Walker Webcast: Building Blumhouse: A Chat with Jason Blum


3 min read

Jason Blum is a world-renowned, Academy Award-nominated, and Emmy Award-winning horror movie producer. He is also the CEO and Founder of Blumhouse Productions, a production company that has brought franchises like Halloween, Paranormal Activity, The Purge, Insidious, and Sinister to the big screen. Blumhouse is known for being one of the most profitable production companies in Hollywood, with its films generating a collective $5.7 billion at the box office. Just in time for Halloween, I had the chance to sit down with Jason and talk about everything from his journey in the media space to the formula for a great horror film.

How Blumhouse Applied the “Moneyball” Approach to Film

For those who aren’t familiar with the film or the book Moneyball, it breaks down how the legendary Oakland A’s coach, Billy Beane, used statistics to create an incredibly low-budget team with tremendous results. Fortunately for Jason, this approach works in the film industry as well. He believes there are two core tenants of the Blumhouse business model that resemble the Moneyball approach.

In a world where studios are eager to court an up-and-coming director who has a short film or two with some buzz, Blumhouse prefers to work with seasoned directors who have a couple of feature-length films under their belt, with a 50/50 success-to-failure ratio. Secondly, at Blumhouse, when a film does well, everyone is paid well. This means that every single member of the cast and crew is incentivized to make the best movie they are capable of creating.

What Makes Blumhouse Different?

Although some say Blumhouse’s business model is easily replicable, few have come close to replicating it. Jason believes the reason no one can replicate the business model of Blumhouse is that there aren’t any other studios that are as hyper-focused as Blumhouse. At the end of the day, Blumhouse makes one type of film: horror. While making a certain type of film to chase an Oscar may seem very tantalizing, doing so doesn’t create a profitable business. Creating a very niche film studio is something that Blumhouse’s competitors simply aren’t willing to do, which is why Jason believes there won’t be another Blumhouse anytime soon.

The Formula for a Great Horror Film

For those who aren’t horror movie aficionados, it’s hard to say what makes a horror movie actually scary. While many believe that the big-moment scares are what makes a horror movie work, Jason believes that the setup for the scares is equally important. There needs to be a riveting buildup that keeps a viewer on the edge of their seat prior to a scare to make it really pop. Blumhouse has honed in on this and implements incredible build-up scenes in all of its films. This is what has made Blumhouse so successful in the horror genre.

Want to Hear More?

I’m privileged to have the chance to interview some of the most influential people in their respective industries, like Jason. If you would like to hear the full interview with Jason and see our list of upcoming guests, be sure to check out the Walker Webcast.

Read The Walker Webcast Transcript

Horror in Hollywood with Jason Blum, Founder and CEO of Blumhouse

Willy Walker: Hello everyone, and welcome to another Walker Webcast. Before I start with Jason, I want to make a quick comment on the ongoing conflict in Israel as I did at the start of last week's Walker Webcast with Peter Linneman. We're still shocked and saddened by Hamas's terrorist attack the weekend below last and the loss of life and peace in Israel. I'm pleased to say that all four Walker & Dunlop employees that were in Israel with their families when the terrorist attack happened are safely back in the United States. But we have many colleagues with family and friends in harm's way inside of Israel, and we're here to support them at every turn. Finally, the discrimination and anti-Semitism that is appearing across the country and around the world has no place in a free society, and we must be vigilant in pushing back against it in any and all forms.

With that, to start things off to my friend Jason, who has just jumped on the video feed.

Jason Ferus Blum, middle name is “wild” or “savage” in Ferus. Son of an art dealer and art history professor, founded Blumhouse Productions in 2000, and after his first breakthrough success with “Paranormal Activity,” he has spent the last decade making global box office hits such as “The Purge,” “Insidious,” “The Invisible Man” and “M3GAN.” Is it M3 Gan, Jason?

Jason Blum: Oh it’s Megan, Megan, Megan.

Willy Walker: "Megan" see. These are things that you're under 24 demo understands that your 56-year-old buddy Willy doesn't.

Fortune magazine writer deemed, “for little more than the catering costs on a Marvel movie.” Blumhouse has created tense thrillers such as “BlacKkKlansman,” “Whiplash” and “Get Out” that all received Oscar nominations. Blumhouse has produced over 200 movies that have grossed over $5.7 billion at the box office. Blumhouse was a Fast Company list of Brands That Matter in 2023, companies that forge an emotional connection with their customers.

Jason is a graduate of Vassar College, where he was the 2020 commencement speaker. I would highly recommend that speech to anybody who wants to have a fun time listening to a great commencement speech. He is on the Board of the Public Theater of New York, the Sundance Institute, Vassar College, and the Academy Museum of Motion Pictures. He has 315,000 followers on X. He is a fitness nut, known as the Santa of Halloween, and I'm super honored to call a friend.

Jason Blum: That was a great intro. I like that. I love that.

Willy Walker: Thanks man. I try. So there's so many places to start. Let's start here. A lot of people who are listening in today have read Michael Lewis's Moneyball, about the Oakland A's and how their general manager, Billy Beane, used different stats.

Jason Blum: Very familiar with it.

Willy Walker: I know you are, such as on base average to build a championship team, essentially having a low-cost roster that produced exceptional results. And a lot of people have compared your model at Blumhouse to Moneyball in saying it's “the Moneyball of the movie industry.”

I don't think that's right. Do you think you're the Moneyball of the movie industry?

Jason Blum: I actually do.

Willy Walker: You do!

Jason Blum: We get compared to Roger Corman, who I love. And I think that we're totally different. Our model is totally different than his. But the Moneyball model is very applicable to the way we operate our business. The most applicable part, I think, is that Billy did so many things that were so interesting, but what he really did was focus on things that weren't sexy, but like the stats that weren't like the sexy stats. And I think in that way and it's different now. But when we started, you know, horror was kind of in the ghetto. Just doing horror generally was not kind of not cool and very specifically, especially in the early days of the company, we chose directors – I mean, this is a very specific example – Hollywood and the studios are set up in such a way that they either choose first time directors or directors who have only had success, which is in our business, almost impossible. It's still today even true, a studio would prefer to choose a director who's done a few shorts and is like there's a lot of buzz around. Then a director who's made four movies, two of which have worked and two of which haven't. We would always choose the director who's done the two movies that worked and two haven't, and that's kind of a very Moneyball thing.

And then I think the other thing that is akin to Moneyball is that the bet on yourself model, like our movie business is based on, if the thing you make works, everyone gets paid. If it works really well, everyone gets rich, and if it doesn't work, you don't make very much money. And that's also very unusual in mainstream Hollywood, but it's also a concept that Billy Beane would have loved.

Willy Walker: I concur with everything you're saying. I guess as I looked at what you've done, I view you as a venture capitalist more than as a producer. And the reason I call you a venture capitalist, because you've created a business model that allows you to invest in ideas, just as venture capitalists do, but do it in a portfolio manner where if something hits, it hits, and you get massive returns off of it. But you've limited your downside by the size of your initial investment.

I guess the only other thing that I saw a little bit different from that is just your focus really on not that Billy Beane didn't focus on talent and trying to find talent. But you have a business model that is so prescriptive as it relates to what you're looking for, what you're looking for in a script, what you're looking for in a director, and then how you manage the money around it that I just I sat there and sort of said, yeah, there are some things, but I kind of viewed what you do much more along the venture capital model and the way that you can make so many wide bets have some payoff famously.

But then also, and we're going to get into this in a moment, but because of your distribution model, Jason, you have the ability to sit there and say, we're not going wide with this. We're going to put it on to streaming and we're going to recoup our costs. And I thought that that sort of downside protection in the way you built your business model is much more relevant to an investing strategy rather than an operating strategy if that makes sense.

Jason Blum: Yeah, I think that's true. And we are like venture capitalists. We take six to eight bets a year. And we keep the bets small unless it's a proven property, right? Unless it's a sequel or IP that already exists. But on the originals, which we hope will create IP and create franchises, we take small bets. My favorite stat about the company is that we have the highest ratio of if you take our budgets against our gross, we're about 10X, which is more than anybody else. It's more than Marvel. It's more because our costs are so low, it's more than anybody else. So that's my favorite stat of Blumhouse. And the statistic I'm probably the most proudest of the company.

Willy Walker: Talk about the sequels for a second. I'm jumping way ahead. But you just raised it as it relates, unless we're making a sequel, and you spend more on the sequels. But something I heard you say that I thought was so interesting was if you're going and making a Marvel movie and you're going to spend $300 million bucks making it, you better damn well have a sequel ready behind it because you've invested so much to make the first one that you have to have an ending that sort of leads into the next one. Whereas with the way that you make movies, the movie better stands on its own.

One of the directors that you had on a panel that you were talking to maybe at Sundance, where you asked, what's the most important thing to do? And he said, “Get the ending right.” And I was like, I was sitting there thinking about in my world and the fact that when we go make pitches, we try and make sure that the whole pitch goes well. But as I heard that get the ending right, it made me think about how every pitch we go do forget about like the story leading up to it. Make the ending right. But you end your movie's right. And then if you have the opportunity to make a sequel, you do, but you don't invest in the first one, thinking about the second one. Is that correct?

Jason Blum: That's right. We end most of them right. You know, it's true. The ending is so much more important than the rest of the movie. We don't end all of them right. You know, the biggest, the biggest Exorcist definitely underperformed for us. And the reason is we didn't end it right. I mean, we tried by the way, we tried, we worked on that ending over and over and over and over, but we couldn't get it right in the movie. Really, really. It's really good and really works for the first hour. And then the next part, just doesn't work as well. And to your point, it's much better to have it the other way around, first of all.

Then the second thing is, yes, when we're making an original, directors are very used to, and writers are very used to talking to studios who are always thinking about what the sequel is going to be. And I am trying to erase that from the creative person's mind because it is so hard to make an original movie that connects with an audience, to make an original movie that connects with an audience, and also is a setup for a second movie. First of all, it's like counting your chickens before they hatch. And second of all, it's too many parameters around the creative process. And the example I used is "Paranormal Activity", which is the greatest example ever of if something works, you can make a sequel no matter what. It's a found footage movie. So just the notion that, oh my gosh, they found another set of footage, we had six or seven "Paranormal Activity" movies. But just the very notion that, oh my gosh, they found more footage is so absurd. But the first movie worked so well that the audience allowed us to take that huge leap and we made six more movies behind it.

So I always tell our filmmakers to figure out what the best version of your movie is without thinking about a sequel, and there are a lot of other things, too, that I think they feel pressure to do. The thing at the thing that I do put a lot of pressure on them about is you got to keep the cost very low on an original – that's very, very important. And you know for us – to keep it very scary, but don't worry about the next one.

Willy Walker: So that's the business model today. But when you started out Jason, that model which you now have you have nailed was not the reason that you created Blumhouse.

So let's just back up for a second, you were an executive at Miramax. You worked for the Weinsteins. You missed investing in the Blair Witch Project, which you were never allowed to forget about, but talk about for a second why you started your own business, because it wasn't because you had this great business model. What we've just talked about as it relates to being a venture capitalist in the movie industry, if you will, or being the Moneyball of the movie industry, was not why you jumped out on your own to begin with. Why did you jump out to create Blumhouse to start with?

Jason Blum: No, I definitely didn't. And I'm very skeptical when we hear business plans of entertainment companies relatively often. And I'm very skeptical of like we're going to attack this in a new way. I suppose this is true in all industries, but certainly in the entertainment business – actions speak louder than words. So make hit movies. And if you've made a few hit movies, then I'm interested in your process. But don't talk to me about your process before it's delivered hit movies. It's just B.S. That's just ridiculous.

So to answer your question, I had worked at Miramax. And there were things that I learned that were very helpful, a lot of things that I saw that I thought when I have my own company, I'm going to do this very differently. And I was on one mission, which was to get a hit movie – because that opens up every door for everything else. It wasn't like I'm going to make low budget movies. We're going to give directors creative control – to have those words come out of someone's mouth who never really produced a movie, even though I had had experience in the business for so long is absurd.

So I was looking for any way to figure out a hit movie, you know, in any genre. What I learned; I was 30 years old in 2000. And that's when I left. I made a handful of independent movies. None of them really worked in any serious way. And what I thought I actually wanted at that time; I thought the quickest way to do a hit movie was to make a big studio movie. I thought that, and by the way, the odds of a studio movie working versus an independent movie are much higher. You're much better off with a studio movie. Much, much better. So that's what I was trying to do. And it just so happened that in the mid- 2005-2006, in my mid-thirties, I wound up doing two movies at the same time. I did the Tooth Fairy, which was the only traditional studio movie I have ever produced, which was at that time much bigger budgeted, very traditional down the middle studio movie, and I started producing "Paranormal Activity". The movies came out at the same time.

I had these very interesting experiences through both movies, which was, when I was finished producing the Tooth Fairy for Fox, all the things that I thought it was going to be, it wasn't. And it turned out to be a very frustrating experience. But the studio distribution of the Tooth Fairy was amazing, and it was everything that I hoped for and more. "Paranormal Activity" was made like the other independent movies that we had made, and it was terrific. When you're making an independent movie, it's great because you're free. There's not a lot of voices. You can take chances, do whatever you want. It's just a totally different experience making an independent movie because there's less people involved in the decision, so it's just more fun. But it was distributed by a studio. Again, it was an independent distribution, which I think is very, very challenged, and not very unsatisfying.

What happened was that with the experience at both of those movies, I realized, wait a second, there's a way to make independent movies, which I love doing. And we do have studios release those movies, which is what Paramount did with "Paranormal Activity", and that's to make low budget horror movies. And that's how we hit on our model to be fair, one of the biggest mistakes that young people make in the movie business is when they have success. This goes for a writer, a producer, a director when they have success and they're 26, which is very rare, but their movie gets bought. And it's a big deal at Sundance and it's a comedy. Immediately they say, like, I want to make something different and show I can be successful in something different, and it almost never works.

Luckily, I did “Paranormal Activity” happen to me till I was like I said in my mid-thirties, I've been doing this a while. I knew what to do with success and that's so profound. I always think back how lucky I was. If "Paranormal Activity" had happened to me when I was 25, Blumhouse would not exist. I would have blown it. I would have thought so much of that success had so much more to do with me than it actually did. When you do this for a while, you realize when you make a successful movie, it has to do with a lot of different things. Many, many different pieces. I was a small part of the success of "Paranormal Activity", but I knew what to do with it, which was to just keep making low-budget horror movies. And that was kind of the birth of the company.

Willy Walker: I've listened to you speak about that so many times, and I've never heard you explain it that succinctly about that moment where those two that the $65 million Tooth Fairy movie converged with "Paranormal Activity" and how that then led to the business model.

Jason Blum: It was such a light bulb moment.

Willy Walker: To that, Jason what I don't quite get is Paranormal have been kicking around for a long period of time and I guess what led you to then say low budget because the Tooth Fairy is $65 million to make, $40 million marketing budget. You saw the value of the $40 million marketing budget which you've kept in place, and that's been obviously a key part. And your partnership with a number of studios. But most importantly Universal and at the same time sitting there and saying, Well, let's see if we can replicate what happened on Paranormal by creating a new business model. I mean that that's the piece that I don't quite get of I'm going to sit there and look for rather than a $65 million budget movie, I'm going to look for a $4 million budget movie.

Jason Blum: Yeah, well, there were a few factors. But here's the main factor. Movies beget movies, making movies begets making more. When you're making movies, you're going to make more movies. Developing movies does not beget movies. Making movies begets more movies.

And to your point, what we were talking at the top of the interview, the more at bats you have, the more hits you're going to get. So from the minute "Paranormal Activity" happened, I was into volume. And the way to get volume is to bring your cost way down. So if you have a horror movie and you can make it for a million bucks, I mean, this is simplifying a little bit. But if you're getting people with experience to work for way less money, if you could bring the cost down, you're going to get the money for that movie. So the way to make many movies quickly was to keep them cheap. That was the initial thing that drove that desire to make low budget movies. Now, what happened is, as I started making more and more low budget movies, all these other benefits accrued to it, not financial benefits. Your interests are aligned with the creator, which is probably more important than anything else. Now, I didn't do it for that reason, but I discovered it. When you pay someone upfront to direct a movie, which we also do, the movie is never as good. It doesn't go so well. The process isn't as fun. That's why streaming is just not good for the quality of movies. It's just not. It's not a good model. When the director gets paid, what he or she makes works much more than if it doesn't. Clearly, the thing is better.

So anyway, all these other benefits of our model became apparent, but the initial reason was that was the way to get movies made. So I think one of the things, one of the mistakes younger producers make is that they're way too precious about the decisions that go into making a movie, meaning they get so caught up in if it's not this actor, the movie's not going to work. If it's not, this is not going to work. If it's not this, it's not going to work. And I learned early on, because I saw it in reverse, I'd see all these movies, especially when I was working in my twenties as an executive at a couple of different places. All these movies where there were all these arguments over who should be in it with the director, what they should wear, what the wig should look like, what the prosthetic should look like. And nine times out of ten it wouldn't matter. And they fight for this one actor And the actor who turned out not to be good. And so when I had my own company, I was able to let go of a lot of decisions and keep my eye on getting what I was doing greenlit. And I think that was a big advantage to me early on.

Willy Walker: What was it that Donna Langley saw in you? Because you tell a story about having gotten kicked off the lot at Paramount and your agent, Brian Lourd heading over and meeting Donna and saying you got to meet with Jason. And the partnership that you've had with Donna and Universal has been incredible. But what do you think it was Jason that made her take a bet on you and this model?

Jason Blum: That is what happened. Like I said, I made a small contribution to "Paranormal Activity", but (Paramount) they undervalued it. The reason I started at Universal is because Donna had lunch with Brian and said, I want to revive the long tradition of horror at Universal. And Brian said, “I know the guy to do it, and it's Jason Blum.” And that's how we met. That was like 15 years ago, and we've done 60 movies with them now. And we have a great, great, long, terrific partnership and we really understand the DNA of each other's companies. My company is 1/1000000 the size of Universal. But there are so many tentacles of Universal and it's been great. It's just been a great partnership. And it's something I'm really proud of.

Willy Walker: You talk about getting the right director, having directors incentive to have an alignment of interest, if you will, in the commercial viability of it, not guaranteeing them wide distribution, which I think is something that people like me don't really understand. But many directors get a commitment by a studio to take a movie that they make and put it out on 2,000 screens. You do not give that guarantee because of exactly what I talked about at the top, which is if you've got a movie that you don't think is going to go wide, you have the option to not put the promotional dollars behind it, put it on to streaming and recoup the $4-5 million bucks that you've invested in the actual movie. Whereas if you've invested, as you did in Tooth Fairy, $65 million bucks and making the damn thing, you better well, put another $40 behind it.

Jason Blum: You got to release it.

Willy Walker: You've got to release it. So that's one of the interesting things. You also mentioned that you very rarely use first time directors, although Jordan Peele was one of the few first-time directors and boy, oh boy, Get Out turned into being a great one.

Jason Blum: I would refute that though. When I say I'm not using first time directors and it's true in the movie side of the company but I'm short handing for people who are just out of film school and made three shorts. The best people for our model are technically first-time directors are showrunners, and Jordan was a showrunner.

Willy Walker: Explain to my audience what a showrunner is.

Jason Blum: A showrunner is the director, there is an actual director of television, but the person with the most creative power in movies is the director. In television it’s the showrunner.

The showrunner is a writer, producer, overseer of the whole operation of multiple episodic television. So he hires the directors of each episode. He or she is involved in the writing, overseeing the writer's room. So the story, the actors, if there's one single voice in television production, it is the showrunner. And what showrunners are incredible at is thinking on the fly and going fast. And that's what our movies are. But showrunners who are good at their job are incredibly lucrative, so most of them aren't interested in directing movies, but every so often we're able to lure one away. And Jordan with Key & Peele was an incredible showrunner now an incredible movie director, too. But I wouldn't say we broke our rule by hiring Jordan Peele. A few times we have hired very young people who really qualify as first-time directors. I just wouldn't put him in that category when we hired him on Get Out.

Willy Walker: When you hire a first-time director or someone who has just done a couple, you typically get options for their future work?

Jason Blum: Yeah. We always try to get options. Some people hate that. A lot of people hate that. I feel like if you give someone that kind of a shot, and it works, they should work with you a time or two again. Sometimes we get them, sometimes we don't. They're not that effective because of the person. If you have a bad experience, they're not going to work with you again. If you have a good experience, then the reason for an option is if you have a bad experience, and you have options, no one's going to want to do them anyway. Even if the thing that that person made is successful. If you have a good experience, you should really work with the person again, you shouldn't need the options to do it. And oftentimes someone's representation will say, well, don't work with that company again. And options protect against that. They're like moral, ethical code enforcers. And I guess I have mixed feelings about them. I guess I have mixed feelings about them, obviously.

Willy Walker: What happened on La La Land?

Jason Blum: Hahaha! That’s what I was thinking about.

Willy Walker: I know you were.

Jason Blum: Yeah, so we did Whiplash. That was a great example. We were the producers on La La Land, the agreement wasn't signed. I wouldn’t have sued the director but Whiplash, once it became successful…

Willy Walker: You didn't go to lunch in Sundance, Jason. You skipped a lunch in Sundance. And that's how the movie walked away for you, right?

Jason Blum: No, no, no. Actually, it's funny that you say that. No, it was in December, and I was going to have lunch with Damon…

Willy Walker: And you thought everything was done?

Jason Blum: And I thought everything was done. And I didn't have the lunch which I hit myself for. But that is not an excuse for not doing the movie. I was told, I knew we wanted to do La La Land, and I was told, now it's hard to blame this person. His name is Couper Samuelson, and he runs our movie company. He's one of our greatest executives. He has equity in the company.

Couper found Whiplash, so we never would have done Whiplash without Couper. So I can't really have any high ground blaming Couper. But Couper said to me, “Don't worry, we're producing La La Land. It's all set. Don't worry about that lunch.” So I blew it off, and there was a voice inside me that knew it's a mistake. Now, who knows? If I had the lunch, maybe the same thing would have happened. Anyway, Whiplash came out, and then they threw us off La La Land and that was a bad thing to do.

Willy Walker: So if anyone wants to know how important Couper is to Jason, when Jason was asked what movie took away his title of having the lowest gross, widest release movie ever, which was a badge of honor, I guess.

Jason Blum: “Jem and the Holograms”

Willy Walker: I thought it was “The Empty Man.” I thought that's what they came up with.

Jason Blum: We held the record for “Jem and the Holograms.”

Willy Walker: Oh, I'm sorry. Yeah. And then “The Empty Man” beat it?

Jason Blum: It beat it. We lost that crown.

Willy Walker: Right, Exactly. I want to know because you're an incredibly competitive person. Incredibly competitive person.

Jason Blum: I am am, it’s a curse.

Willy Walker: What did you do when that movie came out and broke that record? I mean, how did you deal with that? Because I know you and you're wildly successful and you look really relaxed and all that kind of stuff. But when that happened, I mean, you were releasing on 2,000 screens and what was the gross over the weekend, $1.1 million or $1.5 million?

Whatever the number was, it was not what you'd expected?

Jason Blum: Well, to answer your question more broadly, I've been doing this long enough that's happened to me, luckily not that many times, but certainly, more than a handful of times. How do you deal with failure? I don't know. It's very hard. I'm going through two things right now that are at that level. And I don't know. I find it really hard. I beat myself up for taking it so badly. Then I'm like, well, that's why I'm successful because I take it so badly. Then I'm like, I go through a crazy thing. It's very, very difficult.

I think one thing that drives me crazy is when people don't acknowledge failure. And I think people in the movie business are so guilty of that. They're so scared to say, we tried something, it didn't work. One of the big disappointments of “Jem and the Holograms” was – I'm very quick to say when movies we make aren't good or don't work or parts of them don't work or whatever “Jem and the Holograms” is and was a great movie. And Jon Chu turned out to be one of the great directors of our time. When it's something like that, we had the same situation on “The Hunt.” It was a great movie that my friend and colleague Kim Masters, torpedoed. It still hurts when an artist works for you and does a movie that doesn't work and the movie doesn't work, I can take it. But when an artist delivers, when your partner delivers for you. Jon Chu delivered for us. Craig Zobel on “The Hunt” delivered for us and we didn't deliver for them. It drives me insane to this day. It drives me insane.

Willy Walker: So you talk about the “Final Cut”…

Jason Blum: Hahaha! I like that we're moving past that.

Willy Walker: I think there's a really good point, though. I mean, I want to give people, Jason, a sense of how you do what you do. So you get these great directors. First of all, you find scripts. They have to be small. Not too many actors, not too many scenes, and not too many special effects. Is that a fair kind of when a script comes along and you guys say, go, no go, it needs to kind of have those characteristics?

Jason Blum: But the most important characteristic you're forgetting is the above the line talent, meaning the actor and the director have to agree to work for the back end. We can't pay them upfront.

Those four things: not too many speaking parts, not too many locations, sets and special effects. The above the line talent working for back end. Those four things.

Willy Walker: Talk about not too many speaking parts because there's a little piece there, all your movies are union movies. You're a big fan of the SAG but…

Jason Blum: Yes, but this is not so true anymore. But it's still to a certain degree, it's true. If you're doing a party scene, you know, and there's someone serving an hors d'oeuvre you have them serve it and don't say anything because if they speak, you've got to pay an extra thousand dollars. We're not so crazy about that anymore. But when I started, we even looked at that stuff, but I would say, if there's 100 speaking parts in your movie, we're not making that movie.

Willy Walker: And then as it relates to how you actually control costs, once you got the director and the talent to go above the line, if you will. So they're not taking a big guarantee upfront. They've got a percentage of what you're going to make in the back end.

Jason Blum: Obviously, us too. We don't make zero fees on our theatrical movies. Zero zero zero.

Willy Walker: Right. And then you shoot pretty much everything in L.A.?

Jason Blum: No, we shoot all over the place. We used to shoot a lot more in L.A., but now we shoot all over the place for reasons probably not interesting to your audience, but now we shoot everywhere.

Willy Walker: But is part of that tax breaks that you get and rebates?

Jason Blum: To go back to Moneyball, we shot in L.A. because no one shot in L.A. There were amazing crews in L.A. and because there wasn't really a tax break in California. So for me, our movies were so cheap that we actually didn't chase tax incentives. And shooting in L.A. was great because we got great crews, they got to live at home, and there was no competition.

When streaming and production started like crazy, it became very popular to shoot in California. So then we started traveling because we couldn't get the crews that we could get before. And now our movies are edging up. They used to be a million and they're 5 million now. They're more like $10 million and $10 million, 20% is a lot of money. So we'll go shoot a lot now in Georgia. We shoot a lot in Louisiana. We shoot in New York.

You know, we look at rebates. The key thing about rebates which no one talks about and some states are much better at it than others and if you're starting a rebate is when you receive the rebate, a lot of these rebates, they don't pay for two years, which is not then, it's not a real rebate or it's a real rebate but it's a real drag on cash flow. So it's not just the percentage of the rebate, but how it's how and when it's paid.

Willy Walker: So a movie like “Get Out,” which cost you, I think, $4.5 million dollars to make…

Jason Blum: Yes.

Willy Walker: And ended up grossing, I think, $255 million at the box office, I guess somewhere around there. So when that $4.5 million gets made, you then take that to and I don't know whether Universal was your distribution partner on “Get Out” or not, but in the model it would be the you take $4.5 million made movie, take it to Universal, and then Universal kicks in with their promotion to market that, and that's somewhere between $30-$40 million bucks of promotion behind a movie like that?

Jason Blum: Yeah. Just to clarify, Universal paid for the movie. Some of our movies we pay for, some of them we co-finance, we split, and some of them Universal pays for. That particular one, Universal paid for. And yes, the marketing budgets are between when we go wide in worldwide, between $30 and 50 million bucks.

Willy Walker: And the demographic that watches your film is?

Jason Blum: The demographic leans more female than male. We're 55:45 female. So young women love to come see our movies.

Willy Walker: Under 24 women, right?

Jason Blum: Young women under 24. They drive the groups to our movies, and they drag the guys to our movies, which is kind of funny.

Willy Walker: And then that drives a higher social media marketing than for a movie that's trying to target me, right?

Jason Blum: Yeah, well, different distributors do different things, but definitely as compared to other movies. As a rule, our percentage of ad spend on social media is much higher as compared to television. We always have a higher percentage than most movies spent on social media than television ads. It's interesting. Studios, everyone believes different things. Some people believe you really just can't release a movie without television ads. And some movies are released without any TV ads. So it really depends.

Willy Walker: The movie makes X hundreds of millions of dollars. One of the things I thought was really interesting, Jason, is that you're very transparent as it relates to, if you will, the bonus structure.

Jason Blum: Well, the only people who benefit over movie definitions are lawyers and the amount of lawyering that goes into a point and how it defines a point and what is a point and what isn't a point is insane. And it's still insane. It drives me crazy. So when we started and we still do this to a large degree, not for everyone, but for a large degree when we started, I said we're going to pay people based on how much it made at the box office, and the language in the contract will be less than an inch long, right? Like if it makes $50 million and you read that on deadline, you get $100,000. And if it makes $75 million, you get another $100,000. That makes $100 million, you get another $100,000.

After a movie comes out – I don't write the checks, but our accountant writes the checks – I put them in the FedEx envelope. I go to the post office, and I video myself and I send little videos to the participants. I remember sending Catherine Keener a check for $1,000,006 from “Get Out.” I said today you're going to get a check for $1,000,006, which is a very, really fun thing to do. And it and I think it's really important to if your model is based on paying people back end, then you got to be super transparent and you got to be fast. You got to pay them fast, which is why I'm very careful that we do.

Willy Walker: Is there an allure to the big directors to say, Hey, I like that versus what the big studios will do for me? In other words, given that ability to participate on the up end are they going to the big studios and saying, I want the same kind of deal? Or is your deal the only deal they can get that looks like that?

Jason Blum: Most studios do a hybrid of what I'm saying. They pay a good amount upfront against a back end. I don’t like that as much.

The allure for the directors to work with us is that they can do things with the story that you can’t do on a studio movie. If I was running the studio, I wouldn’t let them do either. When you’re spending $100 million on a movie, the list of actors you can cast becomes much shorter. The things you can do with the story, there are a lot of things that like, you know, you can’t kill the lead of the movie 50 minutes into the movie. There’s a type of storytelling and types of actors that you can use in our movies that you just can’t use in $100 million movies. So, yes, there are directors who opt out of making an $80 million movie to work with us in exchange for making something that they have more control over.

Willy Walker: As I hear you talk about the model, Jason, you constantly get asked, aren’t you afraid that somebody will mimic this model? Aren’t you afraid that the big studios will come and run you out of business? And I would sit there every time listening to those questions saying to myself when Herb Kelleher created Southwest Airlines, it wasn’t some great secret what made Southwest beat United, American and Delta and United, American and Delta all tried to kind of do similar things to Southwest. But because the business model was built the way that Southwest was made, there was no way for the incumbents to replicate what they did.

I sort of see that happening with you and the big studios in Hollywood is just that their model is just I mean, they've got 747s, they've got a disparate fleet, if you will. They have to invest in these long hauls. And Herb Kelleher kind of came in and said, I'm going point to point. I'm going to use the exact same model airplane. I'm going to cut out costs here. They're going to have open seating. I'm going to do all these different things. And the big guys never even to today can't replicate what Herb Kelleher did at Southwest, and I view a lot of parallels between what you've done at Blumhouse to the big studios and what Herb Kelleher did to the aviation industry.

Jason Blum: Well, I'm very flattered. I appreciate that. I think this is like the same thing that you're talking about what people always talk about running a business, which is very familiar to you, is focus, focus, focus.

It's really hard to be focused in the movie business because you do “Get Out” and then you go to the Oscars and then you think, Oh, maybe I'll make a movie that I could get more Oscars for. And one thing that we do that the studios can never do is we just make one kind of movie. We make horror movies, that's what we do. They can't operate just doing that. So that alone is a big reason that a studio can't replicate. We're just in this business, they're in 20 different businesses. They're doing TV and all that. But even within the movies, they're doing romantic comedies. They're doing Fast and Furious movies. They're doing animated movies. They are doing kids' movies. We're doing one thing, one kind of movie. That's always what we're going to do.

Willy Walker: But Jason, let me ask you something on that. Why won't your business model replicate into other genres?

Jason Blum: It doesn't work in other genres.

Willy Walker: But why?

Jason Blum: Because, well, most other genres are much higher cost. Action movies, comic book movies, all those movies. The audience when they're going to see a Marvel movie, they expect the world to blow up in different ways every time. So you can't do a Marvel movie cheap. You just can't. I mean, Todd Phillips did the closest version, which is $60 million, and he did pretty damn well with doing it that way. But it's still $60 million. You know, it's a different thing. We don't spend that kind of money on our movies.

Willy Walker: To give people a sense of that, I heard Jason say as he was talking about costs that you were asked about the gore in your movies and you said, you know, we like to leave a lot of that to the imagination. And, oh, by the way, blood is expensive. And so he's concerned about the cost of fake blood?

Jason Blum: Fake blood ain’t cheap.

Willy Walker: Fake blood ain’t cheap huh? I got it. Anyway, go ahead. Keep going on that. But I just thought that was an important one.

Jason Blum: Yeah, shooting with fake blood is a nightmare because it's just the continuity, it just takes a long time. If you're making a super bloody scene, it's as much as the cost of the blood. But anyway, and the other thing is if it's not action, comic, all those require huge scope. Scope is expensive. Kids movies, animated movies, scope, scope, scope is expensive. Although we tried it with “Benji.” Why is Benji a Blumhouse movie? Because it was a low cost, wide release, or a broad audience movie. So we did try it, which I don't want to get sidetracked on that.

But then the other genres you can certainly make a romantic comedy for not very much money, but they're much more movie star dependent. You can't have a romantic comedy work theatrically without huge movie stars. And the above the line talent, the stars that we work with when you get to a certain category, it's like Tom Cruise is not going to work for no money up front. Like it's just not going to happen. So there's like, ten people who are super, super in the stratosphere. They get $20 million up front and back end. And so I'm not getting them in our movies. So that's why it doesn't work for romantic movies, the pressure on movie stars in other genres is higher and scope is higher. So it only works in horror and doesn't work in other genres.

Willy Walker: So does it work in TV?

Jason Blum: For the longest time, it didn't work in TV because TV was not being judged by P&L. It was being judged by subscribers. They weren't judging it by profit and loss. The stock in television companies was affected by something other than. Now the stock is being much more affected by is more money coming in than going out in television? It's much more sensitive to that.

So it is my opinion that TV will shift to something that it was before, be more focused on lower cost and be more willing to give ownership. If you can make a show for a lower cost. It's not there yet, but I think we're getting to that place. So there may be more room for a Blumhouse type model in television than there has been in a long, long time. But it remains to be seen.

Willy Walker: I've heard you say that it doesn't work for the streamers, and yet you have a partnership with Amazon to do the “Welcome to the Blumhouse” series. So help me understand that it doesn't work for the streamers and at the same time you're doing something with Amazon?

Jason Blum: It doesn't work. Meaning we got paid upfront for that show with “Welcome to the Blumhouse” of which we finished. But we made eight movies for Amazon. We finished the eight movies. It was called “Welcome to the Blumhouse.” We were paid an upfront fee for every movie and the actors, everyone got paid upfront. There was no back end in that show.

Willy Walker: Got it. Now that was underrepresented directors on all eight of those, Jason?

Jason Blum: Yeah, that was all underrepresented directors on the eight movies, which I was proud of and there was a lot of pressure to do a 50/50. I said, if we're going to do it, let's do it. So I felt good about that, and the movies turned out great. You know, it was a very fun thing to do.

We did for one year and for the next year, we learned a lot about the brand. Like a lot of people would show up when they saw Blumhouse and it was interesting and fun to do. Not wildly lucrative because, again, you're paid-up front. But it was good for the company. And I'm glad that we did it.

Willy Walker: Talking about working with underrepresented directors, “The Purge” and “Get Out” both had underlying social messages to them. I heard one of the things, as you were looking at Jordan's script, that the two of you sat down and you had to be able to talk to Jordan about race and that the two of you could talk about race.

You wouldn't think horror films have an underlying social message to them. How much responsibility do you take to work with underrepresented directors as you did on the Amazon series? Working on a movie like “Get Out” with Jordan? And then I guess the final question on all that would be as it relates to the degree of violence in your movies, do you have any level at which you say ‘no more’, we're not going beyond that, I've got a responsibility to not put stuff out there or do you let the market determine that?

Jason Blum: On the violence, I really let the ratings board determine that the MPAA like we would never do more than an R-rated movie. There are ratings, there's X rating. There's NC-17 we would never do NC-17. So that's how I deal with that. I never do more than an R rating.

On the underrepresented, we worked with underrepresented directors a lot before it became everybody doing it, which by the way, I think is a good thing. But we did it because it's good business. It represents our audience. And if the filmmakers represent your audience, the stories you're making are going to connect more. So we've always done that.

“Get Out” was no exception to that. We did “BlacKkKlansman.” We did two movies with JD Dillard. We've had a history of doing that. The thing that you're talking about is what I wanted to be sure that I could be comfortable talking like the conversation with Jordan was about the party scene in “Get Out” and there's three black people and when they're looking at each other, they're kind of acknowledging to each other like, here we are with a bunch of white people. I said to Jordan, is that like a real thing? Like, would you do that? Because like, totally you do that, and that's not my experience. I haven't really experienced that. I haven't been to a party where there are three white people and everyone else is black. So I haven't had that experience and it was important to be able to talk about those experiences openly with the director who is making “Get Out” and we did.

Willy Walker: You just talked about one scene in “Get Out.” I want for a moment for you to talk about one other, because I think it does go to the core of your movies, how you make them and why you make them. And that's the deer scene and the fact that that's not special effects. That's not a lot of gore. It's the acting at the moment. will you explain that to our listeners because I found when you talked about that that I said that's the genius behind what Jason invests in.

Jason Blum: Yeah, sure. I think that people who don't understand horror or don't particularly like horror and a lot of studio executives fall into this category because horror can be commercial. So studios go, give me the scary movie. You know, what are your horror pictures? You can tell when someone doesn't really understand horror, when they focus on something like, what are the scares? Like we need more scares, we need more scares.

If you know and love and are a fan of horror filmmaking and the horror business, you understand that the scares are not. You know, this is going to sound weird, but people aren't scared of the scares unless what comes before the scares is riveting. So you have to have great drama and you have to get someone to forget they're watching a movie. And if you forgot you're watching a movie, you can have kind of silly scares that are very scary.

So the example you're talking about, about “Get Out” in the beginning of the movie, when the deer hits the car, there have been 500 movies where people are driving along, and something hits the car. Jordan's not brilliant because he thought of a deer hitting a car. Jordan's brilliant because he puts this couple a Black man and a white woman, they're going out. They're talking about race. They're going to visit her white family. She's saying little, tiny things that are not right. And it's just tense. You're tense. If you're black or you're white, all the audience watching that is like, what is going on in this car? You forget you're watching a movie; the deer hits the car; you jump like crazy.

It's really not appreciating the genius of Jordan Peele or Leigh Whannell or James Wan or Scott Derrickson or so many of these filmmakers – they're not good at doing scares, they're good at doing drama. That's why the scares are so scary. And that's why I also always say, when we're doing a movie, I'd prefer to work with a director who does great drama than like a typical ten horror movies director.

Willy Walker: There's a case study written on Blumhouse by the Harvard Business School. What was the conclusion when you went to listen to them teach it, what was the question at hand? Quite honestly, What did they write the case on?

Jason Blum: They wrote the case on whether I made a decision early on in my company moving back to like business here; so many producers decide they're going to run a production company, and then they sit with the accountants and the CFO and blah, blah, blah, and they're says like, okay, so when you get a fee on a movie, that's revenue for the company, right? So there's some production companies where the production company gets some money and then the producer gets a fee outside of what the company gets, which is not a real company. So when the producer says, I want to start a company, I want to build equity in the company, I want to build a company. And then the producer is told all your fees need to go into the company, and then you draw a salary, which if you want your P&L to look good, should not be that big. It doesn't happen. That's why it's very hard to scale a production company because you're trying to build a company around one person's fees.

So the business question of Harvard Business School about 10-12 years ago, I decided that the way I would make money was to build equity in a company and eventually sell some or all of the company as opposed to collecting the fees that I make on the individual movies. I would say it proved to be a good decision. (laughter)

Willy Walker: That's great. And then the final thing is, you just taped Shark Tank?

Jason Blum: I did!

Willy Walker: Whoa, how was that?

Jason Blum: It was very fun. I've always wanted to be on Shark Tank.

Willy Walker: Who were the others, was it Mark Cuban on it with you?

Jason Blum: It was Mark, it was Mr. Wonderful, Barbara, and Lori.

Willy Walker: Wow.

Jason Blum: It was really fun. I did it all day long. We did two episodes, one in the morning, one in the afternoon. And one of them was a Halloween episode, of course. and it was a lot of fun. And they're on October 26-October 27th.

Willy Walker: And I know you can't tell us whether you invested, but if you go on as a guest and you say I'm investing, you are actually obligated to invest your own money?

Jason Blum: Yeah, they don't give you a pot of money to invest. It's your own money. You make the deal on the show. There is due diligence which happens, but if it passes, if the person has been telling the truth, then you're obligated to invest.

Willy Walker: Oh, that's interesting. So afterwards there is actually a diligence period before you have to go. So the whole diligence is in that interview process. That's interesting.

Jason Blum: The person has to tell the truth about the revenue of the company or something like that. But if what they've said on the show is true, you're obligated to honor your commitment to invest.

Willy Walker: That's really cool. Yeah, I can't wait. It's coming up soon.

Jason Blum: I think it's October 26. October 27.

Willy Walker: That's great. You've been super generous with your time. I loved our conversation. Sorry we didn't get to go on a bike ride last weekend.

Jason Blum: And I'm looking forward to one soon.

Willy Walker: Yeah, we'll make that happen. Jason, great to see you. Thanks for taking the time.

Jason Blum: Thanks for having me on and look forward to seeing you.

Willy Walker: Thanks, bud.

Jason Blum: Bye bye.

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