People, Pixels and Production

June 1st, 2007 was my last day as an employee and the first day of this blog, intended to follow my steps in the starting up of a visual effects company. Modus FX will be two years old in a few weeks…

We had a good feeling we could get through the market; we have a strong know-how for client relations, project management and, well, making VFX. The things my associates and I have learned about business administration, management and finances are overwhelming. Quickly identifying your weak spots and taking care of them, one problem at a time with clear, concise and easy solutions is key in entrepreneurship.

I’m not saying we’re on top of the world and our digital effects studio is this well-oiled machine, rendering away while I’m sipping a drink by the beach. We’re pumping a lot of hours; stress is high and our space still in renovations. But at least we have satisfied customers (even repeat business!) and we’re delivering our product.

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We knew that a key aspect of our success was to fill up our production calendar as soon as possible. We decided to set up strategies for short term (end of 2007) and medium term (early 2008) prospects.

Short term pitching (i.e. right now) requires a lot of work. It is fairly easy to present our company to possible clients and partners in the Montreal region and cold calling current projects in production. The process went well and the feedback was great, but it took a lot of our time with numerous daily visits. Autumn is not the best season to get involved in VFX projects and last November has been pretty awful for the CG/VFX community in Montreal.

2008 is looking much better, and we have been following up on a few projects for early next year. For longer productions, the important issue is to build confidence in the course of a few meetings while demonstrating your know-how. Our very large studio space helped us show our potential as well.

Our calendar is definitely shaping up after a rather slow start and a few delays the past few weeks. We’ll finally be more into pixels and less into 2×4, accounting reports and city permits.

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June 1^st, five months ago, was my last day as an employee. What’s up with our start-up now? Here are a few key issues that have been on our plate the past few days:

• Financing

It’s about to wrap up; there is one last detail to close. We have a number of financial partners that need to agree with each other, so timing everything was tricky. The good thing about all the time and energy it took is we’re gaining a lot of respect since we were able to stick to our plan and get it done. Already we are being congratulated for our patience and perseverance.

• The studio

The architects and engineers are putting the finishing touches to the final floor plan and technical drawings. Our space is so big and totally empty that it needed a bit more time than we planned to set up properly. Instead of waiting for the whole space to be finished, we sealed off about 1,500 sq.ft. to have a decent working area right now, so we can take our time with the major construction.

Also, we are designing our own work desks, the results are quite interesting. More on this later…

• Prospects

Of course, hunting for potential contracts is our number one priority. We’ve done a first wave of contacts and a few meetings and the overall reception is very good. We are definitely on everyone’s radar in the region. We have completed a few simple productions and we are aiming for bigger workloads.

• Recruiting

We were slightly worried about finding qualified and available artists and technicians, but we received a huge amount of e-mails and resumes of excellent candidates ready to join us in our start-up. We should be hiring staff on a regular basis soon.

• Enjoyment

You bet. It’s a wild ride, and we love every minute of it.

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Finally, after securing a fair amount of funds, starting the interior renovations, setting up purchase orders for hardware and tackling on a number of potential contracts, our available jobs board is open. We are lucky to work with remarkable freelancers and we are hoping to also start building an in-house team in October.

Being a start-up, all the classic CG/VFX positions are available. We are setting up a database that we will maintain up-to-date for anyone that will send us their coordinates and resume. We value every application and even if things do not work out right away it is in our interest to keep in touch with a large network of possible employees and freelancers for future work opportunities.

You can check out our available jobs at www.modusfx.com/jobs.html. Hope to hear from you!

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Yesterday I wrote about a loan from the Ministry  of the Economic Development Agency of Canada for the Regions of Quebec, but our first public funding came from something very close to our place of business, the Sainte-Therese CLD (Local Development Center).

In Quebec, CLDs exist to incite economic growth in their region; it was naturally a good place to start looking for help with our project. Early in the summer they awarded us a grant for young entrepreneurs. Our business plan was presented to a selection committee that was eager to have our company founded in Sainte-Therese. It was also with the CLD that we first got in touch with the federal and provincial governments to look into financial programs to help start-ups. That got us to the Ministry of the Economic Development Agency of Canada for the Regions of Quebec.

You need to take baby steps and start to convince accessible people that your project is viable, and with their help you’ll work your way to bigger investors and creditors. It’s also easier to check out the local help when you know where you want to setup your place of business.

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Note: Oops, the loan comes from the Department of the Economic Development Agency of Canada for the Regions of Quebec. Honest mistake, it’s the same Minister… My apologies to Canada Economic Development.

We just received confirmation of financial support from the federal Minister of Labour of the Economic Development Agency of Canada for the Regions of Quebec for our start-up. The Minister himself called me last Saturday with the news as I was frantically working on our first contract, alone in our offices. Needless to say I was caught a little bit off-guard. I hope I remembered to say ‘Thank you’.

Even if this contribution is a loan and not a grant, it is a huge step, as it adds a lot of credibility to our venture. Complete trust from our creditors is essential during our first months; this news comes at a perfect time.

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Now that this blog has appeared on xsibase.com and that traffic has gone up 800%, (ahem, hi everyone!) perhaps I can step back and go through where we are at with the start-up.

• We are three partners with close to 33% each in the company. There is Vincent Toussaint, myself and a third partner that will be announced soon, probably this week-end. We all have over 10 years experience in the CG / VFX industry and have known each other for a long time. Our skill and expertise are very different and best of all, very complementary.

• It took us over four months to write our business plan from scratch. Re-writes are common in the last stages of financing, when every other day brings a new possible loan or investor. It’s a good thing we’re used to versioning in this business!

• Two prospects are going well, with more along the way. We have a law firm, an accounting firm, a few government loans and just enough support from banks. We’re negotiating a long-term lease for a huge open space. Yes, incorporating the business name is taking a long time, but in a few days we’ll be officially in business.

 Here’s a few thing I’ve learned along the way:

• As soon as you get some form of recognition (usually a loan or grant from some government official) everything starts to move very quickly. You get more people interested simply because someone gave a damn about your idea.

• You absolutely need decent professional services (lawyers, accountants, management coaching) to calm down banks and investors. You have to shop around for people you’ll be paying close to 200 bucks an hour, so make sure they pay for the cappuccino the first time you meet them.

• Everybody is happy to meet entrepreneurs that are not from a business background. If you can talk about your work with a spark in your eye, you’re in. Every time.

• Visibility, contacts, network. Scream your project in the streets. Start a blog! People will eventually be interested in your idea eventually, but first they have to know about it.

• Be patient. Be optimistic. You’re driving this thing and trying to get people onboard. Above all, stay focused. This is a very long journey, and you can’t catch your breath even for an instant.

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A pitch for digital effects is simple when you split it into three parts:

• Intention : You can use a classic letter of intent to lay the ground work for your pitch. Is the work loaded with technical issues or is it more an artistic blowout? Is some of your previous experience close to what is proposed? What about your staff and equipment? What do you know about this potential client that goes well with your company?

• Breakdown: Elaborate on some of the key aspects of the work involved. Declare any difficulties you are noticing and of course have a solution for everything. Mention anything not included with the time estimate, i.e. meetings, approvals, data and plate sharing, external costs…

• Estimate: Numbers, hours, money. Here is where you can prove you know what you are talking about. Make sure your estimates are good, because you will be moving numbers around to help balance the budget and manage delays. Numbers too high or too low are contract killers, if the clients know what to expect. Too high and they will shop somewhere else. Too low and they will mention that you “did not understand the full amount of work involved”.

With decent numbers and an honest presentation you’ll have the best chance for a positive response. Even if the deal does not go through, they will come back with another contract later if they were satisfied with what they went through. Even better, they will spread a good word about you in the biz, which is crucial for a start-up.

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