The Playbook For Films – Theatre and Investing
The Playbook For Films – Theatre and Investing
Jun 23, 2022 by Ted Lamade
Guest post by Ted Lamade, Managing Director at The Carnegie Institution for Science
Maverick is back and given the Top Gun sequel has raked in more than $800 million to date, it is already the biggest blockbuster of Tom Cruise’s career. A lot has changed since the original nearly four decades ago, but the secret to its success lies in what hasn’t changed — its “playbook.”
When one of the movie’s producers recently described how his team approached the script, he highlighted a conversation he had with Cruise shortly before the project started. The message was clear. Cruise said,
“This is a competition film. It’s about family, emotion, and the characters. We have to stay true to the original.”
While the Top Gun sequel employed modern technology and implemented a plot to fit the times, Cruise knew that its ultimate success (or lack thereof) would boil down to how well it followed the playbook that made the original so successful. The producers executed on that vision.
Top Gun’s playbook is simple — appeal to the nostalgia of those who saw the movie in the theaters in the mid-80’s. Remind them of the time they bought their first aviators after seeing Maverick wear them on the runway at Miramar, echoed the line “you can be my wingman anytime”, and rolled down their car windows, cranked up the volume, and driven a little faster when Kenny Loggins’ “Danger Zone” came on the radio.
The journalist Rich Eisen said it better on his show a couple weeks ago after seeing the movie,
“I cannot tell you how awesome this movie is. It was spectacular. It made me feel like I was back in high school again in 1986. It was great. Just terrific. It gives you everything you want, everything you are hoping for. You get the sunrise over the tarmac, Cruise on a motorcycle, Kenny Loggins singing Danger Zone, and the script is straight out of the original Top Gun. The flying scenes are incredible and Cruise looks the same. You have to see it in the theater. It is everything you’d want out of a sequel. I was just flying man, literally and figuratively.”
The key to Top Gun’s playbook is that it did not require the perfect backdrop, environment, or ideal release date to be successful. After all, it has generated nearly a billion dollars at the box office despite Covid-19 still making parts of the country hesitant to attend the movies. It just needed to stick to the durable themes from the original script, echo those emotions, and highlight the characters in the film that reminded the viewers of Goose, Slider, Charlie, and others. It has done just that.
Investing Playbooks
The same is true for the most effective investment playbooks. They are not constrained by or dependent on a certain time period, geography, sector, or interest rate environment. Instead, they are effective across a wide variety of situations and circumstances.
Few in the investment world have implemented a better playbook than David Swensen. When Swensen took over Yale’s endowment in 1986, coincidentally just months before the original Top Gun was released, he believed the university could generate stronger returns with similar (or even less) risk by taking advantage of the “illiquidity premium” that existed in the private markets.
As a result, over the next three decades he and his team transformed Yale’s endowment from one invested 100% in liquid securities to one that is nearly 70% illiquid today. It was such a novel concept that it even received a new moniker - “The Yale Model.”
Yet, while Yale’s “liquidity trade off” has been an integral part of the endowment’s strong performance, Swensen still did not consider it the “secret” to Yale’s success. If not, what has been?
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