August, 2011

Investing in Superstars, part 4

[NOTE: I updated this post with more detailed examples]

Background: part 3part 2 and part 1.

In the interview with Jon Gunn in Part 3, I mention that I’ve been thinking of what “version 2” of the Personal Investment Contract might look like.  Here’s the model:

  1. Investment Amount – Same as before, intended to give the individual some time to pursue their passion (or figure out what that is) without having to worry about how to support themselves.
  2. Maximum Return – The cumulative total amount that the investor can receive as return on their investment.  If and when this amount is reached, the contract is over.
  3. Annual Exclusion – The amount of annual income the entrepreneur can make without having to share any of it with the investor.
  4. Minimum Revenue Share – The minimum percentage of gross income the entrepreneur returns to the investor after deducting the Annual Exclusion.

Following are some examples of various different career paths and uses for a …

Investing in Superstars, part 3

For the background to this post, start with part 2 and part 1.  The follow up is part 4.

I get a lot of questions from folks who are interested in learning more about Personal Investment Contracts and so I felt it was time to synthesize some of the most common ones and give you some answers.

Who is the first person you invested in?

A film maker named Jon Gunn.

What is your relationship with Jon outside of this investment?

He is my brother-in-law, and a former business partner of mine in an instructional DVD company we co-founded with Phil Gordon.  I’ve also invested in a couple of his independent films.

Why did you invest in Jon directly?

I have been a big believer in his talent for a long time.  None of the ventures I just mentioned though have made me any return on my investment.  Phil had been suggesting for a while that if we simply invested directly in …