When Avocation Becomes Vocation: A Q&A with Emagine's Paul Glantz

For Paul Glantz, founder of Emagine Entertainment, there is your vocation and your avocation. If you succeed at the first, you can indulge in the second. If you can actually turn the second into your first then you are truly blessed.

"I have worked harder for myself than I ever worked for anyone else," says Glantz. "But if you love your work, you've never worked a day in your life. And that's my story."

Still, it's not every day that someone spends $19 million on what they consider their "avocation." Yet that's what Glantz did when he built Emagine's ten screen theater in Royal Oak - adding Star Lanes, an upscale bowling alley, to boot.

A native Michigander and Wayne State grad, Glantz claims he entered the movie theater business more out of practicality than sentimentality. After spending several years nurturing an accounting career in the insurance industry, Glantz got the entrepreneurial itch and began looking for local business opportunities. He and his then partner considered the typical list of local bars, dry cleaners and family restaurants.

"We'd meet with the owner and want to see their financial statements and inevitably they would tell us: 'It makes a lot more money than the books show,'" Glantz chuckles. "That was a problem for us. We didn't have a lot of money and a bank wasn't going to give us a loan based on phantom cash flow."

By chance, the duo spotted a small Detroit News classified for a small, nondescript movie theater in Clarkston.

"What was unique about this business was that because you report your box office to the film companies every night you essentially had third-party evidence of revenue," Glantz explains. The partners maxed out their credit cards, landed a $75,000 loan from the bank, and became entrepreneurs.

"The business was never really large enough to support our two families," Glantz admits, "but it it was fun and it made money."

Despite those entrepreneurial instincts, Glantz remained in the insurance industry, climbing into the CFO position at Proctor Financial. On the side, he made a study of the theater chain industry, attending conventions and learning the ins and outs of the business.

"It was like a hobby gone awry," he laughs.

When things looked shaky for the insurance industry in the late '90s, Glantz decided it was time to open another theater, this time building it from scratch. Another publication (Crain's), another classified ad (for cheap land), and he opened Birch Run's Cinema Hollywood in 1996.

From there it's been all about careful growth and aggressive innovation. Cinema Hollywood was the first theater in Michigan to offer stadium seating, and Emagine was the first chain in the world to offer all digital projection and mobile bar-coded tickets. His theaters are also known for their ability to serve alcohol. Now, with six multiplexes in metro Detroit (Novi, Canton Township, Woodhaven, Birch Run, Royal Oak and Rochester Hills), and plans for more upscale bowling alleys, Glantz is out to own a very particular piece of the entertainment pie.

And if that isn't ambitious enough, he kept his position in the insurance biz. Not only is he the CEO of Emagine, he's now Proctor Financial's CEO as well.

Glantz sat down with Metromode's Jeff Meyers at Emagine Royal Oak, a couple of hours before the screening of the latest Transformers movie.

So, what does Emagine bring to the movie-going experience that the big national chains, like AMC or Rave, can't?

I think entrepreneurs will always be more creative than large bureaucratic organizations. And I think we've innovated quite a bit in our space. Ultimately, we can offer a better quality experience  than the chains can. They can buy their soda and popcorn more effectively than we can, and keep prices in check. As local entrepreneurs we can be more focused on our guests' experience.

You've had success with your approach but I'm not seeing much imitation. Is it that the national chains don't get it or can't do it?

Well, my competitors, whom I respect enormously, have what I call the "Operationally Effective" business model. It's all based on giving people a good experience... but a homogenous experience. There is no specialization, which would drive up their costs.

We're trying to do something a little different and, hopefully, we'll build up an audience that chooses what we have to offer. There's room in the marketplace for both of us.

Do you worry about the impact of digital media and Internet entertainment options on your business? What does the future look like for the theater industry?

The movie industry is going to be around long after I'm gone. But there's no question we're in a more competitive world - a hyper-competitive world, actually. We constantly have to find ways to differentiate ourselves, to draw people away from their homes to be entertained. If we don't the economic system will take care of us. It's why we're constantly innovating our theaters to be more of a destination.

What made you want to build Emagine's entertainment complex in downtown Royal Oak? Isn't the typical model for movie theaters to build on cheap land with huge parking lots in the middle of nowhere?

What we value about this location is the synergies that are present - bars and restaurants. This is highly synergistic with our business. For those who are worried that we also serve food, we think the more better. It reminds me of the Somerset Mall. There are probably six stores there that are selling the same sneakers. The reality is that they're all doing well because having so many creates its own gravitational pull.

And candidly, the economic downturn worked in our favor. The folks from whom we bought the land intended to build a grocery store and 10-story condo building. But for the housing collapse, we probably couldn't have built here. Fortuitously, the parking deck that was constructed for that property was exactly what we needed to make this work.

Was this the only place you considered?

It was our first choice. If you look around southeast Michigan and ask yourself "where do young people gravitate, where do you find them on a Friday or Saturday night?" This was probably our best opportunity.

Our second choice was Ferndale. The problem there was that we couldn't find a land mass large enough to accommodate us. And building the parking would have been very difficult.

When it comes to development, Michigan's downtowns aren't exactly open to new ideas or approaches.

I think that's changing.

What did you have to do to sell your concept to Royal Oak?

Well, we had every fear and misconception known to man leveled against us. They feared parking problems, gridlock, all kinds of stuff. None of which has come to fruition. What it came down to was that we had to promise that we run this business in a manner that they would be proud to have us.

The ability to serve alcohol was vital to your business plan. Some have criticized local liquor laws as a barrier to entrepreneurship, creating unnecessary barriers for new businesses. What are your thoughts?

I know in Royal Oak, the mayor who was in office when the Liquor Commission came about, now regrets the form it's taken today. The original goal was to simply off load some of the work the commission had to do but since then it's become a real political football.

I think we went to not less than 10 public hearings. If you want a sense of what it means logistically, it means we had to secure a liquor license before we even committed to plans or specs. And then you have to deal with demands for redesigns from the planning commission. I spent over half a million dollars before I even knew whether my plan would go forward. That's not a rounding error in my life. That's a big number. And a heavy burden for any entrepreneur.

You installed solar panels on the roof of your Royal Oak theater. What was the thinking behind that? What are the economics for you?

It works. The financial markets were very very challenged when we were putting together capital. We had to do some creative financing, and by adopting some public policy goals you could extend your lending limit. So, the net cost to adding solar energy was really no more than adding a point to our mortgage.

Plus with incentives we've already earned back 60-65% of the costs, and then the balance will be returned to us in savings. Break even for us is in about seven years. That's pretty good.

What should metro Detroit do to better nurture entrepreneurship?

I think the single biggest impediment to entrepreneurship in southeast Michigan is shaking the mentality that you can go work in an auto plant and have lifetime employment. I think we have to accept that the only job security is in developing out talents and our own skills and our own abilities.

The goal is to have a business where all your customers don't fire you. If I go work for a boss and the boss doesn't like me, I'm just working to please one person, not necessarily my customers. I see greater job security in entrepreneurship than I see in actual employment. You just have to internalize the risk reward ratio.

So, what's the next goal post for Emagine?

I like to say we'll continue expanding as long as I can continue borrowing money from banks.

Jeff Meyers is the Managing Editor for Metromode and Concentrate. He is also an award-winning film critic for the Metro Times. You can email him here.
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