Thanks to Twitter, Hollywood and Silicon Valley Are Finally Working Together

Venture capitalists Chris Sacca and Jeff Jordan say that Facebook, Apple and Android are the new kingmakers

Last Updated: October 2, 2012 @ 8:51 AM

The war between Hollywood and Silicon Valley may finally be cooling off, two of the biggest investors in the technology industry said Monday night at the opening of TheGrill, the annual media conference put on by TheWrap.

Despite fierce disagreements between media giants and tech titans about the threat of issues like online piracy, there is at least a greater understanding of how to be more collaborative when it comes to making new platforms like Twitter pay off.

Jonathan AlcornChris Sacca, founder of Lowercase Capital and an investor in Twitter, Kickstarter and Instagram, noted that the conversations he has been having with entertainment industry executives has changed in the last five years or so.

When he used to take meetings in the entertainment capital as a top executive at Google, the conversations centered on bottom line — how much the company could guarantee in revenue if it partnered on, say, music sales.

Also read: The Grill 2012: Hollywood's Finest at the Opening-Night Cocktail Party

Now, Sacca noted, the dialogue he has had on behalf of Instagram is about how they can use the vast audience to market products and engage with fans.

"It was a different value exchange," he said.

"It was a harbinger of what's going to make this work a little bit now…this has to be a collaborative process," he added.

His fellow keynote speaker at TheGrill, Jeff Jordan, a partner at Andreessen Horowitz and a board member of OpenTable and Pinterest, agreed that old grudges have softened. He noted, however, that there is still a big chasm to bridge because many people in Northern California are busy creating the new forms of distribution and consumption, roiling the older business models that keep the lights on in Tinseltown.

The duo kicked off the conference, which continues through Tuesday, in a free-rangning panel, moderated by TheWrap CEO Sharon Waxman and AllThingsD co-executive director Kara Swisher.

"There’s inherent suspicions," Jordan said. "There’s interest, but there’s also suspicion."

A broad array of industry figures, including "Family Guy" creator Seth MacFarlane, ESPN President John Skipper and Live Nation Entertainment Chairman Irving Azoff, will discuss the challenges facing media companies in the digital age.

Perhaps no platform better illustrates the virtues of entertainment and technology cross-pollination than Twitter. Having celebrities like Ashton Kutcher and Kim Kardashian tweeting about their lives and interests keeps people micro-blogging, Sacca said, but it also is a valuable way for those big names to interact with their most rabid fans and push their latest projects.

"Twitter needs important, rich, exciting stuff to happen there, but those celebrities need Twitter too," Sacca said.

"There is no doubt in my mind Ashton has gotten that value back out of Twitter," he added.

Though Jordan and Sacca were quick to evangelize about the virtues of collaboration, they noted that there has been a huge power shift going on in the entertainment space. Gone are the days when studios were the deciding factors behind what movies got greenlit or which musicians got radio play. The new gatekeepers, in Jordan's estimation, are the operating systems.

"The current kingmakers are Facebook, Apple and Android, and they really can make or break companies," he said.

Looming above them all, however, is Amazon, which both investing gurus said was the one company that Hollywood should pay attention to. Like Apple and iTunes before it, it has built a frictionless form of consumption for users, making it easy for them to shift from browsing to buying with a click of the cursor — something that Google has yet to master.

"They're a modest company who's not afraid to acquire other companies," Sacca said.

The emergence of these deep pocketed players has created a roaring market for original content, as internet innovators like Netflix struggle to differentiate themselves from deeper pocketed rivals like Amazon. That's good news for studios, but potentially problematic for some of the internet companies themselves.

"It's an arms race either have to be cheaper or to have better unique content that nobody else has," Jordan said.

And be wary of Google, which has the financial means to be a major player.

"If I were Google, I'd go out and buy the World Cup tomorrow. Then I’m on every device in world," Sacca said.

However, Google's approach to content organization, as epitomized by the rhizomatic structure of its YouTube channels, is not ideal for directing audiences to the films and shows it hosts, he argued.

"I think Google hasn't totally processed that sometimes we want to lean back and have some stuff come at us," Sacca said.

Because of that, he believes that Hollywood executives feel "empowered to beat the hell out of Google and YouTube, because they don't have the juice up there yet."

Though Google still has untapped potential, it's best to steer clear of many of the emerging technology startups, both Jordan and Saaca said.

"Right now you’re seeing Google money and Facebook money being recycled, and they will lose most of their money," Jordan predicted.

Sacca noted, though, that with many technologies fizzling, the sense of entitlement that entrepreneurs once had is fading — along with the prices for their companies. One company that should be feeling bullish, despite some gripes about its unconventional business plan, is Twitter, said Sacca, who is largest investor in the popular social network.

He declined to say if it was profitable, but he did say it was making tens of millions in revenue and is offering a return on commerce that is five times as effective as Facebook.

"It's a huge F'ing business … it's just getting started," Sacca predicted.

So if Twitter, Facebook and other social networks are beginning to show Hollywood the money — where then is the love?

One issue may be a different approach to paying top talent. In Silicon Valley, many innovators become shareholders in the businesses they help build. In Hollywood, with a more mature cadre of top studios and networks, that is not a viable reward system.

"This town gets paid in cash every 12 months, up there every four years we get paid in equity," Sacca said.