“We live in capitalism, its power seems inescapable —
but then, so did the divine right of kings.
Any human power can be resisted and changed by human beings.
Resistance and change often begin in art.”
— Ursula LeGuin
TL;DR —
A viable alternative to media consolidation exists
deep pockets are not the only advantage in a complex, competitive process
people power has always been about playing the long game.
Intrinsic is finally able (from a legal and compliance perspective!) to announce the details of the next stage of our campaign. Details below!
We are less than $24,000 away from being greenlit on Seed&Spark and having access to the funding we need to turbocharge the next stage of our campaign. Your support today would mean more than ever.
The past week has been exciting!
After a series of pieces last week naming the Usual Suspects as potential buyers of Letterboxd, we were contacted by Deadline to ask why we think we can compete with the big fellas.
Our answer is exceptionally clear. So clear, in fact, that Tiny, the seller of the 60% stake being sold, answered it for us on their own website:
Tiny’s own words: “The product is loved by its users because the team has consistently resisted the temptation to optimize for engagement at the expense of taste.”
In plain English, people love Letterboxd because the founders built it for their community. Not as a “monetization engine”, which is how the CEO of one of the other named potential buyers described their company when interviewed by Fortune Magazine about his company’s investment in the Paramount-Skydance deal.
Here are OUR words:
We think we are the only potential buyer who can credibly preserve the value of the asset being sold.
Letterboxd — like MySpace, Tumblr, and Twitter (R.I.P.) before it — is beloved by users for its quirky personality, not its photoshopped, flawless gloss.
Letterboxd users tend to collectively dunk on inauthentic marketing campaigns while being generous with independent filmmakers who authentically engage with film culture. According to Tiny’s copy, Letterboxd is beloved because they have prioritized taste.
We think the strengths of our bid have never been clearer.
We are offering a mutual gains solution to the problems facing multiple parties:
Tiny wants to exit its investment and realize a profit
LionTree wants to deliver its client a successful exit in the context of a customer base with high ownership sensitivity and a widely reported veto clause retained by the Letterboxd founders
Letterboxd has done very little public commenting, but presumably wants to continue serving the community it has spent 15 years building, run a profitable business, and continue promoting independent global cinema
Independent filmmakers want a way to engage directly with their audiences to reduce marketing costs and allow small but mighty films to compete in the attention economy
Intrinsic Entertainment Collaborative wants to treat Letterboxd like the cultural institution we know it can become; steward the platform for the benefit of independent filmmakers and fans; and work collaboratively with the Letterboxd founders and our cooperative owners and members to build a business that bolsters global cinema and delights fans
And we have very good news to share
We went public with our initiative at the end of May. We launched a Seed&Spark campaign to cover the legal costs of rapidly pulling together a mission-driven coalition, conduct research, and create the documents necessary for a competitive bidding process.
What we were not sure about way back then (six weeks ago, but are we not all living in dog years now?) was whether we would be able to invite unaccredited investors to participate in equity investments in the acquisition before a transaction closed, but we knew we wanted to try to create a cooperative acquisition and not limit the opportunity to our larger investors.
We are thrilled to share that we have completed the research stage of that legal work faster than expected.
We foresaw a multi-month legal timeline. Today we are here, ahead of schedule.
We will be able to invite unaccredited investors to join our coalition by participating in a future Wefunder Regulation CF (Reg CF) equity ownership crowdfund after we complete a few more legal steps. This will allow us to invite our supporters to become equity owners when the next round of legal work is complete.
[Nerd note: Reg CF crowdfunding allows private companies to raise up to $5 million per year using SEC-approved portals, including our preferred partner, Wefunder. Reg CF rounds allow companies to offer equity securities to their communities, instead of only to accredited investors (i.e. people with assets over $1 million not including their primary residence, or income exceeding $200,000 for at least the past two years with reasonable expectation of continuing to earn as much or more). By offering a future Reg CF round through Wefunder, we will be able to allow people who do not meet the criteria for accredited investors to participate at small amounts.
Deeper dive on details
In order to run a Reg CF round, we still have a number of expensive steps to take. We need to pay for a financial audit; file SEC paperwork; prepare investor documents and disclosures; and ensure we are in compliance with SEC regulations every step of the way.
The reason we are raising non-equity funds first is because all this legal work (getting audited, filing SEC paperwork, paying lawyers to draft investor contracts and disclosures) costs a shit ton of money. We wish it didn’t but it does!
We have do lots of meetings with all different kinds of lawyers (there have to be M&A specialists, international tax advisors, SEC compliance experts, etc.), so each step is WILDLY expensive. Then we need to pay for an audit, pay lawyers for their time writing contracts, etc. The numbers rise pretty rapidly.
The most effective way for us to move forward and complete the steps necessary to allow the community to participate in equity ownership is by successfully wrapping our Seed&Spark campaign. This will enable us to keep sprinting forward, build on the incredible momentum of the past week, and assert the seriousness of our bid.
We have been asked why we can’t just ask our accredited investors to pay for this part of the process out of the goodness of their hearts so that unaccredited investors can join.
If you have ever raised money for a business, you already know the answer. If you haven’t, you should know: it’s not how investors operate. We are fighting this fight so that we can evolve it into community ownership according to the SEC’s terms. [Note: if you are one of the people who has sent us this suggestion and you know someone who would like to cover the legal costs, go ahead and send us their name! Telling us to ask accredited investors to sponsor extra legal costs because democracy is cool is not actionable advice.]
We are doing this work FOR THE COMMUNITY so that we can utilize our corporate structure to achieve a MISSION-DRIVEN ACQUISITION of Letterboxd, and steward it as a cultural institution.
It is possible to do this with just large investors, but that is not our goal. Our goal is to democratize ownership of tech platforms and social media. It will take us multiple steps to get there, and that’s why we need the help of the community who will benefit from collaborative ownership of Letterboxd.
We will be able to deliver a significant opportunity to our Seed&Spark supporters.
The SEC limits all companies from raising more than $5 million per year from unaccredited investors.
As we all know, $5 million is not enough to buy Letterboxd. That means we needed to build a coalition before we could open it up to unaccredited investors.
Each year we will be able to invite another round of people into equity ownership, up to the SEC’s limit. Once we have raised $5 million from unaccredited investors, we cannot do another Reg CF round until the following year.
We will open our Reg CF round privately first and give everyone who backed us on Seed&Spark the first opportunity to join the coalition of equity owners, up to $5 million dollars in funds.
Note: there is ZERO obligation for anyone to become an equity investor— it is simply an opportunity we are thrilled to be able to offer our earliest supporters, if they choose.
Anytime there is an offer of “ownership” that translates to selling securities. It is highly regulated and if you get it wrong it can disqualify you from raising equity funds. That is why we could not map this out for you until we had done all the preliminary legal work to make sure we are following the letter of the law.
We are so happy we can finally share this news.
Let’s do this
Steps to success:
We need everyone who wants us to succeed to help us get the Seed&Spark past the 80% mark ($80,000)--that’s the percentage at which they “greenlight” the project and we get access to what we have raised. Getting to $100,000 would allow us to do the legal work plus hire a publicist for the next round, but even the $80,000 will move us significantly forward.
Please share the campaign. We especially need people to share it on TikTok/FilmTok and other social media where Letterboxd users gather. We have focused first on our filmmaking community, but we need your help to reach Letterboxd users broadly. We are not influencers, we are business entity structurization nerds!!! INFLUENCERS, ASSEMBLE.
Here is an option for sharing on social:
The Letterboxd sale is heating up and the only mission-driven bidder needs our help getting the word out about their campaign. Please read, support, and share!
You are also welcome to write your own version, just please be sure to link to the campaign!
New Press This Week!
I had the privilege of spending my Tuesday lunch break with Richard Rushfield talking about the ins and outs of our coalition and why being mission-driven is an underestimated competitive advantage (TL; DR — it aligns incentives between investors, workers, and the community over the long-term, listen to hear how!).
I also had the pleasure of speaking with Dade Hayes, Business Editor at Deadline, who wrote a fabulous piece in response to last week’s various reports.
We think Dade’s piece is a must-read analysis of last week’s media circus.
OK THAT’S IT, THAT’S EVERYTHING!!!
WE LOVE YOU! LET’S DO THIS!
And one more thing…
🧡💚💙🧡💚💙🧡💚💙🧡💚💙
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