Tag: Work

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Wealth Work

Equity performance and inflation

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Right now there are over 10 million job openings in the United States. Meanwhile, 4.3 million Americans quit their jobs in August. It has been a long time since labor has had so much power.

Many of these job openings and quits are hitting small businesses especially hard. Competition for skilled, unskilled and semi-skilled labor is fierce.

When the quantity demanded is high but the quantity supplied is low, prices rises. And that’s what we’re seeing in the market. Small businesses are raising worker compensation to compete for labor.

Wage inflation is now the most commonly-reported type of inflation affecting US businesses, closely followed by higher raw materials and transportation costs.

If these inflationary trends persist, it is reasonable to expect interest rates to rise. The 10yr US Treasury bond yield has risen to 1.544%, and many expect the rise to continue.

The Fed continues to buy $120b of bonds each month, so there is quite a bit of runway before they must raise short term rates, but what would happen if they did? The following chart looks at equity market returns during previous tightening cycles. Although, this time could be different as inflation today has much different characteristics than during previous cycles.

What if someone invests today and the market subsequently crashes?

The following table looks at how someone would have performed if they invested right at the market peak before major market crashes. On a long-enough time horizon, the markets have historically been quite forgiving.

Categories
Life Work

Do you Live to Work?

Photo by Pixabay on Pexels.com

Are you really free? If you’re like most middle-aged people, you’re probably living a life to serve the system.

Everyone starts with 24 hours:

  • 8 hours for sleep
  • 1 hour for showering, breakfast, etc. in the morning
  • 1 hour commute
  • 8-9 hours at work
  • 1 hour commute
  • 1 hour meal prep, eating, cleaning
  • 1 hour of exercise
  • 1 hour kids homework

What does that leave you? 1-2 hours of ‘freedom’. Yeah, your best hours to invest in yourself can begin after you’ve fully drained all your mental and physical energy.

Do you have hopes and dreams? Save them for between the hours of 10:00pm and 11:00pm.

You’ll notice I’m leaving out laundry, groceries, repairing the back stairs, mowing the lawn, dry-cleaning, picking up pencil crayons for your kid’s art project, and so on. That’s where your weekends go. And if you’re like many people, those obligatory social gatherings – after work drinks, in-law’s birthday party – might as well be minor forms of work too.

The time each of us have to actually do what we want is minimal. If you’re like me, you have to find enjoyment in the daily chores.

The funny thing is, most jobs don’t require 8-9 hours. How much of your day is wasted? This has become especially apparent when we started working from home. This new setup is amazing! I can get my work and daily errands done much faster than before.

But the system doesn’t like it. The system wants us indebted with minimal free time. This keeps us dependent on our employers for money. Moreover, with little spare time we blindly purchase short-lived dopamine hits – retail therapy, objects of desire – benefiting our employers. The house always wins.

Yeah, that’s it…your pusher wants you to happily return every penny he provides you so you’re totally dependent. It keeps you coming back for more, despite hating every minute of it.

Ever have a boss suggest you buy a bigger house or upgrade to a new car? Perhaps after they just gave you a raise? They certainly don’t want you using that extra money to pay down your debts to achieve financial freedom. If they’re to shape your behaviour they need you financially subservient. Highly mortgaged people with families to care for make the best indentured servants employees.

God forbid you smoke a little ganga when not on the clock and your employer tests. That stuff stays in your system for a while – doesn’t matter how good you are at your job. Even your free time is co-opted by the system.

In the end, you’re just an anonymous cog in a machine. Those people at work that call each other family will fall off the face of the earth as soon as they retire/quit/fired/die. Although turnover is a pain in the ass, in the long run everyone is replaceable. We’re all just worker drones.

So don’t give your life to work. Because work will happily take it. Break free by striving to become debt free while owning income-producing assets. Only then can you live life on your terms.

Categories
Work

7 Workplace Trends According to Microsoft

Did you know:

  • 46% of the workforce planning to move because they can now work remotely.
  • Remote job postings on LinkedIn have increased over 5X since the pandemic.
  • Weekly meeting time has more than doubled for Teams users since February 2020.
  • There was a 40.6b increase in emails delivered in Feb. 2020 vs. Feb 2021.

According to research conducted by Microsoft, the year 2020 introduced dramatic workplace shifts that are here to stay.

I’ve provided the key excerpts below:

1. Flexible work is here to stay

Over the past year, no area has undergone more rapid transformation than the way we work. Employee expectations are changing, and we will need to define productivity much more broadly — inclusive of collaboration, learning, and wellbeing to drive career advancement for every worker, including frontline and knowledge workers, as well as for new graduates and those who are in the workforce today. All this needs to be done with flexibility in when, where, and how people work.

Satya Nadella, CEO at Microsoft

2. Leaders are out of touch with employees and need a wake-up call

“Many business leaders are faring better than their employees. Sixty-one percent of leaders say they are “thriving” right now — 23 percentage points higher than those without decision-making authority. They also report building stronger relationships with colleagues (+11 percentage points) and leadership (+19 percentage points), earning higher incomes (+17 percentage points), and taking all or more of their allotted vacation days (+12 percentage points).”

3. High productivity is masking an exhausted workforce

“Self-assessed productivity has remained the same or higher for many employees over the past year, but at a human cost. One in five global survey respondents say their employer doesn’t care about their work-life balance. Fifty-four percent feel overworked. Thirty-nine percent feel exhausted.”

4. Gen Z is at risk and will need to be re-energized

“Sixty percent of this generation — those between the ages of 18 and 25 — say they are merely surviving or flat-out struggling right now.”

5. Shrinking networks are endangering innovation

“…companies became more siloed than they were before the pandemic. And while interactions with our close networks are still more frequent than they were before the pandemic, the trend shows even these close team interactions have started to diminish over time.”

When you lose connections, you stop innovating. It’s harder for new ideas to get in and groupthink becomes a serious possibility.

Dr. Nancy Baym, Senior Principal Researcher at Microsoft

6. Authenticity will spur productivity and wellbeing

Before the pandemic, we encouraged people to ‘bring their whole self to work,’ but it was tough to truly empower them to do that. The shared vulnerability of this time has given us a huge opportunity to bring real authenticity to company culture and transform work for the better.

Jared Spataro, CVP at Microsoft 365

“Compared to one year ago, 39 percent of people say they’re more likely to be their full, authentic selves at work and 31 percent are less likely to feel embarrassed or ashamed when their home life shows up at work. And people who interacted with their coworkers more closely than before not only experienced stronger work relationships, but also reported higher productivity and better overall wellbeing.”

7. Talent is everywhere in a hybrid work world

This shift is likely to stick, and it’s good for democratizing access to opportunity. Companies in major cities can hire talent from underrepresented groups that may not have the means or desire to move to a big city. And in smaller cities, companies will now have access to talent that may have a different set of skills than they had before.

Karin Kimbrough, Chief Economist at LinkedIn

The Consequence: Employees are More Willing to Quit

Categories
Work

The 2 Articles Every Rising Executive Must Read

Many of today’s rising managers and executives come from a range of academic backgrounds, from anthropology to zoology. While this doesn’t diminish their intelligence or critical thinking skills, I have found that many middle managers lack some of the foundational learnings critical to a business education.

I still think that practical experience outweighs academic theory. However, many people growing their knowledge within a particular industry develop a closed, myopic view of their industries and business strategy.

For this reason, I believe it is important to familiarize (or re-familiarize, for those who once attended business school) oneself with core strategic training.

Below are two eminent articles by Peter Drucker and Michael Porter, which capture the essence of many business school lectures and books. Read and understand these two articles and you’ll quickly be speaking the language of MBA grads…without the ridiculous tuition.

What Makes an Effective Executive
by Peter F. Drucker

An effective executive does not need to be a leader in the sense that the term is now most commonly used. Harry Truman did not have one ounce of charisma, for example, yet he was among the most effective chief executives in U.S. history. Similarly, some of the best business and nonprofit CEOs I’ve worked with over a 65-year consulting career were not stereotypical leaders. They were all over the map in terms of their personalities, attitudes, values, strengths, and weaknesses. They ranged from extroverted to nearly reclusive, from easygoing to controlling, from generous to parsimonious.

What made them all effective is that they followed the same eight practices.

<Read more>

How Competitive Forces Shape Strategy
by Michael E. Porter

The essence of strategy formulation is coping with competition. Yet it is easy to view competition too narrowly and too pessimistically. While one sometimes hears executives complaining to the contrary, intense competition in an industry is neither coincidence nor bad luck.

Moreover, in the fight for market share, competition is not manifested only in the other players. Rather, competition in an industry is rooted in its underlying economics, and competitive forces exist that go well beyond the established combatants in a particular industry. Customers, suppliers, potential entrants, and substitute products are all competitors that may be more or less prominent or active depending on the industry.

The state of competition in an industry depends on five basic forces…

<Read more>

Categories
Work

Succeed by Slacking: How to Get Promoted

I didn’t receive much guidance growing up. I fumbled my way through school not really knowing where I was headed. The only career advice I received was “be a doctor or lawyer”. I became neither.

I didn’t know much. But I did *know* (or so I thought) that working hard would pay off.

I busted my tail through college and university, and later two masters degrees while working full time. School teaches you that hard work is the key to success. It’s a reward system that I became addicted to and could manipulate to my advantage. Work hard, study hard and get my dopamine fix through my good grades.

I was a great student!

In school I was consistently near the top of my class and I figured I was on the right path to success. Unfortunately, school doesn’t really prepare you for the corporate world.

In the corporate world, hard work will only take you so far. In fact, it can be counterproductive at times. It is in the first phase of your career that hard work matters the most.

During the early stages of your career, you need to learn a lot and prove yourself. Nobody knows you so you must deliver a lot to succeed. This means taking on and learning as much as humanly possible. It means working long days until what once took you 3 hours to complete eventually takes 30 minutes.

Junior employees are ditch-digging foot soldiers. The only thing that matters is how well you can take orders and use the tools provided. Call this Phase I of your career.

Once you become a master of your tools (physical or intellectual), you start to add value. You generate your own processes, interpret and analyze information and communicate recommendations to senior staff. This is the point of your career where those who create value can progress quickly, often by jumping from company to company.

Call this Phase II of your career.

So now you’re a middle-manager in some corporate behemoth. This is where many careers fizzle out. Why? Not because people can’t handle their new positions. No, it’s because they keep applying the same strategies as they did in Phase I and II of their careers.

It is in this third phase that the marginal benefits of hard work start to decline. Sure, a hard worker will be valuable to the team. You will get a decent paycheque and occasional recognition. But working super-hard during this third phase of your career could counterintuitively limit your upward mobility.

When you’re working hard, your time is gone. You’re busy managing multiple projects at the same time with little remining time to think. And by the time you have a moment you’re too drained to be productive.

Doing a lot is not the same as doing the things that matter.

Often, time to ruminate is needed to prioritize the work that has the biggest impact. Executing on 3 high impact projects very well will get you noticed far more than doing 15 low impact activities moderately well. People are remembered for their pinnacle work, not for all the shit they shoveled for the firm.

Another reason to work less hard as you rise in the ranks is so you always have spare capacity. When the big boss has an urgent request, the person with spare capacity can more easily and quickly jump into action and save the day. Meanwhile, people bogged down by meaningless tasks miss those opportunities to shine in front of senior executives.

Perhaps most importantly, unfortunately for the introverts out there (e.g. me), managers who aren’t glued to their desks make connections and get noticed. I’m talking about facetime. Networking. Schmoozing.

Of course, meeting people for lunch or coffee requires time. But networking is critical to career progression so you better make the time. Namely, you better reallocate time from completing meaningless tasks to making meaningful connections with people in your company and industry.

Won’t people think you’re slacking?

Nope. You have to be pretty blatant about it to get noticed. So much work within a corporation is qualitatively measured, it’s almost impossible to keep track of individual capacity. In a corporate environment, determining whether someone is operating at 70% or 100% capacity is an impossible task. Usually, it’s not worth the time and effort to figure out to any degree of certainty. Moreover, if business leaders care about results (as opposed to busyness) the person operating with spare capacity will actually appear like they’re working harder than the rest.

Once you’re in that middle management phase of your career, my suggestion is to set your own agenda as much as possible. Without disregarding your boss’s requests, this means setting time aside for business and career priorities.

If X, Y and Z are critical to your company’s success, don’t waste too much time on A, B and C. Many people mistake activity for productivity. This is why bureaucrats love meetings. Meetings feel productive even though they accomplish nothing.

Many middle managers work like crazy without reward. If you prove you’re an indispensable shit-shoveler that’s who you’ll remain.

Categories
Work

Goldman Sachs and The 100 Hour Work Week

NEWSFLASH: Working at Goldman Sachs is hard.

This is according to a recent survey of Goldman Sachs junior analysts. I won’t go through the entire survey, but the following slide basically sums up the findings. Junior analysts work about 100 hours a week and don’t sleep. As you can guess, these working conditions have had a big impact on their social lives, health and well-being.

Are you surprised? I’m not.

This is Goldman Sachs. The premiere shop in one of the toughest industries, investment banking. Despite grueling working conditions, the company has fresh grads clamoring to work there. A two-year analyst stint at Goldman can set up a 22 year old grad for life. It’s a stamp of approval and proof someone has the stamina and intellect to do anything. This is why Goldman Sachs has no shortage of eager applicants.

What do analysts at Goldman Sachs make?

Junior analysts are paid well. According to data from Wall Street Oasis, Goldman pays its first-year investment-banking analysts an average of $123,500 a year, including base salary and bonuses.

A 22 year old kid isn’t going to make that kind of money somewhere else.

Starting at $100k+, if one continues down the path they would easily net $500k annually within a few years.

All of this information is well documented.

If you join the army don’t be shocked when you’re asked to wear a uniform.

Any business student applying to the analyst program at Goldman Sachs (or any i-bank, for that matter) should know what they’re getting into. These aren’t drunks crimped at naval ports to become crewmen on ships. These Goldman analysts voluntarily chose to fill out an application form, interview and sign on the dotted line. They are also smart, connected and educated. They knew.

And guess what? If it sucks so badly, they can quit. This is a free society.

Despite the working conditions of every investment bank being common knowledge within b-school hallways, every once in a while the press gets ahold of news like this:

“XYZ investment bank analyst working 100hrs a week and doesn’t have time for a life.”

Shock-the-Monkey News Corp.

Well, this isn’t news. The world of investment banking (and many other professions) has always been extremely intense and demanding. 100 hour weeks are the norm – especially when you’re green.

I know I couldn’t handle it and would hate it. I don’t believe in sacrificing my life for money. I’d trade my time for passion, but producing the next corporate spin-off, while interesting, isn’t my idea of pleasure. I’d prefer to limit that kind of shit to 10 hours a day max. Others have a different life plan, and that’s OK.

That’s why I never worked in i-banking. It’s also why I never joined the navy.

Categories
Life Work

UBI: A Modern Day Utopia?

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Categories
Work

Work Emails During a Holiday?

I understand the lure. It’s the weekend or you’re on holiday and your work phone pings. Or perhaps you walk by it on a desk and get the urge to ‘catch up’.

We’ve all been classically conditioned to check our phones.

So you sneak away for 2 minutes to check in to see if there’s anything urgent. Next thing you know you’re elbows deep in work emails, you’re mind is in corporate mode and your stress levels are rising.

Today in Canada is ‘Family Day’. Presidents Day in the US. Yet, just 10 minutes ago I felt the pull to check my work phone.

I caved.

In a flash, I saw dozens of unread messages. Suddenly the final moments of my long weekend turned from relaxing until the sun rises to dreaded anticipation for the shit-storm about to hit in the morning. Nothing out of the ordinary. Just the ordinary, regular, daily shit-storm that we call work.

Repulsed at what I had just done, I quickly put the phone back down and walked back to my family and comfort of my living room. I’ll deal with it all tomorrow. Of course, I now must pay the price for my curiosity with a cortisol spike pushing through my bloodstream.

Who the fuck is sending me emails when they should be spending time with their families or on leisure pursuits?

I spent no more than 30 seconds looking at my phone, but it was enough to see I received a dozen emails over the past 3 days – Saturday, Sunday and a holiday Monday.

Who the fuck is sending me emails when they should be spending time with their families or on leisure pursuits? I understand the drive to get ahead, but if productivity is really the siren’s call then why not learn a skill or read a book? Why attempt to ruin your colleagues’ Sunday with the Monday-to-Friday chaos?

Are these people bored? Do they have no interests outside of work? Or are they trying to cultivate the 24/7 workaholic image, which is celebrated in North American culture?

Worse, do they feel pressured by their peers to check their emails? After all, there’s nothing worse than being 2 days behind on a crisis.

Regardless of the reason, it’s unhealthy.

We already devote 5 out of 7 days to work, and much of the remaining two days is spent preparing for Monday. There’s already no such thing as a work-life balance. We don’t need to make it worse by answering emails on a Sunday.

Categories
Work

MF Doom on Writers Block

RIP MF Doom. One of the greatest MC’s of all time. He was obscure, eccentric and relatively unknown to the masses. However, his lyricism had a giant influence on rappers of all sorts.

With the announcement of his recent death, I thought it timely to share an insight that could help anyone slogging through the creative process. This not only relates to writing lyrics. You might be writing copy for a brochure, developing a new product or planning the strategic direction for a business. Bottom line is this all requires some form of creativity that can get blocked.

Below I’ve provided a snipped from MF Doom. And below that, I’ve also shared a longer clip from Monty Python’s John Cleese on the creative process. Many companies, executives, artists and individuals struggle to be innovative and creative. It’s a discipline that needs to be tended to. If you want to be creative or innovative, it’s important to understand how it works.

Categories
Life Small Business Work

Should You Give Up On Your Dream Job?

I think many parents do their kids a disservice when they encourage them to ‘pursue their passions’ or that they ‘can be anything, if they put their mind to it’. For 99% of the world this is fairytale advice for a brutally pragmatic world.

Once kids leave the protection of home, they have the same relentlessly boring bills as the rest of us. The gas, electric, water and phone companies don’t put your bills on hold while you pursue your dream of becoming a creative director at an advertising agency or fiction writer.

The trouble is, many kids are encouraged to pursue their dreams and end up trapped. They get to a point where the have to decide whether or not to abandon something they’ve believed in for years.

Here’s the trouble with pursuing your dreams:

  1. Most people have the same dreams, so the competition is fierce. What happens when supply (in this case labour supply) is high? Prices (e.g. wages) fall. While a select few might make it, most do not. Although Johnny Depp might make millions per movie, the median hourly wage for actors in America is just $20.
  2. Even if wages are fair, if the supply of labour in a given field is high companies will work staff to death. Don’t like it? There are dozens of other wannabes waiting to take your place. Video game developers find themselves in this predicament all the time.

People decide to abandon their dream job either because it doesn’t pay the bills or because it sucks up their entire life. For most, neither is a great way to live.

If you’re going to survive in this world you must find a job that pays decently, provides a good work-life balance and doesn’t come with the constant threat of redundancy. These kinds of jobs are usually highly skilled, appear boring and don’t attract a ton of interest.

I’m not suggesting you trade an ‘interesting’ career for a ‘boring’ career. Quite the opposite. Careers that are sold as ‘interesting’ – like advertising – can actually be quite disappointing in reality. Every industry has mundane tasks and BS politics. When there is an endless supply of 20-something year olds willing to do anything to enter an industry who do you think will be doing those mundane tasks?

In contrast, when you’re the only actuary within a 5 mile radius, you can be more picky about what you work on.

I used to take a lot of pictures. People often commented that I should get into photography professionally, and for a while I entertained the idea. I found it enjoyable and was reasonably good at it. Before making any irrational decisions, I conducted more research and discovered two things: 1) The top photographers earning a living from their craft are true masters. While my friends enjoyed my work, I was still far from being the crème of the photographer crop. 2) I noticed many top photographers also write books, teach courses, etc. Nobody gets into photography to teach. This means they’re doing this to supplement their income. If the top photographers can’t make a living strictly taking pictures, what hope is there for me? 3) Most professional photographers warn hobbiests that the business of photography is 50% sales, 25% administration and 25% actual photography. So if you truly love taking pictures, the business of photography might be wholly unsatisfying. Discovering all this was deflating. I felt like I found something I loved and was good at. But I was also realistic. I have bills to pay, mouths to feed and didn’t want to destroy a fun hobby. So I didn’t quit my day job.

I hate to be a downer but most people eventually realize that their dreams won’t come true. There are tons of charlatans willing to sell you a dream, but if these people could truly make dreams come true they wouldn’t be selling shitty courses. Everyone arrives at a point where they realize they can’t do what they really wanted. And whether you’re mid-career or just starting out, it’s never too late to have a backup plan.

But don’t take my word for it.

Below is a surgical breakdown of what happens to almost all rock bands, originally written by Steve Albini, the manager for Nirvana and Pixies:

There’s this band. They’re pretty ordinary, but they’re also pretty good, so they’ve attracted some attention. They’re signed to a moderate-sized “independent” label owned by a distribution company, and they have another two albums owed to the label.

They’re a little ambitious. They’d like to get signed by a major label so they can have some security—you know, get some good equipment, tour in a proper tour bus—nothing fancy, just a little reward for all the hard work.

To that end, they got a manager. He knows some of the label guys, and he can shop their next project to all the right people. He takes his cut, sure, but it’s only 15%, and if he can get them signed then it’s money well spent. Anyway, it doesn’t cost them anything if it doesn’t work. 15% of nothing isn’t much!

One day an A&R scout calls them, says he’s “been following them for a while now,” and when their manager mentioned them to him, it just “clicked.” Would they like to meet with him about the possibility of working out a deal with his label? Wow. Big Break time.

They meet the guy, and y’know what—he’s not what they expected from a label guy. He’s young and dresses pretty much like the band does. He knows all their favorite bands. He’s like one of them. He tells them he wants to go to bat for them, to try to get them everything they want. He says anything is possible with the right attitude. They conclude the evening by taking home a copy of a deal memo they wrote out and signed on the spot.

The A&R guy was full of great ideas, even talked about using a name producer. Butch Vig is out of the question—he wants 100 g’s and three points, but they can get Don Fleming for $30,000 plus three points. Even that’s a little steep, so maybe they’ll go with that guy who used to be in David Letterman’s band. He only wants three points. Or they can have just anybody record it (like Warton Tiers, maybe—cost you 5 or 10 grand) and have Andy Wallace remix it for 4 grand a track plus 2 points. It was a lot to think about.

Well, they like this guy and they trust him. Besides, they already signed the deal memo. He must have been serious about wanting them to sign. They break the news to their current label, and the label manager says he wants them to succeed, so they have his blessing. He will need to be compensated, of course, for the remaining albums left on their contract, but he’ll work it out with the label himself. Sub Pop made millions from selling off Nirvana, and Twin Tone hasn’t done bad either: 50 grand for the Babes and 60 grand for the Poster Children—without having to sell a single additional record. It’ll be something modest. The new label doesn’t mind, so long as it’s recoupable out of royalties.

Well, they get the final contract, and it’s not quite what they expected. They figure it’s better to be safe than sorry and they turn it over to a lawyer—one who says he’s experienced in entertainment law—and he hammers out a few bugs. They’re still not sure about it, but the lawyer says he’s seen a lot of contracts, and theirs is pretty good. They’ll be getting a great royalty: 13% (less a 10% packaging deduction). Wasn’t it Buffalo Tom that were only getting 12% less 10? Whatever.

The old label only wants 50 grand, and no points. Hell, Sub Pop got 3 points when they let Nirvana go. They’re signed for four years, with options on each year, for a total of over a million dollars! That’s a lot of money in any man’s english. The first year’s advance alone is $250,000. Just think about it, a quarter-million, just for being in a rock band!

Their manager thinks it’s a great deal, especially the large advance. Besides, he knows a publishing company that will take the band on if they get signed, and even give them an advance of 20 grand, so they’ll be making that money too. The manager says publishing is pretty mysterious, and nobody really knows where all the money comes from, but the lawyer can look that contract over too. Hell, it’s free.

Their booking agent is excited about the band signing to a major. He says they can maybe average $1,000 or $2,000 a night from now on. That’s enough to justify a five week tour, and with tour support, they can use a proper crew, buy some good equipment and even get a tour bus! Buses are pretty expensive, but if you figure in the price of a hotel room for everybody in the band and crew, they’re actually about the same cost. Some bands (like Therapy? and Sloan and Stereolab) use buses on their tours even when they’re getting paid only a couple hundred bucks a night, and this tour should earn at least a grand or two every night. It’ll be worth it. The band will be more comfortable and will play better.

The agent says a band on a major label can get a merchandising company to pay them an advance on t-shirt sales! Ridiculous! There’s a gold mine here! The lawyer should look over the merchandising contract, just to be safe.

They decided to go with the producer who used to be in Letterman’s band. He had these technicians come in and tune the drums for them and tweak their amps and guitars. He had a guy bring in a slew of expensive old “vintage” microphones. Boy, were they “warm.” He even had a guy come in and check the phase of all the equipment in the control room! Boy, was he professional. He used a bunch of equipment on them and by the end of it, they all agreed that it sounded very “punchy,” yet “warm.”

All that hard work paid off. With the help of a video, the album went like hotcakes! They sold a quarter million copies!

Here is the math that will explain just how fucked they are:

These figures are representative of amounts that appear in record contracts daily. There’s no need to skew the figures to make the scenario look bad, since real-life examples more than abound. Income is underlined, expenses are not.

Advance: $250,000

Manager’s cut: $37,500

Legal fees: $10,000

Recording Budget: $150,000 Producer’s advance: $50,000 Studio fee: $52,500 Drum, Amp, Mic and Phase “Doctors”: $3,000 Recording tape: $8,000 Equipment rental: $5,000 Cartage and Transportation: $5,000 Lodgings while in studio: $10,000 Catering: $3,000 Mastering: $10,000 Tape copies, reference CD’s, shipping tapes, misc expenses: $2,000

Video budget: $30,000 Cameras: $8,000 Crew: $5,000 Processing and transfers: $3,000 Offline: $2,000 Online editing: $3,000 Catering: $1,000 Stage and construction: $3,000 Copies, couriers, transportation: $2,000 Director’s fee: $3,000

Album Artwork: $5,000 Promotional photo shoot and duplication: $2,000

Band fund: $15,000 New fancy professional drum kit: $5,000 New fancy professional guitars (2): $3,000 New fancy professional guitar amp rigs (2): $4,000 New fancy potato-shaped bass guitar: $1,000 New fancy rack of lights bass amp: $1,000 Rehearsal space rental: $500 Big blowout party for their friends: $500

Tour expense (5 weeks): $50,875 Bus: $25,000 Crew (3): $7,500 Food and per diems: $7,875 Fuel: $3,000 Consumable supplies: $3,500 Wardrobe: $1,000 Promotion: $3,000

Tour gross income: $50,000 Agent’s cut: $7,500 Manager’s cut: $7,500

Merchandising advance: $20,000 Manager’s cut: $3,000 Lawyer’s fee: $1,000 Publishing advance: $20,000 Manager’s cut: $3,000 Lawyer’s fee: $1,000

Record sales: 250,000 @ $12 = $3,000,000 gross retail revenue Royalty (13% of 90% of retail): $351,000 less advance: $250,000 Producer’s points: (3% less $50,000 advance) $40,000 Promotional budget: $25,000 Recoupable buyout from previous label: $50,000 Net royalty: (-$14,000)

Record company income: Record wholesale price $6,50 x 250,000 = $1,625,000 gross income Artist Royalties: $351,000 Deficit from royalties: $14,000 Manufacturing, packaging and distribution @ $2.20 per record: $550,000 Gross profit: $710,000

THE BALANCE SHEET This is how much each player got paid at the end of the game. Record company: $710,000 Producer: $90,000 Manager: $51,000 Studio: $52,500 Previous label: $50,000 Agent: $7,500 Lawyer: $12,000

Band member net income each: $4,031.25

The band is now 1/4 of the way through its contract, has made the music industry more than 3 million dollars richer, but is in the hole $14,000 on royalties. The band members have each earned about 1/3 as much as they would working at a 7-11, but they got to ride in a tour bus for a month.

The next album will be about the same, except that the record company will insist they spend more time and money on it. Since the previous one never “recouped,” the band will have no leverage, and will oblige.

The next tour will be about the same, except the merchandising advance will have already been paid, and the band, strangely enough, won’t have earned any royalties from their t-shirts yet. Maybe the t-shirt guys have figured out how to count money like record company guys.

Some of your friends are probably already this fucked.

-Steve Albini