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“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
Warren Buffett
A few months ago I wrote about luck versus hard work.
Your position can matter more than both.
In 1994 TLC released CrazySexyCool. It sold over 10 million copies.
T-Boz, Left Eye and Chilli sang the songs, starred in the videos and performed the album on tour.
Their manager, Pebbles, ran a company called Pebbitone. TLC signed their record deal with her company. Pebbitone held the contract with LaFace Records.
Since the cost of studios, videos and tours came out of TLC’s royalties first, little of the album money reached the three women.
TLC got about 20 cents for each album sold, split three ways. Out of an estimated $175 million in album sales, their share was about 1%. That’s roughly $1.75 million.
In July 1995 all three women filed for bankruptcy, with about $3.5 million in debt.
“We’re as broke as broke can be,” Chilli said the next year.
The three women behind an album that sold over 10 million copies ended up in debt.
Alexey Pajitnov built Tetris as a worker at the Soviet Academy of Sciences.
Because he was a state employee, the game belonged to the state.
A Soviet agency called Elorg licensed it to companies in the West. Nintendo bundled it with the Game Boy.
By 1992 Nintendo sold about 7.5 million copies in the United States alone.
Pajitnov earned nothing from those sales. The rights came back to him in the mid-1990s. Only then did he earn his first royalties, about 12 years after he built the game.
Dan Ackerman tells the story in his book The Tetris Effect.
Pajitnov did the work. Elorg collected the license fees.
Hard work from a weak position carries the most risk and keeps the least return.
♟️
How could you put yourself in a position to earn more?
