Jim Miller

Jim Miller is on the podcast book tour to promote Powerhouse: The Untold Story of Hollywood’s Creative Artists Agency and he spoke with Bill Simmons about it.

Miller’s given some good interviews (like this one with Aaron Watson) but what I’m most excited for about the book is Ovitz. I read the 1997 ‘Ovitz’ book and it has little bits of (“I drove people crazy, I drove people out of their minds, but they liked it. I was this brash, inquisitive lunatic.”) How you can read that and not want to learn more ?  It sounds like Miller’s book has it.

Ready for the notes from Miller?

1/ Find secrets. “There were through lines between all three (CAA, SNL, ESPN). Lorne Michaels at SNL, disruption. ESPN and the birth of cable sports, total disruption. CAA 1975 and beyond, disruption. Just blowing up the existing ecosystem that had been there.”

Each alphabet soup companies found a secret. They found things that people wanted but where the needs hadn’t been answered.

I recently finished, For God, Country, and Coca-Cola about the ENTIRE HISTORY OF COCA-COLA. Mark Pendergrast actually does a great job of taking the behemoth apart one piece at a time. One theme of the book was that Coke found secrets (accidentally and on purpose). One was bottle size:

In 1990, when Doug Ivester took over the North American sector, Morgan pitched him with the idea of a 20-ounce contour bottle for Coca-Cola Classic. Ivester enthusiastically approve the project. In March 1994, when the bottles hit Chicago test markets, they outperformed anyone’s wildest expectations, boosting sales by 224 percent in a matter of weeks.

A 224% increase means you’ve found a secret!

But one the cola company never even thought to look for. For a time the six and a half bottle was the only way you could bottle Coca-Cola. As the company explored and tested they discovered secrets.

“Every great business,” wrote Peter Thiel “is built around a secret that’s hiding from the outside.”

Phil Knight did this when he started Nike. There was no such thing as athletic shoes, much less athletic brands. Companies didn’t sponsor athletes. There was little indication that the sports apparel market was a real thing. The only person looking there was Knight. In one hand was a graduate school project, in the other some startup cash from his dad.

Tony Hawk found a secret in the skate world.Milton Hershey found a secret in chocolate. Ed Catmull found a secret in computers that could make movies.

Secrets are like untapped geysers in a world where everyone is thirsty.

2/ Congenial intensity. “All of sudden they (Michael Douglas and Joel Silver) look over and Ron Meyer is jumping over the craps table to beat the crap out of two guys, including one guy who was really big.” “Which is it, is he (Meyer) the nice Jewish guy who talked to his mom every day while she was alive and that everybody loves or is he the guy who was in the marines and his body is covered in tattoos and is probably the last guy you want to piss off because he plays for keeps. That’s a duality you don’t see everyday.”

I loved this story, but when I started to think about what it meant I started to see it everywhere. How is it that Jocko Willink is a former Navy Seal but also Dear Abbey of sorts via his podcast? How is it that Steve Jobs was mercurial but Ed Catmull said that wasn’t quite right? How does Anson Dorrance push his players to the edge but keep a father figure type role?

My guess is that this duality is – one of many – a valuable skill, especially for leaders. You have to be intense in pursuit of the right things, but not in others. As Meryl Streep told James Corden, take the work seriously but not yourself.

3/ It’s never cut and dry. It’s never single effects. “You tell a couple of stories where here’s all this bad stuff this guy (Ovitz) would do, he’d threaten people…all this stuff.” Simmons “At the same he was doing an incredible jobs for his clients. It’s not just one-dimensional. It’s not just one narrative.” Miller

Ovitz, intensity without congeniality. If he worked for you, all the better. If he was against you, batten the hatches. He’ll (probably) come off as a villain in this book at worst, a jerk at best. Miller and Simmons note though that he did some good things too. We should consider both sides of this ledger.

“He’s a cross between a barracuda and Mother Teresa.” Paul Newman

Net-net thinking takes time and effort when we don’t always have both. In the Michael Mauboussin post we noted how we mentally loaf rather than finding base rates and comparing our situation. Net-net thinking requires those resources too.

Charlie Munger thinks we should think net-net about Coca-Cola. Sure, the health effects are neutral at best, but what about your productivity, energy, or mood? Does Coke make you get more done? Does it make you happier? No one would say a Disney vacation ‘wasn’t worth it’ just because it cost thousands of dollars. They’d ask if you had a good time. Why, Munger wonders, is Coke not considered the same way. Is it like a vacation for your mouth.

Another Coke example (geez, this is a lot of Coke in this post, but c’mon, I just read ~500p on the company) is New Coke. Largely deemed a failure because the $4M project was poorly received by the public.

Here’s some of what people wrote in: “Would it be right to rewrite the Constitution? The Bible? To me, changing the Coke formulas is of such a serious nature.”

People were not happy.

That was one side of the ledger. Let’s take a moment of time and bit of effort and ask What else happened?

It turns out that Coke got more than $4M of publicity by the time pivoted and restocked Coke Classic. “Unintentionally,” Pendergrast writes, “Goizueta and Keough had converted the gigantic marketing blunder into a commercial coup.” Further, “despite – or because of – the New Coke fiasco, the Company’s soft drink market share in the United States had swelled to 39% versus 28% for Pepsi.”

Was New Coke a mistake or not? If you look at things from a net-net perspective it’s harder to judge.

4/ Playing the long game. “I couldn’t believe that CAA doesn’t get recurring commission on the four billion and counting that Seinfeld has made.” Simmons

Wait a moment said Miller. “Ron Meyer was the one who basically took CAA out of it because Howard West and George Shapiro wouldn’t have been able to be part of the show, and they asked him as a favor…and remember it was called the Seinfeld chronicles, it was just a pilot. Even given the success of Seinfeld he did a solid for his buddies George and Howard.”

Seth Klarman pointed out that you want to leave a little meat on the bone for someone else. Klarman says that he tries to sell a position before it hits what he guesses is the highest value so that there are people to sell to. In this same way Meyer was able to line up other projects for CAA.

Long term success and short-term success often have different actions. Nick Murray said, “I don’t know how anybody who’s a counselor to advisors who are trying to get their clients to think and act long-term would sully himself with a forecast of any kind.”

Ovitz too saw the difference in long-term versus short-term actions. “You don’t get respect unless you first command respect,” Ovitz said, “you can’t ask someone to do something you won’t do yourself. You have to be first out of the foxhole if you want to lead in battle.”

“When a task had to be done, Ovitz said to himself, ‘I’m going to do it,’ and the other four all said ‘great.’ And before anyone realized it, Ovitz knew more about the business than any of the others.”

5/ Timing Matters. “Ovitz and Meyer were lucky they were in the movie business back then because they had much more influence and many more clients working. It’s a tougher business now.”

Part of finding secrets is the timing in finding them. You can have a great idea (Mark Cuban suggested streaming music) but if the time isn’t right you’ve got nothing.

Ovitz and Meyer had good timing for a new type of agency.

Failed Start-ups had poor timing for their ventures.

Barbara Corcoran had good timing for NYC real estate.

Chamath Palihapitiya had poor timing for the Facebook phone.

6/ Counterfactual construction. “That’s a fun ‘what if’ if (Tony) Kornheiser’s wife had okayed the L.A. move…what if Mike Ovitz had taken the Universal job?” Simmons “What if Tipper Gore had allowed Al Gore to let Bill Clinton give a couple of speeches for him in 2000?” Miller

In the Michael Mauboussin  post I wrote about how hard counterfactuals were to come with. Compared with the outside view, especially so. To get the outside view we start at the base rate and then move up or down, left or right. Counterfactuals are harder because you don’t start  anywhere. In fact, if you start from what actually happened you might be biased by that  very result.

Simmons and Miller have a solution. Ask ‘what it?’

I remember ‘What if’ questions being banned in 7th grade English class, but they’re actually quite valuable. Along with ‘Why 5X’ we can get to other ideas more easily this way.

• What if Sam Hinkie hadn’t been fired?
• What if LTCM has pulled out of the nosedive?
• What if the Soviets had sunk an American submarine in the cold war?

These ‘What If’ questions unlock a mental door I didn’t know I had much less one that I had locked. Mauboussin used a roulette wheel in his analogy of counterfactuals and that’s a good one because we can see what the other choices were. Black 15, Red 19, Black 4, etc.

‘What if’ questions begin to populate a roulette wheel of our own counterfactual outcomes.

Thanks for reading, I’m @mikedariano on Twitter.