The first rule of showbiz: show me the money

With both Kanye West and Louis CK crying poor, Rob Long reveals the secret of funding your pet projects in Hollywood

Kanye West tweeted notables asking for funding for his big projects. Matt Sayles / Invision / AP

Set aside, for a moment, the truth behind Kanye West's claim to be many millions of dollars in debt. A few weeks ago, the rap star and compulsive Twitter user complained that his various artistic initiatives and entrepreneurial spirit had left him hurting for cash.

That was, as it turns out, overstating it. His business managers and accountants, it was revealed, were guilty of presenting to him some financial details in the most alarming way possible. They measured the cost to him – in terms of time and resources and various other metrics – of his many ancillary investments and plotted them against his annual income, and came up with a terrifying, but theoretical, deficit.

Instead of accomplishing what they intended, which was a sober and thoughtful refocusing of his efforts towards highly remunerative things like recording and distributing music, and away from things like becoming the new creative director of the French fashion house Hermès – something West has openly campaigned for – it sent the music superstar into a money panic and a Twitter spiral.

It was all an overreaction. West still, in his words, has plenty of money on hand for “furs and houses for my family”, which I’m sure allows all of us to breathe sighs of relief. But the financial lesson he says he learnt, the hard way, is that whenever possible, when faced with exciting and tantalising investment opportunities, attempt to use someone else’s money.

In Hollywood, this is a fundamental law. Entertainment is what we call an “OPM” business – “other people’s money” – because most ventures fail (this is true of many businesses) and the best way to fail is to fail on someone else’s tab. The economic model will be familiar to anyone in the venture capital business: invest in enough projects, even really crazy way-out ones and you’re bound to have one or two that really pay off. It’s those hits that pay for all of the failures. But in order to get to the hits you have to be able to weather the losses of the failures, which means you need money, and lots of it. And this is where investors come in.

The chief benefit of investors is, of course, that they have piles of money – and here I’m using the term “investor” in the broadest sense: it could be a bank or a venture fund or wealthy uncle or, in my case, a television studio – but aside from that, an almost equal benefit to having investors is that you have to explain to someone else why, exactly, you need the money and how, precisely, you’re going to make it back.

Kanye West – and I confess that I have never met the man, this is just my general impression – isn’t someone used to a lot of negative feedback from his inner circle. Something tells me it’s pretty much a one-way conversation when Kanye wants something. Kanye World, to use the phrase currently fashionable, is probably not a “safe space” where dissent and critical inquiry is frequent.

Again, I don’t know this. But I have a very strong feeling that it is so.

Luckily for Kanye West, and his fur-loving and house-receiving family, his business advisers managed to get through to him. After the initial shock of his massive debt wore off, West began tweeting aggressively to various well-known billionaires – people like Mark Zuckerberg, the staggeringly rich impresario of Facebook – all but demanding that they give him the money he needs, plus more, to “bring more beautiful ideas to the world”. In other words, Kanye West discovered the concept of OPM.

Brilliantly talented comedian and writer Louis CK – his comedy, Louie, is a critical and audience favourite on television – has recently learnt the same lesson. A year or two ago, Louis CK discovered how lucrative it was to fund his own projects. He released two video specials online to his audience – they paid him directly, without a network or a studio or any kind of middleman – and he allowed them to download his work onto whatever device they preferred. It was an astonishing feat. He was an instant hero to every writer and performer who had ever faced a line of unsmiling studio executives or naysaying network programmers, which is to say every writer and performer.

Just do it yourself, was the message. You don’t need executives and investors and meddling money men.

This week, though, Louis CK announced that he was deeply in debt. His tone and demeanour were a lot more emotionally stable than Kanye West’s, but the story was essentially the same. Louis CK had invested in additional projects – his own money, no OPM involved – and one of them hadn’t been nearly as successful as he had expected, which had led to losses.

Kanye West and Louis CK are both, in their different ways, supremely gifted. Both of them have long and lucrative careers in front of them. But both now are wiser and smarter about when to use their own money and when to use OPM: never and always.

Rob Long is a writer and producer in Los Angeles

On Twitter: @rcbl