Ross's partnership with Cameron attracted big-name investors such as IBM, but that didn't solve all of his problems. "It was a tough business then, and it's even tougher now," Ross says. Effects began to eat up bigger portions of film budgets, and studios fought to keep costs as low as possible.

The economics can be brutal. Typically, large film studios subcontract the special-effects "service work" to small shops, which are forced to underbid one another for the jobs. Industry veterans say contracts often stipulate that if a studio doesn't like the work, it has to be redone at no additional charge.

"The producers would just use these companies like Kleenex," says Rob Legato, a world-class special-effects designer who worked at Digital Domain during its early days and now runs a one-man effects shop out of his basement. "It's a very low-profit-margin business."

The firm helped create a rapping Tupac image for Coachella.
Eric Smith-Gunn / evsmitty / flickr.com
The firm helped create a rapping Tupac image for Coachella.
State Rep. Carl Domino (left) was an outspoken critic of the state payout to Digital Domain.
Meredith Geddings
State Rep. Carl Domino (left) was an outspoken critic of the state payout to Digital Domain.

When a multiyear job on a feature film is over, months might pass before a studio gets another big project. Today, the business has been upended by lower labor costs overseas and cities that offer huge tax breaks for film companies. Nowadays, incentives determine who gets the work and where they do it.

There's one exception: companies like Pixar, which transitioned in the '90s into a full-fledged production studio that produces entire films, not just effects-driven scenes. Ross thought mimicking that reinvention was the only chance for survival. "My vision and hope was to make a company that was similar to Pixar... to become a content owner."

Ross says that he and Cameron had disagreed and that Digital Domain was essentially driven into the ground doing overtime work on Titanic. (Cameron's office did not respond to an emailed request for comment.)

Never mind the film's record-setting box office gross of $1.84 billion. Digital Domain "cost $7 million to $9 million just on that film," Ross told Forbes in 2005. "The ship sank in the movie — and Digital Domain almost sank with it."

In 2006, John Textor showed up in California as a potential investor in the flagging company and offered to buy out the owners, including IBM, Cox Enterprises, Cameron, and Ross. Textor was joined by Bay, Marino, and a few other partners.

Textor's name sounded familiar to Ross. Years before the acquisition, Digital Domain had been asked to produce an animated logo for Sims, Textor's snowboard company. Ross says Sims left Digital Domain with an unpaid bill that couldn't be collected.

"That was the first time I heard of John Textor, when we couldn't get payment on the work that we had done," Ross says. "Years later, that same fellow shows up to acquire the company."


Textor is a distant relative of the wealthy DuPont family but has said that after his parents divorced, his mother worked three jobs to support the family. He went to high school in West Palm Beach, where he played soccer and skateboarded. After college at Wesleyan, he worked a series of management jobs. In 1997, in the early days of the dot-com boom, he assembled investors to buy a website that offered link recommendations to visitors.

"The guy is a fucking genius," says Michael Koretzky, who worked until 2001 as a content editor at another of Textor's online businesses, Jester.com. From Jester's office in downtown West Palm Beach, Textor imagined a website as a virtual hangout for teenagers into snowboarding, skateboarding, videogames, and music. Users could click around 3-D, interactive "rooms" on the site, spending hours online. It was a precursor to successful immersive online experiences like Second Life — only a decade too early.

Koretzky remembers Textor as a skateboarder turned cool-guy entrepreneur. He'd toss out new ideas every day at the office, which had a foosball table and a refrigerator stocked with Mountain Dew.

Also in the late '90s, Textor teamed up with Bay, Marino, and former Microsoft executive Carl Stork to form an investment group called Wyndcrest Partners. Together, they assembled a minority ownership of Sims Skateboards. Textor reorganized the company and became chairman of the board in May 1999.

That same year, Wyndcrest invested $1 million for a 10 percent stake in BabyUniverse, an online retailer selling toys and supplies for babies and toddlers. A year later, the dot-com bubble was bursting and the company's investors bailed. Textor and his partners were able to take over 90 percent of the company for another hundred grand. "Nobody wanted to put money into an e-commerce company in the fall of 2000 — except us," Textor defiantly told the South Florida Business Journal.

But in the early '00s, Textor's business ventures took turns for the worse.

"The problem was, in 2000, most of our users had dialup. So you weren't moving very fast," Koretzky says. Jester "was a great idea, but he wasn't really practical about its execution." One day, employees showed up to find the office doors locked.

Sims, too, was in trouble. The world-famous company, founded by Santa Barbara boarding legend Tom Sims, was no longer the star of the industry. In the early '00s, Textor and his partners moved in for a controlling stake, brought in new investors, and completely reorganized the company. But shipments of new products for the 2002 season were late, and the company stumbled when a supplier shut down its factory.

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