Wednesday, June 5, 2024

“MoviePass, MovieCrash,” an Interesting Exploration of the Entrepreneurial Roller Coaster

Stuck with a rainy Sunday afternoon this past weekend, I found myself landing on the just released HBO documentary “MoviePass, MovieCrash.” I didn’t really know much about the story in advance of my viewing, although I did recall a company that had launched a moviegoing subscription service about a decade ago. Maybe it’s my interest in the entrepreneurial experience, honed by a few decades of helping entrepreneurs build companies, but I found the movie quite interesting. Spoiler alert—if you want to watch the film (which I think it is worth your time), don’t read any further!

If you don’t know the story, MoviePass was launched by Stacy Spikes and Hamet Watt in 2011. Unfortunately, like a lot of Black entrepreneurs, their ability to build the business and access capital was somewhat stymied by their race. According to Spikes, “there are certain stereotypes that society has of what a successful entrepreneur looks like, and we didn’t look like that.” Watt added that they ultimately decided they needed a white male with grey hair to attract the capital necessary from a group of white males with grey hair—a sad reality in the entrepreneurial space, even more so a decade plus ago. So they added Mitch Lowe (as CEO) and Ted Farnsworth (CEO of HMNY) to the venture to help them attract the capital they would need to grow the business.

The movie portrays this move as leading to a reversal in power and culture and, ultimately, to ethics that lacked integrity and egregious spending habits resulting in huge financial losses. The Company went from losing about $200k per month while Stacy was CEO to losing greater than $30 million per month under Lowe. These mounting losses led to a declining value for the Company’s stock and, ultimately, a bankruptcy filing about a year after Lowe and Farnsworth gained control. Lowe and Farnsworth settled FTC accusations that they had knowingly deceived customers and in 2022 they were both indicted on charges of securities fraud and wire fraud (trial is still pending).

Like other founding entrepreneurs (e.g. Steve Jobs, Michael Dell, Larry Page, and Howard Schultz), Spikes purchased MoviePass out of bankruptcy and relaunched the business. In 2023, the Company reportedly was profitable for the first time ever. The current plans aren’t unlimited like the original plans (meaning they may actually be able to stay in business without just bleeding cash), but if you love going to the movies, you may want to think about signing up. Of course, you still need to pay separately for your popcorn!

No comments :

Post a Comment