Episode 64 – How to Invest in Movies with Jon Erwin
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October Baby. Mom’s Night Out. Woodlawn. I Can Only Imagine. What do these movies have in common? They’re all creations from the Erwin brothers.
Jon and Andrew have had a passion for creating and making movies since they were young, and while we could talk shop about movies we love all day long, we asked Jon to pull back the curtain into the economics behind the big screen.
How do filmmakers raise capital? Where do investors looking to get involved in entertainment? And of course, how does our Christian faith play into all of this? Listen in to find out…
Episode Transcript
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Jon Erwin: There’s never been a more powerful tool of storytelling than mass entertainment. It’s America’s second largest export behind agriculture. You know, there’s enormous infrastructure being built worldwide, completely flips the model of sharing the gospel because countries pay for American movies. And if you can cross a certain threshold of success, these movies go on global autopilot and these countries are paying you. And so it’s an incredible model to get the gospel around the world. It’s an industry that we’ve historically been underrepresented for quite a while. As Christians, I think it’s our fault. I don’t think you can blame it on some evil Hollywood agenda. I think we’ve abandoned the playing field. In my experience, people are open. They just don’t. I mean, like the chairman, the motion picture group was a great friend, a mentor at Lionsgate. I’m the only Christian he knows, you know, and that’s Christianity’s fault. So I think we got to stop blaming some evil conspiracy that doesn’t exist, in my opinion. And I’m deep inside the industry and we got to get in the dating game again.
Henry Kaestner: John, it’s awesome to have you here, thank you for joining us.
Jon Erwin: Thanks for having me. And love the theme of your podcast. I remember when we did the deal at Lionsgate, we make movies there, the studio. They said, what’s most important to you? This was after the movie. I can only imagine. I said I’d like to be seen as an entrepreneur first and a filmmaker second. And so I think I actually value just entrepreneurism over entertainment. In a way. There’s so much creativity in the process of creating, you know, a company or a revenue sort of engine or a story for a film. There’s a lot of creativity in both. And so thanks for having me on for sure.
Henry Kaestner: Yeah, you’re on the right program then, obviously. So one thing we like to start every show off with is getting a little bit of your background. So tell us about growing up in your own household, your relationship with your brother when the movie-making becomes something you thought about pursuing after you thought about entrepreneurship.
Jon Erwin: Yeah, well, I’ll say this. Some details of the story I’m not recommending. I remember doing a program I think called Money Life, and some of it was like that person was condoning lying. I’m like, I’m not I’m just telling you what happened. I’m just going to preface it with that. But I was born and raised in Birmingham, Alabama, and love the South. I live in Nashville, Tennessee today and commute to L.A. And when I was probably 12, I started working at a cable station and when I was 15, and to anyone that’s young and interested in filmmaking, start now the tools that’s never been as readily available. One of the great assets I had was just to start, you know, very young, you know, probably 10 years younger than most people. And in the providence of God, just he opened up an incredible door when I was 15 at the University of Alabama. We got it.
Henry Kaestner: We got to stop here. So, William, huge Alabama fan.
Jon Erwin: So I could say right here, am I able to say roll tide? Because all can say it sings to my heart, John.
William Norvell: You know, I get I get made fun of all the time on the show with people. And I talk about, you know, how successful we are all the time and just bothers people.
Jon Erwin: You know, Roll Tide in Alabama is a way to say hello goodbye. It’s a way to affirm, you know, healing. Yeah. It’s a way to sit in going for it. It’s a there’s many uses to roll tide.
William Norvell: You know, we need a link to the ESPN commercial and the bottom of the podcast.
Jon Erwin: Mini, an Alabamian has died and their last words were all tied before doing something really stupid. But anyway, it will roll tide, by the way, at any rate, a cameraman got sick three hours before the kickoff and I was apprenticing for a cameraman for my church named Mike. And for about a year I worked for him for free, carried around a tripod.
And he called me and he said, John, get over here right now. I told him I knew a guy like me. Lying is such a strong word. It’s like just neglect to inform them of your age and your level of it. Just don’t say anything at all. Just get over here. So I got in the car. My dad drove me over because I didn’t want him, but I couldn’t drive. He dropped me off four blocks from the stadium. I walked in and did what Mike told me to do. Just basically he didn’t say anything. He just said, I’m here and I’m I’m one of you and all that stuff. And I went up to Karma for and football shoots is the highest camera in the stadium. She’s up and down the field like field goals. And I was used to cameras that were very small. And this was like a telescope was huge and the lens was so powerful it could zoom in and out of a quarter of the moon. So I was just this kid is fifteen year old, homeschooled, conservative, you know, never met anyone that wasn’t a Christian, you know, share my world view kid that had just sort of joined the circus. I was literally zooming this camera just in and out of the moon and having the time of my life. And I just I got bit hard by the entertainment bug. I fell in love that day and they paid me three hundred dollars. I had never seen that much money. We didn’t have a lot growing up at all. So then I was really in love. And I remember I played basketball all the time. And we have another podcast on sports. And my coach called me and said, Are you come out for the team? And I’m like, Now they’re paying me to film games. And he didn’t have a response for that. So that was the end of sports for me. But the next week, crewing agent called me because I was, you know, Birmingham, Alabama, again, providentially is right in the heart of the SEC, which is the best conference anyway. And so there’s games within a five, six hour radius everywhere. So occurring agent called me and said, are you a freelance camera operator in Birmingham, Alabama? And I didn’t know if that was three individual jobs and I had to pick one or if that was one job. So I just said, yes, that’s I’m that that’s what I did. So she sent me down to Auburn and did another game there. And is that the airable or are involved on the air but just didn’t Auburn football game and the Auburn stadium was always very cold. At any rate, I work for ESPN really full time after that. And when I was 16 years old, my dad used money he didn’t to help me get a camera, probably the best gift I’ve ever received. And he helped me and secure a ten thousand dollar loan, which you probably shouldn’t do. There’s a lot in this story you shouldn’t do for a sixteen year old. And he taught us something that has stayed with us. He just said dream bold, dream big dream the impossible. And we’ve tried to live up to that. Ever since and we just started making stuff, you know, I think that there’s a great principle I love to read and I would just highly recommend reading. And there’s a great book called Outliers. And Malcolm Gladwell, the author of that book, talks about a principle called The Ten Thousand Hour Rule that there’s no overnight success in anyone that’s kind of achieved sort of breakout in anything, has spent 10000 hours honing and mastering their craft. And I think as craftsman, as Christians, we don’t respect the season of preparation that precedes a season of influence. And sometimes the season of preparation is a lot longer. And so we just started making stuff and made all kinds of stuff. I don’t remember. I mean, I filmed so many weddings and surgeries and birthday parties and used car commercials and all kinds of stuff, but just round and round the Praxis track, learning my craft. And I think people get it wrong when they consider film an art form. An art is something you express. I consider this a craft. A craft is something you master over a long period of time and just made all kinds of stuff. And then the Christian artist, Michael W. Smith and Amy Grant, the music artist, gave us a break for reasons I still to this day don’t understand, to do music videos for them. And the first one we did for somebody went to the top the charts, and that led to a career doing music videos, working for just a ton of both Christian and country artists and winning a lot of awards. But it was still just a job.
Henry Kaestner: Give a story on that before I go off, because I came of age in the MTV generation is a lot of our listeners did. And so we’ve never talked to anybody on this podcast. It actually made a music video. Give us a good story behind the scenes and music video.
Jon Erwin: There are many, but I’ll tell you one, we used to write these enormous treatments, five, six, seven page treatments and a label would give a song out to 10 or 20 directors, and we’d all compete by writing treatments and then they would award the video. Well, and then I had one at a time, music video of the year, I think three years in a row. And so we didn’t quite have to write as long as treatments. And so there was this band is very sort of heavy rock band, great band called Skillet, and they had a song called Hero. And so I wrote a treatment that just said, basically the band’s singing at night. Things start to blow up. Then it starts to rain. Then it rains and things start to blow up. Then everything blows up the end and gave it to the band and they’re all like, let’s do it. There’s a little paragraph treatment. And so we got all these pyrotechnics and a lot of special effects and a lot of water and things you typically don’t want to mix like water and electricity and fire and gasoline bombs and all that stuff. And I love that stuff. At any rate, the first take the drummer, I forget the name. It was their first video and she was the drummer, so she was the closest to it all. And so we go through the first take and then we yell cut. And she runs screaming because she didn’t know because it was the first video that she could stop to take if she didn’t feel safe or whatever. And so she runs screaming for a trailer. So I’m like, Andy, you should sort of deal with that.
Andy, he deals with the gas, the actors. And then I sat down in her seat and I’m like, Hey, guys, just give it to me full. And it was the propane mainly. It’s like big fire, you know, sort of like patterns of propane. And so they gave me everything. And I’m like, yeah, I feel like my skin’s melting off. We should move the band forward, you know, and no one was hurt. She’s OK. But yeah, that’s called a skillet hero. I think we can see that honestly. It’s actually the most watched Christian video of all time. Well, that one or the movie they did monster that we did for them, I think is like 250 million views. One of them is put a link to that in the show notes and maybe that’s monster. We did Monster and Hero back to back. It was great fun. Anyway, I love that type of work. And so I went to direct the second unit on a movie called Courageous, a faith based film. That real Cinderella Story, a church in Georgia called Sherwood, was doing movies that Sony was releasing. And they were very successful and they had just done a movie called Fireproof that had done very well.
And they were doing this movie Courageous, and they made them primarily with church volunteers. So they’re like a thousand church volunteers. Well, courageous. They want to do a cop movie. They want to do action scenes, foot chase scenes, car chase scenes. Well, these are like wonderful things, like chase scenes in movies. You never want to combine them with church volunteers, or somebody will die, you know, in the process of making the movie. So I was brought in as a second unit director to just do the action sequences and try to get inside Alex’s head and execute those scenes for him in a safe environment with professionals and had great fun. And Alex, you know, Southern Baptists, sometimes I think the the most powerful thing in your life can be the right question. And Alex asked me a question and he just said, John, what’s your purpose and the purpose of your work? And I couldn’t answer it. And not only could I not answer it, I couldn’t stop thinking about it. And the whole time working for them on their film, I couldn’t stop mulling over this question of, like, not what do I do? And by the way, that’s a great question for anybody. Simon Sinek wrote a great book, Start with Why just fantastic book and the idea most people know. What they do, some people know how they do what they do. Very few people know and articulate in lead with why they do what they do. And so it was just a process of thinking about why we did what we did and what our purpose was. And that led us jumping into the fray of faith based filmmaking, which is an honor. It’s very rare thing to be working in an industry that is emerging in such a way that you can have your fingerprint on whatever it becomes. And that’s an honor to be an early pioneer in something. I remember talking with gymnast and we were doing a film, Woodlawn together, and he said, I see you and Andy and Alex and Steven and Devon Franklin and these other guys as like frontiersmen. And I said, thank you, Sean. That’s high praise coming from you. And he says, you know, John, most frontiersmen die on the frontier. Settlers are like, well, the trail will be clearly marked and will be frozen, pointing to the summit. But it’s an honor to sort of you know, if you think about what Michael W. Smith and Amy Grant, who launched our careers and music videos, did for music, they were early pioneers in what has become a platform that a lot of young people can be heard. That was our career to calling moment after the movie Courageous.
William Norvell: Oh, well, that’s an amazing story. Amazing story. Woodlawn, also nice Alabama film. Yeah. Yeah.
Jon Erwin: Real Black Bear Bryant after that, starting with a movie called October Baby. We got into the business of independent filmmaking and I like the quote from then on the Mike Tyson quote, Every boxer has a plan till he gets in the ring, gets punched in the face. You know, you get the ring and you learn. But that was the jumping off point to what we do now.
William Norvell: That’s awesome, John. And so walk us through a little bit. So you’ve got independent filmmaking and now you’re in Hollywood as well. You mentioned you commute back and forth, L.A. and you mentioned Lions Gate. Walk us through what that world looks like. I think some of our audience probably just doesn’t understand. Probably a lot of misperceptions on, you know, hey, it’s Hollywood antagonistic to faith driven films or does it matter as long as you make a really good movie? How that tightrope work? How do you think about yourself and the movies you’re making sort of coming through and out of a place that I think most people may think wouldn’t necessarily like it?
Jon Erwin: That’s a great question. I would say the majority of what we did for a while was outside the system. October baby, we had to raise the money to make and also to market. It cost a lot more to market and release a film that does to make it second film we did send out.
We did with Sony and then the third film we did Woodlawn. We did independently as well as I can only imagine. And the more success we achieved, you know, the more that, you know, it’s fun to sort of operate and develop a direct relationship. You know, one of the things that you can do today is develop a direct relationship with the consumer base, and that is very powerful today. So the more you do that, the more the existing sort of industry comes to you. And now we’re in business with a wonderful partner, Lionsgate. And I would just say there’s never been a better time. I mean, I like this verse in acts where Paul says of David that he served the purposes of God in his generation. That’s cool. Like the gospel never changes, but you got to own your time. Right? And so the way to get it to people does change. And I think that there should be a strong sense of ownership of I’m going to own the tools of my time and infuse them with the gospel. And I think when you think about it from that perspective, there’s never been a more powerful tool of storytelling than mass entertainment. It’s America’s second largest export behind agriculture. You know, there’s enormous infrastructure being built worldwide, completely flips the model of sharing the gospel because countries pay for American movies. And if you can cross a certain threshold of success, these movies go on global autopilot and these countries are paying you. And so it’s an incredible model to get the gospel around the world. It’s an industry that we’ve historically been underrepresented for quite a while. As Christians, I think it’s our fault. I don’t think you can blame it on some evil Hollywood agenda. I think we’ve abandoned the playing field. In my experience, people are open. They just don’t. I mean, like the chairman, Motion Picture Group is a great friend, a mentor at Lionsgate. I’m the only Christian he knows, you know, and that’s Christianity’s fault. So I think we got to stop blaming some evil conspiracy that doesn’t exist, in my opinion. And I’m deep inside the industry and we got to get in the dating game again. You know, now L.A. is the center of narcissism of the world, in my opinion. It’s like you could buy up every billboard in L.A. and put the words get over yourself and it would be a worthy investment. The entertainment industry is an interesting trifecta of sort of power, you know, money and sex. And so I think that there’s an interesting allure to it that my first manager said, you know, it’s not a business of psychopaths. There’s a bunch of really wonderful people, but it is one of those rare businesses where psychopaths can really flourish. So I think it’s not a safe place. But, you know, that’s not an excuse for us not engaging and harnessing the power of this medium. I think it’s really important. And I think we’ve gotten way behind. And I also think that we’re in this little sort of window of time where there’s, you know, the perception that. Entertainment is cheesy or less than or not as good, I see that as a businessman and entrepreneur is a massive opportunity for a brand, but that’s another subject.
I think if you look historically like we had our second movie premiere was at the Chinese theater and Sony put on a premiere for a movie there. And, you know, that’s like the Mecca for a filmmaker. But if you think about that theater, you know, the Ten Commandments are under glass inside. You know, from Charlton Heston’s movie and first movie premiere, there was Cecil B., the King of Kings. And, you know, there’s a lot of faith history. There was a time where faith based films were the epics and the blockbusters of the day. If you take the European art tour, you know, there’s an incredible fusion between faith and art. So we’re in this sort of ditch that we got to work our way out of and I think we can wear. Christian films are associated with poor quality for a lot of reasons. That would take a long time to unpack. But I do think it’s something that we can fix and that we can improve upon and then we can reestablish our voice and culture.
And I just think if you want this is the language of the time. If we want to communicate with a generation, this is the way to do it. And I think it’s ours for the taking. I don’t think there’s ever been a moment where Hollywood is this accessible. There’s just incredible opportunities for anyone that brings a relationship with an audience. So I think when you look at I can only imagine it shocked the system to such a great extent. It triggered this phenomenon called FOMO, which is the fear of missing out. We’ve never been this connected as a culture, but we’ve also never been this lonely. And so people have an extreme fear of missing out and a need to belong. And so whenever a group, whether it’s crazy rich Asians or Fault in Our Stars or I can only imagine what parasite, for that matter, whenever any group rallies together, champions and celebrates something, it tips over into cultural FOMO, into the zeitgeist, and that’s how you start getting millions. Our unified voice is very powerful and very leverage able. And I mean, the industry thinks differently. I think LA’s problem is they think everyone is just like them and thinks like them.
And certainly a certain political mindset is somewhat of a religion. And I find we’re just not represented. There’s some Christian groups that try to influence Hollywood from the outside, but the entertainment industry is so specific you have to influence it from the inside. And that means you’ve got to get really good at what you do and you got to hold tight to your values while you do it. And I just think that there’s enormous opportunities. I think we’ve only scratched the surface of what faith based films could become. I think that there’s a generation of talent behind and, you know, that will far outshine and out exceed our accomplishments. And I just think that we could make an enormous difference over the next decade in the entertainment industry. You know, my Bible says on this rock, I build my church and the gates of hell will not prevail against it. Nobody’s going to throw a gate at you. Nobody’s going to attack you with a gate. A gate is a defensive mechanisms. Gates are meant to be stormed. So we really need to embrace an offensive playbook culturally instead of a defensive playbook to reclaim our voice.
Jon Erwin: But that’s interesting. So I want to ask one question on that. So what is a faith based film mean to you? To people looking like I can think of your films, then I can think of you know, I think Angelina Jolie produced Louis Zamperini story on Brogan. And then, you know, some people were mad. It didn’t go enough into faith, but it was a story. It was pretty accurate to the book in my personal opinion. The book I read right, it maybe left out some things, but it was directionally accurate. You know, what does that phrase mean to you? And is it a broader hey, there’s multiple categories of that. But and so when you’re encouraging people, I’m interested in what are you encouraging them to do? What type of films, what type of influence could be achieved there?
Jon Erwin: That’s a great question. That’s a loaded question. It’s a question of great debate, you know, in the sort of entrepreneurism is space. One of the things that I think that you have to embrace as an entrepreneur is what differentiates you. And it’s OK to be different and to say, look, I love the work of all these people, but I see the world differently and here’s what I want to do. And there are faith based films that are meant to I think the sort of church term would be to edify the church. You know, they’re prescriptive. They’re films that are on topics that the church promotes. They’re meant for people sort of inside the church. And we start sort of almost by accident, really, on the film Woodlawn. And because it was so disproportionately used as a tool for evangelism, it’s fun to put a product in front of people and just watch how they use it. You know, I think one of the keys to being an entrepreneur is just extreme empathy for your customer and how they’re using the product. And we just start seeing tens of thousands of teenagers with Woodlawn come to Christ. And with the movie being used as a tool, we make decisions. Simon Sinek and in his book start with why I point this out. We make decisions emotionally and we back them up logically. So when you have a tool that goes straight for the heart, that’s just the way the brain is wired. That’s what God made us. And maybe that’s why Jesus told super relatable emotional stories and then he explained their truth. So the way entertainment works. I call it setting a volleyball that others spike, I’ll give you an example, there was a woman watching, I can only imagine with her son, I think, in Australia, and they were leaving the theater. And behind them was a woman they’d never met. Probably they had some sort of similar story, Dennis Quaid in the movie. And she was sort of wrecked. And she said to them, Are you guys Christians? And they said, Yeah, hello, nice to meet you. Are you? She said, no. But whatever happened to Dennis Quaid in this movie? I need to happen to me and I just need someone to explain it to me. Can you help? And they led her to Christ right there in the theater. So what a piece of entertainment. The way we design it is our when is when someone says, I need what’s in this movie, whatever’s in this movie I need in my life. And that’s happened over a hundred thousand times on the movies that we know of. And they just are these tools for people to take their results. Like if you show a youth group, if you present the gospel to youth group, you’ll have some sort of result.
But I guarantee you, if you show that same group, Woodlawn or I can only imagine you share the gospel after your results will be massively amplified. And that’s just because the movie is working on a heart level. The movie is working on a story level. A movie in its nature is a vicarious experience. That’s why it’s so powerful. That’s why it’s so dangerous. We typically observe art with movies or television. We enter the story and we experience the life of the character as if we were living in ourselves. It’s that powerful. And so when you give people a vicarious experience of the power of the gospel to change their life, they crave it afterwards. And it creates a window of time where they’re exponentially more likely to be open to the truth of the gospel with someone in their life at the local level. And that’s what we do.
So our simple metric, I guess, is we want to tell stories that are entertaining, cost as much to go to my movies. It has to go to Star Wars. So we want to entertain first. If you want me to lose my mind, people that say, well, the film doesn’t have to be entertaining, the film doesn’t have to be good because it has the gospel in it. I will lose my crap like the film should be. We should earn the message, not use it as a crutch for a poor product. So the film has to entertain and be emotionally relatable no matter what you believe. But it’s engineered to showcase the power of the gospel, to change your life or the power of the virtues of Christianity and society. And that’s our sort of funnel.
I don’t consider this to be a genre so you can do all kinds of different films that serve that same goal. But it’s film making on purpose and it’s films that are meant to lead people to life transformation. But that has to happen on the local level in relationship with people. So it’s so wonderful to see youth, pastors, moms, dads, football coaches, pastors use the films as tools to start life changing conversations. That’s the goal.
Henry Kaestner: So I love that. OK, so I want to switch gears a little bit and talk a little bit more about the investing side of things. You know, enough about our ministry to understand that faith driven investor is about changing them dynamic that so many of us have done for years, which is to have all of our money run by a Merrill Lynch or somebody else like that over here in our left pocket. And then to the extent that we understand the biblical message of generosity, give away all the surplus or to different ministries over here, of course, a faith driven investor, we believe that we can accomplish many of those, if not all of those same ministry goals by storing our investment capital with an intentionality. OK, so you’ve just made the case, I think, very, very well for how movies by due to their vicarious nature through some of those examples in Australia and other thousands of times outside of movie theaters all over the world, how you’re able to accomplish that type of a ministry goal. And yet it’s also an investment by it’s right. Most investors say, OK, I think I’m getting the concept of faith driven investing. I can invest in a private equity fund or a real estate fund or maybe some public equities and things like that. But how in the world do you invest in movies? Where do you get started? And I’ve heard that these different tranches, the only people really make money are the distributors or whatever. Help us just navigate through all of that as you make the case that actually you can invest in these cultural change agents, if you will, and not only accomplish your ministry goals, as we just talked about, but maybe financial goals as well.
Jon Erwin: Help us. That’s exactly right. And to make something scalable and sustainable, you have to make it profitable. And I think that there’s a tendency in faith based filmmaking or faith based entertainment to sort of pull the finish line back to the results achieved and use poor performance or poor thinking to use the message as some sort of get out. Well, we got the gospel out, so it’s OK. And that happened. You know, I could talk about some early successes. Of course, the breakout that led to the Lionsgate deal is I can only imagine. So I could talk about the early models, but I’d like to actually hone in on failure because I think failure is really where you learn if you fail correctly, if you know how to fail. Correct.
Great retailers book principles great on that level. I love that book in terms of his process of you call looping, we did a movie called Woodlawn, by the way, that I get a mention.
Henry Kaestner: That’s first time radio has been mentioned on the Faith Driven Entrepreneur podcast. And I love that you did that for those people who had tuned in to the feature of an investor conference. You’ll notice Tracy Evans homage to Ray D’Alessio when he reaches for the Bible and he picks up, I think, the same book principles.
Jon Erwin: Yeah, it’s great. Yeah, that’s great. And Ray’s course not a believer, but his podcast on how to create a culture where the best idea wins is great. That led me to his book, which is much better and just a wonderful set of principles that work and a process for discovering principles through rapid experimentation and bite size failure. So I think to win, you got to learn how to fail. So we had some initial wins were October, baby made money, moms night out made money. They weren’t breakout hits. And I think we got a little cocky and we made Woodlawn now Woodlawn highest critical rating of any film. We’ve made our first eight plus cinema score.
There’s only about 70 films that have ever gotten any. Plus, it’s the highest grade an audience can give a movie, but I can only imagine to have that grade. We’re one of only seven directors that have to, but we made Woodlawn for about 11 million. We raised the money to make it and then we raised some of the Pinay, which is prints and advertising, which is the money to release it, but not all of it. And we didn’t sort of have control. And the long short of the stories, we didn’t accomplish our goals. We didn’t do what we set out to do. We needed to do about 20 million to break even a box office with only about 15. And it was the first real punch, you know, and what happened was, like you say, there was layers to the investment. So there was a lot of distribution fees and there was a lot of the play money in film as last in first out debt. And they got their money back, you know, with great interest rates. The money behind that, which is the equity, which is the people that are with you from the beginning, are buried at the bottom. And that was the first time I had not returned an entire investment. And I hate to lose like my role in life is like either we win or let’s play again, you know? And I just couldn’t sleep at night with the fact that we hadn’t returned the investment. About two thirds of all the money came back. But again, the equity investors took the biggest hit.
And we actually spent five months in a postmortem, which I won’t go into now, but just soliciting criticism from people inside and outside of the campaign experts. We just wanted to figure out. We wanted to learn. And that led to one hundred and seventy page playbook manifesto sort of postmortem. That was the playbook for I can only imagine. So all the thinking that led to this eighty six million dollar juggernaut that was, I can only imagine, came out of this thorough study of a failure. And I think it’s important to name it failure, because a lot of people think, oh, you got the gospel out and twenty five thousand kids were saved, but we didn’t accomplish our goals. And there’s a word for that. And it’s called failure. And I think stupid for Jesus is still stupid, you know, and we did some things that were dumb and we embrace those things. And we learned and there was a lot that we learned from I like this horse, shall said, quote, We’re leaders. That means we forfeited the right to make excuses. And so we embraced the idea that this is our fault and let’s just give that a hug. And we learned and out of that came a financial model. I would just say that God’s principles work even if they defy the status quo of your industry. And there was a status quo to my industry that these were two different classes of investors in your equity. Investors actually sit at the bottom and then either a studio or another investment group swoops in and you sort of graft into this vulture system and, you know, you don’t have any leverage or control, which are the two greatest words in my industry, at least. And you lose those things. And so you end up with fees that are out of control and a layered system and a totem pole of inequality.
And this whole category of money, this debt called Pinay to release the film, which is typically far in excess of what it takes to make the film. And that’s first in, last out. And typically in retiring that money, a lot of equity investors get screwed. And when I really started diagnosing the problem, the idea is no problem can be solved till it’s fully understood. So trying to take time to deeply understand a problem is a fun process and think your way to the bottom of it and understand its nature. I like read Alia’s book of looking at something as a machine, looking at a company as a machine and trying to understand the basic components of how that machine works. And, you know, basically this whole acquisitions market in film for studios relies on you bleeding out and having your movie and not having a means of getting your movie to the marketplace. Well, in any other business, if you just had the plan to make a widget but you didn’t have the playing time or money to market, distribute and sell your widget, you don’t have a business plan. You got a widget. Well, in film, somehow there’s just this recurring thinking that if we just get it made, everything else will happen. That’s not true. I couldn’t stay awake at night after I can only imagine because of the inequality of this financial model. And then I started thinking, like, if you look at the massive amount of Christian wealth, you guys know the stats a lot more than I do. Like, we should be able to spend our way back into the entertainment industry because there’s so much wealth within Christianity. So what’s wrong with the problem is it’s just been a lack of stewardship from people like me or other filmmakers or other people that don’t put the investor first. And people have lost money. Nobody likes to lose. And so most investors that could fund these things have either lost money in a film deal or know someone that has lost money on a film deal and that keeps the spigot turned off for entertainment as a sector. So we looked at that model of like, OK, here’s out of control fees, a whole category of money that swoops in, last in, first out, and then the people that we really love buried at the bottom. This does not feel fair.
What if we just took this sort of totem pole of inequality and turned it on its side and said, we’re going to create a blended vehicle and if you invest in this vehicle, 40 percent of your money will be deployed to equity, 60 percent to this payday, all your money making money. But we’ll have leverage to go out and get the deals that we want. And it’ll add stuff that doesn’t exist in the entertainment industry, like fairness and common sense, you know, and third grade arithmetic to the mix. And so we went out with that model with I can only imagine, and everyone inside the status quo and said, that’ll never work. These are two classes of investors. You’ll never raise the money because you’re also trying to raise more money and it just won’t work. That’s not how it’s done, but it just seemed fair and ethical. And so we went with it. And then at the time, I was living in Birmingham, Alabama, and I went to a wonderful church, a church of the highlands, the pastor there, because Hodges brilliant mind. And he was going over the financial model of the church. And typically, as a businessman, you sort of scoff at I’m saying we shouldn’t, but there’s this sort of thing like, oh, we’re smarter than churches. But he had this simple principle. I just I’m convinced life is about principles like discovered and applied. And he had this simple principle that basically the churches budget every year. Was 90 percent of their previous year’s budget, even though they grow 20 percent year over year. So the basic principle was they spent below where they were not projecting where they could go. They actually added margin. And so they’ve never done a capital raise and they’ve got like 150 million in cash and assets sitting in the bank. No debt because of the simple principle of margin.
What I realized is I was way over my skis trying to influence culture, betting really hard on where I thought we could go, not where we’ve been. So with I can only imagine we did this blended vehicle that added a dollar one return. We went out our whole pitch beyond the passion for the movie was let me just educate you how you or your friends have lost money in a film deal like it was a whistleblower pitch like this is what nobody else will tell you. And then here’s what we’re doing about it. If you don’t wanna be part of it, that’s fine, but at least you’ll be educated. And so we went out with that pitch and then we engineered I can only imagine we made a cheaper movie and we engineered it to be profitable at Woodland’s box office, which was fifteen dollars million. Now, I can only imagine did that amount of money in like two and a half days in the marketplace because we did like seventeen point one opening weekend. So everything between that number and the 86 million dollars that it achieved was margin and led to an enormous win for us and all the partners in a deal with Lionsgate. But it was a simple principle heard in a sermon.
Henry Kaestner: So I think if I have to I can’t go too much further, though, without asking, because it’s just stuck with me now. So the Church of the Highlands is one hundred and fifty million dollars in cash and they invest. This is something we can leave on the cutting room floor if this doesn’t go well. But I wonder, were they an investor in your film?
Jon Erwin: They were not. I’ve never gone out to anybody, but, you know, we work again. The other thing I think for entrepreneurs out there is just to know your investment type. I work with first generation, second generation self-made people with networks typically in the 10 to five hundred dollar range. I mean, there’s a few anomalies like the Green family is a wonderful family. They’re billionaires, but they don’t have that billionaire nest. Then they’re blue collar billionaires. You know, now, film is a it’s a speculative, high risk investment that belongs in the alternative side of your portfolio. So it’s for people that have money to burn that one to influence culture. And we structure the deals where you can make a fortune if the film hits. But, you know, I think the biggest thing for people in my line of work is you never take money that people need. And I think you put that out front and you lead with it. And we have an incredible track record, you know, with returning the investment in the money we make for people, because I think it’s all about hedging the bet. It’s all about modeling the downside, not getting stars in your eyes on the home run and really protecting that downside. So they’ve never I’ve never actually I’ve never thought of that. Maybe I should. But typically it’s people that, again, exactly what you’re saying that have done very well in some sphere of business and want to be a part of influencing culture through entertainment, through a profitable investment vehicle. But that’s structured to sort of change lives. So it was really through a thorough study. I just cannot recommend enough to entrepreneurs learn how to fail correctly in order to win and also just be constantly learning and seeking out knowledge and insight so that you can solve the problem. And I think if you can do that, if you can combine an extreme resilience with a certain level of intellectual curiosity, eventually you’ll win. You know, if you’re just the last man standing that won’t go away and you’re not afraid to confront your own mistakes and not take yourself so seriously and try different things, eventually everything will coalesce. And for me, that was March the sixteenth twenty eighteen when I can only imagine came out. And you know, again, it was interesting when my dad bought me that camera when I was sixteen, he said, if you give twenty years of your life, if you guys give twenty years of your life to something, you’ll really master it like if you stick with it. And it was twenty years almost to the month between buy me that camera and the release of I can only imagine. So I think it’s just about not giving up and learning and applying what you learn as an investor. If you’re looking at entertainment, I would say that I love one of our original investors, Raymond. He’s a wonderful friend in Dallas, Texas, and he said, you know, I don’t invest in movies. I invest in two kids from Alabama. I’ve always appreciated that about him.
But there is something to invest in, people, you know. And so I think if you’re looking at entertainment, invest in people that you believe in and stories that you believe in and ultimately voices that you want to see developed, I think that, you know, just know that, again, this should come out of an alternative side of your portfolio. There should be money that you’re not afraid to lose. The deal should be structured in your favor in the event that you win. For that reason, I love the industry that we get to work in because it is like brutally competitive. It’s like winner take all. And you have to embrace that. You can be a bare fisted capitalist and a Christian.
Not same time, you know, and it’s fun to win, you know, and we enjoy winning, but I think that when you look at this space, you know, you should again, look at it coming out of the attorneys to your portfolio. You should look at it as a means of influence and a means of developing talent and voices. You do need capital for a memorable call, patron. And the idea that every great move of God is paired with a patron and capital is the means of influencing in this space. But you just need to do it smartly. And I would say just understand that you need to hear a plan. Here’s some things that I would want to hear if I was taking a picture of filmmaker. First of all, I would want to hear a pitch from a filmmaker who also has a lot of knowledge about we don’t make films, we make films for people. And so you need to hear a filmmaker that has an extreme level. I would be listening for a sense of empathy and a great sense of knowledge on who the consumer is and who the film is for. A film needs to be made for a group, and my gotlib, who ran Samuel Goldwyn for many years, he taught me this great thing. He said, I don’t ever ask, is this a good or a great film? I ask, is this a great film for a group of people? How large is that group? And do I know how to get to them, you know? And so I would be listening for instead of like a lot of what happens is so passionate about the story and stuff like that, it’s like this is the film. And I really think this is the audience for the film. And let me tell you about the audience. I can tell you who the core consumer is for a faith based film down to their age where they live, how much their home is worth. You know, what is in their shopping cart when they buy the product, when they buy physical spending DVD, which they still do at Wal-Mart, as opposed to like lala land or something else. And so there just should be an extreme level. I just I’m a huge believer in extreme empathy when it comes to products. And so you should be listening for someone who has a relationship with an audience and has a knowledge of what that audience wants and is making a film for an audience and has some sort of a reasonable plan that has some sort of a logic of how they’re going to not only make the film, but distribute and release the film and market the film specifically. I think that there’s a horrible fault, some in entertainment. And typically this is why most people lose money in films, is because it’s a producer that’s really only thinking about getting the film made. And that’s a Herculean task. It’s so hard to make a film, but as a filmmaker, you climb that mountain and then the fog clears and you realize there’s a mountain twice as tall ahead of you that you weren’t prepared to climb. And that’s marketing and distribution. So I would look for a holistic plan to not only make the product, but take the product to the consumer. That makes sense. I do like this whole radio trick called the believability test in his company, which he wants to create a culture where the best idea wins. Everybody has a voice, but opinions are weighted and believable when someone who’s speaking has accomplished the thing in question more than three times successfully and has a great logic of cause and effect to back up their opinion, it just makes sense. I would look for that and then I would just know that the common problem and here’s a great question I would ask. The common problem in film is that there’s another category of money called prints and advertising, which is the money required to release a film nationally. So like, for instance, I can only imagine costs seven million dollars to make our initial Pinay budget was 13 and a half million, and then we scaled up to 19 million by the end. It’s very expensive to release a film nationally. So in the typical what I would call unfair system, not the studio system, but the acquisition system, the independent model, that money sits on top of the equity. And I would ask them, what’s your plan for the Pinay and just start opening that up as a discussion. I think that’ll show your sophisticated, but also show that you know how typically investors lose money and then the creative arts, you know, it’s all about empowering the right people and it’s all about talent and it’s all about, you know, working with artists is very strenuous at times, were complicated fonts. And so sometimes, you know, greatness is not going to be obvious. And so a lot of times what I do is I want to source down to the person doing the thing and make sure that person is qualified and present, oftentimes or not. So I would make sure if I were looking at a film investment that the talent is in the room and attached. A lot of times it’s sort of like you get pitches that are almost like it would be like a pitch of like, hey, I just hired Michael Jordan’s physical trainer. Let’s go make a basketball team. What’s your name? Michael Jordan. And so a lot of times you have like executives or business people, but the creative force needed to do the thing is not present in the deal. So I always try to hunt down to the bottom. Is their talent involved in this deal? You know, because it takes talent to create great art. And so I would look for that. I would look for a filmmaker that you really believe in. I do think overall it’s a worthy thing to invest in the entertainment sector. I think we should embrace that methodology of Caleb in the Bible when he said, give me this mountain, you know, to Joshua. And I think we should look at that hill with the Hollywood sign on it, with that same mantra of light. God, give us this. We want our voice back. Culturally, I just think you need to be smart about it and you need to be educated about it. And I just believe in giving. I think we keep repeating each other’s mistakes because we’re not sharing information. And I think that the way out of this is to share information. One of the things I did, I haven’t released it yet, but during College Board, I did a lot of teaching series on like ones on film writing, ones on how to raise fifty million dollars for films. And I go over all of the financial models in distribution, how to make money and where you get screwed and how to approach. It’s more for the entrepreneur side, but all the information’s in there. Happy to share that when it’s done. It’s just a way to try to get the information out there so that we can stand on each other’s shoulders. I think overall, you know, we should be encouraged that the ability to influence the world through entertainment has never been more accessible. I do defy the evil Hollywood agenda methodology. I don’t believe in it. And I’ll give you an example. I was talking after doing the Lionsgate deal. Lionsgate is the newest of the major studios, but they did like The Hunger Games and Lala Land and the John Wick films. And Joe’s the chairman of Motion Picture Group at Lionsgate. Wonderful guy, great mentor, great friend, really smart guy. And shortly after we did the deal, he said, hey, John, let me ask you a question, because you’re like the only Christian I know. He had just come in and taken over the Motion Picture Group and he said, there’s this book that’s floating around that was optioned sort of before my time, but there’s some momentum for it. And I just was wondering, it’s called Zealot The Life and Times of Jesus, the Messiah. I’m sorry, Jesus of Nazareth.
You know, you’re the only Christian I know what Christians like that think. I had read it like couple of times. I said, and the basic premise of Zealot is that Jesus was just a rebel leader, that Rome crucified like a Braveheart character. And all of the divinity stuff in Christianity was just added on later. And it’s not real. So no, Christians wouldn’t like it. But I was like, how do I explain this to you in words you can understand?
And I’m like, that would be like if I brought you a pitch for Harry Potter under the basic premise that magic wasn’t real, you’d have a kid running around London crazy with the stick. The fans would hate it. And that’s what this is. You’re taking the force out of Star Wars. You’re taking magic as a story. You’re taking out what the fans want out of the story. That’s what this is. And I said, look, I think my audience will be wrapped around this building with pitchforks and torches. I’ll go talk to him, but I don’t think they’ll isn’t. They’re going to burn your house down, man. And he laughed and he said, I get it if we won’t do that. And I said, if you don’t know what I think we should do, I mean, you do like a trilogy on the Apostles, like a character drama, like a band of brothers type thing on a generation that literally, you know, this family, this group of guys that shape the world as we know it today in one generation completely under equipped. That’s what I would do. I do a trilogy called Apostle’s is like, OK, I’m like, what is it? Let’s do that. I’m like, that’s a huge. That’s a massive. That’s a big. And I’m like, just.
He’s like, that sounds great, let’s go do it. And so that’s one of the things that we’re working on and developing, it’s going to happen. My point is, let’s say I wasn’t in the room. Joe doesn’t know. Let’s say Zellar gets made and let’s say every Christian conservative blog out there is like the evil Hollywood agenda. It wasn’t an evil agenda. It was a lack of knowledge because there’s no one in his life representing our audience.
It’s our fault we’re not in the room. And to know that I’m the only and it’s funny, we did the Lionsgate jump in was the CEO of Lionsgate is a great guy and he’s a good friend. And when he came out, did the deal, came out of his office, one of the heads of the departments waved me over. He’s like, come here, come here. And I’m like, hi, I’m Johnny told me his name. And he said, I want you to know I’m a Christian and I’m here. And there’s a few of us and we’re really glad you’re here, you know.
And after I said that, I think this is like you can come out about it, you know, I came in through the front door. They’re pay me a lot of money to be here. And this is your moment, you know? So I think that there’s just a complete lack of representation. And again, I love that or shows like what were leaders, which means we forfeited the right to make excuses. I just think as Christians, we have to take on the mantra. We have to stop blaming and we have to engage and we’re not in the game in Hollywood. That is our fault. There was a time when we were I don’t know why we’re not today, but we’ve abandoned the cultural playing field and we’re suffering the consequences. And I think the only way to get to a generation is to get back in the game. So I think before you change the way you act, you have to change the way you think. And we have to start thinking differently about the nature of the problem when it comes to entertainment, because I think we’re in this perpetual victim mindset and we’re getting nowhere with that mindset. And I think that mindset, you know, we all have the right to our own opinions, but we do not all have the right to our own set of facts. You know, there’s one set of facts, and I’m deep inside the industry. The facts don’t line up with our opinions on the issue of evil Hollywood agenda. It’s our fault. And if it’s our fault, it’s ours to fix. And I just think that we need to get in the game and we need to trailblazer a little bit and get some paths where a lot of other Christians can follow us. I just think that there’s enormous talent emerging and we need to give them a voice and we need to give em a voice as quickly as we can. The only way to do that is to be smart and to be smart, not artists, to be smart entrepreneurs and to do smart investments and to learn and to embrace the idea that the entertainment value of the product, the success of the product in the marketplace is as important as the message we’re putting into it, because that’s the way we make the scalable and sustainable over the long haul.
William Norvell: John, thank you for joining us. This is just been amazing. I’m just thankful for you sharing this and being a part of this industry. And unfortunately, we do have to come to a close. And the way we love to close our shows is exactly what you have laid out in what you do for a living. So no pressure, but we’d love to see how God’s word transcends our guest and our listeners. And it’s just amazing the stories we get to hear where God was working on your heart on a certain piece of scripture. And one of our listeners needed that as an encouragement or an admonishment or exhortation or whatever that may be today. And so if you and I we invite you to share where God has you and his word could be something you’ve been studying for months, could be the season, could be something he told you this morning. But just invite us into your world and in your study of his word.
Jon Erwin: Yeah, I mean, a couple of things. Number one, on the level of just being an entrepreneur, one of the things I like is when Paul in Philippians three says, you know, not that I have already attained or already perfected, but I follow after so that I can sort of apprehend that for which I’ve also been apprehended. And he said, I don’t allow myself to sort of have done this. I was forced to memorize in the King James version because I’m from Birmingham, Alabama Baptist, he says. But this one thing I do, forgetting what’s behind and reaching towards what’s ahead, I press on towards the price of my calling of God in Christ Jesus. I think that idea of relentless focus, you know, and just focusing on a few things that are important instead of a lot of things that aren’t important, I think as an entrepreneur would be my advice. And I think that that just keep the main thing, the main thing. Know what your purpose is. No. What you want to achieve. No. What’s most important and not necessarily just what’s most urgent and just chase those things relentlessly. I think the people in my industry that succeed have a level of relentless drive and passion, energy and focus that’s uncommon. And I think that’s biblical. I would say on a personal level, you know, we’re doing this covid document. I’m not really allowed to talk about it, but I’ll mention a little bit on sort of the all encompassing history of Christian music. And every artist in the world is involved in it because they all had nothing to do. And one of things I love about it and then I just thought about the Bible. So many of us feel like we’re not equipped, therefore we can’t be called like I’m a messed up human being. I have problems. You know, I’m working in the entertainment industry. I don’t have a college degree. I’m from Birmingham. And then you read through the Bible. And it was just interesting with the music. How all these artists sort of built on each other’s shoulders and then built something really magical and inspired the world with their music, with a lot of flawed people in there, a lot of tragedy, a lot of betrayal, a lot of heartache, and yet great music, wonderful people, but flawed. And then you look through the Bible and God goes out of his way to call flawed people for reasons unknown, I think. So he gets the glory instead of us and you know, the whole jars of clay idea. And I think that that was a great inspiration to me, because I think if you look at yourself, you can say, you know, I’m just not good enough, I’m not a good enough Christian or I’m not educated enough or whatever. There’s always that. And I think to just rest in the idea of God called me, I didn’t call me. And because I’m called, he’s going to qualify me. Right. So God qualifies those that he calls he doesn’t call the qualified. And you don’t have to be perfect or be unflawed to be able to relentlessly chase your calling and be a person of influence and great influence to be educated. You don’t have to do what the world would say is the person that would. A buddy of mine Mike Flaherty founded a company called Walden that I really like. They made the Narnia films and he’s a believer. And he’s like, if Lionsgate only knew that they’ve rested the future of their studio into home homeschooled kids from Birmingham, Alabama. You know, and I just think that if God puts a calling in your life, you don’t have to feel like you’re qualified to use your gift. And that’s probably really recently been on my heart and soul in mind just from this documentary that we’re working on. And I’m far from perfect. And yet God called me and I’m far from qualified, and yet God called me. And I think you can be, too. So I think that that’s what’s probably most on my mind these days.
William Norvell: Amen, Amen, Amen such a great place to end. And especially as most of our entrepreneurs see see big dreams and see something in their soul where God’s gone towards it and there’s no lack of naysayers or you shouldn’t do that or whatever that may be. So I just thank you for sharing that message. Thank you for spend time with us. Thank you for running towards a place where people have run away from in such a great way.
Jon Erwin: Well, you guys, too. And thanks for putting the resources out there, both for entrepreneurs and for investors to make a difference in the world. You know, again, many of the things that I didn’t know the difference between I can only imagine massive success. And Woodlawn was not a better movie. I had to become a better leader. I had to become a better entrepreneur, and we had to become a better company and we had to model some smarter financial principles that are universal. So thanks for taking the time to put resources out there. And thanks for your podcast. Thanks for having me on. God bless you guys.