Dunn sharing his "secret sauce" wouldn't hurt his film career one bit—it'd only boost his reputation sky-high.
After all, this "secret sauce"—his so-called "blockbuster strategy"—would be dissected, summarized, and published by theory gurus in about a decade anyway, becoming common knowledge worldwide.
He didn't mind slapping a "theory master" label on himself too.
Besides, he'd already locked down most of Hollywood's big-ticket IPs for the next few decades. Even if others caught on, they'd be too late to the party.
"So, what's the blockbuster effect? Hold on, we'll get there. First, let me ask you all something simple: who's the richest person in the world?"
It was such an obvious question—practically no one didn't know the answer.
The room shouted in unison, "Bill Gates!"
Dunn grinned. "Yup, that's him—Bill Gates. According to Forbes, his net worth… over 60 billion dollars. But let me tell you a story. Back in 1994, Bill Gates was worth 5 billion, and he owned 45% of Microsoft."
"Here's the thing: conventional investment wisdom says don't put all your eggs in one basket. So Bill Gates hired this brilliant manager, Michael Larson, to set up Cascade Investment. Larson did his homework and convinced Gates to sell off a huge chunk of his Microsoft shares, dropping down to just 3%. The rest of the money went into other ventures."
"And the results? You've seen them. Michael Larson's investments paid off, and Bill Gates became the world's richest man! But here's the kicker: if Gates hadn't sold those Microsoft shares back then, what would've happened? His net worth… would've topped 250 billion dollars!"
The room erupted in gasps and murmurs.
250 billion dollars… what a mind-blowing number!
Dunn pressed on. "Starting in the '70s, American companies with cash went wild diversifying. The common thinking was that spreading out reduced risk. But the reality? Except for Jack Welch's General Electric and Warren Buffett's Berkshire Hathaway, every diversified company saw their performance tank and their stock prices slump."
"Now, we're not here to talk business rules—I just want to make a point: if you spread your eggs across a bunch of baskets, each one's got a high chance of breaking, and you lose 80% of your eggs. But if you put all your eggs in one basket, bet everything on it, and make sure it's a sturdy stainless-steel basket lined with cotton, you might not lose a single one."
"That's what I call the blockbuster effect!"
The crowd was mostly film school students who didn't know much about business philosophy, so a few looked puzzled.
But the front row—especially execs like Michael Eisner, Amy Pascal, Jim Gianopulos, and Alan Horn—were deep in thought.
Ron Meyer's jaw practically dropped, his eyes wide with shock as he stared at Dunn. "This kid… he's really spilling the beans, isn't he?"
To him, Dunn's spiel was on par with an MBA lecture!
Of course, these ideas weren't Dunn's own—they'd be everywhere in a decade.
But in early 2002, this was radical stuff, clashing with mainstream business views. Otherwise, AOL and Time Warner—two barely related companies—wouldn't have merged, chasing diversification to lower risk.
You had to admit, Dunn's take kinda made sense.
"Let me tell you another story. I'm a soccer fan—uh, the English kind. There's this club in Spain called Real Madrid. A few years back, they were winning titles but bleeding money. Their brand was worth next to nothing, and this member-owned club nearly went bankrupt. Then a real estate tycoon, Florentino Pérez, took over. In just one year, he turned it around. Guess how?"
"He shelled out a record-breaking 50 million dollars to snatch World Footballer of the Year Luis Figo from their archrivals, Barcelona! Confusing, right? The club's on the brink of collapse, and he's splashing cash like that? That's where Florentino's genius comes in—he saw the value boost of the blockbuster effect."
"With Luis Figo, Real Madrid's fame shot up. Sponsorship deals soared, fan passion spiked, and merchandise sales went through the roof. A year later, he dropped 65 million bucks on soccer legend Zinedine Zidane. In just two years, Real Madrid's brand value hit the level of Manchester United and AC Milan, making it a top-tier global club."
Dunn wanted to dig deeper into this—he was a fan, after all.
But the crowd clearly wasn't into it. Soccer? Huh?
With a sigh, he moved on. "Alright, back to movies. I'm sure you all love films. Even the most die-hard movie buffs only watch one a week, right? To make a movie a hit, you've got to make sure the one they pick is yours."
"That means studios need to pool their limited resources, go all-in, and push a film to the top as a blockbuster. Create a buzz, pull in the fans—don't waste time dabbling in the slow trickle of the long-tail market. The blockbuster effect is basically the Matthew Effect: the strong get stronger, the weak get weaker, and the winner takes all!"
Entertainment reporters were scattered throughout, cameras rolling for the school's archives, flashes popping nonstop.
As Dunn dove deeper, the applause faded. Everyone was hooked, following his rhythm, lost in thought.
The Hollywood execs in the front row, though, weren't quite satisfied. Dunn's lecture… it was too basic. He'd been talking for a while and hadn't hit the core yet.
The blockbuster effect was cool, sure, but how do you actually make a blockbuster?
Dunn wasn't rushing. He'd worked hard on this speech and wanted it perfect. He was even planning to polish it up with some pros afterward and turn it into a book!
From a blockbuster strategy for the movie market to a broader commercial theory, tied into the classic "80/20 rule."
If he didn't write this book, someone else would eventually.
A decade from now, business would be obsessed with two theories: the long-tail effect and the blockbuster effect.
Two textbook companies: Google with its long-tail strategy, Apple with its blockbuster approach.
Dunn had no interest in the long tail—he was all about big commercial films, pure blockbuster territory. He was fine building on that to become a trailblazing commercial theory guru.
His lack of education was a sore spot. High society often looked down on him.
Hollywood was one thing, but New York's business circles were brutal.
After 9/11 last year, he'd hit up charity galas in New York, and those tycoons treated him like dirt.
To them, he was just a flashy upstart who could make a few movies—zero depth, zero class!
A legit business theory book from him would be a bombshell, shaking up the global business world!
So Dunn took his time with the lecture, switching slides to a set of data.
"Here's Universal Pictures' revenue breakdown for the past five years. The top 5% of films by budget—about 20% of total spending—bring in 25% of global revenue. The top 10% eat up 34% of the budget but deliver 40% of the income. The bottom 25% of films? Just 6% of costs, and a measly 5% of box office. And the bottom 10% budget-wise? Their ticket sales are basically nonexistent."
Dunn spread his arms, visibly pumped. "See that? The data's clear: the bigger the investment, the higher the return! Next up, here's a comparison of Pixar and DreamWorks Animation over the past eight years. Pixar's average film costs 85 million dollars and nets 65 million in profit annually. DreamWorks? Average cost of 32 million, annual profit… zero—or negative."
"Is Jeffrey Katzenberg less talented than Pixar's John Lasseter? Nope. Everyone knows Katzenberg was Lasseter's animation mentor. Last year's Shrek was Katzenberg's biggest investment—and what happened? It blew up, huge hit!"
"I've told two stories, shown two data sets, all to say: the blockbuster theory works! Big investments don't ignore the risks—they embrace them. And yeah, small-budget films can succeed, but the odds say the blockbuster strategy, while risky, is the safest bet."
Michael Eisner was swamped—15-hour workdays, meetings over lunch with execs.
Dunn had been talking for over half an hour without getting to the point, and Eisner was antsy, itching to jump up and ask something.
The blockbuster strategy had its perks, sure, but how was it different from the "tentpole" or "event" movie theories of a few years back?
Dunn was watching the front-row execs closely. This lecture was really for them.
Give them something valuable, and they might overlook the losses he'd caused by exposing the Golden Globes' shady dealings.
Finally, halfway through, he hit the big question: "So, how do you actually make a true blockbuster movie?"
The second he said it, you could see the front row snap to life. They sat up straight, eyes wide, brimming with curiosity.
Like kids waiting for the good stuff.