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How they made it: Paramount Pictures

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Today, we highlight another small business startup with roots that begin with one person who would start a business that defined the movie industry. What is your idea and how will you make it in to a culture changing company?

Paramount Pictures is one of the top grossing movie studios in the world, located in Hollywood, California but it didn’t start that way. It actually finds its roots in 1912 with a small production company called, Famous Players Film Company. The owner of this company, Adolf Zukor, noticed that movies of the time appealed more to working class immigrants. He wanted to offer feature length movies using the big name theater actors of the time in order to expand the market to the middle class, presumably because the middle class had more money to spend on discretionary activities.

Something else was happening in 1912. Jesse Lasky, an aspiring movie producer, opened his own small business startup in the form of a studio called Lasky Feature Show Company. Both Lasky and Zukor began making files and released their films through a small startup company called Paramount Pictures Corporation. Paramount, however, was started by a theater owner and a producer who began making movies of their own.

Paramount solved a problem that was plaguing the young movie industry. Most movies of the time were only distributed regionally. This was obviously a problem because the film’s stars wanted more exposure and the production companies wanted more revenue to offset the costs of making the movies.

Once this problem was solved, Paramount became a powerhouse and because it was an actual corporation, Lasky and Zukor merged their privately owned companies with Paramount to gain the benefits of being under a corporate blanket. This created a company that was not only a great distributer but with Lasky and Zukor, now had some of the best production people in the world.

It certainly wasn’t an easy evolution. Paramount would fight legal and financial battles. Almost immediately after the creation of the new combined Paramount, the three men began purchasing theaters and had purchased so many that they established monopolies around the nation. One monopoly in Detroit became the subject of a court battle that Paramount eventually lost. The decision barred movie production and distribution companies from owning theaters.

This decision proved detrimental to Paramount, sending it in to decline and by the 1960s was near bankruptcy. Paramount was sold in 1966 and new, younger leadership was brought in that reestablished Paramount’s reputation as a powerhouse movie studio.

From the 1970s to the present day, Paramount has established itself as the premier movie studio. It was purchased by Viacom and studios like Dreamworks have spun off from it but what can young business owners learn from this story?

First, evolution never comes easy. Paramount shaped the movie industry and sometimes court decisions and government regulations forced them to turn a corner and go in another direction but they always adapted. A successful business owner must adapt as adversity comes their way.

Second, bring experts to your business. Could Paramount have survived without Zukor and Lasky? Could these two filmmakers have survived without the distribution power of Paramount? Bringing people together doesn’t always work but experts, in collaboration with each other, are often good for business. Don’t write off your competition? Is there a way to include them to make even more money?