Ben Lerer on AI film studios, Hollywood's resistance, and why the short-form drama boom hasn't crossed the Pacific

finance support, giving employees instant resolution for access requests and password resets. And without further ado, we'll bring in Ben Lair of Lair Hip Out Ventures. He's the managing partner there. And he's returning to the show. We had you on a couple weeks ago, I feel like, but great back. It's been months. When was it? End of last

say like six weeks. This is much more legit. It is great to have you here in person.

Real it's a real place, not AI.

How long are you in town for?

Uh for the week. Although I was supposed to be here 3 days ago, but

it's up front.

Did you get snowed in?

I got snowed in and flights actually cancelled.

Six flights canceled. Five flights canceled. Not I was fortunately not at the airport.

Maybe I don't travel that much, but I actually think I've never been in that situation.

That's the charter the charter gods the charter gods telling you. Uh

it's time to like Thank you. Please.

Okay. Gream sales. Let's Gulf Stream sales in over there. Yeah. Um but yeah.

Yeah. I was ran into somebody at coffee this morning uh and they told me it was up front.

It's up front. Everyone on the plane was going up front last night. It's it's it's a big event.

They do a great job. It really is a uh

it's, you know, it's one of the few times when you can go out and see everyone who works, not not quite everyone, but the majority of people that I would consider colleagues in one room for a day. It's it's actually really

is there is there crosspollination outside of technology with other industries? I know upfront in the past has brought Hollywood LA folks, but there's other conferences where it's more like uh Hill and Valley, right? So they bring the politicians out. What

a little bit of that. I mean, I think they do play the LA card pretty hard and and Upfront's brand as a fund is very sort of lacentric.

Um

the event they definitely like take advantage of the fact that there's that kind of talent out here. I don't think a lot of speakers are flying in other than people from the venture world.

Yeah. Yeah. But

the uh the tension between Hollywood and the people funding uh AI, I could see that being interesting.

Yeah. You know, we're we're actually in a company uh that's building a sort of AI first uh movie studio um called Staircase. And what they are doing is trying to use Hollywood talent. So, they're using like SAG talent, um, real actors, real voices, but then enhancing it with AI and they're getting some they're getting a little bit of pull out here in a good way. Whereas, I think if you're sort of if you're not willing to use Hollywood talent and pay Hollywood talent through the unions,

you run directly into a wall. And and by the way, like

this is this is not going to end well if Hollywood doesn't get with it. I mean, at some point it's just going to get steamrolled. there are going to be, you know, look at like A24 bringing in Scott Bell.

Yeah. I I just looked at it as when I living in in LA for the last eight years or so. I've met so many directors and producers that are that that were kind of frustrated with the lifestyle of, okay, I have this job that I love doing, but then multiple times a year, I got to fly to the Middle East and just be posted up in a foreign country away from my life. and there's some element of that that I think is kind of like core to the movie industry. It's like, you know, I think there's some probably will always be nostalgia around it, but we were talking uh probably a couple weeks ago at this point. If you're an actor and and you get the and and you're and you lean into AI, you can potentially get a lot of the benefit while kind of compressing your actual like time doing the work down by quite a quite a lot, right? because it's like, hey, come in. I I don't know exactly what staircases workflow look like looks like, but I can imagine we get to the point where there's like certain scenes that are done like leg, you know, legit the oldfashioned way, and then there's certain scenes where it's like, yeah, we're just going to use

for staircase, none are done the oldfashioned way. So everything is

Do they do like a capture process?

They do a capture process, but never always against a green screen. So, never against or not I don't know if you know if it's against a green screen or just against

against no no screen but with like tracking movements and whatever that would be. Um but they're not ever going and shooting out in the wild.

Um and the technology is changing so quickly that what they can create today relative to what they could do 6 months ago is magnitudinally different. And if you just continue on this curve at some point pretty soon it's going to be ridiculous to think that you're going to go to the Middle East.

Yeah. Matthew Matthew McConna has had some good leadership around this of basically just being like, "Hey, we have to embrace it. It's coming." is just too efficient. It's too productive. The idea of like, "Hey, we need to shoot. We have like a a uh three minutes total that's in this setting. We're going to bring a 100 people out there and spend weeks doing this thing that could be made, you know, in not uh one prompt, but made in a series of prompts and with a lot of editing. Well, and there's an insatiable appetite for just like more content. I mean, you guys were just talking about the, you know, the Netflix or Paramount setup and um like all these platforms just want more and more and more and better and better and better. It seems like there's no there's no limit to the amount of content that people want. And so, uh

yeah, the the the average user, how many times have you opened a streaming platform and just been like, I don't like any of this stuff. which is amazing because there's so much more content created today than ever before and still I I flew out here yesterday. I turned on my Netflix and I'm watching a show from like 11 years ago.

Yeah,

it's ridiculous.

You watch the movie last night, right?

John John was making a joke about the movie Borat, which I loved as a kid,

which is by the way, which you should still love.

Yeah, it's a fantastic movie. But I but I went on Amazon and I bought it cuz I was like, I should own this. It's it's a cult classic at this point. Uh, and it was not as funny as I remembered it when I was 12, which was painful to me. But, uh, still I'm curious on on, you know, talking generally maybe or or about Staircase. Uh, right now a a movie studio will allocate, let's say, $50 million to make a movie.

Yep.

Uh, how do you think that number changes over time? Because in my head, I think eventually it could be five people. you know, you have like writers, you have like whatever the new, you know, director's role probably stays somewhat similar and then you're pulling in other talent for audio and video and all these different things. Um, but how how low and and the reason I don't think that's a bad thing is there's so much demand for content that theoretically that $50 million budget would still exist or maybe even increase, but it would just be spread across. This is like this is the question not for only Hollywood but for everything which is like will you know will AI make bigger or small

when you have when you have deflation does that create

yeah I mean it applies to every industry I think probably with Hollywood you'll see uh frontline talent continue to demand huge premiums so maybe that $50 million goes to 30 but Brad Pitt still makes 25 of it

um and the rest of it you can do much less I don't know if it's fewer people or or the same number of people being much more efficient and working in half the like maybe you're doing it more quickly. Maybe you're doing multiple projects at on I don't really question around the talent side that I'm interested in is it's one thing for Brad Pitt to be like cool you're going to make this movie with mostly AI but I'm still getting my same rate otherwise I'm not going to be a part of this cuz some other movie studio down the road is happy to pay me what I think I'm worth and I don't care if it's going to take me way less time. The question is for new talent, the people in LA that are working as a as a waiter and just like, you know, constantly uh trying to get into the game, what kind of leverage do they still develop, can they still develop um real star power over their career and get pricing power or uh or does that or or does like the the amount of people that can be a star fragment even more? like does there become more of like a because I don't know if how much of a a middle class even exists anymore in in

Hollywood like specifically on the on the actor side.

Sure. Yeah.

Well, I think I I have a few thoughts on this. One might be that probably there is more of an impetus for talent to be able to not only get famous through the channels that Hollywood provides, but to use social media, to use

I think that's like build your own

distribution um to be able to demand sort of like that premium because people think that you can move the market, you can drive sales or you can drive views through your own stardom.

People still care. doesn't matter what the movie's about or who the actor is. They care about who that person is outside in the real world, too. And that influences their experience.

I think that that's going to be a big part of this for for that. But also, Hollywood is going to move more slowly than just about any other industry. Part of it is the role of the unions and how embedded that is and how like that kind of content gets made different than certainly most other industries that don't have that kind of

bureaucracy or lock in. And also, you know, it's a industry that's run by mogul. It's run by old people

uh who are like generally slower moving. It'll be interesting to see

tycoons. How do you think about uh vertical short form? I I I saw a crazy v video of someone doing a movie screening like in a theater but for vertical video that they made.

That sounds terrible.

Which is insane. And it was like it was really crazy because it was like they don't really make projector screens that are super vertical. So you're in this like massive room, but normally you're in a really wide theater and then the the screen matches the the the seats. Yeah. But it was like just off to the side this like vertical screen kind of like a TV we have over there. Um but uh but it does seem like there's a quicker pace of adoption for those like polish what what was that Chinese app that has uh vertical short form but it's reduced. Yeah. The short

real short or something.

Real real short. Real short. And there's And then there's AI versions of that. And that feels like uh

we get a pitch for that category once a week.

You do?

For the last year. Okay.

I mean, it is

Oh, I get it once a day.

Okay. Well, so you have better deal.

I get it once an hour.

No, but it is it is wild how uh And by the way, and the number of pitches, it's funny you guys want to talk about media with me. The number of pitches I still get from people like, "Ben, you're like a media guy." I'm like, "Please leave me alone." Like, I'm not a media guy. like like just everyone just like I'm sorry I did this but there is this moment where uh

this is also like live shopping was another category that you saw massive in China

and short form drama enormous industry in China and everyone's like cool it's going to like be here in the US tomorrow and like 10 years later it's still not really here

I will say that in with one of the companies I they like really forced me to watch some content and I got hooked on a story about like a woman who fell in love with a man in an elevator and I watched

for like two hours in one minute snippets like I see the how you can get addicted to it but uh I I I fortunately broke that

the question yeah the question is how uh how do you actually invest against this trend I think I think

I think yeah I think I think yeah I think because all the content the content wants to be free it wants to flow to the existing platforms I can see YouTube creating like short series like basically like you can subscribe to a series being like

yeah basically like hey you're you're not even just subscribe like cuz the follow button and subscribe button barely works anymore on any platform

but they might be encouraged to be like hey this is a series of 30

videos it's going to be coming out one a day you can subscribe and we'll make sure that it comes out

look I like I think this is an interesting space the difference between an interesting space and a venture scale space is the Grand Canyon. I mean, it is so massive figuring out, you know,

venture requires

the power law, requires these outside outsized returns, and it just doesn't feel like, sure, you have, you know, one or two companies in China that are massive, but it doesn't feel like that's a category that has a sort of theoretically limitless TAM. And one of the mistakes that I've made in my career and one of the sort of learnings is

TAM really does matter. And yes, there's, you know, you have to sort of lily pad your way there. It's not like every market has to be enormous day one, but most of media has turned out to not be venture scale. And I think maybe all of media is not venture scale. Um, and with AI, uh,

venture scale if you can build a platform that can compete with the giants, but you need you need a$5 billion.

But how do you like what is, right? I mean this is one of these things if someone by the way like

Jeffrey Kenberg tried to do thisish with Quibby and there are a few people more formidable in the entire world than Jeffrey and

even with hundreds of millions of dollars like that's not that wasn't the answer. Now by the way today would be a more interesting time to launch Quibby because of what's changed in technology and by the way I've seen the like 4.0 the competitive dynamics with every other app that also has short form videos that the creators are incentivized to share the same content across all of them. Those competitive dynamics are still in place. Look, just like working in an industry that face that, you know, Meta and Amazon and Apple and Netflix that like more than half of the Mag 7 is interested in is a really really tough place to go and build. Every Mag 7 company except Nvidia owns a basically a social network. If you include iMessage, Twitch, LinkedIn, like you actually wind up with a media platform at all of them,

right? And like that is and by the way, this is not your traditional, you know, large incumbents who are asleep at the wheel. These are the scariest companies that have ever been built in the history of humanity who, you know, like no thanks. Uh, how did you process the Satrini virality, the viral article, sold intelligence crisis?

I like bought a farm in the woods and no raw material.

No, look, look, we are we are at a moment right now. I mean, that's that's this week's flavor. Last week, I think there was something big is happening.

Yes. And then there was the counter to it. And obviously, there's a bunch of counterarguments to to this one. Um, I think it's indicative of what a scary time this is and just how um overwhelmed everybody I mean like I wake up in the middle of the night screaming. I don't know about you guys. Just in fear. No, I'm kidding. No, but like this is wild times. I mean this is I look at that article and I think that there is you can you can sort of pull the thread and go yeah I like oh my god you are going to see a bunch of these companies who have to cut costs go lean in become their own worst enemy. I think what this sort of doesn't take into account is that there's going to be a bunch of other interesting amazing new companies that get built that employ lots of people that have a very different growth curve and that it's not just like everything is a race to the bottom. there is going to be all this amazing innovation that happens counter to that.

Also, a good a good counterpoint. Citadel put out a report uh that showed uh software engineer job openings are up 11% year-over-year. And so, it's interesting that we're getting this like where AI is working the best today and coding is causing an uplift in jobs and yet

people are kind of extrapolating and saying every other job is is cooked even though that's not what we're seeing. Yeah.

In the data.

Yeah, it's interesting. Uh what what uh are you revisiting marketplaces? There was a big debate over Door Dash being AI resistant or

I haven't gotten any Door Dash pitches.

Not this week, but I have I've gotten some Door Dash.

I'm just wondering how you're thinking about marketplaces because it feels like there was a boom. The most of the great marketplaces got built. All the all the obvious ones that didn't have massive disintermediation problems. So, uh, the dog walker, the house cleaner, that stuff that gets disintermediated very quickly, but the Door Dasher, the Uber, that is something where you're not just going to meet a great driver and be like, now you're my personal driver forever, right? But you will do that if you're like, I went to this app and I found a house cleaner and they come every week and so I just said, hey, let's stop using the app and cut out the 15%. Uh, take rate. But, uh, what are you what are you thinking about uh, marketplaces on the earlier side? Are there is there anything interesting that you're seeing?

Uh so I I think that there is when you're looking at marketplaces, we're we're trying to find market places where sort of everybody wins.

Sure.

Um and uh there's a company in our portfolio that's very early um building in the uh aftermarket automotive space.

Oh.

Um and this is a category that has

you know millions and millions and millions of SKs. Um there is a question as to does this, you know, spark plug work for my 1984 Mazda Miata or does that one work? Um most of that industry never came online at all. And so you still have to like file, you know, like fax in an order or a requisition. You do have you have some large

sort of endemic players like AutoZone that are actually like quite big businesses, but that still only have a fraction of the inventory. they don't actually know if that if that piece works for this car when you've also done these three other changes and uh that's the kind of industry very messy very hard but with AI you can go and send agents to go do some of this buying so sort of mimic the idea that an industry is online that may never come online sure

um I think that that's

I think there are spaces that by the way and that's also a very large very sleepy TAM Like that is not a that's not a sort of side pocket hobby. That's one of the biggest hobbies in America. Yeah,

that's right. Billion, you know, tens and tens and tens of billions of dollars just in the US just in

after market just to hydrate from like some random skew or some random serial number into like what is this product actually? And there's probably a manual out there somewhere that has it might be on the internet,

might be in a Reddit forum somewhere, but like and then there's the question of and by the way, how do I get this installed and can I do it myself? And you know, is there an AI

uh mechanic

that's built into the marketplace so it can teach you to do the work while you buy?

You know, will this company accomplish it? I don't know. But I love the ambition. And I think when we're looking for marketplaces, we want to see ones that are, you know, I don't want to see an incremental, you know, Door Dash competitor. I want to see one in an industry that really has uh that has not yet been disrupted for reasons that were frankly impossible before the automation of AI.

Yeah. Jordan, are you thinking what I'm thinking?

Me, you this weekend, couple of cold ones. Mansori body kits on the cars.

Let's do it secondhand. We get them. We figure out

John's dream forever.

We can do some LED under lighting. You got a new car. You don't have

I'll stay for the weekend.

You don't have LED lighting underneath that yet.

NS. Have you considered putting NOS in your car? This is a good option.

The uh uh Very good. We got to get uh that'll be your Christmas gift this year.

Body, you want it. It's it's got to happen. Uh the labor marketplaces that uh have exploded are the are the marors, the micro ones

uh that are positioned as

marketplaces and yet feel more like enterprise product like almost like staffing y

in some way. Uh the question is how how durable will those businesses be and

and uh I think a lot of people were surprised that the the uh the Fiverrs and the Upworks didn't kind of react and

capitalize on that as as quickly as they maybe could. But it just goes to show how quickly the the space is moving.

Yeah, I think there are perspectives. there's, you know, multiple camps there, but there are there are camps of folks, you know, smart folks who think that that whole category is like a race to the bottom and like probably a zero. And then there's other, you know, maybe some of those folks like Summer Cory passed or whatever and have, you know, like are rooting against it. But but there's there's definitely a vibe that that is uh you know, maybe if you're on the inside in some of those businesses like now would be a good time to take some secondary. Sure. Um I think obviously uh but you've seen growth that is astounding. Um and you know that's the funny thing about the market right now that that's a category but there's so many categories um like a bunch of these companies that are doing inference like you've seen this like unbelievable growth and like there there's like insatiable appetite for what they have today or you know you know different kinds of training data or whatever. The question is in two years and three years and five years and 10 years like which of these are enduring spaces and which of these are ripping right now because they're selling to five there there's only five buyers or four buyers long term and is that

is that a good business like to be in a business where you ultimately have four companies that are your like theoretical scaled customers. Yeah. I mean,

and right now there's such insane urgency that there's no

Well, and money is absolutely valueless to these company. I mean, it just it pours it like as fast as you open the door, it like bursts its way into your face.

Yeah. I was joking about if you started a janitorial company that just served the AI labs, your revenue would be growing 10x cuz their headcount in in square footage is growing 10x. And you'd be like, "Yeah, my business is 10x." And you know what? I have pricing power, too. My margins are incredible. It's like cuz they never asked.

Let's do that this weekend. That's a good bit. Yeah. They were like, "Hey, janitorial business is wildly different."

There is. I do think that right now is uh

you know and look this is coming after a few years of really disappointing returns for venture as a category and suddenly you see things ripping and growing and like

you want to believe you want like people you know like you and and by the way you have massive massive funds now that need to deploy huge amounts of money and they're looking for things that look like the escape velocity

is there and so they become self-fulfilling prophecies and more money pours in And like, you know, I don't think that all these categories are going to be zeros, but I think probably there's going to be there's a lot of winners in some of these categories. I think there'll be fewer winners and maybe the winners won't be winning at the multiples that they look like they are today.

And then

or they'll or they'll or they'll evolve dramatically

or Yeah. And by the way, some of them will and some of them won't, right? I mean, like it's like keeping up with this market is the hardest. It's the hardest in my career to like companies that are let's even look at like the open AI anthropic thing and granted this is just like you know maybe that's this is like the caricature of the space but it feels like the tide turned so hard even in the last three months where it's like anthropics world now and OpenAI is living in it and three months ago you would have said the exact opposite. Yeah.

Um and may maybe that's just like I'm interested if if you feel that energy. hard to it's it's um yeah it certainly feels like at this moment anthropic is the main character right dominating uh dominating the headlines onx uh and and a lot of of legacy media as well but uh I would say Google Google trends tell you know a slightly different story

slightly different story right we we are in a bubble and uh people are so invested in the race that they want. It's like if you watch an F1 race and Vers Stappen wins every time and he starts in pole

at some point you're like I'm sick of this.

Yeah. You just want to see you want to see some action and you want to see some passes and you want some some drama. So I think people are are invested in the drama. But um yeah and and it's also you're you're watching the the two strategies play out like a very multi-product approach consumer enterprise hardware uh from from OpenAI versus like an a very focused strategy and I think it's way too early to to kind of understand what will in hindsight look like the best call totally

but uh by Meta is gonna come out with their model whenever and then what does that look like And

uh yeah, it's it's interesting times.

Very interesting. Well, thank you so much for coming down to the TBP Ultradome.

Give us a report on uh on Upfront.

Okay. Happily.

Is it tomorrow?

It's today.

It's Oh, you

I abandoned my abandoned my later and we'll we'll give the update on the show. I want to understand I have no sense for how much venture capital like what I think of LA is getting. I have a good sense for like Hawthorne, Elsagundo, Long Beach, Gardina, all these areas feels like uh are raising as much money as ever, but the broader LA it feels like a drought.

I would say it's a drought. We definitely are not spending time out here hunting companies

um really at all.

U and That's the advice I've given to any founder that's not in hard tech is like do not

don't even start don't even yeah don't even start your raise here it's going to just send like a really negative signal that they're not

super serious.

Yeah.

Well, thank you so much on the show. This is great.

Great to see you.

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Huge pickup, huge opportunity. Uh, I'm so excited to see what what uh Riley is one of uh the the greatest minds

high agency

individuals on the internet today and uh I'm so

he's the best.

Uh

yeah, I I think Riley Wells is like a perfect example of like jobs kind of getting more fake. Like what is like like this is like not a This is like not a dis at all. Says says the guy who

No, exactly. I'm also a like very fake shop. Like Riley Walt, he like just goes viral on Twitter. He's not even like making like YouTube videos. It's like

he's been he's been he's been a data analyst for the last few years. He's had he's had

Yeah, but he's not doing data analysis at OpenAI. He's not doing the same kind of work he was doing before.

Yeah, very he's he's perfectly demonstrating.

How do you describe

member of technical staff? Next question.

No. So, so he is perfectly demonstrating the power of the tools, which is if you have ideas, you can build them really, really, really fast

and create super, in his case, super entertaining products, but there's a Riley walls out there of SAS and they're probably just hunkered down, not even really trying.

And I mean, so so so I I agree with you, very very hilarious framing. Uh I do think that we're moving into a world where more and more companies will have a Riley walls internally a uh you know someone who can move very quickly do experiments create value and create little projects and like the leverage that you get from an individual is going up and this is an example of that. So congratulations to Riley Walls