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Sketchy Business

Headquartered in a famed Deep Ellum warehouse, animation studio Reel FX goes Hollywood to take on the big boys.
By Sam Machkovech |
ARTISTIC MERIT: With a concentration on creative talent, Reel FX CEO Steve O’Brien has taken his company from “quaint” to competitive. photography Manny Rodriguez

Steve O’Brien steps out of an isolated meeting room, and it’s hard to tell if the man just woke from a nap. The CEO of Dallas-based creative studio Reel FX Inc. looks disheveled, almost like a modern Fonz—T-shirt, jeans, dark hair that reaches his neck, five o’clock shadow a few hours early.

Of course, looks can be deceiving. After only a few sentences by way of introduction, O’Brien sounds as buttoned-down as any Wall Street executive. The Philadelphia-born, Orange County, Calif.-raised 42-year-old’s monotone is the only thing in the building that lacks animation.

Reel FX proudly displays its artistic chops from the first climb up its warehouse steps. Huge properties like the CG-animation movie Everyone’s Hero and the art of children’s author William Joyce are touted in a glass case next to the entrance. In-house artists hang their paintings along columns in the spacious foyer. An employee walks between desks with a guitar in hand, almost as if a stage manager cued him to do so.

If Reel FX were a big-screen production, O’Brien would be leading man, languid appearance and all-business demeanor be damned. After all, this is the man who has led Reel FX’s growth from a humble two-man operation into a multi-tiered visual production company. With a booming number of Hollywood clients and self-produced projects, O’Brien doesn’t have time to nap.

“You have to aggressively pursue the business,” O’Brien says. With so much “business” in mind, his declaration is intentionally vague. As films and commercials turn more heavily to high-tech content, computer animation and post-production facilities are fast becoming a dime a digital dozen. Studios struggle to stand out in any facet of this vast market no matter where they are but especially anywhere that isn’t L.A. or New York. The company is a lone wolf in an industry dominated by much bigger names in California. Still, Reel FX has made a name for itself in advertising, video game cinematics, feature film assistance, and self-produced content.

But for O’Brien, just being a name is not enough.

When founders Dale Carman and David Needham moved Reel FX from Fort Worth to Dallas in 1995, they had only eight employees and even fewer clients. To an outside investor, the focus might’ve been best described as “regional” or “quaint,” but to the company’s eventual 140 artists, producers, and creatives, Reel FX’s small size and intimacy was a strength, not a hindrance.

Vice President of Entertainment Services Kyle Clark was among those attracted to the studio during its growing stages in 2003. Returning to his home state of Texas after years in the California animation industry (Sony Imageworks, Industrial Light & Magic), he’d considered opening his own CG (aka “computer graphics”) studio before taking a hard look at Reel FX.

REEL’S RéSUMé: Reel FX’s animation work has included the Gatorade
colored-sweat ads (left), The Wild (right), and Everyone’s Hero (below).

“The one thing that stood out to me was the number of traditional artists they had on staff,” Clark says. “I’d recently worked at Sony, and their [post-production] art staff wasn’t nearly as big. That really struck me. They were certainly dedicated to ensuring creative people were a major part of the process.”

But attracting a returning Texan is one thing; Reel FX’s challenge, as it expanded from a mere post-production facility to a self-sufficient audio/visual studio, was to attract talent away from companies and schools that line the West Coast. Subscribing to the “If you can’t beat ’em, join ’em” school of thought, Reel FX opened a satellite studio in Pasadena in late 2004. But O’Brien knows a small, artist-driven shop in Dallas is still enough of a draw to compete with the big boys for talent.

“I know it sounds clichéd, but it’s a ground-floor opportunity,” he says, explaining that Pixar and Dreamworks no longer offer the kind of stock options that the privately owned Reel FX still can. “Those companies have already been through their rapid growth phases.”
Plus, as hipsters age, their needs change.

“Once people get to be a certain age, aspire to home ownership, and things like that, the quality of life is more available in Dallas than it is along the coast,” he says. “When talented people get to that point in their lives, we offer a great place for them to come. And once they visit us, get a look around, see what we’re doing, and meet the rest of the team, that cinches the deal.”

The reasons for such stock potential and quality of life at Reel FX come from a chain of events that revolve around O’Brien’s 2004 hiring. As part of an aggressive expansion plan, Carman sawwhat he describes as a need for “key leadership.” The company had paid some bills with work on GI Joe CGI (Computer-Generated Imagery) movies and Gatorade’s “colored sweat” ads, but the founders knew more work was only a bigger staff away. “The area that I needed to focus on was development of creative properties for feature films, as well as development of our proprietary technology,” Carman says. “With all of this growth and expansion, we needed a strong CEO to join the team.”

The duo soon found O’Brien, the former president of Dallas multimedia firm Big Hand. A Dallasite since earning his MBA at SMU, O’Brien was fresh off the 2004 sale of Nextjet, a logistics technology company that he founded only five years prior and ran with the help of major agreements with American, Southwest, and United Airlines. The duo enlisted him to lead the investment side of Reel FX’s expansion.

“Dale and David created and ran a very successful business for many years,” O’Brien says. “At a certain point in their career, they decided to up the ante. … Part of bringing in external investors is that the investors have expectations. They want to bring in people they’re familiar with to be on the team.”

He’s hesitant to lay out specifics of his career, and even though O’Brien’s business history doesn’t have the detail or lifelike animation of a typical Reel FX project, his story is a good fit for the rogue studio. “I was an investment banker prior to becoming an entrepreneur,” he says. “In doing that, I sat around tables just like this and occasionally watched an extremely large check be handed to an entrepreneur. After seeing that happen a few times, I decided to jump onto the other side of the table.”

And in expanding with O’Brien’s experience and ability to attract investors, Reel FX took its own leap on the animation table. In April 2005, flush with private investment capital, the staff moved into the famed Broadcast.com warehouse at the edge of downtown Dallas and upgraded the space with millions of dollars of editing suites, recording studios, and everything else needed for the company’s jump from post-production to full-on feature production.

Already busy with commercials for longtime associates at Dallas advertising firms like The Richards Group and Dieste Harmel Partners, the growing Reel FX roster included more and more outside projects. Video game companies tapped Reel FX for realistic cinema scenes within their games (most notably Microsoft’s Halo series). The creative teams also brought portions of feature films like The Wild, Robots, and Ice Age 2 to life and produced more than a third of the animation nuts and bolts for this summer’s Everyone’s Hero.

For nearly a decade, the company had built a reputation for quality CG-animation and post-production work. By moving and expanding, Reel FX could take that reputation to the bank more often.

>> THE TAKEAWAY

1. Talented people  like intimacy and opportunity.
2. Commercials are good. Helping out studios is better. Internal Properties are the best.
3. Creative people need managing, but are best managed by not managing. Follow?

“We’ve developed quite a name for ourselves with both advertising and entertainment,” O’Brien says. “Advertising, I’d say that’s a more crowded marketplace. There are lots of different post-production companies around, and so it comes down to relationships with people, clients, and agencies. We’ve developed numerous relationships like that. In Hollywood, it’s well-known who does the good work, and we’re at the top of the list now, so that’s exciting.”

A spot on the client list is well and good, but the companies O’Brien continues to name—Pixar, Dreamworks—didn’t land such name recognition by generating colored sweat in a Gatorade commercial or animating one-third of a movie. The desire to reach the top without riding on a client’s coattails can be heard in every monotone sentence O’Brien utters.

As he strives to bring more name recognition to his company, he isn’t shy about dropping a few big names of his own. Internal Properties are a huge priority to the company, and following the children-friendly starts of the likes of Pixar, Reel FX has three younger-audience properties made entirely in-house. Dennis DeShazer, the co-creator of Barney, co-creates his newest endeavor—Boz, The Green Bear Next Door—under Reel’s roof with partner Jon Green. William Joyce, known as much for his children’s books as he is for CG-animation projects like A Bug’s Life and Robots, has an exclusive multi-movie deal with the studio. Even NASCAR has sold the studio full rights to create an official children’s series for the brand.

Admittedly, none of the three are yet off to a Pixar-level blast-off. Boz has seen multiple DVD releases but no television distribution deals due to its faith-based content. The Joyce and NASCAR deals are still in early planning phases more than a year after each were announced. Fortunately, there’s no downtime in the studio’s Internal Properties sector. Though outside clients keep the creative team busy, Reel FX reallocated its IP staff earlier this year to produce The Very First Noel, a Christmas-themed DVD released for the 2006 holiday season, and the entire project was done in-house—from initial planning and art to voice acting and effects rendering. For an easy sell like a Christmas DVD for kids (and the benefit of a “nice yearly check,” as O’Brien puts it), the reduced overhead from a complete in-house effort is the star on top of the Christmas tree.

Just how big is that star, let alone the tree? O’Brien declines to give any numbers or revenue, reverting to the same declaration about annual growth given in interviews last year: “We’ll double revenue this year, roughly, and our intent is to double it next year and the year after that” to reach the publicly declared goal of $100 million by 2009.

With a full facility, projects of increasing quality, plenty of capital, and a staff whose years of experience come from the best CG studios in the nation, $100 million certainly seems within reach, especially if they get a boost. O’Brien promises that next year the studio “will be partnered up with a big Hollywood studio producing our first feature film that originates at Reel FX,” most likely based on a Joyce property.

“The whole Hollywood dynamic is evolving,” he says. “It was a very closed town for decades, and you’re seeing new opportunities opening up, new ways of doing business. Guys like Mark Cuban and Todd Wagner are changing the game, if you will, and I think we have a unique opportunity to play a part of that. To become an entertainment powerhouse in Dallas.”

Cuban’s name is another he doesn’t mind dropping when talking up Reel FX’s growth. The company stands in Cuban’s old Dallas warehouse digs, inspiring hopes of “some of that good [Broadcast.com] mojo rubbing off on us,” as O’Brien says. He also has a bit of Cuban’s knack for no-nonsense business. O’Brien’s focus is to unconditionally help his artists and producers get the best opportunities with great clients and innovative new IPs.

“The secret to success for any company like ours is the appropriate blend of creativity and business,” he says.

Co-founder Carman agrees: “A genius with a thousand helpers doesn’t build a great company that can last. We want to really build something special, so we needed a CEO who could add to and complement our team, not take over or become dictator.”

Dictators wear uniforms, anyway, and as O’Brien says, “After I took my investment banking suit off, I never put it back on.”

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