Friday 16 November 2018

Digital movie effects studio looks east

Dubliner William Sargent's Oscar-winning CGI firm Framestore has big plans for Asia, tech and teaching, he tells John Reynolds

William Sargent in Framestore’s London headquarters
William Sargent in Framestore’s London headquarters

As the CEO and co-founder of world-leading digital storytelling business Framestore, it would be difficult to find names more well known than those who feature in William Sargent's own story. He's also busy defining the multi-award-winning company's own storyline for the next 20 years, navigating China, AI, mixed reality (MR), acquisitions, working with tech giants and businesses in other industries who want its advice and solutions for data visualisation.

The London-headquartered firm has already more than doubled its headcount from 1,200 staff to 2,500. Seven hundred of these were from Anibrain, an Indian acquisition, but the path ahead may not be so straightforward from here. It may involve acquisitions outside of the CGI (computer-generated imagery) sector. One thing he's clear about is the company's focus on Asia and India - home to four billion potential consumers of movies, games and other digital content - as the source of growth.

Framestore's story has run for 32 years since being founded by Sargent and four friends - and it has an all-star cast. They initially began supplying early digital effects technology that allowed producers essentially to digitally paint on film. Their big break came when they did the sketching in Norwegian pop group A-ha's Take On Me video.

The Rolling Stones' Mick Jagger was one of a group of investors in the London-headquartered business during the late 1990s. James Cameron, Steven Spielberg and JK Rowling are among the writers and directors with whom his senior creative colleagues work closely, helping turn their scripts and screenplays into moving images.

Harry Potter (pictured) is the best-known production that Framestore's CGI animators have worked on, helping bring the story of the young wizard and his pals to life on the screen. The blockbuster has earned over $8bn to date, and has been the third-highest money-spinning global franchise after Marvel productions and Star Wars.

Martial arts movie star Jackie Chan is a backer of the Irishman's firm and is on its board.

'Steven Spielberg and JK Rowling are among the writers and directors with whom his senior creative colleagues work closely, helping turn their scripts and screenplays into moving images.'
'Steven Spielberg and JK Rowling are among the writers and directors with whom his senior creative colleagues work closely, helping turn their scripts and screenplays into moving images.'

Chan took up the role last year after` an investment firm he has backed, Cultural Investment Company, took a majority stake, valuing it at about €175m. Sargent retains a 10pc stake.

More unusually, for five years he also spent up to half of every working day as a permanent secretary in Britain's corridors of power, in the Cabinet Office of Tony Blair and Gordon Brown's Labour governments, as well as on the board of the Treasury, for five years. Prior to that he chaired a European industry group assessing the potential of HD TV, which then led to several years chairing working groups in Westminster including one looking at competitiveness for the Department of Trade headed up by Peter Mandelson.

Sargent knows all about the irreverent side of politics as well. Building on early scriptwriting efforts, he was an executive producer of Spitting Image, the satirical puppet show that ran from 1984 to 1996 and chronicled the ups and downs of the Tory government in often hilarious and memorable ways.

Business seems to be in his DNA nonetheless. His mother worked as an estate agent, while his father was a chartered accountant, advising clients about investments or running their businesses, and who also spent a stint managing a shipyard in Brazil - where Sargent spent the early part of his childhood - for a Dutch company that bought Cobh's port facilities in the 1950s. He sees parallels with his father's management skills and his own, to which he has added his mother's humanity.

Though he comes across as something of a Renaissance man who perhaps enjoys learning and strategic thinking in his role as much as the leadership and management, the 61-year-old found his entrepreneurial feet while still at Dublin's Trinity College, where he studied business and law. He had planned to study architecture in Liverpool, and he might have tried to become a racing driver if he hadn't gone into business, he says.

He worked with friends to cover their living costs and university fees by renting out sound equipment to bands including U2 and Thin Lizzy, working as a mobile DJ, mainly at weekends, and doing a short stint on Radio Dublin.

He recalls many a Friday night playing songs at parties for the wealthy residents of Foxrock or in Dun Laoghaire's Top Hat ballroom.

These days, when he's not working, he contributes to London Mayor Sadiq Khan's business advisory group, visits his friend and former Cabinet Office colleague - now New Zealand's Prime Minister - Jacinda Ardern, following Leinster rugby or Van Morrison around the globe or spends time with his family in Mumbai.

Sargent peppers - rather than drops as if seeking to impress - the above names throughout our conversation, the first 35 minutes or so of which is about how he got into the civil service, his experiences and thoughts on the current state of the world. There's a sense he likes being at the centre of things, the heart of the action.

The Framestore office on London's Chancery Lane - traditionally home to a cluster of legal firms - has not long been occupied. Advertising giant Saatchi & Saatchi is now a few doors down, and more creative firms are taking space here on the edge of the City, which believes more might join them to take the place of any law or financial services firms who might depart because of Brexit.

An Oscar - one of three it's won, including for Blade Runner 2049, Gravity and The Golden Compass - and a tall set of shelves full of Baftas and other awards greets visitors in the reception, which also features a large meeting table, a massive screen showing BBC news, and an in-house coffee bar and barista.

Sargent's own bright and airy glass-panelled office only contains a small desk and doubles as a meeting room. The tall, dapper, softly spoken Irishman likes to talk, earnestly and in detail, explaining his thoughts in a reasoned and thoughtful, sometimes understated, way.

He explains that he placed an emphasis on spending more time listening than talking in his political roles. He was seen as fair, trustworthy, and his fellow civil servants saw him as a straight talker, something they perhaps weren't used to.

"I got credibility because I was always very clear about being neutral. I could only deal with total transparency. I told people not to tell me any secrets, because I'd forget what was a secret and what wasn't. I also believe very strongly that you shouldn't object to something unless you're prepared to make an alternative proposal, however ill thought out it might be. I'd say 'I hear your complaint, but what do you suggest?'

"We had to make our case, and persuade people intellectually of the errors of their ways if we thought they were doing something wrong, or of merits if you wanted them to do something right."

His answer to one, on the legacy of PFI (similar to our public private partnerships), which was under then chancellor Gordon Brown's remit and how it burdens the NHS with spiralling payments exceeding the value of new buildings and services, is a little cold and dispassionate.

"With hindsight, it appears a lot of overpayment has been done. I'm sure there are some examples where it's worked properly. It went wrong in the execution. It became a financial community set of transactions rather than a wider collaboration with more controls in place."

When asked what he makes of Tony Blair's legacy in light of the Iraq war, he says: "From my conversations with him, he was under no illusion that it would damage him personally and politically. He genuinely thought he was doing the right thing. Misguidedly, with hindsight, he thought he could shape America's approach by being part of it.

"Though he had the reputation of being the ultimate manipulator, my perspective is he was actually a conviction politician. With that came positives and negatives. The positives are Northern Ireland and some of the spending on public services. Iraq is obviously the biggest negative.

"As an Irishman, I have to emphasise his work on the North, but it's a disappointment that his legacy will - correctly - be linked to Iraq.

What does he make of current political events? "Frustration is a very civil service word. The Brexit negotiations aren't addressing the future economic health of Britain. They're too focused on current politics. There's a disenfranchisement, which Brexit, like Trump, tapped into, from a say about the society you live in and not benefiting from globalisation. People increasingly feel irrelevant or unheard. When that happens, the 85pc traditionally in the political centre falls to perhaps 50pc. I don't think politicians have grasped that fully, but I'm a believer in a centrist approach."

He challenges Ireland's millennials - as many have done during the recent same sex marriage and the abortion referendums - to "take part in democracy and not write it off. They're dealing with the consequences of the decisions that my generation has made. If they want it to be different, they'd better get stuck in. Get involved, because the democratic system is the right one.

"When I look at Jacinda, Leo Varadkar and Sadiq Khan, I'm hopeful. We need to get to a place where political leadership is of a different kind, that isn't nationalist or extremist, in order to regain people's confidence. It needs to be about someone regaining the centre again, who is able to define what that looks like. Jacinda is an example of that."

Getting back to the business of Framestore, Sargent last year set out an ambitious plan to double sales, initially from £100m (€115m) to £200m, and then again to £400m over the next few years. Last year it booked £129m revenue, up 20pc from the previous year, with growth predicted, from here on, of between 12pc and 15pc.

Acquisitions - "not mega ones though" - would play a key part. "They will be either to extend our market reach or add a skillset we don't have. I'm looking for areas that I can add on. But they have to have the right values. It's very easy to damage a culture if you get it wrong. I need people who are a good fit in terms of culture and financial performance." But the industry is evolving rapidly. Margins are coming under pressure in some elements of CGI work, some of which tends to go to lower cost-base locations or ones with the best tax breaks. There's a war for skills and talent. Smaller US studios have closed down.

UK rivals Double Negative and The Moving Picture company seem to be of a similar size and taking a similar approach: they also have offices in India and China. More and more movie, gaming and other content is being produced.

Box office takings in China are now nearly the same value as in North America, having grown nearly sevenfold in a decade. Significant growth is likely to come from Asia, not just on feature film work. Framestore's majority shareholders and a Beijing office provide strong foundations from which to build, perhaps giving it an edge. "The skills I'm finding there in computer science are excellent. Some Chinese innovation is phenomenal too, so we will have a two-way skills transfer [tech skills from the east, creative skills from the west.]

"We also see a commercial opportunity to teach creative skills; initially a short course. We already operate two internal skills academies in the company. There's a pent-up demand for that kind of education from China's creative industries."

Back in the UK and US, aside from its traditional movie and TV work, Framestore has already embraced a more consultative approach with tech giants, Sargent explains. Facebook and Google are clients. It also designs data visualisation solutions for clients across a range of industries.

"CGI is being applied across every industry now. Twenty years ago it was just entertainment. We work with Ford, visualising traffic flows. We help an F1 team make decisions based on visuals from cars' data. The London Stock Exchange can see instantly what's going on in terms of trading looking at visuals we design. Investment bank Morgan Stanley has 2,000 pieces of data it presents on the largest set of screens in New York's Times Square about the operations in its HQ. Numbers alone aren't enough.

"Working with diverse companies also allows us to see how they're working with the latest tech including AI. Generally they're happy to tell us a bit more about what works and what doesn't because we're not a rival.

"We look at what university R&D departments and other business sectors are doing in terms of innovation, hoping to find something we could use. We don't invent technologies, but we intend to invent how it is applied to what we do.

"With AI, we're looking outside our industry too. We're generally willing to try new ideas first. Our core business will be different in 10 years' time, and even more different another decade later".

Sargent says more future growth could come from a new acquisition outside of the sector "if I felt that I was heading in a direction where I might need that". But virtual reality (VR) and MR are likely to prove significant sources of revenue too.

"We've won over 100 awards now for VR productions we've worked on. That makes us the most awarded company in the world in that sphere. But MR is the prospect for the bigger market. It's much more practical - it's not such a narrow field of vision. It's going to be enormous and we are already working with others in that regard."

The MR content market is set to be worth about €100bn by 2022. "In industry, engineers servicing a jet engine for example, typically need 25,000-page manuals that are on a trolley," says Sargent. "With MR, it might know the part they're looking at and bring up a visual of the correct manual page. It might be the same servicing a car. MR for industrial applications is unbelievably powerful."

Has Sargent looked at opening an office in Ireland? Opening an office in Reykjavik that couldn't be scaled up proved a costly learning experience, he says, so he's mindful of not wanting to repeat the mistake in another small country. "Dublin is one of the ultimate creative centres of the world. Ballyfermot College is a centre of excellence in that regard. But I'd tend to bring them to London, rather than go there. We currently employ enough Irish people - of 55 nationalities throughout the company, from about 1,100 staff here - to make up several football teams.

"The question I would always have looking at Ireland is what can I scale up? As we broaden our capabilities, if there was a sector with a centre of excellence we could tap into, then logically I'd so something there. But if I can't scale up because talented people aren't there, I'm in trouble. Talent is really what our business is about."

The cluster effect benefited Framestore in its early years, in the early 1980s in London, where music, publishing, TV, film and ad firms were all located in and around Soho. Rivals were down the road. "UK companies were doing the best work in the world at the time, so I could see my two main rivals from our door. It made us up our game and aim to beat them. The rivalry was quite intense, in terms of pricing and poaching talent."

Though some of Sargent's decisions don't always pay off, he's conscious of the need to keep taking risks. He worries too about remaining relevant in the midst of the tech-driven disruption affecting every business sector.

"Curiosity is at the core of what we do. It's the tool for keeping us relevant. I've made £1m investments that didn't pay off. They were for the right reasons and I'd probably make them again. I did three or four. One or two worked out and got us to where we are today. We benefited from trying new ideas. You shouldn't take risks carelessly, but you have to take them."

A venture arm invests in relevant startups - such as digital comic app MadeFire - and develops ideas for new original productions.

"I don't expect to find the next Google, but it's a modest incubator that's good for the company. People have a voice to try out ideas. We've learned a lot, and it keeps us dynamic. Some ideas we've sold on and made a modest return. We're currently talking to a major children's TV producer and a major network about one production.

"However, in the past I've also fired valuable members of staff for bullying, and it cost us in terms of revenue. I've dropped clients who were being abusive to colleagues, and it cost us.

"At the moment, I also worry that inflation will hit us and I'll have to deal with that [possibly by increasing pay]. And because we recruit from a lot of universities around Europe, I worry that a block on hiring talented graduates, perhaps because of Brexit, will hurt us. But it will also make us work harder at recruiting closer to home - where we already work with universities - so we now also plan to recruit school-leavers."

Do the firm's Chinese majority shareholders have an exit plan in mind? "I wouldn't be thinking about that at this stage. We're only starting year three of a 10-year plan. There's too much going on in terms of opportunities and growth."

 

BUSINESS LESSONS

What advice would you have for creative businesses who might look to China or India for new opportunities?

There is no shortcut to relationships.

Local partners are crucial. The right one can be transformative. The wrong one can be the opposite. If you’re going to go into a partnership of some form, make sure you don’t do so permanently.

There is no short cut to being on the ground, learning about the markets. Relationships won’t come easily. It’s about time and persistence. Help potential partners. Be co-operative. You’ll get tested. It might not pay off for three or four years.

Ireland and India have a lot in common. It’s about family, extended families, communities, and all of those kind of values we’re familiar with in Ireland. And that resonates in China as well.

Do you have any leadership or management secrets to pass on?

It’s by no means a secret, but sometimes when you’re a CEO, it’s easy not to listen. My civil service role taught me about the importance of that. My colleagues all readily tell me what I’m doing wrong and what the company is doing wrong. I’ve no shortage of shortcomings.

It’s about knowing the right moments to listen, and then when it’s the right time to stop listening and make a decision.

What are the next big things in your industry?

Mixed reality is going to be enormous, both for consumers and in industrial applications. China and India have burgeoning middle classes and four billion potential consumers of movies, games and other content.

With AI, we’re seeking inspiration outside of our own industries. We don’t invent tech, but we do invent how tech is applied to the CGI and visualisation work we do.

We also take a consultative approach, with strategic thinking to designing data visualisation solutions for businesses outside of our own sector. It’s a way for us to discover how they are innovating. We learn from each other.

 

CURRICULUM VITAE

Name: William Sargent

Age: 61

Position: CEO and co-founder, Framestore

Lives: Hampstead and Mumbai

Education: Clongowes Wood College, Co Kildare; BA Business and law, Trinity College Dublin

Previous experience: Renting out music equipment, mobile DJ - Band Centre, Dublin

Executive producer, Spitting Image

Permanent secretary, UK Cabinet Office

Board member, HM Treasury

Family: Married, three children

Pastimes: Following Leinster rugby, supporting Tottenham Hotspur FC, tennis, going to Van Morrison gigs (he has 39 of his albums on his iPhone)

Reading: Factfulness by AR Ronnlund, H Rosling & O Rosling

Watching: Beautiful Houses of the World

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