Ellis Jacob, President and CEO of Cineplex Entertainment

Interview with Ellis Jacob of Cineplex (Part 1/2): Leading with values, while staying ahead of disruption.

Ellis Jacob was appointed President and Chief Executive Officer of Canada’s largest motion picture exhibition company — Cineplex Entertainment — in October 2005. His more than 28 years of leadership experience in the motion picture exhibition industry has transformed the movie-going experience for Canadians.

Prior to the acquisition of Famous Players and the creation of Cineplex Entertainment, Mr. Jacob was President and Chief Executive Officer of Cineplex Galaxy LP, a company created through the merger of Galaxy Entertainment Inc. and the Canadian assets of Cineplex Odeon Corporation. In 1999, Mr. Jacob co-founded Galaxy Entertainment Inc. after serving in various roles within Cineplex Odeon Corporation from 1987 to 1998, culminating in the role of Chief Operating Officer.

He was appointed to the Order of Canada in 2010 for his contributions to the entertainment and movie exhibition industry, and for his voluntary and philanthropic endeavours. In 2014, Mr. Jacob was awarded Waterstone Capital’s Most Admired CEO in the Enterprise Category. In 2013 he earned the Most Innovative CEO award from Canadian Business Magazine.

Ellis’ key ideas?

- Lead with values.

- Don’t be bothered by ‘no’.

- Don’t procrastinate, get on with taking calculated risks.

- Taking risks is easier when they are close to your competencies.

- If there is disruption happening, deal with it up front and get ahead of it.

- To build the best company, you need the best people.

PART 1:

Q: What were you like as a youngster growing up, and what milestones, significant events, or critical learning experiences helped shape who you are today?

A: I was born in Calcutta, India, and went to an Irish Christian Brothers boys’ school. It was quite an interesting experience. I was always eager to learn at school. I loved debating, and won one of their debating contests. I was into sports like soccer, cricket and field hockey which were big in India at the time.

I was also a big movie fan, because when I lived there we didn’t even have TV. You could listen to the radio, go to live events, or go to the movie theatre.

The theatre was usually a large, one screen theatre with 800–1000 seats. The seats were reserved, and the closer you sat to the screen the cheaper it was. So people who were quite warm in the summer time would buy the seats in the front, and have a little nap!

It was a great place to live because it taught me a lot about diversified cultures.

In terms of what helped shape me, I remember a story my Dad told me. During the Depression he was trying to get started with a job. My Grandfather gave him a job at Remington Sperryrand — they made typewriters at the time. He told my Dad you can work, but we can’t pay you, we’ll give you a commission and if you sell you get paid.

His first assignment was to go to Nepal, which was just north of Calcutta. He had to take an overnight train. He was sitting in his seat, and there was a family across from him, as well as another gentleman. The family’s father came over (he was sitting in another part of the train apart from his family) and asked the gentleman if he would switch seats so the family could be together. The gentleman refused. My father overheard this and told the other father that he could have his seat, and went on his way.

He arrived in Nepal, and went to the client he was going to see. He was in the lobby area and was waiting for the head of the purchasing group to decide what and how many machines they would buy.

Who happens to walk by? The father he gave his seat to on the train. He looks at my Dad and says “what are you doing here?” My Dad said he was making a sales call to sell typewriters. The father asked who he was meeting with, and so my Dad told him. The man said “oh he works for me, come in with me.”

So instead of buying a machine a month for five months, he doubled the order. And that’s how my Dad got started.

That stuck with me in a big way. Today I try to do the same. Treat people the way you want to be treated. And check your ego at the door. Life is short and it’s all about those moments and relationships that take place.

In what ways did growing up in Calcutta (India) influence the kind of person and executive you are today?

The main things I learned there was how to deal with different cultures. Today it reflects in our employees, programs, innovations, and what we play on the movie screen.

Also one thing in India that is different than Western countries, is that you negotiate to buy everything. It made me a great negotiator. It was part of the game, it was fun. When I went back there with my wife and kids, and I was negotiating to buy something, my daughter looked at me and said “Dad you’re arguing for 25 cents.” I realized she was right, but it was just a part of the culture! At the end of the day what you have to remember in any negotiation, is you want to come out with both parties feeling good about the transaction. You can’t take every nickel off the table. That’s an important lesson.

There is an entrepreneurial streak that seems to run through your business career. Maybe it goes back to starting Galaxy Cinemas, and taking the risk of opening movie theatres in small markets in Canada. Can you tell the story of how you decided to put it all on the line and start Galaxy?

I was let go when we sold Cineplex to Loews in the US. It was a tough time because I had a wife and two little kids. I said “oh my god, what am I going to do with myself.” I had a non-compete for a period of time, and I went with my wife on a vacation to Istanbul. I got a call and it was Robert Lantos, he was the CEO and Chair of Alliance at the time, and I was on his board with Gerry Schwartz (CEO of private equity firm Onex) and others. He said “hey Ellis, I’d like you to help me, I want to sell my business. When you come back, as soon as possible I want to get together with you.”

So I ended up working with Robert in helping sell Alliance to Atlantis. Interestingly enough, after the sale, both the CEO and CFO of the acquiring company came to me and said “you were so tough on us, can you come and work for us, to help us merge these two companies?” I said “no I really don’t want to work for you guys, because I’ve made up my mind that I want to start a business.” I said I would help them for a year to integrate the two businesses. That gave me the space to get started.

Eventually I sat down with Gerry Schwartz, who also sat on the board of Alliance at that time. He loved the movie theatre business, but he hadn’t invested much in startups. I was one of those few situations where he was putting money into a startup. And at the time the Sobey family was also talking to me about potentially doing something. At the end of the day, Gerry was in Toronto and I teamed with him as a result of investors who were part of the startup.

To be honest with you, most of my friends were naysayers. They thought it was a badidea. Some of my friends did invest. The key investor and the one that stood out in my mind, was Robert Lantos. I provided him with the business plan. I said “don’t you want to look at it?” He said “no, here’s my cheque, you are my business plan.” That put a lot of pressure on me but it was also a huge vote of confidence and trust. It convinced me so much that in the first two years of starting Galaxy, I never took a dollar out of the company, I never took a salary for two years. I was driving a 15 yr old car. I thought “if I don’t believe in my own concept, how can I expect others to?”

With that I ended up getting investors like Alliance/Atlantis because Michael MacMillan (after I spent a year working with him there) invested. I also got Famous Players as an investor. So we ended up with some pretty good investors. But it also raised the bar tremendously, because when I sat in a board meeting it was Gerry Schwartz, Michael MacMillan, John Bailey, Robert Lantos, Victor Loewy, all CEOs of companies. And here I am talking about small markets like Sault Saint Marie and Moose Jaw, places that they’ve never seen.

One thing I believe in is that it’s important not to be bothered by the people that say no to you. That’s been the story of this company. The same thing happened later on when we were looking at merging with Famous Players. Most people said “that’ll never happen.” As a management team we were tenacious, and we got to the finish line. Even to this day people say “we don’t believe you were able to get this done.” I remember when we were leaving to go to Ottawa, and I told my wife “confidentially this is why we’re going.” She said “are you mad?” Even she thought it was a stretch.

To me it’s all about not procrastinating, taking calculated risks, being entrepreneurial. I convinced our people and our senior team that failing is not always a bad result. Most of the time the successes we’ve had outweighed the failures.

Part of my management style is that I’m very much about our people. One thing I reflect on is in the 40 odd years of working, I’ve only had one person ever quit on me. That person was my partner when I started Galaxy. He’s a close friend today, and we invest together. He just didn’t want to be in the public company space.

Now you run a huge enterprise. Do you see yourself as an entrepreneur at heart, and if so, how does that affect the way you lead a large organization like Cineplex?

It is a change in a big way, because when I was running a small company like Galaxy I knew everybody. Today it would be impossible to know over 13,000 people. One thing I keep emphasizing is “let’s keep our entrepreneurial spirit, let’s not take forever and procrastinate to make decisions.” To me it’s critical to be on the path, whether you’re big or small, to make decisions. We don’t take months or years to make decisions, we make a decision and move forward.

And our business is quite conducive to that, because you can always try things in different locations. We did that with babysitting. I thought it would be fantastic, we put it in our Oakville location. But Canadians didn’t want to leave their kids with strangers. So that’s a case of us making a decision, it didn’t work, and so you move on and learn from it.

It also happened to me in Galaxy, when I built the Sault Saint Marie theatre, I built it too big. The next theatre was down in size right away.

In most cases we have more successes than failures. Because they are calculated risks. We know where we’re going.

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Part 2 of this interview will appear next week.

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