While at the 2016 Phoenix ComicCon we had the opportunity to talk with Paul Scanlan, one of the founders of LEGION M, a company that is being labeled as “The First Fan Owned Entertainment Studio.” Scanlan, and co-founder Jeff Annison, already have a number of successful ventures under their belt, including the New York Rock Exchange and MobiTV, but this is something entirely new: An entertainment company that literally anyone can invest in, thanks to a section of the Jobs Act that recently went into effect. Being the first crowdfunded entertainment studio has garnered a lot of attention, and some very interesting financial partners. Stoopid Buddy Stoodios is already heavily involved, and it was recently announced that Alamo Drafthouse Cinema would be sitting on their board, aiding in decision making, and helping with distribution. 42Entertainment has also joined the team, and while not as well known of a name they are certainly an impressive group. If the term “Flynn Lives” means anything to you, 42Entertainment is to thank. They are the ones behind what many to believe the most successful, and certainly largest, film promotional Augmented reality games ever, leading up to the premier of “Tron:Legacy.” (Be sure to check out their video recap of the promotion.)
Full Disclosure: Going into this interview I was a bit skeptical, as most people are of startup companies asking for money. Why was this the first? Would there be any true benefits to being an investor? Who else is getting involved? This is only the second Con they had appeared at, and had been stuck in a booth outside. (in 115°+ heat!) My discussion with Scanlan (some off camera), and a touch of extra research, made me a believer. I am now an investor in Legion M, and will be continuing to post articles on the experience and future developments of this company.
Below is a 360° video of the interview (thick with unfortunate tech difficulties), or you can read the entire conversation below.
Kevin: I have Paul Scanlan here, and you’re with Legion M. A new company, a new concept!
Paul: Totally new concept. First time in history. We’re the world’s first-fan owned entertainment company. For the first time in history we are allowing fans to come be a part owner of the studio with us. We’ve partnered with Hollywood’s top producers to bring TV shows, movies, VR projects, etc. to the market. A lot of entertainment projects with proven creators. But in this case, the fans are helping fund these projects by investing in Legion M. If we are successful they will also participate in shareholder rewards.
By saying “Fan Owned” that means pretty much anyone can buy in?
Yes, absolutely! This is the part that makes it possible: Prior to this year, the SEC wouldn’t allow you to do what we’re doing because they had a definition for what they call an “accredited investor.” Millionaires who earned over 200K a year for the last three years. If you didn’t meet that definition, then the SEC doesn’t want you to participating in early stage growth or financing. Which is really bullshit when you think about it. Before we started this company we grew our last company into a billion dollar valuation. We had friends and family who wanted to invest that we had to turn down because they didn’t meet the accredited investor definition. So really, it was millionaires can make millions on high growth companies but regular investors are not allowed. The fact is, the rules are just outdated. Everybody knew it, so Obama, 3 years ago, put forward a bill, an act through congress call the jobs act, to reform these rules, to rewrite the rules, to allow more entrepreneurial ventures to be funded by fans and the general population. It was supported and passed almost unanimously. And that never happens. So you can tell, it’s been a long time coming, it’s supported by a lot of people. It’s not perfect, it’s a brand new law, it’s gonna go through it’s growing pains. But were pioneers! We’re not expecting paved roads. We’re just going to plow forward. We’re bringing fans on and creating great content
I remember the Jobs Act going through, I had no idea that was one of the stipulations on it?
Yes, these are some of the key components, the parts we care about.
Im sure the fans do too.
As film lovers, anyone who goes to the movies and loves movies, regardless if they are art films, huge blockbusters, everyone who loves movies wants to be a part of them somehow.
So this is their chance! We’re opening the gates to Hollywood! Why shouldn’t fans be a part of the process, go behind the scenes? As an investor, one of the things we want people to get out of being involved in the Legion, is they feel like they are a part of something. They are a part of the community that’s creating this great content. And that’s really important for our business model because the more activated and engaged the fan base is during the production process, the more successful and potential we’ll have in bringing it to the market. We’ll be empowering creators. We’re not trying to interfere with their creative process. We want them to understand they have a legion of support behind them. Not just financial support but with feedback. Instant turnaround of feedback. Tomorrow morning we could find out, “what did people like, the male voice-over or the female voice-over. Which trailer did they like?” When we’re making casting decisions, who did they like for this character? We don’t want to give any spoilers out, we still want investors and shareholders to have a great experience when they are watching the content. But when they are watching content to remember “Oh yeah! I remember when the director was talking about this scene and wanted our feedback on it!” We think that is really powerful.
So something that has happened recently are discussions on “Fandom is broken” and “Fan Entitlement” Do you have any concerns with how that may play here? On one hand, if you play to popular vote or what your fan/investors might like, it could be good, but also when you start ruling by committee, you can dilute your product.
This is absolutely true. The balancing act is “how do you manage it?” We are starting from day 1 to be fan owned. We’re engineering our company to work this way and to get the best benefit out of it. We know there’s going to be some headaches involved and we all know that great art isn’t created by community. It’s really important that our investors understand that we want to get behind creators that we support, and they support and let them do their stuff. But where we can add value, that’s really important too. Our conversations with creators, they actually like the idea. They don’t want the Legion giving them notes on the dailies, but they do want feedback, and they like the idea of being able to go to the Legion and ask something, and get an opinion on something. “What do you think of this, or this trend?” The kind of feedback we’re able to give, these are people who are on the same side of the table. We’re not on the other side of the table. We’re all in this together. We all have the same incentive. To make this movie as successful as it can be.
The other thing I want to point out is we are not expecting that every single project will be 100% appealing to 100% of the the fans. We are going to have a slate of projects. So being an investor in Legion M, means your investment is diversified across multiple projects. That’s actually a really good thing. Because unlike a Kickstarter project where you are really just donating; whether it’s successful or not, doesn’t really matter. You got your coffee mug, you got your reward, you got your bragging rights that you helped make this happen. In our case, we want to create a successful business. Doing that in Hollywood is an intricate business. We need to spread that risk, we want to be in multiple things. As an investor, you’re for sure going to find something interesting across our slate. If you don’t you can sell your share to someone else who does.
I like the fact that you guys are doing TV, you’re doing film, but you are also going into the VR market. Which I believe is the next big horizon. It almost popped up in the 90s, technology wasn’t there, but now you can do it on your phone, like we’re doing right here!
Yeah, it’s amazing. We’re big believers in VR. We’re entertainment geeks, but we’re also technology geeks. We’re really a mashup between Technology and Entertainment and that mashup can determine the future of storytelling. We think that VR plays a key role. We also believe that certain properties lend themselves better to being in all those roles. We may have a feature film that also deserves to have a small VR experience related to it. Either promotion or just another way to experience it. One of the VR projects that we are looking at we think has potential to be a long term lasting franchise, that we’d produce multiple episodes every month. They’re shorter, we’re not expecting people to sit for 2 hours to experience something. But it’s something I think can preserve a legacy for future generations to come. So that’s my tease on that.
That’s a good tease!
In the next few weeks we’ll be announcing what it is!
How long till one of these comes out?
We’re going to announce our first slate, but we’re still in fan funding mode right now. We’re raising the capital. That takes time. You’ve got to get the word out. We’ve done 2 cons now. We’ve Had great response. Great press, great publicity, great reaction from fans. We’re also having great reaction from the industry. Literally the heavyweights of the world calling us and saying “We like what you are doing, how can we get you involved in our projects?” Its quite satisfying. But we still have a long way to go as far as getting the fans, getting the funding together. Announcing the first project, and you know, production takes times. But I would say the first VR project, maybe early fall.
Just to wrap up, you had mentioned some heavy hitters in Hollywood. One is “Stoopid Buddy Stoodios?”
Yup they do Robot Chicken, they are one of our partners, love those guys!
And in the last few days, Alamo Drafthouse was announced?
Yes, Alamo Drafthouse, which is amazing. A few weeks ago we had the luck and the fortune to spend an hour and a half with Guillermo Del Toro at his bleakhouse. Which was amazing. He’s one of my heroes.
Did you get the tour?
We got the tour! He was giving us his incredibly wise guidance and feedback. He had said “You need distribution, you need a distribution partner. The hot hand right now is Alamo. They are also doing film and putting money into independent films.” We were already in discussions with Alamo Drafthouse. We totally had a mind-meld with Tim