The Clubhouse and the Graph

What we call Hollywood is a 1917 industrial template inherited from Europe and the creator economy is a return to what came before.

Seth Hallen is Managing Partner of Hallstone Ventures, an early-stage fund backing the infrastructure layer behind the future of media, entertainment, and advertising. Hallstone closed its first fund in May 2026, exceeding its $10 million target. Before launching the fund, Seth spent two and a half decades as an operator inside Hollywood at companies including Sony, Panavision’s Light Iron, and Pixelogic. He still thinks like an operator, which is how he picks the founders he backs. He sits on the AI Task Force at the Academy of Television Arts & Sciences.

For two and a half decades, Seth worked inside Hollywood. He built businesses there, raised money there, sat in dark rooms with auteurs finishing their movies. From inside, he says, the room feels like the whole world.

It is a small room with a finite number of seats.

The pitches now arriving at Hallstone Ventures sort cleanly into two buckets. The first bucket is founders building products and services for Hollywood. They want to sell into the studios, win the prestige award, get the splashy deal. Their TAM is five customers. Their sales cycles are punishing. Their decks open with how they’re going to redefine or reimagine or transform the industry. Those pitches are stalling. Hallstone isn’t funding most of them.

The second bucket is founders building for everything else. The graph that Hollywood is one node in. YouTube. Vertical video. Microdramas. Live commerce. International production. The infrastructure layer underneath all of it. Those pitches are landing.

The pattern is structural, not a matter of execution. It has to do with what each set of founders thinks Hollywood is. Most of them are wrong about that. So was Seth for most of his career. So were a lot of the people he worked alongside.

The Inheritance

What we call Hollywood is not a natural form of cinema. It is a 1917 industrial template Americans inherited from Europe.

The vertically integrated studio model, the contract talent, the prestige literary adaptation, Thomas Ince’s central producer system. None of it is intrinsically American in origin. Pathé Frères and Gaumont, both founded in 1890s Paris, were running the model at global scale a decade before any American studio existed. Pathé was the largest film company on earth from roughly 1904 to 1911. At its peak, an estimated 60 percent of films shot anywhere were shot on Pathé equipment. The American film industry of that period was, in trade-press terms, an importer.

Two simultaneous events between 1915 and 1917 reorganized the global industry around Los Angeles, California. World War I gutted European production. Celluloid chemicals went to gunpowder. Men went to the front. Capital evaporated. By 1919, by Britannica’s estimate, 90 percent of films screened in Europe, Africa, and Asia were American. In the same window, the United States v. Motion Picture Patents Company ruling broke the Edison Trust, the only American cartel that could have constrained the independents.

Americans codified what was effectively a European industrial template and rebranded it as the natural order of storytelling. Film historians David Bordwell, Janet Staiger, and Kristin Thompson date the consolidation of “classical Hollywood cinema“ to exactly 1917.

Everything we now call Hollywood is a variation on that template. It has held for a hundred years because nothing displaced it. The thing displacing it now is not even a new industry, to be honest. It is a return to what came before the template was inherited.

The Stack

When industry veterans argue about whether Hollywood is dying, they are usually each looking at a different layer of it. Hollywood is not one thing. It is a stack of six overlapping systems that emerged in roughly this order and have begun to decouple at different rates.

The most visible layer is the geographic one, the production cluster that concentrated in Los Angeles after 1910. That layer is dispersing fast. Atlanta, Vancouver, Budapest, Prague, and Auckland have all been doing for years what Burbank used to. Underneath sits the vertically integrated industrial mode that defined the studio system proper, intact from the 1920s through 1948, when the Paramount decree forced the majors to divest their theater chains. The vertical integration that defined Hollywood for a quarter-century has been gone for almost eighty years.

What followed was an agency-and-package power structure, the talent shops (MCA, William Morris, ICM, CAA) that filled the vacuum after 1948 by orchestrating deals through bundled talent rather than studio contracts. That structure has been the working definition of “Hollywood power” for most of the time anyone working today has been in the business, and it is now under more pressure than it has been since it formed.

Below the agencies sits the labor and guild system, SAG, WGA, DGA, IATSE, on which the 2023 strikes were fought. It is the most durable layer in the stack, mostly because it is the only one with an organized constituency.

Then comes the narrative-aesthetic norm. Continuity editing, character-driven causal narrative, three-act structure, invisible technique. This is the layer that has paradoxically grown more globally dominant over the last decade rather than less. Every Netflix original, K-drama, Bollywood blockbuster, and Chinese microdrama still operates inside it. The aesthetic clubhouse is global, even as the industrial clubhouse shrinks.

The bottom layer, distribution-finance, is collapsing fastest. Theatrical windowing, output deals, hit-driven slate economics. These were the working tolerances of the old machine, and they are no longer holding.

When Steven Soderbergh talks about the death of Hollywood, he means layers two, three, and six. When IATSE leadership talks about saving Hollywood, they mean layer four. When a film school professor talks about Hollywood’s aesthetic dominance, they mean layer five. They are not actually disagreeing. They are looking at different parts of the same dying animal. For an investor, knowing which layer a founder is fighting for is the first ten minutes of due diligence.

What Came Before

The American film industry’s first decade, before the 1917 consolidation, was genuinely closer to a creator economy than to anything we would later recognize as Hollywood.

Storefront nickelodeons proliferated from a single Pittsburgh theater in 1905 to roughly 10,000 by 1910, drawing as many as twenty-six million weekly admissions in a country of ninety million. The operators running them were small, local, and almost universally immigrant or first-generation. Carl Laemmle opened a Chicago storefront in 1906. William Fox had bought a Brooklyn arcade for $1,666 two years before, installing a nickelodeon on the second floor. Marcus Loew was assembling a chain out of penny-arcade properties in New York. Adolph Zukor had moved from fur trading to peep shows, and would soon found Famous Players. Many of these operators came up through vaudeville and penny arcades, the live-performance economy that has its own structural rhyme with the creator economy of today. The four Warner brothers opened the Cascade Theater in New Castle, Pennsylvania on February 2, 1907, and within months had begun pooling other small exhibitors into a distribution exchange that they later incorporated as the Duquesne Amusement Supply Company. Exhibitor to exchange to producer, in that order. The same vertical-integration-from-the-bottom move that creator-economy operators make today.

Films at the time were one or two reels, programs changed weekly or faster, and theaters typically seated fewer than two hundred. The films were silent, which meant they asked nothing of an audience that did not yet share a common language. They were ideal entertainment for the ten million immigrants who arrived in the country between 1900 and 1910. Everything about the industry ran fast, cheap, and close to its audience.

Three years. That is how long the open phase lasted before the enclosure began. In December 1908 the Edison Trust pooled the major producers, the French firms Pathé, Gaumont, and Méliès, and Eastman Kodak’s raw-stock monopoly into a single licensing cartel, and by 1910 it had consolidated distribution under its General Film subsidiary. The independents fought back by moving to California, where Trust enforcement was harder, and by going to feature length the Trust resisted. By 1917, the form had hardened around the European template.

The creator economy now is not a new wave inside the inherited template. It is a structural return to what American cinema looked like before the template existed.

The Two Rooms

In different decades, we both had the same moment. The room we were working in was not the whole world and we were late to realize it.

FROM SETH

For me, the room was the prestige clubhouse. More than 25 years of building businesses inside Hollywood, raising money inside Hollywood, sitting in dark rooms with auteurs finishing their movies. The clubhouse is seductive in a way that is hard to convey to anyone who has not been inside it. The dark room, the director, the finished cut, the feeling that the work matters. I spent years optimizing for a five-customer market and telling myself the constraint was an honor. The realization came late.

FROM ANDY

For me, the room was a company I co-founded in New York in the early 2000s. We were building something close to what Frame.io would become much later. A branded, secure way for ad agencies and post houses to send video to clients for review. We had real customers. We had (some) revenue. We had the encoding chops to make it look good over the bandwidth people actually had.

I was even seeing the next wave forming. A trade reporter interviewed me about the company and I told him that anyone with a laptop and a wireless connection at a coffee shop would soon be doing this work themselves. I was describing the world that was about to flatten my business. I built it anyway.

YouTube launched in 2005. Free, browser-based, ugly, none of the things our customers said they wanted. It killed our category in less than a year. Not because our product was wrong, but because the world had decided the layer underneath us mattered more than the layer we were selling.

The room was smaller than it appeared. The graph was forming outside it. Neither of us saw it in time, and we are not unusual for that. The clubhouse fools people on the way in, on the way through, and on the way out.

The Delusion

The clubhouse is deceptive on both sides of the door.

From outside, it looks like the whole world. Get inside and you have made it. The work matters, the people around you are the people who matter, and the story is so durable that founders pitch into it daily, build companies for it, and raise capital to chase it.

From inside, the deception runs in the other direction. The clubhouse really does look like the whole world, not because anyone is lying but because the room is engineered to feel total. The conversations are the conversations. The deals are the deals. The opening night is the only night. Everything outside reads as noise.

This is the delusion that has let Hollywood ignore its own decline for the better part of a decade. The room is shrinking. The graph is growing. From inside the room, you cannot tell.

What To Look For Now

The first ten minutes of a pitch are usually enough to tell which bucket a founder is in.

The clubhouse founders use the language of redefinition. They want to sell into the studios. They want the prestige reference customer. They benchmark against incumbent vendors and argue their edge is better service inside a stack that has not meaningfully grown in two decades.

The graph founders use the language of distribution. They think about audiences, not buyers. Platforms, not pipelines. They assume the clubhouse exists and treat it as one node, not the whole network.

The clearest tell is Adobe and Frame.io. Adobe paid $1.275 billion for Frame.io in 2021. By that point Frame.io had about a million users, and the vast majority were not in the clubhouse. They were in the graph. Post houses, ad agencies, freelance editors, indie filmmakers, all organized around a tool the clubhouse barely knew existed. The clubhouse paid a premium to acquire access to them. Adobe’s own clubhouse revenue is a small fraction of its overall business. The companies winning around media right now are the ones that solved for the graph first and let the clubhouse arrive at the back door.

The contrast case is the generative AI cluster. Runway. ElevenLabs. Midjourney. None of them tried to enter the clubhouse. Some of them effectively dared it to sue them. They built for the graph, scaled inside the graph, and only then started fielding inbound from clubhouse buyers asking what they were missing. The clubhouse meetings, by the founders’ accounts, went nowhere. The clubhouse is not where the work is.

Meanwhile the content the rest of the world is watching reflects what the graph has been telling us for a decade. Korean dramas on Netflix. Nordic crime on every streamer. Reality shows shot in Spain. Twenty years ago everything most Americans watched had a North American lens. That lens was one of the layers of the clubhouse, and it has already gone.

The Question, And What To Do With It

The question every founder should be able to answer in one sentence is this. Are you building for the clubhouse, or for the graph?

There is no wrong answer. There is a wrong answer to avoid, which is not knowing. If the answer is the clubhouse, build for it deliberately. Understand it is a small room. Understand the room is shrinking. Understand it is five customers in a market designed to keep them. The economics can work if the bet is made clear-eyed. They almost never work if the bet is made under the belief that the clubhouse is the whole world.

If the answer is the graph, build for the graph. Stop pitching the clubhouse on something the clubhouse does not want. Stop hiring the clubhouse-resume executive who will spend two years explaining why the numbers are weird. The graph runs on different math, different cycles, and different ideas about what good looks like.

This piece is not a eulogy for Hollywood. The clubhouse will keep making prestige work for as long as a small audience of cultural and financial gatekeepers want it to. The clubhouse is a node. It is not the network.

The discipline is to know which one you are working in. To listen to the operators in the other room. To consider that they might be half-right, and you might be half-right, and the interesting work is figuring out which halves go together. To take experience earned in the room you have been in and use it in a room you have not.

The clubhouse fools people on the way in, on the way through, and on the way out. The graph does not care.

Cocktail Endnote: The Old Fashioned

The Old Fashioned is the only cocktail named after the structure it preserves.

By the 1880s, American bartenders had spent two decades elaborating on the basic 1806 definition of a cocktail, which was spirit, sugar, water, and bitters. Curaçao got added. Absinthe got added. Multiple bitters got added. Fancy garnishes got added. The simple thing became the elaborate thing, and the elaborate thing got rebranded as what a cocktail was. Drinkers who preferred the original preparation started asking for theirs made “the old-fashioned way,” and the name eventually stuck to the drink itself.

That is the piece in a glass. The clubhouse is the elaborate version. The graph is the old-fashioned way. Hollywood was the period during which the original structure was forgotten. The renaissance now is a return to the form that always made sense.

Old Fashioned

• 2 oz bonded bourbon (a Heaven Hill Bottled-in-Bond for the classic version, or a Rittenhouse 100 rye if you want a sharper edge)

• 1 sugar cube, or a scant 1/4 oz rich simple syrup

• 3 dashes Angostura bitters

• A few drops of water

• Orange peel, expressed

• Optional Luxardo cherry, if you must

Place the sugar in a rocks glass, saturate with bitters and a few drops of water, and muddle until dissolved. Add the whiskey and a single large ice cube. Stir until cold and properly diluted, about thirty seconds. Express the orange peel over the top and drop it in. No muddled fruit. No soda water. No sweet-and-sour mix. The mid-century version that did those things was the elaboration. This is the form underneath.

The drink predates the name we use for it. So does the structure it stands for.