--:-- Steph Smith: Happy New Year, everyone, and welcome back to the a16z Podcast. This is your host, Steph Smith, and today I am delighted to share what I think is an incredibly relevant episode for this audience, from our crypto and Web3 podcast, Web3 with a16z. In this episode, Sonal Choksi and a16z Crypto founding general partner Chris Dixon sit down with Bob Iger. Yes, the Bob Iger, longtime CEO of Disney. Bob draws on his learnings from working with top and emerging creators, including how to effectively deliver feedback, what it really took to close deals like Marvel, Pixar, and Lucasfilm, and even what it took for Disney to disrupt themselves. Having just listened to this episode myself, I can tell you you're in for a real treat. And if you like this episode, be sure to subscribe to the show if you haven't already. Just search "Web3 with a16z" wherever you get your podcasts.
--:-- Sonal Choksi: Welcome to Web3 with a16z, a show about building the next generation of the internet from the team at a16z Crypto. Hosted by Editor-in-Chief Sonal Choksi, that's me, and also with occasional co-host, founding general partner Chris Dixon. In this special holiday episode, Chris and I interview Bob Iger, as we've been spending a lot of time thinking about what's next in media as enabled by new technologies. So it was an honor for us to sit down and chat with Bob in an intimate conversation recorded in LA a few months ago.
--:-- Bob probably needs no introduction, but after this chat took place, it was recently announced that he was returning to Disney. Still, just to highlight more about his background as relevant to this conversation: as a longtime CEO of Disney, Bob was responsible for, among many other things, leading the acquisitions of Pixar, Marvel, Lucasfilm, and more. He also navigated questions that many company builders of all sizes face, like whether to build versus buy or how to navigate the innovator's dilemma and disrupt oneself. Bob was also previously the head of ABC Entertainment, and he is the author of the book *Ride of a Lifetime*, which we referenced throughout this episode.
--:-- As a reminder, none of the following is investment, business, legal or tax advice. Please see a16z.com/disclosures for more important information. Anyway, our wide-ranging conversation covers the interplay between technology, content, and distribution, and Bob's journey, and that of various creators throughout, especially as the arc parallels the evolution from TV and cable to the advent of the internet, and Web 1.0 to 2.0 to very briefly touching on Web3. We also discuss business models like advertising and distribution models like streaming, and we end with a quick tour through emerging technologies like VR and AR. But we begin with the very top-of-mind topic of focusing on creators, including the question of what's different about managing creatives.
--:-- Chris Dixon: It's been 13 years since Disney bought Marvel. Why can't the competitors — this has always puzzled me — they've got hundreds of millions of dollars, they can hire whoever they want. Why can't they replicate the success of Marvel?
--:-- Bob Iger: When I ran Disney, I always found that focusing too much on the competition was not healthy. It always created anxiety for me. First of all, it's people. You have to choose the right people. And I'm not just talking about a director. That's obviously important because you don't get a good movie without a good director. But it's management to supervise. It's people who understand — just to give you an idea — in a lot of cases in movies, a movie studio will make a decision that they're making a film and actually slot it onto a calendar, into a schedule, and say, "This is going to come out in July of 2023." And off they go. It's very rare that a studio will say in the middle of the production process, "This movie is not as good as we need it to be. We're going to wait." And so they force things into the marketplace before they are fully baked.
--:-- Basically, it's a lack of commitment to excellence. And I'm a big believer in the relentless pursuit of perfection. Steve Jobs, a great role model there. And realize: no one's ever going to criticize a movie that's great for coming out late. They certainly will criticize the movie if it's bad. If it's bad, it comes out on time.
--:-- Bob Iger: And what happens with these companies often is they think about a movie's going to come out in a quarter and we have to make our quarter and we got to get the box office. And that's the tail wagging the dog.
--:-- Chris Dixon: Well, and also, a lot of these execs — isn't the average tenure relatively short? They're under pressure from Wall Street and the board. And they may not be able to, even if they want to, manage to a long-term vision.
--:-- Bob Iger: Yeah, I think that probably plays into it a bit. But there's a whole other side, too, and that is the management of the creatives. I hired Alan Horn in 2012. I remember the day he came in, June of 2012, and I said, "I've got a really big secret to share with you." He thought he was coming to Disney to manage Marvel and Pixar and Disney. And I said, "We're on the eve of announcing the acquisition of Lucasfilm." He said, "You're kidding." I said, "No." He said, "That's the greatest thing I've ever heard."
--:-- Alan Horn was the kind of studio executive that knew how to manage creative talent. And not just creative talent, but the talent that manages creative talent.
--:-- Chris Dixon: Yes. Yes, exactly.
--:-- Bob Iger: Oh, God, yes. Which is you figure out how to insert yourself into a process in a benign way where you're looking over people's shoulder, but you're not making them feel paranoid. You're giving them advice on what to consider, but you're not ordering them to change things. You're being patient. And you're also understanding the anxiety that they feel. And you're not trying to build onto it or to exacerbate it.
--:-- It's fascinating. I engaged a lot in the big movies. I read scripts. I looked at early rough cuts. There were a couple of times I went into edit rooms, but very rarely, very rarely. It just wasn't my role. But when you look at something and you have to give critical feedback to someone, there's a way to do that.
--:-- Sonal Choksi: Bob, actually, can we pause here? Because I want to ask you more about this because this was literally the part of your book I love the best. And the reason I think it's important for our audience as well is because I think a lot of technology companies don't actually know that they're creative companies first. And this is a huge shift that's happening right now. And so I want specifics on some of your lessons learned for managing creatives and creative management in particular, because the point about feedback is literally one of my favorite points. So tell us more about managing creatives.
--:-- Bob Iger: Sure. The first thing you have to do when you manage creatives is to put yourself in the shoes of the person who's the creator and realize the idea typically has come from within them. It's part of almost their fabric. It's who they are in a way. Not only do they have a sense of ownership, but it's very much tied to their self-esteem, how they feel about themselves. And you can't dismiss that. You have to really understand that.
--:-- Oftentimes, executives try to exert their authority or show who's boss. You don't do that either. It's not about that. It's not about coming in and having the big title. It's about trying to establish in the most sincere, genuine way a partnership. "I come in peace. I just want to help. I'd like to give you my perspective, not tell you what to do. I'd just like to give you some thoughts that I have about what you just showed me."
--:-- Some of it sounds like common sense, but there's always ego on the line.
--:-- Chris Dixon: Is it ego? But let me just play devil's advocate. Someone else might argue, "Well, we do have to make a budget, we have to make this schedule, and these creative people are running around."
--:-- Bob Iger: Listen, I do believe that managing creativity responsibly for your shareholders is really important. You can't allow just wanton spending or allow creators to take however much time they want. Some do, by the way. Some have earned the right to do that. Jim Cameron's a good example of that. I respect Jim immensely. His next *Avatar* movie is coming out under the 21st Century Studios banner, but owned by Disney because of the deal that was made in 2019. Jim Cameron makes movies on his own timetable. You cannot impose your own calendar on Jim Cameron. You have to know that as a studio. And if you don't, then it's your fault. Then what happens ultimately is this tension: "What do you mean you're not going to deliver it by this date?" And then that relationship starts to rupture. You just have to know what you're getting into.
--:-- So there's that. There's also just how do you actually articulate feedback about creativity? I'd often find executives would think if they talked about minute details, that the creator would think, "Wow, what a sharp eye that person has. They noticed this little detail in this image in this film." The opposite is the case. To the creator, that's trivial. That's meaningless. "What are you doing? Why are you wasting my time telling me that the color of the sky is too pink or whatever?" But I've seen executives do that because they want to show that they're looking, they're watching.
--:-- I like to always go in and be really big in terms of my thoughts. "I think you've got a good movie and it's a great story, but it's not as digestible or understandable as I would like it to be. Let me tell you what I didn't understand. I might have missed something, but let me articulate it." It's that simple. Or, "The pacing is off for me. It feels a little slow. It dragged in spots." They may ask, "Well, was there a spot in particular that you felt that?" You have to back it up. "This particular act" — it's not getting too granular, but it's saying, "This is where I thought it slowed down." And often the creator will say, "Oh, that's interesting. I'm going to take a look at that again."
--:-- Chris Dixon: Well, it sounds like you're giving authentic feedback as opposed to kind of fake expert feedback.
--:-- Bob Iger: Yeah. Correct. Or just trying to use your authority. And actually letting the creative diagnose how to solve the problem instead of micro-managing, like saying, "Let's do this, this, and this." Never do that. And that level of notes.
--:-- The other thing you have to realize is know when to stop. When the creator has absorbed enough, has heard enough — they don't really want any of that, some of them. Some of them invite it. Some of them don't really want it. But stop. And often I try to read the body language. And when I did stop, I'd say, "I have a couple of other thoughts. I'll send you an email." Or have Alan Horn do it.
--:-- And then often, sometimes it's hard. You try to lead with something positive. If you could see the worst cut of the worst film and you don't know what to do, the lights would come up in the screening room at Disney. And then invariably, I'd have to say the first thing. I think, "Oh my goodness, how am I going to deal with this?" But I tried really hard to say something nice first, even if it was transparent that I was doing that, because it just puts people at ease.
--:-- And in some cases, it was great. Like when I watched *Black Panther* for the first time. Ryan Coogler, who was not even 33, directed two other films, *Fruitvale Station* and *Creed*, comes in and he's made this big film, first big film he ever made. He barely knew me. He's obviously intimidated because of my title. I could tell he was nervous. And I had to say something first. And the first thing I said to him is, "Ryan, I've got some things I want to tell you about the movie that I just detected or felt. But I got to say one thing: you made a great film here." And it's just like, oh my goodness. You could just see the anxiety just pour out of him.
--:-- Chris Dixon: Yeah, exactly.
--:-- Bob Iger: Yeah, exactly. And people had ease. And that gave me license then to say something. He's still euphoric. And it wasn't manipulative. I truly meant it. But I knew that if I didn't put him at ease first, everything I said was going to bother him.
--:-- That was an earlier version of it. It was a very early version. It was rougher. It changed a lot. Interestingly enough, it was clear that the changes that we felt that could be made were going to cost money. There had already been a big debate about the budget of the film, I think $175 million. And people saying that an all-black cast never resonated in certain parts of the world like China. And therefore $175 million on this film is a huge risk. Well, we're not going to give the black director a smaller budget to make this film. I felt very strongly about that. But I also knew that this was a great story you could tell in the script and it deserved the budget to become a great movie.
--:-- Chris Dixon: And you also actually accelerated it in the slate. In your book, you talk about how you tried prioritizing that as one of the things that could come out sooner, I think.
--:-- Bob Iger: I must say, I don't remember the timing, but what I do remember is in thinking about the changes that could be made to turn this into a true, not only hit, but phenomenal film, it was going to cost money. And we were clear with him right away: spend what you need to make this better. The rest is history on that one.
--:-- Sonal Choksi: That's great. On the last note on feedback, the other thing you said, and this is the part that actually resonated with me personally — I'm glad you read my book.
--:-- Bob Iger: I haven't read it in a while.
--:-- Sonal Choksi: I mean, I read the entire thing cover to cover. It's a very quick read. It was the specific details that stood out. And the one that really stood out to me here was not to be petty with your feedback. Like you already alluded to this already when you said not to focus on minutiae. But I literally had someone call me like two weeks ago because a big tech company, they're launching a new podcast. And the first piece of feedback this person gave to her creative was, "Yeah, the music seems kind of off." And I was like, "That's literally where you started?" That's probably the worst thing to do. And it was so relevant to what you say in your book.
--:-- Bob Iger: Yeah, only say things that will really make a big difference. The big visionary stuff first, which I thought was a really compelling thing. And sometimes the petty stuff, never. There were times when I had a list that was three pages long of small stuff that I just canned.
--:-- Chris Dixon: Essentially, it's a little bit like my business in venture capital where I have a rule where I basically never give specific product feedback to entrepreneurs.
--:-- Bob Iger: Oh, I didn't know that.
--:-- Chris Dixon: Yeah, well, because I used to be an entrepreneur. These VCs would come in and they would say, "Move this button." And we had a person on the team who spent four months on the layout of that page. And the other problem is that what you don't realize as an investor is that will then propagate down through the company.
--:-- Chris Dixon: And it really was just one person's opinion, but suddenly it becomes like a board mandate. And so that's why I just don't want to do it because, sure, I have thoughts, but I don't want it to be seen as an investor mandate, like "the color's off." It's just silly because I'm not an expert on color.
--:-- Bob Iger: But it's interesting, though, conversely, having worked with Steve much as I did, he did believe that details matter. And that a collection of details, which can be small in nature, actually made a big difference. And so the question is—
--:-- Chris Dixon: I mean, he's such a special, I don't know, the books where he's sitting in there going through every pixel.
--:-- Bob Iger: Yeah. Well, I remember he would take me to the Pixar design lab and take the blankets off the design tables and under the blankets were the new products. And at one point, I think I might have described this in the book, but if I didn't, I've described it other times. He made me put my ear down to where the power cord touches the laptop. And it was then they were using the mag connector and you could hear the click of that magnet. And the click — he'd been about 10 times, both our ears down there. Click, click, click. He says, "You hear that?" And it was clear. It was really making him feel good.
--:-- Sonal Choksi: But you're making a key point here, Bob, because there is a paradox. You're right, with how do you focus on details and not pettiness? And there's a difference between the two. And I think you're right, Chris. Like Steve Jobs is an example of someone who's earned the right to be focusing on minutiae because he's such a visionary. The problem that I see with a lot of tech people who do this is sometimes people who come into a room, they'll sort of act like they're visionaries like Steve Jobs, but they're actually not. And then they focus on the minutiae and you're kind of looking at them like, "Yeah, I don't really care what you think." Steve earned the right.
--:-- Chris Dixon: Yeah. And I think what you were saying, I guess I think of it as the feedback should sort of correspond to the person's expertise.
--:-- Bob Iger: Yes, exactly.
--:-- Chris Dixon: Right. The person has earned the right.
--:-- Bob Iger: That's right. Because of experience, knowledge, he's been proven right. And not just hierarchy.
--:-- Chris Dixon: And not hierarchy. Not just throwing authority around.
--:-- Sonal Choksi: I'm glad we talked about that. We can segue to other topics before your guys' pivot, because later on we'll come to Disney+.
--:-- Chris Dixon: Great. So Bob, you became the CEO of Disney in 2005, and you had a career at ABC and a long media career. Can you kind of give us a picture of what the media world was like at the time?
--:-- Bob Iger: Sure. It's really interesting looking back, because 2005, there were forces of disruption that were already impacting the business, but it was still relatively superficial. Web 1.0 and the internet growth that we were seeing by then was starting to have an impact on a variety of different things, including consumer behavior, but not nearly as much, obviously, as we've seen. But it was clear that the promise of the internet was vast. And I think that there was anxiety that was just starting to build in the industry. And people running traditional media companies were being asked to be visionaries. And how were they going to, one, contend with that disruption, and two, really, how would they thrive in a newly disrupted world?
--:-- Chris Dixon: My recollection was you had really obviously the big kind of bubble in the 90s, and then you had the backlash, at least from my perspective in the tech industry, 2001 to 2004. But by 2005, I think Google might have gone public, the downturn might have been overstated, and broadband penetration was increasing.
--:-- Bob Iger: Yes, exactly. And people — just use of new technologies, even though it really was not the era of mobile technology yet — use of new technologies was growing like crazy and people were spending time and money on those technologies. So you kind of knew it was important, but not necessarily specifically how yet.
--:-- Chris Dixon: Correct.
--:-- Bob Iger: But the board of directors of the Walt Disney Company wanted to know when they were interviewing me to become CEO what my plan was. What would my priorities be? What would I do? And what I articulated was that I saw a world where technology was going to create a proliferation of distribution and really of consumer opportunity to access, consume, buy media and entertainment. And as I looked ahead at a world where there was so much more distribution, I also saw a world where there'd be a lot more production or creativity and a lot more consumption.
--:-- I thought, "Okay, well, if the world is going to expand or even explode like that, how does a company like Disney play or really thrive in that world?" And what hit me was that great content, high-quality creativity, and branded content would stand the test of time no matter what disruptive forces impacted the business. In other words, people would seek out best brands, best content, best experiences, no matter how they were getting them. And we should worry less about the distribution and more about what we were creating.
--:-- Chris Dixon: I always think of it — tell me if this is naive — but I think of it as there's an ebb and flow in the media business between the relative strength of content and distribution. And so maybe one way of saying what you saw was that as the supply of distribution went up, the leverage of the distribution side would decrease relative to content?
--:-- Bob Iger: Well, what I was actually declaring was that there's an ebb and flow in terms of the debate, but there really shouldn't be a debate, that the content side would always win out.
--:-- Bob Iger: Because creative, brilliant people is just a fundamentally scarce resource. They'll find their way to the consumer, and the consumer will find their way to brilliance no matter what. And we were way too paranoid about the forces of distribution basically ruining our business. And remember, cable and satellite was still growing like crazy. And then, of course, there was concern that the web browser would ultimately become another form of consumption and distribution.
--:-- Chris Dixon: That's interesting. So another strategy would have been to sort of run around trying to own these different new forms of distribution. You said no. I mean, obviously you'd do some of that, but your priority would be the content side.
--:-- Bob Iger: Well, at that point, what I declared — because there had been a debate at Disney for the decade prior: should we own distribution? Should we invest our capital in that direction? I shut that argument down right away and said, "No, it's all about one thing: high-quality branded entertainment." And I described Disney, obviously, as just that, high-quality branded entertainment. But we had to invest even more of our money, our time, resources in that because, again, it would stand the test of time.
--:-- And interestingly enough, Walt Disney proved that in ways that were so obvious to us. He makes *Snow White* in 1937. And in 2005, it was still being consumed by kids around the world in the form of — at that point, I think it was just DVDs really, I guess Blu-ray was just coming into play at that point. When you think about that, you think, "Wow, that was only movie theater distributed in 1937. It went through an era of TV in the 50s and the 60s, and then it ends up in a home video form." That's kind of telling. It doesn't matter what the technology is that's going to get that product to people. It's about the product itself. And so I made that case loud and clear. I articulated it as the company's number one priority: invest in high-quality branded content, period.
--:-- Chris Dixon: Can you break down "high-quality"? Does it mean premium, like you spend a lot of money on it? Does that mean you don't do low-end TV shows?
--:-- Bob Iger: Well, it means you tell great stories.
--:-- Chris Dixon: What do you not do? Doesn't everyone try to do that?
--:-- Bob Iger: Everyone, I think, sets out to do that, but they don't create processes that result in that. They rush things into the marketplace, meaning they don't take the time, they get impatient, they don't manage the creative community well, they don't take risks on new ideas that sound odd but could be great. They don't know how to process failure in creativity, which is interesting because one of the things I'm seeing today is there's so much anxiety over transformation and disruption that companies managing creative processes are transferring that anxiety to the creative community. There's already basically an embedded anxiety. Don't make it worse. So I just felt that there were ways that we could execute.
--:-- Chris Dixon: So that's sort of a cultural, operational kind of thing that you build into the company culture.
--:-- Bob Iger: Yes, it's very cultural.
--:-- Chris Dixon: And so here we are in 2005. I make that declaration. I look at Disney and see where are the deficiencies. One of the biggest was Disney Animation, which had powered the company starting with Walt in 1923 when he founded it. And if you looked at the years prior when Disney Animation was great, the company was great because it had such a massive effect on company perception, brand perception, of course, on commerce. And then the way Walt created the company was: if you create great IP, it's leverageable in consumer products and theme parks and music and so on.
--:-- Chris Dixon: Why had it lost its way, do you think?
--:-- Bob Iger: There were a lot of reasons. There was a process problem. I could get really granular. You do have a great write-up about it in your book. I spent a lot of time on it. In fact, you had a great line, I think, which was "where animation goes is where Disney goes."
--:-- Chris Dixon: Yeah, and that was very true at that point. And so I thought, "Okay, number one priority under the umbrella of the strategic priority that I just articulated: fix Disney animation." How do I do that? Great people. Where are the great people? They're all working for Pixar. We didn't have them. And then it just happened at the time that a long-term partnership that Michael Eisner had created, which was a co-ownership, co-funding of their movies, was ending. And Steve, having declared that Disney was over and he was done with them. So not only was Disney animation at sea, but the relationship with Pixar, which had driven some pretty good commerce for Disney, even though it was only then 2005, 10 years old, was ending.
--:-- So I thought, "Okay, I got to get the relationship with Pixar back, but I also have to fix Disney animation." The light bulb that went off was: what if we buy Pixar? Which was a crazy idea, because it wasn't for sale. All roads had to go through. They were public and worth $6 billion or something. We paid $7-plus billion for it. I don't remember what they were trading at. But they were expensive and relatively big.
--:-- Chris Dixon: They were expensive.
--:-- Bob Iger: They weren't for sale. Steve owned half the stock. And they were unhappy with Disney.
--:-- Chris Dixon: Correct.
--:-- Bob Iger: And they were really unhappy. And didn't your board even say, "Can't you just acquire John Lasseter and the talent?" And you were like, "Yeah, that's not happening."
--:-- Chris Dixon: Just buy John Lasseter. John loved Disney, but he didn't want to work for Disney.
--:-- Bob Iger: No, exactly. And that's actually part of the point, because the creatives didn't actually work for Disney at that time. They worked for Pixar. So what happened was, in my first board meeting as CEO, after they chose me, I showed them 10 years of Disney animation failure and told them this had to be fixed because it conformed to my strategy. But I went through the process that I had gone through in my head, which is: who do I identify to do it? And I said, "Well, roads lead to Pixar." I said, "The problem is that we can't pluck those people out of Pixar too hard. And they're not for sale. And if they are, it would be terribly expensive."
--:-- I think the board was so blown away by the craziness of the idea that they didn't say yes and they didn't say no. They just felt, "This is so crazy it's never going to happen." And I read that as what I call an amber light, which is: they're not putting a red light in front of me — "Don't do it." They're certainly not putting a green light in front of it — "Do it." But again, I think because they were just so shocked at the thought, they weren't really focused on how are we going to contend with this.
--:-- Of course, in my case, I had a head of steam. I was a brand new CEO. My wife told me I wasn't going to last more than three and a half years if I didn't do something really bold, which is good advice. So I picked the phone and called Steve Jobs with a crazy idea. That was in October of 2005. And we announced the deal, I think, in the first week in February, just a few months later.
--:-- Chris Dixon: How did you fix things?
--:-- Bob Iger: I was lucky, really lucky. Before I became CEO, I spent some time with him. Didn't get that far because he just viewed me as one of the Disney bureaucrats. But I at least showed him interest and curiosity in Apple and what he was doing. And before I made the call on Pixar, there was a six-month period where I was named CEO, but I was waiting for my predecessor, Michael Eisner, to leave, which was planned. I called Steve and I said, "I have a crazy idea, my first crazy idea." And that was to create a television version of iTunes. He had created this with almost every song that you ever wanted to find in one place. I said, "Why don't we do that with TV shows? Why don't we go back to *I Love Lucy* and you name it. Put all TV shows in one place." And at that point, I'm thinking about basically web distribution. I was not thinking about any mobile distribution because the iPod at the time didn't have a screen on it.
--:-- He then said, "I'm going to come down and see you." He comes down, takes a prototype of the iPod with a video screen on it, shows it to me, which in a way was the precursor to the iPhone. There's a postage stamp screen on it. He says, "You see this?" I said, "Yes." He said, "This is a screen. I could tell. It doesn't just show the name of songs. It'll play video. If we put this out" — he was already planning to announce it — "would you put your TV shows on it?"
--:-- Bob Iger: I said, yes. In five days, we made a deal. He could not believe that a traditional media company would be willing to disrupt itself so much by taking shows, *Lost*, *Desperate Housewives*, and *Grey's Anatomy*, and putting them on the video iPod. I think that changed his perception of me tremendously. One, I cut through all the red tape and got a deal done. Two, I showed a willingness to be future-oriented and willing to disrupt ourselves. Three, I was interested in Apple. He knew I showed him playlists. We started talking about music. We hit it off.
--:-- Bob Iger: Then when I called him about the Pixar acquisition, he was viewing me as a much different executive than he expected. So we bought Pixar. I assigned the people who ran Pixar, John Lasseter and Ed Catmull, to run Disney Animation with a goal to turn Disney Animation around. If you look back on what they did, it's just extraordinary. It was *Moana*, *Tangled*, *Frozen*, and *Zootopia*. Those were at Disney but under Pixar. Some of them were not even gestated yet. They were developed by them. Some were in an early pipeline, but very early. So we bought them and put them in charge of Disney. They'd come down every week and turn that place around.
--:-- Bob Iger: We also proved pretty early on that we were good stewards of Pixar. One, we were benign, we wouldn't do any harm. Two, we were incredibly supportive. And most importantly, we were respectful of their culture. That's really important when it comes to creativity.
--:-- Chris Dixon: It was a different creative culture than Disney?
--:-- Bob Iger: Highly. Not even close. Not even close. Very creatively different. And that's why you didn't try to fold Pixar into Disney Animation.
--:-- Chris Dixon: Correct.
--:-- Bob Iger: Although we ended up adopting a lot of Pixar's creative processes at Disney. I'll give you one example. At Pixar, every movie was driven from the idea of a director. The director pitches the idea, Pixar says, "We like your idea, go make your movie." They go and make the movie. There's a passion that exists deep inside that director that is evident in every single step of production and creativity, from when it just starts to be born to when it starts to grow and be shared with the world. At Disney, we assigned ideas to directors. A director would be brought in to direct a movie that was someone else's idea. The connection didn't exist. The passion didn't exist.
--:-- Bob Iger: There were other little things, even logistically. At Pixar, every movie got assigned a room, basically a nice conference room. The movie lived in that room full time. The director and the team put pictures up all around the walls, had music that was referenced to the movie. They did all of their meetings about the film in this room. The movie started taking on a tangible quality of actually existing in a space. At Disney, we had one room that all the movies shared. One movie comes in for a few hours, has a meeting, does something, they move out, another one comes in. That's subtle, really subtle, but a sense of place and home and collegial feeling.
--:-- Chris Dixon: I love that detail. I mean, I had gone up to Pixar. I could not believe what I saw. I go into the *WALL-E* room and the *Up* room. One day I see *Ratatouille*, *WALL-E*, *Up*, *Brave* was another movie they made. Two others that I went into rooms, the movies never got made. One was about a blue-footed newt that was near extinction. And the other one was about pets that lived in a building on the Upper West Side of Manhattan that didn't get made. Interestingly enough, I still remember it so well.
--:-- Bob Iger: By the way, it was so obvious to me. The film that feels like it has a home, the people become part of the film. There's a sense of place. It starts to become tangible, it comes to life. I don't think I've ever really told that.
--:-- Chris Dixon: I love that.
--:-- Bob Iger: So anyway, then I looked at their technology platform. They take me through not what they were using to make CGI films then, but what would be the next generation of them. It was shocking to me what they showed me. They started off as a tech company, right? Ed Catmull, computer scientist. They showed me a technology that enabled a director and a team to edit through space and through time in ways that were vastly different than what I had seen before. Essentially, it was an ability to change a very specific image within an overall image, and the change that was made would basically apply to the whole movie. It was plucking something out of a moment, and that hadn't existed before. It's like find and replace for animation, which seems completely cutting edge. And it was cutting edge. It became the next generation of Pixar technology.
--:-- Bob Iger: You can imagine just how blown away I was by all of this. Then when it worked, we closed the deal for them in 2006. Success through 2009. If I remember correctly, *Cars* and *Ratatouille*, *WALL-E* and *Up*. Just amazing stuff. Original ideas.
--:-- Chris Dixon: Interesting. And then, so then after that was Marvel?
--:-- Bob Iger: Well, we had a process at Disney where we looked at potential acquisitions. We called it an acquisition filter or sieve with definitions of what we might want and what we wouldn't want. There was a list of things that made it through. One was Star Wars or Lucasfilm. One was Marvel. There were a few others. I looked at the team and thought, okay, what's next? Interestingly enough, my first thought was Star Wars. I knew George Lucas well. Steve knew George very well because he bought Pixar from George. People forget. We didn't get a chance to schedule a meeting with George because Steve was sick. This is 2009 when he had his liver transplant. So we put that on the back burner to wait because Steve wanted to meet with George and me to talk about it.
--:-- Bob Iger: While we're waiting for that to happen, I spent months trying to get to the head of Marvel. In June of 2009, I walked into Marvel's office in New York alone, pitched the idea about buying Marvel, told a Pixar story, ultimately got Steve Jobs on the phone to tell how great the relationship had been, offered Disney stock, which I had proven to Steve how valuable that could be. Steve got Disney stock at $28 a share, 135 million shares of it. We ended up closing a deal for Marvel and announcing it at the end of August in 2009. Then we were off to the races.
--:-- Chris Dixon: Did you have... I mean, there were obviously superhero movies like *Iron Man*, but it was nothing like today, right? They'd only put one movie out, *Iron Man*.
--:-- Bob Iger: Yeah. And that gave birth to a slew of things. Interestingly enough, I was never a comic book fan. My dad wouldn't let me read comics because he thought they were frivolous. But I was aware of the passion that people had for comic books. In the process of considering Marvel, I studied the business pretty closely. The one thing I realized is that the stories that had been told already were so voluminous. There's a treasure trove here. Some of the outsiders who were critical of the deal said the company had already licensed a bunch of the characters. Well, what was licensed was Spider-Man to Sony, and *Iron Man* had been made by Paramount, and Universal had Hulk. That was it.
--:-- Bob Iger: When we did the due diligence, first the team said there were 5,000 characters. I said, "Wow." Then they came back and said, "No, sorry, there are 7,200 of them." I thought, well, it has to be characters that are as good as some of these others who are in the right creative hands. We can make them good. I thought, if you can make a good *Iron Man* and a good *Spider-Man*, you can make a good *Captain America*. We weren't thinking *Captain America*. We weren't thinking *Thor*. We weren't thinking *Captain Marvel*. We weren't thinking *Black Panther*. We weren't thinking about any of these characters. *Guardians of the Galaxy*, which existed, came from a whole other group of characters. Let's tell great stories.
--:-- Bob Iger: Like Pixar, they had a core creative team that was really impressive, led by Kevin Feige, who's still at Disney. I always thought this can't just be about an acquisition. It has to be about your ability to execute, and that's people. Creating a culture that enables them to thrive and giving them the resources, which includes not just money, but marketing support and distribution help and bringing things to market in a much more impactful way. So trust the creative team at Marvel, give them as much fuel as they need to make great things. The next thing you know, they come in and pitch this wild five-year plan where we're going to introduce Thor, Captain America. This is the MCU. The whole Marvel universe. They make individual movies for each of those, and then we'll put them all together in one called *The Avengers*, which had been a comic book. The rest is history.
--:-- Chris Dixon: Just to pause there for a quick moment, to give the listeners context, this is very different than Pixar in a few ways. In your book, you describe how not only does Marvel have its own characters, but you made a very controversial decision not to co-brand that as Disney overtly when you put the movies out. These weren't just superhero movies. These were Marvel movies. It was putting a spotlight on the Marvel brand, changing even the look and feel of the logo, and reminding everybody Captain America is Marvel. So that you build the brand with the characters and the stories underneath it, which gives you the license to try new characters and stories. That's how you get to do *Guardians of the Galaxy*. Something crazy and new, but people know it's Marvel.
--:-- Bob Iger: Exactly. And so they go see it. *Black Panther*, another great example of that. But this is Marvel's *Black Panther*.
--:-- Chris Dixon: The second big contrast between the Pixar deal and this one is that Pixar, where you outlined a case to your board that this brand is actually outpacing our brand, people think about Pixar before they think about Disney. That wasn't necessarily the case with Marvel. With Marvel, it seemed like there was more of a "what? How does this even fit? Is this even Disney?"
--:-- Bob Iger: Interesting, because Marvel had been considered as an acquisition by Disney in earlier years and was considered too edgy. I thought, well, that's because people are thinking it has to be Disney's Marvel. Let Wall Street think of it that way, but not the consumer. I felt that Marvel was another Disney and that we shouldn't worry. I wanted the value generated to be considered by Wall Street. It didn't matter whether the consumers knew whether it was owned by Disney or not. The same thing is true with ESPN and you could argue ABC News and other brands too. It just didn't matter. Strengthen that brand and end up with a collection of them. Let each consumer of those brands know exactly what they are, find them, don't make it all convoluted.
--:-- Chris Dixon: So continue your thoughts.
--:-- Bob Iger: The next thing that happened is I went back to that acquisition filter and there was Lucasfilm still sitting there with Star Wars. Steve at that point was really ill. He died in October of 2011. So the dream that he and I had about having lunch with George Lucas was over. I went down to Orlando to reopen the Star Tours attraction that we had redone, which I wouldn't normally have done, but I knew George was going to be there. I thought, this is my opportunity. George and Melody Hobson, who was then his fiancée, and I had breakfast. I broached the subject with him using Pixar as a great example and Marvel. He says, "I don't like comic books." He was not a comic book fan either. He and I had a great relationship going back to him making *Young Indiana Jones* for ABC. He said, "Well, if I ever sell, I'm not ready to sell, but if I ever do, I want to sell to you." I let that go. I dropped it. I wasn't going to put a hard sell on him because I knew that wouldn't work. I waited.
--:-- Bob Iger: He ended up calling me some months later and said, "I want to talk to you about that idea." Clearly, I had struck a nerve of some sort, a positive one. That resulted in a deal that we announced in 2012. So we ended up not just with Disney and ESPN and ABC, but we ended up with Pixar, Marvel, and Lucasfilm. We had more known brands known for their quality of storytelling than any other media and entertainment company in the world.
--:-- Chris Dixon: Were there ones that you wanted to acquire that never happened? The ones that got away?
--:-- Bob Iger: Oh, I had a list. One, James Bond, but I never even had a meeting on it. Would have loved James Bond. Harry Potter was already gone to Warner Brothers. They ended up getting the rights, something obviously Disney should have done but didn't.
--:-- Chris Dixon: So beloved brands where there's expansion possibilities.
--:-- Bob Iger: Exactly. I always tried to envision our theme parks. Could I see a Marvel world or a Star Wars world or a Toy Story world? It all exists today.
--:-- Chris Dixon: So then after Lucasfilm, that was 2012. What was the next big strategic priority?
--:-- Bob Iger: What was interesting was I felt at that point, maybe we don't have to do anything. We have such a great hand. I actually spent 2012 to 2016, an inordinate amount of my time developing Shanghai Disneyland. It was not only a pet project of mine but I thought an incredibly important project for Disney and its future in terms of planting a flag on mainland Chinese soil. We did all that.
--:-- Bob Iger: Then of course the winds of change got even more fierce as Internet 1 gave birth to Internet 2 and app entertainment, new forms of distribution. That ultimately started my thinking about streaming. During that period, it was very clear that the disruptive forces I talked about seeing in 2005 had gotten much more profound. We were starting to see the disruption of distribution disrupting essentially every area of the business. Monetization and advertising.
--:-- Chris Dixon: Was that mostly Netflix? That was sort of the standard bearer?
--:-- Bob Iger: It was mostly Netflix, but it was very clear that what Netflix was doing would be done by others, by well-financed companies. They were at the frontier, but that was going to be the shape of the industry. They were showing the way, particularly for the big tech companies.
--:-- Bob Iger: What was also happening is the consumer was starting to exert more and more authority. One thing we've seen over this period of time, going all the way back to the advent of the remote control and television, is that technology is giving consumers much more authority and power than ever before. Switching costs are so easy. Switching costs between channels, between devices, but impacting time. When do I watch something? Where? How? On a fixed device on the wall or on your mobile phone? All of those things. It started to impact pricing as well, but also starting to have a huge impact on linear television watching. I want to watch program linear channels, and I don't really like the user interface the cable and satellite is giving me. I love being able to watch app-based programs. Going back to the development of Web 2.0, I think apps have proven that for a consumer, they're just fantastic. It was a fantastic development. That's authority. I don't want a channel. I want a program. Give me a program. Boom. Move a cursor over an icon. You got it.
--:-- Bob Iger: Because Disney was so heavily invested in linear channels — ESPN, ABC, Disney Channel, go on and on — I worried that business was going to be replaced by app-based entertainment, and we had to be there. We had been the first movie company to license movies to Netflix.
--:-- Bob Iger: And I realized, wow, what we've done.
--:-- Chris Dixon: Because Netflix, I think of Netflix as a three-act story. First it was the DVDs in the mail, then internet distribution, but mostly licensed content. Movies. Mostly movies from companies like Disney. Then the pivot into original content.
--:-- Bob Iger: Disney first. We were the first.
--:-- Chris Dixon: No, sorry, I meant Netflix. For Netflix, yeah. I know, Disney was the first to license content.
--:-- Bob Iger: Oh, it was the first. Okay, got it.
--:-- Chris Dixon: And then you guys pulled it. I have to say, I was pretty pissed when that happened. I was really mad. I was like, "I want to watch my shows on Netflix, and you guys took them away."
--:-- Bob Iger: Yeah. I joke about it often. We were selling nuclear weapons technology to a country that was starting to build nuclear weapons to use against us. I think people just didn't think Netflix would have the capability to do that. They didn't think they had the money. They proved to me that they did. I thought, okay, we've got to go into that business. If we're just going to license to them, they're ultimately going to disrupt us fully.
--:-- Chris Dixon: Why was it so obvious to you that that was the future? That was very bold.
--:-- Bob Iger: One, as a consumer, it worked for me. That product worked for me. Second, I was tired of on every single earnings call answering the question about what the future of cable and satellite television was. I didn't really want to deal with it anymore. I said, well, the only way not to deal with it is to say, "That's not really where our future is either. Our future is somewhere else. We're going to redirect. We're going to change the future."
--:-- Chris Dixon: Did that go back to your original vision when you became CEO? Content is king, distribution will just be everywhere. When you saw streaming, you thought, this is the distribution vehicle of the future paired with our great content.
--:-- Bob Iger: Well, I knew that our content would thrive in the new distribution world.
--:-- Chris Dixon: That was your thesis originally. You would be a distribution agnostic company because you had such great content.
--:-- Bob Iger: Netflix proved they paid more money for our movies than anybody had ever paid, and than anybody was willing to pay at the time. We used to license to HBO and Starz and Showtime. Netflix blew them all away. So I thought, well, that says a lot. Then I thought, we'll be fine continuing to license to Netflix. That goes back to the argument, high-quality branded content. They demanded it. They were lusting for it.
--:-- Bob Iger: But I thought, now we're entering a new technological era where the customer and the customer's relationship with the company is potentially value-creating. If you can strengthen that relationship, you can improve the value of your relationship with the customer. If you look at Disney in 2016, 2017, we started really talking about this. The movie theaters own the customer for all of our movies. There were great Marvel, Star Wars, Disney fans, Pixar fans. But the tickets were being sold by Fandango and movie theaters. We had no idea who was watching our movies. Then we put the movies on cable and satellite and Netflix. We didn't know who was watching there. We'd sell consumer products. We'd sell thousands of Spider-Man costumes for Halloween. Walmart and Amazon would know who the customers were. Other than our theme parks, we had no customer relationships. We had all this passion. The greatest fans in the world, Star Wars fans, my goodness. How passionate are they? We had no idea who they were.
--:-- Bob Iger: So I thought, okay, we're losing. There's a value proposition there that we're not participating in. I know our content is going to work on a new technology platform. I know that if we control it, then the customer will be ours and we can create a deeper, more intimate relationship with them. It would also give us the ability to wean ourselves off our reliance on cable and satellite.
--:-- Chris Dixon: I have two questions here. Earlier, when you were saying that you had this very strong belief that content trumps all tech, distribution tech, everything. Did you ever doubt that for a moment when you saw what Netflix was doing? Because there was a point where I doubted it as a consumer. I would lazily, comfortably watch Netflix over anything, even if it was bad content, just because it was so convenient.
--:-- Bob Iger: Well, I knew what our movies were doing on that platform. They gave us some indication how popular they were. They didn't give us too many details, which, by the way, spoke volumes too.
--:-- Chris Dixon: Yeah, you don't get the data.
--:-- Bob Iger: I knew that Disney animation, particularly musicals, was huge on Netflix. So I never doubted that ultimately creativity and quality and brands would matter more. It's interesting if you look at today's world and you look at all the streamers that are out there. There are haves and have-nots, and the have-nots are going to fall by the wayside.
--:-- Chris Dixon: What do you mean by the have-nots in this context?
--:-- Bob Iger: There are streamers that are not going to survive. There will be blood, to quote the name of a movie. They're not going to all make it. The reason is that there are some platforms that don't have the high-quality branded content. They don't have enough of it, and they're not differentiated. Not all streamers are created equal.
--:-- Chris Dixon: The other question: did you ever have concerns or doubts or fears about being able to shore up on the technology side to pull off streaming?
--:-- Chris Dixon: Tell us more about that.
--:-- Bob Iger: Reed Hastings from Netflix tried to convince me that there's no way we could do it. "You won't have the platform. You don't know how to manage things like busted credit cards, all the issues with geo-targeting. There are so many different factors that you have no ability to do any of that." So after I articulated the desire to go into the business, we had to figure out how we're going to execute that. There were a few impediments. The biggest impediment was we needed a technology solution. But the other impediment was that we were making all this money from other forms of distribution, including licensing movies to Netflix and cable and satellite subscription fees and advertising. In making this pivot, we were going to have to convince Wall Street that it was essential for us to disrupt ourselves. The innovator's dilemma was essential for us to reduce revenue in order to go in this direction. That means telling Wall Street, "Okay, you've enjoyed all this great profit growth for Disney over what had been a decade. That's now going to go in the opposite direction." That was hard.
--:-- Bob Iger: On the technology side, we immediately started hunting for a solution. One thought was that we should build. I was told half a billion dollars, five years. I said, "Five years is an eternity." I thought this change was going to happen fast. We don't have five years. We have to do it faster. Kevin Mayer, who was running strategic planning for me at the time, started looking for opportunities. We invested in a platform that Major League Baseball had created called BAMTech. By investing, we had a path to ultimately buying control. That became the solution.
--:-- Chris Dixon: Ah, interesting. One quick thing around the Strategic Planning Group and how you decentralized. You have this amazing narrative in the book. You have multiple examples of how Disney and ABC before that had to decentralize its own decision-making. I want to ask this question for our audience because a lot of people who are in crypto and web3 think about decentralization first. Do you have any thoughts on things that you might not give up or things that you would if you were to go through that again?
--:-- Bob Iger: I think sometimes decentralization is misinterpreted to mean anarchy. It can't be that. Pushing down decision-making and empowerment and a sense of ownership into organizations is important, as long as it generally conforms to what leadership expects or other constituents expect and want. There's a very careful balance. I felt at Disney that too many decisions were being made centrally. There wasn't a sense of empowerment or ownership. Some people who knew more about their businesses than any central organization were being deprived of the ability to apply their knowledge. So it had to change. That said, I felt managing the brand and its qualities, its attributes, had to be done centrally and consistently.
--:-- Chris Dixon: The other point besides the technology you brought up in your book, which I thought was super interesting, is that you also had to shift the company's organizational structure and mindset. For instance, when you went from licensing revenues to subscribers as a metric. That's a really interesting example because it reminds me of what happened in tech when technology companies went from selling software to software as a service. They had to shift their entire org chart, how sales were done, how everything was done.
--:-- Bob Iger: At a company, particularly a successful company, every single thing is designed to protect incumbency. Everything. It's compensation. It's the relationship with investors. It's how executives are being measured. What is the definition of success? If you're running a studio, the definition of success is what's the box office. Suddenly you're saying, "We're going to take some of the movies that you're making. We're not going to put them in movie theaters. We're going to put it on Disney+." Box office goes away. That lack of measurement of success also transfers to the creative community. How does a director know or a team know their movie is successful or not? Or a creator of a TV series who knows about ratings, makes something so that it gets high ratings, that goes away. It's no longer about ratings. It's about other metrics. It reverberates throughout. It's very, very hard.
--:-- Bob Iger: The innovator's dilemma is very real, very tangible. I faced it head on. I learned the hard way because I sort of took the flag and decided to carry it up the hill. It was a steeper, longer hill than I thought it would be. I encountered resistance throughout. But in the end, because of the success of those other acquisitions and the fact that my strategy articulated in 2005 had worked, I had built up a lot of trust. Not just among the Wall Street community, but the board, and in particular, my senior team. It's nice when a leader has the trust of its team, even though it may not feel right to them because of how disruptive it is. If this guy says, "This is what we're doing, and I promise it's going to turn out all right," they believe you.
--:-- Chris Dixon: I think what's interesting is, I don't know when it was, five, six years ago when you first did the pivot. From the outside, I didn't know you. I would have assumed Disney would not take the new tech seriously. That's been the successful assumption in the tech community. Let's take retail as an example. Amazon against Barnes & Noble, against JCPenney, against Sears, now Walmart. You can pretty reliably predict that the incumbent non-tech competitors will make noises but won't ever really go all in. That's a pretty good assumption. For example, in retail, Amazon continues to, I would argue, even places like Walmart just never really go all in. They're not really willing to give up on their sacred cows.
--:-- Bob Iger: Well, exactly.
--:-- Chris Dixon: I didn't know you, but I assumed the same thing. "Oh, here goes Disney. We're going to see another Walmart."
--:-- Bob Iger: Oh, ye of little faith.
--:-- Chris Dixon: Let me take that further. The one exception in my mind is founder-CEOs. If you look at Facebook, I would argue, is the only tech incumbent right now that's taking Web3 and VR and other new areas seriously. The rest, I think, are kind of not as much. That's because the founder both has the vision and the gravitas. But you weren't a founder. So I think you might be one of the few cases of a non-founder CEO taking on the Innovator's Dilemma and succeeding. Didn't Disney+ just pass Netflix in subscribers?
--:-- Bob Iger: Yeah, global subscribers.
--:-- Chris Dixon: Well, I appreciate the compliment.
--:-- Bob Iger: Going back, I strengthened my conviction. I believed it was the right thing to do. I had the credibility. The fact that you'd already had success maybe helped. Had you tried that first, would it have been?
--:-- Chris Dixon: No way.
--:-- Bob Iger: Yeah. The other thing I was fortunate to have at the time is the board supported me. Not only did they support me, they exhorted us to do it. They actually made you go faster.
--:-- Chris Dixon: Is that because they trusted you or they saw the same vision?
--:-- Bob Iger: Well, a couple of them had the same vision and they trusted me. I don't know that they were as convinced as I was that we'd be able to execute well, but they wanted to give me that chance. In fact, they came back. I pitched the whole thing to the board. They had an executive session to talk about it with management out of the room. They came back, and one of the board members who communicated the sentiment of the board during the executive session said, "Speed is of the essence. Go for it."
--:-- Bob Iger: And then I did something that, in hindsight, turned out to be more valuable than I ever expected. I met with some key investors that I trusted, that had followed our company and our business.
--:-- Chris Dixon: These are like mutual funds?
--:-- Bob Iger: Yeah, fund managers. One of them was Will Danoff from Fidelity. The advice that Will gave me, and that others gave us as well, was if you're going to do this, go all in. And to your point, Chris, about some of those other companies, they don't have the ability to go all in because going all in is a serious step. It's money. It's disruption. The key thing is you have to forego money. You have to stop, probably kill revenue. We told Wall Street we were going to depress our earnings by $2 billion the first year.
--:-- Chris Dixon: Yeah, those really hefty licensing fees that Netflix gave you actually backfired at this point. They went away. They stopped.
--:-- Bob Iger: Right. And not only that, we spent more money on production to get ready for the new platform. Cost went up. Revenue went down. Usually when you're running a company, that's not what you try to do. But the street said, and it was so important that we did this, do it. Be serious about it. Go all in. And I thought, wow, okay.
--:-- Chris Dixon: So talking to them was important both to hear that, but also to share your message with them so they understood how to think about your stock price?
--:-- Bob Iger: Well, yes. I wanted to set it up with them in a way that would have them appreciate the opportunity that we had and the reason why we had to do it. The relationship with the customer, leaving too much money on the table, the disruptive nature of the new streaming platforms on the linear channels and linear television viewing, all of those things. So when they heard it, when we first announced we were doing this, the stock shot up. People were saying, "Oh, we're going to destroy our profits." Boom, the stock goes up.
--:-- Chris Dixon: That's amazing.
--:-- Bob Iger: It was just amazing what the reaction was. And this all led to an investor meeting. This goes all the way back to when we showed the street what we had developed. This is in April of '19. We launched Disney Plus in November of '19. Up on the screen comes Pixar, Marvel, Star Wars. Now we've bought 21st Century Fox and The Simpsons, National Geographic, Avatar, go on and on. And everybody says, "Wow, okay, this is a destination that I'm going to want because it's got all this high quality brand and entertainment in one place for a great price." And now we've got the technology to do it.
--:-- Bob Iger: Talk about a nail-biting moment. We launched in 2019 and our plan was for four to five million subscribers in the first year. We signed up 10 million in 24 hours. And if you don't think I was nervous about the technology... But once it did, we're off to the races.
--:-- Chris Dixon: It's good that you bought BAMTECH, I think. Instead of waiting five years to try to build it yourself and maybe not even have it work as well.
--:-- Bob Iger: Yeah. I had the luxury of having many great days in the job and exhilarating days. That 24 hours of launching Disney Plus and getting the 10 million...
--:-- Chris Dixon: Was that one of the best?
--:-- Bob Iger: Sky high.
--:-- Chris Dixon: Well, I'd love to hear about today. Pass forward to streaming. It seems there are multiple competitive platforms now. I think most people probably do see streaming as the future. How do you think that will play out?
--:-- Bob Iger: Streaming wins. It wins over linear cable. Linear cable and satellite viewing is marching to the edge of a great precipice. And I happen to believe that with generational shift, meaning baby boomers being replaced, it goes over the cliff. It goes over the edge. Not necessarily news and sports.
--:-- Chris Dixon: So in that world, it's streaming and then mobile phones, social media, the two dominant forms of media?
--:-- Bob Iger: Yeah, absolutely. So I think streaming wins. Not all streamers win. It's not for the faint of heart. It costs a lot of money to make great stuff and maintain it. But streaming, we should think of as the premium high-end experience.
--:-- Chris Dixon: And will we also see new models like ad-based models?
--:-- Bob Iger: It's interesting because among the factions that are feeling anxious these days, advertisers are one of them. But I'm actually convinced that viewers, consumers, will tolerate ad interruptions for lower prices. Partially, I think, has to do with inflation, but it also has to do with the fact that consumers want more than one streaming platform. And in order to afford more than one, they'll take ads to cut the cost.
--:-- Chris Dixon: So all the services will have multiple tiers, like the way Hulu does?
--:-- Bob Iger: Yeah, I think that's a good thing. I don't know what Apple ultimately does, but yes, Netflix has announced they're doing it. It'd be interesting to see ultimately what Google does and YouTube and whether they go into this space. I think right now the only thing that's really preventing them from acquiring content creators is regulation and fear of antitrust, whether in Europe or the United States.
--:-- Bob Iger: So advertisers win. Linear TV goes away. No one wants to watch channels anymore except maybe news and sports. The power of live and big events will exist.
--:-- Chris Dixon: Won't sports move to streaming at some point? There's this tangle of existing deals, right? But at some point that works itself out. And I don't know how long that plays out. Bob, feel free to give us more of your predictions, as many as you're comfortable making.
--:-- Bob Iger: What else would you like me to predict?
--:-- Chris Dixon: Movie theaters.
--:-- Bob Iger: Movie theater going will never return to its high water mark. It'll still be a thing, but it'll be a niche activity. The reason for that is greater competition from movie quality television that can be watched in the home. Everything about the home experience or the out-of-movie theater experience is pro-consumer. Mobility, convenience, time, customization, personalization. It all is moving in the direction of giving the consumer more authority, and they're going to use it.
--:-- Chris Dixon: What do you say to the critics who say that all of this has hurt the quality of films? That you just have superhero movies and you don't have... [laughs] I'm just laughing at Martin Scorsese's stomach.
--:-- Bob Iger: Yeah, well, you still have the Martin Scorseses, but do you have the next generation? Martin did nail us. He and I talked at one point. I like him a lot. First of all, I think we're ignoring the fact that the creativity right now that exists in what I'll call television is phenomenal. Vast. It's incredible.
--:-- Chris Dixon: So this is just a format change, not a loss of creativity.
--:-- Bob Iger: Exactly. A lot of the shows that I watch, they're not multi-season. They're one season. It's four or five episodes, six episodes. Sometimes you'll watch a slew of episodes. You don't even know whether it's coming back for another season. But it's great storytelling. And you can watch it all in one weekend, all at once in one sitting. Or you can play it out over weeks.
--:-- Bob Iger: Look, if you really want me to predict, the other thing is that advertisers are going to prevail. Streamers will prevail. Consumers will prevail. Creators will prevail.
--:-- Bob Iger: It's a great time for creators. They're anxious now because of disruption in how they get compensated and how they get measured. That too shall pass. It will be figured out, and they will have access to more consumers, more shelf space. There's more shelf space for creators to create on. I started at a time when there were three TV networks and movie theaters. That was it. Now, look at the world out there for creators. It used to be, by the way, if you had made movies and you turned to TV, you were like a pariah. You've come down a lot. That's not the case anymore. The great movie makers are making plenty of television.
--:-- Steph Smith: I would argue about TV and how it's great right now. That's also because in TV, the showrunner is prime. And that's a very different model than a lot of what's been playing out in the past with movie structures. I think it actually reinforces your point that it's about the creator's vision, or even the Pixar vision of the director vision first. When you're describing going to Pixar, the big difference between assigning and having a person have an idea that they pitch is that person has a vision for what they want to do with it. That's a very big difference than someone walking in, turning around a situation. There's a very similar parallel between that.
--:-- Bob Iger: By the way, on this very subject, the other thing that Pixar did that was quite interesting is that before the executive team came in to critique a film, all other directors critiqued the film.
--:-- Bob Iger: So they'd go in a room with all the other directors and have an oftentimes viciously honest critique.
--:-- Steph Smith: That's interesting.
--:-- Bob Iger: You would get critiqued by your peers, people who had had a lot of success on their own. And at times, I'm told, I was never in one of those sessions, but it got kind of heated because they were unfiltered. But you're getting it from another creator, not some executive with a big title.
--:-- Steph Smith: That's funny because we had this debate internally. I created a channel that's editors only for precisely this reason. Because editors to other editors, there's just a respect when you have skin in the game. It changes the dynamic when anybody else is in that room. You have this respect creator to creator.
--:-- Steph Smith: And interestingly, earlier you were talking about the M&A strategy to Chris's question. The point that I think really struck through for me is that creatives draw other creatives. Because one of the reasons you were able to go from Pixar to Marvel is that you could say, "Well, Pixar, we've successfully acquired them." And similarly, early in your career, when Spielberg and Lucas are engaging with you because you took a risk on Twin Peaks, that's the message to me there. Creatives don't want only a suit in charge.
--:-- Bob Iger: And by the way, creators love executives that have the courage to take big risks. They love that. You want to work for someone like that.
--:-- Steph Smith: No, it's great. I agree.
--:-- Chris Dixon: And then, to your earlier point about the startups, there's an interesting connection here because when you said as VCs, we're kind of picking this person to invest in their vision. I agree.
--:-- Steph Smith: What do you think is going to play out with the content strategies that all the streamers are working on and executing right now? You covered tech, you covered the creatives, the rise of streaming is going to win, advertising is going to be there no matter what, all these trends. What do you think is working, not working out there?
--:-- Bob Iger: Well, I think it can't just be about volume. It can't just be about filling your home screen with rows and rows of product. I think you still have to be choosy. You have to apply a little bit more editorial judgment. That's a big difference, I think, between Disney Plus and Netflix. Netflix has a zillion things. There's some original content, but it's all kind of mixed together. Disney Plus is very premium. I don't really want to speak for Netflix. I certainly don't want to be critical of them, but it wouldn't surprise me if they reduced volume.
--:-- Bob Iger: The other thing to look at: if their subscriber base isn't going to grow significantly, and they can't price higher very easily because there's more competition and there's inflation, then buying rights in perpetuity may be an issue. Not everything is forever value. So it's going to be an interesting thing to watch. Licensing or buying these things for shorter-term usage, and then it'll revert back to the creator and the creator will have an opportunity to sell to others.
--:-- Chris Dixon: That's super interesting.
--:-- Bob Iger: Which will be a good thing for the creative community.
--:-- Chris Dixon: On the IP side, you have so much experience on this. A lot of our founders and creators are thinking about new ways and creative ways of extending IP, building IP. Do you have any thoughts or lessons learned when it comes to the IP game?
--:-- Bob Iger: Well, I think if you create IP that is consumed and appreciated and understood and valued by a consumer, don't whipsaw them. Don't change it too often. Maintain a consistency, including when you innovate with that IP, when you change it. I'm a big believer in respect versus reverence, because the world changes, and even IP has to evolve. Mickey Mouse doesn't look the same as he did in 1928 when he was created. But do so in a measured and user-friendly way. Suddenly, everybody wakes up and Mickey Mouse no longer is a mouse but is a rat or something like that. That doesn't work.
--:-- Chris Dixon: One thing we haven't talked about is gaming, video games, interactive content. People talk a lot about the metaverse. People define it differently. Maybe it's virtual reality. Maybe it's an interactive 3D world. Maybe it's just a deeper immersion in our use of the internet, which has already become pretty deep, going even deeper. When you think about the future going out, streaming was sort of the last decade. But when you look on the horizon, what's exciting?
--:-- Bob Iger: What seems to be clear is technology, whether it's AR or even VR, but I'm thinking more AR, is going to create more compelling experiences for consumers. Either communal consumption and interaction while consuming, or just more deeply immersive, more dimensionalized experiences, even visually, than they've had before.
--:-- Chris Dixon: I like that. I do think that immersive digital shared experience, communal experience, is interesting. Could you bring people together in a digital place and have them all experience something with one another? We saw it early on with Sims and Club Penguin, a little ahead of their time because the experiences being created were so rudimentary. You couldn't really do all that much. There was no dimension. Even the visual experience wasn't that great. At a higher level, it could be kind of interesting. Could we all convene in a digital town square and watch a movie together?
--:-- Chris Dixon: I do VR a fair amount. I'm very interested in it. I think people get caught up looking at the resolution. If you compare it to a big screen TV, it's weak in the ways a big screen TV is strong. It doesn't have the same quality content. Maybe you see the pixels. But it's got a different feature, which is if you do it right, you actually feel the sense that I feel right now when I'm in the same room with you. The sense of presence.
--:-- Bob Iger: It always tricks people with new tech. It's always better in a different dimension. If you looked at the first mobile phone as a desktop computer, the lack of keyboard stood out to a lot of people.
--:-- Chris Dixon: Right. But if you looked at it as, "Wow, a personalized phone, a magical computer screen in my pocket," it was amazing.
--:-- Bob Iger: Right, exactly. So a lot of it is perspective. If you look at VR as a big screen TV, it's going to look weak. If you look at it as this magic box where I can be in the same room with you with graphics that aren't quite there yet...
--:-- Chris Dixon: Yes. It's also funny how quickly we forget some of the changes that felt so inorganic. We all had BlackBerrys, and Steve comes out with the iPhone. What? I got a touch point on the screen? Famously, the reporters were like, "Well, how are people going to type with their thumbs?" He's like, "They're going to learn. They're going to learn how to use a touchscreen."
--:-- Bob Iger: I was around when he was doing that. So much just happened that he didn't even see happening.
--:-- Chris Dixon: Yeah, yeah. He was against the App Store originally. At the beginning, someone said, "How do I create an app?" He said, "You create a website. You have a browser. That's it. There's no apps."
--:-- Bob Iger: Yeah, I remember that. Because he didn't like these cluttered, ugly things in his perfect garden. He and I had a conversation about books. I asked him, I don't know whether it was the iPad or the iPhone, "You're going to have a bookstore. You're going to be able to read books." He said, "No. You know, what do people want to do?" And he got it quickly, by the way.
--:-- Steph Smith: Given your experience in the physical world of character building, Disney World, Disneyland, do you think we would ever get to a point where we could have a Disney World in a digital immersive experience entirely?
--:-- Bob Iger: Well, I think it will be tried, some virtual theme park experience. It might become very compelling. I don't think it replaces the physical experience. That's very unique. You do share it with others, sometimes too many others. While I agree with Chris that VR has something about it that's very compelling, even though sometimes there's a loss of picture quality, there's something about that tangible immersive experience that's about as powerful as it gets. When Disney's Imagineers build an immersive world that feels real, that experience is very, very hard to replicate on an app or even with VR glasses. You're not going to have people that just stop interacting with one another in the physical world because they can do so with glasses. Not going to happen, I don't think.
--:-- Chris Dixon: It'll probably be something native to the medium, like a Roblox or a Minecraft, something that's truly an interactive experience as opposed to generally when you take something offline and try to make it online. Or like you said earlier about trying to turn the early history of film as starting as plays instead of what's native to the media.
--:-- Chris Dixon: I think you could argue also, in fact, I would probably argue, that you end up with a lot of these mature technologies with a barbell structure. Meaning you go more digital, you also want to go more physical. People value the in-person time more. What you get rid of is all the middle stuff, the mediocre experiences.
--:-- Bob Iger: Interesting.
--:-- Chris Dixon: This is typically what happens in any maturing industry. It happened in retail. They call it death of the middle. You have the scaled Amazon experience and you have the Gucci experience, but who needs the middle? Who needs the mediocre? I think it's maybe happening with remote work now. In our team, we have big offsites, we have dinners, and then we have Zoom, but who needs the mediocre coffee in the office?
--:-- Bob Iger: That's interesting. I hadn't thought about it as it relates to work.
--:-- Steph Smith: So just mentioned remote work. Do you have any thoughts on that?
--:-- Bob Iger: I tend to be conservative on remote work. I happen to believe that it can't possibly equal the productivity of in-person work. That's very conservative, I understand, and generational, perhaps. Also creative, maybe. I worry a lot about creative. Bouncing creative ideas off other people in the same space is really important. Creative feedback. If you can't give someone body language, make them feel comfortable, and you're doing it on a Zoom... Oh boy, I wouldn't want to be a creator listening to someone bitching about the movie I just made via Zoom. Doesn't work.
--:-- Bob Iger: Culture is another thing. I worry you want to create a company culture or business culture. I happen to believe that there's value to that. It's going to be harder to do with everybody working remotely. And then leadership and mentoring. I would not be where I am today had my bosses not been able to see me perform in some physical space. I'm convinced of that.
--:-- Steph Smith: That's great. I was dying to hear your thoughts on that.
--:-- Chris Dixon: Going back for one quick question. Obviously, I work a lot and I focus on Web3 and crypto. There we think a lot about bringing communities together and new ways to market and fund and co-create.
--:-- Bob Iger: Well, I'm excited about Web 3.0 developments, although everything seems so nascent that I don't think anybody really knows what develops. If I were a creator, I like the world that is ahead, even though I think it's ill-defined right now. Sometimes, as you know, it's a matter of some great creative mind using these tools in the most compelling way. Pixar is a great example of that. It's computer-generated animation. Originally the vision was to make TV commercials out of it. And then someone said, "Why don't we make movies instead of hand-drawn animation?" And Pixar showed what could be done with that technology to enhance storytelling and thus the customer experience. I don't think we've seen that yet in Web 3.0. So I like the prospects, but I can't be specific. I don't know.
--:-- Chris Dixon: I think of these technologies as having distinct patterns where there's an emerging phase. And as you said, there's usually a breakout. I call it a native creative experience. So you have the Pixar, you have probably in mobile, it was something like Instagram. You had apps before, but it wasn't an app that really embraced the new medium. That to me is what makes these new technology shifts exciting. This interaction between the technology and the creative side.
--:-- Bob Iger: That point, Chris, is such a great point. To go back to what we talked about at the very beginning, which is Pixar. I go up to Pixar, I spend a day there, and I observe very closely, what is the dynamic between the creative side and the technology side? John Lasseter articulated this really well to me. He put into words what I was seeing. The creative side turns to the technology side and says, "Give me the tools to do this for my story, to tell the story this way. I want to show snow in the most realistic fashion. Give me those tools." They're constantly challenging the technology side to enable them to fulfill their creative vision. At the same time, the technology side creates technology, not even knowing how it might be used by the creative side. But they show it to the creators and inspire them to create on a completely different level or in a different direction.
--:-- Chris Dixon: Yeah, Pixar's so interesting because normally this happens in a broader marketplace. You have YouTube come along that's dependent on broadband, which of course is hundreds of companies and hundreds of video providers. The yin-yang, as you describe it, happens across all these organizations. In Pixar, it's unusual. And I think maybe that's due to Steve Jobs' visionary nature. And George Lucas. They kept funding it kind of irrationally for, I think, like 10 years, wasn't it? Before they finally had... I think it was early 80s when he first bought it, right? As I recall.
--:-- Bob Iger: I know that he bought it for $15 million. He bought it as a pure tech thing. For $15 million, he put $35 million of his own money in. So it's $50 million and he sold to Disney for $7.3 billion.
--:-- Chris Dixon: Well, the crazy thing is he IPO'd it a week after Toy Story came out or something.
--:-- Bob Iger: Yeah, he IPO'd it. I don't remember what the date was.
--:-- Chris Dixon: We actually covered that on our podcast at one point. Anyway, I personally think that we're entering an era now with things like virtual reality, augmented reality, Web3, where the technology is getting to the point where really creative people can come along and try to use those tools to create brand new experiences. And as you say, there will always be these eternal truths in storytelling and other kinds of creative activities. But what is this new medium? Like early film, my understanding is they started off filming plays and then they realized it has its own language.
--:-- Bob Iger: Just like creative vocabulary. You can go well beyond the confines of a stage in a theater. The stage is limitless. You can do close-ups and zoom shots and all sorts of crazy stuff you couldn't do. And what does that mean? It took decades for creative people to really develop that.
--:-- Chris Dixon: Yes. And I think in Web 3.0, we're going to see some silly experiments. But then something's going to come along. I muse about it all the time to myself. What could it be? That yin-yang, that dynamic fascinates me. I think what you describe is going to play out where technology is put in the hands of the storyteller.
--:-- Bob Iger: Walt Disney had a great quote in the 50s. He had to write something about the future of media to put in a cornerstone of a building. He wrote something like, "No matter what happens, the purview of the storyteller is only to get broader or become more exciting." He's thinking of a world where technology is one of the storyteller's greatest weapons, tools, to create great stories. That, to me, is what excites me about next generation technology.
--:-- Chris Dixon: Well, thank you, Bob. Thank you for spending time with us. This was super amazing.
--:-- Bob Iger: I enjoyed it. Thank you.
--:-- Chris Dixon: All right. And this ends this episode of Web3 with a16z.
--:-- [Outro music begins]
--:-- Sonal Choksi: Okay. We have good music. We're good.
--:-- Chris Dixon: Oh, we have great music.
--:-- Bob Iger: I may give you a note on that.
--:-- Sonal Choksi: Thank you for listening to Web3 with a16z. You can find show notes with links to resources, books, or papers discussed, transcripts, and more at a16zcrypto.com. This episode was produced and edited by Sonal Choksi, that's me. The episode was technically edited by our audio editor, Justin Golden, with 7 Morris. Credit also to Moonshot Design for the art, and all thanks to support from a16z Crypto. To follow more of our work and get updates, resources from us and from others, be sure to subscribe to our Web3 weekly newsletter. You can find it on our website at a16zcrypto.com. Thank you for listening and for subscribing. Let's f*** go.
--:-- Chris Dixon: Do you want to say what your next book is on?
--:-- Bob Iger: Yeah, I started out by wanting to write a book about leadership during crisis, which I think is different than just general leadership, because what's demanded of a leader is much greater. I'm adding to that, it essentially includes leadership during times of great disruption and transformation too. It's relevant to a lot of things that we've talked about. Themes that I'm covering are basically what are the attributes of great leadership during times of great change or great crisis. It's pretty clear to me that courage and empathy are right at the top of the list. Being able to be present for people, particularly during a crisis. And having courage is really important. But at the same time, you have to be able to make decisions at a much more rapid rate than ever before.
--:-- Chris Dixon: Do you have a title for this book yet?
--:-- Bob Iger: Nope. If you've got any ideas.
--:-- Chris Dixon: Got it.
--:-- Bob Iger: You know, I wanted to say "Crisis of a Lifetime" because the first book was "Ride of a Lifetime." Oh, yeah. Too cute. So I don't know.
--:-- Chris Dixon: Thanks for being here, Bob.
--:-- Bob Iger: Nice to be here, Chris.
