A Hollywood Executive On Negotiation, Talent, and Risk

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Welcome to the hbr ideacast from harvard business review. I'm sarah green carmichael. The movie, TV and music business might feel a world apart from the office you work in, but there are lessons to be learned for anyone about how to manage creativity and talent, about how to negotiate and about how to get your product out there and build an audience. Today's guest played a major part in everything from Jurassic Park.

Mr. Pamlin, after careful consideration, I've decided not to endorse your park. So have I.

To the TV show er.

One year old found unresponsive in crib. Couldn't get an iv.

What'd you find on arrival?

No spontaneous recipe. She's cyanotic. Faint Holt in 200. We scooped and ran.

What happened to Prince's Purple Rain movie?

Purple Rain. Purple Rain.

Mike Ovitz co founded Creative artist agency in 1975, a company that managed clients in the movie, TV, music and book businesses. Around the time he left, it was described as the most powerful talent agency in the industry. He went on to serve as the president of the Walt Disney Company, a position where he only lasted about a year. Today he advises young entrepreneurs in Silicon Valley. But while while he was a major player in Hollywood, Ovitz also says he has some regrets about some of the tactics he used to succeed.

I had this thesis that we always had to be moving forward and upward and win. Winning was critical in my strategy and I discovered, unfortunately after the fact, that we could have won just as big by winning just a little bit less and letting a few other people take some wins off the table.

Mike Ovitz recently sat down with Harvard Business Review editor Alison Beard to discuss his new memoir, who is Mike Ovitz?

So first, congratulations on the book. It's a great read.

Thank you.

Early in it, you say that agents are first and foremost sellers of themselves and of their clients. Sue, what makes a good salesman?

Well, there are different ways to approach sales. We tried to do it in a little more elegant way. Sales can be done incredibly aggressively. They can be done with thought, with no thought. They can be done where it's a constant barrage. What we tried to do is sell based on the quality of the client that we were presenting. And we would try to do it in a very elegant way, make the presentation creatively, softly if possible, but aggressive in that we would never stop. We just would not take no for an answer. Caveat to that would be that we had to really believe in what we were selling. So one of the precepts of the company was that we would only engage in signed talent that we really believed in for the long term.

But when you were just starting out, how did you sell yourselves to those quality clients?

That was an uphill fight. We were young. We had good experience from having worked at the William Morris Agency. All five of us had worked there. But I think that the great thing about the entertainment business in the 60s, 70s, 80s, it was a business of high risk, high reward. People were willing to take risks. They were willing to take risks on talent. They were willing to take risks on executives. But the one thing that was particularly helpful to us is that there were eight or 10 agencies that had a lock on the business out of the 150 or 160 agencies that were franchise to work in LA and New York. And I think that the community itself embraced us as somebody that possibly could be new and that they could probably take advantage of at the beginning or for whatever reason they thought, but they were supportive of us. So it was easier.

And ultimately you really revolutionized the way that agencies worked. So how did you manage to not only sort of come up with those ideas, but then also gain acceptance for them across the industry?

Well, for starters, we had to differentiate. In today's world, where I work up in San Francisco, we would call it disruption. We could not perform the function of a traditional agent. Traditionally, agents basically were fielders of calls and interest in their clients, and they would then try to sell the client into a job. We came up with the thesis that we would create jobs or that we would take the dreams of our clients and try to put them together by packaging them with disparate elements from around our list or taking from other people's lists to try to put the projects together and create work for people, rather than just wait to try to assign clients to jobs. That was from day one, when we arrived in our office the first day. How do we create work rather than just be reactive to it?

You admit now that the tools and strategies you used to yourself become a super agent and turn CAA into a powerhouse sparked a great deal of pushback and resentment. People have called you a bully, a villain, maybe worse names. So if you could do it over again, what would you do differently?

Well, I talk in the book about how it's possible to cut back a little bit. I had this thesis that we always had to be moving forward and upward and win. Winning was critical in my strategy. And I discovered, unfortunately, after the fact, that we could have won just as big by winning just a little bit less and letting a few other people take some wins off the table. When I was doing this, the goal was to win every single issue that came across the table. And it's something, as you get older, you learn that it's not necessary, there's room for others to win. One of the reasons the music business is so much different than the movie or television business is if you have a top 10 record, you're well thought of in movies, you have to have the number one movie. It's good for pr, it's good for sales. The camaraderie in the music business is much better than in the movie business. The movie business is very rough, very dog eat dog. And it's because you have to be number one. And it was something that translated through to our business. We felt we had to be number one. We had to have 100% market share, we had to always win. We wanted to have the number one book, the number one New York Times bestseller. We wanted to have the number one movie. We wanted to have the number one TV show. I remember when we sold ER into a very unwilling NBC who really didn't like the pilot. We manipulated everything we could as aggressive salespeople to get that to work. We pushed from every angle we could to get ER on the air. Now, we believed in it. The man who was running the network at the time, Don Ohlmeyer, didn't like it, didn't like the handheld camera, like the blood and the reality of what Crichton and Spielberg created. But we believed in the show and we had to go with that gut. But we ran over a lot of people at NBC to do it.

So it sounds like the tactics did work, but in the end caused problems.

I think that's correct. I think I might just say it a little differently. The tactics worked really well, maybe too well. But in the end, there was a cost associated with it, which I would have preferred to not personally have paid. Right.

You definitely don't pull punches in this new book. In the prologue, you call out specific betrayals by three former colleagues and friends. Jay Maloney, Michael Eisner, Ron Meyer. So why rehash those stories now? Are you trying to learn from the experience? Are you trying to help others learn from the experience?

So I believe the book is a combination of telling a story, a lot of lessons learned, things done right, and things done terribly wrong. When you have a 35 year business relationship with someone. I think there's a very, very big lesson to be learned in why these relationships go wrong. And each of those relationships went wrong for different reasons. One of the relationships has turned out to stay wrong. One of the relationships was ended by the fact that the individual passed away and one relationship's come back to life, which is very pleasing to me.

And so this memoir is really an attempt to not only tell your side of the story, but bring closure.

So I'm at a place in my life where I look back at the things that I've done and I look back at the things that are good, the things that were not so good. And I don't have a career to deal with right now. I work as an investor and a consultant up in the Valley up north. And I love the work. And I'm meeting the most brilliant young people. And what I try to do when I'm advising them is give them the best advice that I can. And a lot of the lessons they like are the mistakes that I made so they can avoid the mistakes.

Right.

And the people this book is directed at on the business side are the young people.

Right. Going back to some of the various aspects of your career that yield lessons for younger executives and younger creatives, one for me was negotiation. You know, you've been involved in so many high stakes deals representing both Hollywood stars and then huge media organizations. Sue, what's the key to achieving a successful outcome?

So what we like to teach at CA in our training program and work with our executives on is that approaching a deal is no different than approaching any kind of a problem. It could be a math problem, it could be a history test. You want to know what the answer is and where you want to end up before you engage in the discussion. So we spent hours of prep work on the major negotiations. We did computer studies readouts, we did decks. We did everything we could. We did role playing in some of the negotiations. Now, of course, those were the larger ones. Those were negotiations for selling companies or for taking a company public or taking a company private. But even in the smallest negotiation, we always wanted to know how was the meeting going to end before we walked in the door? And how do you manipulate that scene to get what you want for your client and to get it to the point of acceptance for both sides and how to leave something on the table for the other side so when they walk away, they feel happy and that they've gotten what they want.

But what if your counterpart comes in with their idea of how they want it to end and it's dramatically different than yours.

Well, that happened a lot, actually. And that was the fun part of negotiating, right? We had a lot of different ways of handling that. When we were on the buy side, for example, for a package and we were buying for the clients and someone would come in and quote us for an actor a fee that was just completely not in line with the budget or with what the other actors or, or creative people were getting on the show. Sometimes we wouldn't respond. We would just say, there's nothing to respond to. We're going to have to recast or look for someone else. Sometimes if someone offered something that was so outrageous, we would offer guild scale, which was done as a joke. But the point was made pretty clear. There were different ways of handling. Usually, frankly, it was done with humor. It was never done like, oh, that's ridiculous, or say something nasty. It was done humorously. One time someone asked me for a fee for a movie for one of their clients to play opposite two of our clients. And our clients were getting X and they asked for double X. And we came back and said, you know, you're under asking, you should get 5x because your client's worth 5 times. But both our clients are added together. Well, well, the agent was not stupid and was highly sophisticated. He understood what we were saying. And the lawyer was on the phone. When they got done laughing, we got down to making a serious deal. So there were different ways of handling.

All of this and strong arming was one of them too.

When we had leverage, we used it. There's no question about it. It did not make us popular, particularly when we had packages. We talk in the book about the Jurassic park package developed internally at ca. Michael Crichton pitched me the story for the book and told him I was in love with dinosaurs. My young son was in love with it, my dad was in love with it and he cut across every demographic. Gave the book to Stephen, who I knew would love it, called me the next morning after I read it, said he was in. We had a producer, Kathleen Kennedy, in it, we had a writer and we had Michael Crichton's book as the foundation. And we had no studio and we controlled all the elements. So we had the ability to go to the first studio and say, we have good news and bad news. When asked what the good news was, we said we had a book that required no movie stars, it had three young cast members, it would be a best selling book. It was going to be directed by the great Steven Spielberg. And they said, what's the bad news? I said, well, we control it and the clients own it and you don't. And they said, what do you want? We gave them a deal that we wanted for the clients, which was a partnership deal with the studio, dollar for dollar. And we said they had one day to come back to us. Now, it was said in that tone and it was said nicely, but it was about as strong arm as you could be. And if they said no, we already had it backed up and sold at another company.

You were in the business of putting all these different creative people together, putting a team of agents together. And now I know you work with startup companies, so how can you tell when people are going to work well together and create something amazing?

So a lot of it is frame of reference combined with instinct. Going up to the Valley now, dealing with these young, brilliant men and women who come to the Valley with complete hopefulness and a point of view of that they can do anything is exactly what I dealt with in the 60s, 70s, 80s and 90s in the entertainment business. You had young people who had ideas, they were hopeful, they were spirited, and you could tell by sitting with them, by how they would accept suggestions if they were collaborative or not. But the condition precedent to both these businesses is exactly the same. They're collaborative businesses. People don't invent these businesses by themselves. You look at someone like Mark Zuckerberg, he created Facebook and he shepherds it and it's his vision, but he's got brilliant people working for him and they tell him the truth and they tell him what they think. And that collaboration is no different than when we put Ghostbusters together and Dan Aykroyd wrote it, but Bill Murray put his own imprimatur on it. Ivan Reitman, the director, added his, and Harold Ramis, may he rest in peace, added his. And it was a daily discussion about where it should go. Everyone had something to say about it. So it's a bit instinct, a bit frame of reference, and a bit pushing and probing and seeing how collaborative they can be. The creative process is a very amorphous animal and it is constantly changing and weaving and moving around. It's a work in progress and flux at all times, and one has to kind of ride it like you ride a wave. If one doesn't have patience for that and doesn't want to deal in the unexpected and the unknown, don't get into the creative business.

Right. And how were you such a good judge of which risks were worth taking?

You know, that's another great question. I don't know that I was. I know that I would eat, breathe and live the entertainment business. From the time I was 17 years old when I got my first job at Universal Studios as a tour guide. And I watched everything that came out on the screen, the big screen. I watched every television show. I read every top 10 book that was nonfiction. I read every script that came out. I read notes on the scripts I couldn't read. I had subscriptions to several hundred magazines a month that I would skim through to get a sense of popular culture. Because art directors and writers would be planning things that would come out six months later. So they had some edge on popular culture. And I was a student of popular culture. And then I had one unique common denominator. I tried to do things that I wanted to see. I was the ultimate fanboy. I love TV and movies and books and records, just love them to this day. I got a sense of what I liked and I let that translate into what I thought other people might like.

You talk about all this research you're doing. You're obviously working night and day for your clients. You say in the book that service organizations live or die by time management. But when there are so many things to do, how do you, or how did you. And how did CAA more broadly get that aspect of the job? Right?

So time management is one of the key things that I actually spend a lot of time with the entrepreneurs up north talking about. It's the same in any business you're in. You could be a doctor, a lawyer, a writer, an interviewer, an entrepreneur starting a new company. It's all the same. Time is our most valuable commodity. And frankly, it's our biggest enemy. One of the things that we worked on early on in the 70s, before we even started CA, was this whole concept of time management. I was obsessed with what we could do to increase the hours in the day. I was so obsessed that I had a clock in my office. There was a gag gift to me by a client that was a 25 hour clock. And the goal was to how can we be productive? And one of the things we discovered was honesty. Don't lie. Because then you have to turn around and figure out what you said. If you're honest about things, you don't have to think about what you said. If you are responsive to your associates first and quick, it cuts the time management down geometrically because it increases your ability to have more time because you're getting fast answers. So internally at caa, we had A system where if you were asked a question by an associate, everything else was put off until you answered that question. It made the company run like a Swiss clock. We also had a rule. If you do not have an answer for something, tell the client or the buyer, I don't know, I'm going to get back to you. Up to the time we started ca, a lot of people felt, knowledge is power. I'm going to make up the knowledge if I don't have it. We didn't do that. We felt power was based on correct knowledge. Correct knowledge was based on asking questions. And then lastly, we kept notes on everything and individually and collectively. You'd walk into executives offices and on their desks were rows and rows of organized notes. We had a key word, it was called follow up and communication. We kept nothing a secret. We shared information and bottom line, we followed up on everything. If you asked me to do something for you, you'd have an answer from me by the end of the day, period.

But how do you make time to answer every single question that comes in when there must be hundreds?

You prioritize them and they were prioritized by the clients. Who had the largest need, the agent who had the largest need, the buyer who had the largest need. Time frame. Sometimes we were asked questions about things that weren't time sensitive. They got pushed to the bottom of the stack. But we also had a thing that we returned every phone call by the end of the day. And so you'd see people sitting in the office, hundreds of people in the office, till 8 o' clock at night, before they went to dinner, returning phone calls or at least even leaving messages. So people knew that you attempted to get back to them.

Right. And yet you had a wife with whom you're still close and kids. So how did that work for you personally?

Sometimes good, sometimes not so good. I have great kids. My wife and I were married when we were 21 years old. She helped me start CAA. She was a secretary along with the other wives of the other founding partners. It was difficult and they were understanding, all of them. We worked seven days a week. We would come into the office at 7 and we'd leave there at 11 at night. We were taking meetings around the clock in 1974 and five just to try to sign a client list because we had nothing to sell and it was hard. Now I was fortunate. Six years into ca, I had Chris Ovitz, my first son, and that was a game changer for me. But for the five years it took to establish the business. I didn't have any children, responsibilities. And you couldn't be more correct. Having children is a game changer. It is a giant responsibility. And I just worked it around. I cannot tell you how many times I would leave CAA at 3 o', clock, be on the phone in the car till I got to the John Thomas dye school at 3:15, watch one of my three kids play in a sporting event while I was on the phone and watching them multitasking, going up to them and congratulating them whether they won or lost afterwards and then getting right back on the phone in the car, right back to the office. It was just a way of life for 25 years.

I also wanted to ask you about cultivating this team environment with very different agents, all of whom have very different personalities and also very different personal ambitions and their own client bases. How did you get all of those people to work together as one united force?

I had a choice. And it wasn't just me, all of us who started the business, we worked together at William Morris and we watched the ways that management could proceed. It was very clear that you could manage a business by creating competition between the employees, have a cutthroat environment and try to go very Charles Darwin survival of the fittest and hope that those that were the fittest would produce the most and would balance off what you'd lose from those that might have talent but they weren't fit. Or you could go the way to create a combination of American team sports with a little bit of Japanese philosophy. And at the time, 70s, 80s, Japan's production lines were just beating everyone else in the world. And it was done with a very simple basis called Nemo washi, which was management by consensus from the bottom up. And if you took an American team sport like football or basketball where people played together and you added the management from the bottom up and you had people invested in each other. And when you went to hire someone, you didn't hire from the top, but you had the people on the line that were going to work with the individual you hired go interview that person and bring them in as a recommendation to the business. And if you hid nothing in meetings and you were open with each other and you had people that volunteered to jump in and help each other, others would help them. And that's how we ran the business. You'd sit in a staff meeting at our company Wednesday morning, 8:30, and we started an hour ahead of every other company so that by the time we got out and they were starting, we could Call their clients with information. But we would sit there, and I could say, we have John Mellencamp, who's a fine singer and wants to do a film. He's got an idea. It really sounds interesting. It's a stretch, but let's see if we can do it. Rand Holston would raise his hand, who was a literary agent, said, I'll help you. Now, he had no reason to help. He was a literary agent, had nothing to do with any of this. But he did, and we got a movie made. I remember the same thing happened with Prince, who was a client of ours. He had an idea. He wanted to do a movie based on an album, Purple Rain. Again, Rand jumped in. He said, we can do this. He and a half a dozen other agents raised their hands, said, let's try and do this. And my God, we did it. Purple Rain was a huge hit and was a great piece of creative work for Prince. No one thought he could act until he did. Until he did, yeah.

You knew so much of Hollywood intimately. I have to ask, in this particular moment, you know how aware you were of the rampant sexual harassment and abuse problem that was happening, and if so, what did you do to combat it or to protect your clients from it?

You know what I mean? Talk about this a lot now, because it's so much in the news and it's so prevalent, I must say, we have to look. First of all, I don't condone any of it, and I think what's happened is actually a positive thing. Like all other things in Hollywood, it's moved very far to one end of the metronome and hopefully will balance itself at some point so that accusations are made and followed up on and people are proven guilty after they're presumed innocent, rather than the other way around. That being said, there are a lot of guilty people out here, and I think it's about time. There are a lot of brave women who have stepped up who probably wouldn't have stepped up, or I wouldn't say probably wouldn't have stepped up in the 60s, 70s, 80s, and even into the early 90s. I remember we had our first sexual harassment seminar at the agency. It wasn't until the early 90s when it really started. We didn't really know what it was. We were in a very liberal and loose business, and a lot of people went into the business because of it. I marvel when I watch Mad Men because I grew up in that business. I'm not condoning it. It's how I was introduced to the business. There's a story in my book about going to lunch with an agent and a client at William Morris. And I was starving. I'd been up since six in the morning, hadn't eaten a thing, and they were drinking their lunch. And it was an eye opener for me. The sexual harassment issue was an eye opener for me. It never really hit me until we had an incident, a small one, at our own company. And we handled it as best we thought we could at the time. We put someone on hiatus from the business, which was the kiss of death because almost impossible to recover from that kind of a punishment. But it wasn't to the extreme of what we've seen here. It was a much lesser offense.

Did you feel that you had to protect your clients from some people?

Well, it's interesting. We really didn't know what you know now. We weren't in a world of social media. We weren't in a world of iPhones. We weren't in a world of pictures. We were in a world of hearsay. And he said, she said. And we were in a world of a very open environment. It doesn't justify it. It doesn't make it right in retrospect, it wasn't right. A lot of things our clients did, we had no idea. You know, we dealt with Harvey. We had no idea. To the extent that Harvey had issues, none. It never showed its head around any of us. And by the way, we didn't have a lot of clients complaining to us about problems. When we did, we took care of them. But on the other hand, we didn't allow clients to have meetings in odd places. And most of the time, our agents accompanied our clients, particularly our female clients, to meetings. And we didn't have these kinds of events that occurred where female clients were put into hotel rooms unprotected. We just didn't do that. But again, we didn't have a reason to do it because we didn't get the female clients calling us, saying that they had issues when they did. You know, we covered it and we did the best we could do. Now, could we have done better, in retrospect, 30 years after the fact? Absolutely.

Yeah.

But to this day, I don't know a lot of what occurred or didn't occur. My assumption is that less occurred than more because we never heard about it. And when we did, we tried to protect it. We surely didn't hear about it, nor did the business take it as seriously as they are now.

Yeah, so there's this running theme through the book that there was sort of no End to your ambition, but as a result, also no end to your anxiety. When you were running CAA and building your media career, was there ever a moment when you felt at peace?

You know the answer to that is no. With a qualified yes. I made some giant mistakes. I remember when we sold Columbia Pictures to Sony, and I was on both sides of that transaction, but representing Sony. But also I had strong relationships at Columbia and Herb Allen and I, the great investment banker Herb Allen, who is a good friend and a brilliant banker. And we were sitting in a room and we finished the deal and everything was signed. And I looked at him and I said, well, what's next? And he looked at me, he said, you're the dopiest guy I know. I said, well, I know that. What else is new? He said, why don't you take a couple days and enjoy the fact that we've just sold a studio that was having some issues and we sold them to everyone. Came out on this cocoa. Coca Cola came out, Columbia came out, Sony came out. They got what they wanted. Mr. Morita got what he wanted. We had a good time doing it. It was a fair deal. Why don't we just enjoy this? I couldn't. I went on and started working on Matsushita. Buying a studio within five working days. The anxiety part was as simple as being the operator of a business. Every day you walk in and you have to have an idea, because when you turn that key, you have an overhead. It's something I still tell my entrepreneurs. If you think it's going to run itself, it's not going to be. You have to run it. You have to be creative. You have to think of ideas. You have to keep your people's spirits up. You have to keep the machine running at a way where everyone's enjoying themselves, they're turning a profit, and everything's moving in the upward direction. Now, what does that do? Creates happiness on the one hand, anxiety on the other. Occasionally I'd step back and say, my God, look what we created. But those moments didn't last very long.

So when will you relax?

I would imagine I'm going to have eternity to relax when my time is up.

Terrific. Well, thank you so much. It was a pleasure to talk to you.

Thank you so much.

That was Harvard Business Review editor Alison Beard speaking with Mike Ovitz, author of the new memoir, who is Mike Ovitz? He was one of the founders of caa. This episode was produced by Mary Dew and Kurt Nickish. We got technical and production help from Rob Eckart Adam Buchholz is our audio product manager. Thanks for listening to the HBR IdeaCast. I'm Sarah Greene Carmichael.