[TV static drones]
Downloaded from YTS.MX
[bright tone]
Official YIFY movies site: YTS.MX
[indistinct chatter]
What are you wearing right now?
What am I wearing?
Oh, it's--
I know. I still got to support.
Ugh.
It's my Superman moment right now.
A lot of people stop me when I'm wearing this shirt,
and they go, oh, my God, that's so cool!
MoviePass, we remember them.
Whatever happened to those guys?
[hip-hop music]
If you're anything like me,
you wish you had seen all those movies
that everyone's talking about.
Well, there's one red-hot company that gets it.
MoviePass.
- MoviePass. - MoviePass.
The popular movie-ticket app.
This is a MoviePass card.
This was my best friend for quite a while.
MoviePass, a subscription service.
The Netflix for the movie theaters.
It sounded like a dream.
You pay a monthly fee,
and you can go to the movies every single day.
What are you waiting for?
Get your movie on with MoviePass.
MoviePass's CEO Mitch Lowe and Ted Farnsworth.
Look at this incredible growth.
We thought this could reinvigorate
the moviegoing business.
Any movie, any theater, any day--that was me.
MoviePass has been very successful
in bringing more people to the theaters.
This is getting millions of users.
A year ago, a lot of people didn't know
what MoviePass was.
It's become such a big thing. My mom has MoviePass.
MoviePass is the fastest-growing company
ever in the history of media, and the stock shot up.
We were worth $80 million-plus.
He'd just spend, spend, spend, spend, spend.
Going to Coachella,
partying with Big Boi and John Travolta.
Fifty fucking Cent!
It is an endless list of,
oh, my God, what is happening here?
They burned through $250 million.
Whoa, whoa. Wait, wait. Whoa, whoa.
We're the hottest brand out there going for the last year.
I mean, he gave me big-pimpin' vibes.
He said, everyone's going to be rich.
At that point, everything was possible.
They were on this gravy train to greatness.
What they did is definitely illegal.
It is theft, and he actually got arrested.
Karma's a bitch.
My first moviegoing experience was "Psycho."
[screaming]
My aunt had an old El Camino,
and she would take us all to the drive-in.
And we would hide under a blanket in the back
so she didn't have to also pay the 25 cents for us kids.
And in that shower scene...
we all jumped
and hit our heads on the ceiling of the car.
Movie theaters were slowly but surely dying away,
and I have been in the business of entertainment
for about 40 years.
You're in total control...
So many people said that there was no way
that Redbox could work, that Netflix could work.
Now, Mitch Lowe was part of the founding team at Netflix.
Now MoviePass CEO-- that's the service
that offers an unlimited monthly subscription for fans
to catch theater showings on tens of thousands of screens.
You pay $39.95, and you go to as many movies as you want.
You used your iPhone or Android app to pick the movie,
the time, the theater.
We activate a debit card which we send you
that gives you the money to just walk up to the box office
and pay for your ticket.
- You used to work at Netflix. - Yes.
Is that where you kind of got all these ideas?
Yeah, you know...
The whole idea here
is to build a big subscription base...
In the same way Netflix reinvigorated
the home, you know, rental experience.
If MoviePass could be successful,
you could get people back to the movie theater
in that social environment, on the big screen,
with the big sound.
I was really excited that Mitch
was the one running the company.
If there's anyone that's going to make this company work,
it's going to be someone like Mitch.
There was this real energy around the brand.
[upbeat rock music]
I called my friend.
I was like, you're never going to believe where I got a job.
I was, like, such a fangirl about it
that it really did feel like I was getting a job at Netflix
or I was getting a job at Google or Facebook
or any one of these, like, big tech companies.
We were at a WeWork, so they, like,
showed me, like, the snacks and the tap on the bar.
I was like, wait, we're getting--
We can drink at work?
So I was just like a kid in a candy store.
MoviePass, funny enough,
was my first actual engineering job.
They were the first company to, like, actually give me,
like, an offer.
So it was the start of my engineering career,
which is pretty crazy.
That first day, like, really set the stage for,
I'm working with people who genuinely care
and love what they do, and especially Stacy, right?
Oh, man, he loved it.
Everybody loved going to the movies,
and we made moviegoing easier, right?
We brought people back to the movies.
Before MoviePass,
I was the vice president of marketing at Miramax,
and I had worked on "Scream,"
"Trainspotting," "The Crow."
I remember being walked around
and introduced to the team.
And, you know, we were spearheaded by Mitch.
And I thought that he was a pretty compelling person,
you know, a bit of a visionary.
And our vision at the time-- we wanted to build
a large subscriber base of movie lovers,
but to do any kind of all-you-can-eat subscription,
you know, you need a lot of money.
MoviePass was hovering around 20,000 subscribers.
We're just treading water,
and the money well had dried up.
[person shivering]
We needed a lot more money.
I was able to raise a little bit here,
a little bit there from high-net-worth believers.
I've got ties with a number of the folks
who were very early at Netflix.
And Mitch knows his stuff.
The idea that streaming was going to destroy theaters
was worrisome to me.
I thought that we should play a role
in trying to change that.
I was at Facebook from 2005 to 2010
as general counsel
and vice president of corporate development
and chief privacy officer
and left to run for attorney general.
I lost the Democratic primary
to this up-and-comer named Kamala Harris,
who you may have heard of.
I was involved in MoviePass,
but I knew that user growth was critical.
I talked to Mitch.
He said that he'd had some conversations
with this guy Ted Farnsworth
and that he had some connections
with folks in New York finance circles,
which would be, you know, helpful.
Ted was the CEO of HMNY.
HMNY stands for Helios and Matheson New York,
a small data-analytics company focused mainly on IT.
He's extremely likeable,
the typical CEO/entrepreneur.
They love to chat it up. They love to be friendly.
And they go and take on these companies,
get people to really believe in them.
And he had a long history of doing that
in the beverage industry, in the supplements industry.
Ted has a great background in finance
and raising money, PR and marketing.
It was kind of natural.
I knew that if Ted fell in love with MoviePass,
he would invest.
So I went to meet him and got to know him,
thought he was a super-smart guy.
He said, I absolutely love what you're doing.
And he saw MoviePass
as something that could fit
under that umbrella.
[upbeat jazz music]
He's incredibly charming and very much,
you know, sort of knows how to talk about the future
and, ultimately, showed passion for the business.
He was a little worried about the business,
especially the total user base.
MoviePass had never gotten beyond 20,000.
And he said you needed millions of subscribers.
20,000 was not going to cut it.
The deal that was put on the table
was tens of millions of dollars,
which is more money than we'd ever seen at one time, right?
Which was very exciting
but with such a big asterisk next to it.
In order to get $25 million in cash,
we had to reach 100,000 new subs
within 6 months.
But it took 5 years
to get the 20,000 members that we had.
So we didn't know if there's a way to do it.
We explained the various pricing models we had tested.
And he asked us, what's the one you think is the best?
And we said, $14.95, 2 movies a month.
But we're worried about how much it's going to cost
to market and, you know, get people to try it.
He said, no, what you need to do is,
you need to make it so attractive
that you don't need to spend money on advertising.
And I thought, okay, let's give this a shot.
MoviePass dropped their prices...
to $10 a month.
[all cheering, screaming]
MoviePass is now promising
a month's worth of movie tickets
for about the cost
of a single admission.
- Ten bucks a month. - It's a heck of a deal.
[all cheering]
I showed up to work.
All I can just remember is just all of our queues
being in the red.
Everyone wants to sign up. Everyone wants a card.
When can I start using it?
And so, like, we got bombarded.
♪ ♪
You could look down for an hour
and see the customer number increase by 20,000 people.
I mean, it was remarkable.
♪ ♪
You have incredible demand.
People love this.
Their website was crashing all day
from sheer volume of people trying to go and visit it.
You went from $40 a month
to $9.95.
What happened?
This is the whole idea-- to get attention.
[laughing]
We thought it was going to take
about a year to reach 100,000 new subscribers.
But all of a sudden, we got 100,000 people
in 48 hours
and then another 75,000, like, the next day.
[phone ringing]
I remember Stacy calling me and saying,
shit, how are we going to send out that many cards?
We only have 50,000 cards.
And those cards weren't easy to make.
You know, they are real Mastercard debit cards.
I was like, okay, turn this promotion off
so that we could order more cards.
We need to pump the brakes a little bit
to make sure we didn't have a run on too many people
that we couldn't manage it.
I asked Stacy, how in the world do we get cards?
We have to hire a Brinks truck
to bring a big truckload of them
to a new facility in LA.
That's the only way we're going to be able to catch up.
It was not sustainable.
I said to Mitch, we can't do this every week.
And he said, no, this is great.
Keep it going. Let's try and figure it out.
[upbeat music]
♪ ♪
All I did was check my mail every single day
for my MoviePass.
The second I got my MoviePass, I didn't think twice.
I went from my mailbox right to the movie theater.
Today is awesome.
Why?, you ask.
My MoviePass card showed up.
One movie a day every single day with the pass.
I'm telling you, this is the truth.
That's insane!
The hottest startup
to disrupt Hollywood since Netflix
is getting rave reviews from moviegoers.
I'd watch a lot of movies.
I'd watch a movie twice now.
I think I'm going to invest in that.
Going to the movie theater, there's nothing like it.
♪ ♪
It was a Saturday afternoon,
and I went to the movie theater.
And I see the person to my left get out a MoviePass card.
And I see two people here get out a MoviePass card.
And I see people over there,
and they all have MoviePass cards.
♪ ♪
It was exciting to see people with the cards,
like, in the wild.
It felt like I had, like, a secret.
It was like, they don't know I work at MoviePass.
There was more than one occasion
where someone's MoviePass card wasn't working at the theater,
and I was like, can I please help you?
Like, I actually work there.
I troubleshooted whatever the issue was.
When we saw the growth, I mean, I was blown away,
and I was excited to see the promise
of the model validated.
Ted's team began marketing it extraordinarily well.
♪ ♪
I always tell Mitch, it's like we're doing
social re-engineering.
We're taking people back to the theater.
I'm seeing viral growth.
I'm seeing no need for paid marketing.
♪ ♪
The word of mouth is so strong.
♪ ♪
Making MoviePass a household name was absolutely
one of those things that we were starting to see
actually happen.
We're, at that time,
the fastest-growing subscription company
since Spotify.
There was a retirement community,
The Villages down in Florida,
that actually has a network of movie theaters.
And I swear, every single retired person in The Villages
had a MoviePass card.
A guy blamed his, like, divorce with his wife
on the fact that he loved using MoviePass so much.
So there were definitely some, like, wacky, weird complaints.
And just like that, you went from 20,000 subscribers
to 600,000.
Has it gone up more than that? That was the end of October.
Oh, yeah, it goes up every day, you know.
Because of Ted's good idea,
we were getting 100 million in PR and marketing value
and probably more each month.
That made me want to continue working.
That made me want to focus on my work and do well, you know.
But while the phenomenon is going on out there,
you're just kind of, like, blind to it
until we reached the million mark.
And I knew that was happening because I had
friends and family who were like,
did you hear about MoviePass?
I'm like, I work there. You know?
They're like, you do? I'm like, yeah, I do.
I had a cousin. She's like, I love your product.
Oh, my God, me and my boyfriend go all the time.
Like, damn, we're a lot bigger than I knew.
We were signing up
a quarter of a million new subs every month.
It has hit 1.5 million subscribers.
Mitch and Ted had a goal based on this trajectory
that they wanted to get to 5 million customers.
I was like, why are you running so fast?
You're out in front of--
Just put it on pause and catch our breath.
They would push back and say, we know what we're doing.
We got this.
Our plan was never to have a price point
that's promotional forever.
I think that's where the business got
into a tricky place.
In my conversations with Mitch and Ted,
I told them, I said,
we're kind of learning how to build the plane
in mid-flight
and changing it from a crop duster
to a 747 that can handle large volumes of people.
We were not prepared to keep running at that pace.
I would hear
that Stacy would have those conversations,
you know, at the bar after work or offsite,
telling a few of the employees that this would never work.
He did kind of pull up, like, a pitch deck
of kind of what he saw the growth trajectory
of MoviePass looking like.
He just wasn't being a constructive member
of the team.
I immediately kind of perceived
that Stacy was this impressive person
that I had no clue how he kind of fit
into the landscape of MoviePass.
A lot of times when they talk about MoviePass,
you usually get a picture of Mitch and Ted.
And that was, like, the thing that was, like, the spread
to the media, right?
MoviePass founders, Mitch and Ted.
But that's definitely not the case.
That's Stacy and Hamet.
Stacy and Hamet had built this company
from the ground up since 2011.
And when it finally...
found its groove with pop culture,
it had already been taken over by two men,
Mitch Lowe and Ted Farnsworth.
Which is funny, right?
You start thinking about it, right?
Like, two Black guys come up with an app.
They don't get any credit, but the two white guys do.
[sighs]
It was hard.
All of this was part of a bigger story.
I grew up in Houston, Texas...
born and raised.
And, you know, I think that it was really simple.
Treat others how you'd want to be treated and love God.
[soft music]
♪ ♪
One day, I went to see "Blade Runner."
[dramatic music]
I'd never seen anything like that.
And all I knew is,
whatever that is, I want to do that.
I graduated in 1985.
I went out to LA.
And I would go on auditions.
This one particular one, the line was--
it's HBO. Can I curse?
Yeah, you can say whatever you want, really.
[chuckles] The line was,
"Give me your motherfucking money!"
I kept screwing up the line.
Yo, give me the motherfucking car keys!
Give me your motherfucking car!
Give me your motherfucking money
and the keys!
And this white guy
comes out from behind the tape and says, no.
See, you have to hold your hand like this.
And he's explaining to me how to be a thug.
And it was just--
I just left.
I was like, this isn't going to work.
Music was always a part of me.
I was actually in a Rush cover band.
[Rush's "Spirit of the Radio" playing]
One of my favorite Rush songs to cover
was "Spirit of the Radio."
both: ♪ Begin the day with a friendly voice ♪
♪ A companion unobtrusive ♪
Anyway, so...
I got a call from one of my friends.
Motown was hiring.
- ♪ So we come ♪ - ♪ Oh, oh ♪
♪ To the end of the road ♪
I worked my way up
to product manager for Boyz II Men.
Their biggest hit single was "End of the Road."
Every high-school dance, you put on Boyz II Men.
They were like the frickin' Beatles.
When I was 25, they hired me at Miramax,
and I became the vice president of marketing.
I had grossed more than $3 billion for studios.
I was "Hollywood Reporter" 30 under 30.
It's like I didn't just fall off the truck.
25 years ago, I went to Sundance.
I talked to the head of the festival
about helping them show more films by people of color.
They said if there were more films that were good enough,
they would show them.
That just wasn't a good-enough answer.
So I ended up creating the Urbanworld Film Festival.
Our first festival was 1997.
Today Urbanworld
is one of the largest festivals in the world.
We premiered more number-one films
than any North American festival.
Such a big part of my cinematic life.
It's the festival that fostered what I'm doing now.
Stacy gave Black filmmakers,
filmmakers that appealed to urban markets,
Latino markets, a place to actually exhibit their films,
and that's something that hadn't been done before.
With Urbanworld Film Festival,
he found a great niche.
He understood,
find that customer, because all you need is one niche.
And those people,
because they've been neglected for so long,
when they finally feel like somebody just respects them,
man, they're going to be a customer forever.
There were a lot of subscription models
starting to be on the horizon,
from Netflix to Pandora.
And I thought, can we make a subscription
out of Urbanworld?
That was the origin of MoviePass.
I went around for five years,
and I couldn't get anybody to invest.
A friend of mine who's a movie producer says,
have you talked to Hamet Watt?
I think you and that brother should talk.
I was starting companies and/or investing in companies.
And that's all I've ever done my whole career.
I got very excited about the opportunity
in the theatrical window
because I saw that this was the part
of the entertainment ecosystem that innovated the least.
Stacy and I immediately
were finishing each other's sentences,
and we locked ourselves in the room with whiteboards
and started talking about the world of subscription.
We should do this. We should do that.
We should do this.
The next thing you know, we were putting together a model
and a plan to build what we were hoping would become
the largest moviegoing subscription business
ever conceived.
[upbeat music]
♪ ♪
Hamet said, I can raise money for this in a month.
I was like, yeah, right.
And he said, if I can, do we have a deal?
Can we be partners?
And I said, sure.
So we raised $4 million pretty early out of the gates.
I remember the first hire that we made at MoviePass.
I remember sending the note, welcome to MoviePass.
And that was the first of many hires that we made.
It was a really family-oriented atmosphere.
We had a lot of fun.
And we knew that this was a special company.
Very first version of MoviePass,
we built through movietickets.com.
They were part owned by AMC.
That allowed us to access the tickets.
Everybody loved it.
And we did the Fourth of July launch.
Here we go! Here we go!
"Transformers," the Michael Bay film.
You're coming home, old friend.
We had all the press there.
We showed them how the product worked.
We started the screening,
and the press agent brought us out and says,
hey, guys, something's happening.
AMC is really upset about this MoviePass thing.
AMC released a statement saying,
whatever this was, they were not in support of it.
Oh, my gosh.
The biggest player in the industry is not happy.
We got a cease and desist from AMC.
The music stopped.
So we were literally born on a Thursday,
and we died on a Friday before we ever even launched.
After you get shut down,
you start to realize that you need to be independent
or as independent as possible.
The problem we needed to solve at that time
was just being able to access tickets.
Since the theaters weren't allowing us
to go through their system,
we had no way into doing business with them
unless we built our own system.
That's when...
the red card came to be born.
You would go to a theater
where you wanted to see a movie.
You would look in the app, pick a showtime.
Your app would verify
that you were actually at the theater
that you wanted a ticket at.
And then it will load funds to purchase a ticket.
At that time, no one had figured out--
And that's why we got a patent granted on it.
No one had figured out a way to do that,
to use location services
to authenticate
a presence in an environment that would unlock access.
♪ ♪
Stacy and Hamet had solved the problem of,
how do we get access to enough inventory?
That was the secret sauce for me.
I think Stacy had sent me one.
[laughs] And I tested it to make sure that it worked.
And it did.
Like, I was able to go to a theater
and, you know, check in on the app, drive the card.
And, you know, that was really why I'm like,
oh, this can't go away.
This is a great idea.
We were running out of capital.
Chris said, I really like what you guys are trying to build.
And I'm going to give you guys a million dollars
to keep running the company.
He, that day, wired half a million dollars
into our accounts.
And I remember saying to him,
I said, Chris, if you come into this deal,
we're going to do a fair deal with you
in terms of the economics that you'll get.
But you'll also be our partner.
The terms he gave us
were actually more favorable than what we had discussed.
And then Chris put another investment in.
That is really what gave us the foundation
to start to do a lot of the stuff
that we ultimately did.
Stacy, first of all, how exactly is this going to work?
Pretty much wherever you are,
you're going to be able to go to movies using MoviePass.
We had a product now that no one could stop.
I remember trying to make an appeal to Gerry Lopez,
the CEO of AMC.
We needed to make money, obviously,
as a subscription service.
And part of that was going to come
from a partnership with theaters.
The holy grail is you got to get
what we called "butts in seats," right?
You got to get people to come to the theater.
What Stacy and Hamet were presenting
was a very innovative and very different idea
on how to drive people to the movie theater.
We said, we will improve moviegoing by 60%.
And if we do that, all we want to do
is participate in some of that upside.
Stacy and Hamet did a fantastic job
of teeing up a relationship with AMC.
They were visionaries,
and they wanted to be visionaries in the space.
They knew that the historical use of movie theaters
was going to change in radical ways.
Their thinking was clear.
It complemented all of our strategic direction.
Frankly, a no-brainer, because if it works,
we're going to want to go national with it.
So, we ran a double-blind survey
over a two-year period at AMC exclusively.
And we confirmed there was 112% increase--
I can still see that number--
112% increase in moviegoing behavior
after people joined MoviePass,
more than we had estimated.
It could work.
The attendance curve could be bent in such a way
that you could get incremental moviegoing.
This thing is a win-win-win for the studios,
the theater owners, and the consumer.
And Gerry agreed to roll MoviePass out
in partnership with AMC nationwide.
We were thrilled.
The future was finally going to happen.
[dramatic music]
♪ ♪
But Gerry made a decision to move on
to another company.
The new CEO was a guy named Adam Aron,
who was just far less receptive.
He gave us a hard no
that he liked the idea and believed in subscription,
but said, we'd rather do it ourselves.
I didn't know what we were going to do.
I honestly was like, we're done.
♪ ♪
All of these investors that were kind of looking
like they were about to come in,
everybody started slowing down.
And it was, if theaters won't invest in this concept
and studios won't invest in this concept,
why should we?
It wasn't that we weren't ringing on the doors.
We knew everybody. We had met with everyone.
Of all of the industries
I've ever spent time in in my career,
I found moviegoing to be one of the most insular, right?
If you're not part of the community,
if you're not an insider,
you're automatically an outsider.
Well, all industries have a little bit of that.
But in Hollywood,
I found that that was probably the worst of all.
♪ ♪
The cash burn was still significant.
And so I was providing some more financing
because I didn't want to see it die.
Somehow, Chris got connected with Mitch.
Mitch was starting to suggest
that his involvement would help unlock some more capital.
Chris said, I can't keep funding
unless we make a change.
And I'd like to bring in Mitch Lowe as a CEO.
I got on a red-eye,
and I flew out to have the conversation in person
and to say, look, this isn't working this way.
We've got to go with Mitch to kind of amplify
some of the very good stuff that we're doing.
And I know you're not going to be happy with that.
But, you know,
I think that you guys could be good partners,
but we need to put Mitch in charge at this point
and try to turbocharge the operations here.
He said, you can either go with this, or I'm out.
And I just didn't know where we could find
an ally that we had in Chris.
I rolled with that decision,
and that was a decision that I made,
to go in that direction.
Stacy still had a role.
I still had a role on the board.
And Mitch was going to be some potentially new blood
that might provide
some gray hair and optics.
Stacy and I were brothers
in this journey from the beginning.
There were some concerns
that both he and I had around Mitch.
When he joined,
the board structure changed.
Hamet and I were two seats.
Chris was a seat, then Mitch was a seat,
and then Chris had another seat.
So you had this shift of power.
There were many times that Stacy and I were talking
to each other about just keeping the faith
and keeping on going.
♪ ♪
If you have a white male
with more gray hair,
that could inspire other white males with white hair
to be more comfortable investing.
It's a factor that we considered
through the entire entrepreneurial journey.
The stats are pretty clear, especially back then.
Women and minorities
were only accessing 1% to 3% of all venture capital.
So that's a pretty small number.
And Hamet and I were seasoned entrepreneurs
and had been around and had very successful track records.
For Black founders, Black entrepreneurs,
no matter what your business is,
the access to capital...
there's no equity.
It's a challenge for every entrepreneur,
but it's much more of a challenge
for Black entrepreneurs than it is for anyone else.
There's certain stereotypes that society has
of what a successful entrepreneur looks like,
and we didn't look like that.
And it's hard to tell sometimes
whether that lack of receptivity
is a function of doing something disruptive
in an industry
or dealing with two brothers
trying to do something disruptive in an industry.
A lot of times...
African-American,
because we don't have all the opportunity,
we're so excited that somebody is believing in us,
and sometimes we're on our last breath,
we take the money,
and we don't ask what you want out of it.
Then whatever you get is at a predatory level.
So you're set up to fail.
Mitch was brought in as the CEO.
Mitch came out to New York to meet with the team.
He said, so you're on probation for a while,
and I'm going to see how you are
and determine whether or not I'm going to keep you.
Oh, God. These old stories.
[scoffs]
This is a company, not a family.
And, you know, we're here to make the company successful,
and everything has got to, you know, revolve around that.
I thought that it was arrogant.
I thought that it was mean-spirited.
I thought it was unnecessary.
While Hamet was a co-founder,
he really was not active at all.
With Stacy, I realized, you know, Stacy knows
the ins and outs.
He knows the software.
And so I moved Stacy from being CEO
to being chief operating officer.
I'm just not going to say
what came through my mind at that moment.
But it's like that sketch from "Key & Peele"--
"The Anger Translator."
Good evening, my fellow Americans.
With me as always is my anger translator, Luther.
I hate you!
86, you [bleep]--
The anger translator saying what he really wants to say.
I was respectful to him.
I said, I'm grateful that you're here.
I'm looking forward to working with you.
And that's what I said.
I hear your voices, and I'm aware of your concerns.
So maybe if you can chill the hell out
for, like, a second, then maybe I can focus
on some [bleep], you know?
♪ ♪
I had an expectation that Mitch was going to provide
more financing to the company
and that that was gonna take some of the burden off of me.
And that did not happen.
And that's when HMNY and Ted came in.
Ted was just slick.
That's the best word I could come up with, very...
just slick.
We had skepticism around whether or not HMNY had money.
We had skepticisms around whether or not
they were credible from a strategic standpoint--
like, would they be the right investors to have?
But in terms of the capital,
they actually did have the capital.
[applause]
The pitch that Ted and his group were making
was that they would be able to drive growth.
First, I want to welcome everybody here in...
There was a hedge fund that turned out
to be the primary backer
of HMNY--Hudson Bay.
And so the first tranche of the financing
allowed us to start to do some really interesting things
that we had never been able to do
because of the amount of capital.
[cheers and applause]
[all cheering, screaming]
And the stock is exploding today
after the CNA team called it a gold mine.
Right now HMNY is up 21% today
at 2,541.
There was this huge run-up of the stock,
where a lot of people were really excited about it.
It got crazy with Wall Street,
particularly millennials.
This was exactly what they were looking for.
They had missed out on Netflix.
Put my money in this, I could become a millionaire,
like all those Netflix millionaires.
It took off.
Really, the whole excitement and lure for a retail investor
is getting in on the ground floor of the next billion,
$10 billion business.
I believe I got in around $9,
and, man, I felt like a genius.
Shares climbed 146%.
So $9.99, you can watch as many movies you want.
Fuck, you can't beat that, man.
That's better than Redbox. Fuck Redbox.
Now is an excellent, excellent time
to buy into HMNY.
There's no denying that it was a real rocket ship
when it came to subscriber growth.
And that was the number-one metric
that a lot of people were paying attention to.
And that was just through the roof.
It was pretty exciting
because the stock was going through the roof.
Public markets were excited about the user growth.
The stock price climbed from $2 a share
up to $38 a share.
So the brand was there.
The acknowledgment in the marketplace
of the value we had created was there,
but we were paying for tickets full price.
The average ticket price was $11.50,
and we were charging $10 a month.
But people were going to four movies a month.
We were losing a lot of money.
And so you took that $25 million,
and you just said, poof.
We had a million users, and active users, you know,
not just like, oh, I have a subscription,
but I don't really use it-- no, they were active.
Or some people were seeing the same movie
six times in a week.
Okay, I will admit it.
I would go see
about a half hour of "The Avengers"
and then come back the next day
to see the next hour of "The Avengers."
And then if I missed a part,
I would go back the next day
to go see the first half of "The Avengers" again.
Why?
Because I could. [laughs]
I said, I'm going to go to watch "Crazy Rich Asians"
every single day for a week at the theater.
[laughs] Yeah.
I watched "Crazy Rich Asians" 14 times overall.
[gong sounds, indistinct chatter]
Because they can.
I liked it a lot--it's a really good romantic comedy,
and not many good romantic comedies around anymore.
I went probably close to 20 movies a month.
I wish I could have seen more.
You know, I was engaged,
so I didn't have a lot of free time.
In total, I went to the movie theater 428 times.
[laughs]
Don't hate the player, hate the game.
Every board meeting I was vehement
that we needed to increase the price
because there was no way for it to be profitable
at this level.
But Mitch and Ted were doing their own thing
and making those decisions.
Obviously, we couldn't have a subscription service
where, you know, we're paying
more than we're receiving.
But I think Mitch and Ted were more focused
on what was making the stock move,
which I think at that time was just top-line user growth.
And that was all that they were fixated on.
And they were confident that would allow them
to figure the rest out later.
We have figured out a way to give people a deal
they cannot believe we can even afford to give.
Mitch was able to get a lot of deals in place
that Stacy had not managed to move along.
We're on the way to over 5 million subscribers
by the end of the year.
And that's when the cash flow starts to become positive.
We knew 5 million subscribers
would get us to somewhere
between 12% to 15%
of all the box office in the country,
which I believed was enough clout
to convince AMC to discount us,
the studios to pay us millions of dollars a month
to advertise.
Then selling the data
was going to be extremely valuable.
How much of this is about the data,
about knowing Tyler and Melissa and me?
Yeah, a huge amount of it is the data.
Because, you know, this whole system is broken
in the movie-theater business.
Imagine, Warner Brothers does not know
who saw all the previous Batman.
They have to spend $50 million, $100 million
marketing every time a film comes out.
And that's why Helios and Matheson,
a data analytics firm, actually just made a--
they took a stake in your company.
That's right.
There was a ton of enthusiasm,
but we were, like, severely understaffed.
A big moment for us was the first time
that the, like, app went down.
The entire platform was virtually unusable.
Thursday night to Sunday night,
we were being hit hard.
It was one hit after another.
Our servers were getting annihilated...
[chuckles] All the time getting emails,
errors, errors, errors.
I worried about the brand,
our reputation in the industry.
Mitch and Ted would push back and say,
we know what we're doing.
We bought you.
Thank you for sharing.
[train horn blaring]
♪ ♪
At the monthly board meeting, Hamet and I were told
we were being removed from the board.
They said, hey, we're reconstituting the board.
We don't want the co-founders on it.
I remember Stacy pushing back.
It broke my heart to see two Black founders
create a company the way we did,
and then all of a sudden, there was an all-white board.
I didn't want to be in a place where I was, like,
really feeling like in the back of the bus.
I'd say to myself, the value is high.
I can only hope that these guys
are going to be aligned with us and be good stewards
of the capital to continue to make sure
that the business is valuable.
Stacy was...
because he had been more truly day to day,
fought that a little bit more.
Unfortunately, there are people
who are not cut out for the stress and anxiety
caused in a start-up.
Ultimately, that was a decision that Mitch made,
and it was one that we needed to back him on--
or we felt we needed to back him on at the time.
I reached out to Chris when they told me
they were kicking me off the board.
He didn't respond.
Chris is such a sweet guy.
The last thing he would ever do is fire anybody.
So he said, you deal with it.
And so that's what I did.
A few weeks later, there was an email from Mitch.
"We want to thank you for your services,
"but you're no longer needed at the company,
"and...
there will be someone moving into your office next week."
We were all just pretty upset.
How do you fire Stacy Spikes from MoviePass?
The founder of the company is leaving.
That's not a good sign.
He's, like, the heart of MoviePass.
I think I did a very fair--
You know, he still owned all his stock.
He still owned all his options.
I just thought that it would be better
if he wasn't a part of the team.
Some people were really upset.
A few people started crying.
A lot of hugs.
And I said, you know I live right around the corner.
I'll be there if you need anything.
I packed my stuff up,
and I left the key on the desk,
and I walked out of my office.
I called my wife before.
So I think she had gotten all of her crying and stuff
completely out before I got there.
But I got home, and she gave me a big hug,
and she says, honey, I'm so sorry.
And then it just kind of settled in.
It was like, wow, this is a trip.
♪ ♪
[fireworks popping]
[upbeat music]
♪ ♪
No one knew anything about the founder of the company
being ousted,
but at this point, that's when the company
drastically changed.
There was definitely an atmosphere of partying.
You know, every single month,
there was a MoviePass-hosted event.
That was really part of the excitement
of our operations,
trying to develop PR and marketing...
Making contacts.
Ted's the best at that.
He is someone who understands
what convinces people to buy a product.
He is exuberant.
Ted portrayed a kind of visionary status
that you see with business leaders like him.
I asked him one time, why are you giving a $100 tip
you know, for a sandwich?
And he said, my mom put me through school.
She raised us all on tips.
♪ ♪
Our first company holiday party,
everyone's just--you know, wine everywhere, right?
Just wine, wine, wine--free. Like, here take it.
Mitch was making a toast,
and he said, all your stock options, you know--
You're gonna be good. We're gonna be making money.
He said, mark my words. Everyone's going to be rich.
Everyone's gonna make it.
We all went back to Ted's house, his apartment.
It was very nice. [laughs] It was very nice.
[elevator bell dings]
That was always something that was--
especially seeing his apartment building--
was, like, living in this, you know, lavish penthouse.
Ted is a wealthy guy who has a lot of connections
who were changing the culture.
[dramatic music]
His nephew worked there,
you know, some other family members, close friends.
My friend of this and my friend of that.
Ted's official photographer is his executive assistant.
Bob Ellis was a close friend of Ted Farnsworth--
is the ex-husband of Diana Ross.
He has been in and out of the Hollywood social scene
for decades,
was basically hired to be in charge
of marketing as a consultant.
I'm going to talk a little bit
about relationships and connecting, and...
One of the major figures that Mitch Lowe hired
was Khalid Itum.
He was someone who was selling furniture
at one point in his life and decided to change things up.
And he happened to meet Mitch at a conference.
Basically pitched him.
Said, hey, I think I could be a good fit for your team.
He just got to the point of saying the right things,
that he just kept going up and up, up the ladder.
We needed to think about having an office in LA.
I thought of Khalid--
someone who could connect with the studios
to sell advertising and work out data.
I made him VP of business development.
Khalid, the connector that he is,
knows everybody and brought on a number of people
in Los Angeles.
We have this entity called MoviePass Ventures
that's going to make movies.
[upbeat music]
MoviePass had the ability to make a small film--
you know, $1 million, $2 million films.
MoviePass could ensure their success
by promoting them to our 3 million subscribers,
buying a ton of tickets.
♪ ♪
A million here and there
seemed like small change,
especially relative to what I saw as the benefit
that it could be.
They were on a spending spree.
It was very nerve-racking
because we owned a decent chunk of the business
and the value of the business had gone up so much.
We put our everything into it
and left at a high point,
although we had an asterisk next to that high point.
When I was fired from MoviePass,
my ownership was valued
at around approximately $80 million.
But there's, like, a 12-month lock-up period
that you're not able to sell your shares.
If you can't sell it, it's hard to really count it.
And so we are hoping and dependent
on that business maintaining and growing its value
but not in a position to control that.
That's why I don't count that.
I don't count that shit until it's in my account.
It's dangerous to do that math before you can spend it.
And so it's an incredible amount of anxiety.
You're not behind the wheel.
You're not even close to the wheel.
Oh, my God, are they really spending that much money now?
Like, that's not going to sustain, right?
I'm worried that that's not going to sustain.
But maybe they had a rabbit in the hat.
Joining us now, MoviePass 's CEO Mitch Lowe
and Ted Farnsworth.
Welcome, gentlemen. - Thank you for having us.
- So another milestone today. - Yeah.
There was a certain point in late January of 2018
where a lot of decisions
started to get made by Ted.
And I could see these components coming together.
MoviePass, within the next 60 days,
should be self-sufficient on its own.
- Wait. 60 days... - Yes.
It's going to be cash-flow neutral?
Yeah, like, self-sufficient,
where they're not going through cash burn.
[upbeat rock music]
♪ ♪
We understood the business strategy.
We're going to be able to set up technologies.
We're going to be able to do all these other things.
We have all of this data from the consumers that we can use.
All we had to do was sit back
and explain the story to the media.
And that was a really great place to be.
- The idea of selling data-- - We're the only ones--
Have you been able to sell any of the data yet?
- Oh, yes. - You have?
Yeah, we've already signed agreements with studios.
♪ ♪
We're investing in building
a huge subscriber base.
People are seeing films they never would have seen...
- Right. - Without a MoviePass card.
We're buying sometimes 20% of all the movie tickets
in the United States.
The media was trying to grok the economics of this.
All they could see was an inherent loss
with every transaction.
You have everybody all over the industry saying,
your business model doesn't work.
Correct.
So why does it work?
Oh, you want me to explain?
Why the business model does work, yeah.
It had a disconnect on how that data
would be used downstream to really bring in the revenue.
We have figured out a way to give people
a deal they cannot believe we can even afford to give.
- Yeah, 'cause you lose money. - Yeah--No, we actually don't.
How do you not lose money?
I was really--I was a believer in the mission.
I believed in the vision.
You know, you invented this...
Mitch and Ted were doing a lot of TV-show interviews.
And I felt like--
you know how sometimes somebody is trying to...
prove that they're confident?
I almost kind of was like, okay, go ahead.
Feel yourself.
You're the chairman of MoviePass.
It's an enormously huge idea.
Any movie, any theater, any day--that was me.
That's what I created. - [chuckles]
[upbeat music]
♪ ♪
We were at Sundance Film Festival.
Ted became enamored
by this whole business of entertainment.
Khalid introduced him to a number of people
and the potential
between MoviePass and filmmaking.
They rented probably--
it had to be a $50 million mansion.
Everybody was wilin' out, dancin', celebratin',
and just really kissing the ass of everybody
that worked at MoviePass,
because they all assumed, like I did,
that they were just the next big thing.
Like, they were the ones to get involved with.
After they made such a name for themself,
everything was possible at that point--everything.
♪ ♪
I had heard a little bit about MoviePass
within the past couple months just on media,
whatever it may have been. [camera shutter clicking]
I was fully engulfed in my social-media influencing.
And Bob Ellis had called me basically out of the blue.
I'm doing this event with MoviePass.
We need you. We want you to do merchandise.
You're going to fly in. We have VIP tickets for you.
You're going to go to this party,
and then you're also going to go to Coachella.
It was three days prior to the event.
[electronic music]
♪ ♪
And Dennis Rodman showed up.
I didn't know who Dennis Rodman was.
He's tall. I'm short. This is hilarious.
♪ ♪
I saw Dennis Rodman
getting out of the MoviePass helicopter on Instagram.
[chuckles]
It is dry as a motherfucker, all right?
And he was walking all around,
telling people about MoviePass.
We were just all like, what?
$20 million, what they're spending here.
I don't even know what they were doing,
but what I was told was,
make Dennis Rodman wear this merchandise.
Got to thank these guys here, MoviePass.
For Coachella, it was Khalid thinking,
this is a great way to get our name out there.
The entire Coachella thing was just weird.
I mean, what's going on? Why is this happening?
It was just kind of like, what the fuck?
Where did we get money for that?
Ted and his crew did like to post pictures
of them having a good time.
♪ ♪
I don't understand why we were even at Coachella
as a movie company.
Staff on Ted's side--
they're really enjoying the ride.
And people were back at the office
trying to figure out customer-service issues
or why somebody wouldn't get their card.
At the time, it was super backed up.
There were hundreds of thousands
of customer-service tickets
and, like, seven people answering them.
You remember that? The Coachella party?
Do you think they invited us, the customer support,
or just anyone who wasn't upper management to Coachella?
No, they didn't.
I sensed a resentment
by the MoviePass employees.
Each individual has their various roles,
and not all roles get to party.
They had spent over a million dollars.
Meanwhile, there weren't extension cords
to plug our computers into.
I still have to go next door to the bank
to borrow pens or whatever, you know?
Like, it was insane.
Mitch and Ted started to develop plans.
Some of them were logical,
in that they wanted to promote the service,
but they became illogical and irrational
as it relates to the way the business
was going to finance itself.
And that's the thing that became very tricky.
Ted became all excited, telling me,
hey, we're going to do this film.
John Travolta is attached to it.
And Ted said, yeah, and I'm going to put
your name on as a producer.
And, okay.
For me, it was just a film that made sense
that we could promote and earn money from.
Let me tell you something.
"Gotti" opening weekend--
it's got the dreaded 0% Rotten Tomatoes score.
Not a single person who reviewed it
gave it a positive score.
- That's a goddamn lie! - Order!
Gotti, they're lying! She's lying!
There were, like, these weird, little, like,
cockamamie schemes,
where they thought, oh, we can generate money.
And I don't think anybody could figure out
how this was supposed to work, this $9 a month.
People were asking me, how do you think it worked?
Like, you know, what's the Coke secret formula?
And I was like, I don't know-- something with concessions?
That's the only thing that I could think of.
The first MoviePass story I wrote
that was of major significance
was when they had their 10-K filing.
[applause]
Because MoviePass's parent company, Helios and Matheson,
was a publicly traded company,
they have to file things that you can see publicly.
They had their 10-K filing--
when a company needs to kind of, like, assess
where they're going.
It revealed that in 2017,
they lost, like, over $150 million.
When I was CEO,
we lost around $200,000 a month.
When they were running the company,
they lost $30 million a month.
I wish we had access to those reports
before they went out--
when the 10-K was released
and they were seeing
this hemorrhage.
I primarily invest in small companies
and help build businesses as a venture capitalist.
If you read the 10-K of this company...
which I did,
it is an endless list of...
oh, my God, what is happening here?
There wasn't any sense
that the financial situation would improve.
And that would mean they would just keep having
to go out and find hundreds and hundreds
of millions of dollars
to continue to float their company.
The investors started getting nervous.
All they saw was money going out the door--
millions every month.
Their stock plummeted.
Me writing about that really set things going
of people realizing that maybe things aren't going
as well at MoviePass as many of us thought.
[ominous music]
One day, I was just googling Ted Farnsworth.
What you're about to learn today
is how you can travel around the world
for pennies on the dollar...
I was really down a rabbit hole,
looking at videos I've seen of him from a lot of companies.
Ready to go, lock in your freedom, lock in...
And I kept seeing these articles
all built around a defense of Ted.
"Ted Farnsworth may seem like a scam artist,
but he's actually not."
"Anyone can say he's a scam artist,
but he's really, like, a great businessman."
They were all using similar language.
And I was just struck by,
God, like, someone's got to be paying for these.
Like, this is such a ham-fisted strategy
to try to improve your public image.
I mean, he doesn't necessarily come across
as a very...
I should say, traditionally sophisticated businessperson.
You're making money while you're sleeping.
I always tell people when they sit there
and they're having lunch with somebody,
they could be saying, I'm making money right now.
He's gotten into the energy-drink game,
the farming game.
Hello, I'm Latoya Jackson.
If you have any questions about your future,
now you can call your own personal psychic anytime.
Starting a psychic hotline with Latoya Jackson.
He's a chameleon.
I do want to ask about how your biometrics works.
So it's three points of the face
and a mathematical formula.
That's really the big differentiation
between us and any other facial-recognition company
out there.
Suddenly, he was a movie exec.
I just was baffled.
Who is Ted Farnsworth?
Ted never shared his master plan with me,
but every single Monday,
we needed more money than the previous week.
And I had no idea how we were going to get it.
I would go to Ted and said, How long can this go on?
And he said, just keep going, and the money will come.
♪ ♪
When they were losing all this money,
Ted was also trying to start a plane company.
♪ ♪
We have a hemorrhage going on in your business model.
And now John Travolta's plane has a MoviePass logo on it?
And he calls it MoviePass Air.
Yes, it's called MoviePass Air.
I saw that crazy spending,
and I was just shaking my head.
I was just like, oh, gosh.
Please, like...
let them know something I don't know.
All right, MoviePass is fucking awesome.
And welcome 50 fucking Cent!
[cheers and applause]
Ted just wanted to go to parties
and hang out with Hollywood stars.
Make some noise for 50 Cent!
Go! Go! Go! Go! Go! Go!
There was no branding strategy
for Ted to be involved in hobnobbing with Hollywood.
I started getting reached out from people
who actually work at MoviePass.
There were some people
that would send me recordings of meetings.
We would have big meetings.
I remember Mitch telling us, everything's great.
Everything's great.
You know, everything's going to plan.
I was focused on trying to save it,
trying to find some solution, a different model.
In an attempt to stop the money loss,
MoviePass was changing their terms of service daily.
Changes continue
for the troubled film-subscription service.
MoviePass announcing more changes.
The subscription-based company will now only allow users
to choose from six movies a day
and see a total of three movies per month.
You can't use it on Memorial Day Weekend,
but you can use it during these windows here.
A little shady.
A lot of people are probably not happy about this.
We implemented a ticket-verification thing.
Next time you go into the app,
if you want to see another one,
you have to upload the stub, take a picture of it.
We were trying to find out ways to not bleed out cash.
The type of images people were supposed to send
were their actual ticket stubs, but...
I've definitely sent MoviePass a picture
of my middle finger before.
It became clear that we were not able
to provide any solutions to people
with the state of the app as it was.
It simply was not working.
So there was very little that we could do to help people,
which is really frustrating when that's your job.
It just felt like chaos.
Summer of 2018 was when MoviePass
started to really hit a fever pitch
in terms of popularity.
[suspenseful music]
♪ ♪
That "Mission: Impossible" film--
I remember it being promoted,
or they had emails actually encouraging members to go.
When "Mission: Impossible-- Fallout" came out,
we started hearing from customers
that the service was not working at all.
I've ruined your day, haven't I?
When I check the MoviePass today,
let me show you guys what I see.
"Mission: Impossible-- Fallout,"
I haven't seen that.
There were already signs
that there were some technical issues
with being able to fulfill the promise
that MoviePass had.
But I noticed with "Mission: Impossible,"
it felt like a national issue.
It's just the discussion surrounding that movie,
I recall, was vitriolic.
[chuckles]
We're right here at this theater, right here,
and they just opened-- no screenings at this theater.
I might as well start a fire and try and send
customer service smoke signals.
They're more likely to answer that than their phone
or the email that I sent.
We did get a lot of hate mail, I remember.
We had stacks of hate mail.
It got so bad that, apparently,
a customer literally sent a box of shit to the office.
I get it.
Like, I mean, I wouldn't send no shit to a company
if they were doing me wrong, but...
wow.
A lot of these things were during a period of time
that I was--
You know, I was in the middle of a divorce
after 40 years of being with my former wife.
I was totally distracted.
So, without a specific amount of time,
I just thought, you know, this would be a good time
for me to take off and let Khalid take over.
Mitch was still CEO, but Khalid Itum was running
the day-to-day operations.
I'm sure you're aware of Khalid, right?
You know, honestly, I don't even remember his role.
I just know he went from one role,
and then next thing you know,
he was senior vice president of that role.
And then next thing you know,
he was, like, pretty much running the show.
While Mitch took off to Mexico
in the wake of his divorce,
Ted is living his best life.
[easygoing music]
♪ ♪
There was a picture on my manager's IG
of them partying it up on a yacht.
♪ ♪
And then he put this picture on private.
I'm like, it's too late.
People within the company were beginning to realize,
there was not going to be a happy ending to this.
[indistinct shouting]
It's like that moment in "Titanic"
when the band is still on the boat
while it's going down, but they won't leave the ship.
Shares of Helios and Matheson
have plunged 90% so far this year.
Shares peaked at the equivalent
of more than $8,000 a share.
Right now it's trading between one and two cents.
I desperately went to Ted and said,
we need a minimum of $5 million.
Ted said, I'm sorry, we can't come up with the money.
[somber music]
♪ ♪
Well, subscription movie-ticket company MoviePass
announcing it will shut down.
It was a bit of a bummer that this good thing
had to come to an end
for everybody that really saw the vision.
♪ ♪
Eventually both HMNY and MoviePass
declared bankruptcy.
It took Stacy over a decade to create MoviePass
and less than a year
for Mitch and Ted to drive it into the ground.
Ah...
♪ ♪
I think the hardest part--
I think if we had failed--
and I use the collective "we" of the MoviePass team
We tried a product,
it didn't succeed in the market,
and we just failed.
I think I could have lived with that.
But what was hard about what had happened was,
we had succeeded.
We had built a brand over years.
The brand had enormous value in the marketplace.
We were disrupting the movie industry.
We were changing everything, and it worked.
And that made it harder.
But I think losing all that money was...
[groans]
It's very disappointing.
You work more than a decade on something.
You summit Everest. You literally make it.
And then it's gone within the amount of time
that you as a founder can't sell your stock.
It just vanished.
By the time MoviePass was no more,
the stock value, around $80 million,
that Hamet and I had was worth pennies.
It's a pain to have to explain
the MoviePass situation,
'cause when it was in the news, like,
I had to explain that to everyone
that I interacted with on the business side,
and that's not fun.
And the only thing I could say is, like, look,
we exited the business,
and the new team took it in a direction that--
took it in various directions, right?
I had to be fairly neutral around that.
I was not talking to Ted at all.
I knew from the beginning that Ted and I did not have
the same values,
but Mitch did say, I apologize.
Like, I remember him apologizing...
which I was glad he did,
but it didn't solve the pain.
It was 10 years after we launched Netflix
that streaming first began.
Mitch loves to pump up himself
as this great disruptor,
but it was clear for people who worked at MoviePass
that this guy was not the answer.
Mitch's history, as I found out more,
was spottier than he would have represented.
He would tell us how he was one of the founders
of Netflix.
Mitch was not a co-founder of Netflix.
Mitch Lowe, in the early days of Netflix,
was someone who was able to provide them
with loads and loads of disks, of DVDs.
When Mitch came on board,
he had some very strong opinions
and had a very...
non-Netflix, non-Netflix-y way of approaching it.
Mitch and I got to a point where he told me
that he was going to quit
if I didn't take Ted's financing deal.
And I ultimately said,
well, I don't want to run the company, I can't.
I've got other things to do right now.
So I guess we're going to do this.
You know, and that was the beginning of the end
in some ways.
[train screeching]
I got a voice mail
from someone who said they were from the FBI.
And I ended up doing an interview with them
regarding investigations that they were doing
on MoviePass and HMNY.
I was talking to the Attorney General's Office,
the FBI, and the FTC.
It was quite nerve-racking.
I've never seen or done anything like that.
The FTC was investigating allegations of fraud
by MoviePass against customers.
The deeper you got in, the more you realized
all the shady dealings that were going on.
Mr. Farnsworth and Mr. Lowe
got themselves into a real predicament.
What I heard was that Mitch Lowe
told his tech team
to block people from using the app.
The subscriber didn't know the rules had changed,
and that was unfair.
I understand needing to get costs down,
but that's not the way to do it.
I think there was a time
where MoviePass was struggling financially,
where they started to do some very questionable things
around...
turning people's cards off and things like that.
No one ever made the cards not work--
never, never, ever, ever.
We did do some things to attack fraud
that we believed was happening.
Had a lot of people that were abusing
the terms and conditions early on,
so we slowed down and slowed down the growth.
A company can certainly implement procedures
to make sure there's no fraud going on,
but that's not what they were doing here.
They were hemorrhaging money,
and they wanted to stop the frequent users
from actually using the product.
We were being told, you know,
to build roadblocks to our users.
That, to us as engineers, was just not okay.
For us to do things that was, like, a little dirty,
like, didn't seem right.
As a guy running a business,
I feel like Mitch was doing what he had to do to survive.
He was trying to lose less money.
Comically and ironically,
that meant selling less of his product.
Now you've taken someone's money
for a product that you're not giving them.
The first thing that really jumped at me
was those internal documents and emails
that were basically saying, hey, should we do this?
The FTC might come after us if we do it.
There seemed to be almost an awareness
that, like, the FTC is going to be very upset
when they hear about this and might come knocking,
and they did it anyway.
There seemed to be an aspect of that
that was almost sort of cavalier.
Look, Wall Street loves this story.
They love a growth story.
We got over 3 million subscribers.
Nobody's even close to us.
With MoviePass,
the way they were telling the story was exciting.
We're the hottest brand out there going for the last year.
And so we're here.
We're not going to run out of any cash
or anything like this.
I had invested in MoviePass between $4,000 and $5,000,
and I chose to invest
because it felt very disruptive.
It was exciting. I pounced on it.
Our burn now is, like, down
to approximately $12 million a month.
Ted's sitting on TV, telling everyone,
this is going to be profitable,
but you as an outside investor,
you couldn't disprove it.
We're the only ones--
Have you been able to sell any of the data yet?
- Oh, yes. - You have been able--
Yeah, we've already signed agreements with studios.
They were doing a lot of interviews
and mentioning the way they would make up the loss was,
they were going to sell people's data.
That's insane.
I can sell someone's
specific data to an advertiser
for $2 to $4 per 1,000 people.
I might get 10 bucks.
And that's per 1,000, which wasn't going to offset
the tens of millions of dollars
that they were losing on a quarterly basis
running this business.
And how much of this is about the data?
A huge amount of it is the data.
The stock price goes up
because Mitch and Ted created some crazy story.
60 days, it's going to be cash-flow neutral?
Yeah, like, self-sufficient,
where they're not going through cash burn.
It is not illegal to be stupid.
It is not illegal to be wrong.
It is illegal to knowingly lie and mislead
and then take someone's money.
It's the small retail investor
that gets sucked into these ideas,
and no one ever sends the money back to them.
They don't see it coming.
I believe I ended up losing about $200,000,
which was a significant amount for me.
[chuckles] Looking at a MoviePass card,
it makes me feel like...
warm shit.
[laughs]
Ted and Mitch fleeced retail investors
and the average person,
either users of the service or shareholders like myself.
It's just sad.
Ted was not selling a product.
Ted is a stock promoter.
You see a repeated pattern.
[dramatic music]
I'm so glad to see that you made the right choice
to come to the next section.
So what you have to wonder is,
how is HMNY...
getting the money...
so that MoviePass can lose it so quickly?
And the answer is,
they're raising it from Hudson Bay.
Hudson Bay was the hedge fund
that was behind them.
In total, it was upwards of $200 million
that Hudson Bay invested into HMNY.
Your next question is,
why is Hudson Bay buying stock
or getting debt from HMNY
for a business that's losing so much money?
We were investigating
these hundreds of millions of dollars in losses.
And we kept trying to figure out,
what was the plan to actually make this business work?
People like Ted are not there to build a business.
They're there to sell you stock.
That's what they do.
And the people who were working at MoviePass told me
there was never going to be any big partnership
with the major movie theaters.
There was never going to be any huge marketing dollars
that were going to somehow save the company.
There was never going to be this big data
that magically was sold to a tech company or something
and made everything work.
It is no different than making a play on Broadway.
You need a star,
you need a story, and you need a prop.
Mitch is perfect.
Look at his background. Look at his appearance.
Mitch is the guy. He's the guy. He's the CEO.
We're on the way to over 5 million subscribers
by the end of the year, and that's when the cash flow
starts to become positive.
Ted's the visionary.
MoviePass is our prop.
Look at the growth.
And what is the revenue stream
that makes that possible? - Multiple revenue streams.
They're putting on a play.
Instead of buying a ticket, you bought their stock.
[chuckles] In both cases, you left with nothing,
other than memories.
Some of the instincts we had
around the way the ship was being run were correct.
That behavior and those decisions
were destroying value.
And the brand that we cared about,
the subscribers that we cared about,
the user experience that we obsessed over
all was getting washed away.
And this just in.
The former CEOs of MoviePass and its parent company
have been charged with securities fraud.
Prosecutors say they misled investors as part of a scheme
to artificially boost the company's stock price.
The problem with Ted's strategy at MoviePass--
like, he lost so much money so quickly.
It could have lasted much longer
had he said, $30 a month, and sacrificed the growth.
It seemed like he just had a "Thelma & Louise" strategy.
Let's just gun it and go off the cliff.
[tires squealing, engine revving]
♪ ♪
People's money just went up in smoke.
If I had done what they had done
and gone through $250 million, I would have been in jail.
It's kind of like they were the goddamn Mike Tyson
of fucking movies.
How do you burn through $250 million?
What the fuck is wrong with you?
Are you crazy?
Ted's a con artist at the end of the day...
period.
What was a fantastic business idea
got turned into this circus.
When I look back,
I can come up with a dozen things
we should have done differently.
It's true for any failure.
It's not only embarrassing,
but it's also a big learning lesson.
And for me, it just reminds me
how many mistakes that I made in that whole business.
♪ ♪
I'm going to talk a little bit about relationships
and connecting.
My name is Ted Farnsworth.
I'm the co-founder and chairman of Zash Global Media,
as well as co-CEO of Vinco Ventures.
Let me apologize to the shareholders
of Vinco Ventures.
It looks like a circus going on here.
At one time,
there was this really positive group of people
who were just trying to make moviegoing easier.
And...
it's really an example of, like, corporate greed
and...
what that can do to people and to a company.
Ted and Mitch are the people who took MoviePass
and turned it into this, like, monster.
It was the greatest thing ever.
I was paying $10 a month,
and I was able to go see a movie once a day, every day.
And I averaged, like, about--
I'm going to say I averaged about four movies a month,
sometimes four movies a week, for real.
And I'm realizing, I haven't been to a movie since.
[laughs]
Oh, I miss MoviePass. Oh, I miss it.
I wouldn't have had a problem
paying a little bit more just to keep the company around.
Maybe had they would have done it from the beginning
or kept it the way it was when it first started,
maybe it would still be around today.
The reason why I still have it, it was just--
it represented a great time in my life,
despite all the hell and high water
and just a lot of stuff that happened
outside of MoviePass for me.
Like, you know, I grew a lot, and I learned a lot,
and I think, like, you know, it's wisdom well earned.
So I think that's why I hold on to this.
I heard those are collector's items now.
You heard that? - How much?
- Was it $1,000 or something? - $1,500.
This bitch will be on eBay tonight...
[laughter] Guaranteed.
When I got fired, I went to a monastery,
where I sit with monks in silence.
My anger is there,
but if you don't do something with that energy,
it devours you.
It eats you from the inside. It debilitates you.
When Stacy and I exited MoviePass,
I gave myself permission
to not have to think about it as much anymore
and to really start thinking about new businesses to build,
new problems to solve,
new...
people to work with.
Even to this day, when people, you know, hear
that I co-founded MoviePass, I get a lot of love.
People kept talking about MoviePass.
Like, maybe one day this thing can come back.
In the summer of 2021,
I heard that MoviePass was put up for auction.
I contacted the courts,
and then I made a bid to purchase MoviePass back.
Out of the ashes, like the rising of the phoenix,
MoviePass has returned under the ownership and guidance
of the original owner of MoviePass,
you know, back when MoviePass was a legitimate business.
MoviePass is back.
MoviePass and its CEO are back at it again,
this time placing all bets
on believing they now have the perfect recipe
to get moviegoers back into theaters.
With theaters looking for a big boost,
company leaders feel now is the perfect time
for a relaunch.
We've gotten the experience really down tight.
And we're already seeing--
because we've got lots of people
that are already on the platform.
Joining me now here at the floor
of the New York Stock Exchange
is Stacy Spikes, the CEO of MoviePass,
also author of the book
"Black Founder: The Hidden Power of Being an Outsider,"
the man himself joining me.
Stacy, thanks a lot for taking the time.
Thanks, JD.
It really feels nice to see the people tell
how the book has helped them
and the honesty of what I went through
and talking about the emotional journey,
that a lot of entrepreneurs and founders
have really appreciated that level of honesty.
Thank you for being a Black founder.
Thank you for being an inspiration to all of us,
for being a man of influence, impact, and integrity
and character that you are.
I was always inspired by stories like Steve Jobs,
you know, leaving Apple and coming back.
I was inspired by Michael Dell leaving Dell Computers
and him coming back.
And there's so many stories in the entrepreneurial ethos
where the founders came back.
I'd never live with myself if I didn't try.
♪ ♪
I hope that Stacy's next attempt here
to make MoviePass what we all hoped it will be will succeed.
The best way I can describe Stacy--
he's, like, very consistent and persistent.
He still feels like he has an itch he wants to scratch
with this business model.
MoviePass doubled the revenue in theaters.
That's revolutionary.
IMAX didn't do that.
Dine-In didn't do that.
And two brothers built that.
I'll never forget-- it was a Saturday afternoon,
and I went to Regal Union Square.
And I was sitting in my seat.
And in between the seats, this young brother looks at me,
and he says, yo...
are you Stacy Spikes?
And I said, yes.
He goes, man, thank you.
Thank you for everything that you've done, man.
You make me proud.
And that moment...
that encapsulated everything.
♪ ♪
[bright tone]