April 9, 2014
Build Lean. Fail Fast.
Anthony and I often meet with producers and companies that just had a great artistic success. The conversation often focuses on remounting the production in some capacity. Sometimes it’s folks who want us to generate some budgets for the anticipated transfer production and other times it’s productions that want to rent the Gym at Judson.
The problem is that the traditional transfer contracts all have serious downsides. The Transition agreement is strictly for non-profits and can permanently restrict you from producing Showcases. A Mini-Contract can require $80k - $100k depending on the particulars. The production budgets of other Equity contracts only go up from there. These are all large jumps to make from the $35k Showcase that you just mounted, particularly if you aren’t adept at fundraising and are unsure you’d be able to fill the 6-8 performances per week that you’d need to make money on one of these bigger contracts.
Luckily, there’s another answer instead of hopefully raising money and hopefully filling the house night after night. This answer is the Periodic Performance Agreement. It allows you to produce your show as an open-ended run for between 1 - 4 performances per week in a venue up to 199 seats. The total compensation (salary + benefits) for an actor is about $103. This agreement will limit your budget in other ways - you’ll probably be sharing a venue with another production and that will bring your rent down to about $1,000 per performance. Sharing the venue requires you to strike your set each night so that will limit your physical production. If done right you can move your show from a Showcase to an open ended run for under $50k and possibly a lot less if you can reuse your set and avoid a full rehearsal period.
You might want to jump into doing four performances per week but we advocate that you start with one and view the production as a build-measure-learn loop. You’ve built the minimum viable open-ended production - a show that’s performing once per week - and you’re going to relentlessly measure your sales and the related metrics. You’re looking to learn how to sustainably and repeatedly attract an audience to your production. If sales are lagging then you need to change something about your production’s press and marketing. You’re learning what doesn’t work and are searching for what does. Interview audience members. Do experiments with different ads and distribution channels. Stand in the lobby before and after the show and hear what the audience is saying. The show’s running cost is so low that you can fail repeatedly until you learn how to successfully sell out the house.
Once you do that you can move up to two performances per week and repeat the build-measure-learn loop. Do this until you’re selling out 4 performances per week and THEN move up to one of the contracts mentioned above.
The beauty of this method of producing is two-fold. The first upside is that you’re able to test your assumptions in a low-risk way and really learn how to attract an audience. Frequently shows close because their marketing and press was based on assumptions of who the audience is as opposed to facts. It’s too late for them to adjust by the time they realize their assumptions were wrong and the show has to close. The Periodic Performance agreement gives you the financial and temporal leeway you need to turn your assumptions into facts. The second upside to the periodic performance agreement is that you can probably finance your production internally. You can keep it lean enough that you don’t need investors (or need a lot less capital). That means you can retain ownership of a much larger percentage of the show and that percentage will yield profits that you can use to further grow the company and lessen the fundraising requirement even further.
Form was created to bring a scalable, repeatable and sustainable growth framework to the arts. We’ve taken a page from startups and are applying a framework that allows companies to test their business models and scale them in a low-risk and low-cost manner. Together we can build the theater companies of the 21st century.
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