The Exchanges

Q What are some of the examples of the things that you put in place to actually make this work? Because I'm imagining you probably talked to, like, 50 people a day for 15 years.

A Well, you're off by about a factor of five. So an average agent at our place would run 200 to 250 phone calls a day. Remember, some were, some were 15 or 20 seconds. So you gotta bifurcate this into pre-internet and post-internet. So pre-email, we had a system that we developed that was fail-safe. One, return all internal clients first. Two, you don't go home at night without Returning every call, and three, we had a, what's called a buck slip system, which was, everyone had buck slips, which were these pieces of kind of heavy paper that had your name on it, and you'd write a note to an associate, and I would say Ben spoke to Scorsese, recommended Goodfellas, Call me if questions. That would get sent from my office to that person's office, to your office, in real time. It was our form of email. Then he had to answer me that he had read it. So he'd strike it out and answer it. Send it right back to me. So when Scorsese called him, which he did, He'd say, fantastic, Marty. I heard that Michael talked to you about good fellows. Couldn't be happier about the decision. And then Marty goes, wow, these guys are on their business.

AI assessment note: “pre-email, we had a system that we developed that was fail-safe.”

Q If the Universal job had worked out, if you had gone to Universal, do you think things would have played out differently? I mean, Universal is a very different company than Disney, much more pure play focused on, on content at the time, uh, than, than Disney was. Uh, would that have been Better or different?

A You know, David, I'm going to tell you two things that both conflict with each other, because you asked a really smart question. Part of me thinks that I would have done an amazing job at building that business, because when I went to Disney, I put together seven initiatives. That I wrote about in the book that would have made Disney a fortune, starting with buying Yahoo, buying CBS records for two billion dollars, which is worth 10 times, 20 times that right now. Buying a publishing company instead of throwing money at a crappy publishing company that they had. I had a chance to buy from Universal, um, Penguin, Putnam, which is now the biggest publishing company in the world. I would have done that at MCA. Those other part of me said I would have failed at MCA too, because the Bronfman family would have never given me a free reign, and I'm just not, frankly, I'm not a very good employee.

AI assessment note: “Part of me thinks that I would have done an amazing job... other part of me said I would have failed”

Q too, is it also fair to say that your background, because most if not all of you came from television, was that kind of a secret weapon? Because packaging was more common in television, A, and B, television was still relatively new. I'm imagining most of the old people at, at WMA and, and then also in, you know, the studio business just weren't tuned into this new world, right?

A No, actually, if it's a good question, but let me correct something. William Morris was the top television packaging agency, and we all knew how to package television, but it's very different than packaging movies, because in television, the producer is a key element, and in movies, it's the director. And the director actor and actors are cast in television prior to the eighties when fading movie stars were brought into television. But the thing about William Morris is they bifurcated TV and movies at a time when they were starting to come together. And that was a thesis that we didn't agree with. So that helped us leave, but it was a different business at the time. And William Morris wanted to keep them separate, and we were asking the head of William Morris Picture Department and Television Department to run joint meetings, because people could work in both areas, and they refused to do it. That was another nail in their coffin. So when we started, we made a conscious decision to be TV only, because by SAG rules, they had to pay every Thursday. And we started our business on a 100,000 dollars, and we never went into debt beyond that, paid that debt off in six months, and never carried 10 cents a debt, ever. And the reason we didn't is our TV clients got paid every Thursday, so we took our commission. But, In 1978, we made a decision that we needed to be in the movie business,…

AI assessment note: “No, actually, if it's a good question, but let me correct something.”

Q What could have made CAA an enduring franchise that became a gigantic force rather than sort of apexing as you exited?

A So You know, it's funny, I had dinner with Ari a couple weeks ago, and we were, you know, he was a trainee at the agency, and one of the best we ever had, and I think he's done a fantastic job at building his business and diversifying it. I spent a lot of time, which very few people know, looking into how I could diversify CAA. Could I run it public? Could I sell it to private equity? Could I buy an ad agency? And I looked at buying J. Walter Thompson. I looked at bringing in private equity, and at the end of the day, I didn't know how to divide it up amongst the players. I couldn't figure out how to get it transitioned to a bigger entity. And Ari said, well, yeah, Michael, you could have bought an ad agency and blown the company up. But I said, I said, Ari, this was. 30 years ago. Economics were different. Public entities were different. Private equity was different. It just wasn't like it is today, and I couldn't figure out how to keep my core group and compensate them all, and I decided it was better to make a clean break and try to do it on my own in a different field. So how could it have been? Yeah, I could have bought Jay Walter Thompson. I would have gone into debt. I wouldn't have known how to give options in what To so many people at the agency, because how do you tell a group that's all for one, one for all, and we're splitting all the proceeds and then go through wh…

AI assessment note: “I looked at buying J. Walter Thompson... couldn't figure out how to get it transitioned”

Q like you were always looking around and identifying what's the new way that we've become more valuable and how do we leverage that into the next thing? Can you talk about some of the Like, that and some of the other ways that you just, by sheer force of will, or by counter-positioning against other agencies, how you were able to be different than everyone else around you and win?

A Well, we were different for one solid basic reason, which is that we basically worked as a team. So if the two of you were clients of ours, You didn't have one agent. What we resented at William Morris is that one agent coveted one client, and you couldn't go anywhere with that, because human nature is such that eventually there's a relationship problem. It just is. The longer you're around someone, the more there's a relationship problem. So we went ahead And put teams on people. We had some clients that burned through three, four, five agents, but they never left us. As a matter of fact, in a 25 year period, I think we lost under six, five or six clients. We never lost clients, because we had teams of people on them that they could relate to. So we would have a, for an actor, no actor ever had a literary agent. We'd have a literary agent on an actor. Well, why would we do that? Well, it would be stupid not to. Why wouldn't we? What does an actor do? All they do is read scripts to see what they want to do. What does a literary agent do? All they do is read scripts to see what actors' roles are available. So we were in a state of shock. That actors didn't have literary agents. When we looked into it, we were saying, wow, are we, are we stupid or is everyone else stupid?

AI assessment note: “we were different for one solid basic reason, which is that we basically worked as a team.”

Q That's wild. I mean, so, uh, we're talking about this point in history where you had already become this big successful agency, you were already representing these people, and you're, you know, branching out into things like trying to take on Koch's advertising. Can we hear the entrepreneurial story from you of how CAA came to be in the first place? Because you really started with nothing, like zero.

A Yeah, I mean, it, it, it's actually pretty simple. Um, I'll, I'll try to give you the highlights. We were, A group of us, there were probably 15 young agents at William Morris, maybe 20. All in our twenties. And I was the assistant to the president at the time. Bill Haber ran the TV talent department. Ron Meyer was a first-class talent agent. Roland was a, and Mike Rosenfeld were TV packaging agents. And basically, we noticed that A disagreement philosophically with where they were taking the business. And crazy as it sounds, CAA was born out of a bad staff meeting at William Morris. Where the guy I worked for, who was head of the television department, his name was Sam Weisbord, announced with great pride and passion that he had signed Ann Miller, which will mean nothing to you two young guys, but she was a fifties song and dance queen and a Broadway star. And we said in a staff meeting, we all sat in the back. We weren't allowed to sit at the table because we weren't senior enough. And one of us got up and said, look, Ann Miller is a talented lady, but we should be signing Bob Redford and Paul Newman and Dustin Hoffman and Sean Connery and Sidney Poitier, and we should be signing those people, not Ann Miller. This is William Morris. We've been around since The older guys went ballistic, and you then saw a division at William Morris that never healed, and then they made a card…

AI assessment note: “CAA was born out of a bad staff meeting at William Morris.”

Q They made money. You made money. Coke did great, right?

A Everybody was happy, but more importantly, you know, it's funny, our competitors put out all this press. CA is gonna use their clients to make commercials. How stupid, blah, blah, blah. I'll never forget one of our clients, Dick Donner, who did Superman. Call me up laughing. He said, I just read this article in Variety that we're all stupid for doing these. He said, I just cashed my check. He said, and I'm, he says, I'm between movies. I couldn't be happier. I just want you to know that. So it's just that kind of, you know, we thought out of the box. Nobody else did. And when we Did the commercials. I said to Roberto, I want you to premiere them like a movie. Invite the press and run them all, because 35, 32nd commercials is less than 20 minutes. And he ran them for the press, and the press we got was insane. We got the cover of Time Magazine, which was important at the time. We got a love letter in the New York Times. We got unbelievable press, except for the advertising journals.

AI assessment note: “Everybody was happy, but more importantly, you know, it's funny”

Q He was really like a Leonardo da Vinci type, right?

A He was amazing. Here's a guy who was a medical doctor, screenwriter, director, travel writer, um, short story writer, novelist, and just was probably the greatest guest to ever have at a dinner party, because he could talk about anything with an extraordinary depth of knowledge. And it's fascinating to me, because later we'll talk about another friend of mine who I love putting together, and that's Marc Andreessen. Um, the two of those guys, um, Probably suck. 90% of the brain power that God gave away in their birth years. Um, they're just like extraordinary, but Michael ran into a very tough patch, really tough patch. And a lot of writers and creative people, and you've probably heard the expression writer's block.

AI assessment note: “medical doctor, screenwriter, director, travel writer, um, short story writer, novelist”

Q Was there an element, I, I know this was the case at WMA, but maybe at all the agencies of a holdover from old Hollywood where, where New York owned these, like who owned these, uh, your competitors, uh, like, um, like, like you said, you know, when CAA did well, y'all did well, like it was partnership. How were economic structured at other agencies?

A They just made what they called market deals. So if you wanted to hire an agent, you try to pay them whatever they asked that was a market deal. And we did just the opposite. We paid very small front money and said at the end of the year, if we do great, We're gonna overpay you. We're gonna pay you more than you can get elsewhere. You know, we had an agent who was co-head of our movie department get offered a job by Jeff Berg at ICM, who was a very good agent, and Jeff invited him to a meeting, and the guy came in to see me, and he said, should I, what should I do? I'm just gonna turn it down. I said, absolutely not. Go take the meeting. Now, I had two things in my head when I told him that. One, I wanted to know what they were gonna be doing and what their thought process was going forward, and I knew that he'd get that out of them. But two, I knew they'd under-offer him, and I wanted him to see what he could get elsewhere. Now, I didn't tell that to him. So he went and took the meeting, and they were having a Jolly time. And until it came to comp and I had instructed our guy to ask for what he'd get paid. So the answer came, we'll pay, I'm going to pay you more than I'm making.

AI assessment note: “They just made what they called market deals.”

Q So is my characterization maybe not fully accurate then that I'm, I'm thinking of blue and MCA as sort of opening up a seam for artists, but then closing it again, but maybe that's not totally accurate. Uh, is, uh, How, how would you characterize Lou then and what he did with universal?

A I don't think that they gave participations out. They didn't stop it. They negotiated hard and tough on their side, no different than we did on our side, but they were sympathetic to, they didn't just say, look, we're not doing this. We're reversing it all. And frankly, as CAA gained momentum in the eighties and early nineties, they didn't have a lot of choice because of the 50 top grossing directors in the, for example, in 90, CAA represented like 45 of them. So it was impossible. You couldn't say no. I remember when we signed Mike Nichols, may he rest in peace, a great director. I'll never forget a call he made to me. He was getting two and a half million to direct. And when he became a client of ours, and he, we went to make a deal for him, I called him up and I got him five million. And he said, I don't understand. That's not my price. And I said, well, it is in the context of being a CAA client. Because five million was what the top directors made at that point in time. So I said, Mike, you're a top director. I said, if you want, I'm happy to take two and a half of it and donate it to charity. At the time I was raising money for the UCLA hospital, we were going to rebuild it. So I said, I'd be very happy to take that two and a half million for the hospital. And he said, I'd love to do that, but I'm very pleased to have the full amount.

AI assessment note: “They didn't stop it. They negotiated hard and tough on their side”

Q He was one of your founding partners, right?

A Yeah, Bill Haber could read a screenplay, a teleplay, And give as good a notes as any executive at any television company. As a matter of fact, I could probably make an argument. He could probably do it better. He was really good at it. We put together Shogun. As a miniseries, everyone said Bill and I were crazy that we'd lost our minds. Who cares about the Far East? And how do you make a TV series about a bunch of Asians and one in Anglo? Well, it was our point of view from everything we were reading that Asia was becoming a very hot commodity in the seventies and eighties. People were really interested in what was going on. The rise of electronics and electronic companies like Sony and Matsushita, Panasonic, National, These were major players in our business developing hardware for all of the software that our clients were creating, and those are the kinds of things we would think about, but moving back to Coca-Cola, We weren't in the ad business, but we had a sense of what people wanted to watch, so I was at a Allen and Company conference, and Herb Allen was the, on the board of Coca-Cola, and of course, the CEO and president of Coke were at the conference, and we were having a coffee out on Herb's porch, and the, both guys said to me, we're getting Hurt by Pepsi Cola. And bear in mind, in the eighties and nineties, there was a book written called The Cola Wars, where these …

AI assessment note: “Yeah, Bill Haber could read a screenplay, a teleplay”

Q the sort of pre-CAA studio world, you know, the talent agencies would represent the talent, and then the studios would do development, where the, the studios, you know, they would buy the script, and they would attach a director, and they would turn it into a film, and then they would go cast the, the actors. How did you sort of get the idea of, oh, we could do that?

A Well, the idea was pretty simple, frankly, in that when we started in 74, we didn't have any clients. So all we had were relationships. So all we could do is put elements together and try to attach ourselves and hang on to a bucking bronco. And by doing that, and if we could hang on, it developed that as we took clients in, we'd surround them with elements. Because it became very clear to us that the clients were the creative force And they were the ones that were gonna dictate what was going to happen. It was kind of the same reason that I encouraged everyone at the agency to read a lot of magazines. Now, you can't think of magazines today the way we did. Because in the seventies, eighties, nineties, and early 2000, magazines were vital part of the culture of the country.

AI assessment note: “when we started in 74, we didn't have any clients. So all we had were relationships.”

Q Do you agree up front to a fee? Do you say, hey, let's figure it out later? Do you agree to a fixed price?

A So I did something in those days that cannot be done today. And let's bear in mind, guys, this is. 35 years ago. I worked my tail off to understand Japanese culture. And I read everything that was published. I studied the language. I studied the culture. I studied the art. I studied how they treated people. I read everything under the sun that wasn't tacked down. There was a Japanese American bookstore in Rock Center. I was their biggest customer. And I took a shot at something which paid off for me in multiples. So, all of the banks, excluding Alan and company, and me, asked for a fee letter up front. We asked for nothing. We said, look, if we do a good job, you can pay us an obscene sum of money. If we do a bad job, pay us our expenses and We're all good.

AI assessment note: “We asked for nothing. We said, look, if we do a good job”