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HATTIE: (In the Studio) Hi. I'm Hattie Bryant, and this is SMALL BUSINESS SCHOOL. From San Diego to Boston and from Tampa to Seattle, we take you inside small businesses and you learn from the people who run them.

In 1995, when he was doing $14 million in sales, Ben Dominitz told us how he started Prima Publishing by writing the first book himself. As a musician in the Sacramento Symphony, he decided he was tired of being poor. Today, sales are up to $60 million. Wow! Way to go, Ben.

We hope you have a computer in the room where you're watching TV. Come online now to learn about Ben and the dozens of small-business owners we have studied here. You can register for free information and sign up for our weekly e-mails.

In beautiful downtown Burbank--and I'm not kidding--that famous suburb of Los Angeles, we found a business doing things the old-fashioned way.

(Excerpt from commercial)

Announcer: Across the universe people are asking, `What fiend would steal Air Jordans?'

MARVIN THE MARTIAN (Cartoon Character): Oh, goody. More Air Jordans for me.

DOG (Cartoon Character): Me, too.

HATTIE: (Voiceover) This 90-second spot for Nike was their first project. It aired on the Super Bowl.

MICHAEL JORDAN: This is no way for a pampered superstar to travel.

BUGS BUNNY (Cartoon Character): What the--shoes?

MARVIN THE MARTIAN: And they're all mine.

HATTIE: (Voiceover) In 1992, Ashley Quinn and Darrell Van Citters left Warner Bros. to start their company, Renegade Animation, to have control over their own lives. A lot of small-business owners are workaholics.

DARRELL VAN CITTERS (Renegade Animation): Yes, they are.

HATTIE: Did you decide early on that that's not the way you were going to run this business?

DARRELL: I had decided that when I worked at Warner Brothers you do what comes down the pipeline and you do it when it has to be done, whatever it takes. And it didn't seem right to me because I see a lot of my friends working over at the Disney Feature Animation Studio, and they are working seven days a week, long hours on those days. And it didn't seem to me that it needed to be done that way, that with a little better management, a little more organization, it could run smoother.

ASHLEY QUINN (Renegade Animation): For me it was more a feeling of--the bigger risk is staying in a place that makes you unhappy. Fundamentally for me, throughout my career, which at that point wasn't very long...

HATTIE: You were only 27 when you left.

ASHLEY: I am a happy person in general. I have a sunny countenance. I think I was blessed with that. And I just, `This is not for me.'

DARRELL: I knew I needed somebody like Ashley to do this because I couldn't do all of it myself. I learned enough to know that I couldn't handle the entire running of a business. And she came to work with me at Warner Bros. as my assistant, and we got along great. She was driven the same way I was driven, to get things done. It wasn't about playing a game, it was about getting things accomplished.

ASHLEY: Pick your partner like you're picking your spouse. It is almost no less important in your life because this is the person that you're going to spend a lot of time with, that you're going to make important decisions with. You're probably going to go through some hard times with and have to really buckle down and reach deep and figure out how to get through difficult times in your business. And if you're not in sync, you're not going to be happy long term. And we're in sync about how we want our personal lives to be and how we view where work stacks up in our lives. And so that just makes it that much better.

DARRELL: Quite frankly, the whole thing with this business has not been to make money. I didn't start by saying, `You know what? I think we can make a lot of money. Let's go do this.' I did it because I wasn't happy where I was. I didn't like the alternatives out there once I left. But this looks like a good idea to me. We can kind of control out own destiny, and it's just more fun.

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(Excerpt from commercial)

MICHAEL JORDAN and BUGS BUNNY: (In unison) What's up, Doc? Announcer: It's Bowling for Martians.

BUGS BUNNY: With Bugs Bunny. (End of excerpt)

HATTIE: (Voiceover) In the first year, Renegade did $1.2 million in sales. And even though it is slightly larger in sales today, there are only four employees.

(Excerpt from commercial)

PORKY PIG (Cartoon Character): It says so in my deal.

Announcer: Geez, what a pig! (End of excerpt)

HATTIE: What gave you the nerve to think that you could go out and get an account? How did you get your first piece of business?

ASHLEY: Our very first piece of business was a small piece of animation from Mattel. And it came from a post-production facility that we had worked with. And they needed help with the animation and called us. The second one was the Nike spot, the Super Bowl sequel to the one we had done at Warner Bros. On the strength of that spot, we got an agent, a rep--they're called reps in the commercial business.

HATTIE: What does a rep do, and how much do you have to pay them? Is it a percentage deal?

ASHLEY: Yes. It's a percentage deal. What we have is we have Andy. His company's called Blah, Blah, Blah, which is a great...

HATTIE: Blah, Blah, Blah!?!!

ASHLEY: So Andy's job is to find the storyboards at the ad agencies that have and need animation.

HATTIE: So tell us what does an ad agency do?

ASHLEY: Well, they talk to their clients and the client says, `Here's the products we have. Here's who we think our customer is. Here's how much money we want to spend this year, or over the next three or five years. Come back to us with a plan of how to do that.' So the ad agency comes back and says, `Here's what we think you should do.' And at that point, they begin storyboarding and scripting the commercials. And at the point that we get into the process, the storyboards and the script are pretty much approved. And sometimes, if we really want the job or if it's necessary, we'll do some spec drawings, or--the storyboards that we get tend to be fairly simple. They don't have camera angles in them. They don't have anything like that. So Darrell can take a storyboard and really push it to the next level.

HATTIE: So what is your competitive edge?

ASHLEY: Darrell's talent. And I would like to believe my skill as a producer, because I think that people come away from here having had a really smooth experience most of the time. But it is Darrell's talent as an animator and his reputation.

DARRELL: You're getting a one-director house here. You're not, like--some of our competitors will have, five, six, 10 directors, which gives you a lot more breadth because everybody will specialize. Here if you look at our (unintelligible) you'll notice that it's very varied. It's extremely varied, in that we do a lot of different kinds of animation. And that's part of the fun of doing this kind of thing is that you can change drawing styles. You can change looks every time you do a different job. So it's fun from that point. I'm always learning that way.

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HATTIE: This right now is called direction because you're, like you said, setting guideposts. And each one of these sheets will have multiple drawings associated with it.

DARRELL: They use this as a guidepost. And it'll hit some of these key poses. Some of them they find, you know, `It would be a little smoother if I didn't follow this drawing exactly, if I made an adjustment here or there.' But that's what it's there for, is to give you something to go from rather than have you trying to figure out what I want and what the agency wants and what the client wants. If everybody sees it in this form, they say, `That's roughly where we're headed,' then it's a lot easier. This is, basically, the bible for the animation product. Everything plays off of here. All of the instructions are on this sheet.

HATTIE: And you're the one that decides if it's on for one second or two seconds. And you're the one who decides what motion the character is doing while the words are going on.

DARRELL: Right, right. And you do it the way you think is appropriate.

HATTIE: (Voiceover) Ken McDonald explains how he moves Darrell's storyboard through the process.

KEN McDONALD (Renegade Animation): What Darrell does is he gives me drawings like these. These are the drawings that Darrell did for this scene. And, basically, the kid takes the yogurt away and then he delivers his line and, `Silly rabbit,' and the rabbit reacts. He says, `Ohhh! don't take my yogurt away,' which happens every time. With the little boy I followed Darrell's starting in poses pretty closely. But with the rabbit, we decided to do something a little different at the start and the beginning of the scene. So I altered the poses a little bit. Darrell enjoys that part of the process. And it gives me an opportunity to, you know, come up with ideas and be more creative and try to come up with a different expression or an action or an idea to make it even more interesting or entertaining, or to make the communication clearer.

HATTIE: So now tell me what you're going to do?

KEN: Well, I've done the corrections and changes I wanted to do on this. So I'm going to shoot a pencil test. And it used to be that this was all done on film, and it would take two or three days. And now with the computer, I can pretty much just shoot a pencil test in a matter of minutes. You know, frame by frame drawing by drawing. It's already up there. There's one frame.

HATTIE: So this is actually the first time the computer has been injected into this process. So now what are we going to see?

KEN: I'm going to take the first scene that I did a couple of days ago, and the scene you saw me shooting, and we can put it all together and we can see the whole seven seconds that we're doing and see how it all hooks up together with the sound and everything.

(Excerpt of commercial animation) Announcer: This spring you'll be in the dark.

TRIX RABBIT: Wow! Announcer: Until you open Trix yogurt.

BOY: Silly rabbit. Announcer: Four surprise color combinations now in marked packages. (End of excerpt)

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HATTIE: How much do people pay for a 30-second animated commercial?

ASHLEY: One hundred twenty to $180,000 per 30 seconds.

HATTIE: Those dollars don't all come to you, though?

ASHLEY: Yes, that would be just us. That's just the animation.

HATTIE: That would come to you for your part. That would...

ASHLEY: Yeah. So we have, over the years, kind of honed our skills into saying, `OK. This is that kind of job. This is the kind of job where it's only one character or two characters. It's simple backgrounds. It's no tones and highlights,' which are effects levels that make it more complicated. `So that's a, you know, $3,800 per second job,' vs. one that comes in and we see the storyboard and we go, `It's with live action. It's got effects. It's got six characters,' blah, blah, blah. `That's going to be about $5,000 a second.' So you get, sort of--as you go you get, as in any business I think--to recognize what slot things fit into. And then I get on the phone with the producer. And I like to start by saying, `How much do you have? Because we can also creatively solve problems for you working backwards from your number.' Where I don't want to try and sell you a Mercedes if you can afford a Saturn. I mean--but we can give you a really, really cool-looking Saturn.

ASHLEY: (Voiceover) Say that we're looking at the PSA, the Don't Drink and Drive PSA. We know we don't have any money, and we have a great concept which really doesn't need any bells and whistles because the concept is so very strong. We can do things like, `Let's put him on a white background. Let's not color him in.' The only thing that's colored in is the brain and the beer, which is really the gist of the whole concept, anyway.

(Graphic on screen) If You Let Him Drink And Drive, You're Brainless, Too. (End of excerpt)

ASHLEY: So we save money in ink and paint. We save money in scanning. The animation is quite limited. If you notice his body will be what we call a held cell, and only his eyes will be moving, or only his head will be moving. That's a much smaller drawing than redrawing his whole body each time. So we can look at something and say, you know, `This is what we can give you for that.' And it's not less. I mean, I'm committed to the idea that, aesthetically, that was the best way to do that commercial even if you had a million bucks to do it. ASHLEY: (Voiceover) So then you look at Chester Cheetah, and he is beautifully--what we call rendered. When we composite with live action what we do with the characters is we give them a tone and a highlight on their faces and bodies which match the shadow that's on the live action. So if I were animated sitting with you here, I would have shadows on me the same as they are on you.

CHESTER CHEETAH: Cheesy! Announcer: Cheetos, dangerously cheesy. (End of excerpt)

ASHLEY: We do as much in-house as we can.

HATTIE: But on the Chester Cheetah which parts of it are we seeing that you had to outsource?

ASHLEY: Right. On Chester Cheetah, what you see that we outsourced is the compositing, which is taking our animation and putting it together--marrying it we call it--with the live action, or with the computer-generated imagery. And that is machinery that we don't need to own, except for that little part of the process. And so we can't justify in our own minds going into that part of the business. But more important than the cost to us is it's not what we're good at, and it's not what we like to do. So we're not going to do it. And quite frankly, even if it was slightly more expensive to outsource it, we would still outsource it because the quality of our lives and our experience in the work and what we have energy for is focused on what we want it to be focused on.

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KEN: When you're working on a feature film months and months on end, 50, 60 hours a week, and they come in and say, `You have to come in and do 60 hours this week. You've got to get your drawings done.' I'm here. I think that's one of the things that Ashley does so well when she's producing the commercials and she's making the schedules. She really takes into account problems that might come up. We have room in the schedule. And she really schedules them so that we can have times for our lives, our own personal lives, and still get the commercial done on time or ahead of schedule and the client's happy and we're happy. We're not stressed out.

HATTIE: And what did you say that you would do if they decided to make an animated film in the Disney style with music and stuff?

KEN: Oh, I'd leave. I--if they did that, if they wanted to do a Disney-type musical film, I'd leave because I left that. I was doing that and I wasn't enjoying it. I think you've got to do something different. And even with the TV commercials, we try and do something different. We try to explore new designs and new ideas and new ways of approaching the characters to make them interesting, to cut through the clutter.

(Excerpt from commercial) Cartoon Character #1: Up there. Cartoon Character #2: Help! Cartoon Character #3: I'll bet it's Bat Woman. Character #2: Help! (End of excerpt)

HATTIE: (Voiceover) Renegade's customer list includes Dow, Mattel, Campbell's Soup, Barq's Root Beer and Nike. You see their work in commercials, television shows and video games.

(Excerpt from commercial) Cartoon Character #4: Biting enough? Unidentified Man: Well, that send a positive message to the kids. Next! (End of excerpt)

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HATTIE: When you lose the bid do you try to do some intelligence around why you lost it?

ASHLEY: Yeah. Usually we know why--I mean, it'll be fairly clear why we lost it. `You were not the low bid and the client said we had to go with the low bid.' Now if they're telling the truth, then I go, `OK. Well, you know.' Or they'll say, `You know, we just liked the sketches the other company did better or'--and in that case, we actually feel like, `OK. Good. Then you made the right decision.' Because, you know, we're operating in a very subjective area when it comes to art and aesthetics. So at times you just have to go, `Well, you know, we're probably'--and we look at jobs sometimes saying we're not the right people for this. We do turn jobs down when we feel like they don't play to our strengths. Because we have a feeling that eventually the client would not be happy with what we were giving them. And we would rather turn it down than have a bad experience. Because they'll come back to us when they have something that is right.

HATTIE: So that's a good piece of advice.

ASHLEY: Very good. And hardly ever do people do it. People think we're nuts to turn down anything. But we're really committed to that.

HATTIE: Is Darrell the one that says no?

ASHLEY: Yeah, usually. Or I'll say no, `They don't have enough money.' I mean, `They just don't have enough money to do what they want to do. And we're not going to take a loss on this job. And we're not going to cheap it out and have them be unhappy,' because then we've lost them forever.

DARRELL: There's no point in taking a job that you're not interested in and having your work be crummy because, one, you're going to do a bad job if you're not interested in it. The client's going to know you did a bad job, so they're not coming back to you. So if you're doing it just for the money, then you should forget because you're not going to get any more work. That's a stupid way to operate.

HATTIE: OK. But I would venture to say that a large percentage of business owners say yes to as much as they can say yes to.

DARRELL: Yeah. And you know what? You make yourself crazy. And it takes a toll on your personal life. It takes a toll on your health. And I think it takes a toll on your business. I think it pays bigger dividends in the long run to take the jobs that interest you the most because why did you start the business? If you started it just to make money, you might as well be an employee because you can make money being an employee. But if you really have a passion, then that's what you should follow. You should do it because you believe in X and Y, not because you just want to make money. If we just say, `No, we're too busy,' or, `No,' you know, `it's not right,' or, `No, for that price I can't give you what you want, what you see on our reel that you like is not attainable for that price and I'd rather turn it down.' Those people almost always call again on something else.

(Excerpts from various commercials)

Cartoon Character #5: Sit, I'll tell you. First the workout, then the hairdresser.

Cartoon Character #6: ...(unintelligible) your world.

TRIX RABBIT: Can I have a taste? Cartoon Girl: Sorry, silly rabbit.

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HATTIE: (In the Studio) You may be tempted to take work just for the money. Darrell and Ashley would advise against that practice. They've built a solid business by saying no to projects that don't fit their mission. Learn from them. Clearly define what it is you want, then develop the courage to say no to opportunities that don't fit your mission. Just say no.

HATTIE: When did you first fall in love with animation?

DARRELL: I had heard about it through an animator I'd met back in New Mexico, that they were just starting up, at California Institute of the Arts, a Disney-sponsored animation program. And it sounded pretty cool. So--and it happened to be the ground floor, the first year of the program. So I came out to see what would happen.

HATTIE: And that was what year?

DARRELL: 1975. HATTIE: And you were how old?

DARRELL: I would have been about 18.

HATTIE: Was it as if the whole world opened up, and was it just so exciting?

DARRELL: It was. It was pretty cool because I came out to the school and I came across all these other people who thought the same way, who had been watching cartoons and loved them and wanted to do them, which was really strange because the environment I came from nobody cared about it, or anything like that. So you get this group of about 20 people in one room who are all really jazzed on the same thing. It was really cool.

HATTIE: What does it take to do a business--to make a business successful? It's more than talent.

DARRELL: Sure

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HATTIE: What other, along the seven years decisions, have you made that you go, `That was a good decision.'

ASHLEY: Right. Some of the decisions that we've made--actually, some fairly recently--to up the level of some of the other outsourcing we do, in terms of our accounting firm and letting them do a little more than they had been doing. I want to get rid of it, but I want to be as in touch with it as I am. So how do you do it? What kind of reporting are we going to set up? You know, `How am I going to monitor that process?'

HATTIE: It is scary to turn the checkbook over to somebody.

ASHLEY: Absolutely.

HATTIE: So it's really not true that entrepreneurs are, like, leather and have no feelings and no fears.

ASHLEY: No. No, it's not true at all. Oh, no. It's not true at all.

DARRELL: Because there are times you get in here and you go, `What the hell was I thinking? I must have been out of my mind.' I mean, you know, when you're having troubles sometimes, you know, you just go, `This is--there's got to be an easier way.' Well, there is an easier way, but it's not more fulfilling. You know, you can go be an employee someplace, but it's not--you'll still regret that if you do it.

HATTIE: Do you think this is soul food?

DARRELL: I guess you could argue that, yeah. Definitely. I mean, I'm doing this because I tried the other and I can't do the other. I don't feel comfortable in a corporate environment. This is--I'm doing this because I have to do it.

ASHLEY: With our four people, you know, we also have 35 freelance artists working all the time. So we, you know, we're bigger than we seem. But you're going out there, and you are really saying, `No, no. Really, we can do this.' I mean, we produced that Nike Super Bowl spot out of Darrell's garage. I mean, we are the classic story that you hear. And it was just like, `Well, OK. We're going to do this. We're in'--you know. You just do it. (Graphic on screen)

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HATTIE: Small-business owners are notoriously independent. But there's an organization that Ashley belongs to that is perfect for the non-joiner. Incoming president of the Young Entrepreneurs Organization, Milledge Hart, explains. So, Milledge what is the YEO?

MILLEDGE HART (Young Entrepreneurs Organization): The Young Entrepreneurs Organization is a group of entrepreneurs around the world who get together for education, fun, social interaction and to really have a peer group.

HATTIE: All right. `Young' means something. What does young mean?

MILLEDGE: Young means you get kicked out when you're 40.

HATTIE: I'm so glad to know it goes up to 40. So what are the other criteria that one must meet to be in the YEO?

MILLEDGE: To be in YEO you need to be a founder, co-founder or controlling shareholder of a business with revenue in excess of $1 million.

HATTIE: And under 40 years old?

MILLEDGE: You must join before you're 38. There's graduate organizations that you can go into after 40. Primarily, what YEO intends to do is to educate its members with the best resources in the world.

HATTIE: So you're an education organization. How is it that you deliver these educational components?

MILLEDGE: Well, there's three primary ways we deliver that. The first is the monthly education events, by chapter, in the cities. The second is the forum group. And the third is the international events.

HATTIE: Could you draw some conclusions about the type of person that is in the group?

MILLEDGE: Well, typically YEOers are non-joiners. So the vast majority of the group doesn't want to be a part of an organization because they don't think they'll get much from it. So that's one thing we find a lot of the times. And a lot of times people don't think they have time. They're very, very busy people. And what we always find out, and the more time you spend on YEO, the better off you are, the better off your business is.

HATTIE: How does one join?

MILLEDGE: The best way to find out about YEO is on the Web. http://www.yeo.org

HATTIE: We've met others here who belong to YEO. In Boston, Vicki Bondoc took us to her forum where YEO members help each other solve problems.

VICKI BONDOC (Member YEO): I'm in this group because it gives me the opportunity to build relationships with other business owners who are experiencing some of the same issues that I'm going through on a day-to-day basis.

HATTIE: (Voiceover) Register while you're online. Do it quickly with just your e-mail or register for a free copy of a special issue of Bottomline or register by requesting free mentoring from your SBDC.

HATTIE: Remember, as Ashley and Darrell have done, you can control your growth by saying, NO, to projects that do not fit your mission. We'll be back next week.