My First Million
The best business ideas come from noticing what's working and doing it better, faster, or for a different audience.
Production companies are among the worst businesses you can start, despite appearing lucrative from the outside
The Reasoning
Production companies face 'feast or famine' revenue (dependent on individual show success), Distributors control all pricing power, high infrastructure costs with low margins (20-30%), and valuation multiples tied to easily-disrupted cash flows. Success looks dramatic but sustainability is nearly impossible.
What Needs to Be True
- You must have multiple hit shows simultaneously
- You need vertical integration to capture decent margins
- You require long-term contracts (5+ years) for stability
- You must build relationship with distributors who control your fate
Counterargument
Some production companies sell for hundreds of millions and create significant wealth for founders
What Would Change This View
If streaming platforms started offering production companies true partnership deals with shared upside rather than fixed budgets, or if direct-to-consumer distribution became significantly easier
Implications for Builders
Avoid production unless you have unique distribution leverage
If you do it, focus on building sustainable competitive moats
Consider production as part of larger media empire, not standalone business
Understand you're building a services business, not a scalable product
Example Application
“Instead of starting a production company to create content, consider building a distribution platform, content-adjacent software tools, or investing in production companies rather than operating them.”