Beer with an Entrepreneur: Zareh Nalbandian, co-founder of Animal Logic

Beer with an Entrepreneur: Zareh Nalbandian, co-founder of Animal Logic

– It does sound really
impressive, doesn’t it? When you hear something
made 200 million dollars at the box office? – It sounds like you want to get into it. – Yeah. – Animation studio Animal Logic has been part of creating
iconic films such as The Matrix, The Great Gatsby, Happy Feet, LEGO The Movie, and more. Hundreds of millions of
people has enjoyed his work, but few have ever seen him. I’m happy to have at this table Zareh Nalbandian, co-founder
and CEO of Animal Logic. – Thank you.
– Thanks for stopping by. – It’s a pleasure, this
is going to be fun. – First things first. Let’s go back in time to a
moment that, according to me, changed the history of the world. So you walk into your office one day, open the door, on the
desk there’s a new script. You pick it up, the
headline says: The Matrix. Take us from there. Because that’s exactly how it happened. – Oh, I’m sure, it’s
exactly how it happened. I was just gonna dispel that myth because it’s never how it happens. There’s never that definitive moment. Everything’s like an evolution, you know? Nothing ever starts or stops. And it’s all based on
relationships, opportunism. It’s, you know, convergence
of different things, the stars aligning. But The Matrix was one
of those defining moments for Animal Logic, yeah. – Could you see early on
that this was something else? – I think you do. You sort of kind of sense
something in the DNA of a project. I’m sure it’s the same if
you’re developing an app or, you know, anything
you’re doing in life, really, any creative enterprise, where you kind of go, you know what? I can sense something
different with this one. It’s not like the other
three I’ve worked on. – You’ve been running Animal Logic for what is about to be 27 years. – [Zareh] Don’t remind me. – Do you still remember
the first couple of days? – We started with a dozen
people, give or take one. We rented a premises in Crows Nest in a really ugly office building, which had, I remember, peach-coloured
carpets and pink walls. And I remember sitting
on the floor of that empty office space with the
other colleagues, our team, and going, what are we gonna do? What’s the vision for this? Literally. And it was so good because, you know, what we dreamt up that night sitting in an empty room on the floor was what we did in the
coming months and years. We have a very simple philosophy, which is create great work with great people and good things will come. So if you stay true to that cause, then everything else will fall into place, as opposed to, make a whole lot of money and then be successful. – Talking about money, that’s such a fascinating
thing with your industry ’cause as outsiders, we read the stories about this movie or that movie made 800 million in the box office or whatever, but we don’t understand anything, what’s going on behind the scenes, how those funds trickle down, ’cause I assume those 800 million doesn’t only end up in your personal piggy bank. – I wish it did. I wish a small percentage did. But we started as a service company, and we were making a margin
on the services we provided, and, to very recently,
we were still doing that, and I always say we’ve had
good and bad years financially, but more importantly, we’ve
never had a bad year creatively. When I look back on
all the work we’ve done year in, year out, even when we’ve struggled
sometimes financially, I’m always really proud
of the work we’ve done. I always feel like we’ve innovated and we’ve done something
that advances our brand, our reputation, our relationships. But coming back to your question about how the waterfall works in film. It does sound really
impressive, doesn’t it? When you hear something
made 200 million dollars at the box office. – It sounds like you want to get into it. – Yeah, and it only cost
50 million dollars to make. But, you know, typically,
the 50 million dollar film or the 100 million dollar film that it costs to make the actual film, the studio, the distributor, the distributor will spend another 30 or 50 million dollars
distributing that film, advertising, marketing,
printing, distribution. So now you’ve spent, let’s
say, 150 million dollars between making the film and
the distribution of the film. And it sounds great, you’ve made 400 million dollars at the box office, and then you go, no, no, no, the exhibitors, the theatre owners will keep a little bit over 50% of that, the studio is gonna
take a distribution fee, which is going to be 15% of that, and you very quickly realize that you can actually make a loss on a 400 million dollar box office on a 100 million dollar movie. And when that light bulb goes on and you realize why it’s such a rarefied atmosphere in terms of who makes money. – And I think that’s so
fascinating right now. When you are committed to taking, I mean, and for some years, take Animal Logic from
being a service provider to a technology company. – Well, we’re not a technology company. I think that we’ve been
very lucky sometimes, but I think also very
strategic and opportunistic in terms of finding what
I think is the important convergence between creativity,
technology, and commerce. If any one of those pieces don’t work in running a business
in the field we’re in, I think, ultimately, you could fail. If you put technology ahead of creativity or if you just put the profits
ahead of building brand and capability, or if you just go, we’re creative, we’re just going to follow
our creative instincts and you have no regard
for the financial side, you could fail. So I think the team at Animal Logic as a leadership team
and generally, you know, everyone in the company have really done an amazing job of finding
that perfect convergence. But I see ourselves as a creative company, not a technology company. Having said that, our technologists, our software developers, and infrastructure teams and IT teams are just as important to the
creativity of the company as our designers and fine artists, because it’s that partnership. We get a production designer who pushes the tech, going: “I need this.” And so the technologists have to step in and create the tools. Sometimes we get the
software developers going: “You know we could do this.” And the artists go: “Well,
I know how to use that.” So it is that nice balance that we have. You know, it sounds great when you tell the story of
Animal Logic, but it is 27 years, and it is 27 years of a lot of hard work, a lot of amazing people, you know, who’ve been dedicated and
passionate and talented in bringing all that to the company. A lot of challenges along the way. So you’ve got to have a longterm vision, and you’ve got to be committed to it. Now, if you’re developing
a great idea of an app that costs $200,000 to make, maybe it’s a completely
different business. But in the area that we’re in, which is making tent-pole films for all ages, for global audiences, you know, it moves like a supertanker, it’s not a speed boat. So, you know, we’ve always
been driven by doing great work and doing it with great creative partners, and when you think about
that as a longterm vision, you go, how can I best achieve that goal? Well, you’re probably gonna
best achieve that goal if you’re there from the
beginning to the end, which means conceiving the idea, developing the script and the story, packaging the actors and
the talent, making the movie and being involved in marketing
and distributing the movie, and hopefully having a
financial share of it because you have been there
from concept to execution. That last phase of the company, that new last phase of the company has been going for 10 years. You know, 10 years ago
we were an advertising service provider, a VFX service provider, an animation service provider, and we started developing our own films. Our first film was
Legend of the Guardians, and then from there, we
developed those later films, and we’ve literally been spending more than a million dollars
a year just in developing IP. And then, you know, fast-forward to today, where we’ve got our first
live-action film being made. That was years in development and making. And I guess my point is
that it’s a long road and you’ve got to back yourself
and believe in your vision. You’ve got to be prepared
to fail over and over again and get up and do it again. Because if you don’t have the strength to deal with failure,
you shouldn’t even start. So for us it’s been a really organic and very gradual process, but it’s always been heading
in the same direction. – We live in a software age
now, where you release your app and then you can make improvements
and updates continuously. You guys, when you have a deadline, you really have a deadline. – We sure do. – I mean, what kind of creative creature does that turn you into? – A lot of creativity and art, you never actually finish, you just have it ripped away from you and it’s taken to the audience. And I’d like to think
that we’re a little bit more in control than that, but ultimately, you never have enough time,
you never have enough money, you could always do more, you
could always make it better, but you’ve just got to be, you know, know what your priorities are in developing a film and making a film, and know that there’s gonna come a point where you have to launch
it into the world, and the rest is going to
be up to the audience. But it is about prioritizing
what’s important along the way. – So the big money-makers now, I guess, are the big franchise brands out there. What are the characteristics
of something that can become this big franchise brand? – Well, if there was a formula for that, I would be like…
– Not sitting here. – I would be doing this on
my private jet right now. But, you know, there are things that are common threads, I think. I mean, sure, you can say
brand awareness is key. But more importantly,
you look for great story and great characters that you care about, ’cause if you’ve got a great story and great characters you care about, then you’re gonna get
empathy from the audience, and even if it’s made
with little LEGO bricks, because LEGO doesn’t have a story, LEGO is a medium, it’s not a story. So what made the LEGO film work was you had this amazingly
empathetic bunch of characters, and they had a really
great, relatable story. And it was surprising, it
was not what you expected. So that, to me, is the key to a franchise, not just the brand awareness. – You guys create characters and worlds. But to some extent, that’s what all companies
today want to do. They want to create their
own storytelling universes. What do you think the insurance
company, big corp CEO, or the 20-year-old app developer
can learn from you guys when it comes to storytelling? – I think being relatable, I think being fresh, I
think being surprising, having a really interesting,
new, surprising, and fresh take on something
that’s been done before. It’s actually being innovative. It’s about not settling for mediocrity because you can get
something made in a week, or you could take a year to make it and not over-polish it. But it’s really, really
pushing yourself to go, how can I make this better? How can I make this original? How can I not make this derivative and I lose my audience before I start? But I come back to it. A great story, great characters would be at the core of that. – Do you remember any
particularly tough times during these years? – Sure. How long have you got? Totally. Every second year, you know? Seriously, it’s a tough business. – One of the toughest things in your job’s got to be pulling the plug. What is that like? – It’s tough, you know? Sacrificing some of your
babies is really tough. But, again, I think this applies for all creative, technology-driven industries. You’ve got to be prepared
to fail, fail quickly, acknowledge failure,
move on and do it again. And we’re in a business where not everything’s gonna work, so you need to have
multiple horses in the race, you have to bet on a
number of things at once, not because you want them to fail, you want everyone to succeed, but you got to prepare, you know, yourself for natural selection as well, where the projects, the stories,
the movies that are really kind of getting traction are
gonna get ahead of the rest and you’re gonna have to let some go. It’s never easy, it’s expensive, which comes back to my earlier comment. You’ve got to be in it for the long haul, because you’re playing
a game of averages too. – And your story, Animal Logic’s story is the story about
consistency and longevity. When you see the modern startup stories of here is this app and
fail fast and, you know, the software that you can
continuously pivot and whatnot, can you, entrepreneurial-wise,
relate to that world? – I can and I can’t, because I think we do
that in a small microcosm within the company in different
departments every day, whether it’s in an assets department, that’s building a prop or an asset, or it’s in an animation department that’s trying different
animation techniques. But sometimes when I think, when I see that there’s an
enterprise that’s just around building one thing and, you know, rolling the dice and hoping it comes up as success, I go that’s not necessarily
really longterm enterprise. That’s placing a bet. And sure, if you win,
you might get 200 to one, but you’re still only placing a bet. So I tend to be on the more conservative, let’s have an enterprise
that’s a real enterprise, that’s got depth and breadth
and has got longevity, and let’s look at the success over time. – It’s easy to look at
your repertoire of films and think that you’ve just
been jumping from success to success to bigger success. Do you ever worry? – I worry every day. I’ve been worried ever since
we started the company. – 27 years of worrying. – Yeah, but I say that in a positive way because I really believe that, as a CEO, you should always be worried. If you’re not worried, you’re kind of resting on your laurels, and I think that, you know, there are some negative things to that, which could be that you’re
not aware of the potential challenges that might
be around the corner. But equally, you’re not thinking about how you can push things further, how you can make things better, how you can actually optimize
and plus and improve. And so you should be worried as a CEO, in a good way, every day, and I have been, I can tell you. – Visualizing the 20-year-old first-time entrepreneur out there, what would be your 30-second pep talk? – Back yourself. I keep saying it, be prepared
to fail and try again, but also, be your biggest critic. Don’t just settle for mediocrity because it’s a competitive
world out there, there’s gonna be thousands of people who are just as talented as
you who have a great idea. So you’ve got to break through. You’ve got to be passionate, man, and you’ve got to really drive yourself and be your biggest critic, and keep trying. – What makes you emotional? – Inequality, unfair practices, poverty, famine. Those things really make me sad and angry. But you know, three years
of profit in a row makes me very emotional. – Thank you so much for being here. – Thank you, alright.
– Thank you.

2 thoughts on “Beer with an Entrepreneur: Zareh Nalbandian, co-founder of Animal Logic

  • March 10, 2018 at 12:37 am


  • November 20, 2019 at 5:25 pm

    Very Nice. Thanks for this.


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