An entrepreneur by the name of George Lucas just cashed out of the company he founded and built: Lucasfilm.Unlike many entrepreneurs who build companies these days, George Lucas didn’t raise any VC money.
And that means he gets to keep the whole check Disney wrote for his company, which was for a not-inconsequential $4 billion.
How did George Lucas build a company worth $4 billion without any outside investors?
Here are the key points:
- He quit an early career when he realised it wasn’t right for him (he wanted to be a race-car driver … until he almost got killed in a crash)
- He made a type of product he loved and cared deeply about (movies)
- He made—and learned from—lots and lots of different products (There were many Lucas movies before Star Wars)
- He evolved (Lucas’s early movies were artsy non-commercial films)
- He studied and learned from the best mentors (Francis Ford Coppola, among others)
- He became friends with other extremely talented people in the industry (Steven Spielberg, among others)
- He was shrewd (He sold his directing services to Fox Studios for Star Wars for cheap—but kept all the merchandise, licensing, and sequel rights, which Fox didn’t want)
- He was very, very patient (Unlike many of today’s entrepreneurs and investors, Lucas wasn’t looking for a “quick flip.” Lucasfilm was founded in 1971, 41 years ago)
Put all those things together, and you’ve got yourself a recipe for building a great business.
And how here are the details, as described by Wikipedia:
George Walton Lucas, Jr. (born May 14, 1944) is an American film producer, screenwriter, director, and entrepreneur. He was the founder, chairman and chief executive of Lucasfilm before selling the company to Disney on October 30, 2012.  He is best known as the creator of the space opera franchise Star Wars and the archaeologist-adventurer character Indiana Jones. Lucas is one of the American film industry’s most financially successful directors/producers, with an estimated net worth of $3.3 billion as of 2012.
Lucas grew up in the Central Valley town of Modesto, and his early passion for cars and motor racing would eventually serve as inspiration for his USC student film 1:42.08, as well as his Oscar-nominated low-budget phenomenon, American Graffiti. Long before Lucas became obsessed with film making, he wanted to be a race-car driver, and he spent most of his high school years racing on the underground circuit at fairgrounds and hanging out at garages. On June 12, 1962, while driving his souped-up Autobianchi Bianchina, another driver broadsided him, flipping over his car, and almost killing him, causing him to lose interest in racing as a career. He attended Modesto Junior College, where he studied, amongst other subjects, anthropology, sociology and literature. He also began filming with an 8 mm camera, including filming car races.
At this time, Lucas and his friend John Plummer became interested in Canyon Cinema: screenings of underground, avant-garde 16 mm filmmakers like Jordan Belson, Stan Brakhage and Bruce Conner. Lucas and Plummer also saw classic European films of the time, including Jean-Luc Godard‘s Breathless, Francois Truffaut‘s Jules et Jim, and Federico Fellini‘s 8½. “That’s when George really started exploring,” Plummer said. Through his interest in autocross racing, Lucas met renowned cinematographer Haskell Wexler, another race enthusiast. Wexler, later to work with Lucas on several occasions, was impressed by Lucas’ talent. “George had a very good eye, and he thought visually,” he recalled.
Lucas then transferred to the University of Southern California School of Cinematic Arts. USC was one of the earliest universities to have a school devoted to motion picture film. During the years at USC, George Lucas shared a dorm room with Randal Kleiser. Along with classmates such as Walter Murch, Hal Barwood and John Milius, they became a clique of film students known as The Dirty Dozen. He also became very good friends with fellow acclaimed student filmmaker and future Indiana Jones collaborator, Steven Spielberg. Lucas was deeply influenced by the Filmic Expression course taught at the school by filmmaker Lester Novros which concentrated on the non-narrative elements of Film Form like colour, light, movement, space, and time. Another huge inspiration was the Serbian montagist (and dean of the USC Film Department) Slavko Vorkapich, a film theoretician comparable in historical importance to Sergei Eisenstein, who moved to Hollywood to make stunning montage sequences for studio features at MGM, RKO, and Paramount. Vorkapich taught the autonomous nature of the cinematic art form, emphasising the unique dynamic quality of movement and kinetic energy inherent in motion pictures.
Lucas saw many inspiring films in class, particularly the visual films coming out of the National Film Board of Canada like Arthur Lipsett‘s 21-87, the French-Canadian cameraman Jean-Claude Labrecque‘s cinéma vérité 60 Cycles, the work of Norman McLaren, and the documentaries of Claude Jutra. Lucas fell madly in love with pure cinema and quickly became prolific at making 16 mm nonstory noncharacter visual tone poems and cinéma vérité with such titles as Look at Life, Herbie, 1:42.08, The Emperor, Anyone Lived in a Pretty (how) Town, Filmmaker, and 6-18-67. He was passionate and interested in camerawork and editing, defining himself as a filmmaker as opposed to being a director, and he loved making abstract visual films that create emotions purely through cinema.
After graduating with a bachelor of fine arts in film in 1967, he tried joining the United States Air Force as an officer, but he was immediately turned down because of his numerous speeding tickets. He was later drafted by the Army for military service in Vietnam, but he was exempted from service after medical tests showed he had diabetes, the disease that killed his paternal grandfather.
In 1967, Lucas re-enrolled as a USC graduate student in film production. Working as a teaching instructor for a class of U.S. Navy students who were being taught documentary cinematography, Lucas directed the short film Electronic Labyrinth: THX 1138 4EB, which won first prize at the 1967–68 National Student Film Festival, and was later adapted into his first full-length feature film, THX 1138. Lucas was awarded a student scholarship by Warner Brothers to observe and work on the making of a film of his choosing. The film he chose was Finian’s Rainbow (1968) which was being directed by Francis Ford Coppola, who was revered among film school students of the time as a cinema graduate who had “made it” in Hollywood. In 1969, George Lucas was one of the camera operators on the classic Rolling Stones concert film Gimme Shelter.
George Lucas is a filmmaker, with a film career dominated by writing and production. Aside from the nine short films he made in the 1960s, he also directed six major features. His work from 1971 and 1977 as a writer-director, which established him as a major figure in Hollywood, consists of just three films: THX 1138, American Graffiti, and Star Wars. There was a 22-year hiatus between the original Star Wars film and his only other feature-film directing credits, the three Star Wars prequels.
George Lucas with Chandran Rutnam. Lucas acted as a writer and executive producer on another successful Hollywood film franchise, the Indiana Jones series. In addition, he established his own effects company, Industrial Light and Magic (ILM), to make the original Star Wars film. The company is now one of the most successful in the industry.
Lucas co-founded the studio American Zoetrope with Coppola—whom he met during his internship at Warner Brothers—hoping to create a liberating environment for filmmakers to direct outside the perceived oppressive control of the Hollywood studio system. His first full-length feature film produced by the studio, THX 1138, was not a success. Lucas then created his own company, Lucasfilm, Ltd., and directed American Graffiti (1973). His new-found wealth and reputation enabled him to develop a story set in space. Even so, he encountered difficulties getting Star Wars made. It was only because Alan Ladd, Jr., at Fox Studios liked American Graffiti that he forced through a production and distribution deal for the film, which ended up restoring Fox to financial stability after a number of flops.
Star Wars quickly became the highest-grossing film of all-time, displaced five years later by Spielberg’s E.T. the Extra-Terrestrial. After the success of American Graffiti and prior to the beginning of filming on Star Wars, Lucas was encouraged to renegotiate for a higher fee for writing and directing Star Wars than the $150,000 agreed. He declined to do so, instead negotiating for advantage in some of the as-yet-unspecified parts of his contract with Fox, in particular ownership of licensing and merchandising rights (for novelizations, T-shirts, toys, etc.) and contractual arrangements for sequels. The studio were apparently unconcerned to let go of these rights – at the time, licensed products and merchandising did not represent the significant market that it is now. This negotiation has earned Lucasfilm hundreds of millions of dollars over the years, as Lucas has exploited merchandising rights wisely, and now directly profits from all licensed games, toys, and collectibles created for the franchise.
Over the two decades after the first Star Wars film, Lucas worked extensively as a writer and/or producer, including the many Star Wars spinoffs made for film, TV, and other media. He acted as executive producer for the next two Star Wars films, assigning the direction of The Empire Strikes Back to Irvin Kershner and Return of the Jedi to Richard Marquand, while receiving a story credit on the former and sharing a screenwriting credit with Lawrence Kasdan on the latter. Lucas also acted as executive producer and story writer on all four of the Indiana Jones films, which he convinced his colleague and good friend, Steven Spielberg, to direct. Other notable projects as a producer or executive producer in this period include Kurosawa’s Kagemusha (1980), Lawrence Kasdan’s Body Heat (1981), Jim Henson‘s Labyrinth (1986), Godfrey Reggio‘s Powaqqatsi (1986) and the animated film The Land Before Time (1988). There were also some less successful projects, however, including More American Graffiti (1979), the ill-fated Howard the Duck (1986), which was arguably the biggest flop of his career; Willow (1988, which Lucas also wrote); and Coppola’s Tucker: The Man and His Dream (1988). Between 1992 and 1996, Lucas served as executive producer for the television spinoff The Young Indiana Jones Chronicles. In 1997, for the 20th anniversary of Star Wars, Lucas went back to his trilogy to enhance and add certain scenes using newly available digital technology. These new versions were released in theatres as the Star Wars Trilogy: Special Edition. For DVD releases in 2004, this series has received further revisions to make them congruent with the prequel trilogy. Besides the additions to the Star Wars franchise, in 2004 a George Lucas Director’s Cut of THX 1138 was released, with the film re-cut and containing a number of CGI revisions.
Lucas at the Venice Film Festival in 2009. The animation studio Pixar was founded as the Graphics Group, one third of the Computer Division of Lucasfilm. Pixar’s early computer graphics research resulted in groundbreaking effects in films such as Star Trek II: The Wrath of Khan and Young Sherlock Holmes, and the group was purchased in 1986 by Steve Jobs shortly after he left Apple after a power struggle at Apple Computer. Jobs paid U.S. $5 million to Lucas and put U.S. $5 million as capital into the company. The sale reflected Lucas’ desire to stop the cash flow losses from his 7-year research projects associated with new entertainment technology tools, as well as his company’s new focus on creating entertainment products rather than tools. A contributing factor was cash-flow difficulties following Lucas’ 1983 divorce concurrent with the sudden dropoff in revenues from Star Wars licenses following the release of Return of the Jedi.
The sound-equipped system, THX Ltd, was founded by Lucas and Tomlinson Holman. The company was formerly owned by Lucasfilm, and contains equipment for stereo, digital, and theatrical sound for films, and music. Skywalker Sound and Industrial Light & Magic, are the sound and visual effects subdivisions of Lucasfilm, while Lucasfilm Games, later renamed LucasArts, produces products for the gaming industry.
In 1994, Lucas began work on the screenplay for the prequel Star Wars Episode I: The Phantom Menace, which would be the first film he had directed in over two decades. The Phantom Menace was released in 1999, beginning a new trilogy of Star Wars films. Lucas also directed Star Wars Episode II: Attack of the Clones and Star Wars Episode III: Revenge of the Sith which were released in 2002 and 2005, respectively. Numerous critics considered these films inferior to the previously released Star Wars, The Empire Strikes Back, and Return of the Jedi.
In 2008, he reteamed with Spielberg for Indiana Jones and the Kingdom of the Crystal Skull.
Lucas currently serves as executive producer for Star Wars: The Clone Wars, an animated television series on Cartoon Network, which was preceded by a feature film of the same name. He is also working on a so-far untitled Star Wars live-action series.
For the film Red Tails (2012), Lucas serves as story-writer and executive producer. He also took over direction of reshoots while director Anthony Hemingway worked on other projects. Lucas is working on his first musical, an untitled CGI project being produced at Skywalker Ranch. Kevin Munroe is directing and David Berenbaum wrote the screenplay.
“I’m moving away from the business… From the company, from all this kind of stuff.”
—George Lucas on his future career plans. In January 2012, Lucas announced his retirement from producing large-scale blockbuster films and instead re-focusing his career on smaller, independently budgeted features. He did not specify whether or not this would affect his involvement with a fifth instalment of the Indiana Jones series. In June 2012, it was announced that producer Kathleen Kennedy, a long-term collaborator with Steven Spielberg and a producer of the Indiana Jones films, had been appointed as co-chair of Lucasfilm Ltd. It was reported that Kennedy would work alongside Lucas, who would remain chief executive and serve as co-chairman for at least one year, after which she would succeed him as the company’s sole leader.
In 1991, The George Lucas Educational Foundation was founded as a nonprofit operating foundation to celebrate and encourage innovation in schools. The Foundation’s content is available under the brand Edutopia, in an award-winning web site, social media and via documentary films. Lucas, through his foundation, was one of the leading proponents of the E-rate program in the universal service fund, which was enacted as part of the Telecommunications Act of 1996. On June 24, 2008, Lucas testified before the United States House of Representatives subcommittee on Telecommunications and the Internet as the head of his Foundation to advocate for a free wireless broadband educational network.
In 2005, Lucas gave US$1 million to help build the Martin Luther King, Jr. National Memorial on the National Mall in Washington D.C. to commemorate American civil rights leader Martin Luther King, Jr.
On September 19, 2006, USC announced that George Lucas had donated $175–180 million to his alma mater to expand the film school. It is the largest single donation to USC and the largest gift to a film school anywhere. Previous donations led to the already existing George Lucas Instructional Building and Marcia Lucas Post-Production building.
Lucas has pledged to give half of his fortune to charity as part of an effort called The Giving Pledge led by Bill Gates and Warren Buffett to persuade America’s richest individuals to donate their financial wealth to charities.
The American Film Institute awarded Lucas its Life Achievement Award on June 9, 2005. This was shortly after the release of Star Wars Episode III: Revenge of the Sith, about which he joked stating that, since he views the entire Star Wars series as one film, he could actually receive the award now that he had finally “gone back and finished the movie.”
Lucas was nominated for four Academy Awards: Best Directing and Writing for American Graffiti, and Best Directing and Writing for Star Wars. He received the Academy’s Irving G. Thalberg Award in 1991. He appeared at the 79th Academy Awards ceremony in 2007 with Steven Spielberg and Francis Ford Coppola to present the Best Director award to their friend Martin Scorsese. During the speech, Spielberg and Coppola talked about the joy of winning an Oscar, making fun of Lucas, who has not won a competitive Oscar.
On August 25, 2009, Governor Arnold Schwarzenegger and Maria Shriver announced that Lucas would be one of 13 California Hall of Fame inductees in The California Museum‘s yearlong exhibit. The induction ceremony was on December 1, 2009 in Sacramento, California.
In 1969, Lucas married film editor Marcia Lou Griffin, who went on to win an Academy Award for her editing work on the original Star Wars film. George and Marcia adopted a daughter, Amanda, in 1981, and divorced in 1983. Lucas has since adopted two more children: Katie, born in 1988, and Jett, born in 1993. All three of his children have appeared in the three Star Wars prequels, as has Lucas himself. During the 1980s, Lucas was in a relationship with singer Linda Ronstadt. He has been dating Mellody Hobson, president of Ariel Investments, since 2006 and she has accompanied him to several events including the 79th Academy Awards ceremony in February 2007, an American Film Institute event in October 2007, the 2008 Cannes Film Festival held in May, and the 2010 Golden Globes.
Lucas was born and raised in a Methodist family. The religious and mythical themes in Star Wars were inspired by Lucas’ interest in the writings of mythologist Joseph Campbell, and he would eventually come to identify strongly with the Eastern religious philosophies he studied and incorporated into his films, which were a major inspiration for “the Force.” Lucas eventually came to state that his religion was “Buddhist Methodist”. Lucas resides in Marin County.
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