Funny or Die at Five: How They Make Money -- and Get Mike Tyson to Play Herman Cain for Free

 Danielle Levitt

The idea for comedy-video website Funny or Die came out of a CAA brainstorming session in 2007, and originally, the site's founders Will Ferrell, Adam McKay and Chris Henchy didn't want to do it. But, five years later, the website is a profitable business, and yet, has managed to retain it's "cool-kid" status ("We never wanted it to be forced and sweaty," Ferrell tells The Hollywood Reporter. "Just a cool, fun thing to play around with."). 

The site's success was kicked-started by a trash-talking two year old, in the one of the first videos FoD posted, "The Landlord," which remains it's most viewed piece of content, with 78,250,250 clicks.  In  that video, McKay's then two-year-old daughter, Pearl, is seen berating Ferrell with profanities to try and collect his rent while drinking a (fake) beer. But, celebrities like Mike Tyson, Taylor Lautner, Paul Rudd, Harvey Weinstein, Marion Cotillard and Billy Crystal have also come flocking. Most recently, their video about a Republican primary debate has been viewed 1.6 million times.

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"I'm just motivated to entertain," says Mike Tyson, who wasn't paid for his Herman Cain videos or the FoD Oscar-talk segment he did last year with Leonard Maltin. "I like to perform and show people that I have the actor side of me. I put Funny or Die in the same league almost as Saturday Night Live as far as the spoofs. I don't do it for a fee. I'm getting more and more experience every time I do a skit."

Likewise, The Dark Knight Rises actress Marion Cotillard recently made the spoof, "Forehead Tittaes" to poke fun at her dramatic actress reputation. With nearly 4 million views, it has become a FoD Hall of Fame video. 

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THR senior film reporter Jay A. Fernandez  and West coast business editor Paul Bond chart the website's meteoric rise, starting with 10 videos, evolving into a place where stars, politicians, studios, networks and even banks, breweries and phone companies turn to showcase their latest projects or sex up their images, and its plans for the future: one sketch has been turned into a reality TV pilot, while another has been made into a feature film premiering at the Sundance Film Festival this month.

Here is some of the FoD insider information from this week's THR cover story, which features CEO Dick Glover, writer Chris Henchy, Will Ferrell and co-founder Adam McKay on the cover.  

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HOW FoD ALMOST DIDN'T GET OFF THE GROUND
"Our first response, especially in light of the tech crash in the late '90s, was no," says McKay of being pitched the site's concept by Sequoia Capital partner Mark Kvamme and CAA's head of business development, Michael Yanover. "We were just so dubious of any kind of startup, dot-com venture because all that garbage from the late '90s had all evaporated so quickly." But the idea stuck with them. 

By early 2007, Yanover, the Kvammes and Henchy tracked down Ferrell and McKay in a room at the Bel Age Hotel (now the London West Hollywood), where the sweatpants-clad writers, surrounded by pizza boxes, were bullying together the Step Brothers script. They were told it was in-or-out time. "Jimmy Miller, who was also involved in setting this deal up, said to us, 'There's really nothing to risk,' " says McKay of the Mosaic manager who reps the trio. "He said, 'At best, you're going to get a situation where you can do sketches that you can't do on Saturday Night Live and discover new talent. It could be really fun. And at worst it goes nowhere and you don't lose anything.' And that was really what got us over the hump on it."

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WHAT FoD IS WORTH (CLOSE TO $300 MILLION) AND WHY THEY WON'T SELL
With banks, breweries and phone companies using FoD to sex up their images -- and studios and networks to showcase their upcoming projects -- CEO Dick Glover acknowledges that when AOL paid $315 million in February 2011 for the Huffington Post, a company with similar revenue ($31 million annually), he took notice. "We said, 'Wow, we must be worth a lot of money,' " says Glover, though he stresses that no IPO or acquisition is expected anytime soon. "There is no exit strategy. Let's build this brand, let's build a library, let's build a skill set, let's build lots of money in the bank -- then we'll have a zillion options." In Glover's formulation, the company has been "sustainably profitable" since the fourth quarter of 2010. Since the company is privately held, FoD won't disclose its financials. Tom Taulli, author of the book Investing in IPOs, predicts FoD will post $40 million in revenue in 2012 and could be worth close to $300 million if it were to go up for sale.

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HOW MANY PEOPLE ARE WATCHING
The site is frequented by nearly 4 million people a month, according to ComScore, who watch videos there 60 million times each month. (The company says that as many as 16 million unique visitors have hit the site in a single month.)

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WHO MAKES THE CALL ON A VIDEO'S FINAL CUT
The FoD system has flipped the entertainment dynamic on its head because the talent has a direct channel to fans and consumers, while their studio and network employers are in the less powerful position of essentially needing FoD's invitation. Where features and TV series take months or years to come to fruition, stars and filmmakers can have projects up on FoD in a week and see immediate reactions to new characters. They also essentially have final cut. "We give them the greatest thing you can give anyone, which is, if they don't like the video, we won't air it," says McKay, who cites  a video from Pharrell Williams that was nixed.

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FoD's FUTURE VENTURES
The company also is evolving into a genuine TV production studio. TBS is doing a reality pilot off the FoD sketch "Undercover Karaoke," in which pop star Jewel disguises herself as a businesswoman to belt her own songs at a karaoke bar. Fuse just premiered Billy on the Street with improv comedian Billy Eichner, and HBO has picked up Funny or Die Presents for a third season. The site's feature-film influence is beginning to bear fruit as well. Tim and Eric's Billion Dollar Movie, which came about through the relationship of creators Tim Heidecker and Eric Wareheim with the FoD principals, is set to premiere at the Sundance Film Festival on Jan. 20 before its release through Magnolia Pictures in March. Ferrell and McKay are executive producers. And Farah has been on the hunt for a script that they could turn into a movie for less than $1 million and promote entirely through the site's social media.

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MICHELLE OBAMA: "THE LANDLORD'S" BIGGEST FAN
"Landlord" was FoD's calling card, a 2½-minute video featuring McKay's daughter berating Ferrell that was first unleashed April 12, 2007, when Henchy, McKay and a few others involved in the site's creation e-mailed the link to 10 friends.

In 2010, Ferrell and his family received a surprise invitation to the White House Christmas party, where he and his wife, Viveca Paulin, found themselves sitting with first lady Michelle Obama. While chatting amid the holiday lights and high-level Cabinet members, the FLOTUS unleashed an unexpected compliment."I just have to tell you, I saw 'The Landlord,' and oh my gosh …" she said to Ferrell. Then, with a chuckle, she threw out the infamous line: " 'I want my money, bitch!' "

Read the full THR cover story here

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