The Power Law is incredible and it’s relevant across Venture Capital, Sports, Movies, Books, etc. You need to understand this, so let me to break it down.
TOPICS 1. What is the Power Law? 2. How it applies to Sports/Entertainment 3. Proving My Point 4. What If You’re Not a Blockbuster?
POWER LAW EXPLAINED 1-2 INVESTMENTS DRIVE ENTIRE RETURNS
Sebastian Mallaby wrote a book on Venture Capital and how it is a game of bets. In many cases, only 1-2 investments driving returns for the entire portfolio.
The majority of startup investments go to 0, so it’s argued that the ones that are the most promising should receive an overwhelming amount of resources and attention compared to the rest of the portfolio.
In Sports, We Call This A Blockbuster...
Funny enough, years before The Power Law was written, Harvard Business School Professor Anita Elberse wrote about the Blockbuster effect.
Anita argues that building a business around blockbuster products such as the movies, television, shows, songs, athletes that are hugely expensive to produce and market is the surest path to long term success.
In other words:
Sports Teams, Movie Production Companies, Podcast Production Companies, Record Label Companies, etc. should allocate most of their resources to the TOP 1-2 dawgs….
The top athletes/entertainers/companies receive the overwhelming majority of money, investment, listeners, deal flow, subscribers… We’re talking in some cases the top 2 per category.
SO WHAT IF I’M NOT A BLOCKBUSTER?
I am talking to you since you’re probably not Lebron, Ronaldo, or Curry.
You’ve had a great career, but we live in a hyper competitive world where you need to stay creative on ways to generate income, subscribers, followers, downloads, and/or purchases.
If you’re an athlete, this means providing insights on the industry you’re working on outside your sport to set up a differentiated wedge into making money after your career.
If you’re a fund manager, this could mean partnering with like-minded athletes to differentiate yourself in the market.
Since both of guys are reading this, help us help you bridge the gap
