George Lucas: control, independence, and betting everything on yourself

Executive overview

Studios owned Lucas's films, cut them without permission, and kept most of the profits. He decided the only solution was to own everything himself — the money, the technology, the rights.

His entire career is one long act of buying creative freedom. Every deal, every company he founded, every risk he took was in service of that one goal.

The person who controls the money controls the work — and George Lucas structured his entire empire to make sure that person was always him.

Early life and obsessions

• Read voraciously as a child; landmark biography series sparked a lifelong addiction to history
• Drew inspiration from Scrooge McDuck: work smarter, do things no one has thought of before, never compromise your ethics
• Clashed constantly with his father, who wanted conformity; Lucas vowed independence from an early age
• Told his father: "I'll never be back. I'm going to be a millionaire before I'm 30." He was, with two years to spare
• Mediocre in school until he could choose his own curriculum — then became an exceptional student

Film school and the USC mafia

• Discovered filmmaking at USC and fell completely in love: "There was no going back after that"
• Ignored every professor's instruction; his first film opened with "A short film by George Lucas" in defiance of the assignment
• Preferred shutting himself in his room sketching ideas over parties; called movies his addiction and his "next fix"
• Hated collaborators, preferred working alone — especially in the editing room, which he called his natural habitat
• Built lasting relationships with Coppola, Spielberg, Scorsese, De Palma: the USC/NYU mafia who would hire, fire, and collaborate for five decades
• Key lesson from Coppola: no one takes a director seriously unless he can write; Lucas forced himself to write despite hating it

Blueprint: independence over everything

• Met independent filmmaker John Cordy, who ran a barn-studio in Northern California outside Hollywood — Lucas immediately saw this as his model
• Coppola visited Danish filmmaker Morgan Scott Hansen's hilltop mansion-studio; they named their joint venture American Zoetrope after an optical toy Hansen gave them
• American Zoetrope's founding philosophy: control the money, own the facility, make films your way
• Lucas's repeated mantra: "Stay small, be the best, don't lose any money"
• Broke with Coppola over money: Coppola spent recklessly on antique pool tables and espresso makers; Lucas was disgusted by anything that didn't reach the screen

THX 1138, American Graffiti, and earning the stake

• THX 1138 flopped; studios cut four minutes from his final cut — "They were cutting the fingers off my baby"
• Officially founded Lucasfilm in 1971 out of his house, with his wife as the only other employee
• American Graffiti: wrote it himself after blowing the advance on a screenwriter who delivered an unusable script; called the process "bleeding on the page"
• Turned down $100,000 directing offers for other films while broke and in debt, because he couldn't be mid-project when Graffiti launched
• American Graffiti cost $1 million; earned $55 million at the box office — one of the highest returns on investment in cinema history
• Lucas earned nearly $4 million after taxes, fulfilling his childhood promise

Writing Star Wars: forcing the work

• Treated writing as a full-time job: desk at 9am, couldn't leave until 5pm, even if nothing was written
• Hung a wall calendar and required five pages a day; finish early and you could leave; most days he ate a TV dinner and glared at the news
• Couldn't convey the dogfight scenes in prose — edited 20 hours of WWII aerial footage into an 8-minute demo reel instead
• Took three years; was never satisfied: "If I hadn't been forced to shoot the film, I would doubtless still be rewriting it now"
• Only one studio said yes: 20th Century Fox — yet Lucas still negotiated hard from a position of one

The merchandising and sequel clause

• Fox expected Lucas to demand millions; instead he said: keep your money, give me the sequel rights and the merchandising rights
• Fox signed them over, thinking they were "underbrush" — footnotes in the contract
• Star Wars merchandise revenue would eventually be three times the film revenue; Fox executives later shook their heads at what they had given away
• Spielberg gave Lucas 2.5% of Close Encounters; Lucas gave Spielberg 2.5% of Star Wars — that stake paid Spielberg more than $40 million over four decades

Industrial Light and Magic

• No technology existed to make the special effects in his head — so he founded a company to build it
• ILM was seeded with his own money and structured as a Lucasfilm subsidiary
• Ron Howard: "How many people think the solution to gaining quality control and stimulating technological innovation is to start their own special effects company? But that's what George did."
• ILM became one of the cornerstones of the Lucasfilm empire and dominated special effects for decades

The Empire Strikes Back bet

• Star Wars made $775 million at the box office on an $11 million budget; Fox took 60% of profits for providing financing
• Lucas's view: Fox borrowed money from a bank using a letter of credit, then took half — so why couldn't he just borrow directly?
• For the sequel, he informed Fox he would finance the film himself using Star Wars profits as collateral
• Sold 40 million Star Wars action figures in 1978 alone: "Lucas would finance the sequel one action figure at a time"
• Bought the first 1,700 acres of Skywalker Ranch while making the sequel; eventually built out 5,000 acres
• Weekly payroll: $1 million; bank threatened to call the loan; Lucas gave Fox a few extra points in exchange for a guarantee
• Empire Strikes Back opened in 126 theaters, broke attendance records in 125 of them, and became the third most successful film of all time
• Lucas pocketed more than $100 million in profits: "He had literally bet the ranch and won"

Hiring: lessons from founder biographies

• Steve Jobs: "The first 10 people will determine whether the company succeeds or not. Each is 10% of the company."
• Rockefeller: hired people as found, not as needed; prioritised social skills above almost everything else
• Vannevar Bush: gave candidates a real unsolved technical problem in the interview; hired whoever came back the next day with a solution
• Nolan Bushnell: asked candidates about their reading habits — "People who are curious and passionate read. People who are apathetic and indifferent don't."
• Ogilvy (endorsed by Buffett): "If each of us hires people smaller than we are, we shall become a company of dwarfs. If each of us hires people bigger than we are, we shall become a company of giants."
• Bezos: "Every time we hire someone, they should raise the bar for the next hire" — future hires should be so strong that current employees wouldn't get their own jobs
• PayPal: prioritised speed in everything except recruiting; "A players hire A players, B players hire C players, so the first B player you hire takes the whole company down"
• Elon Musk: interviewed the first 3,000 SpaceX employees personally; solved one candidate's relocation problem by calling Larry Page to transfer the candidate's wife to Google's LA office
• Larry Ellison: asked university recruits "Are you the smartest person you know?" — if no, asked who was and tried to hire them instead
• Edison: "I can hire mathematicians, but they can't hire me" — develop skills that cannot be hired for