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- Company: Triggerfish
- Players: (Back left) Jean-Michel Koenig, Anthony Silverston and Mike Buckland (Middle) Stuart Forrest and (front) James Middleton
- Bought: 2004
- Contact: triggerfishstudios.com
Sometimes growth happens quickly. The right market, idea and execution combine and the result is a high-impact, high-growth business. Other dreams take longer to fulfil. The strategy has a longer tail, and the entrepreneurs must practice painstaking patience. The goal might take longer, but the results will be worth it.
Stuart Forrest is living one of those long-term goals. He believes his company, Triggerfish, can produce a US bestselling animated film by 2030.
It sounds like a lifetime away, but when you’re competing with industry giants like Disney and Pixar, even two decades is pretty audacious. It’s going to take careful planning, unwavering focus, and continuously building on small victories, but Triggerfish is certainly up to the challenge.
Forrest and his partners believe that success is a practice thing – the more you do something, the better you get at it, from developing stories and characters, to implementing and fine-tuning systems and processes.
Here’s how they’re planning on doing it.
An international reputation
When Forrest joined Triggerfish in 2002, it was a stop frame animation company whose biggest client was Sesame Workshop, the New York-based parent of Sesame Street and Takalani Sesame. Forrest and a colleague, James Middleton, bought minority shares in the company in 2004, but hit their first roadblock almost immediately.
“Stop frame was becoming a thing of the past, and we didn’t have the skills to produce computer generated animation,” says Forrest. It’s a problem many companies have. The market shifts dramatically, and the business can’t keep up.
“We were forced to sell all the equipment and the original owners moved on to new things, leaving us with full ownership of Triggerfish.”
It was tough times, and Forrest went into huge debt financing his living expenses. “There was significant international credibility in the fact that we’d been doing Sesame Street animation for ten years, but we’d also done enough work for them to last the next two years. Our biggest client didn’t need us.”
Add to this the fact that the stop frame market had disappeared, Triggerfish had no clients and no work in the pipeline. All they had was the Sesame Street reputation, which was the gold standard in the kids’ animation industry. It was the only leverage Triggerfish had.
“We had scaled down, moved into my living room and sold all of our equipment.” And so the partners came up with an incredibly risky passion project: They would create a local, animated feature film based on a feature film pilot they had created for a US investor. It was a huge risk. They had no money, and even though they were living incredibly lean, they had no guarantee that the project would take off. If it didn’t work, the business would fail. But if it did, they were one step closer to creating a major local production house, with an eye on the international market.
Mike Buckland, who had worked with Forrest on the pilot for Zambezia, joined the team in 2006 as head of computer animation. At the same time, creative director Anthony Silverston joined as the fourth partner and began work on writing feature film scripts. The team was assembled, and focus turned to getting Zambezia off the ground.
“We spent a year writing the script, and then began pitching it to investors,” says Forrest. Which is where the studio’s great reputation started paying off, and where a key lesson is clear – always play to your strengths. “We secured funding and the project was green lit.”
This was in 2008. It took another year to close the legals, production began in 2009 and the film was released in 2012. With worldwide distribution and major releases in several big territories, the film went on to become one of the highest grossing African-owned films of all time. While the film did make money on its initial release, expenses and finance charges were high.
“Today we receive a cheque every three months, and this will continue indefinitely. That’s the beauty of digital; it doesn’t take up shelf space, so it will continue to be sold and screened.”
Making Zambezia wasn’t about money. It was about creating and distributing a feature film, and learning enough lessons to make a second, better film. That film is Khumba.
“The local film industry is too obsessed with South Africa. We make films for South Africans, and ignore the international market. At Triggerfish we didn’t want to do this. Our eyes are on the international stage. It’s going to take us a long time to really compete in that space, but that’s why we have goals, and a path that we’ve worked out. We’re not going to rush it. We’ve got a lot to learn before we hit that 20-year goal, and we know it.”
Getting Khumba off the ground is certainly a step in the right direction though. This time, funding was easier to secure. Production began in 2010 and the film was released in 2013.
“We’re still bootstrapping the business while we focus on the bigger picture. We have writers in the US and South Africa, story board artists and a core development team, but the bulk of the talent we use are contractors who work on a project-by-project basis.”
Major representation in Hollywood
The business side of Triggerfish had now become all-important, as Forrest realised that operating as a collection of artists working on passion projects wasn’t paying the bills.
In 2012 the fifth partner was brought into the business – chief financial officer Jean-Michel Koenig. Koenig recognised that the keys to improving revenue lay in getting better deals with the distributors, and this could only be achieved by deeper networks and holding more market leverage.
In 2014 Triggerfish signed a deal with William Morris Endeavor (WME), the Beverly Hills super-agent operating at the heartbeat of Hollywood. The deal sees WME partnering with Triggerfish to raise financing, handle distribution and use their extensive networks to enable the young studio to grow into their vision.
“We understand that to reach our aims, we can’t put a ceiling on what we want to achieve. If you want to be big, you have to think big, but understand that it’s the small, careful, and above all, patient steps that get you there. It would be delusional to expect to compete with the major studios on our first films, but we know we can get there eventually if we don’t lose our focus.”
A third project, Sea Monster, has already been in development for three years, and a fourth, Seal Team, is hot on its heels.
Meanwhile, Triggerfish’s momentum is accelerating, and the company is racking up awards, including the Sanlam/Business Partners Innovator of the Year award in 2012, and a nomination for the South African Premier Business Awards for best Exporter, as well as many awards for their films from China to Brazil. The ultimate goal is still a long way off, but anything really worth achieving always is.
Alan Knott-Craig Answers Your Questions On Money And Partners
From starting the right business, to managing business partners and finding your magic number, there is a secret to happiness.
If I get rich will I be happy? — JC Lately
Does money equal happiness? Mostly, yes. Research in the US shows that your happiness is proportionate to your earnings up until you earn $80 000 per annum. Thereafter, incremental income gains have a negligible effect on your happiness.
In other words: More money will make you happy as long as you’re poor. Once you break out of poverty and enter a comfortable middle-class existence, more money will not make you happier.
These are the top three for old folks:
- I wish I’d spent more time with family.
- I wish I’d taken more risks.
- I wish I’d travelled more.
Therein lies the secret to happiness. Spend time with your family. Take risks. Travel.
But first, make money. Don’t do any of the above until you’re making enough money not be stressed about money.
What is the magic number? — Mushti
The magic number is the amount of money you need to not worry about money ever again. If you don’t need toys like Ferraris, yachts and jets, the magic number is R130 million. Here’s the math: R130 million will earn R9,1 million in interest annually (assuming 7% interest). After tax that is R5,46 million.
Assuming you need 50% to maintain a good lifestyle, that leaves approximately R2,7 million for reinvestment, which is enough to keep your capital amount in touch with inflation for 50 years. The balance of R2,7 million (after tax) is for your living costs. In South Africa, R2,7 million will afford you a lifestyle that allows you to send your kids to a great school and university, to travel overseas a couple of times a year, and to live in a comfortable house.
Over time your living costs (and inflation) will eat into your capital amount. After 50 years you should be down to nil, assuming you earn zero other income in that time.
In 50 years, you will probably be dead. If you’re not dead, your kids will be able to support you (because they love you and they have a great university education).
I am the sole director of a company (the others still have full-time jobs and don’t want to be conflicted) and there is pro-rata shareholding based on our initial shareholder loans. However, I am putting in most of the hard work, together with one of the other actuaries. How best do I manage the director/shareholder dynamic? I obviously want to make as much progress as possible but there are times when I need the input from the others (and their responses aren’t always as quick as I would like). — Mike
If you have any perception of unfairness regarding effort/risk vs reward, deal with it NOW! You can’t do so later. The best approach is honesty. Call your partners together. Explain your thinking. Perhaps argue for 25% ‘sweat equity’ for yourself. Everyone dilutes accordingly. Ideally cut a deal whereby you have an option to pay back all their loans, plus interest, within six months, and you get 100% of equity (unless they quit their jobs and join full-time).
Equity dissent must be resolved long before the business makes money, otherwise it will never be resolved.
What do you think of WiFi in taxis?— Ntembeko
It’s a good idea, but not original. Before embarking on a start-up, you should survey the landscape for competitors. Just because there are none doesn’t mean no one has tried your idea.
It just means that everyone that tried has failed. You need to be 100% sure that you have some ‘edge’ that makes you different from everyone who came before you (and failed). Otherwise you will fail. What is your advantage that is different to everyone who came before?
Read ‘Be A Hero’ today
What You Need To Know About The Lean Start-up Model
The Lean Start-up philosophy was developed by Eric Ries, a Silicon Valley-based entrepreneur who also sat on venture capital advisory boards. He published The Lean Startup in 2011, igniting a movement around a new way of doing business.
The model follows key precepts that include:
Taking untested products to market
The fact that too many start-ups begin with an idea for a product that they think people want, spending months (or even years) perfecting that product without ever testing it in the market with prospective customers.
When they fail to reach broad uptake from customers, it’s often because they never spoke to prospective customers and determined whether or not the product was interesting. The earlier you can determine customer feedback, the quicker you can adjust your model to suit market needs.
The ‘build-measure-learn’ feedback loop is a core component of lean start-up methodology
The first step is figuring out the problem that needs to be solved and then developing a minimum viable product (MVP) to begin the process of learning as quickly as possible. Once the MVP is established, a start-up can work on tuning the engine. This will involve measurement and learning and must include actionable metrics that can demonstrate cause and effect.
Utilising an investigative development method called the ‘Five Whys’
This involves asking simple questions to study and solve problems across the business journey. When this process of measuring and learning is done correctly, it will be clear that a company is either moving the drivers of the business model or not. If not, it is a sign that it is time to pivot or make a structural course correction to test a new fundamental hypothesis about the product, strategy and engine of growth.
Lean isn’t only about spending less money
It’s also not only about failing fast and as cheaply as possible. It’s about putting a process in place, and following a methodology around product development that allows the business to course correct.
Progress in manufacturing is measured by the production of high quality goods
The unit of progress for lean start-ups is validated learning. This is a rigorous method for demonstrating progress when an entrepreneur is embedded in the soil of extreme uncertainty. Once entrepreneurs embrace validated learning, the development process can shrink substantially. When you focus on figuring the right thing to build — the thing customers want and will pay for, rather than an idea you think is good — you need not spend months waiting for a product beta launch to change the company’s direction. Instead, entrepreneurs can adapt their plans incrementally, inch by inch, minute by minute.
Start-Up Law: I’m A Start-up Founder. Can I Pay Employees With Shares?
Bulking up employee salaries with equity is a common method to attract, retain and incentivise top talent.
Every early stage start-up company battles with restricted cash flow and not being able to pay market related salaries to their employees. Bulking up employee salaries with equity is a common method to attract, retain and incentivise top talent.
Can I pay salaries with shares?
South African labour laws require that employees be paid certain minimum wages, and “remuneration”, as defined within the Basic Conditions of Employment Amendment Act, either means in ‘money or in kind’. ’In kind’ does not include shares or participation in share incentive schemes, as determined by the Minister of Labour. As such, there is no room for start-ups to completely substitute paying salaries with shares or share options. However, there is no restriction in topping up below market related salaries with equity via an employee share ownership plan (‘ESOP‘).
Employee Share Ownership Plans
There are a variety of ways in which employees can be incentivised, and it will always be important for the start-up founders to consider what goal they wish to achieve by incentivising their employees.
ESOPs can be structured in several ways, for example: employees may be offered direct shareholding in the company, options for the acquisition of shares in the future; or alternatively, a phantom / notional share scheme can be set up.
ESOPs permit employees to share in the company’s success without requiring a start-up business to spend precious cash. In fact, ESOPs can contribute capital to a company where employees need to pay an exercise price for their share options or shares.
The primary disadvantage of ESOPs is the possible dilution of the Founder’s equity. For employees, the main disadvantage of an ESOP compared to cash bonuses or bigger salaries, is the lack of liquidity. If the company does not grow bigger and its shares does not become more valuable, the shares may ultimately prove to be worthless.
Some key features to consider when setting up an ESOP are:
- ELIGIBILITY – who will be allowed to participate? Full time employees? Part-time employees? Advisors?
- POOL SIZE – what percentage of shares will be allocated to incentivise employees?
- RESTRICTIONS – will employees be able to sell their shares immediately?
- VESTING – will there be a minimum period that service employees will have to serve with the start-up to receive the economic benefit of his or her shares?
Employee share ownership plans are great corporate structuring mechanisms for attracting and retaining employees, as well as fostering an understanding of the company ethos and encouraging loyalty and productivity. It is essential when implementing an ESOP that all the tax implications are considered and that the correct structure and legal documentation are in place.
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