Laika ramps up Oregon animation industry


Phil Knight’s $100 million investment will change our creative landscape.


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s_Cover06July The wonderland of Laika

By Christina Williams

Artsy jobs, beaucoup bucks and an ambitious vision. Phil Knight’s animation operation is one cool boost to Oregon’s fledgling movie industry.

When Phil Knight announced last year that he was rechristening his animation studio with the name Laika and trotted out plans for two feature-length movies, it was easy to dismiss the far-off distribution dates as pie in the sky.

But word this summer that Knight will pump millions of dollars into a state-of-the-art movie-making campus south of Portland makes it crystal clear that the man who took Nike from waffle irons to $21 billion isn’t merely dabbling in movie making. He’s playing to win.

Knight, Nike’s notoriously shy chairman, plays down the sizable investment the campus will require him to make even before the studio’s first movies hit the box office. “The property bought to be Laika’s headquarters will, I am confident, increase in value over the years,” says Knight, in an e-mail response to questions. The campus is essential to Laika’s strategy of becoming a major force in the global animation industry.

Before ground is even broken early next year at the 30-acre campus site in Tualatin, the two movies in production at Laika will move parts of the company into temporary digs in the Portland area and the company will go on a hiring tear, bringing on several hundred creative workers who will shoulder the burden of getting Laika’s first films from the drawing board to the silver screen.

What started as juicy ego-clash story about Knight’s battle with the animation studio’s founder, Will Vinton, has evolved into one of the sexier business development opportunities to come Oregon’s way in some time. Between the big-name talent already imported to Portland and a financial backer with deep pockets and a strong commitment, Laika is positioned to make a name for itself, and its home state, in the world of animated movies.

MANY STILL LINK LAIKA, named for the 1950s-era Russian space dog, to its past as Will Vinton Studios and a troop of Marvin Gaye-singing, high-stepping raisins with attitude (see timeline, p.30). The studio has been in the headlines in recent years but mostly because of the power struggle between Knight, who became the largest shareholder of the near-bankrupt company in 2002, and founder Vinton, who was ousted in 2003.

But members of the new Laika regime don’t give much thought to the studio’s past.

“I think of this as a new company,” says Jorgen Klubien, his chin jutting when someone evokes the Vinton name. “It’s always exciting to work for a new place. There’s a willingness to do something different.”

Klubien, whose work appeared in Monsters Inc., Toy Story 2, A Bug’s Life and this summer’s Pixar film Cars, is bustling around a third-floor studio in Laika’s low-profile headquarters on Portland’s Northwest 22nd Avenue in jeans and a pullover, talking about his latest project: Jack and Ben’s Animated Adventure. He’s been working on it for more than a year already, which is no time at all in the animation world, and the plot is still being tinkered with. It’s there on the wall where it can be physically rearranged: cards with spare sentences, colorful sketches. Around the corner, artists are rendering and re-rendering the characters, trying to hit the right level of what Klubien calls “cartooniness.” Every detail is drawn on paper and the two-dimensional sketches pave the way for the three-dimensional computer-generated effects that will make up the final product.

A few blocks away, Henry Selick’s walls are plastered with similar work, but — without revealing the creative details that visitors are required to keep under wraps — very different characters. There are notes about costumes, fabric samples and on a table, eggshell-hued models of three-dimensional characters with bulging eyes stand waiting for life. Selick made a name for himself directing The Nightmare Before Christmas and James and the Giant Peach. He’s now hard at work on Coraline, a film based on the children’s book by Neil Gaiman, a project Selick brought with him to Portland. In May, Laika landed a domestic and international distribution deal for Coraline with Focus Features, the studio behind Brokeback Mountain.

Selick enthuses about the characters and the casting. Dakota Fanning has been locked as the lead since October as the voice of Coraline. The comedy duo Dawn French and Jennifer Saunders, the women behind the BBC hit Absolutely Fabulous, were signed in June to voice Coraline’s eccentric downstairs neighbors. Teri Hatcher will be the voice of Coraline’s mother and the Other Mother.

The movie will be a stop-motion animation film, in the style of the recent Wallace & Gromit Curse of the Were-Rabbit and Tim Burton’s Corpse Bride, on which Laika shares production credit. But Selick talks up the ways his team will use computer-generated imagery (CGI) animation in combination with stop-motion to better animate the characters’ facial expressions and to add special effects to the film. When the film goes into full production sometime later this year, there will be as many as 18 stages with puppet characters laboriously acting out each scene. Selick will use a new 3-D filming technique, a first, he says, for stop-motion animated film.

For Selick, the biggest creative name to grace the company roster, animation isn’t a movie genre, it’s a tool for storytelling. He wants to make animated movies that cover new ground, and in his mind Laika is a place where being creatively bold will pay off  — both in the race for box-office cash and in the competition for top talent in the animation world.

RUNNING THE SHOW AT LAIKA is Dale Wahl, a former Nike executive who was named CEO by Knight last fall. His language is peppered with references to the fine line Laika aims to walk between economic feasibility and a quality movie-making operation.

Wahl, who looks the part of a Nike alum with close-cropped gray hair, a golf vest and a yellow Live Strong bracelet, was called out of semi-retirement to lead Laika after serving as a consultant to Portland-based Oh! Shoes and CFO to Metro One Communications. He left Nike in 1998. “It’s been a vertical learning curve situation,” Wahl says of his tenure at Laika. “I haven’t spent much time worrying. It’s too early for much to go wrong.”

Wahl’s Laika has two distinct divisions. Laika/house, which has about 100 employees (including administrative positions that serve both divisions), focuses on making television commercials that feature both stop-motion and CGI animation such as the cheeky animated M&M candies, a blue mouse for British car insurer Esure and an award-winning spot done last year for ESPN about fan loyalty.

House is led by division president Lourrie Hammack, a six-year veteran of the company. While the commercial division has the closest ties to the company’s past as Will Vinton Studios, Hammack says being reborn as Laika has had a rejuvenating effect on the business. “We’re the busiest we’ve been in years,” Hammack says.

The new division is Laika Entertainment, the movie-making arm of the business, which started the summer with about 85 employees but is expected to swell to between 400 and 500 in the next year or two as movie production ramps up. Unlike Laika/house, which brings in money, Entertainment is a veritable sinkhole for cash as each movie costs between $50 million and $70 million up front with any return several years out (the target release date for Coraline is sometime in 2008, while Jack and Ben is aiming at 2009).

Right now, the entertainment division leans heavily on Laika/house for talent, but Wahl expects that to seesaw over time as artists are freed up between movies to help on commercials.

Dan Philips, VP and head of production, started with the company in January. An industry pro whose career includes stints at DreamWorks and Disney along with DKP Studios and the Big Idea Company, he’s one of a team of executives being gradually installed around Wahl, who readily admits neophyte status in the movie business.

Philips is in charge of making sure the producers and directors have what they need to make their movies: time, people and money. Long charts on his wall track the positions Laika will fill, with short yellow lines representing the time it will take to recruit and longer blue lines the length of time they’ll be needed on the project. To be successful for the long haul, Laika will need a pipeline of projects to keep employees busy.

“We’re going to hire everyone we can from this area who has some level of experience,” Philips says. “It’s not worth recruiting mid-level people from far away.”

And when it comes to enticing top-tier talent to come to Portland, Laika hasn’t had much trouble so far. Selick, who has a theory he does better work the farther away from Hollywood he is, points out that long, rainy winters are conducive to the time requirements of animation. And Klubien says Oregon’s weather reminds him of his home in Denmark.

Steve Oster, executive director for the Oregon Film & Video Office, says Laika will take advantage of state tax incentives designed to lure movie production operations to come to the state, including the Oregon Production Investment Fund, which offers a 10% rebate on production costs of $1 million or more up to $250,000, and a 6.2% rebate on payroll withholding taxes.

“We’re always interested in working with local employers,” Oster says. “Having them in town keeps our workforce here employed.”

And for Portland, where talk of its creative class has almost become cliché in repetition, 400 to 500 new, actual creative jobs would be a welcome addition to the employment base.

“I would see them becoming a major player,” says Anne Mangan, who oversees the Portland Development Commission’s relationship with creative services cluster companies.

Mangan met with representatives from Laika several times over the course of the year and worked to find the kind of land it needed for its campus in the central city area, but to no avail. The property in town all needed to have buildings taken down before new ones could be built. “They seem to be on kind of a fast track,” Mangan says.

Plans for the campus, announced in May, call for a three-building, phase-one build-out to begin later this year and open some time in 2009. Descriptions of the scheme echo that of Nike’s corporate campus in Beaverton — a fitness center is on the drawing board as part of Laika’s main administrative building. 

The campus will house cutting-edge technology and the infrastructure to support it. The computers needed to render animation have become bigger and more powerful over time so the tricky part becomes managing their electricity consumption and keeping them cool enough to get the maximum performance from each machine.

For Laika employees, a young, casual bunch that favors perks such as dogs in the office and being able to bike to work, the commute to Tualatin will be a change of pace to say the least. But developing a 30-acre campus with state-of-the-art facilities is integral to Knight’s plan for Laika.

WITH OR WITHOUT A GLITZY CAMPUS, it’s Laika’s movies that will have to stand out.

Pixar’s merger with Disney, a $7.4 billion stock deal announced in January, has changed the market somewhat, but the union of two giants hasn’t diminished the crowd of animators hawking their wares at the box office.

At least a dozen CGI films are due out this year, more than twice as many as last year. And as technology costs come down for the sophisticated computers needed to create CGI animation, that number could continue to climb.

“You have to develop stories, compelling stories,” says Steve Lidberg, research analyst at Pacific Crest Securities in Portland who follows the animated movie-making business. “That becomes increasingly important as the number of people targeting CGI grows.”

That message has come in loud and clear at Laika, where even investor Phil Knight thinks enough about story that he attended Robert McKee’s Story Seminar, a seminal course for screenwriters that was featured in the 2002 movie Adaptation.

“What Phil really values is a good story,” says Fiona Kenshole, the excitable Brit who Knight hired as director of worldwide scouting operations for Laika. Kenshole, a former children’s literature editor and publisher, is in charge of finding the best stories for future Laika movies. She scored a coup this spring by beating out DreamWorks for rights to the book Here Be Monsters. She finagled the deal by promising the author, Alan Snow, that Laika directors would stay true to his vision and that she’d throw in a pair of Nikes for his son.

Here Be Monsters is now in development along with two other titles Kenshole brought in, one by an Oregon author about the origins of Halloween and another, a book called The Wool and the Wing, that takes place in a version of Manhattan where everyone can fly and features what Selick calls “the funniest villains I’ve ever read.”

The ideal situation is to have four movies in various stages of production at any one time. Building up the development department — where a number of stories will be in the works until they rise to the level of being green-lighted by management — will be a key to that strategy.

While Knight has had a say in what projects are pursued by Laika to date, he says he’s not interested in being a day-to-day guy in the business. “It is a very creative company rescued from insolvency,” Knight writes in an e-mail. “I did the rescuing, but its success, while important and possible, will be the legacy of the people who work there full time.”

Knight first became involved with the company when his son, Travis, got a job as an animator at Will Vinton Studios. The younger Knight, who by all accounts is a strong artist, is transitioning into more of a management role and holds a seat on the studios’ board of directors. “One of the side benefits of the Laika involvement is that it has allowed me and Travis to be together more,” says Knight.

Ultimately, between the stiff competition, the novice investor, the inexperienced CEO and an inherently risky business, Laika will have anything but an easy ride to success, but nobody involved seems very worried. 

“We’re not trying to play catch-up,” Henry Selick says. “Nobody can, for any amount of money, be the next Pixar. It’s a ghost of the past.”

“I like to do things that are hard to impossible,” says Philips, the industry gray hair. “All these companies are risky. I’ve worked for two companies that have gone bankrupt in the last decade and a half.”

And in a world where CGI studios are sprouting like weeds, Laika plans to make a competitive advantage out of its ability to do both stop-motion and CGI, combining the two where it makes sense. Stop-motion animation is experiencing a resurgence of sorts and Laika’s Vinton past strengthens its stature in that arena.

In a decade, Wahl expects Laika to be building out its campus and nurturing a flow of movies. “We’ll have the reputation of  ‘Who knows what they’re going to do next,’” Wahl says.

However Laika’s reputation shakes out on the national scene, Oregon will be keeping a close eye on its own opportunity to add a movie-making success story to its business repertoire.

A brief history

1974 Will Vinton wins first Academy Award for a short film, Closed Mondays, putting his studio on the map.
1980s Vinton becomes synonymous with “claymation,” the term he coined, and the California Raisins, which his studio creates for the California Raisin Board.
1998 Phil Knight makes his initial investment in Will Vinton Studios and his son, Travis, starts work there as an animator.
1999 Vinton Studios staffs up to 400 employees for work on the animated television series The PJs.
2002 Phil Knight becomes the majority shareholder of Vinton as the studio teeters on the brink of bankruptcy.
2003 Vinton is laid off and a legal battle for the company ensues with Knight coming out on top.
2004 Knight hires Henry Selick, director of Tim Burton’s Nightmare Before Christmas, as supervising director with the intention of building up the studio’s movie-making ability.
July 2005 Knight renames the studio Laika, with two divisions. Laika/house makes commercials, such as the award-winning spot for ESPN made in partnership with Wieden+Kennedy about sports fan devotion. Laika Entertainment makes movies, with two projects announced including Coraline, based on the Neil Gaiman children’s book, and Jack and  Ben’s Animated Adventure.
October 2005 Laika announces Dakota Fanning will be the voice of Coraline.
Summer 2006 Laika announces the purchase of land  in Tualatin, where it will  construct a state-of-the-art campus that will include a building devoted to computer-generated graphics and another to stop-motion animation. In the meantime, Laika will lease office space in Portland to house its production team.

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