There's one business like show business : The Indicator from Planet Money There's no business like show business. Or is there? It turns out the business of producing a Broadway hit shares a few things in common with the business of investing in tech start-ups. Today on the show, the producer of hits like Dear Evan Hansen and Leopoldstadt explains how he applies lessons learned from venture capital tech funding to investing in multi-million dollar Broadway productions.

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There's one business like show business

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And I'm Wailin Wong. Adrian, I don't know if you're into musicals or not.

MA: I love a musical.

WONG: Do you really?

MA: Yeah, I love a song and dance, a little jazz hands, a little high kicking.

WONG: Well, I love them too. My first musical was "Phantom Of The Opera." I still remember what I wore, and I remember that chandelier coming toward me. It was very magical.

MA: (Laughter) So that is your theater kid origin story. And for Hunter Arnold, he had an origin story, too. And it started with a show called "Peter Pan." It was this 1979 Broadway revival starring Sandy Duncan in the title role.


SANDY DUNCAN: (As Peter Pan, singing) Look at me way up high. Suddenly, here am I. I'm flying.

HUNTER ARNOLD: I was old enough to, like, understand it wasn't real, but young enough to believe in magic, if that makes sense. And I remember thinking what these people are doing for us, the audience, is incredible.

WONG: After the show, Hunter waited by the stage door to meet Sandy Duncan.

ARNOLD: And she talked to me like I was an adult and mattered, and I had never experienced that before. People call it the theater bug. That is the moment that the bug bit me.

MA: Fast forward a few decades and Hunter finds himself working not in the theater, but in the world of internet startups, so pretty different.

WONG: But the theater bug always stayed with Hunter, and so he later left tech behind to become a Broadway producer and investor. He's produced mega-hits like "Dear Evan Hansen" and critically acclaimed shows like "Leopoldstadt," which won this year's Tony Award for best play.

MA: And it turns out the two parts of Hunter's career have a lot in common. So today on the show, we draw back the curtain on the economics of Broadway to see how risking money on a production is a lot like betting on a tech startup.

WONG: Our show must go on and will go on after this brief intermission.


WONG: So Adrian, in musical theater, there's something called the I-want or the I-wish song. Are you familiar with this?

MA: Oh, yeah.

WONG: Yeah. It usually falls in the first act, and it's where a main character expresses their heart's desires, so like Alexander Hamilton singing, I'm not throwing away my shot, at the beginning of "Hamilton."

MA: What about that, you're going to love me, song from "Dreamgirls"?

WONG: Oh, yeah.

MA: But you know, the I-want song is not just for fictional characters. Like, I mean, we all want something out of life, right? And for Hunter Arnold, his I-want song moment happened years into what was kind of an accidental career in tech startups.

ARNOLD: I sort of woke up in my mid-20s as a tech guy, but that was never really the plan.

WONG: The plan had been to work in theater. Hunter's I-want moment was realizing he wanted to get back into that world, and his detour through tech had given him some money to play with. So Hunter went to New York, and he put his money into stage productions.

MA: And Hunter very cleverly treated this as his sort of, like, do-it-yourself theater business school program. What he would do is he would contact producers of shows that he really liked, and he would ask them to invest in their next project.

ARNOLD: I would say to these people, you know, I'll give you 25 grand, which for some of these off-Broadway projects was a lot, but I have to be able to sit in everything and see how it works.

MA: Now, Hunter knew the tech playbook for investing in Silicon Valley startups. Entrepreneurs who need money go to venture capitalists, and these VCs cut checks, make bets on various companies, and then hope these companies grow as fast as possible.

WONG: And Hunter's insight was that theater is not that different from the Silicon Valley tech scene. So in Broadway, investors put up the upfront costs of mounting a production. These costs are called capitalization.

MA: And this number is typically in the millions of dollars for a Broadway musical. And in recent years, it has climbed well into the double-digit millions as shows have taken on bigger casts, more elaborate sets, special effects and, you know, maybe a celebrity in the lead role.

WONG: The most recent revival of "Funny Girl," for example, had a capitalization of $16 1/2 million, and then some shows, like last year's revival of "The Music Man" starring Hugh Jackman, cost over $20 million to get off the ground.

MA: That's dollars with a capital D. And that rhymes with C, and that stands for capital.

WONG: You got trouble.

MA: (Laughter) Or at least you got high price tags. In fact, one common statistic in the industry is that only 1 out of 5 Broadway shows actually recoups their upfront costs. So there is a lot of pressure to find a hit.

WONG: And in the same way that one Facebook or Uber can make up for the failed startups in a venture capital portfolio, one "Book Of Mormon," for example, can make up for a string of flops.

ARNOLD: Most of your shows have to be pretty commercial, and the way I would describe it is the industry fully functions like venture capital. If you fail, it just goes (imitating whooshing sound) to zero.

MA: But there's one key difference that Hunter found between the worlds of theater and venture capital, and that is in the scaling up part of the process. So with tech, companies grow at this breakneck pace until they go public, or they get acquired by a bigger company. The investors get paid. Everyone buys a vacation home and - scene.

WONG: In theater, it seems like the move would be to start small in some tiny, far-flung theater, then scale up to Broadway, get that big marquee in Times Square and run for years, packing the house every night.

MA: But Hunter says scaling up a show - that's a process that can kick off after the Broadway run. And one important way that scale happens is by taking the show on the road, literally through a touring production. Mara Jill Herman is a performer and creative producer based in New York who's experienced this scaling up firsthand.

MARA JILL HERMAN: Sometimes the joke is you live here to work everywhere else (laughter).

WONG: Mara has traveled the world as a performer, like around 15 years ago when she got cast in a North American tour of "Jesus Christ Superstar."

HERMAN: My agent called and said, they lost someone, and you're in. Can you start rehearsal on Monday and leave town in a week? I said, yes, hustled to find a sublet while memorizing all this music and choreography, packed my bags, and we did 90 cities in five months.

MA: That is some real scale, so 90 cities in five months.

WONG: I can't even name 90 cities.

MA: I can't even name five months.

WONG: (Laughter) Yeah, the schedule was intense. Mara and her castmates would board a bus early in the morning, travel five or six hours to a city, do a soundcheck at the theater and perform that very night. Mara played a disciple girl in the chorus.


UNIDENTIFIED ACTORS: (As characters, singing) Tell me what's happening. What's the buzz? Tell me what's happening. What's the buzz?

MA: Sometimes they would only spend one night in a city. Mara says she didn't think about this at the time, but this schedule makes sense from a business perspective because the business of Broadway is making more in ticket sales than it costs to actually put on the production. So a sold-out theater is what producers want.

HERMAN: If there's that one-night-only vibe in San Luis Obispo, Calif., then that might help the producers see the greatest return.

MA: Our protagonist producer Hunter Arnold, he says even if investors lose money on the initial Broadway run, they can still end up ahead if the tour is successful. And there are also other ways besides touring to make a return, like a show can get picked up by regional theaters.

WONG: Or some productions get licensed by university or high school drama departments. Hunter calls that mailbox money because it's just money that shows up without any additional investment.

MA: Mailbox money - now that that is something that I can pretty much imagine everyone having an I-want song about.

WONG: Do you ever think about if there was a musical about a venture capitalist, what their I-want song would be?

ARNOLD: A real venture capitalist's I-want song would be - I want you to change the world and buy me a beautiful lake house in the process.

WONG: (Laughter) Would you invest in "Venture Capital: The Musical"?

ARNOLD: I'd have to know who the creative team was.

WONG: (Laughter).

ARNOLD: But no, I mean, listen, like, the thing about VC is not all of us are wired to tolerate it, but it is full of drama.


MA: This episode was produced by Brittany Cronin with engineering by Patrick Murray. It was fact-checked by Sierra Juarez and edited by Dave Blanchard. Kate Concannon is our editor, and THE INDICATOR's a production of NPR.

WONG: Do you have, like, a favorite vocal warmup?

HERMAN: Sirens are good - (vocalizing).

And then my brother gets a kick out of this one - hey, taxi. You have to do it with the hand though.

WONG: Do I have to do it with my arm raised?

HERMAN: Yes (laughter).

WONG: Like - hey, taxi - like I'm actually hailing a taxi.

MA: Hey, taxi.

HERMAN: Exactly.

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