By Christine Bunish
Issue: February 1, 2003

The Business of Boutiques

There's probably never been a better time to be a boutique. Economic downturns, wobbly markets and a time of transition for the broadcast industry can spell business woes for mid-size and large facilities looking to keep rooms full so they can pay off notes and sign paychecks. Boutiques with low overheads - less real estate, fewer employees, smaller equipment inventories - are able to survive, and even thrive, when bigger companies are struggling to hang on.

Three Fingered Louie used Avid's Media Composer and Symphony on this Rock Climber spot for Old Spice out of Saatchi & Saatchi,NY.
But the boutique model is attractive for more than just economic reasons. Often owner-operated, boutiques have hands-on, collaborative creative environments prized by principals, employees and clients alike. Customers also value the attentive, personalized service they receive. Boutiques are win-win all around.

So it's no wonder that almost 90 percent of all visual effects/dynamic media businesses (which include production companies, Web interactive media companies, effects/animation studios, post production facilities and recording/mixing studios) have fewer than 10 employees, according to TrendWatch, Inc. ( in Mill Valley, CA.


When composers/arrangers Allan Schwartzberg and Bob Mann decided they wanted to form their own music house, they definitely had a boutique in mind. "We knew we didn't want to build a monument to ourselves," Mann recalls. "We're basically two very good friends, musicians who wanted an excuse to hang out together. We didn't need a giant physical ego-structure."

AvatarLabs' Rex Cook: "Staffing up and waiting for work is not a good business model."
"I've seen all the glitz [in studios] that are now rocks around the necks of their owners," Schwartzberg adds. "I felt we could do it in a more streamlined and economical way."

The partners opened Deep Diner Music in New York City ( four years ago to create music for commercials, records and films. They spent their first two years occupying The Warehouse's Studio B, where they had access to the renowned studio's other facilities. When The Warehouse was sold to Wyclef Jean and they had to leave, they scoured the city's SoHo, Tribeca and Flatiron districts for new space, but they discovered the ideal real estate uptown at 52nd St. and Broadway in the building that had housed the legendary Birdland.

"Birdland was a place Allan and I went to often as kids; it was called the jazz corner of the world," says Mann of the spiritual connection to the place. "And it was a good economic choice too: The square footage cost less [than downtown]."

"Ernie the Ant" was created by DFreedomZone using Maya 4.0 and appears in their short film Eden X, currently in production.
The partners have made the most of every square inch of their 1,300-square-foot space, says Schwartzberg. "It sounds great, clients are comfortable and musicians enjoy it." Deep Diner features a studio with a Yamaha grand piano, a control room equipped with a Digidesign Pro Tools Mix 3 Plus system, and a separate MIDI room with Pro Tools. File sharing enables Schwartzberg and Mann to do two projects simultaneously.

Although the studio has easily accommodated sessions with 10 strings and horns, if clients require more live space or a room with a traditional big mixing board, the partners have their choice of facilities in town. But spot clients such as AT&T, Radio Shack, Advil, Prudential, Prego, Pepperidge Farm and Jell-O are perfectly at home in Deep Diner's boutique.

As a two-man shop, Deep Diner offers a distinctly hands-on approach to its customers. "Clients realize they're dealing with the people running the company, creating and producing the music, and performing the music," notes Mann. "They know we're doing it all."

Bob Mann and Allan Schwartzberg (L-R) of the two-man music studio Deep Diner.
"We're not just overseeing the music," Schwartzberg emphasizes. "Bob and I have been a party to a lot of hit records for the past 30 years and that experience may give us an edge and perhaps a unique perspective in solving music puzzles."

Looking ahead, the partners see a way to grow their business without abandoning the boutique model. "We have a Deep Diner South or Deep Diner West in the back of our minds," Schwartzberg reveals. "They'd be the same kind of operation."


"These days boutiques are definitely a viable business model," says Ellen Poon, one of the partners in San Francisco's DFreedomZone (, a visual effects/animation boutique for feature films, commercials and interactive projects. "You used to need a lot of investment in software to do feature effects, but today you can buy Maya, Shake, Photoshop, After Effects and Final Cut Pro, and you've got yourself a fairly good set-up."

Poon has experienced both boutiques and large studios having worked in London at The Moving Picture Company and Rushes, then at Industrial Light & Magic where she saw the CG department grow from 25 to 800 people. With DFreedomZone, she hopes to "get back to a slightly different mindset where you can get your hands onto the entire process, not just part of it."

Fred Ruckel and his Inferno at Stitch Motion Graphics.
DFreedomZone employs 10 people fulltime and uses freelancers as needed. Because of its size, "people get to do everything: be artists, creatives, technicians - they aren't pigeonholed in one thing," Poon explains. "In a smaller company you can feel more creative more easily because there aren't so many layers of bureaucracy to deal with."

DFreedomZone's size also means "a more tight-knit, friendly environment. In a big company you may not know who you're working with, and you lose camaraderie sometimes. It's important to hang out together after work and have a beer."

If some of the boutique model's advantages are economic, so are some of the drawbacks. "It can be hard to stay afloat if you're small," Poon points out. "Big companies tend to have a bit more of a cushion. So boutiques have to be a bit more aggressive in marketing, getting work done on time and staying on top of everything. Because you can do everything means you have to do everything. That means you can end up not having a life."

Poon is eager to turn her attention fully to DFreedomZone after spending 18 months as visual effects director for Hero, a martial arts epic already breaking records in Asia. It's due for release here in 2003. DFreedomZone was not involved with that project.

Poon notes that tight feature film budgets mean visual effects departments are often the first place cut. "When there were big budgets, people tended to go to one big shop and got everything done. Now the prevailing method is to split up a show to different shops so you get the same quality for less money. But the key is having a really good visual effects supervisor to oversee the work of the different companies and make sure everything looks good."


Creative director/Inferno artist Fred Ruckel calls New York City's Stitch Motion Graphics ( "as boutique as we could be." But although the company has just a handful of full-time staffers, it offers "all the services of the big boys: a Discreet Inferno; Adobe After Effects for design and motion graphics; a motion control camera; a 3D room with Alias| Wavefront Maya, Softimage and cost-effective Electric Image; and a DVD authoring suite featuring Apple DVD Studio Pro with Digital Voodoo for realtime capture."

Ruckel says Stitch "uses people to the best of their abilities. We have specialists in every genre and hire freelance artists who have specific talents such as 3D particle effects, character animation, 3D shading and lighting effects. This allows us to deliver a great product without compromising anything."

Stitch is a spinoff of Refinery, which offers creative editorial and Avid Symphony finishing from offices in the same building. With Stitch separate from Refinery "clients are able to taste what we can do without being tied to Refinery's services," Ruckel explains. "Or, we can put together a package with Refinery, apart from audio mixing and telecine." Stitch and Refinery are networked for quick, efficient file sharing.

One of the chief advantages to being a boutique is "the ability to give great client service," says Ruckel. "Clients know they're not just a number. It makes them feel they don't have to worry about their projects. They know it will be delivered on time, in the right fashion." Close client relationships make for easy banter during sessions and fun after-project dinners.

Ruckel cautions boutiques to be careful about growth. "As business comes in, you could continue to put in equipment but no matter how great you are, there will always be slow periods and how will you weather them? If you build out rooms, you take on more real estate, equipment leases, upgrades, maintenance contracts."

Ruckel acknowledges that Stitch's new Inferno, acquired last April, was "quite an expense, but we needed to be able to provide more for clients instead of finding work arounds." Stitch previously had Inferno on an Onyx 2 but became "one of a handful of companies in the world," Ruckel says, with Inferno on an Onyx 3 with 600 MHz processors. As a longtime Inferno beta tester, Ruckel has been using V.5 for the past 10 months and has been able to do film work, HD and component digital jobs without switching projects and restarting the software. (Inferno V.5 was released Jan. 24.)

Stitch also added an IMC motion control room headed by DP Nick Mavroson for clients wanting to do tabletop work and full greenscreen shoots on an insert stage. "It's been busy since the day we put it in," Ruckel reports. A promo for A&E's Benedict Arnold featured childlike, stop-frame animation and shuffled typography shot by Mavroson on the IMC, edited on one of Refinery's Avids, with tracking, keying and color done on Inferno.


Many animation studios follow the boutique model. "Every commercial produced requires some sort of video element but not every one requires animation. The net number of jobs available are lower, so that keeps you lean and mean," says Ashley Postlewaite, executive producer at Burbank's Renegade Animation (

Postlewaite and animation director Darrell Van Citters opened Renegade, a 2D animation studio whose spot credits include Dodge Ram, Disney World and Cheetoh's Chester Cheetah, 10 years ago. Its 3,200-square-foot space features two large bullpens, one with traditional animation desks and the other sporting computers and editing equipment for pencil tests and compositing.

Renegade's staff of five increases by drawing from a top-notch freelance pool. "We recently had 20 artists jamming on a big project," Postlewaite reveals. "We can shrink and grow very quickly; that's acceptable in the industry. The talent pool is used to working freelance. We work hard to have three or four top choices for every position available, and we work hard to recruit even if we don't need people at the moment."

Postlewaite says animation boutiques have to "fend off the temptation to grow," sometimes in markets that look appealing but may be just a flash in the pan. "Several years ago the whole games industry had a growth spurt," she recalls. "People said, 'You should start a games division,' but we said, 'We're not gamers,' although we can be a service provider to gamers. When the bottom fell out of games we looked smart because we didn't have to close a division."

Still, some growth may certainly be desirable. "You have to weigh if you're being silly to not grow when you have the opportunity," Postlewaite notes. "But when we look back, we think it was prudent to stick to our core competency and not dilute ourselves beyond our main dream and passion."

Where Renegade has focused its growth is in content creation for TV and feature films. It sold a pilot to Cartoon Network and is now working on a second pilot for the same show. Renegade also provided cel animation for the Nabisco Cheese Nips commercial Pullin' the Plug, featuring the cartoon stars of SpongeBob SquarePants on Nickelodeon. In addition, Renegade has helped bring back the popular 1950's animated character Elmo Aardvark by providing cel animation for the weekly Internet series, Elmo Aardvark, Outer Space Detective.

Postlewaite advises boutiques that are doing well to consider the inevitable rainy days to come. "A lot of people get a good year or two and buy expensive things, and when business turns they can't stick with it."

Nevertheless, she believes there's "nothing that outweighs the upside" of being a boutique. Boutique owners derive satisfaction from the hands-on nature of their companies that require their day-to-day, close participation. "In the corporate world there are fewer choices in setting the rhythm of a place and its philosophy," Postlewaite notes. Boutiques can be more nimble and faster making decisions than top-heavy facilities. "The ability to think quickly is extremely important. Darrell and I can take a board of directors meeting at lunch!"


Rex Cook learned the "stay lean" lesson when he was a partner and founder of Colony Design, a Hollywood-based motion graphics, Internet and branding studio. "Staffing up and waiting for work is not a good business model," he declares. "There's a natural tendency to feel 'if you build it, they will come,' but that's not necessarily the case. Organic growth may be a little slower, but it's more sustainable."

As executive creative director of Encino, CA's AvatarLabs (, which opened last summer, Cook is determined that the motion graphics and editorial design studio adhere to the boutique business model. "We have four people on staff and a design talent pool of about 10 others who work on a per-project basis," he says. "We're keeping our overhead lean. We can expand and contract as necessary."

With credits including the main title design/opening sequence for the CBS sitcom Still Standing, graphics for The Discovery Channel special James Cameron's Expedition: Bismarck and graphics for the TV trailer for the independent film, Real Women Have Curves, AvatarLabs is keeping its talent busy. Today the talent pool is deep enough to ensure a good selection of artists for every job, Cook reports. "It used to be harder to staff up quickly with A-list talent; all the good people had jobs at companies. But now, a lot more are freelance. We work with three or four designers remotely, from their homes."

Cook points out that in the entertainment industry, there's a constant need to upgrade software and hardware. "If you don't have cutting-edge, desktop equipment you won't be as competitive as others."

But he advises not growing "beyond what your clients need and what your financials will allow." For AvatarLabs, growth in terms of more rooms and additional staff is predicated on "key repeat clients at the studios and networks. Another couple of clients would necessitate doubling the size of our equipment complement and staff," Cook reports. Currently, AvatarLabs has an Apple Final Cut Pro editing station; five Macintosh workstations running After Effects, Photoshop, Illustrator and Flash; and three PC workstations for Maya. The company recently acquired some dual-gig PowerMac rendering machines for its Fox movie trailers.

The principals and employees of boutiques thrive in a "friendly collaborative environment," Cook says. He remembers working at several trailer companies that started small, then swelled to over 100 people. "When you get around 40 people the culture starts to change. The creatives are no longer as invested or enthused. If we grew to 30 people, I'd consider opening another branch. That way, you could cap the growth of each office."

Cook doesn't believe that boutiques, by their very size, get lost in the crowd of bigger facilities. "Over the last several years, I think big clients have become much more confident working with smaller companies. They used to be reticent about working with you if you weren't a certain size. Now they know we can handle the workflow and deliver the quality needed as well as provide more specialized service and attention to detail" that's a hallmark of boutiques.


Creative editorial houses lend themselves to the boutique model of close collaboration with clients, outstanding client service and attention to detail. But perhaps more than music shops or animation and design studios, creative editorial houses are more likely to outgrow their boutiquehood in an effort to offer additional services - sound design, original music, online finishing, visual effects - related to spot work, services that enable clients to remain under their roof and provide additional revenue sources.

Executive producer Lynne Mannino, who's partnered with editors Dave Smallheiser and Wendy Rosen in New York City's Three Fingered Louie (, is a firm advocate of the boutique approach, however.

"We wanted to create an intimate, manageable space," she says of the three-year-old creative editorial company. "This was our first business; we had all worked for other people. We felt it was a wise choice to start small and see how we'd do."

Clients walking into Three Fingered Louie's Flatiron district loft space feel as if they've just walked into someone's living room, Mannino reports. "We've created a space where people are comfortable and clients feel they're getting the attention they're paying for. It's so intimate here that clients know everyone on staff. If one of the editors is booked, it's an easier cross-sell to another editor."

Three Fingered Louie's boutique size also "makes the staff more well rounded," she points out. "We all have to assist each other. And we can grow somebody from the ground up and that person will know how the entire company functions."

Three Fingered Louie, which also numbers editor John Anklow among its members, opened with three Avid offline bays. At the end of its first year the company was doing so well it built an additional room and purchased a Symphony for conforms, titling and secondary color correction. "Symphony allowed us some flexibility while keeping within the realm of our expertise," Mannino notes. "With Symphony, we have the ability to address the budget concerns of certain clients. We can edit PSAs shot on DV and do the titling and color correction in online so we can keep the budget on mark."

Mannino sees Three Fingered Louie remaining a boutique in size and spirit. "We're not interested in being a facility and booking hours. That's where business becomes something different from our creative boutique experience. Editorial is our area of expertise, where we want to shine, where we want to attract clients."