Harnessing the Wisdom of the Crowd - How Decisions are Made at Legion M
As a company with a stated goal of having 1,000,000 shareholders, people often have questions about how decisions are made at Legion M. They wonder whether it’s a democracy where everyone votes on everything (definitely not) or whether the opinions of our shareholders mean anything at all (absolutely!) The fact is, we’ve put a lot of thought into how decisions should be made at a fan-owned company, and we thought it was worth taking a moment to share those thoughts.
Wisdom of the Crowd
The foundational idea behind Legion M is that a company owned by a large audience of fans can develop competitive advantages. One of the ways we hope to do this is by harnessing the “wisdom of the crowd” when making company decisions.
When it comes to entertainment (or any business, really), it’s remarkable how many REALLY BIG DECISIONS come down to the gut feel of a single executive. Or the collective gut feel (subject to all the personal and corporate politics at play) of a very small group of executives. These people determine what we watch by deciding what makes it to the screen and what never sees the light of day. The results of these decisions can mean the difference between success and failure for an organization.
Whenever possible, Legion M tries to bring our community to bear on these decisions. We believe our community as a whole can be much smarter than we are as individuals. We also believe there is no better resource on the planet for evaluating entertainment projects than a large audience of the very people who buy tickets, pay subscription fees, and decide what to watch. Content may be king, but the audience is the kingmaker, which is why we believe a company OWNED by the audience has such great potential.
We work hard to create fun, gamified tools like M-Pulse and Film Scout that give our community a direct voice in the decision making process. For example, the feedback we received from our army of Film Scouts led directly to Legion M’s involvement with Memory: The Origins of Alien (2019) and Save Yourselves! (2020). The decisions to move forward with many of the projects on our slate were made based on feedback from M-Pulse polls. So were the decisions NOT to move forward with many projects that didn’t poll well within our community.
In addition to M-Pulse and Film Scout, we also gather input informally via surveys, live Q&As, online development meetings, and discussions in our members-only FB group. For example, the idea of developing a feature film about the life of Captain Robert Smalls (Defiant) came directly from our member’s only Facebook group. As a company, we make time for our executives to interact with shareholders, whether it be online via social media or in person at comic-cons, film festivals and other Legion M events. While this adds overhead for Legion M, we believe it’s appropriate – our shareholders are the ones that own the company after all. More importantly, we think harnessing the “wisdom of the crowd” can help us make better decisions that ultimately make the company more successful.
Business Matters
While we believe a large audience of fans is one of the best sources in the world for helping us evaluate projects and creators, we don’t think it’s particularly well suited to negotiating deals or navigating the “business side” of entertainment. That’s because the information needed to make these business decisions is often nuanced and highly confidential. The legal and economic intricacies of the entertainment industry are notoriously complex – which is one of the reasons you hear so many horror stories about investors getting ripped off by bad deals and “Hollywood Accounting”.
Film and TV is one of the most ruthlessly competitive industries on the planet. To build something that can stand the test of time, you need experienced hands on the wheel. For that we’ve got the Legion M team, as well as a deep well of knowledge from an advisory board that has centuries (literally!) of combined experience in everything from modern day streaming strategies to traditional film and television release models.
Our job as a management team is to balance the "will of our shareholders" with input from our advisors, and use that information to chart the course of the company. But our North Star will always be our community. You own the company after all – we work for you.
Corporate Governance
One of the decisions we had to make early in the formation of Legion M was how to govern a company that could (hopefully!) someday have 1,000,000 investors on its cap table. Traditional publicly traded companies (even those like Disney with lots of retail shareholders) are primarily owned by large institutional investors. Legion M is designed to be the inverse – a company built from the ground up to be owned by a very large number of small, casual investors with very little experience (or interest in) corporate governance.
Our solution was to employ a dual-class stock structure modeled after those used successfully at companies like Facebook, Google, and Berkshire Hathaway. While the financial terms of ALL Legion M shares are identical (i.e. the shares owned by the founders and large investors have the EXACT SAME financial terms as the shares owned by small $40 investors), the founders and seed investors have a 10X voting preference that concentrates decision-making power in their hands. This not only ensures corporate decisions are made by experienced professionals, but also dramatically reduces the chance of a large investor buying blocks of shares in an attempt at a hostile takeover. And because there are no financial preferences (i.e. everyone's stock has the exact same financial terms) we're all in the same boat -- we win together or we lose together.
That said, it’s worth noting that in the company’s entire 6+ year history we’ve only had one decision that needed an official shareholder vote (a proposed stock split). In that case the founders agreed to vote their shares in accordance with the results of the vote by the equity crowdfunding investors. Even though the founders had the power to make the decision themselves, they left it up to the community to decide.
You Don’t Make Great Art By Committee
Finally, one of the questions we’re frequently asked is how much creative input our community has into our film and TV projects. Our answer can be summed up by a simple motto:
You don’t make great art by committee. You make it by empowering great artists…and then staying out of their way.
What this means is that while we lean heavily on our community to determine what artists and projects Legion M backs, when we invest in an artist we are investing in THEIR vision. We’re happy to offer our community as a resource for everything from focus group testing to crowdsourcing ideas, but it’s entirely up to the artist to determine if they do so and how.
When we unite, we can do anything!
At its core, Legion M is about uniting fans to leverage our collective strength. Individually, we have no power, but together we’re responsible for a multi-trillion dollar global industry. Entertainment is home to some of the most valuable companies in the world – but their value comes from the people like us that buy the tickets, pay the subscriptions, and decide what to watch.
And while nobody’s attempted anything quite like Legion M before, we’re dedicated to developing systems and processes that allow us to tap into the true power of community – creating an entirely new type of company that we believe has the power to change the world.
Onward and Upward!
Read the Offering Circular and risks related to Legion M’s Round 9 Offering before investing in that offering. The Round 9 Offering is a Reg A+ offering made available through StartEngine Primary, LLC, member FINRA/SIPC. These investments are speculative, illiquid, and involve a high degree of risk, including the possible loss of your entire investment. You should never invest more than you can afford to lose in Legion M or any equity crowdfunding offering.