain the creative control and maintain the financial control so that you're the rights holder, to your story, you wrote it, you own it, and it stays that way, throughout the whole thing. So you can have the reap the benefits. If you go down that route, there's a whole nother set of responsibility. It's like going from the minor leagues into the Olympics, the training is different. You know, yeah, yeah, you have, the training is different. You can't, you can't, you can't mix one up with the other. So if you're going to go play softball with your friends, it's one thing if you're going to go try out for the Olympic team, that's a whole different way of operating. So and that's what happens is a lot of people get stuck in the transition. You know, I've got a lot of filmmakers that come to me, and they've made a couple of short films, right? When they, you know, they, they paid 2000 bucks. And, you know, they they did a great job. And they're winning awards. And it's great. I love that, because I think that shows a lot of character, right? The same time, I know people who come to me and they've made 12 shorts, and I'm like, stop making shorts, like, like we get it. Like, with all of the time and energy and money that you're putting into all of these shorts, you can be making a feature that you can sell. But But my my point is that there's a mentality around that experience, especially if it's their first time on set. And now all their friends are there and they get to boss everybody around and they get to be the big boss and the Big Cheese, and they sit in their director chair. And, you know, they're

Alex Ferrari 1:18:07
playing the part, right playing the part to play the part

Franco Sama 1:18:11
they walk away from, but then they think that when they go to a movie for 2 million bucks, it's going to be the same thing except bigger. And it's not the same. Same thing, and no, you can't bring your buddy out of film school to be your dp. Do you know what I mean? No. Or to do your budget? No, at that level, when you're talking about millions of dollars, you have to build a team. And when I tell these guys is when you made that short film, you probably didn't do it alone, right? You brought in a dp and a first ad and a script supervisor or whatever you had to bring in, you needed to build an infrastructure around you so that you could direct that film. Well, in my world, I do the exact same thing, except we do it in the business. And I surround people with the people that they need to build their business team so that they can go out and properly the keyword raise the funding to be able to make the movie that they envision and then we go out and put together the team of professionals that are going to support and surround them so that they that they can make the best movie possible that we all have the same stake and because we want to see it get distributed and sold and return investment because if you can do that, especially on their first film, if that should be the goal. The goal shouldn't be to win the Oscar on the first round although that would be lovely. The goal shouldn't be to Sundance box office right

Alex Ferrari 1:19:39
Sundance can South by Southwest yes yes.

Franco Sama 1:19:41
I have people say actually say to me Well, I'm gonna I'm gonna I'm gonna bring it to Sundance like they're gonna walk in and Sundance is gonna go come on in here. This is a screen open right there. I just go shoot it right up there. Hold on. Let me go get a couple of people to watch this video. Would you

Alex Ferrari 1:19:54
like some popcorn sir? Would you like some popcorn and we can massage your feet while you watch it sir. Is that is that yeah, that's not the way it works. You're trying to basically you're just mitigating risk, you're mitigating risk, because the higher the number goes the budget, the more risk you have at that thing, and the studio's do it all the time. That's why now it's just reboot after IP after, you know, established properties, because they don't, at $200 million, you can't risk. It's very difficult, like avatar was the last time I saw a studio take a $500 million risk on a new IP, but it was James Cameron, and he could do it. That's why they're, that's why it's always reboot, reboot, reboot IP, ip ip, because they can't, they can't risk that much.

Franco Sama 1:20:36
And even then, about I don't know when this happened, but I remember it's good. It probably been a good 10 years now. There was a time when there was never any such thing as seeing two Studios on one film, right? Everybody was competing for universal web. Now you see them working together. But for that reason, because if they're going to if they're going to work on $150 million project, why don't we put up 75 million each and share the risk and utilize our resources, instead of fighting with each other one, we join each other and make this thing a huge hit, you know, and that's what's been happening now is that they're they they've started to smarten up and

Alex Ferrari 1:21:19
azeema. And then there's, and then there's cats. Which I can't wait to see it. I'm dying. But I mean, I am dying to see only if it's inside, sir, because obviously we're not allowed out anymore. But no, but I keep telling this to people, I've never seen it. I don't want to bash anybody. But I mean, it's when you have a once in a generation, it's a once in a generation situation where you have 100 million plus studio film that fails at such a just a Goliath of a failure. It doesn't happen. And on paper, that movie had everything going for it. It was a it was an IP that world renowned, the best how multiple Oscar winners. And the behind the scenes is the director, the writers, the actors, this the visual effect, it had every thing going for it. And it obviously was a colossal failure in many, many ways, was like the

Franco Sama 1:22:27
opposite of the producers. But it was the opposite. But it's interesting, because it brings up a really important point that I that I've talked about for 10 years now, I have a I have a phrase that I use, I say to filmmakers, when they come to me, they have a lot of expectations, right. And that's understandable. But there's a reality to all of this too. So because it costs a lot of money to do this, you know, this is this, nobody's working for free here, this is a business. So there's a lot of money at stake, there's a lot of hard at stake, a lot of stress. But at the end of the day for people who are willing to go through the process and develop a film properly and figure all that stuff out in, in my world, I'll help them I'll take them by the hand and carry them through that process, which is an arduous process, especially if they've never done it before. But I say to them, you can do everything, right, like literally everything right from day one, you have a beautiful script, that's like top shelf script, you can go out there and make a shoot a gorgeous film, beautiful, you can go into the editing room. And you know, because you could lose everything right there, the whole thing could fall apart. But assuming that assuming that you don't, and then you come out on the other side, and you've got a beautiful piece of art to be able to display. What I tell people is no matter what we do together as a team, or whoever's involved. At the end of the day, there's only one thing that's going to ultimately determine the success or the failure of your film. And it's the film. No, stop.

Alex Ferrari 1:24:01
It's no, it's everything else. But the story is

Franco Sama 1:24:06
not the writer. It's not the acting. It's not the sound. It's not the lighting, it's not the music, it's all of it. And that catch is such a perfect example. You know, because anyone in their right mind who might have been given an opportunity to invest in that movie would have been crazy not to do it.

Alex Ferrari 1:24:23
Of course, like I said on paper. It's perfect. Yeah.

Franco Sama 1:24:29
But but that's why that's why it's such a great example of what I'm saying is because it was perfect until it wasn't. And now people are you know, hurting from that. I mean experience

Alex Ferrari 1:24:42
that's, but the thing was, so if we analyze cats for a second, that's the beat. Let's beat up cats a little bit more because God knows it hasn't been beat up enough. There was a risk involved that no one took into consideration and this is the best minds in Hollywood, Oscar winning minds as well as the best I miss universe. There's no slouch. As far as making movies is concerned. No one. No one, everyone has underestimated the risk of the CG. Everyone assumed that the visual effects were going to be solid because they had a great company doing it. But no one took in consideration pushing the visual effects artists to fast and unrealistic deadlines, constant revisions, no one took all of that into consideration. Because that director who is a fantastic filmmaker, from my experience did not have he's not a CG guy. He's not James Cameron, he's not David Fincher, he's not someone who understands that world and understands timelines as though he was, you know, he did the King's speech and, you know, more, you know, those kind of films. So I think that was no one took that in consideration. And it just felt because I talked, I saw the talk the actress, I saw the actors afterwards, you're just like, we were on a set in green screen. Like, we had no idea we were going to look like that. Like, we were good. I worked 10 days, I had a ball. It was fantastic. You know, you got it. But no one under no one ever did the test to go, hey, maybe these guys look creepy. I've said this. I've said it's the best review ever of cats. And I'm gonna say it again, because I've said it on the show before but I can't stop saying it. The cats is the worst thing to happen to cats and dogs.

Franco Sama 1:26:27
Oh, that's funny. That's good. That's good. And it's probably true. Oh, God.

Alex Ferrari 1:26:34
All right. So let's, let's get off the couch for a second. Now, I wanted to ask you a couple more questions if you have some time. So because I know you're a busy man. We we've talked a little bit off air about this, and I just did a podcast recently about this where there is not only is there a lot of predatory people and scam artists in the distribution space and in the sales rep space. But there is oddly enough in the film financing space, which is a space you live in. And now with the episode and I'll put it in the show notes, which was about the minimum guarantee scam, where now you go, you know, to someone who's pretending to be someone like yourself, and says, Hey, we will package the movie for you, we will get an mg a minimum guarantee from x or these distributors who we have all the connections for all we need is 40 to 60,000, maybe 80,000 upfront to do this work for you. And I just got off the phone with a poor filmmaker who got and it was like a million plus film, dollar film and he got screwed for 40 or $50,000 out of this one of these companies. And I wanted to just throw it at you to say what can filmmakers look out for? Because, I mean, obviously you and I would smell that coming from a mile away. But a lot of young filmmakers or even people who are just not familiar of this side of the business, what can they look out for? What are some some signs that we can kind of protect yourself from these, these these predators?

Franco Sama 1:28:03
Well, you know, because I've been doing this for 20 plus years, I have to say, I've become very jaded around all of that. Because I am at the point where I literally don't believe a word anybody says to me a great

Alex Ferrari 1:28:22
until, until the check clears until the check clears.

Franco Sama 1:28:27
That's the baseline. The baseline is when they say to me, I'm working on this film, and I got it's a million dollar budget. And I have 300,000. I'm thinking No, you know. So let's start there.

Alex Ferrari 1:28:41
Let's prove to me that you have the 300,000.

Franco Sama 1:28:45
Yeah. And even then they scam you because that I was telling somebody the other day that I had a guy that needed $750,000. And we were looking for proof of funds. And what he did was he's delivered me a a redacted like a like a Charles Schwab type of investment account. certificate. Sure. And it was real. It was real. And it had but it had the name in the social security number and all that redacted. So you couldn't see that. But I could see the balance of something like $6 million in there. And he and this was a long time ago. This is years ago. And he said, See, this is my guy, he's got $6 million, so 750 might be a problem. So I went with it. I haven't run around town tell anybody I had $750,000 in the movie, only come to find out that although the proof of funds, paperwork was legit. There was just a friend of his that did him a favor and gave him a piece of paper to use. The guy had no intention of putting any money in the movie. There was nothing connecting the money that I could see to the film that we were trying to put together. So they're the we used to have the phrase prove the money And I've had to change that now to move the money

Alex Ferrari 1:30:04
Into an account that we all agree on. Yeah. We'll be right back after a word from our sponsor. And now back to the show.

Franco Sama 1:30:21
We'll establish the account you put the money in. And unfortunately, it's come to that. Because if they're not willing to actually move funds

Alex Ferrari 1:30:31
Into an escrow account, by the way, that's an escrow account. That's not like a personal account for you. It's an escrow account.

Franco Sama 1:30:36
Place to tuck Did anybody can touch it? Right, but just to the physical moving movement of the foot of the funds, now we have a basis for a conversation. Even then, that's all it is. Right? Because they can take it back out. But at least if it's there, now I have a basis for a conversation to engage. So you know, what I tell in this kind of ties into your your hypothetical scenario about the filmmaker, you know, that was making the first movie is that really, what I did at the beginning was I got on IMDB Pro, back then this was 20 years ago. And I found a filmmaker event randomly, who I believed sort of when somebody who I felt like I looked at a couple of them. But I started taking people out to lunch, I started meeting people on the phone. Now I was in a unique position because I had investors. But I didn't have any projects. I didn't even know what that meant. I didn't even know what the requirements were, I didn't know any of that. So I went out, I found this executive producer, who my deal was, I will bring my investors to you. In exchange, I want to be a part of this, of all of this, I want to learn. Yeah, I want to learn, I want I want, I want money, I want to credit, I want to build something. So I wasn't in a unique situation. But it worked. Because by being in those rooms and listening to those meetings, and actively participating in all of these conversations, I got to a point where after a while, I thought I got this, you know, I can do this now on my own, I feel competent enough and being able to do all that. And I had watched her make her own mistakes. So I knew what not to do in a lot of cases. So I think today, you know, it's hard to do, I'm not suggesting for a moment, it's easy, but I am saying it because it happens, because I'm on the receiving side of that now. So a lot of the times I'll get these random emails and stuff, especially like on LinkedIn. People say, I'm looking for an executive producer. So for me, executive producer is code for money. So when somebody says to me, I'm looking for an executive producer, my response is how much you know, I'm looking for an executive producer, how much do you need, because that you know, who you kidding. But but at the same time, you know, being able to partner or be mentored by or find some way of getting to be around the people who are doing it and are doing it well, and who are trustworthy, you know, and have who have good names and reputations in the industry is really a good way to get started. Because you know, you were joking. But the truth is, most of these people that I meet, they are on the creative side, and they don't want to do this stuff. They don't want to learn this stuff, but they don't want. And, and those people aren't the ones I'm interested in, you know, I because I don't want to work with them either. You know, I want to work with people who want to work hard figure this thing out and do it and do it the right way. And I want to is more of a collaboration at that point. You know. So that's, that's really what you have to do. And because if you have a foundation like that, when that guy comes and shows up, and says, Hey, give me 50k. And this is what I'll do for you. You have two or three point people like me, and you know, that have that kind of experience to be able to pick up the phone or shoot an email and go, Hey, you know, and I got probably 10 of those people out there in the world that I have a policy with, if you have a problem, if you have an issue if you just want me to look over an agreement or something I'm having to take a look at in order to protect those filmmakers, and I'll tell you, but they have to build that relationship with those people. One of my biggest pet peeves is when somebody just shoots me an email with a pitch package.

Alex Ferrari 1:34:49
I get them I get them and I'm not a financier. How does that work? Do your homework.

Franco Sama 1:34:55
I got I mostly got two or three of them today. Right now. There's no introduction, there's no nice to get to know you. There's no Hey, blah, blah, blah. They just literally send you this long email. And then, uh, and then five attachments with their script, and their pitch deck, and all of this. And I'm like, Hello. Nice to meet you. Like, what happened to a report? What happened to earning?

Alex Ferrari 1:35:26
I'm not a piece of one. I'm not a piece of meat, sir. I have a heart. I have a soul try to get to know me, Franco.

Franco Sama 1:35:35
It's true. It's like it's it's etiquette. It's courtesy. It's professional with diplomatic. It's like, because because that's what I'm attracted to. Right. I'm attracted to commitment. People who make commitment, you know, people who are willing to go all in and make commitment. And there's a lot of people who say that, that they're all they make commitment, but they're not really there. And I'm, I'm interested in people who are willing to go all in and make commitment. But I'm also interested only in people. Look, I say this all the time. I always say this is great projects. And shitty people pardon my French. Right? And then there's shitty projects and great people. Yes, is great projects and great people. I want the great projects with the great people, because even if they're shitty projects, but they're great people, we can go find another project, it's not so shitty, and we can still work together. Right? But people is the problem, then I'm out. And anybody who feels that it's okay to bombard anybody's email yours or mine with just puking out all this information without at least making the effort to establish some kind of rapport is out in my book, ie they might have a great project, and I might pass it out might be the next big thing. And I lost. But you know what I would have, it would have been a nightmare. And I'm not interested in that.

Alex Ferrari 1:37:15
And I've been saying this for years as well, if filmmakers do not understand, look, I'll go back. The problem, I feel that a lot of filmmakers in general have it is not their fault. They have been taught this old system from film schools and by Hollywood, that you got to do this, this, this and this to get your movie made. And you don't have to worry about the business will take care of it for you. And but that's what that's that's the message that's been sent out at film schools and sportsmen sent out in the industry. Why? Because it benefits the industry, it's that's how the business works. That's Hollywood accounting, they don't want you to know too much about what goes on behind. They don't want you to know how the sausage is made. They don't want you in the room where the decisions are made. If I may go Hamilton, they don't want any of that. Because once you are informed, you become harder to deal with, because now they can't scam you. So I think any filmmaker in today's world that does not understand the entire process, even at a rudimentary level, you know, understand what the DP is doing. And also understand what the distributor is doing. At a simplistic level you are do you're going to get taken advantage of in one way, shape or form from somewhere. So you need to understand the entire ecosystem, the entire process as much as possible. Look what you did. When you were first starting out, you're like I want to learn I want to learn everything I want to know about everything. You know, I'm not going to hire you to dp my film. I know that, but you but you know what a good dp is. And you know, when a good dp is trying to pull one on you because they want something cool for their real. And they're not making their hours and they're not making their pages because I need to get this one shot. That's nice. But we need to move it along.

Franco Sama 1:38:49
Yeah. Am I right? Yeah. Yeah, you're 100%. Right. And you know, one of the things I'm often quoted as saying is that film school teaches you how to make a movie, but who's going to teach you how to get a movie made? So those are two different things. And it is my opinion, based on experience that film schools literally, like you just alluded to, they don't want you to know the stuff that I teach people, because they're gonna scare these guys away. They're gonna scare them away. So what happens is these these people go out and spend 30 4050, whatever. $1,000 on film school, a year a year. Yeah. Yeah. So I'm not taking that away in terms of the value from an artistic, creative perspective. But then they come, they get and they graduate, then they come knocking on my door. And they're like, Dude, what do I do? Like, I don't even know step one. I don't even know where to start. And so that's actually one of the reasons why I initially I started why created the development program is because it occurred to me that these are really talented people. They have just spent all this money and they don't even know Step one, they need to be educated, somebody has to pick up with film school left off and say, Look, let me show you how this works. Let me at least explain you said the basics. Let me at least explain it to you. So that you understand the concepts of the basic concepts of financing, equity, debt, tax, credit, financing, distribution, casting, every element legal pose, really post production levels, budgeting, scheduling, all of the stuff that that they just don't have, they don't they don't see it in relationship that leads to actually going out and raising money and putting funds together. So I think it's a big void. It's been great for me in the sense that, you know, I've been able to build a whole branch of my, my company, on based on educating people, they fit into that category, and they love it. They love it. And but that's the point. If they don't love it. I don't want them there.

Alex Ferrari 1:41:08
No, no, absolutely. Well, because look, it's

Franco Sama 1:41:10
at recourse, I want them to be excited, I have this one couple I talked to you know, I do this on Skype, because most people don't live. And it literally every Monday, we can't, we can't wait to sit in front of our computers and talk to each other. Because we just know that for an hour and a half, we're gonna have a lot of fun, while they're learning how to do this. And they're so excited and animated. And it just gives me such a joy to be able to work with them. And that's what the people want to invest my time and energy into.

Alex Ferrari 1:41:40
Right? No question and but the thing is, and that's where a lot of filmmakers get caught up in is I've said there's a lot of times, Hollywood is really good at selling the sizzle, not so much the steak, but the sizzle, man, they're the best in the world at the sizzle. And film schools, you know, they sell the sexy part of this process. It's this it's sexy to to work with the actor to work with the actors to look play with the camera and the lenses and, and editing and all that it's really sexy to kind of be the creative part. But when you're done with that product, it's like it's really sexy to bake. Like, you know, like all those baking shows like, Oh, look at these cool things I'm making. It's all great. They're like this cake that, you know, explodes and does all this. It's fantastic. Now how are you going to make a business out of that product? Yeah. And that's the thing that nobody nobody talks about. Because that's not the sexy part. I love that part. I think it is the sexy parts. It's more exciting. It's actually one of the most exciting part marketing and the business side is excites me a lot. You know, being a film intrapreneur so I really love I love that part of it. But most filmmakers just want to sit back, go to the red carpet, sign the autographs, hang out with the actors and and play the role and play the role but then play the role at a $3,000 budget don't play the role on a $3 million budget.

Franco Sama 1:43:02
Your own money. Yeah, don't come. Don't come to us. Yeah, and I do I feel that same way like so because I am that like, I love that. I love it. I love to develop a process. I love watching people like go on and go oh my god, that's such great information. I feel so good. Because what happens is by the time we finish what my my job with first and second time filmmakers, yes, education, but empowerment. Like, I want them to be able to go out into that world and have those meetings and sitting around those people, and really have a good solid foundation and a confidence about them and err confidence above them that they can sit down. And if they happen to meet somebody on a subway or a restaurant, that's and they spark up a conversation about they're making a movie and the guy happened to a woman happens to be an investor and they're curious. I want them to be able to sit there and hold their own and have a conversation. They may get to a point where they go, you know what I better shut my mouth and have Franco talk to these people. Because I don't want to say the wrong thing. But they but they want them to be able to be empowered to be able to be confident enough to be able to initiate because when you're talking to investors, people, it's a different language. And this is what I tell people. People say to me all the time, what's the number one thing that will make us do well, when it comes to raising money? And I always say and I've said it, you've heard me say it a million times. They go out too soon. They're not ready. They're not prepared. They're not in a position to be talking about that. And part of the reason is because they're pitching story to money, people. It doesn't compete. Yeah, pitching story, stories. Critical. It's important. But an investor doesn't know what you're talking about goes right over their head, and they're gonna walk away and go what a frickin nutjob that guy asked me for $2 million. And I got nothing. I got a story,

Alex Ferrari 1:44:54
isn't it an equivalent of me going to the bank and going I want a small business loan and I'm gonna put up a bakery. And all I talk about is the ingredients, the the fond on the how it's layered how many you know, the cupcakes and how beautiful that that's all I talk about is the product. I have no understanding about how I'm gonna make money with this. But that's the equivalent. It's the equivalent you can't talk store your creative to business people, it doesn't work that way.

Franco Sama 1:45:20
And in what, in what other business in the world? Is that? Okay? Why is it okay for us? Like, that's the part that bothers me. You know, I think I might have told you this before, but a guy come up to me after one of my one of my seminars. And he says to me, I'm so frustrated. He says, I've had five investors, I pitched my movie to five investors, and every one of them shut me down. He says, What am I doing wrong? And the first thing I said was, you had five investors Really? Because No, you didn't. You might have had one or maybe two, but you didn't have five. So let's start there. All right, cuz there's a lot of this going on out there. And three of those a PS. Alright, so I didn't have fun that you feel any better. You didn't lose. Then, but if you even had one, like I said, What are you saying? Like, what if five people walked away and said, No, what are you saying? Because maybe something you saying is making them say no. And I said, Give me your elevator pitch. You pitch the story. It sounds great. Now what? Usually Well, that's it. And I'm like, That's it? Like, that's alright. Yeah. And how much you need 2.5 million. Really? Okay, that's cool. Um, so you have, you know, I just think you should do me a favor. And I love playing this. I said, Do me a favor. I gave my business card. I said, Can you email me? He goes, Yeah, yeah. I said, No, no, no, no, your script, I don't want you to script. I said, I want you to eat me your budget, the $2.5 million budget, and the guy's face just draw. And I said, What's the matter? He says, Oh, I don't have a budget. I said, You're already spoken to five investors, asking for two and a half million dollars. And you know, you don't even have you don't even know if it actually is 2 billion, like the divorce

Alex Ferrari 1:47:14
Or schedule, or schedule or caste,

Franco Sama 1:47:18
Or, or proposal or anything. He's literally pitching story to money people, and it doesn't compute, it's a disconnect. So what I do is I spend time educating people on how to speak to investors, not just where to find them, how to find them, and what to do with them. But what what to say to them, or more importantly, what not to say to them. And that way, whether I'm in the room or not, because more often than not, I'm not, I am to help support them. They can keep up like they're in it. They're not sitting all in the corner going I hope Franco closes this guy. You know what I mean? They're like, this is my movie, man. And I'm here to sell it, you know, and I'm empowered. Because I know, I'm ready. Hit me with the questions. I've got the answers. And if I don't, this guy will help me. That's what you want to do. And that's why I'm saying partner partner with, you know, with people who do have that base of experience, and don't try to go along.

Alex Ferrari 1:48:14
I know this has been an epic conversation so far. And I know we could talk for another three or four hours. But I do want to ask you one last question, because I think it's very important that we talk about this. What are your thoughts? What are your thoughts on the changing world of the film market? Because you and I have gone to AFM many times, I know you go to Cannes and all the many other film markets this year alone, I think it's going to be very interesting. They already zipties already got canceled. I can't I don't see how can is going to be able to go which is insane to say out loud. But I know Berlin just is it just happened or is finishing happening or something. But I heard I've heard through reports that was pretty empty. And the Chinese Chinese market the guys were not there. So where do you see before the Coronavirus showed up? It was already starting to go It was starting to the world has changed. How do you feel that these filled markets are are going to what place? Do you see these film markets going because it is built on a time of the 70s 80s 90s and early 2000s. That's when the markets really were kind of in their prime, where now there's so many other options. I'm just curious on what part they are going to play in this new ecosystem that we're moving forward with. I think they still have a place in the in the ecosystem. And there's things you can do in a market you just can't do anywhere else. But I'd love to hear it. I'd love to hear your point of view.

Franco Sama 1:49:44
Yeah, it's because just like in any other industry face to face, you know, is the is the best, most

Alex Ferrari 1:49:51
mask mask, the mask mask, the mask mask.

Franco Sama 1:49:55
It's definitely the most productive way to conduct business, right and so That's what the hype is around all of the markets, right? Because it's exciting. You get to travel around the world, you get to meet people, a lot of times you're meeting people that you see year after year. So you reconnecting with people. That's one of the things that I love about about the market, particularly FM, because it's right here. And but I think that there's, I think that there's been a lot of this stems from the first conversation we had about the purge that's about to take place around distribution, because that's what the markets are for. Right. It's buying and selling and, and, and promoting film. And so if the, if the core of that is unstable, which it is, which is what I think the purge is going to at least address, I don't know, if it's going to necessarily rectify it, then that foundation is shaken. And then you add the Coronavirus thing on top of it, where people are going to just be gone, nobody's going to show up. And I think that that's all going to contribute, I think it's going to go way bigger than just distributors having sales, people having to wake up to a new reality of the way they have to conduct themselves in just in terms of their internal business models, but on a global on a global scale. And I think it's going to be a hit, I think it's gonna, I think the virus is going to be the biggest part of it. I think, like I said, next year, or the year after that it will recover. But it'll never be the same. It's never going to be the same. And I think in a lot of ways that might be a good thing. Because, you know, the the the the traffic is down, and the crowds are different. Like it's a different.

Alex Ferrari 1:51:46
Oh, and there was a lot of filmmakers. It was a lot of filmmakers this year at AFM a lot of filmmakers as opposed to a lot of distributors.

Franco Sama 1:51:54
Right. And here's the thing, there's a lot of filmmakers going AFM for the wrong reasons, you know,

Alex Ferrari 1:52:00
Selling story selling their story.

Franco Sama 1:52:03
Yeah, they're walking in with pitch decks, trying to get distributors to come up with their project before they even have any money or they have any, any they haven't even done any development. Sometimes they have. Right, so. So that's what's happening. In my opinion, it's turning into sort of a, you know, a money pit, you know, because it's great, I love it, because I get to go and see my friends every year. But also I get to meet these people from all around the world. And a lot of the filmmakers that I work with, are from around the world. And my relationship is built completely on a on a on a computer Skype. So it might be the one time in three years, I'm actually going to meet people that I've been working with all along and be able to sit down and have a drink or a meal with. So from a social aspect. I think it's a very powerful place. But from a business perspective, it's just starting to read every year, it's just changing more and more and more. I mean, I do think that at AFM specifically, it was probably a good move to kind of restrict who can come in, because I know there. I remember the years when crazy. We used to run through bikinis and trying to, you know, all the crazy stuff. And I do think that that sort of took away, it was fun for a minute, you know, but I think it took away from the seriousness of the business at hand for serious filmmakers and buyers. But I, I also think that it's kind of gone a little too far now. And people just like you feel like you can't even move, you know, around. So so. So I don't know, it's hard to say I don't know what the answer is. I do think that this business, this industry as a whole is extraordinarily resilient. We've gone through so much. I mean, all the way back to the writer strike, and, you know, everything that what we're what we're saying, I mean, Jesus. Yeah, it's a resilient business. And like I say, I think that we've had enough lead time now, as indeed people that we've stablished, who we are out there in the world, I don't think we're going to have to, we're going to suffer any more or less than anybody else. But I do think it's the kind of thing that's just gonna have to play itself out and see what the repercussions are of this lack of physical attendance. And try to re maneuver away to be able to continue to manage do business, on the global market in terms of sales and distribution, without necessarily getting on a plane and in going to brands. You know,

Alex Ferrari 1:54:40
Right? I mean, that's nice, though. I mean, it's nice to go to France, and they can it's a fun time.

Franco Sama 1:54:47
And that's what so that's what that's what makes it such an exciting business to be in is to be able to travel around the world or the country and be able to explore all of this is literally your job. It's part of your Your job, you know, so that that is great. And I think that that will return. After this thing settles out,

Alex Ferrari 1:55:10
it's gonna be just it's gonna transform like everything else like everything settles in after after VHS after DVD after streaming. It there's just different evolutions, and it's just happening faster and faster and faster and faster nowadays, everything.

Franco Sama 1:55:24
We all thought it was gonna be a catastrophe and life was over as we knew it, and it was in a way, but then it got bad, you know, or something new came along, and, and so I think we're, we are all going to be fine. I think the most important thing for everybody right now is to just really stay focused on the present, like what's in front of us the projects that we're working on, and make the commitment to the thing that's right in front of us, you know, I've got two or three right now, you know, to be able to focus on I've got projects coming in from different directions. And I don't want to, I don't want to, I don't want to shift the way I do things, because what I'm doing has been working for me and for the backers. So I don't want to change that until our lesson until I be it becomes a situation where I'm forced to, in order to adapt to whatever this is that's going to be coming down the road.

Alex Ferrari 1:56:18
Franco, this has been an epic conversation as I knew it would be. This is going to be a mandatory lesson for anybody in the indie film hustle tribe in the film entrepreneur tribe, because this is a wealth of information that you've spit out some amazing knowledge bombs today. So I do truly appreciate it. Now, I warn you my last thing I'm going to say, Be careful what you wish for. How do people find you, sir? your home, your home and your home address and phone number would be best?

Franco Sama 1:56:48
Yeah. What maybe the computer and I'll show you my building. This year, I've my summer co films headquarters has moved, very proud to say, We are now on the lot at Los Angeles studios, which is downtown LA, great little Independent Film Studio. So I'm very happy to be there. It's great to be on a lot to be in that environment and be in that creative environment every single day. So that's our where we physically are at La center studios downtown. But the best way to reach me is really just directly through email. But there's two ways you can get to me is my website, of course, which is just summitgofilms.com. And I do recommend people go kind of take a look, they can see my all the films I've done. But also they can see the films that are in development and in the projects that we're working on moving forward. And my email, I'm happy to give it out,

Alex Ferrari 1:57:51
Be careful, just be careful.

Franco Sama 1:57:53
I always do it. And my email is simple. It's just [email protected] And so by all means people are welcome to either email me through the website, or email me directly if they have any particular questions or anything. They would like to run by me if anybody's interested in the development program, I can send them information on that. Or I do a one on one six week course that they can inquire about to most of that informations on the website. But otherwise, they can just reach out to me and it might take me a moment to get back to people so I asked him to be patient because you're absolutely right. You expect a good influx of of emails and I welcome them. Sure it just might take some time to kind of get get my cut my way through them.

Alex Ferrari 1:58:45
So then this make sure you send when you email send your script your pitch deck, do not introduce yourself and just tell them your story. That's that's that's the protocol. That's the protocol.

Franco Sama 1:58:54
Not even hello, not even interested in Hello,

Alex Ferrari 1:59:01
Franco man, it has been an absolute pleasure. We have to do this at least more than once every two years. because things are things are changing so rapidly. And we are on the front line. So I do appreciate you brother, thank you so much for doing what you do and trying to help as many filmmakers as you are, man. Thanks again.

Franco Sama 1:59:16
Thank you Alex. I appreciate it as well take care.

Alex Ferrari 1:59:20
I want to thank Franco so much for coming on the show and dropping some major knowledge bombs on the tribe today. Thank you again, Franco. If you want to get a hold of Franco or links to anything we spoke about in this episode, please head over to the show notes at indiefilmhustle.com/380. If you liked this episode, please share it with as many filmmakers and screenwriters anybody in the industry that you can I really want this episode specifically, but information in general from the show to get out to as many people as humanly possible. I know it's a bit weird and scary out there right now guys, but we will get past this Things will get back to normal eventually. And you got to be ready for those opportunities when they present themselves. So if you're writing, keep writing that screenplay. keep educating yourself. listen to audio books, read books, listen to podcasts, watch videos, take online courses. Educate yourself as much as you can, while you're in this kind of self quarantine or social distancing era that we're in. take this opportunity to better yourself to prepare yourself for when the opportunity comes when the clouds lift and the sunshine does come through. Thank you all for listening, guys. I wish you all for you and your families to be safe through this terrible time that we're going through right now. But it will pass. As always, keep that hustle going. Keep that dream alive. And I'll talk to you soon.

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IFH 309: How to Get Investors for Your Indie Film with Matthew Helderman

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Today’s show is going to be EPIC. Our guest is Matthew Helderman, CEO, and Co-Founder of Buffalo 8 and the BondIt Company. Buffalo 8 operates seven core divisions: development, production, post-production, distribution, client management, marketing, and creative branding services with accolades from the Sundance, Berlin, Toronto, Tribeca, and SXSW festivals.

 

At Buffalo 8, Matthew is endlessly passionate about creative storytelling, media technology, and the business of entertainment in equal quotients; we are the fusion of entrepreneurial ethos and quality content creation with a unified ambition to provide first-class service. With a background rooted in media production, finance, and digital technology he leads the team of both businesses on a daily basis.

We get DEEP into the weeds on how to raise money for indie films, how to approach investors, what companies like him are looking for and so much more. I learn a ton for this conversation and I know you will as well. Get ready to have your mind blown.

Enjoy my conversation with Matthew Helderman.

Alex Ferrari 0:31
Today's guest is Matthew Helderman from Buffalo eight. Now Matt is the CEO and founder of Buffalo eight and bonded media capital. Now what Matthew does is he finances movies every year ever and not just small movies. He does big movies, he does independent films, he helps out with all sorts of different financing. It really was. I mean, I can't tell you the treasure trove of what you're about to listen to. It is a master class in finding money for movie how how movies are made behind the scenes, how financing is structured, what you need to do, how do you need to approach finance companies or even independent finance ears? or private money if you're trying to raise money for your independent film? I mean, I can't tell you how much I learned talking to Matt. He was just so forthcoming and told me like anything I asked, he answered. So I mean, seriously, get ready to take some notes, because this is an insane, epic interview with Matt. So please enjoy my conversation with Matt Helderman. I'd like to welcome the show, Matt Helderman. How you doing, man?

Matthew Helderman 3:17
I'm good. How are you?

Alex Ferrari 3:17
Good, my friend. Good. Thank you so much for spending the time and demystifying finance in the film business for us. So before we get into it, man, how did you get started in the business because it is a unique story. It's something about the New York Stock Exchange was in there somewhere along the line I read.

Matthew Helderman 3:34
Yeah, so so I grew up. I grew up back east in Connecticut families in the private equity in the hedge fund world. My dad had started with a group of partners a fund when he was about my age. And so grew up in and around that environment. And like you mentioned, I got to have some pretty cool internships both some some pretty well known hedge funds and private equity places as well as we're being a runner on the stock exchange when that was still a thing. And recognize that there were aspects of finance that I liked, and are aspects of that sort of level of business that I could ultimately where that industry was going was not really suited for what I want to do with my life and I loved love loved content growing up. But from an audience, Asian perspective more than from a filmmaking perspective. So I was obsessed with film history and filmmakers and film theory and in college got into European film and the history of cinema and cinema studies. And then in undergrad, I got inspired by this digital boom that was happening with the red camera technology and Final Cut beings are available to edit and export content from a MacBook Pro. And all of a sudden it really leveled the playing field of how you could make and distribute content. So I made a feature when I was an undergrad and came out to LA to sell that during my senior year, spring break. It was my first trip out to Los Angeles and sort of had the veil lifted on this huge industry. That's out here. With sales companies and agencies and distributors learn the business from the ground up. And so buffalo been launched that prior year to produce that picture. And we brought that business out here, right? We graduated and grew it and grew it and grew it, and built out the management side, the post production side, and then launch bonded into end of 2013, early 2014. And that momentum just snowball across both businesses. And it really is sort of taking the applications of finance, both corporate finance and single project financing, as well as a true love and an understanding of content. Because at Buffalo eight, we had produced more than 40 features before we even launched bond. And so we had a real understanding of the cash flow need and our understanding that the banks and certainly institutional finance years, like traditional hedge funds, weren't really able to support let's call it content below six $7 million, which is the vast majority of independent film. And so we built a business that could could support that content.

Alex Ferrari 6:03
Now, can you explain specifically cuz you do a lot, it sounds like you do a lot. So can you speak to the audience specifically, like what you do on a daily basis, and what you're kind of like what your job is, so they can have a better idea of what you do?

Matthew Helderman 6:16
Yeah, I wish that everyday, you had some form of, of consistency, but we do. On the financing side, we finance almost 60 single picture projects a year. And so that range that ranges from very small, low budget content, where we have a handful of companies that finance or that we finance that are producing television content, so half $1,000,000.02 million dollar, either episodic or TV movies, and they might do five or 10 of those a year. And then we have clients that are making really, I'd call the middle market independent films, the two to $4 million type budgets. And we're not only originating those deals and structuring those deals, but closing those deals, and the closings are very taxing. I like to joke that I had hair when I started these businesses. It's partially a joke, but it's also partially honest, which is the closings end up taking the majority of our time, we see across the slate, probably close to 1000 project submissions a year. And those are projects that have cast directors, and all on board, sales already executed a distributor in the domestic components sometimes already buttoned up. And we're just coming in and effectively acting as the financial support for those pictures. And so the regular day looks like sifting through a slog of active closings at any given time, we probably have four to six closings that are term sheet out or term sheet sign. Then you have obviously the active portfolio, which at any given time is about 40 pictures. So you're tracking what's going on with the pictures you funded. Where are they in the collection cycle? What are the issues that need to be worked through in the delivery process, a distributors rejecting delivery in this territory, news or pain, painstaking brutality, that that is managing a portfolio of that size. And then there's also the buffalo eight side, which is producing content. So you're checking in on projects, that different set of team members day to day than the bunded team? How are things going on the active productions will short form and long form. And then I think maybe you know as well, but it also owns ABS payroll. So 30 year old entertainment payroll company, which is processing payroll for 700 films a year, it's a team of about 3030 or so. So it's my job is checking in and basically putting out fires across each of those areas.

Alex Ferrari 8:38
It sounds intense, sir. It's very it sounds. I'm exhausted just just listening to you. I can only imagine what you're like. I always tell people when they asked him like, I have twin girls, I'm like, I'm 25 Look what they've done to me. You must be like, 15 Look what this business is done to you, sir. That's exactly right. I'm aging horribly right. Now, so I want I've always wondered about this, because making money in the film business is almost an oxymoron. In many ways, like jumbo shrimp or military intelligence is like many multiples, like it's very difficult to do. So I always understand like, Hey, we're gonna go get a bunch of dentists to throw in 100 grand and make a movie. That model I understand. And I understand on the studio side when they're dealing with financial institutions and hedge funds and those kind of situations because at the studios, we you live in a very weird place because you live in a independent, arguably low budget, though a lot of people think under 10 million isn't low budget, but it is in the grand scheme of what movies are made for. And you're able to do this successfully and you've been able to grow your business. You're not doing one or two movies a year you're doing 60 a year. So there has to be some sort of You know, I'm just curious on if I don't know how much you can talk about the financial world behind it. But like, how do you obviously you have a track record. So you know, banks are going to do it in institutions, hedge funds are going to trust you guys to be able to make these kind of, you know, financing choices. But I'm so fascinated about, you know, returns and what is expected. And because, you know, the film business is infamous for not making money, do you group them together with like, a group of 10 films, and they kind of the, you know, the bad ones, the good ones pay for the bad ones? How does it work specifically, in your side, your corner of the industry?

Matthew Helderman 10:38
Yeah, I would actually say I'll answer the question by sort of painting a picture that is oftentimes most helpful whenever someone wants to have this discussion, which is, there are three models that effectively can work in, let's just call it independent studio world, which which I would say I know, folks who do million dollar movies, and they have great businesses doing that. And they're the folks that do sort of middle of the road, $5 million, then there's this nerve dolmen, and 7 million to $15 million, is a really hard place seven to 20 is a really hard place to make a movie, we can talk about that. But ultimately, there are three models that can work. There's the Megan Ellison model, right, your dad literally says, Here's 200 million bucks and go and you have basically a business model to say, Okay, I'm gonna lose money for seven to 10 years to build a brand to build a library and then the next seven to 10 years are hopefully making that money back and then some taking a long view on a library approach. that's never been our model. Very, very different business, then there's the business of Okay, let's come in and let you call it dentists and doctors, I would say there's definitely a sort of a single picture world where that 100% is a business. It's a really hard business. For producers. I don't think it's sustainable. I think it as an industry will continue to be a very real thing, right? There's gonna be 5500 feature films made this year globally, of that less than 10% are going to have any theatrical footprint at all. So the vast majority are either one of two things that are made for s VOD made for TV titles, or more likely, they're dentists, doctors throwing in capital that become sort of very expensive paperweights. And so we're not we're not really the Annapurna model, we're not really the dentist, Dr. model. And then there's a third model, which is you're effectively reverse engineering the content to fit the market, which is really what we've been able to capitalize on. And when you say we have a track record that we've done over 300, single picture financings, and we've lost money on less than four of them. And the reason is that we're not taking theatrical or why would even go further and colleges Commercial performance risk, which is a really tough business, I would go so far as to say it's a really bad business. Tell us about this. Yeah, and Unless Unless you have, and here's the thing, I mean, if I had 10 times the capital that we have been bonded, maybe like you're saying, you allocate some of it towards bigger trying to hit triples and runs, but funded today is you hit lots of doubles. And these are pieces of content that from a structural perspective, you know, the economics before you actually write the check, you know, what your return is, that your risk is really coming down to can the producers execute and deliver the film? Can the distributor that is signed up to buy the picture stay in business, which is a real risk in this environment? And can you do that enough times that you'll heavily outweigh any of the losses or issues that may may arise? And we've done it enough times to know there's always going to be bumps, there's always going to be challenges. But ultimately, again, we don't take I think about our portfolio, we've done 300 of these films. When bond in the early days, we were capitalized by investors that were backing the company that were backing single projects that were putting money into a farm. And we were lending that capital out against minimum guarantees, and pre sales and tax credits. And then about three years ago, we went out, we hired an investment bank to help us at that point, we had a track record, to help us go out and raise institutional money, which is insanely challenging. The administrative aspects of it reporting aspects of it on a go forward basis are mind numbing, it's equally as complex as filmmaking, except people don't want to hear excuses, and you've got to be even more on top of it. And we raised we raised capital from a very large institution that has been around for 40 years, and they provide capital to every asset class. So lending against construction, real estate and automotive, an invoice factoring. And they were able to really help us think about our business in a much more sophisticated way, especially because they can be very patient, right? They're public company. They've got $400 million balance sheets, a very different business than a film financier. And so when we got that deal done, then we were able to be a little more flexible, saying, today we have a dozen or so clients that are sales companies, distributors, animation houses visual effects companies that use bonded almost like a bank to smooth out their cash flows to finance their original productions, to borrow against their libraries. So all of a sudden, you're effectively peeking under the hood of hundreds of these businesses, whether it's on the ABS side, whether it's on the bonded side, that has allowed us to, I'm answering your question in a very roundabout way, understand through the financial dynamics of how so many of these companies are either working or not working, and then apply that when a new opportunity comes through the door.

Alex Ferrari 15:38
Very interesting. Now, in your in your experience, what is the biggest mistake filmmakers make when looking for financing? Because there are many?

Matthew Helderman 15:50
You can even write a book on it. Sure. I would say we have a number of filmmakers who reach out to us saying this isn't the next XYZ project. Yeah, it's just it's just wrong. And it's not to be arrogant or rude that maybe you could have written the greatest script in the world. Yeah. I won't, I won't say names, I'll just say, a top literary agent at the largest agency, most important agency in the world. We had lunch with them recently. And they said you could have the Best Screenplay in the whole world. And that one person gives a shit, you can actually make a decision anymore. They don't care. It has to be age based. It has to be cast as on directors on here's what the budget looks like. Here's the finance plan. Here's how we've mitigated by bringing in this number of sales. Here's how much capital has been raised to sort of hit this threshold. That's a good presentation. A bad presentation. Is this screenplays amazing, can you please have your team read it and get back to me in 48 hours, I need to go into production by this timeframe, because I have this actor who wants to do it. And his best friend is my best friend's cousin. And you hear that stuff 15 times a week. And you just know, those filmmakers are gonna have a really challenging time making that movie. And no matter how much you tell them, they still want you to get on a phone call. Just regurgitate, you can argue lead them to on our website that sort of guides them through, here's what you need, they'd rather get on a phone call and try and convince you that none of this is different. And I think that's the biggest mistake is believing that it itself is somehow going to convince someone like us would affect their institutional financier to take risks. And we see Angelina Jolie projects release their own projects, Edward Norton project doesn't matter, you still have to pass on it. If the deal doesn't make sense. We're not here to lose money. I'm not here to to have just credits. You I want to have a business that is sustainable and built for the long term. And I think filmmakers are so driven by making that movie. There's lots of producers, and I'm sure you know them too. They'll say anything, I get a deal. And it comes your job filter both the sort of two things, right. There's the passion of the filmmakers that hopefully they have good intentions from outset, when they believe the content is that good. So that's Mistake number one is not building the elements when they make that initial presentation. And then the second biggest mistake is just how much this industry attracts people that are scam artists. And I think what ends up happening ultimately, is you've got people that have good intentions, but the desperation of getting something made leads them to do bad things. And then once they've done that, once or twice, it's a lot easier to tell someone a half truth or a quarter truth than it is to actually be honest. And that's, that's a big part of our job is dealing with people that are talking out of one side of their mouth today and another tomorrow. And it's that's really challenging.

Alex Ferrari 18:41
I can only imagine what you have to deal with on a daily basis. The phone calls the meetings with people because I mean, at every level of the business, there's people who are trying to scam you, in many ways. Every every level from the screenwriter who's talking to a producer is like, Hey, kid, you know, sign this paper, and I'll option it. I'll you know, give me $1 and I'll option for 10 years. And now you've basically lost that screenplay just because, you know, there's multiple levels. But when you get to the world of money, and I've been in those meetings, and I've sat in those things, and I've meant, you know, you sometimes have dumb money, I've seen dumb money, like you know that will we'll write a million dollar check for a movie. Ever first time director, I've literally been in that room. I wasn't the director, unfortunately. But I've been in that room. So I can only imagine what you go through daily.

Matthew Helderman 19:37
It's crazy, which we tried to get better, especially over the years doing a few things, one being just listing out the exact criteria in a Frequently Asked Questions section and just directing people to this. So instead of them wanting or trying to get me on a phone call, or one of my team members on a phone call, it's guys you just have to follow this criteria and then we can really look at it and then we've also tried to get really better at there, there were days, certainly even as recently as the last few months where we've got 50 or 60 team meetings in a week that you're looking at new projects, or you're sorting out portfolio issues, and it's like, that's just not sustainable. You've got to figure out a better system to filter these projects, and also to deal with the projects when they have issues. So it's, it's definitely a continuing learning process.

Alex Ferrari 20:23
I can only imagine the egos that walk in those doors if you're sir. There is a lot I mean, how many how many? How many times have you had someone say, Well, this is going to win the Oscar

Matthew Helderman 20:34
So many times it's even better when when when the Oscars get announced like they did this morning and you've got people that are challenged say see by told you, my phone is exactly like this. It just got nominated for an Oscar and it's like, man, people will go to crazy lengths to justify why their deal is the best deal,

Alex Ferrari 20:53
Don't you love when you read a business plan? And it's like a horror movie, and then they bust out like paranormal activity. Blair Witch?

Matthew Helderman 21:01
Yeah, it's only blumhouse it's like, I'm basically just gonna make Jason blooms most successful movies.

Alex Ferrari 21:05
That's exactly everything's gonna hit exactly the way that's gonna happen. Correct. Or even worse, they'll bust out like things like, you know, easy writer. things up from the 70s in the 80s, that were independent, it's Yeah. You know, like, plan nine from outer space, man. And would he was on the I mean, look at that, how much money is that made? Over the years? Now, what are some of the biggest myths you you come across? Or would you like to dismiss regarding getting money for your independent, independent film? Because there are a lot of filmmakers have these ideas? Like many of the things we just were joking about, like, putting down examples of films like this is just like the matrix meets Marvel, like, dude, like you have it's in? It's a $50,000 budget, like, come on.

Matthew Helderman 21:54
Yeah. I would say? Yeah, yeah, definitely. I think I think there's a few of them. The first is, I'll just blanket it, which is what you've just said, which are people using comps that are not only irrelevant. It also goes into your your question about mistakes that filmmakers make, they haven't done the research to understand even the business they're trying to operate in, in the sense that a bloom is a perfect example, the number of people using vlaamse business model as a reference, he spent 10 years producing content independently with really close colleagues before he even had to deal with universal. He spent eight of those years negotiating that deal with universal, he negotiated a deal with universal that allows them to release these films on a studio level 1500 screen a minimum of the PMA commitment to be supported at 15 million or above on every picture, that cannot happen again. That way, someone will be as successful again, someone will do something and build an independent studio in a niche market again, but it won't happen that way. And so by saying, Oh, my movie is going to be paranormal activity. No, it's not because even movies that were successful two years ago, years ago, the movies that are going to look completely different because the models changing so much. I mean, Roma is a perfect example. That movie should by all file types and purposes, that movie should be financed by a single private investor, not a tech company, right? If you were trying to write the business model for Romo, you would not have written the model that ended up making the film successful. So it's dispelling the belief that what was successful will be successful, especially in today's age, where technology is changing how everything's happening in our business. And filmmakers just want to say, here are the numbers, here's the raw data. The second piece is going further into that raw data and saying, okay, so a movie makes $100 million. I don't think you understand how little of that actually goes back to the pool that you think it does, in the sense that you have so many costs in between the gross and the net, that you're not taking into account. And most producers we know don't even understand this, especially producers that are just trying to claim shot deals. And you're like he said, sell you on stats that are not truthful. That's the biggest myth is reading the Monday morning box office gross numbers and being having your jaw drop at some of the numbers because at the end of the day, cut it all in half. That's what comes back and then cut it all in half again after taxes and then hold that against the actual cost of a budget and see if it mattered, right? You've got off the top p&l costs, exhibitor costs, distributor costs, then you have the actual collection account costs, then you have latency because a lot of those costs are going to come in late so many of them are going to be written off as bad debt, then you've got to have it come back into the waterfall and you've got a senior lender on almost every movie before the equity even recoups then you've got the senior lenders premium before the equity that starts to recoup, then maybe mez, then maybe equity and then at that point, the equity has to start paying taxes. To what do you do again, an understanding of that waterfall to me is one of the biggest myths of What Hollywood has been able to really do a great job just like they do with the rest of their product, sell sexy story, as opposed to sell the honest reality of what the economic waterfall looks like. And really, art, film finance ears get this. And they, they, they use it to their advantage.

Alex Ferrari 25:18
But I think that's probably the biggest myth to me is boxoffice. Hollywood is very good at selling that sizzle, but not so much on the steak. Without question, so like, in that I want to talk touch a little bit about the box office myth, because, you know, people's like, oh, that movie made $800 million. Like, yeah, Mike, how much did it cost? How long did it take out that what's the Mark was the PNA budget that they had on it like, so movie like, justice? Like I always beat up Justice League because it deserves to be beat up. But, you know, movie like Justice League that cost upwards of over $200 million on a production standpoint, then at least 200 million on PNA. We would you agree with that. I mean, because it was everywhere, like you couldn't even move without seeing a poster for that damn thing. So now you have a $400 million plus budget, not to mention all the there's probably a bunch of other expenses. I didn't see the movie pulled in what 780 800 or something like that domestically, let's say. So if it pulled in $800 million, let's do your math. Cut it in half, then cut that in half. And it pretty much was a loss.

Matthew Helderman 26:28
Yeah. And I think what people often forget is taking the taking the gross number and applying it just to one set of economics isn't how it works. And I think the easiest way to think about this is why it's so important for a film to open up so well. We can one weekend to weekend three is that the exhibitor takes the lowest percentage of your gross in those three weekends. And even easier or set another way, as you think about the business of owning a movie theater, you're effectively a landlord, and you have a new tenant who's willing to come in each weekend and take that space and likely pay you more because more people are going to see it. So your split is going to be larger, you're going to make more money by bringing in new movies. So film that stay in theaters longer. Unless they're crushing it. They're just paying a larger percentage on a winding down tale of ticket revenues. So when you think about justice league, that movie, let's say it stayed in theaters for eight weeks. By week four, they are truly effectively at split with distribution costs, and x exhibitor costs. So now you're literally only able to justify staying in if the number of folks continuing to see the movie are outpacing the amount of economics that are being eaten away by the distributor exhibitor. Again, the collection costs, a lot of these theaters paid really, really late, and then they find every excuse in the world not to pay. So I think it's, there's so much more behind that. And just again, the box office numbers people are obsessed with. But that's not the whole story. For sure.

Alex Ferrari 28:01
What is in generally, I mean, I've heard different splits on opening weekends, I've heard a 3070. I've heard at 20, depending like I know, I remember when there's like big Marvel movies and like that is the ticket. We all know it's going to make a billion dollars and Disney will like flex its muscle like you want and it's going to be an 8020 for the first weekend, as opposed to the standard 7030 and then it just every week, you'll start glowing going down to 5050. Yeah. And how how low does that go? And in your experience,

Matthew Helderman 28:29
The lowest I've ever seen is 50-50

Alex Ferrari 28:31
50-50 is generally the lowest it'll go. But But at that point, though, yeah, it's not making it's just it's all because

Matthew Helderman 28:38
Yeah, the exhibitor doesn't have the same with you. That's a terrible tough business as well. But yeah, being the exhibitors don't have the same overhead structure. They've got their own issues to deal with, but they don't have. They also need to be recouping p&i, they also need to be recouping the actual production costs, they need to be recouping. Oftentimes, especially in those big pictures, there's huge bank loans that the interest is right and the film, The film is owned by the bank. And so that loan is paid off. The Disney is a different story Disney's effectively financing internally and then with JPMorgan. But that is a again, one of the biggest myths to me, is filmmakers not studying that understanding that and say, Okay, well then how do I how do I operate in this environment where maybe it's a better economic model to make a smaller picture that has a bigger footprint with international sales, a domestic distribution deal that might not even have a theatrical component is another one of the biggest mistakes we see filmmakers make is only wanting to make a movie if it has a theatrical footprint. That's just not justifiable anymore in the in the world we live in.

Alex Ferrari 29:45
Right and that is another thing that I love to talk to you about the theatrical because the I mean, look, theatrical is is the dream, especially for a certain generation. I'm not sure as much for the generation coming up behind us. That theatrical is going to be that big of a thing. But for us, we you know, we didn't have anything else when we were growing up. And theatrical is like the, the, you know, the the gold standard for you know, if you made it into a theater, you are a filmmaker. Right? We're now it's like you make it on Netflix, you're a filmmaker in many in many circles. What kind of you know, in your business model having, you know, budgets of 10 million? That's a 10 million and below, how important is the article? And where is the? Where are you looking for the revenue to come in from more than than not?

Matthew Helderman 30:33
It's not important to us at all. It's not that we dislike it. It's not that we dismiss deals that have either theatrical ambitions or a theatrical component built in by the time they reach us. And it's almost a certainty. What we do care about more than anything is who's selling the film internationally? Okay, what sales have they executed, both in which territories and to which buyers in those territories? And what does the domestic strategy look like more often than not, the domestic strategy is some form of the day and date with s VOD. And with theatrical maybe five to 10 City theatrical for certainly these middle market five to $10 million movies. But I think people again, miss the the rationale behind why that theatrical is often even happening, which is oftentimes it's only there as a tool to drive a Netflix deal. Now what I mean by that is Netflix has a structure in place with many distributors, that if they've opened up a film and X number of cities theatrically, Netflix takes it at a different level of their rate card. So Netflix has a rare card that is based on a number of things, and they've obviously massaged it over the years. But it can be based on percentage of box office gross, which was very famously for someone like relativity or even someone like Disney. So Netflix is literally paying X amount against box office gross, then there can be a structure in place that says if you as an independent distribution company have opened up a film in 15 to 20 of the major markets, we will take it for a million dollars guaranteed. That is usually the rationale on why distributors are playing the Xbox game, it's not knowing that they're not going to drive or attract and that much the economics from those theatrical markets, but ultimately that it's going to drive a better underlying s5 deal. So what bonded is doing is we're coming in and we're providing capital against in that example, just the Netflix piece, and whatever the guarantee was from the domestic distribution component in the other windows. So you're on the S VOD window, whether that's the utricle, whether it's traditional television pay cable, those windows, have assignable rates and assignable values and a great distributor and a good producer will pre sell those, or at least a portion of those, to make their film to not have to go out and try and beg borrow and steal from doctors and dentists. Some of the best producers we see don't raise any equity anymore. They make their films completely on negative pickup structures, using that kind of a model, where all of these windows are being pre monetized before they go into production. And I think that's going to become even a bigger piece where the business is going to go. And that's why we like the seat that we sit in, which is being selective, we'll say no to deals that we believe have too much risk, because we have a long term belief that film it content, whether that's now a television product that's being produced independently that we see a ton of whether it's digital content creators, and we have clients that are producing just content for YouTube, or Instagram, or Facebook, watch, the model is the same, those platforms are pre licensing, pre buying that content, and we're coming in and financing it, we have a very real belief that there's going to be more content. And I think probably you feel the same way, there's gonna be more content than ever before in the coming years, especially as you've got these huge players like Netflix, having these land grabs to acquire more and more so to us, the utricle is a nice component that can work for a certain kind of movie that I wouldn't want to I wouldn't want to bet on theatrical risk. And that's why we don't we don't do PNA we don't do to first out dance. The actor theatrical waterfall, we will secure against the theatrical waterfall, but only in the instances where we have the other windows as well as firm collateral because we just we see movies with projections that are incredibly aggressive and you look at them and say, oh, maybe this makes sense. And look, we've seen one of that and they have the exact names of the film. But you see Tom Cruise and Brad Pitt level movies. People are coming to us to ask you for PNA help or even production help from a financing standpoint. You take a hard look at it. You think okay, how is this going to do? If we had done those deals, you probably lose on half and make money on half but you break even at the end of the day. And those are probably two of the biggest movie stars in the world. So it's hard to justify the lower budget, theatrical play when the market even for the Iron Man talent is so volatile. And I'd even just say it's completely uncertain. It's a monkey throwing a dart with a blindfold. You just can't consistently pick winners if it's not possible.

Alex Ferrari 35:12
I mean, and that brings me to another question regards to star power. I mean, back in the olden days, stars meant some like really meant something like, you know, you put Bruce Willis Tom Cruise Brad Pitt, it's a guaranteed 20 million opening. It's a guaranteed 30 million opening. In today's world that's not the case at all. There's there's very few if I can't even even the rock you know, who's one of the biggest movie stars in the world? He guarantees certain amount but it's not like it used to be me. I remember when Tom Cruise opened the movie or Tom Hanks or or Brad Pitt or Will Smith, those those like it was an automatic people who just show up. We're in today's world. It's not that I mean, the only things that are generally winners every time are the Marvel movies. And they're very smart about how they do it. And even Disney, even Disney has their you know, long, Lone Ranger's. They're you know, john Carter from Mars, they have those occasionally, that they but they're so damn big. They could take those fibs orbit, they could absorb it and keep smiling. All they got to do is sell a couple more tickets to Disneyland. Alright, so what in your opinion like? Well, first of all, how do you guys at Buffalo eight actually assess projects for financing? I'm sure that's a question a lot of filmmakers like to know about.

Matthew Helderman 36:31
Yep. So I think what's most important is remember two completely different businesses, Buffalo eight is production post production management focus, okay, the only projects we're really looking for on that side are projects that can fit. And we have a nice overall relationship with places like Netflix and Amazon and Hulu, where we've done original content deals with them. Our goal going forward is almost exclusively to make content with s VOD platforms. It's much cleaner, when when it's a yes, it's a much safer and secure. Yes, it is with independent financing. Now, it's also the future. And I just am a huge believer. And we should just be putting all of our efforts behind building content specifically for these partners that we've built over the years. So the kind of content Buffalo, it's looking for package content. And that can be one of three things, or two or three of three things. And I think these are the underlying principles that will continue to drive this business, no matter what happens. And it's it, it's cast, or let's just call it more broadly, talent can be director can be writer, it can be cast, and it's IP. So it's IP capital. And I just, I'm a huge believer in that those are the three things, there has to be one of them, you either have to have some capital attached, the IP itself needs to be a huge meaningful piece of IP, by the time it comes to us, or you've got to have given you, you have to have one of those pieces assembled, it's too challenging otherwise, to move the ball up the field. And regardless, and we've had huge pieces of intellectual property, I mean, I'm talking Twilight Zone, I'm talking Spike Lee, I'm talking huge pieces. And it's still challenging. So buffalo eight looks exclusively for projects that have a piece that we can then move into and Shepherd into against sort of the esbat Arena abundant, we're looking at, I'll be very cut and dry first, and then I'll back it up with a little more empathy. We're, we're looking for projects that have SR collateral, it can be a tax credit, pre sales, it can be a bridge loan, it can be a negative pickup, it can be a media company looking to borrow against a library, it could be a media company looking to buy a buy another company, we're coming in and providing the capital for the acquisition. backing that out, obviously, we then care about the team involved, and the project to make sure that not only do we believe that the team can execute the project, but that the project isn't egregious. However, we want to apply that term. And also, again, is the element that we're calling collateral, actually secure the number of producers that will call and say, I've got this movie, I really want you guys to finance the tax credit, can we start closing and you look at it and say we don't have any other financing. There's no tax credit until the rest of your finances close, we'll have a filmmaker come to you and say, we've got all these pre sales want you to come in and do the pre sales loan, and you look at the company doing the pre sales and they've never sold the movie before in their life and they don't have a website. We're not doing we're not doing that. And then the number of filmmakers who say oh, I want you to come in and do a bridge loan and say, Okay, well, what am I bridging, you're bridging a guy that I met at a dinner party who said that he might want to finance my movie, that's not just called losing money. We won't be doing that. So it's, it's it's about assessing the package. And then once you actually have received the package assessing that the package is actually a verifiable opportunity versus a filmmaker again, likely being well intentioned, but just not being fully informed on what a company like us needs.

Alex Ferrari 39:56
Now, I want to ask you, what does a filmmaker need Legally to ask for money because there's so many not from you. But just as a general statement other than Look, if it's mom and dad giving you a check different, but if you're going outside of friends and family, what do you legally need to have to go out and raise money for a feature film in the US?

Matthew Helderman 40:18
Yeah. It's a good question. And like you said, it really depends how you're going out. And the terminal here is solicit. Now there are there are solicitation limitations. In regards to how you can go out and raise capital, you ultimately need a pretty, pretty serious document from from an attorney, if you're going out and trying to raise capital. That document it can take the form of five pages, it can take the form of we've seen 200 page.

Alex Ferrari 40:48
Is that is that a business plan? Or is that a ppm? What is that? Exactly?

Matthew Helderman 40:51
So yeah, it's a ppm but a ppm generally, what we see is now encompassing all of the aspects of the business plan.

Alex Ferrari 41:00
Can you tell Can you tell people what a ppm is?

Matthew Helderman 41:03
Yeah, it's a private placement memorandum. So it literally stands for going out and raising private capital. So you're you're soliciting an investor, whether that's an individual, whether it's a fund, whether it's a broker, and you're literally soliciting them to put a private placement into an entity, an LLC, or an inker Corp, whatever entity, you've set up to own the intellectual property and the underlying economic structure of the picture, the investor is buying a piece of that and to sell off security, which is ultimately what you're doing. You need to have your ducks in a row, because there there are many tripwires in regards to financial securities. So a ppm we see being the most often used tool, but I'd go and I'm sure you've seen the same thing to two sides of the market, really low budget producers, they just slingshot emails, dozens of them all over the place, every financier will get them on our buffalo emails, we'll get them in our body of emails, we'll get them in our abs. He knows like this filmmaker, this, this group is just slingshotting 15 episodes of spray and pray approach to raise money. That's probably not a good idea. I don't know many people getting movie science that way. So that's one side of the market where there's not a ton of organization. Then there's the high end of the market, where you've got the well known producers, I'll just get a phone call. And then you say, we just pre sold this for 10 million bucks, the Lions Gate. University is going to take the rest of the world for 5 million bucks, there's going to be a $1 million tax credit in Georgia despondent want to do it. You say Yeah. And then you get a finance plan that is sent via email, and you're off to the races. There's no ppm. There's no incredible documentation. It took those producers. It's kind of like that great story about Picasso dabbling on a napkin in a cafe towards the end of his life. And he was drawing and doodling and crumble the napkin up and get ready to throw it away. And a woman said, I want that napkin. And he said, Oh, I'll sell it to you. And she said, how much he said, $400,000? And she said, but it took 10 seconds makes it? No, it didn't, it took me 76 years in 10 seconds. And that's the same analogy I see with with high level producers is they are able to operate like that, because they navigated all the landmines of this business, and got to that position of being able to make a phone call and get a deal done. So the two polar opposite sides. And the reason I think we're willing to really play on both is, we have a lot of filmmakers that started on the lower side of the market that have now become really, really great producers, indie Spirit Award winners, producers that are climbing up the ladder to go do Golden Globe films. And we know that that has to be the way we think about investing in our business and investing in the community of earlier stage content creators that have to sort of get through again, that analogy of surviving the landmines of this business, but I would say hire a low cost entertainment attorney, it's a template document that they should be able to shoot out for you pretty quickly. And then just go out. And I think building that initial network of investors that believe in the filmmaker or the company, it's critical. It was what we spent the majority of our time doing is as we were building and I know it's not necessarily the most fun thing in the world, or glamorous, but it's the only way to build your real sustainable business.

Alex Ferrari 44:18
I mean, entertainment, they it's I find that filmmakers generally and I've met and spoken to 1000s of them over the course of my career, that a lot of them just don't want to do this kind of work. They just want to be artists. And they don't want to think about the business and they don't want to think about all the all the work that goes into building these relationships that you can literally just call up. Hey man, I'm just gonna call you up and I'm like, Hey, I got Yeah, pre sold this to Lionsgate for 10 million I got a 5 million let's let's make a deal. That took that took a while. I mean, you're not going to just accept that from anybody if I called you to said that. You were going to go Oh, wow, this is never made a $10 million movie. This doesn't make a lot of sense. Let me make a few phone calls to my Friends at Lions Gate at Universal, the sea, he's actually telling the truth. We'll be right back after a word from our sponsor. And now back to the show. But it takes time to build those kind of relationships up. And that's things that filmmakers don't get that this is a business. And I always I always use this line that I stole from a producer friend of mine, Suzanne Lyons that the word show in the word business, the word business has twice as many letters as the word show. And there's, there's a reason for that. Do you see? Do you see that as well, that they're just this people that just don't want? They want the quick, easy? They want that sizzle to Hollywood have sold them? But they're not willing to? To cook the steak?

Matthew Helderman 45:49
Yeah, yeah, no, of course, there's a not to use another quote. But if you're familiar with who Robert Mondavi is really famous wine maker in Napa, and towards the end of his life, they were basically reflecting on huge, crazy career, he built and launched effectively, an area of the United States into one of the most important wine industries in the world. And they asked him, he said, Well, it took a long time, he said, Well, it took a lifetime. But what else was I going to do? This is what I love. This is what I was always going to do here. And I think if you can think about filmmaking in that perspective, I think where I've always looked is, if you get the unfortunate reality of how the sausage is made with a lot of aspects of this business, and still love it, you're good, you can stick around. But otherwise, it'll it'll beat you up and tear you down, you have to be willing and able to put in a lot, a lot of hours outside of just being creative, the best producers and even the best creatives we know, they now invest time in some of the best directors we do, are now on closing costs. They're wanting to join and understand what's going on with the financials of this film, what's going on with how the finance ears are thinking about this project? What does that give me insight into the rest of the market? And I'm talking big filmmakers, right? The kind of folks that don't necessarily need to do that. But they're incredibly curious. And and I think that curiosity ends up just being a really big driving force.

Alex Ferrari 47:14
The more information you have, the more dangerous you are as a filmmaker, I always tell people, you know, you can have a conversation totally someone like yourself, and at the level, at least, or close to the level of what your expertise is. That opens up a lot of doors that would be close to filmmakers, in many ways. Would you agree with that?

Matthew Helderman 47:33
Totally agree. And I think from a finance ears perspective, or executive producers perspective, you have to be willing and able and wanting to do vice versa, right? You have to, we've made it a priority to go visit at least one set every single month. There oftentimes, there were years when we were building these companies where you have 30 movies in production in California at any given time. And you've got to be able to have that personal touch as well, it's in to know and I came up as a result from building buffalo eight and being on the ground building and making lower budget content, which is brutally challenging. From the seat of a PA to coordinator to production manager to line producer then getting pulled into a company that was producing a ton of international, freestyle driven content, trying to learn the business from if a producer calls me and says, hey, there's this issue, I get it, we've gone through it on the other side of the business and the buffalo 18 continues to go through it with projects we make. That to us is the biggest differentiator between the way we approach the market and almost anyone else is we've got sustainable long term capital. And we've got a team that likes and appreciates content, not only from an audience perspective and a creative perspective, but because we get how brutally hard it is to do it. And you've got to be willing and able to be flexible when you're a financier because of that, just like a filmmaker you like you said, should invest the time to learn some of the nuances. And even if it's just a cursory understanding of where the business is going, it'll inform you 1000 times better when you're out there trying to raise money.

Alex Ferrari 49:07
Now, I want to ask you about Netflix, and specifically because that is the the company of the day they are, they've come out and they've basically become a major studio in a short amount of time. I mean, they are bigger, and they're spending more money than most of the big major traditional studios in many ways. How have they changed the movie business landscape, in your opinion, in the sense of how business is done? I mean, they've they literally up ended this entire industry. But you want to see from your point of view, how do you feel that they've changed? Have they changed the game?

Matthew Helderman 49:47
Yeah, they changed the game in so many ways. And I would say there's a analogy that CIA has used multiple times which is Netflix is not, doesn't doesn't chain like an entertainment company. It iterates like a tech company. And so keeping up with the change of those iterations, when the tech company launches a piece of software, and then there's 2.1 and 2.2, they're literally updating the software for bugs. Bugs does that with their business model? And in an industry where things have operated pretty much the same way for hundreds of years. Yes, yes. So what a week See, I think the biggest and most obvious that is on everyone's telling us, they tapped into the reality that direct to consumer is the future. And it is the future now that really smart and agile companies like Disney, or unbeliev, unbelievably well run, arguably, more well run, we'll figure it out, we'll catch up, we'll build your own product. Netflix has a head start, no doubt about it. So I think direct to consumer that has changed a lot. We see a number of you know, even when maybe I'm sure you recall, when Uber came out, everyone in their mother was launching a business that was Uber of that Uber of eating Uber of walking dogs and car washes. So now you have everyone launching the Netflix of that

Alex Ferrari 51:04
we've got the Netflix of African American content, the Netflix of Christian content, the Netflix of children's content, and I have the Netflix of filmmaking content, you know, with irh TVs is a streaming service, right? Yes. And I position it that way. I'm like, I'm the Netflix does that something that everybody gets right away? When you say that?

Matthew Helderman 51:24
Correct. So we see a ton of those platforms popping up, which has led to great opportunity for us, because then we become the financing partner for I can't necessarily name the name of the company, as I'm sure you could research them to companies that are Netflix or African American content, and they've got 700,000 subscribers that pay 699 a month. That's a real business, oh, yeah, can you can find it, you can find some content, you can build a little platform, you can build a library and build a little studio. Same thing with the content. So that has been a big opportunity that this Netflix effect has created for us, then there are the sort of negative implications, which is the fact that Netflix expanded very quickly to 110 108, whatever the exact number is, international territories. When they did that, a lot of traditional, let's just call it second window, whether that's Home Entertainment, through pay cable free cable satellite video was up ended. And that up ending took on different forms. Because other areas of the world are just not as saturated yet, with Netflix, we're comfortable with Netflix. And they're certainly areas where they just don't have good enough internet connection to be saturated with Netflix as we do. And so we started to see a lot of these buyers in these areas, going out of business or having to merge or not pre being able to buy at the same level they did before or having to buy only an action movie starring Sylvester Stallone for X amount, that's all they could buy, because that's the only thing they knew guaranteed could work. So we again, we phrase it internally as a Netflix effect continuing to push out traditional second window, again, in many forms, pay pay cable TV, and cable and entertainment. Then you have the reality of the Netflix originals. Right. So now you're talking about the business model and direct to consumer the model being now plot as their model then expanding and pushing out a lot of these traditional buyers, which has changed the way filmmakers can pre sell content, it has changed the ways that finance ears can bank certain content, like the UK used to be one of the most important territories in the world, like to the utricle distributors left on that entire country. So that's a huge change. And then you've got the implications of Netflix originals, which is crazy, crazy, because it changed so much over the last three or four years, which was they came up big at places like Sundance and Canon Berlin buying big splashy titles. And then they said, You know what? Screw it. We don't need to acquire anything. Let's just sign over all deals with the duplessis or sign an overall deal with Woody Allen at Amazon. And all of a sudden it became okay. They're just financing all this content and producing it primarily stage. And that changed the landscape for distributors. Do you think about someone like a two for a two four has had to be reactionary, and build that business climate when third party acquisition of titles isn't the way it was when Harvey Weinstein was around getting to go out and acquire unbelievably independently made movies that he might have had nothing to do in the development phase II two, four has to be heavily involved. And when we talked to them last week, we're going to do I think somewhere between 15 to 16 films, eight to 10 of them are going to be internally developed from script stage through theatrical release. So you've got to be able and willing to again take a very long view because you can't wait because Netflix is doing the same thing. They're corralling it from the script stage. And maybe even earlier, right Jordan Peele signing an overall deal. First, look, deal with Amazon, you have to be willing and able now to operate that landscape. So what are the implications? The implications are smaller distributors getting less optionality or having to pay higher dollars for big, splashy titles, and then they still need to still needs to work. You know, you think about neon, awesome, really cool. But they come out and they spend $10 million on assassination nation and the movie makes like a million and a half dollars, you have to imagine some of that was driven by a belief that Netflix was going to try and scoop it up, or 84 was going to scoop it up. And so now you're sidestepping landmines in a completely new way that you didn't have to two years ago, at Sundance or two years ago, it can. So I think Netflix is changing the business, obviously, I think, seeing anything revolutionary, they're changing the business at every single turn.

And they're, they're unbelievable. I mean, we've done Netflix original productions with them at Buffalo weed. And it's incredible. It is, again, in my opinion, it is absolutely the future of how a sustainable middle market Independent Film and Television company will live and thrive is by doing a deal with Netflix. And some of my closest friends in this business have said, we're doing everything, we can't just sign up for picture a year deal. And that will be our entire business, Netflix will finance all of them will build producer fees into that structure, we'll build our company overhead into that structure. And we're just producing content direct for Netflix. And those are some of the best and brightest and strongest companies in the entertainment business, basically turning their back on traditional theatrical and saying it's not the future, the future is Netflix.

Alex Ferrari 56:37
I mean, if you I just saw this Christmas that Kurt Russell movie, the Christmas movie that was directed by Chris, Chris Columbus. And I saw that I was like, This is the easily could have been released theatrically correct easily would have made hundreds of millions of dollars easily. But yet it was on Netflix. I was just like, Wow, that's a moment. Like, because it makes so many originals. It's like it's hard to keep track. But that's a that was a big budget original. You know, that was a big one. That was a big one. And I was and they I'm sure they did unsane amounts with that film. I'm sure. We're sure. And what do you think about Apple and all the other big players that might be coming into this space? How? How do you because Netflix has been the big boy for a while but you know, Disney? And then if Apple decides to throw its weight around, because it's got more money than anybody? Yeah, if they want to how do you think that's gonna affect this landscape and your business in general?

Matthew Helderman 57:36
I think it's good for our business, because a lot of that that product will still need to be financed. And a lot of the banks are already at their lending thresholds for Netflix and for Amazon. And so they actually tap us and say, Hey, you guys want to look at this because we're at our threshold. Now, which is great. I think why Netflix is so good. Compared to everyone else throwing their hat in the ring, is that they've identified the fact that their brand is many things to many people, whereas Apple is trying to be brand consistent. Hulu has tried to figure itself out as it's changed hands corporate ownership wise. YouTube Red is built for that we've gone into pitch content to them. And they say, Oh, this is good. But you have anything with Selena Gomez, and they're dead serious right? Now with audiences. And you think about Netflix, Netflix can be that right? It can release Taylor Swift's reputation, concert

Alex Ferrari 58:30
and Roma,

Matthew Helderman 58:32
Correct and Roma in the same same span. So to me, Netflix is bargain. They have by far the biggest moat built around their business. But how do what what do I think about? Obviously, Disney is the big one. It's Disney's big, big, big, big and Apple's definitely big. But Apple's also very measured, right? They're not going to come out and try and do what Netflix has done by launching the nobody with the crazy stat I'm in the film stats, kind of upsetting, which is only doing 44 Netflix originals between there's there's two departments at Netflix in terms of the original film team. There's the Ian brick and Matt Bromley team, which is doing sub $15 million movies. They're only making 44 reads this year. And then there's this scottsburg team is doing it's called Netflix studio. And they're doing the 40 million to $100 million movies and they're on track to do about 15 so total they're not even doing 60 movies, right and then you've got the TV side and they're gonna make 700 pieces of original television. Whether that's contained miniseries doc series, contained format, long format, you know, season two's etc. So TV is obviously a huge focus for them. And I think the stat that came out of their quarterly earnings call last year was 70 some odd I 74 75% of content that people are watching on Netflix is television. So for every hour, every 10 hours, you have seven and a half of that you spend watching Television. So I think the big companies will have an impact. Certainly there's an impact on Disney. And a lot of these, these people have finally recognized let's rip our content off of Netflix and not give them the keys to our car with without charging them a price.

Alex Ferrari 1:00:16
But they've already but they've already changed their business model. They've already they've already adjusted that like, Okay, take Disney say goodbye, do what you want to do. We've got 700 original pieces here, and we have one of the most valuable libraries in the planet. Correct. We did it in less than a decade. Correct. It's insane. It's absolutely insane. totally insane what they've done. But I think you're right, I think it is something that a tech company would have done. Because it's traditional Hollywood, they would have just never thought of it like they could not have seen it. So. And now. I want to ask a few questions. Ask all of my guests. What advice would you give a filmmaker wanting to break into the business today?

Matthew Helderman 1:00:57
Network like crazy lead on relationships like crazy in the sense of alumni networks, or family, friends, anyone that can get you a window into sitting down for lunch and meeting picking someone's brain. There's also great resources, understand and read the books in the history of this business. And then again, I think there's a was a rule of the early days of CIA. And we applied it and made it a rule here as we were building, which was someone on the team has to be at a event every single day, whether that event is a lunch or dinner, or an opening a screening a premiere, or an investor conference or whatever, someone has to be continually building their personal brand or a business's brand every single day for years. And we were doing that 567 years where you're attending something, what seemed like just a revolving door of events, but that becomes like you've mentioned, it becomes a Rolodex and a really, really strong Rolodex. So I'd say break in by leaning on people that can help you gain access to the business.

Alex Ferrari 1:01:57
Can you tell me what book had the biggest impact in your life or career?

Matthew Helderman 1:02:03
Yeah, I mean, I'll be like a cheesy teenager and say that early days, it's like Catcher in the Rye, of course, just being being high school kid. But then in terms of entertainment business, things like Easy Rider, raging bull crap rebels. Rebels on the back lot. But I would say most recently, the biggest books are probably the CIA book, powerhouse. That book has been definitely I love, love, love that book. A book called power house.

Alex Ferrari 1:02:32
Oh, that's going to be on my list. I don't even know about that book. That's the CIA. I've read I've read over it. I read over this bio back in the day, which was Yeah, fascinating. Facts. Excellent. And then also spikes. A spike Mike, slacker and dikes. Yeah, very good. That's another amazing of the glorious 90s glorious night, the glorious 90s, which many filmmakers still live in? And they think that that's going to be yes. We're all waiting for that El Mariachi check from Columbia. Yeah. We're all waiting for that. I made a $7,000 movie too. I don't understand why I didn't get the deal that Robert did What's wrong?Now what is the lesson that took you the longest to learn whether in the film business or in life? These are heavy, like Oprah style questions? I apologize.

Matthew Helderman 1:03:19
Yeah. Yeah, it's okay. I would say that that to me is probably a but I'm sure you can recognize I build these businesses very, very, very aggressively. Building up to the sort of track record we have in the timespan that we've done it in his requires your pedal to the metal. From day one, I would say, this year, I'm definitely I would say probably learned it towards the latter part of last year, being more reflective before being so reactionary, whereas when we were building it was you have to be reactionary all the time. That's just the pace at which you're moving and growing. Oh, it's now being more reflective, whether that's dealing with the growing team here, or the projects we're working on. But it at the end of the day, it's about taking a deep breath, and through the cheesy thing of counting to 10. before you're, whether it's responding to an email or dealing with a situation with a team member or an investor or as the portfolio got bigger and bigger and bigger, so too, does the stress. And you've got to be able to sort of say, Hey, sit down for all. And it's ultimately people and if you can deal with people well, usually being more restrained as I've gotten into my 30s. Now, trying to be more restrained. It's, it's definitely the thing that took me the longest and I was not willing or not wanting to be that person in my 20s. I wanted to be an absolute maniac,

Alex Ferrari 1:04:45
As you should be in your 20s. Now, the toughest question of all three of your favorite films of all time?

Matthew Helderman 1:04:54
I'm probably gonna go and use it very similarly to the book. question in terms of those that made the biggest impact No, no in order. I think the earliest big film for me is probably something like Apocalypse Now, mainly because I remember being like 12 years old, maybe even younger. And Francis Ford Coppola, or that 60s and 70s style filmmaking was the first introduction I had through my parents do really high level quality content that clearly was not made in through the traditional way. So I'd say that was huge. I don't even necessarily call it a favorite, I will call it one of the biggest life changing movies. The second would be, I was a freshman at a boarding school in Connecticut, and I had an unbelievably awesome English teacher who had just gotten out of college. And he had tremendous taste and the films that he introduced me to still to this day. I mean, I saw I saw Rushmore when I was 13 years old, and I've been a lifelong Westerners and obsessive ever since. Yes. So that was huge, definitely changed my life in a major way. And that was one of the first movies where I remember saying to that teacher at that time, like, I need to understand how this movie got made. who financed this?

Alex Ferrari 1:06:05
How does that work? What kind of what is this pitch? How do you pitch a film? Like?

Matthew Helderman 1:06:11
Correct? So I'd say Russian was probably my second. And then I would say that teacher definitely I won't even I won't necessarily reference him, you know, he turned me on to I guess it was awkward by then. A lot of painful so getting into it, obviously really breaking we'll European film, but I'm only a very long engagement in sort of the john Peters in that filmmaking. And then that got me into European film rights. film. Definitely. As I got older, Ingmar Bergman became like, yeah, especially in college, when I was studying film, philosophy and film history, scenes from a marriage totally changed my life, and just how, how talented you are as a filmmaker, basically, all you have is a room, a camera, and two actors and like four lights, and you're making a movie that is arguably one of the most powerful pieces of content ever. That was mind blowing. And I could go on and on. But I would say those three are probably the sort of end but then I got really into even around that time into what are the spielbergian history of it all? Of course, that's with Spielberg.

Alex Ferrari 1:07:16
Who wasn't? And if you're not, you're crazy. I mean, come on. And look, you can watch jaws right now. That movie was made in 77 and 76 forever, and, or 7576. And it's still holds. And not a lot of films in the 70s there's only you know, Scorsese stuff Spielberg Coppola. There's a handful of movies a hell hold and that's one of them. You know? Agreed. Watch Raiders of the Lost Ark today. Still still good. The fax still good. Now this last question, I'm gonna ask you, please be careful how you answer it. Where do you want people to find you? And how do they want you to find? Like, how do you want people that? Where can people find more about what you do? But do not give them personal information? I promise you you will be inundated.

Matthew Helderman 1:08:02
Yes. It's a bandit website, www.bonded.us. And there's a there's a application form there. If someone wanted to reach out with a specific project. It's just [email protected] And then the buffalo wait website, buffalowaves.com. Abs, abspayroll.com. And we're all over social media as they think everyone our ages. So surely on Instagram, probably most active but Facebook and Twitter as well.

Alex Ferrari 1:08:31
Matt, Matthew, thank you so much, man. It has been an actually eye opening conversation with you. You've dropped an insane amount of knowledge bombs on the on the tribe today. And hopefully, we've helped a few people along the way today not to make some mistakes. Thanks, Matt.

Matthew Helderman 1:08:47
Very good. Of course.

Alex Ferrari 1:08:50
I want to thank Matt so so much for dropping some major, major knowledge bombs on the tribe today. And I am in that list. I learned so so much from doing this interview with him. And again, Matt, thank you so much for being so forthcoming. So open about the process, and really educating the tribe on how you actually get movies made, how you get money for those movies and how you should approach investors and so many other things we talked about. So if you want to get links to Matt, anything we talked about in this episode, please head over to indiefilmhustle.com/309 for the show notes. And guys, I know a lot of you are finishing your movies and you need close captioning, to put them on different SVOD, or TVOD or just deliverables to a distributor and you need closed captioning. So I am going to give you the tool that's going to save you hundreds of hundreds of dollars. It is called Rev. All you have to do is go to indiefilmhustle.com/rev. And you will get closed captioning done. professionally done for $1 a minute. That's right. It used to cost like $8 a minute to do just normal closed captioning, but now it's done. A minute, so just head over to indiefilmhustle.com/rev, and sign up and you get $10 off your very first order. And that's it for another episode of the indie film hustle podcast. As always, guys, keep that hustle going. Keep that dream alive and I'll talk to you soon.

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IFH 202: Film Finance & How to Raise REAL Money for Your Indie Film with Franco Sama

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Film Finance & How to Raise REAL Money for Your Indie Film with Franco Sama

Film Finance is a mystery to most filmmakers. How many of you need money for your next film or series? I’ll wait…yeah me too. Today’s guest is film producer Franco Sama from Samaco Films. Franco is an Executive Producer and an expert in finding money for independent films. Here’s a bit on Franco.

Independent feature film producer Franco Sama boasts a remarkable and extensive history in public speaking, public relations and a decade of independent film development, production and financing.

Sama has Executive Produced an impressive array of over twenty (20) independent feature films including most recently, “[easyazon_link identifier=”B00UGQ10MA” locale=”US” tag=”whatisbroke-20″]Guns, Girls and Gambling[/easyazon_link]” starring Gary Oldman, Christian Slater and Dane Cook which is quickly becoming a cult favorite; this film was released into theatres on December of 2012 and, in January 2013, acquired a worldwide distribution deal from Universal Pictures.

Other films Sama has produced include; “[easyazon_link identifier=”B007VYECQQ” locale=”US” tag=”whatisbroke-20″]Black Limousine[/easyazon_link]” starring David Arquette and Vivica Fox, “[easyazon_link identifier=”B00196RBRO” locale=”US” tag=”whatisbroke-20″]Tooth and Nail[/easyazon_link]” starring Michael Madsen and Vinnie Jones, “[easyazon_link identifier=”B001GXK6HM” locale=”US” tag=”whatisbroke-20″]Paid[/easyazon_link],” starring Corbin Bernsen and Tom Conti and “[easyazon_link identifier=”B00E0WFT5K” locale=”US” tag=”whatisbroke-20″]The Penitent Man[/easyazon_link],” starring “The Terminator’s” Lance Henriksen and

Sama also serves as Executive Producer on the recent film festival darling “[easyazon_link identifier=”B00DJSUOTM” locale=”US” tag=”whatisbroke-20″]Petunia[/easyazon_link]” starring Thora Birch, Brittany Snow and Academy Award winner Christine Lahti.

His shingle “Samaco Films” is currently producing a slate of several independent feature films, including “Bless Me Father” starring John Turturro, Michael Rapaport and Michael Rispoli as well as a moving military drama titled “Through my Daughter’s Eyes” being directed by Dallas Burgess, starring ingénue Avi Lake as well as “Jarhead” and “The Island” veteran actor Martin Papazian.

Samaco Films released two films in 2015, the first, “The Livingston Gardner” stars James Kyson the beloved “Ando” from the NBC television hit series “HEROS” and the second, “[easyazon_link identifier=”B00WMRB1DO” locale=”US” tag=”whatisbroke-20″]3 Days in Havana[/easyazon_link]” starring Ally McBeal alum, Gil Bellows; both of which have been released through Samaco Films’ sister company, Synergetic Distribution and have been released via all digital and Video on Demand (VOD) platforms worldwide.

And the company’s latest film “Game of Aces” directed by Aussie Director Damien Lay and starring heartthrob and former “American Pie” star Chris Klein alongside “Transformers” Victoria Summer (Transformers: Age of Distinction”) and Werner Daehn (“Valkyrie”, xXx) is scheduled to hit theaters early this summer.

Please share this episode with every filmmaker, screenwriting and content creator you can. Franco basically gave a free masterclass on how to raise and find money for indie films. Get ready to take a lot of notes. Enjoy my conversation with Franco Sama.

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