So there we were in late 2000. Sales were flat. Expenses were skyrocketing. Jonah was heading into production, but we were $20 million short of being able to complete it. (A fairly remarkable thing, given the fact that it was only supposed to be a $7 million film. The rest of the money was needed to cover all the staff and projects we had added to non-production areas of the company.) And LaSalle Bank had the right, at any time it saw fit, to take over the company and sell off Bob and Larry.
We were in deep doo-doo.
It was clear to me that changes needed to be made to my leadership team. Though they were all good people that I liked very much, their lack of experience in the entertainment business, coupled with my lack of experience in the entertainment business, was not going to get the company through this crisis. Nervously, I asked several key members to step down. Several others left in protest. (They had, by now, become a fairly tight bunch.) By the end of 2000, my president, CFO, marketing chief and licensing chief were all gone. Only my executive vice president and head of human resources remained. My EVP and I quickly brought in a freelance CFO to keep the bank from panicking and shutting down the company. We then went on a tear, trying to raise $30 million in less than 120 days. We sent out information packets and visited with wealthy VeggieTales fans across the country. The reaction was not good. Though they loved the company and the films, the financial situation Big Idea now faced did not inspire confidence. One potential investor, after reviewing the company’s financials, shook his head in disbelief and muttered, “What did you do to VeggieTales?!?”
In April of 2001 we met an experienced Christian executive from Hollywood who wanted to help. Clearly in dire need of someone who really knew the entertainment business, I hopped on a plane to Los Angeles and offered him Big Idea’s presidency. He hit the ground running. Sharing an office in the basement of our old Woolworth space in Lombard with our freelance CFO, the new president soon discovered that the situation was worse than we had thought. According to their new forecast, the company would run out of cash and be forced to shut its doors by the middle of June, just 60 days away.
It was clear drastic steps were needed. The new president recommended immediately cutting staff to preserve cash. Though I absolutely despised the thought of laying people off, it was clear that Big Idea was horribly overstaffed given our actual sales level. Many of our leaders had built their teams based on sales forecasts that simply never came to pass. The unthinkable was now the only way out.
In early May of 2001 I stood before the entire company and explained the choices we were forced to make. What began as a typically upbeat all company meeting soon turned into a funeral. The whole room wilted in front of me as I explained that it would be the last day at Big Idea for some of those gathered there. Some burst into tears. Others sat in stunned disbelief, or hardened into anger. For everyone, a part of Big Idea died that day. A part of me died, too, as I found myself overwhelmed with the feeling I had let everyone down. After the meeting I drove to a nearby park, sat on a park bench and cried.
30 really great people lost their jobs that day. My president and CFO had a sinking feeling it wasn’t enough – that we hadn’t cut deeply enough. I sure hoped they were wrong.
At this point, we really had just two options. The first was to press ahead with the current plan – to raise enough money to complete Jonah and hope that this film about a waterlogged prophet would bring in enough money to keep Big Idea’s own leaky boat afloat. The second was to radically cut back. Stop production on Jonah, shut down the animation studio and outsource future animation to Canada or Japan, cut the company down from 200 to a core team of 30-40 people, and go back to producing just one or two VeggieTales videos per year. Both my new president and our freelance CFO recommended this second, more radical option. Frankly, it was the option most likely to save the company. At least what would be left of it. But I couldn’t do it. To pull the plug on Jonah and shutter the animation studio – the animation studio we’d been building for 9 years – seemed like a decision I would make out of a lack of faith. Surely God was pleased with the impact we were having. Surely he was pleased by our efforts to have even more impact. Surely he could use Jonah to cover up the mistakes of our past, erase our fiscal shortcomings and set us on the road to renewed health and ministry. The way I saw it, to choose the second option was to lose faith in God. I wouldn’t do it.
That decision made, we needed to come up with a bunch of money very quickly. My new president knew it would be impossible to raise the money we needed from investors in 90 days. We all knew raising money directly for Jonah’s production wouldn’t work, since the amount of money we needed far exceeded Jonah’s production budget. (Wanna look like a fool in Hollywood? Tell people you need to raise $20 million to produce a $10 million film.) The only potential source for the money, my president reckoned, was our distributors. VeggieTales videos were still among the best-selling kids videos in the world. Retailers wanted more. Distributors wanted more. The market’s desire for more of our product appeared to be the only asset we had left.
Within a few weeks my new president had a plan. We could raise millions if we could create a new series to offer to a new distribution partner. We had previously toyed with the idea of spinning off Larry-Boy as a separate series. Given his television experience, my president figured a new series of videos could be produced more like an animated television show, greatly reducing production expenses compared to our big-budget VeggieTales productions. “The Cartoon Adventures of Larryboy” were born and placed in the hands of a gifted ex-Disney animator who had recently joined Big Idea.
But that alone wouldn’t be enough to save the company. The distribution rights to VeggieTales videos were worth much more than a new series, but were unfortunately locked up with Word Entertainment and Lyrick Studios, better known as the creators of Barney the Dinosaur. Lyrick held the rights to distribute VeggieTales videos in mass market retailers like Wal-Mart and Target, a market that by then made up more than 50% of our sales. We had chosen Lyrick over many other interested distributors because the company was owned and run by Dick Leach, a committed Christian who loved both the work and the mission of Big Idea. Other distributors had asked us to remove “God” from our videos to ensure their acceptability in the mainstream world, but Dick Leach had stood firm with us and pledged to sell them exactly as they were. He was our guy, ready to risk it all to keep God in the videos. Because of the value we placed on his convictions and dedication, we requested two special provisions in our contract. First, if Dick Leach ever left leadership at Lyrick, we wanted the right to walk away, too. Second, if Dick Leach ever sold Lyrick Studios to someone else, we could walk away. Our message was very clear. If a big company like Disney or Viacom bought Lyrick and/or Dick Leach left leadership, we wanted the right to leave, too. Lyrick agreed.
That point was about to become very important.
Continued in Part 6 >