The Hollywood Model for startups

“The team had never worked together before, and the scenes they were shooting that day required many different complex tasks to happen in harmony: lighting, makeup, hair, costumes, sets, props, acting. And yet there was no transition time; everybody worked together seamlessly, instantly. The set designer told me about the shade of off-­white that he chose for the walls, how it supported the feel of the scene. The costume designer had agonized over precisely which sandals the lead actor should wear. They told me all this, but they didn’t need to tell one another. They just got to work, and somehow it all fit together.

This approach to business is sometimes called the “Hollywood model.” A project is identified; a team is assembled; it works together for precisely as long as is needed to complete the task; then the team disbands. This short-­term, project-­based business structure is an alternative to the corporate model, in which capital is spent up front to build a business, which then hires workers for long-­term, open-­ended jobs that can last for years, even a lifetime. It’s also distinct from the Uber-­style “gig economy,” which is designed to take care of extremely short-­term tasks, manageable by one person, typically in less than a day.”

— Adam Davidson, The New York Times, What Hollywood can teach us about the future of work

This “Hollywood model” is used not just in movies production but in startups too. By leveraging a team of highly specialized and experienced experts during the initial phase of your project, you may quickly take your project off the ground. And then, later, you may manage, update and distribute the created product or service with your primary team. In opposite, when a project team doesn’t have the required experience then you will face high risks of failure caused by the reinvention of the wheel and will lose too much time and resources in finding the right way to start. In my experience, instead of trying to have your existing team to work on a new project in an unknown area it is better to form a separate and external team of professionals with the successful experience with a very similar project. These “external” experts will help you to make the very first steps and to gain a foothold in the market. And once you reached first milestones you may move and update the project with your regular team.

Large venture firms do recognize the value of providing access to a team of professionals and model themselves after Hollywood agencies. For example, Andreessen Horowitz (A16z) venture capital firm had 45 experts (out of total 70 including investors and general partners) to help startups they’ve invested to. As one of A16z founder and a former successful entrepreneur Marc Andreessen told the Fortune magazine about these experts:

“Those 45 folks are across five teams of professionals that work with our entrepreneurs. And those are across five disciplines: executive recruiting; engineering recruiting, so two different what we call talent functions; a function we call market development, which helps companies meet the big companies that matter in their industry. We’ll do on the order of 1200 briefings in our executive briefing center downstairs with Fortune 500 management teams, connecting them to the best and brightest new startups. And then fourth, marketing and PR, which is fundamental: How do you get your message out, how do you break through all the noise. And then fifth is corporate development: How do you raise money, how do you go public, how do you — you know, if it comes to it, how do you sell yourself, and how do you deal with all the issues around corporate finance.”

A16z created this model after CAA (Creative Artists Agency, an American talent and sports agency). CAA represented famous artists, directors, sports stars and other public such as George Clooney, Michael Douglas, Tom Hanks, Brad Pitt, Steven Spielberg, Sharon Stone, Meryl Streep, David Beckham, Joe Biden and many others.

Some smaller companies are providing experts for their clients based on this model too. Last year I interviewed Polina Kachurina, CEO of DocSourcing, a small business that helps startups with market research and business plans. The company relies on a distributed team of experts where CEO tests each expert against highest standards. For every project (like a business plan preparation) they are forming an online project group. The company’s fees depend on an actual success of a project. For example, the success in raising funds for the business plan. This model engages experts into a project and attracts more customers because of the transparency and the goal-oriented process.

If you are considering to run a new project based on Hollywood model then you should be aware of the following advantages and disadvantages:

Advantages:

• You are getting a much higher quality of the first iteration of your business.
• A failure rate is lower because experts may predict critical risks to avoid based on their experience
• Less time will be required to make first steps because these professionals already did this before and now they know where to focus first.
• Fewer conflicts and less stress for your existing team as you are not distracting them from their work
• Your team may take control over the project once they successfully executed the first milestone.

Disadvantages:

• Be prepared to up to 2–5 higher costs of hiring experienced professionals comparing to your inexperienced team. But you should examine the resources, time and money you will spend to train your team to get to the same level of experience.
• Be prepared to invest into new tools these outside professionals would ask you to provide for them. These tools may differ from the ones you use. That is why it is better to treat them as a separate team and, in some cases, even as a separate business entity.
• Be ready for the different processes and workflows different from ones you have. Don’t try to teach or ask professionals to adapt your tools and existing processes. Asking them to follow your workflows could lead to a higher total cost. The magic of “Hollywood” workers lies inside the unique mix of workflows, tools, and professionals.
• Your existing team should be ready to collaborate and to provide all the required data and knowledge. The team should also be willing to learn from the outside team to successfully adapt their work.

Here is my recent experience: the outer team of professionals helped my team to move the existing Drupal-based website with hundreds of pages and lot of customization into Wordpress platform. But the main struggle was that the team of programmers I’ve worked with didn’t have any experience with Wordpress before! Instead of trying to figure out the best ways and instead of learning the nuances website customizations, we decided to form a team of external professionals. I found a specialist who was specializing in exactly this: moving websites from Drupal to WordPress. The project executed by this guy cost as two months of the full-time programmer but he did the migration in less than two weeks! He also suggested the most suitable website plugins and set the internet site on a new hosting service. Another professional was also testing the site by comparing the new one and the old one to make sure all the links and pages works as expected. The whole process took about one month, and now the primary team supports and updates the website.

So, where to find these professionals? First, don’t even think that they are waiting for you to contact them. They are highly valued by the market and by other entrepreneurs and already working on another project. Maybe even working for your competitors. You will need to find them, to engage them and to motivate them not just by an amount of money they may earn but by giving them a new challenge. Though money is not the ultimate goal for them, you are expected to pay a higher rate. In Hollywood, even entry-level electricians are making 40% more comparing to the national average for electricians in the United States.

The Checklist:

• Use professionals for new projects with high risks in executions, where you and your team don’t have any previous experience.
• Interview professionals to find out details about their experience and look for the very same project executed before.
• Do not integrate professionals into your team but form a separate project team or even a temporary entity.
• Allow them to use their tools, services, and approaches. Invest in these tools and services if they ask to do so.
• Expect to spend 2–5 times more comparing to what you would pay to your team but expect the whole project to be executed much faster and with a much lower failure rate.
• Think of the way to pitch your project as a great challenge.
• The project should be transparent as much as possible so your team could extract the necessary information to run and support the project later.