Patience, Contacts Turn Idea Into Directors’ Site to Store Demo Reels

Three years ago David Katz was a film, commercial and music video director with an idea: He’d formulated a Web-based method for updating and delivering his “demo reel”--a visual resume of his work--to interested employers and agents. What does it take to turn a good idea into a viable business? Patience, time, money and contacts, Katz says. He was interviewed by freelance writer Karen E. Klein.

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In 1997, I found that I was spending up to $50 to edit and copy choice cuts of my latest directing work into a demo reel and have it delivered by a messenger service to the professionals in my industry who would be interested in hiring me for a project.

It got really costly and time-consuming, because I typically had to make a new demo reel any time I wasn’t working, then I had to make videotape copies and send it out to eight or 10 places. The next time I was between jobs, I needed to update the reel and send it out again. I was making a new demo reel about three times a year.

To save money, I bought a computer program and taught myself how to create a Web site that stored my director’s reel online, so that I could upload new information whenever I wanted, update the content, then stream it over the Internet to anyone who wanted to see a showcase of my work.

As streaming media technology advanced and began to be embraced by the creative industry more and more, I saw that the Web site I had created just for my own work could offer a solution to the same problem that many of my colleagues had. It wasn’t difficult to realize that this could become a profitable enterprise, but I wasn’t sure how to get a company started around the idea.

At first, I used my available time and money to build a test Web site, research the market and obtain domain names that I might want to use.

The cost related to starting a streaming media company on my own was starting to take its toll by 1999, however, so I went out to find an investor. I went to people in the industry who could both invest in and use the service, because I knew they were the ones who could see the potential in my business model.

I was on the set of a music video one day and talked to another director, Chris Blanch. He works as a first assistant director and realized the value of what I was doing very quickly. He became an investor and by January 2000 it became possible for me to focus 100% of my time and efforts on starting the company.

Still, at that time the company consisted of just the two of us and it was little more than an idea. One day I read an article that listed the 250 most-trusted financial advisors in the industry and I made a cold call to one of them, an executive at PricewaterhouseCoopers in Los Angeles.

I got through pretty quickly and I told the story about how I’m a young director with an idea and I gave him a good pitch about the potential value of this company.

I got hooked up with PWC’s Internet division. Over a two-month period I met with them three times and got help with formulating my business plan to shop to interested investors. They also urged me to look for a more diversified domain name and worked with me as advisors, encouraging me that I needed to get moving because if I didn’t have the company up and running soon, someone else was going to do it very quickly.

In my search for a better Internet domain name, I came across some information about the island of Tuvalu (which owned the rights to the .tv domain tag), and immediately contacted their government ministry.

They put me in contact with the DotTV company in Pasadena, and we bought the DemoReel.TV domain name in May for $1,000 per year. With the merger of the Internet and television on the horizon, we thought that DemoReel.TV was the best domain name to build on.

Now I had a business plan in hand and a great domain name. My father, Marty Katz, is also a director and former senior executive vice president of the Walt Disney Co. He introduced me to Dan Cannon, senior financial advisor of Interfirst Capital Corp., on the set of a film.

Dan Cannon heard my pitch, read my plan and told me that he was interested in securing the financing for my company in exchange for equity. We came to an agreement and the partnership of Cannon, Niksefat & Blair paid for incorporating my company, leasing an office on Main Street in Venice and hiring a professional business plan writer to draft a final business plan for us.

When I had 10 people involved, I started to build a board of directors to both help mold the company and impress possible investors and clients. I brought together five key people in the music, recording and advertising industries to join our board and issued them each 10,000 shares of pre-IPO stock options in the company.

At that point, I hired a creative director and designer to help brand the company and build us a Web site, in exchange for fees and equity. She hired a programmer, two designers, a producer and a copy editor, all of whom agreed to work on a deferred agreement. The next step was hiring a three-person sales team to work on commission selling our service to the industry.

We went to a trade show, Showbiz Expo, last spring, taking examples of the Web site and handing out 750 applications to qualified leads. Leveraging contacts, meeting people in the industry who have an understanding of the need for this product, and constantly shopping the company to interested investors has led us to our recent launch, on Sept. 15, with 19 people now involved in the company.

Over the last three years, I’ve gone from a guy with a good idea to a business owner about to get ready to shop for venture capital funding. Getting to this point took time, research and energy, and finding other people who understood my vision.

Right now, I feel that the future for my company is unlimited, but none of this would have happened if I’d stayed out there on my own.

Recent Learning Curve columns are available at https://www.latimes.com/curve.

If your business can provide a lesson to other entrepreneurs, contact Karen E. Klein at the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016 or at kklein6349@aol.com. Include your name, address and telephone number.

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AT A GLANCE

Company: DemoReel.TV

Owners: David Katz, Chris Blanch, CNB Inc., Corinne Nakamura, corporate board members

Nature of business: Streaming database of demo reels

Location: 1501 Main St., No. 205, Venice, CA 90291

Founded: 1997

E-mail: info@demoreel.tv

Web site: https://www.demoreel.tv

Employees: 12

Annual revenue: $0