Dan Cathy Replaces Hollywood: Trilith Studios and the Chick-fil-A Chairman’s Surprising Vision
In today’s newsletter:
- Dan Cathy Replaces Hollywood: Trilith Studios and the Chick-fil-A Chairman’s Surprising Vision
- Film and TV Move to Georgia, Market Watch, and Americans Are Drinking Much Less
- 3 Things to Keep In Mind Before Getting into Real Estate Investing
Have you ever been to Hollywood?
For first-timers, it can be something of a shock. And no, I don’t mean because of all the glitz, glamor, and celebrities, but because of the filth, crime, rampant homelessness, danger, open prostitution, and overall dinginess of the place. As someone who lived in Los Angeles for many years, whenever people ask me what to see in Hollywood, I always have to tell them to manage their expectations.
Hollywood is kind of gross.
Perhaps that is why we so often see a low view of humanity coming out of our culture. Films, TV shows, and even music are far too often deeply cynical and nihilistic. While there are certainly multiple reasons for this, could it be that part of the reason our creative elite puts out lowbrow, despairing content is because the place in which many of these creators live is, well, the way that it is?
Billionaire Chick-fil-A chairman Dan Cathy seems to think so. But he frames it in positive terms rather than throwing shade at Hollywood. He focuses on what he can do.
And turns out, there’s quite a lot you can do with connections, vision, a motivated team, Georgia tax incentives, and billions of dollars.
Dan’s solution? He calls it “Place-Making.” What if the creatives who make our popular culture lived and worked in a place that encouraged rather than suppressed their humanity? What would be the effect of a place that values good ol’ decency, sunshine, trees, and walking? What could be accomplished by good working conditions, safe streets, a place to raise a family and rub elbows with potential collaborators?
What if we treated these people, from the studio executives to the key grip holding up the boom on set, like they were made in the image of God?
That is Dan Cathy’s vision. That is Trilith Studios and the brand new neighboring town of Trilith.
Trilith
I spoke to Mr. Cathy about his project last year. His excitement was palpable, and he seemed very driven. He emphasized his desire for people who work demanding jobs on a film set (crew can often be on their feet doing physical, precise work for 14-hour days) to have a place during filming that feeds their soul. He calls it “place-making,” and he hopes that by creating an environment that is rich in hospitality, that goodness will bleed down into the art that we make.
He has been quoted as saying, “If you live a broken life, you tell broken stories. If you live a beautiful life, you tell beautiful stories.” Evan Baehr, who has had occasion to work with Cathy, sums up the visionary’s philosophy. “Dan says: Let’s find the best people in the world and love on them radically; their work will be the fruit of how we serve them.”
Trilith, formerly Pinewood Studios, is no small player, either.
“Marvel is making movies here, Disney,” Dan Cathy says. Some of the highest-grossing films of all time were filmed at Trilith, including Avengers: Endgame, Avengers: Infinity War, and Spiderman: No Way Home. Then, each day after work, these high-powered creatives are just a short golf cart ride away from homes that are clustered in little communities, restaurants that serve healthy farm-to-table food, and nature everywhere to help them refuel.
This project, now a few years in, is chugging along steadily, and Trilith is still building. (If you’d like to live there, new homes are running from about $750k to $1.5M.)
Cathy’s faith certainly plays a prominent role in this vision. Arguably, the development’s symbol and namesake is a nod to the Christian doctrine of the Trinity.
“Trilith” refers to a monument made of three stones (such as Stonehenge). Those three pillars, according to Trilith, stand for storytelling, purpose-built places, and emerging technology. “A trilith is an appropriate symbol for our new identity,” according to the president and CEO of Trilith Studios, Frank Patterson.
“We’ve been very careful to envision a community that will attract a wide spectrum of people, that will inspire folks to live well and to honor others. I believe this is the model for future generations,” Dan Cathy said when he originally announced the project nearly ten years ago.
Selah
Cathy’s vision is intriguing, both for its wild ambition and for its humble smallness. Sure, a nearly 1,000-acre studio and town that aims to support the health, wellness, fitness, mental health, and community needs of the world’s greatest creators is no small feat. With 51% dedicated greenspace, a layout designed to maintain the “walkability” of the place and to eliminate the need for local cars, and an entire educational system for K-12 and post-grad studies – not to mention the world-class studio where top filmmakers produce their work…
The vision and execution have certainly been impressive. But at the same time, Cathy does not make movies. He does not buy scripts. He does not require creative control.
He makes the space. He’s treating people with dignity. And he’s leaving the rest up to God.
INDUSTRY INSIGHTS
Film and TV Move to Georgia, Market Watch, and Americans Are Drinking Much Less
Film and TV Move to Georgia
Film and TV productions spent $4.4 billion in Georgia’s fiscal year 2022 (and another $4.1 billion in fiscal year 2023), while California saw just $2.3 billion in fiscal year 2022. California has been redoubling efforts to preserve the film and TV industry in its state, which still boasts nearly half of motion picture jobs, though the manner of calculating that figure may require scrutiny. Georgia’s famous film and TV tax credit (a flat 20%) has attracted numerous productions to the state, which now boasts more film studio space than New York, and is on track to pass California by 2027. “Hollywood” is fast becoming a figure of speech as the industry decentralizes production to Georgia, New York, New Mexico, Vancouver, and other hot spots.
Market Watch
Federal Reserve Chair Jerome Powell reports that the Fed is wary of cutting interest rates too soon, and dashing investors hope that March will see the beginning of steady decreases. The stock market responded with a modest dip in spite of the fact that Powell’s remarks seem consistent with earlier signals given by the Fed during the last part of 2023. Many experts have been warning for some time now that markets are overly optimistic, as evident by the high cost of equity in the US and the rapid increase in valuations.
The Dow Jones, for example, has seen a a6,000-point increase in just the last quarter, an increase of nearly 20%. The gains, however, are not evenly distributed, and some experts warn that the markets are too hot, presaging a possible bubble burst – though the real increase in wealth generated by AI may save the day and make up for the current difference between expectations and reality.
Americans Are Drinking Much Less
Here’s a headline you probably never thought you’d see: Non-Alcoholic Beer Sales Skyrocket. In fact, the category has experienced nearly 3x growth since only 2019, according to an in-depth piece by the Wall Street Journal. Regular beer (alcoholic) had quite possibly its worst year in a generation, shipping less than 200 million barrels in 2023. It’s true that the Bud Light boycott may have had some influence – Bud Light sales volume was down 28% in December when compared to 2022 – but it is insufficient to explain the total trend: People are drinking less, and specifically, they are drinking less beer.
According to Gallup, only 62% of adults under 35 say they drink, down from 72% twenty years ago, and the younger generations are leading this trend. “Dry January” participation is up, and alcohol consumption is down, while people say “improving physical health,” “saving money,” and “making a lifestyle change” are the top three reasons for cutting back or abstaining. Beer and wine are on a steady decline, but consumption of spirits is, by contrast, growing slightly.
Sunday School
Q. What is the purpose of the epistle 1 Peter?
A. To comfort, commend, encourage, and instruct believers in Asia Minor suffering under Nero’s severe persecution.
“Poor guy.”
TIPS & TRICKS
3 Things to Keep In Mind Before Getting into Real Estate Investing
“Real estate is never worth nothing.”
“If you want to make some real money, buy real estate.”
“Being wealthy and successful means passive income, and passive income means real estate.”
If you’re like me, you’ve heard the above axioms your entire life. When time, money, and opportunity all converge, buying real estate is the obvious choice. In the Big Sort during COVID, in which millions of Americans moved across state lines, enterprising investors bought and flipped homes left and right, often at tremendous gains as home values went up and up (and as California and New York money flooded into Texas, Idaho, and Tennessee). Developers were building like crazy. Rent was rising. It was a party you didn’t want to miss, financially speaking.
With so much success, investors have been increasingly attracted to the prospect of getting in the game, but home values haven’t really gone back down, interest rates and inflation present a very real obstacle to home ownership, and the supply may not be meeting the needs of the demand.
All of that to say, it can feel odd to question the wisdom of buying property when you’d like to invest, but it may be a good time to do some very serious digging before buying real estate. As Larry McDonald recently said, the housing market is “a slow-moving train wreck” and predicted up to $700B in coming defaults.
Some will still do well with real estate, even now. But here are three things to consider before you buy:
Rates Are Climbing Again
After a few months of sharply falling 30-year fixed mortgage rates, from October of last year through mid-December, we have seen the trend line climbing again. As of Monday, rates are back above 7%.
This may represent a correction to some of the overly optimistic market outlooks of the past few months. Even just a 1% difference in mortgage rates can price out a lot of consumers, contributing to a stagnant demand. Home prices have fallen 0.2% overall since October, but the circumstance depends greatly on where you live or invest. Markets like San Diego are increasing sharply (8% year over year), while cities like Boise and Austin are experiencing falling prices (just under an 8% drop).
Boomers Are Not Downsizing
Part of the reason the US housing market has worked for so long is that people naturally sort themselves out according to their needs.
For example, a 19-year-old mechanic is not typically going to buy a large house. He’s likely going to rent or buy something small. When that mechanic gets married, however, and certainly by the time he’s got a few kids, his need for space has increased (as has his earning power), so he trades up, now willing and able to spend more on living space. Then, once the kids move out, and our mechanic and his wife are in their late 50s or early 60s, they might decide that the extra costs in time and money for maintaining a big empty nest just isn’t worth it. So, they downsize to a small home to save money and focus on traveling, hobbies, or spoiling the grandkids.
That’s the idea, anyway, and for a long time, it has worked sort of like that. With the “silver tsunami” coming as Baby Boomers are now firmly in the autumn and winter of their lives, and with so many people in this generation, you would expect a surplus of family homes to flood the market right about now, bringing prices down, and making space for young families and first time home buyers.
The only problem? Largely due to market conditions, Boomers aren’t selling. They aren’t downsizing. It’s easy to see why – homes have appreciated tremendously since the 80s and 90s when many in this generation bought their homes, and faced with the massive capital gains tax, high-interest rates on new loans, and a small available supply for sale, it just doesn’t make sense to sell right now.
This means the supply side is not well matched with the demand, further contributing to the awkward, halting nature of the current market. There are a few macroeconomic conditions that could shift this current trend, but for the moment, it’s what we have to plan around.
Trying to Flip or Develop Is a Risk
“Don’t count your chickens until they hatch” is a wise saying for that reason.
That flip that is “going to” earn you a quick $75,000 free and clear might do just that – but if it doesn’t sell, you’re left with a property that may or may not become financially burdensome, depending on maintenance costs, insurance, and if you are able to rent it out. A flip that doesn’t sell ties up a lot of capital, and in an inflationary environment that isn’t ideal. A flip can also end up requiring more money for rehabilitation than originally expected, and it’s no longer 2021 when home prices were basically guaranteed to go up.
Some people prefer to buy land, get a building loan, and add to the overall supply. This, too, can be lucrative, but in a strange home-buying market such as this, you have to be very sure that your home is going to be in a price range that is acceptable to the right demographic for the area. Carrying costs on building loans can be steep, and six months can mean the difference between a healthy profit and breaking even. Another six months after that can turn an asset into a liability.
TL;DR
All investing involves risk, and just because there are uncertainties in the current housing market does not necessarily mean you shouldn’t participate. It does mean that investors should be cautious, have a plan B in case things go south, and consider other options for their money.
(This information is for entertainment purposes only and does not constitute financial advice.)
Quick Hits
- Amid a sinking local stock market, Chinese money increasingly moves to digital assets.
- $1 and free timeshares are increasingly common, as inflation and rising fees increasingly make owning a timeshare a financial burden.
- Universal Music Group to remove its catalog from TikTok, meaning no more Hillson, Tauryn Wells, TobyMac, Chris Tomlin, et al in TikTok Videos
- Due to a lack of exploration, experts predict an oil supply shortage by the end of 2025.
- Joel Belz, founder of WORLD magazine, a Christian news service, passed away at 82.
- Pew Research has released a new study this week on American’s views of keystone institutions: “From Businesses and Banks to Colleges and Churches.”.
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