Hyperreal Film Club: $10K to Build Out the Upstairs Screening Room

Nathan: All right, the question is, should I get into the movie business? I am here in Austin, Texas at Hyperreal Film Club. Jenni: We are a nonprofit micro cinema. We’re truly trying to highlight underseen art films as well as locally made films. Nathan: What’s the business model here? I mean, how do you pay for the space? How do you pay for all the inventory? How do you make money? Jenni: We have a membership. So, we have people pay anywhere from $2 a month up to like $50 a month. And then we do sliding scale ticket prices, $8 to $12. Nathan: So what would it mean if I cut today a $10,000 check into the business? Jenni: Oh, I mean it would be a game changer. Nathan: So this is super cool. Crazy colored building. I see Film Club. What’s going on in here? What is this? Jenni: We are a nonprofit micro cinema. So I actually founded Hyperreal with two friends of mine, David and Tanner. Nathan: So what is the idea of sort of a micro film club? Should I think about it like the old big box movie theater? Jenni: Well, we’re not really playing those first run films like Superman that you would go see in AMC, Regal, what have you. This is a more intimate experience where we’re truly trying to highlight underseen arthouse films as well as locally made films. We’ll play everything from a Parasite to some obscure Japanese arthouse film, to this week we’re doing a shark week — Jaws 3D and Deep Blue Sea. Jenni: We started it back in 2016 and we were really just a popup outfit. We were showing films of all kinds all over Austin. Nathan: So, just to be clear, you would go find these sort of traditional theaters or backyards with excess inventory, maybe a slow night, and say, “Hey, can we use it this night? We’ll market it and fill it up.” Jenni: Yeah. But it wasn’t movie theaters. It was mostly bars, museums, parks, hotels. Hotel Vegas was our longest running residency and that was like a Monday night. They normally didn’t have anything. It was really slow. We would come in, fill the space out by playing a fun film. They’d get bar sales. We’d get payout from the door. It was kind of a beautiful partnership. Nathan: So can you maybe sum up — what would you guys make in one of those average nights? Jenni: If it was just ticket sales, it’d be like $300 to $400 for a night. Depends on if we were licensing the film, which could cost about $150. So that would be like our main overhead for all those years was just licensing costs. We were just sort of squirreling that money away for all those years in case the perfect place opened up — and then it did. Nathan: A lot of people think about big box movies and think those things are dead, going out of business. What’s the business model here? Jenni: Well, we are a nonprofit, so we have a few different ways to make money. We’re grant funded, so we apply for grants. We have a membership tier from $2 a month up to $50 a month. And we do sliding scale ticket prices, $8 to $12. A big thing for us is accessibility. We want people to make friends and connections here. Nathan: Are you both side projects right now or full-time? Jenni: We are able to pay ourselves a little bit. Specifically, at the space, we have a paid position every night — a show manager that gets paid hourly. We have people that volunteer to help us every night run the concessions and clean up. So we are primarily volunteer-run except for those paid positions. And then Louise is our rentals manager. On the weekends, we rent the space out for private rentals — movie parties, birthday parties, people just wanting to watch a movie with their friends. Jenni: Here’s our auditorium. Nathan: Okay, so how many seats are we looking at here? Jenni: We’ve got 65 seats. These were sourced from a theater that got shut down. So we got these basically like $5 a chair and with volunteers cleaned 10 years of popcorn out of them. Nathan: Let’s talk more about that day-one opening. You said it was your dream since 2018, 2019 to put some money aside, get some grant money, save up to eventually do this. Did you buy the place or are you renting? Jenni: We were renting it for about $6,700 a month. Nathan: Gosh, Austin is so expensive. Jenni: I know. Nathan: How many months were you committing to or years were you committing to? Jenni: Two, I believe. Nathan: What was that like when you signed? Jenni: I was freaking out a little bit, but we were just so excited. We never thought that day would come that we would be able to have our own space. Nathan: What was it before you guys moved in? Jenni: Well, it’s lived a life of being a unlicensed strip club. The pole used to be there’s a cage right there. Nathan: Oh my gosh. What are some of the customizations you’ve done that really add to the community feel? Jenni: Well, we built this whole stage. The whole AV booth was built, the screen, the frame of it all was all built. We were all kind of learning as we were going — woodworking, everything. It’s pretty much built volunteer. Nathan: And did this cost a lot of money to build out or was it basically all donations? Jenni: We did do a Kickstarter crowdfund campaign for $50,000. Nathan: Did you hit it? Jenni: We actually passed it up to $60K, which is great. Nathan: That is very hard. Jenni: I think it helps that we already were on this membership model. So it was kind of similar — merch, free tickets, perks. On the back of all these chairs, we’ve got little name tags, so you could customize one of the plaques. Nathan: How many chair plaques? Jenni: We’ve got about 30 or 40, but you had to pay $500 to get the chair plaque. So that was a really fun incentive. Nathan: What’s the vision? Where do you guys want to take this thing? Jenni: Our hope is to create a lot more special events and opportunities for people to meet outside of just our Monday-through-Friday screenings. We’re building out the upstairs right now to be an additional space that could be rented for a more intimate screening, but also have a movie-themed gift shop that we could have open during the day. Nathan: Can we go up there? Jenni: Yes. I want the rough version. I’ll follow you guys. Jenni: So we actually share this hallway with a tattoo and occult shop. Hi, Rachel. This is currently our satanic church. Nathan: That is exactly what it feels like, a satanic church. Jenni: Right now, this is basically used as overflow for when we have our big parties or we put up a photo booth. The long-term vision is kind of a version of a retrofuturist Pee-wee’s Playhouse — that’s the vibe. Nathan: So the vision for expansion is making more money from this location by booking more of the time you have available, or is it opening a second location? Jenni: I think honestly it’s investing in this space is our current plan. There’s so much opportunity here, especially with this upstairs area. We’ve been talking about having this even be a VIP area where we can send the signal to the smaller TV. So that can be a higher membership tier, like a more intimate screening space. Nathan: If you could wave a magic wand and get this designed and outfitted exactly how your vision is, what would that cost? Jenni: I think $10K is what we’ve budgeted for up here to get it completely built out and functioning, and have the smart-tech available so it can be a really smooth space. Nathan: How much time do you think it will take you to get that money? How many months? Jenni: Our goal is to get this up and going by our 1-year anniversary party, which is in September. Nathan: Two to three months from where we’re at today. Is there any value from someone like me, sort of cutting a check to help accelerate any timelines? Jenni: We’ve got volunteer labor and like love covering a lot of the stuff that’s happening in terms of the renovation, but if we had extra money, then we could really build out the gift shop idea, which is another source of revenue. Nathan: So, what would it mean if I cut today a $10,000 check into the business? Jenni: Oh, I mean, it would be a game changer. We are all donating our own time for the most part to make this place something that’s really valuable for the community. Nathan: I’m usually a software investor. We’ve invested over $200 million in 500 software companies. But even as I invest in that trend, I think as people get sucked into AI, they’re going to crave in-person experiences like this. So if I did cut a check today for $10,000, are you more interested in some structure where I get paid back some percent of ticket sales, or are you more interested in an equity deal where you don’t have to pay the money back, but I ask for a chunk of the business? Jenni: I think probably the first one, just because we’re growing and this is all of our first business. David: I agree. As a nonprofit, I wouldn’t want to bring you in as somebody with equity and then continually disappoint you with our disinterest in making money. Nathan: Okay. So if we structure this as I cut a $10,000 check today and the business pays me back — I’m trying to think what’s the right percentage. Is it a percent of each ticket sale each night, like 10 cents per sale until I’m paid back $15K, or is it some other structure? Jenni: Technically it would be more strongly attached to rentals and retail happening up here, but ticket sales are more reliable. I would agree like some percentage of that. Instead of having to count all ticket sales, what if we did a structure where I write a check and you pay me back $700 per month? Nathan: Mhm. And now that’s $8,400. Jenni: But for two years, right? So you’re basically paying me $7,000 over two years for the right to accelerate your vision by getting $10K today. Do you think the business could support a $600, $700 monthly payment? Or is it constrain the cash flow? David: I think the business could definitely handle $400 a month as one private rental. Jenni: I was going to say, if it was more from a rentals point of view, that would be more comfortable because we know those are continuously booked out every month. And this investment would be directly helping with the rentals program. Nathan: So I think $400 a month would be more comfortable. Annually that’s $4,800 per year. So still after year two I haven’t made my money back. What if we did $10,000 today and the company pays back $600 per month just for 2 years? So $7,200 per year for 2 years. I’m making $14,400 on my $10,000 investment. Jenni: Well, if you love the space so much, what if we did $500 a month and you got two free rentals a year that you could do here — pitch competitions, meetings, even a party with your friends for your birthday? Nathan: Okay, I like this. So sum up the whole deal and send it back to me. Jenni: If you cut this check for $10,000, we could do $500 a month, and we could also do two free rentals for you in the space per year. Nathan: And how many months or years would you guys do the $500 per month back to me? Jenni: We would do the $500 per month for 2 years. Nathan: It’s a $10,000 check today. You’ll pay back $500 per month. So, $6,000 per year for 2 years. I’ll make $12,000 total. And I also love the concept and the space. I want to bring my own foot traffic here. So I get two free rentals per year. Jenni: Yes. Nathan: Two free rentals per year. What do we think about this offer? Jenni: You know, let’s do it. Nathan: Let’s do it. Do you want to talk to Louise? David: No, I think that’s fine. Nathan: All right. This is exciting. I’m so excited for this. When do we start ripping up carpets and going to town? Nathan: Now you might be wondering what happens after I leave. Well, I reached out to them via email and tell them to go sign up at founderpath.com where they connect their profit and loss statement so I can confirm that data matches what they told me live. At that point, my underwriting agent writes a 10-page memo on the business with a capital offer at the bottom. If Hyperreal Film Club likes the deal, they type yes in the chat. They connect their bank account so I know where to wire the money, and we get the deal done. If you’re looking for a deal, go to founderpath.com today.