Legion M Founders: ‘It’s Amazing How Many Decisions’ Are Made by One or Two Executives
Legion M co-founders Paul Scanlan and Jeff Annison will be the first to tell you great art isn’t made by committee.
The studio behind cult hits like “Mandy,” “Colossal” and “Jay and Silent Bob Reboot” believes that its “fan-owned” approach to movie making can disrupt the way Hollywood thinks about franchises, leaning on its own loyal network of like-minded fans and investors to take risks and make smart, data-driven decisions about emerging filmmakers and original stories that the average film executive wouldn’t.
“We want to give our shareholders a direct voice in their company, for their benefit,” Annison told TheWrap for this week’s Office With a View. “But the other thing is our shareholders collectively are a lot smarter than Paul and I. It’s amazing how many decisions, particularly in Hollywood, come down to the gut feel of an executive or two. We just feel like there’s got to be a better way.”
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Legion M is what’s known as an equity crowdfunding company, which allows individuals to invest as shareholders in a private organization. The “M” in their logo, stylized to resemble the Roman numeral for 1 million, represents their goal of reaching 1 million investors and people in their wider network. And to date, Legion M has 150,000 people in its community as free members and approximately 35,000 investors who have each invested a minimum of $100 into the company. In all, they’ve raised $16 million, with that money going to every phase of the company’s financing, development, production, post-production, marketing, merchandising and even distribution of their various projects.
But their business model goes beyond simply canvasing with an IndieGogo page to raise funds on individual films. Annison says to think of it not like investing in “Snow White” but investing in the future of Disney as a company in the 1930s. Fans are investing as shareholders in the company at large, and they’re provided the opportunity through member surveys to give input on what filmmakers or talent they’d like to see the company work with.
Members can even participate at film festivals through a game and mobile app called “Legion M Film Scout” to recommend and predict the buzziest titles. Legion M has even used some of that data to get involved in films such as Bleecker Street’s “I’m Your Man” or a project from a filmmaker who’s now directing Legion M’s upcoming documentary about William Shatner.
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Legion M is making a big stand at this year’s Comic-Con and will host multiple panels, including a Hall H panel with Shatner as moderated by Kevin Smith, a panel with Christopher Lloyd on behalf of their film “Nandor Fodor and the Talking Mongoose,” another about a Sean Astin film titled “The Man in the White Van” and a panel with “Batman” producer Michael Uslan for a project called “Dark Knights and Daydreams.”
But ahead of Comic-Con, Scanlan and Annison spoke with TheWrap at length about how involved their fan base really gets in the decision making, how their mandates have evolved, how other studios can adapt their model and what they’ve learned from their past projects.
The below conversation has been edited for style, clarity and length.
What’s your approach when it comes to defining your brand and developing movies?
Paul Scanlan: Imagine like everyone at Comic-Con getting together to own their own entertainment company. They’re our community, and the whole idea with Legion M is to create something that’s almost like the inverse of the traditional Hollywood system, to create a company that’s owned by the fans from day one. Almost 100% of our financing comes from entertainment fans.
We have a built-in audience that’s not confined to sequels and reboots of existing franchises but is instead searching for new original IP to create the next franchises for the future.
We truly see them as helpful and insightful in the decisions that we’re making around what projects were investing in. What projects are they interested in? And even when we’re developing a project, interacting with them in a smart, data-driven way to help make better decisions about the project.
Where have you seen the most growth since your launch in 2016?
Scanlan: Each one of our projects is an opportunity for us to grow, and when we first started, the hardest phases were when we didn’t have the track record. We were just, “This was our plan, and this is what we what we aim to do,” and it was really just a promise to the investors.
We’ve got people that are fans of those past projects that will be attracted to Legion M. We call it our flywheel. That the bigger we get, we get access to bigger and better projects. And when our community is bigger, we make a bigger impact on those projects, which gives us better odds for success. We’re super proud of everything we’ve done to date, but we have some studio level films that we’re developing that would be a step up from what we what we’ve done in the past.
Jeff Annison: In the early days, we would have to invest and put money into a project just to get a seat at the table. And now, we get paid in some cases to come sit at the table. And that’s just solely by a function of the fact that now we’ve got 35,000 investors and 150,000 people in our community. We’ve demonstrated how we can use that to move the needle and to make a difference.
As we continue to grow, our negotiating power gets stronger and stronger, our deals get better and better, and it’s one of those flywheels, so as we can grow to 50,000 and 100,000 and when we get to the point where we’ve got a million people in our community, we believe we can become unstoppable.
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Do you have a mandate in terms of the type of films you’re looking for or what your audience expects?
Annison: It’s stuff that’s maybe off the beaten path, stuff that’s creative. “Elevated genre” is a term we use a lot.
The power of Legion M is this idea of a built-in community and a built-in audience. If you think about it, that’s what powers Hollywood. The reason why “Fast and Furious 17” is going to exist is because there’s a built-in audience that is going to come and see that movie no matter what. The reason that The Rock is the highest paid actor in the world is because whatever you put him in, there’s an audience that’s going to go out and see it. We believe that a built-in audience is literally one of the most valuable things in Hollywood and has been since the beginning.
What we’re attempting to do is to build a studio that has a built-in audience for everything that we do. That’s about allowing creators to step outside the box. It’s about allowing people to take risks, things that, well, are risky. Because that’s where the reward is. We want to create the next franchise as opposed to just servicing the last franchises.
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Do you expect that others in Hollywood could find similar success with this particular equity crowdfunding model?
Scanlan: Entertainment is such a unique industry and such an awesome opportunity to pull people together because it’s an industry that’s driven by passion and creativity and fandom. We’re fans ourselves, and that’s what makes it authentic and genuine. We want Legion M to be the poster child for how this can work, even with other companies doing similar things in the entertainment space, and we still feel like all boats will rise.
This is an innovation. Prior to 2016, you couldn’t do this. You’d have to take your company public, and it just wasn’t conceivable. It would take too long. By the time you were public, you aren’t really owned by fans, you’re owned by venture capital and private equity. And in our case, we’re truly owned by fans. Even our earliest investors or angel investors are fans.
What have you learned from making your prior films as you look ahead to the future?
Annison: A lot of people warned us about having a large community. When you’re raising money for a company, it’s the exact inverse of what most people want. Most people want to find one or maybe a couple big investors and have them be responsible for the funding, because it frees you up as the manager of the company.
What happens when you’ve got people that don’t agree? What happens when you’ve got people that are tugging in different directions? The idea of having a million investors on our cap table makes a lot of accounting people just apoplectic. They’re just like, “What are you talking about? That’s going to be complete insanity.”
What we’ve found over now six years of doing this is that I think the complete opposite is true. We have gotten so much out of our community. One of the biggest problems that we have as a company is we don’t have enough hands to accept all of the things that people want to give, whether it’s their time, their wisdom, their ideas or to volunteer… So I think that there is truly an art of harnessing the power of that community. And that’s what we spend a lot of our time thinking about.
I feel like if you had a crowd-owned company, and every single decision was a democracy, it would be a nightmare and you’d end up with Boaty McBoatface. But the power of that community is just immense. It allows us as an eight-person company to operate like a 40-person company, and I feel like we’re just scratching the surface of it.
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Scanlan: What’s been so interesting about it as we’ve grown is to see how open minded our community is. There was a period of time where we thought we might be confined to projects that are that are fan or cult-oriented. Like, we’re going to do horror and we’d be stuck in horror. It turns out, our community, they want horror, they love horror, but they don’t only want horror. They also want sci-fi. They want true crime.
What we’re finding is actually no, the most successful route is to have a lot of diversity across our portfolio and our slate, as long as our community is accepting and encouraging. You get the best of both worlds, because now we’re doing what our community wants and we’re going after probably the biggest opportunity that we can create with this.
