Wait, how does a movie that had a $175mm budget with $880mm in box office revenue lose money? Other notable movies that haven't turned a profit:

• Star Wars: Return of the Jedi (budget: $32mm, box office: $475mm)
• Forrest Gump (budget: $55mm, box office: $683mm)
• Harry Potter and the Order of the Phoenix (budget: $150mm, box office: $942mm)
• Men in Black (budget: $90mm, box office: $589mm)
• Coming to America (budget: $36mm, box office: $288mm)
• Bohemian Rhapsody (2021) (budget: $55m, global box office $911mm)

How is this possible? Hollywood accounting.

Writers, actors, and producers often get stuck with a share of the net profits. For example, Winston Groom, screenwriter of Forrest Gump, sold the screenplay in exchange for $350,000 and 3% of the net profit. Yet, Groom never saw any of his share of the profit.

Net profit can be easily manipulated, whereas gross revenue is harder to change. Studios, not wanting to pay out their royalties on profit, have a few (in my opinion, unethical but legal) tricks up their sleeves to make these hit movies look like they have turned a loss.

First, studios typically set up a subsidiary corporation for each movie. The studio then charges that subsidiary to make the movie. The studio has free rein to increase overhead at different points along the value chain. Arbitrarily calculated "distribution fees" from the studio to the production subsidiary. Then more fees for other services, like advertising and marketing. Since the studios are simply paying themselves, these fees can be set at anything.

Only a fool would accept net points in their contract – Eddie Murphy

Another trick is to shift expenses from different movies to the highest grossing movie. Imagine a movie that flops and loses $100mm. That loss can be spread out across many different projects, turning many profitable projects into unprofitable ones.

Of course, all creatives would love to negotiate net points instead of gross points, but not all have the leverage against the studio. Some new writers might not even know this practice and settle for net points.

But it's not all bad news – some actors end up with great deals. Sandra Bullock, fresh off of her Oscar win for The Blind Side, was allegedly able to negotiate 15% gross (!) box office for her role in the movie Gravity. The movie had a budget of $80mm and netted $723mm in the box office. Bullock most likely walked away with over $100mm from that movie!

So it pays to negotiate for net!

If you're wondering what Hollywood accounting actually looks like, here's a receipt from Harry Potter and the Order of the Phoenix:

2021 was all about ownership. Diving into a new trend in retail investing: Direct Registration.

There are three ways to hold securities in the United States: a physical certificate, "street name" registration, and direct registration.

"Street name" registration means that the securities are held under a different name, usually the broker-dealer firm's name with you listed as the beneficial owner. You don't receive a certificate, but the broker-dealer shows that you own the securities on your account statement.

Brokerages are able to lend out your shares to short sellers. In many cases broker-dealer can also rehypothecate – borrowing against assets that have been posted as collateral by their clients. After the 2008 crash, rehypothecation was limited to 140% of the loan amount. If a broker-dealer goes bankrupt, your securities are only insured up to $500,000 under the Securities Investor Protection Corporation (SIPC).

Direct registration lets you hold securities in their your own name electronically. Proxy materials, corporate communications, and everything else goes directly to you.

When it comes time to sell your securities, DRS is a bit more complicated. Some issuers have programs in place to accommodate such requests, but many do not. Most likely, you'll have to move your security back to the broker-dealer to sell. Only broker-dealers can execute limit, market, or stop orders.

Why are redditors turning to DRS? The GameStop "apes" of Reddit are moving their shares from online broker-dealer to DRS in troves. It's their hopes that DRS is a way to "short squeeze" GameStop yet again. With DRS, broker-dealers can no longer lend out $GME shares that the Reddit "apes" buy. Other Redditors are wondering if they will get an NFT drop for $GME shareholders if their shares are tied up in a brokerage.

The DRS issuer for GameStop is a small Australian company called Computershares. It's pretty interesting, because not only does Computershares look like its from the 1990s, but it also charges fees for practically everything (transfer, per order, per share, direct deposit) in an age where we're so used to free trading (Robinhood, etc.).

Creating an account and transferring your shares is anything but easy. Brokerages don't want to let their shares go ($$ fees), and up until recently Computershare has never processed transfer requests for so many retail investors. If your shares are in a retirement account or IRA, it may be logistically impossible for you to direct register your shares or you may have to pay early distribution taxes.

The overarching theme of 2021: ownership. Consumers want more ownership of their assets. This theme is evident in the NFT and crypto craze. GameStop "apes" found that they really didn't own as much of their shares as they thought – online brokerages were able to lend out their shares and borrow against them.

The real question is whether or not consumers want the true cost of ownership. We've seen crypto wallets fall prey to easy scams with no chance for retrieving any lost funds. NFTs or tokens wiped out of wallets by clicking on a bad link or visiting a site that has an obvious JavaScript exploit (BadgerDAO).

GameStop "apes" and Computershare shows us that some retail investors are willing to pay fees and go through pain to own their shares. Is there more consumer surplus in DRS than free trades? My guess: probably not. Many companies have tried to give consumers more control over their securities like voting in shareholder meetings, but it traditionally hasn't worked. On the other hand, sometimes it seems that the pendulum has swung too far in the direction of institutions away from the retail investor.

DevOps is about the software production lifecycle, but has industrial roots. The technical pipelines of software delivery and the human elements like kanban, agile, and lean all come from one of the largest car manufacturers in the world: Toyota.

The Toyota Production System (TPS) is the secret sauce behind lean manufacturing and logistics at Toyota. Here are 14 principles distilled from The Toyota Way.

Principle 1
Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.

Principle 2
Create a continuous process flow to bring problems to the surface. Eliminate waste. 7 types of waste to eliminate:

1. Overproduction
2. Waiting
3. Unnecessary transport or conveyance
4. Overprocessing or incorrect processing
5. Excess inventory
6. Motion
7. Defects
   

Principle 3
Use "pull" systems to avoid overproduction.

Principle 4
Level out the workload.

Principle 5
Build a culture of stopping to fix problems, to get quality right the first time.

Principle 6
Standardized tasks and processes are the foundation for continuous improvement and employee empowerment.

Principle 7
Use visual control so no problems are hidden.

Principle 8
Use only reliable, thoroughly tested technology that serves your people and processes.

Principle 9
Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.

Principle 10
Develop exceptional people and teams who follow your company's philosophy.

Principle 11
Respect your extended network of partners and suppliers by challenging them and helping them improve.

Principle 12
Go and see for yourself to thoroughly understand the situation.

Principle 13
Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly.

Principle 14
Become a learning organization through relentless reflection and continuous improvement.