January 9, 2024 • 1hr 48min

Michael Ovitz - Knowledge Is Power - [Invest Like the Best, EP.359]

Invest Like the Best with Patrick O'Shaughnessy

In this episode, Patrick O'Shaughnessy interviews Michael Ovitz, the legendary talent agent and co-founder of Creative Artists Agency (CAA). Ovitz discusses his career building CAA into Hollywood's most powerful talent agency, his transition into investing and advising tech companies, and the lessons he's learned about talent, creativity, and business throughout his career. Ovitz provides fascinating insights into the entertainment industry, the early days of Silicon Valley, and what it takes to spot and nurture world-class talent across different fields. He shares colorful stories about working with major stars and directors, innovative approaches that disrupted traditional industries, and his philosophies on building influential organizations.

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Key Takeaways

Scale and information are critical for success - Ovitz believes scale gives you information, and knowledge is power. At CAA, having multiple people communicating and sharing information gave them a huge advantage.
Momentum is key for building a business - Ovitz emphasizes the importance of constant momentum and action in growing CAA. They made 250+ calls per day to create unstoppable momentum.
Tell the truth to clients/talent - Unlike other agents who would lie to clients, Ovitz believed in always telling the truth, even if difficult. This built trust and stronger relationships.
Invest in people and talent - Ovitz focuses on investing in talented people with good ideas, rather than just the ideas themselves. The founder/talent is most important.
Work ethic and time commitment are essential - Building a successful business requires immense energy, drive and willingness to work extremely long hours for many years.
Creativity and art are powerful tools - Ovitz leveraged his knowledge of art to connect with creative clients and come up with innovative ideas like the Coca-Cola campaign.
Take risks and be audacious - Many of Ovitz's biggest successes came from taking bold, unconventional approaches that others thought were crazy at the time.

Introduction

In this episode, Patrick O'Shaughnessy interviews Michael Ovitz, the legendary talent agent and co-founder of Creative Artists Agency (CAA). Ovitz discusses his career building CAA into Hollywood's most powerful talent agency, his transition into investing and advising tech companies, and the lessons he's learned about talent, creativity, and business throughout his career.

Ovitz provides fascinating insights into the entertainment industry, the early days of Silicon Valley, and what it takes to spot and nurture world-class talent across different fields. He shares colorful stories about working with major stars and directors, innovative approaches that disrupted traditional industries, and his philosophies on building influential organizations.

Topics Discussed

The Importance of Scale and Information (17:21)

Ovitz emphasizes that scale was critical to CAA's success, as it allowed them to gather and leverage massive amounts of information:

Having multiple agents sharing information gave CAA a huge advantage over competitors
Scale provided "information to the hundredth power" compared to smaller agencies
"Scale gives you information, and knowledge is power." - Michael Ovitz
CAA agents would share all information at 8am meetings, then use that to get ahead of competitors whose meetings started later

Building Momentum Through Constant Action (33:28)

Ovitz describes how CAA created unstoppable momentum through relentless action and communication:

CAA agents made 250+ calls per day to create constant momentum
This level of activity compounded on itself to the "hundredth power"
Momentum was built by action, not inaction
Having 150+ agents all doing this level of outreach created an unstoppable force

Telling the Truth to Clients (1:16:37)

Unlike other agents who would lie to clients, Ovitz believed in always telling the truth:

Most agents would lie and tell clients their work was great even if it wasn't
Ovitz viewed himself as "the ultimate fan" who could give honest feedback
Telling the truth built trust, even if difficult in the moment
Shares story of telling major star the truth about poor performance, which led to 20 year relationship

Investing in People and Talent (45:35)

Ovitz discusses his approach to identifying and investing in talent:

Focuses on investing in talented people, even if their first idea fails
Looks for drive, emotion, deportment in quick meetings
Compares evaluating talent to developing an eye for great art
"I invest in people. If they've got a decent idea, and I feel the founder is talented and dedicated and believes in his or her idea, I will invest in them." - Michael Ovitz

Work Ethic and Time Commitment (35:29)

Ovitz emphasizes the extreme work ethic required to build a successful business:

Worked 7 days/nights a week for 20+ years building CAA
Says it takes 7-10 years minimum to build a great business
Need "burning sensation in your gut and fear of failing" to succeed
Cautions against starting a business if you want an easier life

Leveraging Art and Creativity (1:10:19)

Ovitz shares how his passion for art became a powerful business tool:

Used art knowledge to connect with creative clients like directors
Leveraged art books for creative inspiration on Coca-Cola campaign
Views movies/TV as another form of visual art
Art appreciation gave him unique insights in the entertainment world

Taking Risks and Being Audacious (1:33:19)

Many of Ovitz's biggest successes came from bold, unconventional approaches:

Pitched radical new approach to Coca-Cola commercials
Brought in movie directors and stars to do commercials, which was unheard of
Delivered 35 commercials for the price of 7 through creative methods
Wasn't afraid to compete head-to-head with established ad agency

Transitioning from Hollywood to Silicon Valley (52:48)

Ovitz discusses his move into the tech/startup world:

Mark Andreessen and others convinced him to focus on tech investing
Realized the similarities between talent agenting and startup investing
Leveraged his skills in spotting/nurturing talent in a new domain
Built relationships with key Silicon Valley figures like Andy Grove

Creating Mystique and Image (1:00:29)

Ovitz intentionally cultivated an air of mystery around CAA:

Refused to talk to press or allow photos
Created "cult-like mystique" through secrecy
Only let head legal counsel talk to reporters
Goal was to get people wondering "Who are those guys?"

Balancing Work and Family (1:25:09)

Ovitz shares how he tried to balance his intense work with family life:

Adjusted work hours around kids' schedules once he had children
Always had dinner with family at least 2 nights per week
Brought kids to social events rather than leave them at home
Attended kids' games, even if still working on phone

Acts of Kindness in Hollywood (1:41:52)

Ovitz recounts meaningful acts of kindness he experienced:

Cast/crew of Rain Man sincerely thanking him at the Oscars
David Letterman calling on Christmas Eve just to say thank you
Bill Murray showing up unexpectedly to support him during a difficult time

Conclusion

Michael Ovitz's career spans the heights of Hollywood, Silicon Valley, and beyond. His insights on spotting talent, building momentum, leveraging information, and taking creative risks apply across industries. While his extreme work ethic and aggressive tactics may not be for everyone, his emphasis on honesty, relationships, and investing in people offers wisdom for any business leader or investor. Ovitz's stories provide a fascinating glimpse into the behind-the-scenes dealings that shaped the entertainment and tech industries over the past several decades.