Is AI Really Replacing Filmmakers?

Jeffrey Madoff: This is Jeffrey Madoff, and welcome to our podcast called Anything And Everything with my partner, Dan Sullivan.
 
Dan Sullivan: We can't predict at all what Jeff and I are going to talk about here. He dropped an idea on me. I had no preparation for it, and I was instantly attached to the idea.
 
Jeffrey Madoff: And that idea, thanks Dan, is doing a dive into Sora. And Sora, the promise and the shutdown. Sora was OpenAI's text-to-video generation model. And you typed a prompt and it produced a video. And it was extraordinary in terms of what it looked like, the cinematic quality and all of that. By the way, they never showed you under the hood how hard it was to achieve that little snippet that they put up on the screen, but that's another story. And when OpenAI first demonstrated it in early 2024, the reaction was something close to shock. You know, film producer Tyler Perry was so stunned by its capabilities that he was willing to put construction of an $800 million studio expansion on hold. And IndieWire filmmakers reported that construction was on hold because they were so afraid of what was going to happen that a single prompt could start making a movie. So nobody knew what was going to happen.
 
Dan, you and I have that phrase, which I love, which is guesses and bets. And this is a big example of guesses and bets. And that filmmakers reported they could give direction, direct specific camera movements, vivid background detail, complex scenes in which there were leaps ahead of anything that was previously available, and the creative industries took it seriously and seriously worried about it. You know, SAG did, after the Actors Union did, and they were worried about it from day one. At the end of 2025, the U.S. and Canada integrated social media aspects into the app, and it rose to the top of the iPhone app store. So this is giving you some idea of just how amazing the tidal wave was initially. CNN talked about the ambition being clear. OpenAI wants to be a player, not just in the enterprise of AI, but in consumer creative tools, filmmaking creative tools, and social media. They even aped some of the successes and copied some of the successes that TikTok had.
 
And one other thing is that the marquee partnership that seemed to signal Sora's mainstream arrival in December of 2025 is that Disney linked a three-year licensing agreement under which Sora would generate user-prompted videos from more than 200 masked, animated, and creature characters from Disney, Marvel, Pixar, and Star Wars, with Disney planning to take a $1 billion equity stake in open AI. So it was the kind of deal that suggested that Hollywood was choosing to work with AI rather than fight it. So what we have here is something that's got all the hallmarks that we've talked about in terms of new products, entrepreneurship, and so on, which is disruption. And this was disrupting an entire industry.
 
A few other quick facts, and then I want us to jump into just what's going on here. Because what went wrong? So many things converge so quickly that by January 2026, new installs, which were going through, there's a waiting list to get this software, had decreased 45 percent, dropping to 1.2 million users, and operating costs were reported to reach up to 15 million a month, which actually had exceeded that. And the market was getting really crowded. ByteDance, that owns TikTok, released SeedDance, which was their model equally powerful and fewer regulations on it. And Google's deep mind, Veo 3, was actively courting filmmakers. So there was all the makings of a disaster. And those makings were significant controversy, legal headaches, unions uniting against it, celebrity estates threatening legal action over deepfake videos, copyright holders from Japan's animation industry demanding OpenAI to stop using their content, and watermark removal tools for the videos were created so everybody could just con everybody. Nobody knew who was originating anything. And then just last week, March 24th, OpenAI announced it was discontinuing Sora.
 
So I just wanted to give you a quick lifespan of this from the extraordinary hype and all the disruption it caused to where it is now, which is shut down. And by the way, Disney promptly ended its partnership and pulled the planned billion-dollar investment. So it was astounding. And look at the lineup with Marvel and Pixar and Disney and all this stuff. It looked like it couldn't fail. And you know what? It failed. So, you know, I think that this is a compressed version of what we're seeing across the AI industry, a dazzling demonstration, a genuine disruption of incumbent industries, a rush to gain users, and then the cold mathematics of how much it actually costs computer-wise, the data mining, all this stuff.
 
You know, how are we going to build something out of this at these costs and how long it'll take the runway to actually get there? None of this is going away, by the way. It's just who's going to be doing it. It looked like it was OpenAI was going to be the dominant character and they're not anymore. I don't know what they're going to announce next. I'll announce something. I mean, was it Microsoft recently or was it a new version of Google Glasses that made a brief noise and that's gone away again? Which was that? Do you remember?
 
Dan Sullivan: Well, and then Apple had its new glasses, that it's augmented AI, which you have what you're looking at, but it's got text, it's got sound, which I think actually, not to depart from the main theme here, but my sense is that there's a lot of the trades like auto mechanics, for example. Volkswagen has a complete AI program for auto mechanics dealing with Volkswagen motors, and they can bring somebody who has no skill with motors in on Monday, and they show them how to take an engine apart and put it back together. And by Thursday, so Monday they start, by Thursday they can do it without any coaching and without any help. My belief is that this is where AI is really going to affect the economy, if you can bring people on board in trades so that they can do things correctly, like maintenance, like repair, like replacement. I think that's a big deal.
 
Jeffrey Madoff: Well it is, and you know a very simple version of that is my wife went online because we're having a problem with our washer and she looked it up. This is a real world problem. And as a result, and you can find extraordinary things on YouTube. It's not AI; it's a knowledgeable person taking you through, if this happens, do this. Then there's a hex bolt here and you can … anyhow, she fixed it. She fixed it. And there are all kinds of ways, that kind of coaching you're talking about, which has been going on for a long time, really. These little how-to videos, which are very successful on YouTube. So what makes it even more interesting to me in light of our conversations is it's a human-to-human thing. You know, it's an expert who's showing you how to fix something and do something. What you're talking about is, you know, a more grander scale training, which they're doing with doctors on surgery and remote surgery things and stuff like that, which I think is fascinating. But you're right, the trades, I mean, already, if you become a plumber, an electrician, you can make a really good living.
 
Dan Sullivan: Oh yeah.
 
Jeffrey Madoff: And it would be interesting enhancing that with what you're talking about, what that could do for the economy. Because you made a point a few weeks ago when we were talking, as so many predict, if this wipes out entry-level jobs, who's gonna buy stuff? You know?
 
Dan Sullivan: Yeah. I tell my entrepreneurs in The Strategic Coach Program, and they've gotten in the habit, and I think it comes from Mark Zuckerberg, was move quickly and break things. And I said, you know, I don't think that's a good motivation. I said, why don't you have an attitude that you're going to create something that pulls a lot of things together so that it transforms in a higher level? There's more value creation. And I said, the reason is that I believe in Moore's law, which is the law that computers are going to get faster and faster and faster, which AI really is. It's really fast computers operating at speeds that seem magical. But I also believe in Newton's third law: for every action there's an opposite and equal reaction, so that if you have a goal of disrupting something, and destroying something that already exists, it's going to react by trying to destroy you. Karma. You can call it karma. You know, you're building up karma. And if there's a Mark Zuckerberg of the AI world, I mean, Mark Zuckerberg is in the AI world. But if there's a character, it's Sam Altman at OpenAI. He doesn't even like human beings. I get the feeling his goal is to destroy human beings. You know, we got to merge with the robots as fast as we possibly can.
 
Jeffrey Madoff: Yeah. Something that is not appealing.
 
Dan Sullivan: I don't want to be a robot. I don't even want to know a robot. I don't want a robot around.
 
Jeffrey Madoff: You know, I think that Sora lasted less than a year and had a huge financial burn and everything. And again, they're still going to use that technology somehow, some way, whether they're licensing something to somebody else and part of the technology they discovered or something. But to me, one of the things that it demonstrated was that awe is not a business plan. To get people to say, wow, that's incredible. That's not a business plan. And that's so far what that was in terms of making a film. I don't know if you happened to see, there was a clip circulating and it was very realistic. And it looked like Tom Cruise and Brad Pitt were fighting on the roof of a building in an urban setting. And it was very realistic. Their voices, it sounded like, it wasn't their voices, but their voices, they were AI generated voices. And it looked extraordinary.
 
Now, looking extraordinary was this few-second clip. And it was fascinating, the reaction, because Sora had already started. and they hadn't decided to shut down yet at that point. And so you saw this and I think a lot of people started to understand what was frightening so many actors. And there were many, many articles that came out after that video was posted just a few weeks ago. This is the end of Hollywood would be some of the headlines on it, not thinking about anything other than a gee whiz effect of this video. When you look at the credits at the end of a movie that's heavy with special effects, there's like hundreds of names. And the complication and execution, no matter how you do it, it's a complicated path to go. But when you go from such an amazing launch to shutting down within a year and all of the press that it generated, what do you think in terms of hype can an entrepreneur learn from something like that, if anything?
 
Dan Sullivan: The big thing is that you're paying attention to the competition. You're not paying attention to the customer. In other words, we're going to be more gee whiz than Anthropic is, or we're going to be—I'm looking at it from OpenAI. OpenAI is a loser to begin with because they have the wrong organizational structure. They started off as a non-profit. They positioned themselves as a non-profit. And my feeling is that if you're in a world where you're competing with profit organizations, but you're a non-profit, you're at a disadvantage, and they're trying now to turn a non-profit into a profit-making company, and it's endless. Your stakeholders who will just sue you to stop what you're trying to do is immense, because the people who get involved in non-profits have a totally different motivation about the creative output, what the impact is on the public.
 
And I mean, I think that Elon Musk was the number one funder of OpenAI when it started. And he pulled out very early, he said, because if you don't have profit as your central theme, I mean, if you're saying we're spending $15 million a month to do this, you're talking like the government, because the government always talks about how much money they're spending on a program with no attention to, does this do any good? You're in a gray zone as a company. I just think the problem is that they're in a gray zone as a company. There's nothing clear cut about them. But he sees himself as the original gangster, you know, who started this because of ChatGPT. We're miles down the road. All the horses are out of the barn, you know. They're not even in the local area. They're in the next county, all the horses. I mean, everybody's getting involved with this. There are 13-year-olds who are doing interesting stuff right now.
 
Jeffrey Madoff: Friends of mine in venture capital were saying in various discussions over the last couple of years, so what is the main enticement for an investor? And it was .ai after the name. You could get a meeting any place. That was the hottest thing. That's where all this money was going. I think this is just the beginning of what appear to be these massive ideas that are going to crash. You know, when Facebook gained traction and, you know, at first it was MySpace and Facebook and MySpace went away. And, you know, there's antecedents to this, except that the technology wasn't there and the consumer audience wasn't there to make such a huge splash at that time. But there was an article—I'll send it to you—an article that I wrote about social media, which I always referred to as corporate media. It's not social. It's corporate. If it appears that you're getting something for free, then you're the one being sold. You're the product, which goes all the way back to radio.
 
Dan Sullivan: Oh yeah, yeah. Your attention is being packaged and marketed. Exactly, exactly.
 
Jeffrey Madoff: That's right. And all these things that were going to be revolutionizing how we behave, I think the failures are far greater than the successes on it. And of course, those early successes and early to the market, like Facebook, like, you know, Musk, like Microsoft, all of them, I think it's much harder to get that entry at this point because the costs are so high. You know, it's like when there were all these independent film companies and they were churning out product, you know, back in the early part of the 20th century, and there were so many, as consolidation happened because the cost of entry was just too great. And now, you know, there's these behemoths in film distribution, and the whole business has changed. Streaming has changed. Theaters, whether they'll survive or not, which I hope they do, because I think it's, ultimately, I think it's a communal experience. That's the campfire, is the movie screen. But it was also interesting that the talents involved the actors, the cinematographers, all of those who were protesting against basically having their images appropriated, their voices appropriated, and all these things, when it was literally the suits against the creatives, I think that the creative people realized the weapon they had. And, because I can never get, you can't make movies without actors.
 
Dan Sullivan: Well, you can't make them without a great story.
 
Jeffrey Madoff: That's right, that's right.
 
Dan Sullivan: And the actors are the instruments of having a great story.
 
Jeffrey Madoff: That's right.
 
Dan Sullivan: Yeah, we just went to see last night, here I'm telling you about a movie that I saw, maybe you've seen it already, but we went to see Project Hail Mary.
 
Jeffrey Madoff: I want to see that. I haven't seen it yet.
 
Dan Sullivan: It was terrific. You know, if you've read enough science fiction, it was a very simple story. The antecedent for it goes back 30 or 40 years, I mean. But it was a well-put-together film. One character, really, Ryan Gosling, is the main actor. And the film is largely about him and an alien life form that he makes friends with to solve a major problem because there's some sort of organism that's been introduced into the universe that is eating stars. It was reducing the intensity. It was using up the energy of the sun. In 30 years, the sun is only going to be able to keep the temperature at 10 degrees cooler on the planet, and there's not going to be any agriculture, and we're going to die. And everybody's getting together, the Chinese, the Americans, the Russians, everybody's getting together. We've got to solve this problem, or half the human race is going to be gone in 30 years. Great story, and it's well done, and it's got some of the most amazing CGI I've ever seen, but the actor carries the whole story, and he does a great job.
 
Jeffrey Madoff: Well, and Gosling, I think, is a wonderful actor, and he's very simpatico.
 
Dan Sullivan: Oh, yeah. Yeah, he's great. I've just seen Barbie, and he's just an everyday guy that something weird is happening to. He said, I don't know what's happening here. You know, what's going on? We don't know what's going on, and he doesn't know it. So there's immediately, there's a connection to the actor. And he does it beautifully. I mean, he just does it beautifully.
 
Jeffrey Madoff: Yeah, and that's also an example of a movie that really begs to be seen in a theater. Because the images are so striking, and the sounds and all that. A few of my friends have seen it. I haven't seen it yet, but they said what you said, that it's a very arresting story.
 
Dan Sullivan: Oh yeah, it's very engrossing. I only cry in movies, and there was a tear-jerking scene near the end. I don't cry in real life, but I cry in movies, you know. And Babs looks over and she says, this got you. I say, yeah, that was a transformative moment. It's usually some sort of transformative moment that kind of gets me. I like transformation. It's what I sell in the marketplace. So I'm very favorable towards transformation.
 
Jeffrey Madoff: Well, what about the werewolves, you know, when he would transform on the full moon?
 
Dan Sullivan: Yeah, yeah. Well, they don't all make you cry, but yeah. But it was well done. Scientifically and technically, it's beyond belief, but it's the story that matters. I'm not checking out the science of it. That's not why I go to the movie. You know, it's like Sam Goldwyn. He was accused and criticized in the 1930s and ‘40s that his movies did not have a message. And he said, if I want to send a message, I'll go to Western Union. He says, I'm not in the message business. I'm in the entertainment business. And these people are forgetting that. If you have an agenda that you're going to disrupt the industry, you're not being entertaining.
 
Jeffrey Madoff: Right. Yeah, if that's your goal. Well, it's also the people that are marketing various kinds of AI. And their main selling point is that, you know, they were able to eliminate 80 percent of their staff. I don't know, that's not appealing to me. What's appealing is what are you actually making or doing and why should I want it? And yeah, of course you want to have smart economies in your business and efficiencies in your business and not waste money. But if what you're talking about is the product you're making, that it's just going to eliminate jobs. how am I supposed to filter that, you know? I don't know, it's not, that's not the thing to me. The thing to me is, what are you creating? How will that make my life better? And I guess you could argue that, well, if it costs you less, you can make more money, that could make your life better. But somehow that's not compelling to me.
 
Dan Sullivan: Yeah, but the central plot here is the quarterly earnings of corporations.
 
Jeffrey Madoff: Well, that's right. That's right.
 
Dan Sullivan: That's why your notion that social media is corporate media because it's all based on quarterly earnings, you know, it's the Chinese goes to the nation state level, you know, some countries trying to do something and it becomes a different, but it's not entertaining.
 
Jeffrey Madoff: Yeah. So I think of what was something else that was positioned that was going to be a major, major change in mobility that was going to have a huge impact. And you remember the segue?
 
Dan Sullivan: Oh, yes.
 
Dan Sullivan: Yeah, but nobody wants to look like a dork. Or necessarily just ride around on those two wheels.
 
Jeffrey Madoff: But do you remember the hype before that? I mean, they were on the Johnny Carson show, the developer of all this. It was the thing that was going to change how we live and get around.
 
Dan Sullivan: It's going to fundamentally change the transportation world. Yeah, about not right when Segway came out, but I was in San Diego, and all of a sudden there's a police unit, maybe five police officers, and they've got helmets on, they're on their segways, and they've got shorts, and they all look like dorks. And I said, that must be, that must be a penalty. I mean, they're on penalty squad. You know what we're going to do? You're going to wear shorts, you're going to have a helmet on, and you're going to look like a dork, and we're going to send you out there. And you have to do that for two weeks, because you didn't fill in proper forms two weeks ago, and we just want to penalize you until you realize, fill the damn forms in right. They looked like idiots, and they looked bemused. You know, the officers look kind of, oh, don't look at us, don't look at us. But you know where the segway actually really paid off? In really big factories. You could move workers from one side of a factory to another really fast with the segways.
 
Jeffrey Madoff: Did they become a profitable business?
 
Dan Sullivan: Well, I have no notion of that, but I knew they became useful in factories where people didn't see them coming, you know. You're not checking out all the boxes of what people actually like when you bring out your invention.
 
Jeffrey Madoff: And so what are those boxes? I mean, I guess first and foremost is who would want it and why would they want it?
 
Dan Sullivan: Yeah, yeah, it was like the Google glasses when they came out. And they were out in Silicon Valley before anywhere else. And immediately every bar and restaurant forbade people to have those glasses on. Because there are people who are having affairs in the … they don't want to be seen together. And you can take photos with them with the glasses, you know. Nobody wants to have their photo taken if they haven't given approval.
 
Jeffrey Madoff: Right. Yeah. And I think that, who did they want? It was actually almost more of a helmet. Was that the Apple or the Microsoft one?
 
Dan Sullivan: You're talking about Oculus.
 
Jeffrey Madoff: Yes, yes, yes. Oculus.
 
Dan Sullivan: That was Facebook. Palmer Luckey was the inventor of that when he was about 18 years old. And that hasn't worked at all. I don't think it's made money. I don't think Oculus. He made money. He made two billion because that's how much Zuckerberg paid him for the invention. But then he became an employee and he's not an employee. You know, he's an originator. He's out inventing all sorts of new things right now. But he got his two billion, which is nice.
 
Jeffrey Madoff: Yeah, that's nice. But, you know, when we're talking about hype and, you know, hype is the spine of marketing. How do you talk about what you're doing in order to get the attention and the excitement about whatever product or service you're offering? You know, how do you do that? And, but you aren't thinking about where's the context that this is going to play out. So I'm trying to remember who had the glasses. You know, Google glasses failed. And then somebody else came out with something. It was either Microsoft, or maybe it was Meta. And it was called Apple Vision.
 
Dan Sullivan: No, I had people saying, you can't believe what this is going to do to the world. But if I checked with them six months later, they weren't using it, and they didn't see any progress on it. See, the big thing, where's the money made? The money is made on the possibility. The money is not based on the reality, okay.
 
Jeffrey Madoff: Well, the hype isn't based on the reality, that's for sure.
 
Dan Sullivan: No, no, but the money is on the hype. The money isn't with the actual thing. And I've been reading this series of British historical novels that take in the time when the railroads were crisscrossing Great Britain. They were linking up every town with every city, you know. And there's a character there who's really smart. And he said, you know, you want to be in on the building of something. You don't want to be in on the operation of something. He says all the money is in the building. The moment it becomes operating, it's just cost.
 
Jeffrey Madoff: Yeah. Yeah. And I think that there's a big distance between a compelling vision and a sustainable business. And I think that that gets lost on a lot of people because they believe their own hype and can't deliver on the promise. This is actually going to be a sustainable business going forward.
 
Dan Sullivan: I remember the conversations in the tech world, and there's an institute in Silicon Valley where you go and you brainstorm how your invention could have a billion customers. You have all sorts of investment experts and start-up experts, and they said, don't think of inventing something unless you have the goal to have a billion customers. And I said, well, you know, a billion's really, yeah, it's a nice number. But does it even work for one person? I said, why don't you start with one person and see if it works with one person? Because if it works for one person, you know 50 percent of what it'll take for 10 people to use it. Okay, and then if it works for 10 people, you know more about what 100 people could be like. And if it works for 100, then 1,000. So you're working in tens.
 
But the beginning of it is you're trying to ignore the learning curve, that whenever you bring out something new, it has to adjust to the existing world. It has to adjust to what people like now that they're gonna have to give up to use what you're proposing, and that's in the area of emotion and habit and don't make me learn something new. You know, I'll determine whether I want to learn something new. Don't tell me I have to learn something new, because I don't want to. I'm already learning some other things and it's going to take my attention away from what's already important to me. You know, and that's what they do. They think, well, you know, everybody's just going to change because there's a new way of doing things. Actually, people resist doing it a new way.
 
Jeffrey Madoff: Well, I think a great example of that is driverless cars.
 
Dan Sullivan: Oh, yeah.
 
Jeffrey Madoff: You know, people don't trust a driverless car. And even if statistically they're safer, it doesn't make any difference. Perception is nobody's hands on the wheel. I'm at risk.
 
Dan Sullivan: Yeah. Plus it looks weird.
 
Jeffrey Madoff: Yeah.
 
Dan Sullivan: No, it just looks weird. They have Waymo's. I go to Phoenix a lot and there's a lot of Waymo's there. And I said, it's so weird. First of all, it's got something on the roof and it's got, you know, it's going like that. And everybody, all my tech nuts that I have in the Program, they say, oh, it's and everything like that. You don't have a bothersome driver. I said, the driver is the most interesting thing for me because a lot of them are immigrants and a lot of them, this has been their entry level into making money and being an Uber or Lyft. That's how they made their money. They're not American born drivers. They're from Slovenia, they're from Romania, they're from Bulgaria. And then I get them to tell their story and it's an interesting story.
 
Jeffrey Madoff: Yeah, Waymo, which is probably the most known of the names out there, the driverless cars. What's the adoption rate on that? How is that? I don't know how that is even doing.
 
Dan Sullivan: I don't know.
 
Jeffrey Madoff: That's a Google invention.
 
Dan Sullivan: Yeah, the Waymo. They should have Waymo police cars, where they just suddenly stop, and they just grab you, put you in the back seat, and they take you somewhere, and they lock you up. I said, that would be an interesting application of driverless cars, police cars that just suddenly stop, and they run you off, and they compel you to get into the back seat. I said, that would be an interesting story. Well, there's Robocop. Robocop.
 
Jeffrey Madoff: Which I thought was a great film. It was fun. A friend of mine edited it. Mark Goldblatt, great editor. It's interesting because I think driverless cars, we heard about it constantly for a while. Now we don't hear about it much. And I'm sure that the efforts are still going into development on that, but there are so many instances of, it's as if the hype were the product.
 
Dan Sullivan: Yeah, and they have a problem. Anything like that where people can get killed is a problematic product. So it works perfectly well for 10,000 people, but one more than 10,000, somebody gets killed. What do people remember? The one person who got killed. They don't remember the 10,000 that it worked okay for.
 
Jeffrey Madoff: Well, that's right. That's right. That's what I was saying. The stats may be it's safer, but people don't believe it. Or they don't want to give up what they perceive as a control over their life and ability to get around. The thing we're talking about with Waymo, with Sora, with the glasses and all of that, it's, Sora was a compressed version, I believe, of a pattern we're seeing across AI, period. It's a dazzling demonstration, genuine disruption of incumbent industries, a rush of users. Then you start getting into what the costs are of actually executing that idea. And then how are you going to make money at it? You know, with those extraordinary costs, all the data farms that are necessary, you know, in the tech world for using all of this stuff, how does this actually get done? And those questions that it seems to me you need to have some idea of answering before you get that far into it. Unless you can do what I've never been able to do, but like your friend Palmer Luckey, is he'd get in and get out with a pocket full of money and it's somebody else's problem.
 
Dan Sullivan: Yeah, and he's entirely into weapons now. He's almost entirely a defense industry. Yeah, I mean, he's got some applications, but they involve government, almost all of his inventions. So, for example, little sensors that you can put in wooded areas that can detect a day before a forest fire is likely. It's just there's a certain level of heat and dryness that you can literally prevent. And then it sends signals to come out and have all your folks really alert that there might be a forest fire here. If a wind kicks up and you have dryness and you have heat, you're likely to have a forest fire. So he says there's lots of things, sensors. So he's looking at sensors in the civilian world, which is, you know, the public lands. But he's also doing a lot of military stuff with sensors. This war in Iran, nobody's talking about it, but the problem with the Iranians is that they're taking a 40-year-old idea and they're fighting against two countries that are operating at very advanced stage of detection, surveillance, and response. You know, they're fighting with 1996 weapons against somebody who are using the most advanced 30 years later weapons right now.
 
Yeah, there was an interesting article. I've been watching some of the YouTubes on this, and they said that the U.S. probably has a technology that can see through mountains. They can see 2,000 feet down. They know where the tunnels are. They know where there's caverns. They know everything else. And they have bombs that can penetrate that much and everything else. And they said, the Chinese have just disappeared as a maker of advanced weaponry because all the weapons were in Venezuela, and they didn't see the helicopters coming. You know, in Iran, those are all Chinese equipment, and they haven't hit a jet. It's been four weeks, and it's 5,000 sorties, and they haven't hit an enemy jet yet with any of their sensing equipment. So the competition is between nation-states because it's a big money-maker for nation-states. I mean, we're talking in the hundreds of billions of dollars for …
 
Jeffrey Madoff: You're talking about the defense industry.
 
Dan Sullivan: The defense industry, yeah. Two businesses where the money's always made. One of them is weaponry. Then there's a second one called toys. And then there's a third one called porn. This was true 2,000 years ago. I think it's true today. That's where the money's made.
 
Jeffrey Madoff: Yes. I'm thinking again back to entrepreneurs. And I'm thinking about when the whole world is telling you how you have to market what you're doing, how do you not get seduced by that and at the same time lose your message? in terms of what the value is of the product that you're creating. Because although we're talking about it on a hyper level, like Sora, just in the kind of businesses that Coach deals with, what do you think the focus should be?
 
Dan Sullivan: Yeah, well, first of all, the vast majority of our businesses are service businesses. So 95 percent of our 2,500 clients have services business, and our whole point is keep doubling down on personal relationship. Have conversations, have breakfasts, have lunches, have dinners, and ask them what's on their mind. How are they seeing the future? And we have a concept called D.O.S. What are the dangers that you have right now that you'd like to eliminate? What are the opportunities you'd like to capture? What are the strengths you have you'd like to maximize? And let's put a game plan together where you can measurably improve in those three areas. And it gives you a monopoly on that person's attention.
 
Jeffrey Madoff: See, I think that there are so many distractions and that focus can be really difficult to achieve, and focusing attention on what you're doing can be really difficult to achieve. I walked into my class once and there are 40 students in there and they're all talking and active and so on. And I took a chair, plastic molded chair, threw it across the room. It makes a lot of noise when it hits that terrazzo floor. It's reacting. And I said, “Okay, what did I just do aside from throw a chair across the room?” And there was silence. Some of the students were still shaking. And then somebody said, “Got our attention.” I said, “That's right. I got your attention in a cheap gimmicky way, but I got your attention. But then what's the challenge after that?” So I said, “Keeping it.” I said, “That's right.”
 
How do you sustain the attention? And it's about them. And that becomes, I think, the more important aspect. Now that I've got your attention, what are you gonna do with it? How are you gonna sustain it? How do you make it something that's going to be appealing to them to pay attention to? And I think that's the critical thing. And I think that marketing, like the marketing that was done on Sora, wven going back to segway, you know, Apple's marketing, which was brilliant, and you go to the marketing and you've got the mechanism to get people's attention, but at a certain point, like with Sora, when all eyes are on you and you're on the way up, all eyes are gonna be on you on the way down, too. I'm sure there were a lot of people applauding at the closing of Sora.
 
Dan Sullivan: Yeah, but going back to the email you sent out about Personality, if you go back to 2019, how many people were at the stage of development that you were at in 2019? Hundreds, probably, okay? And some of them got big payments to actually make it into a play, go on Broadway, and it closes in three months, and that's a loss of tens of millions of dollars, okay? What held your project together was really, really solid relationships.
 
Jeffrey Madoff: Yes.
 
Dan Sullivan: But the other thing is, your goal wasn't to make them a lot of money and then have a lot of money whether the play worked or not. I'm sure on those other plays there's people who made lots of money, but their objective wasn't that it was going to be a successful play, it's that they were going to get paid up front.
 
Jeffrey Madoff: Well, so an example of what you're talking about, Queen of Versailles, which it was an all-star group of people involved, from the director to the producing team, everybody. Christian Chenoweth, who was a great, talented performer on Broadway, a star name on Broadway, all of the surface ingredients, all those boxes were checked. And it closed, I think, within five weeks at a loss of 24 million dollars. And nobody made any money on it. I mean, the actors were paid for their five weeks or whatever, and they're prepped for it. But yeah, the relationships, people believing that you can deliver on the promise. And films and plays don't happen quickly. Most of the public doesn't realize how long it takes for something to make it to the screen or, you know, to make it to the stage.
 
Dan Sullivan: Yeah, but is it even an interesting topic? I don't see Versailles as even an interesting topic. I mean, all the people who were at Versailles got their heads cut off.
 
Jeffrey Madoff: Well, this was actually about this big fashion event that happened there. So it wasn't like a historical piece. I mean, unless you look at history, it's something that happened in the ‘70s, which I guess it is at this point. But it's, you know, an interesting example of something that had all the right ingredients, it seemed, but didn't work.
 
Dan Sullivan: Well, if you look at Hamilton as a roaring success. And the reason is that Americans are fascinated with the history of the revolution and the starting of the country. I mean, they're just, they checked all the boxes about what people are actually interested in. And it's partially true. I mean, Hamilton himself, he arranged for house slaves in New York. He was a slave dealer himself. But, you know, he put that aside and say, was it an interesting performance and everything like that. But there's some topics there really interested to highly educated elite people. Like, fashion is interesting. Like, Devil Wears Prada is the worst play I've ever seen in my life, because I'm not interested in the industry. I'm not interested that there's mean malnourished people who are mean to each other, and that's what the whole play was about. And the movie was good because it was brilliant dialogue, but a play didn't have the brilliant dialogue. They tried to turn the dialogue into songs, and it didn't make it. It was just not an interesting play. And yet they spent millions on that play, I'm sure.
 
Jeffrey Madoff: Well, they did. Actually, did you see that in Chicago?
 
Dan Sullivan: London.
 
Jeffrey Madoff: So what happened is they first opened in Chicago, not well reviewed at all. I think that the ace in the hole they had was that Elton John did the music. And not to say whether the music was good or bad, it's just he will attract funding. And they basically went back to the drawing board and rewrote the play. So when it opened in London, it was not the play that had opened in Chicago and gotten those reviews. And it's just interesting because if you've got someone who's a magnet for investment that can really, it can prolong your life. Whether you'll be successful or not, that's a separate issue, but you know the movie not only I guess did well, there's a sequel coming out to it. And yeah, well, we don't know if that's gonna right. I mean, you know when you've got Meryl Streep and Stanley Tucci …
 
Dan Sullivan: Yeah. But it was great dialogue. There was great relationships. The movie was the proper medium for that story. A play isn't a proper medium.
 
Jeffrey Madoff: Well, and there you get into an interesting area. Also talking about hype is that people feel that you are de-risking their investment, be it a theater owner or a money investor or whatever, if you have a star. That de-risks it because they figure on the advance something—you have Hugh Jackman. He can sell out three month’s worth of The Music Man and he can sell that out and it can be a profitable run even if the reviews aren't great because the advance, they're already committed. And of course investors love seeing a big advance because that indicates that there's a good chance you're going to make your money back plus. Think about, did you see Hamilton?
 
Dan Sullivan: Yeah.
 
Jeffrey Madoff: So I did too. And I saw it back when it was at the public theater and it was brilliant. And what I wondered about is, how in the hell do you pitch this play? We have a mixed race, a hip hop musical about the founding fathers. What? And it has become one of the most successful plays of all time. And a triumph of talent for Lin-Manuel Miranda. And it deserves the accolades. It's that good.
 
Dan Sullivan: Yeah, but it gives you absolutely no formula for …
 
Jeffrey Madoff: Exactly.
 
Dan Sullivan: It's a one-off unique hit.
 
Jeffrey Madoff: Exactly.
 
Dan Sullivan: There's no formula here.
 
Jeffrey Madoff: Exactly.
 
Dan Sullivan: And that's fascinating. But what we're talking about is, you see, my feeling is that AI on an individual basis is having a tremendous impact, especially on the U.S. economy. I think you're going to see quite a jump in productivity. I think you're going to see quite a jump in profitability from AI, but it's not because of what the corporations are doing, it's what individuals are doing with the tools, you know.
 
Jeffrey Madoff: Yeah, it'll be interesting to see how that plays out because it can help extend the capabilities and research of a small business, which is what most entrepreneurs are.
 
Dan Sullivan: 90 percent.
 
Jeffrey Madoff: Right. 99 percent, really. And so I think there's that. And then there is the far bigger world of medical research, things like that, which it could bring a real boon to. And I think there's a lot of the areas in the middle. I mean, I get so many crap emails about, you know, that you can tell were written by AI that are trying to, you know, market whether it's building your sales funnel or here's how to use the tools. Are you being left behind? And, you know, all that kind of stuff. And, you know, like anything, there's going to be a lot of waste and crappy businesses that don't make it. But I think that the possibilities when those tools are used well can expand the reaching capability of smaller companies that that kind of capability was not within reach before.
 
Dan Sullivan: Yeah, yeah. That describes my client base. But I'm seeing usefulness and there's general optimism, there's proof that things are getting done faster, they're getting freed up. I mean, I see proof all the time, but it doesn't relate anything to the story of what the major tech corporations are going through.
 
Jeffrey Madoff: Yeah, yeah. What's that distinction?
 
Dan Sullivan: Well, they're worried. I mean, Wall Street is really worried about all this investment that's being done, and they're not seeing any normal return that they can measure. But you can't measure what single individuals are doing with it. There's no pattern to, you know. I mean, I write a book every quarter. Before AI, before Perplexity, you know, the app that I use, you know, it was about three or four weeks to structure it. Now it's three hours. I got the whole thing structured in three hours. You know, I can get the idea on a Saturday, I can start recording on a Monday. That's a big deal.
 
Jeffrey Madoff: It is. And I think a lot of that comes down to using the proper tool with having an idea of what that workflow is.
 
Dan Sullivan: Yeah. And I'm just relating it to one activity that I do. I mean, I don't use it for coaching at all because coaching operates at the speed of reality. You know, it's eight hours in a workshop. You don't want the workshop to be four hours and you send them away. You want the full eight hours, you know, and it's your attention on that activity and not being distracted by other things that really matters, you know. So, yeah, I'm saying that it's going to have a tremendous difference, but not in a way that can be measured by the people who are looking for scaling returns.
 
Jeffrey Madoff: Do you think all businesses need to scale?
 
Dan Sullivan: I think very few businesses need to scale.
 
Jeffrey Madoff: Because if you look at …
 
Dan Sullivan: I think they need to grow, but they don't need to scale.
 
Jeffrey Madoff: And give me the distinction between the two.
 
Dan Sullivan: Well, if you increase by 10 percent per year, that's not scaling. That's growth. 10 times a year is scaling. Yeah, we say, we'd like you to think about taking your business 10x. Okay, and people say, oh, 10x. Oh, 10x. I can't do that in three years. I said, who said anything about three years? I didn't say anything about three years. I'm gonna give you 25 years. Do you think you can grow your business 10 times in 25? 25 years. I wouldn't need 25 years. I could do it in 15 years. And he says, oh, what would you do with the extra 10 years? Well, if I could do it the first time in 10 years, so you're having a problem with 10x, and now you're talking about 100x. I said, entrepreneurs don't go crazy with their goals. They go crazy with their deadlines. I mean, if you improved every quarter for 100 quarters, do you think you would increase your business by 10 times? I don't think there'd be any problem with that. You could have a good private life. You'd have good health and everything like that. That's 100 chances to improve overall what you're doing and all your team members are improving too. I don't see any problem if the public wants what you're selling, if the marketplace wants what you're selling.
 
Jeffrey Madoff: Which is the cornerstone.
 
Dan Sullivan: Yeah.
 
Jeffrey Madoff: Because you don't have a business if they don't. Thanks for joining us today on our show, Anything And Everything. If you enjoyed it, please share it with a friend. For more about me and my work, visit acreativecareer.com and madoffproductions.com. To learn more about Dan and Strategic Coach, visit strategiccoach.com.