If there were a Mount Rushmore of Motley Fool stories, this one would be on it.
In this episode of Rule Breaker Investing, David Gardner recalls his experience in the late 1990s meeting Hollywood director and producer Sam Raimi, who flew the Gardner brothers out to the West Coast to see if they could make the leap from internet investing gurus to TV stars. Though their Hollywood stint proved to be short-lived, David's reflections on their Foolish thinking at the time was key to how things would play out for the Fool, and there are lessons for you, too.
A full transcript follows the video.
This podcast was recorded on April 12, 2017
David Gardner: Welcome back to Rule Breaker Investing. Great to have you with me this week. Last week it was "Something old, something new, something borrowed, something blue." I hope you listened. Maybe remembered one or two of those. I think I can at least remember one of my points from last week.
This week's going to be simpler, because I'm just going to tell pretty much one story, and I'm going to make a few points about it at the end. It is, if there were a Mount Rushmore, (which there isn't), of Motley Fool stories, this would be on my Mount Rushmore, anyway. This is probably one of my top five favorite Fool stories of all time; therefore, it is a pleasure to bring it to you this week.
In fact, I'll be reading. It will be a dramatic reading. A presentation. Something I do a little bit on this podcast.
Most of the things I say from week to week I haven't taken the time to write out, but whenever I have, it means that I'm going for something extra special. I'm actually choosing my words, so let's see how it works this week.
And it starts like this:
"Guys, I want you to come to California. We should meet. I think there's a TV show here."
So it was the late 1990s. The Motley Fool was maturing into a media company. Tom and I had about a quarter of the audience we have today, but we were doing lots of media back then. Back when we thought media exposure equaled business success and a Motley Fool TV show; well, that would follow naturally from our radio show, our syndicated newspaper column, and the best-selling books that we were already doing.
"But, Dave, this guy's shows are like Xena: Warrior Princess. Stuff like that," Tom said. "Does this make sense?"
I'm not sure whether it did or not. We decided -- what the heck? -- to accept the invitation to visit Universal Studios in Los Angeles, meet with our host to plan the show, and then meet with a Universal producer the day after that to pitch the concept.
When we met our host -- our champion -- his name was Sam. We liked him instinctively. We had driven straight from the airport to meet him at his rigged-out trailer on some generic-looking Hollywood film lot. Here he was. A five o'clock shadow. Very casually dressed. Shades tipped down over his nose surrounded by a small and likable team of young, creative types.
He may not have been the biggest name in the business, but they thought a lot of him. "Sam's a genius. Good to meet you guys," said his assistant.
"The Motley Fool's perfect for TV," Sam began. "I'm a big fan of you guys. You guys are like superheroes. The villain is Wall Street. You guys are going to vanquish them. The show can be great. Let me play you some theme music we're working up."
He played it. It sounded, well, heroic; particularly to a couple of internet entrepreneurs who, in their early 30s, had started all this as a newsletter for their parents' friends. Now we were going to be superheroes! With theme music!
"So what's the show going to be like?" we asked.
"Oh, it depends what the markets are looking for. I have my ideas," he said. And laid out a few more of them. "Universal will have its own, too."
He then showed us some clips of Xena. Or maybe it was his new Hercules show, also then airing on UPN.
On the one hand, these didn't seem to be hit shows. They didn't exactly instill confidence in us. On the other hand, Sam had two shows running on a TV network. He was a player.
"The thing is," Sam said, "if we go for this, you guys know you only have one shot. If you try and fail on network TV, they'll never give you another chance."
At lunch the next day, the Universal exec threw us a curveball after the appetizer plates hit. The exec -- call him Ken, svelte and debonair, occasionally waving to other tables at the chic spot where we were dining -- pushed his California-blonde hair behind his ear and gave us the lowdown.
"The only way Universal would do a show like this is for 10% of what you guys do." By "you guys" he meant Tom and me. He wanted 10% of all future Motley Fool everything.
So Sam had just laid out how for 30 minutes, in Friday prime time every week, our show would educate, amuse, and enrich millions of viewers with its cheeky market rap and cartoon humor sketches. Ken, a grizzled realist, was willing to take this seriously if only because Sam did.
And 10% was what Ken came back with.
We were young and impressionable. This was TV. I mean, Hercules! Xena! And The Motley Fool!
But even back then, 10% was too round a number.
Well, Sam talked gamely through the lunch, but along with us looked increasingly crestfallen. By the time our host called the check, we walked out leaving things open-ended. "Good luck, you guys." I expect that's the way all such lunches end, really, whatever happens afterward.
Well, back at Sam's trailer we all realized that our two days together would come to naught. We had enjoyed meeting Sam and his crew, but it would be more Xena and Hercules for him, and back to the internet for us.
That was 1998. The next few years for the Fool were tremendous. Then came 2001, when the market crashed and almost brought down our company with it. After a super rebound today we couldn't be happier, looking backward, that we didn't give Universal its 10%.
But the best story, of all, is Sam's. Sam went on to make a real superhero show a few years later. A movie, actually. It was called Spider-Man. And director Sam Raimi's love of superheroes and villains culminated in an amazing film trilogy, the combined cost $600 million to make and grossed $2.5 billion worldwide.
And that's where our story ends. I have three lessons that I want to highlight for investors and entrepreneurs. All right, three reflections. Maybe they're lessons. Maybe they're just reflections. Here's the first one, thinking back on that story about 20 years later.
One thing that I like that happened there -- and I hope I made it clear -- I'm really glad that Tom and I didn't give away 10% of everything that The Motley Fool is doing in order to try a television show pilot on probably UPN.
I'm really glad we didn't do that, and I think the reason we didn't do it, ultimately, is that we were playing the long game, and that is reflection number one. Playing the long game is going to serve you so well, not just in life or, in this context in business; but, of course as an investor.
In fact, as I look over our Motley Fool Stock Advisor scorecard (the service launched in March of 2002), I have nine 25-plus baggers since that service opened in March of 2002. And here's the key to them: every single one of them remains an open position. Every one of those 25-plus baggers remains an active recommendation. A company that we like probably even more today than when we first bought it.
Of course, that's partly because we've gotten to know it over time and they've done so well for us. But companies like Priceline and Netflix and Amazon. Companies I've talked a lot about and will always talk a lot about in Rule Breaker Investing are those kinds of companies and we were playing the long game. Most of those picks were made more than 10 years ago.
After all, if you're going to roll up and make a 60-bagger, it usually takes a while. But the good news is if the stock doubles again, all of a sudden a stock that was up 60x goes up to 120x. And that's what I've seen over the course of my life, and it's not just something that Stock Advisor members have seen. At least in my own case, I've seen it from my parents and how they invested. And this is the story of playing the long game.
Reflection number one -- play the long game as an investor, as a professional, and in life.
And before I cruise on to reflection number two, I think I have to briefly remember another moment where we were playing the long game as young entrepreneurs. Scott Cook -- the founder of Intuit, a very brilliant businessman, a very good guy -- was once in Fool HQ back in the day trying to purchase The Motley Fool. He wanted to take a stake in our company.
And in a classically bad line from yours truly (one that my brother Tom will, from time to time mock me for, and I'm happy to be mocked for it again and again over the years), I said to Scott, "You know, Scott? First of all, we admire you greatly and Intuit is an amazing company. I've used the tool," I said to him, "myself, tracking my finances and investing for years. I love what you do. And yet, Scott," I said, "I actually think maybe it should be us buying you."
And at the time I was not trying to be arrogant. I know I was cocksure. But it was a time where the possibilities of the internet early on -- it looked as if our company, The Motley Fool, having gotten such an early start and great head-start advantage over the rest of the industry -- most of which financial companies weren't even looking at the online medium. They didn't even believe in it. We started to think, "You know, we can probably almost reorganize the world of finance if we do this right," which I guess we didn't, "through The Motley Fool as a vehicle."
So Intuit, I was explaining to him, having a great software program like that, would be a tool that would be one of the things that we would sell. Offer our members over the course of time. But that would just be part of what we do. And as history will now show, Intuit has gotten quite a bit bigger in the 20 or so years that Scott pitched us. And we've gotten a little bit bigger, but I'm pretty sure I deserve to be mocked roundly for that line and I'm happy to have that so.
OK, reflection number two. This is a pretty simple one. That was a lot of fun. That story, telling that story, sharing that with you this week is a lot of fun for me. Being there, that day, was a lot of fun. In fact, we got there a day early and they'd given us free tickets around the Universal theme park that was around Universal Studios in Los Angeles, so we just kind of hung out on a roller coaster. And even though it didn't all play out, we had a lot of fun.
And part of it is that we did it as brothers. And I think that's something ... if you're an entrepreneur, or you've ever started something with a sibling, you know what I mean. It can be hard, sometimes, but for the most part it's a wonderful experience. And when I think of the people that are having fun out there, I think, for example, of the brand Life is Good, if you know those t-shirts, those hats. Accoutrements. That comes from two other brothers. That's Bert and John Jacobs whom we've gotten to know a little bit over the years. They are having fun and they're creating fun every day for their customers.
Fun is probably always underrated. And I mean this, again, as a businessperson. I think you should be trying to have fun with the culture in your workplace. You should be trying to create fun for your customers. And I think as an investor you're going to be well-rewarded for finding companies that do just that. Life is good. Have fun.
And my final one, reflection number three. I was thinking about some of the people that I've gotten to know and know over the course of my life, now, at the age of 50, and I was thinking about Sam Raimi as an example who I've never seen since. Sam, I hope you're listening. I hope you enjoyed our story, again.
But a great addendum to our Sam Raimi story is what happened on the Motley Fool Stock Advisor scorecard because, if you're a member of our service, you can go in and see, if you look at my June 2002 pick, you'll see it is Disney. Picked on my side of the scorecard in the month of June 2002. But if you actually double-click down, you'll see that it was actually Marvel Entertainment that I picked. It was not Disney. Disney bought out Marvel subsequently, and we've just kept that investment and rerec'd it multiple times in place ever since.
So now you actually know the full story of my thinking at the time; because Marvel, at the time, was an underperforming old media play perceived to be a comic book company and that wasn't a great business. And it was pinning its hopes, at the time, on converting its content to film. And our friend, Sam Raimi, was at the helm and that investment, today, is a 59-bagger.
But I think about visionaries. I think about the dreamers out there. Sam Raimi is obviously one of them. He led me to Disney. I did get to meet, a few times, Reed Hastings, and that was a reason that I ended up recommending Netflix in 2004. And then Elon Musk, as I mentioned last week, came to our Motley Fool offices to speak to our employees in 2011, and shortly after that I recommended that stock.
And if you think reflection number three is about you need to know the right people in business, please understand I don't know, personally, any of the people that I've just mentioned to you. But, what I think is true of these encounters and these interactions is that I was attracted to each of these people. Connected with them in some cases. And it's because they were visionaries, and this is reflection number three. Look for visionaries. Love your visionaries. The dreamers out there.
You know, probably my favorite college basketball player, for obvious reasons if you follow the sport, is the point guard of the North Carolina Tar Heels National Championship winning team, thanks to last week's victory, Joel Berry. Joel's not a big tattoo guy. He is playing the sport where some people have a lot of tattoos all over them. But they said, "Joel, you got a tattoo." He's like, "I'm not a tattoo guy. This is the only one I have."
I believe it's his right bicep, and it's just the word "believe." And he said he looks down at that and he's reminded, every day, to believe. And I think that's what we do when we succeed as investors and businesspeople. We believe. In some cases we need to believe in ourselves, but in other cases we need to find the visionaries and believe the vision that they have, whether it's "you know, we can make a good superhero movie out of a comic book," or "people will ultimately be streaming content over the internet instead of their cable TV," or "darn it, electric cars will succeed."
So look for visionaries. If you are a visionary, congratulations. Look for the dreamers and believe. It puts me in mind of a lyric of the movie that I was hoping would win best picture this year -- I think a lot of people expected it to -- La La Land. But my favorite song in La La Land, which is entitled "Audition," and the parenthetical subtitle is "The Fools Who Dream." Maybe you saw this movie. Maybe you remember Emma Stone singing these lines: "Here's to the ones who dream, foolish as they may seem. Here's to the hearts that break."
See you next week. Fool on!
As always, people on this program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Learn more about Rule Breaker Investing at RBI.Fool.com.