Milken Conference: Ryan Kavanaugh Says 'Being a Disruptor Made Me Public Enemy Number One' (Video)
During a Milken session on Disruptors, the CEO of Relativity said he faced critics when he wanted to change the status quo in the movie business.
On a panel titled "Disruptors" at the Milken Institute Global Conference on Monday, Relativity CEO Ryan Kavanaugh called Thomas Edison, J.P. Morgan and Albert Einstein the original disruptors.
"If you're going to do anything original in the business you're going to have to disrupt," said Kavanaugh, explaining that the word is a "misnomer." "Disruption is innovation." He said that what Edison and the others did was about "breaking models" that were then in place.
There is a price to pay for that, added Kavanaugh. People, including investors and the media, are all skeptical of anyone who thinks they can bring change to business models that have worked for generations. He says that is what he faced when he entered the movie business with a new strategy about how to make, sell and distribute movies. "I was definitely public enemy number one when I was building the business."
For instance, he said he questioned why studios have departments of hundreds of people to handle movie distribution when half a dozen control most of the business, but Relativity does it with 20 people.
Kavanaugh pulled out a sign that he said can be seen all over the Relativity offices. It said “Our mission … Challenge the status quo ... Make new things … Break old models that don’t work … Reinvent new ones that do."
Abe Burns, head of digital operations for Maverick and A-Grade Investments, with investors including Ashton Kutcher and Ron Burkle, said in choosing which new ventures to fund they try to "see past the distractions that come up in any startup.
"We look for kinship there and a gut check of whether to move forward on an investment."
Burns said being based in L.A. rather than New York or Silicon Valley has worked for them because there are fewer competitors for the best ideas. "We look for companies that are disruptive and where we can be helpful," he said. "That comes down to our strengths and where we can put a company harder and in different ways than they can do for themselves."
Burns said when they hear from companies who say that if only Kutcher would tweet about them, "That’s the end of the conversation. That's not going to change your company, but a vision and a great product will."
Musician and Black Eyed Peas star Will.i.am sat on the panel wearing a thick black band on his wrist that he said was a new product he was developing, although he refused to say exactly what it is or even what it is called.
He said that his music is popular with people of all ages and it has allowed him to use his wealth to help others, often traveling around the world to help victims of disasters. His travels led him to new ways to do things. So he is working with teams in India and Singapore, using his funds, to work on his mysterious new device which he hinted could communicate like a phone, play music and provide other information.
"I'm going to earn money from music and do philanthropy and tell kids there is a reason why you need education," he said. "Ten years ago Black Eyed Peas launched on iPods. Now I have something on my wrist.
"I’m just a little guy who is doing something disruptive. I'm going to wait until the time is right to say why it is disruptive. When David threw that rock that hit Goliath, it was very strategic. So I don’t want to just start throwing rocks."
Later in the session, Nanxi Liu, 23, talked about having started two different successful companies that each proved disruptive to the status quo. The first began with an idea in her native China where she saw kids who were not vaccinated because there was no refrigeration to store the drugs. So her company came up with a way to distribute vaccines without the need for it to be kept in cold storage. Her other company, InPlug, uses software to create digital signs but does it in a way that makes it easy to use, to be creative and to allow the user and consumer to interact.
"Disruption is the ability of a company to add more value to the end user than its competitors," said Liu. "What InPlug did other did not was to focus on end users ... We made it easier, we made it more sustainable."
Kimbal Musk, CEO of The Kitchen Community, which has invested in a diverse slate of companies including Tesla Motors, Space X and the Learning Gardens, said the success of most "disruptive" companies is that they do "incredible things in that space by tying it to the community in a way that makes consumers start to care."
The panel was moderated by Lauren Lyster, host of The Daily Ticker, on Yahoo Finance.