All language subtitles for MoviePass MovieCrash

[TV static drones]

[bright tone]

[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]