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Early Birds

Before DVDs became big business, this pair of entrepreneurs saw the chance to get in on the ground floor.

Matt Kennedy remembers the night he snapped. It was the low point in the early days of 1K Studios. The North Hollywood, California, company-which Kennedy and his business partner, Jayson Won, started in 1996-makes menu interfaces for DVDs. Creditors were circling like vultures, and the partners had been toiling for days-adding music, titles, background visuals and refining other details. In the offices of 1K Studios-Won's apartment-they had hardly slept. Which is why, during a rare nap, a bird chirping at 4 a.m. really bugged Kennedy. And so a stressed-out, irate Kennedy charged out on the street in his underwear, throwing rocks to chase the bird away. He says, "I thought 'I can't take this much longer.'"

It would make an amusing scene for a movie, which is fitting since 1K Studios has worked so closely with movie studios. Fortunately, Kennedy didn't have to "take it much longer" before the company was on solid footing. He also had the benefit of knowing that their problems weren't due to a lack of work or a lackluster reputation. "The first year was tough," explains Kennedy, "because the studios weren't used to paying to have DVDs made, and so it could take months to receive a check."

The shortage of dependable cash meant Won and Kennedy couldn't afford to hire the help they needed, and they were maxing out their credit cards. Not until they'd been in business about 18 months did the cash finally start flowing in.

Won and Kennedy, both 34, founded their company-1K stands for Won and Kennedy-on the eve of the DVD revolution. Just a couple of years before, the pair had been working in network TV doing computer graphic design. In 1996, Won was approached by Universal Studios to be an interface consultant on one of its first DVD projects, and, sniffing a business opportunity, he suggested starting a company to friend and peer Kennedy. They parlayed Won's experience into working for more studios, and soon, a successful company was born. Before studios started producing DVDs faster than the speed of film, and before many competitors had cropped up, Kennedy says 1K Studios worked on 30 per-cent of the DVD market.

The more choices a DVD offers, the more 1K Studios is involved-so for their production services, they might make as little as $5,000 or as much as $1 million. Today, the trend is for movie studios to lavish attention on their DVDs. It's a trend that 1K helped create. For instance, when Planet of the Apes appeared on DVD, 1K Studios filmed an ape on the set of the movie for a 3-D effect in the menu. Zoolander's menu has dialogue that 1K Studios wrote and Ben Stiller performed. Other projects have included the Indiana Jones trilogy and even Harry Potter and the Chamber of Secrets.

But there are other ways to measure 1K's success: They brought in $8 million in sales in 2003 and project $10 million in 2004. The company has 65 employees and, each year, grows by about 25 percent. And 1K has partial ownership in subsidiary companies-record company Sarinjay Entertainment and documentary film company Sparkhill Productions. Due to this involvement, 1K has other directions to go in if DVDs ever become obsolete.


Geoff Williams is a writer in Loveland, Ohio. Contact him at gwilliams1@cinci.rr.com.

Geoff Williams has written for numerous publications, including Entrepreneur, Consumer Reports, LIFE and Entertainment Weekly. He also is the author of Living Well with Bad Credit.

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This article was originally published in the March 2004 print edition of Entrepreneur with the headline: Early Birds.

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