How to Set Your Sights High -- and Still Pay the Bills

Last Updated Jun 9, 2010 6:15 PM EDT

Many entrepreneurs dream of creating a product that will become hugely profitable. In the entertainment sector, businesses strive to create intellectual properties that can be exploited on multiple platforms in multiple territories. Get the right character for the lucrative kids' market, and you can reap millions of dollars in licensing and rights deals. That kind of success typically has an entertainment powerhouse like Disney behind it, but in an unfashionable neighborhood in South East London -- a long way from the entertainment giants of Burbank, California -- a small start-up called Karrot Entertainment has come up with a creative strategy that will increase its odds of creating a breakout hit, while generating income in the meantime.

Karrot seeks to emulate the success of TV properties like "Peppa Pig," which last year alone grossed its licensor, E1 Entertainment, more than $150 million in UK retail revenues. Such a win is not beyond reach: Karrot's series "Sarah & Duck" (pictured), has just been accepted into this year's Cartoon Forum, a global event where the firm will get the opportunity to pitch the property to investors and broadcasters. The challenge for Karrot now lies in generating other work that will, in the meantime, both pay the bills and nurture its creative talent. I met with Karrot founder Chris White to hear about the unique way he's structured the business for both long-term and short-term viability.

Unlike many of its competitors, who start out with a single property, Karrot quickly developed a slate of ten character-led properties, each created by a different member of the team. "Where we can win is by encouraging each of our creative team to be a creative director and come up with a property," White says. "As stakeholders, they'll be the co-owner of that property forever and have a vested interest in making it work." White is betting that the multi-property approach will create better odds for commercial success than putting all the firm's energies behind a single idea.

Meanwhile, with the route to market from idea to screen notoriously slow and risky, the business needs to generate other revenues to fund the animation studio. Karrot was commissioned by Unique Television to create animation for the CBBC show "One Minute Wonders" and is also working on projects for commercial clients like Dell and Orange. While Karrot doesn't own the CBBC property, it won the company kudos in the marketplace and provided the financial kick-start the business needed. Along with gigs creating animation for smart phone apps and websites, this activity provides a training ground for young animators to cut their teeth while underwriting some of the studio overhead. Even with Karrot's low overheads, White explains that the cost to produce commercial work vary from £3,000 a minute to £10,000 a minute (that's about $4,500 to $14,500 per minute).

White has put the foundation stones in place for long-term earning potential across TV, publishing, toys and merchandise if Karrot's intellectual properties strike gold. His ambitions may seem grand, but White sees no reason why he shouldn't aim high. "We don't come from anywhere in the industry, we come from a blank sheet of paper, a desire to just do it," he says. "And if you don't come from anywhere, you can go anywhere."