Is Hollywood doing enough for the black community? The point of view of a venture capitalist
Doug Graham knows that smart entrepreneurship and smart investments can tackle some of society’s biggest problems.
As Director of Economic Development for Detroit Renaissance (now called Business Leaders for Michigan), he focused on revitalizing Southeast Michigan. Graham later led the turnaround of a number of struggling businesses, saving jobs that could have gone missing. Today, the 61-year-old is executive vice president of investments at bMuse, a media and technology accelerator.
During his 30-year career, the Motor City native has led the strategy with a capital of some $ 6 billion. Now he’s setting his sights on Hollywood.
This interview has been edited for length and clarity.
You have decades of experience in private equity and venture capital. From your PE / VC perspective – and as a man of African American descent – how do you see Hollywood’s relationship with the black community?
I would characterize Hollywood’s relationship with the black community as âit’s complicatedâ.
Black dollars are sought after by Hollywood, but Hollywood does not take advantage of the diversity within the black community. Hollywood almost entirely lacks the submarkets within the black community. What the public sees as black images in film and television reflects more of the âperceivedâ images of the black community, and not its true reflections. The black community is not a single entity.
âContent is kingâ as the saying goes, but it didn’t translate into the black community. There is a very fertile ground with very rich content between the overrepresentation of films about slavery and the now controversial traumatized black porn. Black history has yet to be translated or archived on the big screen. Thought Hidden numbers. [A biographical drama about African American female mathematicians at NASA.] There are thousands of hidden figure-like stories to be made.
What must happen to end the status quo in Hollywood?
Change the studio’s risk model by changing the measure of success and failure. This is the difference between a Moonlight which was made for little money and yet brought in hundreds of millions of dollars around the world (risky); Black Panther, a Marvel comic but an all-black cast and its $ 100 million budget grossed $ 2 billion worldwide (less risky) for Mission Impossible 8, $ 100 million budget (just the fact that there were 7 before, no risk). The adjustment of the risk model leaves room for more subjective elements to the success of a film such as Hidden numbers.
Not all stories will be successful. Hollywood’s risk model must change.
McKinsey published a study claiming that the film and television industry could reap an additional $ 10 billion in annual revenue, a 7% increase, by tackling racial inequalities. If that means more income, why isn’t Hollywood on the bandwagon?
The McKinsey study was excellent at describing issues affecting racial inequality and quantifying it. Now the discussion is deepening.
I don’t believe Hollywood is feeling the 7% loss – it’s not painful enough for the change to happen. I think the number is low. This is more in line with a 10 to 12% range. When [Hollywood executives realize] it reaches 10 to 20%, it will become painful. The McKinsey study is more based in the United States and did not include the global market with the desire for black content from the African diaspora in the United States and other countries abroad. In this global market, African and Caribbean citizens and expats around the world watch and desire black American images and content.
Take Nigeria, for example. Almost nobody knows Nigeria is the third largest film and television industry in the world. [Note: producing about 2,500 films per year, Nigeria ranks #2 after Indiaâs Bollywood in terms of film production volume.] The American film and television industry does not even recognize this astounding fact! Netflix and Amazon Studios are starting to broadcast foreign Nigerian and other black content. Netflix’s Ted Sarandos certainly understood that.
by netflix Lupine, a black French series about an international burglar, a non-ethnocentric character, drew 75 million viewers worldwide in its first month of airing. Today, that number must exceed 100 million and climb.
You have led investment strategy decisions for over $ 6 billion in private equity. Where do you see the greatest business opportunities for the film and television industry with respect to the black community?
From a private equity / venture capital perspective, the Hollywood business model is very outdated and yet industry disruptors are starting a very transformative chapter.
Hollywood could use the example of tech companies like Apple and embrace open source, a more decentralized model that encourages open collaboration for technology and content development. Think of TikTok, YouTube, and Instagram. Open source is represented by the Apple App Store. Apple’s 2020 App Store revenue was $ 72 billion. Also, if the old Hollywood model is controlling, a new collaborative model can emerge.
Netflix is ââon its way to becoming the leading open source film and television producer and distributor.
The McKinsey Report shows that the film industry, with 92% of senior executives white, is less racially diverse than the energy, transportation or finance industries. It’s a bit shocking. TV is only slightly better at 87%. Why is cinema lagging behind other industries?
Hollywood as an industry probably generates more entrepreneurs than anywhere else in the United States. People are products or brands. It is therefore an entrepreneurial society or culture. It creates a very closed culture.
Also, Hollywood does not exercise the same oversight over its products as the industries you mentioned. Energy, transportation and finance depend on government funding and policy. Hollywood does not have this level of oversight in its products. The auto industry has laws, regulations, and government funding built into the development of its products, influencing the way cars are made. The government is not involved in the Hollywood product.
There are representation issues in front of and behind the camera, but couldn’t part of the problem be the lack of diversity among those who fund film and television?
The most important piece of this puzzle is the lack of diversity in film and television funding. The examination of how film and television financing occurs should be examined in a follow-up report from McKinsey. Sometimes funding happens and relies on input from senior executives telling investors what will and will not be successful. This stage of the film’s investment cycle is completely subjective. If diversity is to occur, film investors are going to have to play a more practical role in order to achieve greater diversity.
If I am building a house, it is the difference between my choice of doors or my contractor choosing the doors for me.
If the financiers demanded more black participation, the producers and directors would do more. Do you agree, disagree or have no opinion?
Yes I agree. The investment community may start to demand more diversity. I am convinced that change can happen at this level. Investors have different levels of risk taking which are very different from the levels of risk taking of managers.
If investors demand it, executives will have to adjust their risk models to account for diversity.
What projects are you involved in at the moment, especially in the world of cinema and television?
I have had informal conversations with executives in film and television about how best to get things done on this topic with a private equity / venture capital solution. Investment can lead to change.
Personally two of my best friends and production partners are Michael Mailer at Michael Mailer Films and Dan Crown of Red Crown Productions. For both, this topic is always a priority and racial inequity has directly affected them. Dan’s The beasts of no nation for Netflix was one of the best movies of 2015, but it didn’t receive a single Oscar nomination.
Out of 528 Best Picture nominations, throughout Oscar history, no film with an all-black cast has ever been nominated for Best Picture until Black Panther in 2018. It was a Marvel movie. .
As a white man, I want to be sensitive to my blind spots. Is there something I should have asked you but didn’t do?
Is this report unique to Hollywood?
This McKinsey report could be written about any American industry. Our problem is a cultural problem now entrenched in our American economic system. This cultural divide highlights those who benefit within our culture from those who lose.
This was established hundreds of years ago. Only those on the losing side recognize and feel it. Those on the winning side are fortunate enough not to feel it and benefit from it, as the saying goes, “This is how it always has been.” ” And they are right.
This is a very big problem. Our old business model no longer works for our people, and the new model needs to be more collaborative. Our economy has become much more complex for companies to tackle these issues on their own in silos. This is my last mantra: Big problems can be solved if we focus on them together, not competitively.