LA Tech Week 2022: The Art of the Deal

To celebrate the LA community and the city’s growth, a16z recently hosted Time to Build: Los Angeles, an event where we invited LA-based investors, founders, and operators from across a diverse range of industries to talk about company building in LA. In this episode, Marc Andreessen, co-founder and general partner at a16z, and Ari Emanuel, CEO of the global sports and entertainment company Endeavor, are interviewed by a16z general partner Sriram Krishnan about the evolution of the entertainment industry, where it’s headed next, and the story of how they first met. 

Transcript

Sriram Krishnan: We are in LA Tech Week, and we wanted to put together something really special which represented both everything LA and everything tech.

We have somebody who needs no introduction for creating Netscape, for Opsware, for a little known little firm called Andreessen Horowitz, and kind of tweets a lot. And next up, we have somebody who has pretty much changed the world of entertainment, who is known as a super agent. You may all seen him played by Jeremy Piven on “Entourage” as Ari Gold. But then has gone on to conquer everything from UFC to bowling to…if you go to a live event, he’s probably involved in it somehow. So, without any further ado, it gives me great pleasure to welcome Marc Andreessen and Ari Emanuel. Give it up.

So, let’s start with the serious stuff. What’s the meet-cute story between you two? How did the two of you first meet, Ari?

Ari Emanuel: Marc was on the cover of “Forbes,” and I actually don’t remember the article. And it’s what I normally do because I have this phrase that I try and create serendipity. I read the article, and I blind called Marc. I had never met him before. This time he picked up the phone call. I said, “I’d like to meet you. I read the article. I kind of thought it was incredible.” I said, “I’ll fly up.” He says, “No, I’ll fly down.”

He flew down. We had a meeting. I think, in the meeting, I started raising money because we had just started a merchant bank called Raine. He said he would put in money, but he wanted to bring his two friends along. One was Nikesh, and one was Egon Durban. Egon Durban from Silver Lake is my largest investor, and that’s just the serendipity of life and how I create serendipity. And that’s how we met.

Marc Andreessen: Now, the number one rule of business is you never, ever cold call.

Ari: I only cold call.

Marc: You only cold call, exactly.

Sriram: We are in LA Tech Week, after all. And at the LA Tech ecosystem, the scene here in LA, what do you think?

Marc: There’s been this long-running, basically, drama, a story, story arc over the last 25 or 30 years. My first meetings with the big entertainment companies were like 1994, explaining the internet, and being like, “Okay, this thing might be a big deal someday.” And there was this extraordinarily long period of time where there in theory was going to be a convergence. The buzzword literally used to be convergence. And it would literally be a coming together of the two great California industries of entertainment and culture, and then tech. And in theory, it was going to happen, in theory, it was going to happen. And then it turned out to be war a lot of the time. And I think it’s fair to say the entertainment industry viewed new tech for a long time as a threat.

Ari: Still do.

Marc: And that may still be the case. And then, in theory, the tech industry at some point was going to do…it could do entertainment. But the running joke was like, “We’re so nerdy and stiff in Northern California, if we made a movie, it would be like the movie version of the manual for a Cisco router,” not be the most compelling, exciting content in the world. And so, there is this weird shadowboxing thing where nothing ever really came together. And then it feels like, I guess, probably Netflix was the big breakthrough, or streaming?

Ari: I think it probably started a little bit in gaming. And then entertainment companies that we consider entertainment movie companies thought they could take the IP. And they didn’t realize that was making billions of dollars and they were not that important in the movie business. But maybe now it will happen with kind of what Unity is doing, and Web3. So, who knows? My sense is the first company that actually did it was Netflix to kind of bring it, if we define that as technology.

Marc: And it was kind of a two-part thing, right, which is what…one is, Netflix, all of a sudden, is a distribution medium for video, like a new premier distribution medium. The first new one probably, what, since DVDs, probably videotapes before that…

Ari: Yeah. Blockbuster.

Marc: …satellite TV. But the first one really out of Silicon Valley. And then the other ones, of course, Netflix then actually started making content. 

Ari: I sold the first.

Sriram: Really?

Ari: Yeah.

Sriram: What was it?

Ari: It was a little show about Washington, D.C. somebody got arrested for.

Marc: “House of Cards.” The brilliant and amazing “House of Cards.”

Ari: It was a classic story. So, their stock had fallen because they did the double pricing and…

Sriram: Quickster.

Ari: Yeah. The whole craziness with the DVDs and everything. And then a company I had started called MRC had this treatment. [David] Fincher was attached, HBO was going to do a pilot, and Ted [Sarandos] came and realized, “Okay, we got to figure this out.” And he put 13 episodes up at…I think it was $150 million. Fincher went overboard, “We need another $15 million.” I mean, HBO could not believe that we were going to go to Netflix and do that over the brand of HBO. Ten million to 150 million, it was an easy conversation. And we were off to the races at that point.

Sriram: So, let’s fast forward to 2022. Netflix just had maybe not the greatest earnings quarter, right? Is the golden age of TV over? Marc just grumbles all the time when he’s not finding anything interesting to watch. Or where do you see content going?

Ari: That is like the biggest lie in the world. All I get all the time from him. “Have you seen this show? Have you seen that show? Have you seen this show?” I mean, it’s like…that’s a fallacy. And you know that.

Marc: Cornucopia. Well, okay. Is the quality holding up?

Ari: Yes.

Marc: Okay, all right. Okay. All right.

Ari: I mean, it depends on…you can get content from anywhere. There’s plenty of great content. There’s a lot of bad content. But okay, don’t watch it.

Marc: How many TV…

Ari: How many things are on my list for Netflix? Fifty.

Marc: How many TV shows are being filmed this year in the…

Ari: I think it’s television shows, between non-scripted and scripted, I want to say 900. Probably more.

Marc: Nine hundred, And 20 years ago, that would have been?

Ari: In 2011, I want to say it was…no, 2009, it was 39. 2011, I think it was 130. And the problem is, it used to be a drama for linear television would be $2.5 million, $3 million. Now, an episode, now it’s $16 million. And you can’t get special effects people. I mean, there’s no studio space. There’s some physical issues surrounding all that. That’s hopefully why tech and us come together, maybe there are ways to figure that out.

Sriram: So, let’s get into that. So, we had just some examples. “The Mandalorian” shot entirely in Unreal Engine Power thing. We’ve had “Star Trek: Discovery,” one of my favorite shows, shot by motion capture in the actors’ homes. We had indie movies do great VFX. Do you think, A, is there a democratization of movies done by indie filmmakers coming up?

Ari: No.

Sriram: What do you think? What do you think, Marc?

Marc: Well, so a couple of things. So, one is Hollywood has had a pattern over the decades of it sort of hits a creative…I don’t know, whatever, wall of some form. And then there’s a reinvention of the medium of film. And that happened in the 1970s, right, with the New Hollywood. It happened again in the 1990s with the indies and Quentin Tarantino. 

Ari: Listen, there’s always going to be people pushing technology and pushing what that means. It’s happened in the music business. To make an album now it almost costs you nothing. Before, it used to cost you a lot of money. Is it going to happen in movies? Yeah. But then there’s going to be filmmakers that want to do it the old way, and on film. And so, there’s no set rules to it. Do I think that because of that, pricing is going to come down? No, because you’re going to have to put actors in it. It does take writers. Writers cost now a lot of money because they’re doing three or four projects. So, the economics are going to be the economics. Is there going to be technology around shooting stuff maybe cheaper? Yes, possibly.

And just answer to the other question, so in 1974, Charlie Bluhdorn, none of you know who he was, he was running Gulf and Western that did…

Marc: He’s in “The Offer.” You can see him now. Paramount just made this TV show, Paramount streaming, about the making of “The Godfather.” Tremendously good movie. You can learn all about it.

Ari: He goes and says…and I think it was 1974, in “Variety” which is a trade paper in Hollywood, he goes, “The movie business is over.” When I start the firm in ’95 they go, “The television business is over.” And then at the time there was four networks going to five, and I was like, “How could the television business be over and they’re starting two new distribution points?” So, all I would say to you is, you and I would never pay for ads on direct to consumer. There’s going to be a VOD. There’s going to be more…if it’s now 900, it’s going to be 1500 by the time we’re done. Distribution is expanding and you’re going to have to fill the pipes.

And if you just look at the numbers right now, people are going to Paramount+, they’re watching “The Offer.” And then when they’re done watching “The Offer,” they get rid of Paramount. And the only way to keep them is either through sports or through new content. And so, there’s just going to be more and more content being built. And then they’re going to have to figure out the economics because the economics are extraordinary right now.

Sriram: Okay. I’m going to ask a question to Marc, though I think Ari has a strong opinion on this. So, I’ll let Marc go first. So, best movie of the summer, “Top Gun: Maverick,” right? We had multiple MCU movies come out. This week, we have a LOTR prequel, and I believe a Game of Thrones prequel come out. Marc, what do you think is happening, and will we ever see original IP again? And then Ari can respond.

Marc: Okay, I’m going to drive him straight through the ceiling. There’s the system. I mean, there’s the system. There’s whatever the studio system or whatever it is that you would call sort of their inheritance of the studio system, and they’re sort of “mainstream.” And then, of course, there’s this extraordinary kind of… What’s the indie scene of today? It’s YouTube, it’s TikTok. It’s this complete…just this incredible long tail in this incredible creative universe. And so, you’ve got this weird thing, right?

So, one of the hallmarks of the evolution of the entertainment industry, see if you agree with this, is that the previous medium becomes the content for the new medium. Right? And so, written stories become the content for stage plays. Stage plays become the content for movies. Movies now become the content for streaming services. And so, that’s part of what happens. And so, you bring all these old mediums along with you, but you also get new creators doing new kinds of things. And they’re not making movies, they’re not making TV shows. They’re making original video short form content. They’re having a completely different kind of relationship with their audience.

And so, you’ve got this completely parallel universe running. And of course, there’s some crossover, which is you’ve got some of those people that then want to sign up with you, and then want to become TV or movie stars. But you also have this whole parallel world. Agree with that? You guys agree with that?

Ari: Yeah, I completely agree. I mean, it’s the basis of the firm. So, my…the George Gilder book, “Life After Television,” is…there’s going to be more distribution than ever. That’s why we built the firm, because we get more verticals, books, etc., social. So, one form of distribution is social. One form of distribution is movies and television, one form is betting, gambling, one form is games. There’s just more distribution and more content because we have more and more free time. And that’s what people want. And there is crossover to that. Right? And that’s ultimately how we’re built to make sure that…we’re not perfect at it, make sure that it happens. And when somebody creates an incredible piece of content on social that can elevate up, that’s hopefully what happens.

But that does not mean, based on your question, there will not be original IP. I went through the whole period when shows came out of the UK, right? “The Office,” I put it together, we represented the star in the UK and gave it to Greg Daniels, who I represent, and we put it on the air. That happens. But then there’s just Larry David and “Curb Your Enthusiasm,” and that’s original.

Marc: Well, Curb’s original… When did “Seinfeld” start? When did “Seinfeld” premiere? 1992?

Ari: Well, Curb’s been on for 13 years, and then so that was another 9 years. And then, yeah, it’s about 23 years ago.

Marc: Twenty-three years ago. So, that’s pretty…I mean, it’s great, it’s fantastic. 

Ari: There’s tons of original shows.

Sriram: Okay, we were talking about the future of content on two things. First of all, one thing is VR, which I know, Marc, you’re passionate about. How do you think VR… some of the more immersive experience, how do we thing that’s going to change content.

Marc: So, look, the bull case for VR is really powerful.

Ari: Isn’t AR that the bull case is for?

Marc: No. Definitely not. The bull case is definitely VR.

Ari: Really?

Marc: So, this is actually…

Ari: We’re going to make a bet right now.

Marc: This is a great East Coast-West Coast thing. And Ari is currently challenging…he’s currently channeling…

Sriram: Ari West Coast.

Marc: Yes, but…

Ari: Emotionally at East Coast.

Marc: So, what I would say is all of the non-nerds think that AR is the big thing. All the nerds think the VR is going to be the big thing. Because the non-nerds are…

Ari: I’m not sure if I should be insulted by that.

Marc: Well, you need to decide. And hopefully, this will keep you up late tonight as you try to figure out whether that was an insult. So, look, the non-nerds, they like real life. They like real life. They get up in the morning, the world’s a cool place. They hang out with lots of cool people. It’s all great. They have a cool time. And so, the idea of a medium like VR that would blank out the real world and replace it with something else seems like it must be bad. And a medium like AR that feels like it would overlay on the real world, seems like it’d be good. What us nerds know is that the world sucks. Right? The world’s not like that. The world’s not cool like that.

Ari: Do you actually think the world sucks?

Marc: Well…

Ari: I’m asking you a question. So, you actually think the world sucks? Do you actually think it sucks?

Marc: I think for…

Ari: Because you have a fucking good life. Do you think it sucks? Do you actually think it sucks? Because if you think it sucks, we’re all fucked. I mean, seriously. I mean, I’m leaving.

Marc: It’s a reasonably good point.

Ari: Okay. Reasonably.

Marc: No. But for a lot of people in the world, the world does suck. A lot of people live in places where there’s nothing interesting going on. A lot of people live in places where there aren’t interesting people to talk to.

Ari: That’s why there’s 900 shows on the air.

Marc: So, look, if the world is not that great, then the idea of the actual medium that actually puts you in a different world is incredibly compelling. And so, the actual question would be like, what is the ratio basically between those two populations? And I think it’s just obviously true that for most people it…

Ari: You’re avoiding my question. Does the world suck? I actually think the world’s really good. I think there’s some bad things that happen. And I think there’s probably going to be a place for, I guess I’m not a nerd, for us non-nerds, and there’s going to be a place for the nerds. And it doesn’t mean that they can’t coexist.

Marc: Well, okay. Let me make a stronger pro-VR argument. The stronger pro-VR argument is that it’s…so, sometimes, it gets referred to by people in the field, it’s the last medium. And I was going to say, this is a very provocative statement because we’ve had many, many different forms of entertainment media basically through the centuries. But they’ve all ended up, like the best case scenario today is that it’s on the screen, on the wall, and maybe it’s got the 3D or whatever. But that’s what it is. But the point of the final medium that I think people should mull over, people should think about is like, look, if you can take the entire sensory apparatus, if you can literally be in the thing, then…

Ari: Then I agree with you.

Marc: And then it’s like the last…because there’s no place to go after that.

Ari: Yeah, but I don’t have to make that decision now. When it comes, I’ll be the first one in.

Sriram: Making money. I love it. Okay. So, next, changing gears, a lot of people here are involved in the economy, they’re maybe… themselves. I mean… companies. At a16z, we definitely are. Ari, I’m curious, people with audiences, creators with audiences, they could be sports stars, movie stars. You do a lot of work with them. Where do you see that going. Why is it important, where do you see that headed?

Ari: The interesting thing about our two firms is we’ve built the business that it started out in the movie and television business, and then it went to non-scripted, books, music, theater. Then we went to sports, we went to fashion, art, betting, taste, meaning food. And then we built layers, a licensing business, a commercial sponsorship business, so that when we enter somebody’s life, whether that be cricket, or whether that be an actor, or influencer, we have the ability to kind of take them global, and also take them across all the things that they want to do to build a business. And whether that be Mark Wahlberg, or Dwayne Johnson, or whomever, to a powerful influencer.

And so, they’re all realizing the value of their brands, and that they have the impact they can do. And we talked about this this morning. You have a big actor, a big actress, or sports star, they love what they do in acting, or in the sport they’re in. But they also realize that’s kind of like a commercial that enables them to make money across all these other places. And that’s the difference, I think, that we’ve realized. We started this thing called Talent Ventures. We invest off our balance sheet to make sure we’re kind of enabling certain things that we can influence. And that’s where all these people now, stars, or people of influence, or that have social followings, realize the power that they have in all this downstream or upstream economics and brands.

And that’s kind of what the firm is now built to do. We call it architecture, how we introduce that across platform. And that’s what we do. I don’t know if that answered your question.

Sriram: Well, I think it does. It’s really about the power of having a large audience. Speaking of it, Marc, you have a million followers on Twitter. Two questions. One, what do you think of just the power of having an audience as a creator, and where do you think it’s headed? And two, when are you going to tweet again?

Marc: I have to get back…

Sriram: Who wants to see Marc tweet again?

Audience: Yeah.

Sriram: Yeah, I don’t know about that. Oh, wow.

Marc: There was a lot of…a lot of a lot of hesitation from the crowd. A lot of hesitation here up on stage. So, look, I think there’s…so, this is where, again, I would be super bull on the following. I think sort of the social networking revolution, the idea of having these sort of direct brands, direct followings through social media, I think it’s probably still significantly underestimated. I would go so far as to say I think we…

Ari: I agree.

Marc: …I think we might be in the final era of corporate brands. I actually think this might be it for corporate brands or product brands because, fundamentally, if you think about it, why does the corporate brand exist, right? Or why does the product brand exist? Just because… So, from the era of mass marketing, mass production, mass media, where you had these very thin, narrow pipes to be able to get messages to people. So, you had to run TV commercials. You needed to put a brand on things and put it on the shelves.

But now in this sort of peer-to-peer connected world that we have where you can pick the people you want to follow, and have this kind of para-social relationship with them, and kind of be part of their lives, all of a sudden, it’s like, “Okay, now I can actually have a relationship with a person.” And a relationship with a person will always trump the relationship with a company. Right? And so, I actually think that…I think, basically, anybody with a large scale following is probably dramatically under-punching their weight today in terms of what’s possible.

Ari: I agree with that.

Marc: I am a… Okay, here is a good question. So, I went on Twitter basically because I wanted to chin a million Twitter followers. And Elon’s up to 100-and-probably-20 million Twitter followers, something like that.

Sriram: There are a lot of questions about numbers. I don’t want to get into trouble.

Marc: So, I am 1/120th of Elon, just in terms of follower count. So, I don’t know, I’m like 12 micro Elons or something.

Ari: But that’s powerful.

Marc: Well, that’s the thing. It’s 12 micro Elons, is that proportionate?

Ari: The question I have for you, if you actually put your mind to it, how many you think you can get?

Marc: Well, this is the thing. I think these guys have laid out a playbook where if you really put your mind to it…

Ari: I think you could get up to 50.

Marc: I think I probably could. Now. I just think this is a playbook that actually hasn’t… Everybody in social media today is still experimenting. We don’t actually…

Ari: No, everybody… Listen, the lot of guard is, you have to protect the brand. You have to really kind of not oversaturate. They have written completely a different go for it, doesn’t matter. And there is consequences to that. So, yeah.

Sriram: Well, maybe we’ll see you on social media someday.

Ari: Yeah. Maybe.

Sriram: The title of the session was ostensibly Art of the Deal, not regular people. And both of you allegedly for deal-making. Right? So, Ari, what do you now know about buying a company, making a deal? Because a lot of people here are in VC. They’re founders. And some day, they want to be where both of you are. What do you now know about making a deal that you didn’t know when you started? And you made some big ones? The UFC party, one of the biggest ones. What do you now know? How do you go about it?

Ari: Well, listen, I would say to you, most of the time when I’m trying to either buy a company or make a deal, and the hardest thing for me, because I do have ADHD and I just want to get…you do have to know how to shift gears. In the television business, when I was first starting out, you went from first gear to fifth gear. And then because you had seasons, and by May, you knew the show was going. The movie business is a lot slower. Buying companies, running a company, you really have to slow it down, and you actually have to show up. I think 90% of you come with all the baggage, good and bad, but showing up, coming up with good ideas, and being present. And I’m in the middle of one right now, trying to get a deal done. You have to be relentless.

Sriram: Bye the way, because there are some stories about how long you’ve courted some of these companies. How many phone calls?

Ari: Yeah, a lot, I would just say. But you just have to be relentless, and you have to be creative about your approach because it can be…I can be exhausting.

Marc: I know.

Ari: So, when you go at them, you have to kind of bring some charm to it and everything. But you have to just keep on showing up because…and that takes a lot of emotional endurance. And I think it’s the hardest thing that we all have, especially with social and all that. And you have to come with great ideas of where you would take it. Because on the UFC deal, none of the numbers on paper worked out at the beginning. And we were in the middle of it. It was nine days of hell. My phone was on my chest, and just solving problems. And then Brexit happened, the banking systems fell… I mean, it was a disaster. And in the middle of it, one of my partners said, “Are you sure you want to do this?” And I said, “No, I’m not sure. We are doing this.”

And that’s just what it takes. It just takes hanging in there, having emotional endurance. And when you have to get on a plane and do the things you have to do, you just have to do it. It doesn’t matter how tired, or how exhausted, or how emotionally trying it is. And I think that’s the hardest thing to do kind of when you’re starting a firm, getting that emotional endurance to kind of weather those storms because they all happen to us. In the 27 years, COVID was horrible, ’08 was horrible. I mean, you just have to…that’s kind of the secret sauce, if you can have that emotional endurance. And it’s also win the deal, and to try to buy a company or build a company.

Sriram: Which made a good segue into this. I mean, everyone is super happy here, but I think a lot of people, what’s on top of mind is the market. Everything is down, everything across the board is down. A lot of people are doing flat rounds, or some raise money, or if you’re a founder, you’re dealing with laying people off. And so, you folks have been through a lot of market cycles, been through all of it yourself with your own company. For people here that are kind of dealing with this, and maybe having sometimes a really tough time, how do you think they should approach it from a mindset perspective? What advice would you have for them? Maybe Marc can go first.

Marc: Sean Parker had the best quote of all time, and I’ll just prepare you ahead of time, audiences hate this quote. So, I’ll just prepare you for that. Sean Parker had the best comment on what it’s like to be a startup founder. He said, “Being a startup founder is like chewing glass. Eventually, you start to like the taste of your own blood.” And it always gets this exact reaction.

Ari: That’s true, though.

Marc: And he’s right. It is brutally difficult. And I actually think it’s…we live in a culture in which people have…popular culture, it’s very positive interpretations of how incredible it is to be a founder. And then there’s all these negative kind of hit pieces and so forth. And then there’s just kind of the reality in the middle. And the reality in the middle is just it’s always really hard. There’s always a lot of really hard things going on. And then there’s also…I kind of rail on this a little bit. There’s this…in the Valley in particular, there’s this kind of fail fast kind of culture, kind of when something’s not working, give up quickly. And that makes a little bit of sense in certain circumstances. But by and large, it’s kind of the opposite advice. You tend to find the great founders following, which basically is like when the going gets hard, the answer generally is just work harder and fight it harder.

Ari: That’s true in entertainment too. I mean, Greg Daniels created “The Office.” Jeff Zucker, he did six episodes. Jeff Zucker said… And usually after 6 episodes, you get 22 episodes. You kind of go in the mid…at the time, you went into the mid-season pick up, and then you get 13 or you get 22. And Jeff Zucker calls him up and he said, “I’m just going to give you six episodes.” And he lost his mind, and he thought he’d failed. And he’s one of the great writers. And I said to him, “Just stay in the ring.” He goes, “I’m not doing six episodes.” I said, “Let’s just do six episodes and see what happens.” And six episodes led to the season of “The Office.” And the same thing is true with “Seinfeld” and Larry David, who I represent. I mean, that’s just what it takes. You just have to stay in the ring, take the beating, and just keep on going.

There’s plenty of times in my life when that happened at the firm, partner was stealing from me. We had no money, went into the bank account, paid all the employees, and didn’t think we were going to make it to the next day. And that’s just what…I started to enjoy my own blood.

Marc: So, you wrote “Seinfeld,” and then obviously Curb. “Seinfeld” was a huge hit right out of the gate. Is that how it went?

Ari: No.

Marc: No?

Ari: So, it was on I want to say Wednesday, when they put it up, and you deal with your testing. It said, “This is about nothing.” And the first six episodes, didn’t work. Brandon Tartikoff was in the hospital, had leukemia. His first bout.

Marc: This is the executive who sponsored.

Ari: Yeah. He was the head of NBC.

Marc: Sort of guy who was protecting it.

Ari: And he then saw the episodes and he said, “Let’s put the reruns on Thursday night behind ‘Friends.'” And then the ratings went up. They then ordered 13 episodes. They wanted to…I’m going to script this. But there was a problem with Larry David because he didn’t want to listen to their notes. They brought somebody in. That man gave up his points because he said, “This show goes nowhere.” Gave up…I think it was 15 points, which was…

Marc: On “Seinfeld.” A lot of money.

Ari: And he took for the 15 points, I think, $250,000. The story’s probably wrong, $250,000. And they are worth now hundreds of millions of dollars. And they then put it on Thursday night, huge hit.

Marc: But very tenuous at the beginning.

Ari: Oh, my God.

Marc: Even “Seinfeld”…

Ari: Oh, yeah. It was about nothing.

Marc: Right. So, you go back in. And by the way, the same thing with a lot of these big successful companies in the very beginning. Well, the other thing that just gets buried in the history is you can sometimes get it out, but the other thing that gets buried in history is this, for each of the great tech companies, there were almost always moments where they would have or almost did actually sell the company very, very, very early on.

Ari: Really.

Marc: And some of these stories are very famous. You’ve heard a number of these stories. Netflix almost sold to Blockbuster. They were all these kind of points in time where…

Sriram: Facebook to Yahoo.

Marc: Well, Facebook…

Ari: Well, Netflix got lucky because Blockbuster and Viacom, because he owned a big chunk of it, had so much…put so much debt on it. And they were about…they had all the digital rights. They just couldn’t afford it. And Viacom ran into all the trouble, and they were splitting the company up and everything else like that.

Marc: Facebook actually sold to Yahoo. They actually had a completed a deal.

Sriram: Really?

Marc: Yeah. They actually had a completed deal. They had a completed deal at $1 billion. And then the CEO of Yahoo at the time.

Sriram: Terry

Ari: Semel.

Marc: The financial crisis hit and Yahoo reduced the price. And that gave Mark the latitude, because he obviously needed to adjust for the down market. And that gave Mark the latitude to walk away. And actually, the other funny part of that story is…

Ari: That’s crazy.

Marc: …at that time… It’s even crazier. At that time, the internal Yahoo deal back on buying Facebook, this is 2008, actually leaked to the press.

Sriram: It’s very public, you can still find it online.

Marc: It’s actually right on TechCrunch. You can google it, you can find it. And so, it’s the internal Yahoo projections for Facebook’s future earnings stream.

Ari: What did it say?

Marc: And the overwhelming reaction was, “That’s insane. Yahoo has lost their mind. There is no way that this thing can ever make that level of money.” And of course, it undershot ultimately by 100x.

Ari: You know what…

Marc: Yahoo was being crazily conservative in retrospect.

Ari: You know what the value of at the time when Disney bought Cap Cities ABC, what they valued ESPN at?

Marc: Mm-mm.

Ari: Zero.

Marc: Zero.

Ari: It was at the time before linear and cable went to nothing. It was at the height probably worth $100 billion, $50 billion.

Marc: There was a theory there that it…was it just not far enough long, or was the theory that watching it…keeping shows about sports…

Ari: Yeah, exactly. It wasn’t far enough long, and who is going to pay for sports?

Marc: So, these things…anyway, the point of the story is, these things are super tenuous up front. Success is not…it’s almost never the case that it’s like, “Okay, this thing is going to be a slam dunk success, and then it’s a slam dunk success.” It’s almost always just a continuous fight against people who just literally don’t believe.

Sriram: And the interesting thing about the Facebook story, and this is very public now, is that a lot of the Facebook exec team at the time were not happy with not selling to Yahoo. They really wanted to sell.

Marc: Enough time has passed, people have talked about this. One hundred percent of the Facebook executive team at that time wanted to sell, except for Mark.

Ari: Really?

Marc: Yeah, it was overwhelming inside the company.

Ari: I mean, my story is we start the company. Three months in, I’m going to say a bad name now, so I get called into Harvey Weinstein’s hotel room. With my three partners at the time. The four chairs are there. And he says, “I’ve made a deal for you to go to William Morris. They’re going to pay each one of you $2.5 million.” Well, we had no money. I wasn’t taking a salary. We were getting sued. It was a disaster. “And you’ll go over there and they’ll buy the company.” Asshole me says to him, “What are you fucking talking about? I’m going to buy them one day.” Cut to 15 years later.

Marc: Did all the people you were in the room with that day hang with you?

Ari: Except one left at the merger. And we merged/took them over.

Sriram: Okay, all right. So, okay, we’re almost out of time. I’m going to ask one last thing to both of you. And I know both of you hate this, but I’m going to ask this anyway. So, I’m going to start with you, Mark. What is one thing over the many, many years you’ve known Ari that you learned from Ari? And then vise versa, but we’ll start with you.

Marc: Well, look, Nietzsche has this thing, will to power. And so, I think that would be my…just like…and you’ve seen it demonstrated in the stories today, which is it’s an overwhelming determination to get to the objective, and to not let… Another way to describe it is Ari leaves an Ari Emanuel-shaped hole in any brick wall he endeavors, including calendar, my… And so, yeah, just at the end of the day, there is no substitute for sheer willpower and determination, and I think he has a lot to teach about that.

Ari: Definitely that phone calls are not as important.

Sriram: Oh, come on, come on. Give us something real.

Ari: No, listen, he’s built one of the…we actually were just talking about this at lunch at his house. He’s built a company that he’s realized…he continues to shift how he thinks about the world. And he’s constantly curious about things that are happening in the world. And his capacity, and I think I have a pretty big capacity, it’s not even close to his, to absorb all these different worlds, and then take things from them, and then incorporate into his business is extraordinary.

On that note, this has been…

Ari: Thank you.

Sriram: …amazing.

The above transcript is abridged and edited for clarity.