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Mad invest – The business of making movies with Valentin Greutert

How a bunch of filmmakers flip the script on how movies are financed, produced and distributed.

My guest today is the film producer Valentin Greutert. Valentin might be most known for his latest movie Paradise War - The story of Bruno Manser. During his career, Valentin has produced over 20 movies for TV and the big screen.

Today he will lift the curtain on the economics of movie-making in Europe, we discuss the future of filmmaking and zoom-in his latest project; Mad Heidi, an exploitation movie that is only possible due to fans and investors from all over the globe who chip in to make this movie a reality.

Transcript

Mad Heidi - Too controversial for Switzerland?

Valentin Greutert: He took unpaid leave from this job to write the first version of the script. And when he came back  his superiors had found out and when they saw that teaser, they immediately fired him.

Jonas: That's absolutely crazy.

Valentin Greutert: It's ludicrous and I was so mad. I was so mad. They just saw a violent, unfunny Nazi movie. That's what they saw no. They thought this was actually serious.

It's hard to believe, you know, when you watch the teaser, I mean, how can you think that this is not supposed to be funny?

Now I'm working on a project called Mad Heidi. And we have developed, I would say nothing less than a revolutionary method to finance, produce and distribute this film.

And yeah, maybe that's that's enough, for a teaser. We'll talk about it later. 

Jonas: And there's the blockchain involved. 

Valentin Greutert: There's the blockchain involved.

Jonas: Hello and welcome to Unforkable - the podcast that brings you juicy stories straight from the blockchain. My name is Jonas and today on the show, how a bunch of filmmakers flipped the script on how to finance, produce and distribute movies. And yes, there's the blockchain involved - well, at least sort of, and Heidi. 

My guest today is a film producer, Valentin Greutert. Valentin might be most known for his latest movie Paradise War -  The story of Bruno Manser. During his career Valentin has produced over 20 movies for TV and the big screen. Today, he will lift the curtain on the economics of movie-making in Europe, we discussed the future of filmmaking and zoom in on his latest project, Mad Heidi, an exploitation movie that is only possible due to fans and investors from all over the globe who chip in to make this movie a reality. So grab your popcorn and let's start the show.  

How Valentin became a film producer

Valentin Greutert: Why did I become a film producer and I don't have an answer, but that's what I am now. 

Jonas: But do you remember? Like the first moment when you had this idea? 

Valentin Greutert: No. I mean, when I was 14, I wanted to become a film actor and then when I was 16, I wanted to become a film director. And then I started making a movie with the VHS camera and stuff and friends, and I think at some point I just realized that I'm better at helping people do what they want to do.

First 3D horror movie in Europe

Jonas: you have a master in economics and  business administration and you've produced over 20 movies, among them the first and probably only Swiss, 3d horror movie. 

Valentin Greutert: I think there's only one other European and English 3d horror movie, but apart from that, One way trip is really the only one, and we started working on this film and decided to make it 3d just before Avatar came out. So it was really pioneering work. The 3D technology really made a big leap and that made it very interesting for us to work with that technology at the time, it was just a huge challenge. 

I mean you need a stereo rig with two cameras and a mirror in between. So you can move these cameras and decide on the stereo effect you want.  Just changing the lens once took an hour, while usually it takes like three minutes. 

Jonas: Yeah. 

Valentin Greutert: But it was very much fun also because we shot six weeks only at night. And you have this total switch from, you sleep in the day and you're up in the night. I mean, I have never done that for such a long time. Usually you have a couple of shooting days at night. But never over such a long period and all  the movie was practically shot outdoors. So that was also very interesting just to be in the woods all night every day. And a big challenge.

What is the role of a film producer?

Jonas: So maybe a step back now to  being a film producer. I mean, everybody knows what an actor is. Most people even know what a director does, but what is a film producer doing? 

Valentin Greutert: Well, It's, it's always hard to explain, because there isn't really a definition. Okay, the producer is the guy who somehow organizes the money and who is the entrepreneur. The rights to the film belong to the production company, and that's where it stops, because every producer has a different way of working. you know, how much do you get involved  in development? How much are you involved on the set? I mean, are you present? Most producers are not present on the set, you know. They stay in their office, they just have hired their crew and the director shoots the movie. so there's no clear definition, except for: he has to get the money on the table somehow. Um, when I make a movie, I have to do it with everything I have. I have to be present on the set every day. I need to see what's happening because if I'm not there and they just do something and after that, I see it and I'm not happy I cannot take responsibility. You know, I want to know what's happening. I want to be involved. I also want to be able to, to tell the director, Hey, are you sure we should do it this way? maybe try a little more this way, because I have developed the story, the script with the director. I have gone through all the casting process and stuff. So, for me, it's really an all in thing. I have to do it with all my flesh and blood. Otherwise, it's not making me happy, otherwise I can go sell toothpaste or something, you know? The creative process of movie making is something very important to me. 

 Jonas: So you are there on the set and you said you're involved in the movie. In the story and the plot. It sounds like you are the director. 

Valentin Greutert: No, I'm not for example, the work relationship with the director is very, very important and I have had projects, you know, you get to know someone, you start working, everything is easy and then come to problems. You know, when you, when you start shooting, when there is not enough money, constraints you have in the production. And it happened to me that, that  you know, I did not get along with the director anymore. And that makes it very difficult because,  when you make a movie you're in the same boat with the director for two, three, four, five years. The development of the script is easy two or three years. And the financing, the production, then the post-production. And if you stop getting along with the director during the production, you have to keep on working with the person for another one to two years.

 Before realizing the Bruno Manser movie

And that makes it very difficult. so this base of trust between the producer and director for me personally, it's very important. For example, when I did. Um, my last movie, the Bruno Manser or, Paradise War, is the English title.

When I met Niklaus who directed it and wrote it, I said to him, look before I'm going to make this movie with you. I need to make two other movies. Because, I'm not gonna go to Borneo for half a year in the jungles and try to shoot a movie, because we need to make sure that we will get along even if we have conflicts. 

Jonas: So wait, you said to the director, before we do this huge project. 

Valentin Greutert: Yes, 

Jonas: we do two 

Valentin Greutert: smaller movies, 

Jonas: two smaller movies. How long did that take?

Valentin Greutert: Um, I mean this whole project took 10 years to make. And It took like five years to make these other movies. 

Jonas: Wow. Okay. That's quite a commitment. 

Valentin Greutert: Yeah, it's a commitment, but, but you know, when the work relation is good, I mean, you want to continue it.

And this has been a very good collaboration. so it was absolutely normal that we would go on and go on. But  this trust relationship is something fundamentally important. Also, you have to imagine that a director is a very lonely person. In the sense that. You know, when you shoot a movie, you have so many decisions to make every day. You only have this one day where you shoot this one scene. You're not going to come back here and reshoot it. You just have to shoot it then. And at that point, there are so many factors and decisions to take. The director doesn't have any friends in that. You know, because nobody, you know, they're just technicians, they're there and they're engaged and everything, but they don't have the bigger picture. They didn't go through the development. They didn't have so many discussions about what this movie should be, that they don't talk about distribution. these are all things that the producer is here for, you know, so, so I consider myself in a good way, also, like as the best friend of the director, the backdrop, you know, Not by interfering with his decisions, but by supporting them by shaping them, by discussing about them and this is a way of trying to make the best film possible.

Financing a movie a never-ending story 

Jonas: Now going a little bit deeper into that financial aspect, because I think that's very interesting. We are sitting here in Switzerland, just for the audience we have like around 8 million people, but four different languages so it's quite a fragmented market, like a tiny little market. And I guess a lot of films that are produced in Switzerland are surviving and only possible due to financing from the state and organizations that want to see the Swiss film culture prosper and stuff like that. Do you have a view? 

Valentin Greutert: Yeah, I mean, you're right. But this does not only concern Switzerland it's in the whole of Europe. Uh, but film is I would just say 90, 95% financed through subsidies except for the UK, because they are very focused on the U S market.

And, it's a very complicated system. Let's just take the example of the Zurich Filmstiftung. You know, you can apply there too to get your movie subsidized only a small fraction of it. Eventually you will need like 10, 15, 20 different sources of financing to make your budget. So let's say we want 100,000 francs from the Zurich film Stiftung. They will want us to spend 150,000 in the Canton of Zurich. 

They call it an economic spending effect, you know? So, that's how they justify the subsidies for the politics. That's the argument, you know, we only give a 100 K, but we will get back 150 K. And now you have to imagine that you have 10, 15 sources like that to finance your movie and each of them has their own regulations, you know, which mostly means you have to spend the money where it comes from. 

Jonas: And also what kind of movies will get through by all these boards? I mean, usually maybe not the most provocative or most entertaining movies, maybe they have to have a certain educational aspect or stuff like that as well, right? You have so many decision makers that maybe spoil a little bit the soup. 

Valentin Greutert: Exactly. I mean, polemically, you could say this system produces the local social drama. You know, That doesn't travel really, that, you know, describes some problem that happens in a specific area. 

You know, And that's most of the films that are being produced in Europe  because  you're not allowed to just say, okay, you know what? I want to shoot this movie in English. You know, there's all these constraints, there are like point systems, you know, and you say, okay, the sound guy is from Germany. Okay. One point  the composer is from Switzerland. Okay. Two points, you know, and that's how the system works. Uh, because, because it's so heavily subsidized, you know, you also have to understand the other side, you know, I mean, why should the state put money into movies? You know, Obviously they say, Hmm, if we put tax money into a movie, we also want to make sure that people from our country are hired. There's two sides to it but the bottom line is the system that we currently have: a) requires too many different financing parties. Which you know, you need a year, one and a half, or even longer two years to finance a bigger film within this system because, you have to submit one after another and slowly collect all the money and that's just not very entrepreneur friendly, I would say.

Asking Valentin to brag about his work

Jonas:  We don't like to brag about what we have achieved, right? It's not in our culture. But if I give you now this little challenge that you brag about what you have achieved with your movies, how would you do that? Like just bragging a little bit for a while. 

Valentin Greutert: Well, as you know, I'm Swiss and  it's very hard for me to do that. Um, You know, when you start out making movies you think : "I'm better at it. I can do better movies than anybody else. They all don't know how it's working." And then you kind of land in reality, you see that it's really, really hard to make, to make a good movie. You know, it happens to me that I see, you know, 

Turn on television and some movie of mine is being broadcasted and I'm like: "what? I did that? How was that possible?" For example,

Jonas: In a positive way or like?. 

Valentin Greutert: In a positive way. For example we shot that movie Rocksteady the roots of reggae. It's a movie about the rocksteady era, which was at the end of the sixties. After that it was called reggae. And we gathered all the musicians , who were big stars at the end of the sixties, we gathered them from all around the world and brought them to Kingston and re-record it an album with them in the studio one, in Bob Marley's studio one. And still today, I wonder how I managed to get this done. Because it's kind of far fetched, you know. And the same is with this Bruno Manser movie. I mean, we shot this film with indigenous people in the middle of the jungles of Borneo. 

How did we manage? You know, you don't speak their language and there is no infrastructure, there is fucking nothing there, you know. And we needed logging companies to help us, even though it's an anti logging film. Everything was so complex and when I look at this movie now, I'm like, how was it possible that I did this? 

Jonas: Is that also  maybe the most expensive Swiss film of all times. Could that be?

Valentin Greutert:  Well, some people have said that, but actually, I don't know. And for me it's not an important, you know, 

Jonas: Metric yeah

Valentin Greutert:  metric. Uh, I think  

Jonas: But it's one of the biggest productions in Switzerland 

Valentin Greutert: it's certainly that I think nobody ever dared to do something like that in Switzerland. But I think even to international standards, I think what we did there  is really impressive. I mean, we took indigenous people from Borneo and shot that movie. Uh, and we shot on three continents, we had 76 shooting days, which is very, very long for a European film. And it was a massive, massive operation and I'm very, very proud about this film also.

Paradise War - the story of Bruno Manser 

Jonas:  This movie is about Bruno Manser and he was this activists and environmentalists from Switzerland who went to Malaysia and lived with those tribes, right? And then kind of started to fight against uh..

Valentin Greutert: Deforestation. 

Jonas: deforestation, et cetera. Um, but from what I've seen from the movie, you also tried to make it  in a way that it's entertaining. That it has kind of like a blockbuster feel to it. 

Valentin Greutert: Yeah. 

Jonas: But some people also have criticized that afterwards. How did that feel for you? Because.. 

Valentin Greutert: Oh, this never got to me this kind of criticism, because this is a historical figure. So this guy existed and there are documentaries on him, there are books about him. 

if you want that, then go read those books and look at those documentaries. We tried to compress the story into something that makes it available for a larger audience, you know? That it doesn't have this, this  small feeling, this documentary feeling. 

It's an important subject that the core of this film is really the story of the origin of mankind. I mean, that's what, what Bruno Manser was looking for. He was looking for the most original lifestyle of humans that was still available on the planet. And those were those forest nomads. They don't have possession, they don't own land. You know, they just roam around the forest and, and take what the forest gives them. 

And, and, you know, to oppose that, with deforestation, which is the hunger of a capitalist society, you know. The economy needs those resources, you know, and the clash of those two ideas is like the most original form of being without possession and, and capitalism and that clash. 

That's what we were trying  to show in this movie what's happening there. And in that context, when you make a movie like this, you have to make it big  I'm very convinced of that. And that's why this kind of criticism never, never touched me.

The 6 million swiss franc production

Jonas: And how much did it cost to produce this movie? 

Valentin Greutert: This movie was 6 million Swiss francs. Okay. And it was only that cheap because  in Borneo, 

Jonas: It's cheaper.

Valentin Greutert:  It's, I mean, it's the third world. There is nothing there, you know, where we  shot. I mean, we shot in areas, there's not even, you cannot even use your phone. There's nothing there. We had a walkie talkie production, which is. You know, There was no email, nothing, you know, we couldn't even rent cars. And our team had to go out on the street and ask people if we could have their car for two or three months, you know, because no there was nothing there was nothing. We built a huge camp for a hundred people in the forest because it was too far away from anywhere we could stay in a house so we had to build this camp and, and, and it was really a crazy production. Crazy, crazy. 

Jonas: Have you ever been inspired? Because that reminds me of  when was the German guy? Um, 

Valentin Greutert: Werner Herzog

Jonas: Yeah, Werner Herzog, were you  inspired by this story? 

they pulled that boat over.

Valentin Greutert: Yeah. No. I mean, of course you look at that  but the difference with this project is that, you know, These people. Are really affected by the problem. I mean Werner Herzog he just shot a fictional story. We  shot a story that's actually happening and is still happening.  These people  who you see in the movie. They are affected by this deforestation. So there was an emotional value for them in telling this story, which is completely different to a completely fictional story. So that was a very important  motivator for everybody to work on this, to go through all these difficulties. I mean, it's not so easy to make a movie over there.

Economics of movie making in Europe

Jonas: And now given that this was a big success right ?  It's one of the biggest movies you've shot. Just to put in numbers again, how much did that movie earn back? You know, What are the... I'm interested in the economics of movie-making. 

Valentin Greutert: Yeah uh, it's still ongoing, because the movie is selling, it was just coming out in Germany and it was supposed to come out in Austria, obviously now through COVID this will all get delayed. but I can say the movie has brought back in Switzerland alone about 20% of the cost. That's very good, very good for this small country. 

Jonas: Okay. Do you think it will be a financial success in terms of breaking even, or even... 

Valentin Greutert: that's hard to tell at this point. You know, we're, we're still in the race for the golden Globes and if we get a golden globe nomination then I think this might well happen. 

The pandemic has a mighty impact on films , currently. You know, because there's just no distribution going on. I mean 

Jonas: Like traditional...you're talking  about cinemas  and this kind of distribution, right? 

Valentin Greutert: Yes. But, you know, in today's world, the festivals and theatrical distribution is still the cornerstone of things for a movie like this, you know, you need to get some visibility. And it was going very well in Germany. We were running for one week in Germany and we were  in the charts on place seven, which is very good. But, the impact of the pandemic is disastrous on that, so I wouldn't want to make an estimation if we're going to break even or not.

Mad Heidi

Jonas: And I think it's a good segue into Mad Heidi. Mad Heidi is a very different  movie from the one we just talked about. Do you maybe just want to give it a quick overview of what Mad Heidi is about? 

Valentin Greutert: Yeah. So Mad Heidi is building on the Heidi brand, probably the biggest brand of Switzerland. The book has been sold over 50 million times around the globe. It's very, very big in Japan. Tons of series and movies have been made about it. So  Mad Heidi is based on Heidi, but Heidi is now grown up, she's a young woman and she lives in a dystopian Switzerland, which is ruled by a dictator who owns a cheese empire. And, he managed to create a cheese with a very high lactose degree. And by feeding that to the population they become obedient. And then  Goat-Peter, Heidi's boyfriend gets killed and Heidi gets abducted and she's being turned into a fighter uh, You know, I'm not going to continue more on the story, but in any case, she has to make her way and learn how to liberate Switzerland and give freedom back to the people.

The first Swissploitation movie

Jonas: So it's a very  a trashy movie, you can say that right, without being offended 

Valentin Greutert: in a positive way. It's an exploitation film.

Jonas: exploitation, and you call it swissplotation and talking about, just a quick side question. What about the brand of Heidi? Is that kind of expired and everybody can take it? 

Valentin Greutert: Yeah, it's expired. The original book was written in 1871, I think

Jonas: So everybody can use now the Heidi brand freely, okay. Um, what's an  exploitation movie exactly? What are the characteristics of that? 

Valentin Greutert: Exploitation movies are generally building on cliches and bring them to an extreme. I mean, most exploitation movies are very graphical, but to a degree where everybody realizes, okay, it's over the top. 

And I think today's most known exploitation film director is Quentin Tarantino.  but the genre was very big in the sixties and seventies and there have been many deviations, like blaxploitation, nunsploitation. And now we're doing. Nuns. Nunsploitation 

Jonas: like nuns that shoot around and kill people 

Valentin Greutert: Nuns that do stuff.

Jonas: That's an own genre. Yeah, that's interesting.

Valentin Greutert: There's plenty of you can, you can ploitate, everything, everything. So we do Swissploitation, which means  we're making fun of Swiss cliches, like Heidi like, cheese, like mountains. and all that.

Too controversial for the Swiss?

Jonas: Uh, the film is actually so controversial that one of the writers of the movie has lost his job over it. 

Valentin Greutert: Yeah. He worked for the security department for the cantonal police of Zurich, at the airport. He's not a policeman though. He's like a civilian working for the airport security.

 He's one of the guys who checks your luggage. Yeah. When you want to jump on a plane. And  he took unpaid leave from this job to write the first version of the script and when he came back  his superiors had found out had seen the teaser to this film, to which he wasn't even involved. 

But when they saw that teaser, they immediately fired him. 

Jonas: That's absolutely crazy. 

Valentin Greutert: It's ludicrous and I was so mad. I was so mad. I mean the whole process, how that happened. You know, it's so amateurish. I mean, I mean, they wouldn't even, they wouldn't even listen to the guy, you know, they weren't even interested in what he had to say. You know, they, they wouldn't be interested in. 

In that they just saw a violent, unfunny  Nazi movie. That's what they saw no. Yeah, they thought this was actually serious.

Jonas: What really? 

Valentin Greutert: It's hard to believe, you know, when you watch the teaser, I mean, how can you think that this is not supposed to be funny? Yeah. Uh, but they didn't think so and they fired him and we  on the other hand, we immediately engaged our fan base and collected 10,000 francs for him to pay for the lawyer, because the joke is if you get fired without notice, you are not allowed to get unemployment money.

Jonas:  Oh really?

Valentin Greutert: You won't get any unemployment money for one month. Because you were fired without notice you know.

Jonas: Which is a particular grave reason, usually why you got fired. You've done something really bad. 

Valentin Greutert: So, this guy has a family, two kids. He was going on a small salary anyway. So, he has a huge problem. He could never have paid for the lawyer. And now it took. almost 18 months and in February, the cantonal court had decided that this was so unlawful, what they did.  But the police did not accept the verdict and they went to the Supreme court. So we had to wait and another six months, seven months now. 

Jonas: That's absolutely crazy. 

Valentin Greutert: It's a scandal you can't believe it. And, you know, Again, they lost now because also the Supreme court says, wait a minute. You can't do that.

Jonas: Is the verdict in then? 

Valentin Greutert: Yeah, yeah it's in now and now it went back to the other court because they didn't define the sum that he will get, because obviously they will have to pay money. And we're waiting now for that court to decide how much money he gets. 

Jonas: for this movie, you engage a lot with the audience. Such a case, could that also be helpful for the movie even ?

Valentin Greutert: Of course, I mean, for us, it was good that that happened because it gave us visibility when we came into the press, and that certainly helped from that point of view. But, still, it's not what you're looking for, you know. I mean, then you make the best out of it. but, now we're in 2020. For me it's shameful to see that the police in this area has a mindset of the 1980s.

Jonas: Okay. And how did that movie come about? I mean, it seems to be a very different movie from the ones you've done before.Mad Heidi started as a Poster

Valentin Greutert: I have always been interested in original stuff. So Mad Heidi started out as a poster. You know, we just had a poster and Johannes the director, he just put that poster on Facebook and it gained inexplicable traction, you know, and we suddenly saw that there's, there's, there's demand for something like this. And then we said, okay, here, take this money. Let's let's do a teaser. Let's just shoot a teaser, you know, to see what comes out and then, you know, the teaser that you can now see is the result of that. And then we said, okay , let's launch a crowdfunding campaign  and then with the money we started developing the script properly and Hmm. And  the project kind of got bigger and bigger, we have more than 2,700 people from 46 countries who bought stuff on the Mad Heidi webpage. imagine that we have a turnover of over 270,000 francs, just from people buying stuff and there's not more than this teaser. Yeah, which is a very fascinating thing. So, this project just growed on us. 

Turning  film production on its head

Jonas: It's like really bottom up it's like exactly the opposite of how you do the movies otherwise, where you go. 

Valentin Greutert: Yes exactly. 

Jonas: to someone and they have to give the okay. And give the money and here 

Valentin Greutert: not only that, not only that it's also upside down in the sense that you start with marketing. Yeah. And nothing else, you know, usually you make a movie and when the movie is finished and you have a release date, then you start the marketing. We started the marketing before we even had a script. You know  and that made us realize, Oh, there is demand, people want to see something like that. And that's what made us continue and continue. And eventually developed this Mad Invest system, that makes crowd investing possible for the first time with a high number of investors. You know, you can do crowd investing. If you have 20 investors, it's no problem. But if you have hundreds, you need a system that kills the administration. 

Difference between crowdfunding and crowdinvesting

Jonas: We're going to deep dive into that afterwards, I want just to quickly make sure that we understand the difference between you mentioned you had a crowdfunding campaign and now you have a crowd investing campaign? Yes. Um, can you quickly lay out? , what is the difference between the two? 

Valentin Greutert: Yeah, it's an extremely important difference because most people actually don't really understand it, but when you crowd fund something, people more or less donate money. You know, they will get something in return. They might get a t-shirt or they might get a DVD or something, but it's essentially a non-monetary value they get. They are not investing in the sense that they are actually participating in the revenue. And this is where crowd investing  comes in, which is  a whole different game, because you can expect to get your money back. 

You know, Depending on how it goes, you won't get all the money back or you might get a multiple of your money back.

Jonas: That's actually one of the reasons  one of the things that drove me personally to crypto. 

Because I was very interested in crowdfunding, I even wrote my master's thesis about crowdfunding back in the days. And I was  disappointed because I've seen projects that have grown only with people who crowdfunded them for instance, Oculus Rift this VR headset. Selling years later for 2 billion, to Mark Zuckerberg. 

Um, the people who bought that shitty product, which was not yet fully developed, have seen nothing for that. Right. And crypto is so interesting to me because it's permissionless. You don't really have to ask if everybody can contribute. And I wonder  how has this now with the platform you're using is FilmChain.

What is FilmChain and how does it work?

And they're using somehow the blockchain in it. Can you describe  is that also permissionless, could an American for instance, cause they usually have high hurdles to  enter in all kinds of investing schemes could and in an American invest in Mad Heidi ? 

Valentin Greutert: Unfortunately they cannot officially because the SEC forbids any kind of crowd investing, in that form. And our lawyer said that Americans cannot invest. I mean, you know, It depends on the amount because the SEC did not have projects like ours in their mind, but they had the big scams where people invest millions and they just evaporated  and stuff. so yes, we are working with this company called FilmChain and they are actually a collecting agent. They collect revenue for films and distribute it to the parties in the waterfall.

Jonas: The waterfall being kind of the distribution of the money, 

Valentin Greutert: The distribution of the revenue.,Yeah. And they are doing this based on blockchain, which means it's a private blockchain, and they get the documents from the producers and then they create a smart contract out of it and all the money that comes in, is distributed to the parties that are eligible. 

There is no crypto involved. That means we are just using the blockchain to secure. Uh, the excel sheet, if you want. Because, you know, eventually, you know, you could use an excel sheet for that. But the problem is somebody could. You know, mistype something or just change something. And then,  it's not safe, you know  and this system allows us to handle hundreds and hundreds of investors without having to send around paper. The investors can go on their account and transparently, see where's the money coming from and what's my share. And they can withdraw the money from their wallet. 

Jonas: So if they invest with Mad Invest, don't get any cryptographic token and they can also not pay with crypto. 

Valentin Greutert: They can pay with crypto through Coinbase. But the investment will be recorded in FIAT money in Swiss francs. 

Jonas: So is that platform, the only kind of like partner who can collect this money or who is collecting the money? are they collecting the money? Are you collecting the money, sending it over to them? 

Valentin Greutert: No, they are collecting. We will also get the money from them.

Jonas:  Yeah.

Hollywood Accounting

Valentin Greutert:  Usually this is how it happens, as a production company, I get all the money and I have to send it on to the investors. Yeah. this is where terms like Hollywood accounting come in, you know? 

Jonas: Never heard that term. Is that something 

Valentin Greutert: that's something, it's even on Wikipedia. It's called Hollywood accounting. I think the most famous example is, is that Peter Jackson, the director of the Lord of the rings movies never, never saw a dime from 

Jonas: Lord of the rings

Valentin Greutert: from Lord of the rings, because of Hollywood accounting. 

And, you know, because the thing is, you cannot control it. You know, imagine you're an investor and there's some producers somewhere and they, you know, they send you a bunch of paper. there's some numbers on it. How do you want to control that? You know, how do you want to make sure if it's true or not? Yeah, it's, it's, it's prohibitive for you. You, you, you, you can't. 

And this is why the collecting agent is so important. And this is why it's so important that the investors always can go check and see, okay. 10,000 from there 70,000 from there. And they just see where it's coming from. And it's a third party and also the producers, the filmmakers are being paid through the same platform. 

And  that provides a form of security in a crowd investing scheme that I think is absolutely important. Moreover, you have to see that it wouldn't be possible for us anyway. I mean, we could not handle a thousand investors. imagine to have to make a thousand bank transfers to pay out. I mean, they. 

Jonas: You need to use a platform for that.

Valentin Greutert: Yeah exactly. 

Jonas: But I  I think it's very good what you're doing. And especially now you also gave me a little bit the background with his Hollywood accounting. And what the movie industry has to grapple with right. Uh, to be honest from the crypto point of view, there's like this saying in the crypto space, like a blockchain is just, you know, like an expensive database. And from what I understand, you don't really need the blockchain for what you're doing. Because, I mean, it's like Airbnb or Uber or whatever, it doesn't matter what the database is that you need to have to trust that the money goes in and you need transparency. But I mean, It's not like programmable money. FIAT is not programmed as a smart contract. Only crypto can be  programmable money. Do you know what I mean? 

Valentin Greutert: Yes. I know what you mean. As a purist, you're absolutely right. We could do this with an excel sheet. We could, but  I think if you're wanting a thousand investors, You, you can still think, Oh, but who's, who's making sure that nobody tampers around with that Excel sheet, you know, 

And I think that the fact that the waterfall is being tokenized. And it cannot be changed by anyone, you know? provides an additional degree of security, but it could be done in other ways as well. That's true. 

Jonas: so it's still on, it's still running you have a certain time limit. You want to achieve this goal in 46 days or seven, something like that. Um, currently you have around 400,000. Yeah. And the goal is 1 million, correct? 

Valentin Greutert: The minimum goal, the soft goal is what is one of the soft cap is 1 million. Uh, we can prolong the thing until the end of April. I must say that the pandemic is also limiting us a little bit, because you know, many people have financial worries. Also it can't be underestimated and also we can't do in person events, which has always been something important for us to communicate with the fans and stuff. so  yeah, but, it's only a question of time because we will find all these people.

Jonas: how do you do that? How do you find all these people? 

Valentin Greutert: Well, on one hand it's of course communicating with the fans. Uh, bringing out new stuff on social media and all that, that works very well, then there is the traditional media, which is more difficult, I have to say, we're working hard on it. And it just takes time because also the pandemic, you know, everything else becomes unimportant. Then we have the issue that some traditional media think but this is promo, we don't do that. You know? 

Then you have the Mad Heidi is what it is. You have seen the teaser, you know, not everybody wants to. 

Jonas: People get fired over it. 

Valentin Greutert: So, and the third thing is ads, you have to spend money to make money  and we're experimenting with different kinds of ads.

Jonas: Yeah. And actually I've seen the ads and that's why he came to my mind actually. It was and Ad on LinkedIn and it said something with blockchain and film investing was like, Oh, that sounds interesting. 

Because I've heard about Mad Heidi before I think at the crowdfunding stage and now years later, that's when it popped up again on my screen. From my Master Thesis  not for crowd investing, but for crowdfunding. Uh, I've seen  in the beginning, you have a lot and then at the end. So now you're in the. 

in the low phase. 

Yeah, you need that pressure at the end, then people will  jump on it again.

Tapping into the crowd - fan powered filmmaking

Valentin Greutert: It's a fascinating thing to go through a campaign like that because you really go through all the stages of feeling high, feeling low feeling. it's like a political campaign, you know, you just have to try out things and see if it works. See if it doesn't work and then change strategy. Be very agile and just try to find your way. And when you see how the fans react, you know how much they can give you back when they can participate in stuff. It's very, very interesting, especially, I mean, I come from filmmaking. It's my normal job, but I never had this kind of connection with the fans and it's really very different from normal film making this kind of fan powered entertainment. Fan powered in many ways, fan powered by they give ideas. They are part of it, some of them have read the script and gave input and developed the project with the fans. That's something very different, very different from usual filmmaking.

Making the case for investing in Mad Heidi

Jonas: Yeah. It's really the fan base that is doing a lot of the work. It seems also we've been promoting and. But, um  as you said, it's crowd investing.  can you do like the case for, Hey, this is also a good investment.  I mean, I've seen some of the numbers, but what would be a case where you say, look, I really believe that this can be a good investment in terms of ..

Valentin Greutert: Yeah. I mean,

Jonas: giving back Multiple.

Valentin Greutert:  if an investor is in for the money I would say, don't do it. Simply because  we're like a startup. You know, we're trying to do something and we're doing our best to make it a success but there is no guarantee. And I always like to say this first, because it has to be very clear it's a high risk thing. 

What we can guarantee is that there's probably not been a more fun investment before. Okay. Because you really are part of a community and you get all these insights into how a movie is made and you can invest yourself, you know, with your own ideas and stuff.  it's some kind of engagement you can never get with any other investment. You have to like that aspect. Then you know, I have seen so many revenue estimations from startup companies from movies and they all fail. So we have decided not to create this like the worst scenario, best scenario thing. But we have simplified this model and given a thinking to people how they can estimate the potential success of the project.

Okay, we have a budget of 2.6 million. How many sold streams do we need to break even? And if we imagine a price of 15 us dollars, it's like 280,000 or something, below 300,000. 

Jonas: of paid  streams. Yep

Valentin Greutert: Paid streams. And the closest reference we have to that is Iron Sky, the movie by my production partner, Tero Kaukomaat, which was made in a similar way. He did this in 2010, when crowdfunding was really new. And  so Iron Sky had two million paid views. 

Jonas: 2,000,000 paid views

Valentin Greutert: 2 million paid views

Jonas: wow

Valentin Greutert: And, you know, then you have of course the effect that the price goes down and the price might even vary between countries and stuff. Uh, so. Even if it takes in the end 600,000 to break even because the price is lower or something. I think if we manage to build up our community, reasonably enough, we have a very good chance of actually breaking even or even making profits for the investors. Um, but. It's a startup and you never know. I mean if anybody on this planet had the recipe to make successful movies, then we would only have successful movies.

Movie prices are pretty much set

Um, the film market has a few elements that are very very different from normal markets, for example, movies for the consumer always have the same price. You know, regardless whether a movie costs 2 million or 200 million. If you go, 

Jonas: that's true

Valentin Greutert: see a Movie, you will pay the same price. And you couldn't imagine this for any other product. At the same time, you cannot say that a movie that costs 200 million is going to be more successful than a movie that costs 2 million. It's also not sure, but it's just interesting to have this in your mind, you know, that regardless of the price of production, the end price is the same and the producer has no influence on the end price.

Jonas: You mean the price people pay for the product? You can not set the price. Yeah. 

Valentin Greutert: How can you set the price? You can't set the price that the price is just a standard in the industry. You know, that's, that's just how much they pay for a DVD. That's just how much they pay for  a cinema ticket. 

Jonas: Not even with the streaming, because it seems ...

Valentin Greutert: so streaming is a bit more flexible. It's a bit more flexible, but you know for example Amazon,  you cannot say I want my price up there. They will start with it, but then they will take it down. They don't want such differences.

Movies are prototypes

And, another interesting thing is films are always prototypes. It's a prototype market, you know, in a normal industry, you would start making a prototype of your product. Then you would test it, give it to people, and then you get the feedback. Then you go back, make prototype two, prototype three prototype four until after a few runs, you feel like you have a product that's ready for the market. 

When you make a film, you don't have that. You can't do it. You know? When you shoot it. That's when its made, 

Jonas: but don't, they have like, at least in Hollywood those tests viewers, and then they do some changes if people don't laugh at the right spot

Valentin Greutert: Well, yeah, I mean that you can do, you can do test screenings and then say, Oh, okay. We need to edit here and there a little bit. 

But it's not like you can reshoot whole scenes, you know, a scene that doesn't work, maybe you can cut it out, maybe it's too important so you can't cut it out and then it's just there. But a movie is always a prototype. And that's also part of the reason why there is such high risk.

Cutting out the middlemen

Jonas: What I found quite interesting is what you showed on the Mad Invest page, where you can invest, is how the traditional way works and how much of the money they take there. 

Valentin Greutert: cinemas take 50%. Yeah at least

Jonas: Okay. Um, then you have the local distributors. Who are they? 

Valentin Greutert:  Let me tell it from the other way. So I have as a producer, at least three intermediaries, middle men we call them. Uh, until I get to the audience. And obviously. 

A, this market is super fragmented. You know, the problem is. As we were talking about the Bruno Manser movie before, which was released in October in Germany, when it was last November it started in Switzerland, so it took almost a year to come out in Germany and that's like this for the whole world, you know? 

Because these local distributors have their own agenda, they can do whatever they want. And the problem is in today's world. When you have a movie that people actually want to see. Then you're just dead, you’re dead because people will pirate it .

Jonas: yeah 

Valentin Greutert: you know, and that's part of the thing that happened with Iron Sky one, you know, because they had, they had all these distributors and then, you know, the English distributor, he released the DVD one day after he brought the film to the theaters. 

And as soon as you have that, and you have a ton of people waiting in the U S do you see the film you think they will wait? No, somebody will upload the film and everybody will download it. Because you didn't give people the chance to, to see the film. That's a huge problem in today's globalized world with the internet, we have a distribution system that's really stuck in the 20th century. 

Jonas: Does it have to do, because back in the day is the film's physically had to be brought to the cinema maybe until today, sometimes? 

Valentin Greutert: Well, no today. I mean everything is 

Jonas: everything. You just download it. 

Valentin Greutert: DCP, it's called digital cinema package, so that works fine on a digital level today, but what does absolutely not work is to be able to have a same day global release. Why do you think the, the Hollywood studios do that? If they have a big movie, why do you think, they put so much money and time to make a same day global release? They do it because of piracy, that's the only reason. And for a project like Mad Heidi, where we build up a global community. We need to cut out all these middlemen. We need to have a same day global release. 

And we can do it today. We can do it digitally. and if we manage to build up our community and make Mad Heidi, the webpage, so known, then we can get people on our web page and watch the movie there.

Jonas: Okay. And then have 100%, 

Valentin Greutert: 100%. You have to revenue. And then, you know after a short while, of course we will put it on all the other platforms, iTunes, Amazon, blah, blah, blah. 

But the first impact we would like to have on our Mad Heidi page, because that's where we get the highest revenues. And I think that's a huge potential now for all independent filmmakers, if you have created your market. People don't really care where they see the film today anymore, you know? And that's a huge possibility that we have the internet  for independent people. Um, to have a similar power, like a Hollywood studio. Streaming platforms

Jonas: That's quite impressive. from what I understood first, you want to have it only on your website. You get all the money and you have all the people which are very engaged. And then later in the second phase, you roll them out on different distribution platforms  Vimeo, they take 10% , iTunes, 30% and Google play 30 again. They take quite a huge cut. Do you have experience how much they also add, you know, like how many people they reach with that or?

Valentin Greutert: They don't do shit.

Jonas: They don't do anything,

Valentin Greutert: they don't do anything. okay. Look, they have to provide the technology. They have to provide the servers and stuff. And of course  they have the name. So people actually go on iTunes and look for movies there.

Jonas: They don't have to enter again to their, you know, the payment data 

Valentin Greutert: Exactly. But it's the same, like with the app shop, you know, 

And they're under scrutiny for a long time, because they just, they just take too much. They take too much of the revenue and they're big corporations, you know, making billions and billions of profit  and it's just a problem. You know, the money doesn't go where it should.

Netflix and other streaming services

Jonas:  I also believe you are not a big fan of streaming platforms like Netflix. 

Valentin Greutert: Well, I mean, I'm impressed by Netflix, you know. I mean, they started sending out DVDs. mailing DVDs that was their initial business. And of course it's very, very impressive what they have achieved nowadays, but the problem is, if you work for Netflix. You, you lose everything. You have no rights. You don't even know how many people have seen your movie. You're just uh,  it's commissioned work then, you know  um, and, I don't think that's very interesting, at least in the long run for filmmakers. On the other hand, what they have is a full wallet. They can come and go bang and you have your movie financed. And that's where we come back to what I said before, with the independent movie industry who has to finance with so many little pieces, up to 15 to 20 different sources of financing to get your movie financed. And then nowadays you have these big streamers on they come and go "Tack" and your thing is there, you know, And  probably  some kind of brain drain is going to happen. So talented, young filmmakers will be attracted by the possibilities the streamers can give them. 

On the other hand, they will lose all their rights. And in the long run, I think this is very, very unsatisfying. Artists have been fighting for a long time, to participate in the revenue of what they do and obviously with Netflix, it's a one-time payment and you will never see a dime. You know, you're not participating in anything. 

Jonas: Oh really, is that the standard contract.

Valentin Greutert:  Yes. Yes. 

Jonas: But I assume people who have like a certain power they can still

Valentin Greutert: They just get more money

Jonas:  upfront. 

Valentin Greutert: Yeah. 

Hmm. But Netflix, doesn't tell you how many people have seen your movie. That's another thing, you know, Netflix doesn't care how many people see a specific movie, because they are going for the subscriptions. You know  so they just need things that give them high visibility. But the actual number of people watching a specific show. They don't care about that. 

Jonas: It's just not the right mix of content to attract enough people and to retain them, to keep them. 

Valentin Greutert: Yes, I am pretty sure that this business model they have is not sustainable in the long run. 

I mean, they have never made profits ,uh, Netflix, so, but they always have new investments and that's why they have very high cash flow, but  eventually, almost everybody will have some kind of subscription. And then, then you need another Disney subscription and the Swisscom subscription and  at some point the market will be full. 

You know, and then  they will have to, it's a very interesting movement.  I don't know if you have seen that but in France they are now having a linear TV channel, Netflix where they're just air stuff. 

Jonas: Oh, really? 

Valentin Greutert: Going back to the old 

Jonas: with ads, or no ads? 

Valentin Greutert: No ads, but I think it's just a Netflix shows that come they're just playing like that because they also found out that, you know, not everybody always wants to choose. You know, just give me something 

Jonas: That's true. That's true. It takes a lot of time to choose. 

Valentin Greutert: Exactly. And then the, with the interface of Netflix, which is not very handy and stuff. So below the line, I'm very impressed with what Netflix does. Uh, I think it's good because it makes the industry move. That's the good part about it. 

Jonas: And the quality, I mean, you could argue that there's never been  a better quality of shows on TV. I always had the feeling that interesting people go from making movies for the cinema to TV shows  because they're getting so good. 

Valentin Greutert: Well, yeah, I think this is like a wave movement. Uh, you know, at some point the TV shows are really high in the series and everybody wants to make them but that's already going down a little bit again. But certainly there has been a movement away from theatrical movies to streaming content and  Mad Heidi is jumping on that as well. I mean, we will have fan events in theaters and stuff, but I think, eventually the future for theaters is more  an event character. That's cool because there are people and you watch a movie together in the theater. But in the long run, people will have streaming services all over and that's the way they're going to watch movies. 

I think that's that's, that's the sign of the time. It was, it was enforced by, by the pandemic now. Looking into the future of blockchain and movies

Jonas: Jep. There's an interesting project going on for music. Um, it's called Audius. It's like Spotify, but it's decentralized. So basically they built the whole thing on a decentralized system. People will listen and then, you know, whoever owns the rights to those tracks we'll get paid automatically. So it's like, really digital first and like a crypto native system. Do you think anything like that will happen for movies? 

Valentin Greutert: I am dreaming of one thing that unfortunately I cannot do myself because I'm not  enough in that area, but what I'm dreaming of is that somebody creates a unique file ID that is written into the public blockchain. 

Which means I could produce 10,000 files of a film and you can only watch it if you own the ID. So, if you want to watch this. Uh, file  it will communicate with the blockchain ask, who is this? And you have to stick in your wallet. And if you want to watch this file, you have to verify your identity. Through something like that, you could create a secondary market. You know where, I have this film you don't have it but you would like to see it I can give it to you for five bucks. 

Every trade of the file would participate the makers, the original owners of the file. I think that would kind of bring back the physical aspect of DVDs because I have the DVD you don't. I can give it to you. You can pass on the file. And, and I think that would be very, very interesting uh, addition, because I think the revenue participation of the artists is something that is one of the most important things in art, because you have to see that, you know, when you are a filmmaker, it's hard to make money, compared to other businesses, compared to average society and eventually you make a film and tons of people see it, but they all seed for free, you know? Nobody pays for what you did, you know? You cannot make money with your work and with piracy and all that and since 20 years, you know, this file sharing and stuff it's becoming increasingly difficult. And I think blockchain that could be really a game changer there. If something like a unique file ID could be created. 

Jonas: I mean blockchain brings digital scarcity and next week. I have an interview with one of the digital art markets. They sell those NFT, tokens where you kind of own a digital art piece. And I'm sure the same technology and same thinking could be applied to a movie. But I think that's a good  kind of outlook for the future in a good way to end the episode. Thank you so much. Thanks Valentin. Um, do you have a place or like a message for what people should do where they can find more about you or about Mad Heidi? 

Valentin Greutert: Hey, just check out MadHeidi.com or MadInvest.co. You will find it easily if you type it into Google. If you have a question, write us. I think it's really exciting and if you want to join, welcome. 

Jonas: Great thank you

  Outro

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