Let the Royalties Ride

Tony Hawk is the most famous skateboarder in the world and the face of the Tony Hawk's Pro Skater video game franchise. He grew up in San Diego, joined Stacy Peralta's Bones Brigade as an amateur and was earning royalties at 16. He co-founded Birdhouse Skateboards in 1992 and landed the first 900 at the 1999 X Games. Today he runs Birdhouse, Hawk shoes and clothing, the production company 900 Films and a foundation that has helped fund close to 1,000 skateparks, and he has angel invested in Nest, Blue Bottle and DocuSign. These signals are from Tony Hawk's interview with Sam Parr and Shaan Puri on My First Million.

1. Betting on Royalties. Just before Tony Hawk's Pro Skater came out in 1999, early reviews were coming back at 9s and 10s, and Activision offered Hawk $500,000 to buy out his future royalties. The number sounded like "a half a gazillion dollars" to him. He had just bought a house with a mortgage he could finally afford and decent sponsorship income, so he chose to let it ride. When the 4th game came out, all 4 titles were in the top 10 in sales, and his Activision contact slid him a check for $4.5 million.
2. Final Approval. Hawk had done big brand campaigns that he felt portrayed skateboarding the way Madison Avenue imagined it. He decided that any future big deal would give him final approval over what went out, a daring demand for a skater at the time. Activision was the first contract with that clause. The company had dozens of employees and was newly controlled by Bobby Kotick, so it was willing to try anything and trusted him.
3. Rejected Pitches Plant Seeds. Around 1997 Hawk and a coder pitched a skateboarding game engine to Nintendo and several publishers, and nobody bought it. One executive asked why a skateboarding game would sell when skateboarding wasn't popular, and Hawk had no answer. The coder gave up but told him his name was now planted in the games world. About a year later Activision called saying it had heard he was working on a game.
4. Hardcore Users First. Hawk set out to make a game hardcore skaters would respect, with real skate spots, real pros and their music. During development he burned beta copies and modified friends' PlayStations so real skaters could give him honest feedback. When hardcore skaters started buying consoles just to play "the game," he knew it would work. Non-skaters loved it too, which Hawk hadn't expected.
5. Free Placement, Huge Payoff. Hawk's Birdhouse partner, Per Welinder, wanted Activision to pay to feature Birdhouse boards in the game. Hawk argued that Activision had no money to spare and that the exposure would be the best marketing Birdhouse could get. Sales went ballistic, and 1999 to 2005 was the brand's peak. Birdhouse had lost money for its first few years and only turned profitable around 1997 or 1998; decks still sell for about $60, the same price as 20 years ago.
6. Boom, Then Bust. The Back to the Future wave lifted skateboarding from about 1986 to 1990. Hawk's best year was in the hundreds of thousands, and he owned 2 houses and spent freely. In 1991 his income started halving month after month: his Airwalk deal dropped from $1,500 a month to $1,000, then $500, then $300 within a year. At 22 he was told he was too old for commercials, which ad agencies still treated as a kids' sport.
7. Learn Other Skills. Hawk never considered quitting skating, so he picked up other ways to earn money. A Hollywood shoot paid him $500 for 2 days plus $100 to build a launch ramp in his driveway, which he trucked to the set and then home again. He learned video editing and cut a commercial for NEC's TurboGrafx console at a tenth of what an agency would charge. He had a young child by then, which forced him to hustle.
8. Determination Over Talent. Hawk says he was "pretty bad" for his first couple of years and only cared about learning tricks. Stacy Peralta saw something in him beyond the small, inventive tricks: frustration and the tenacity to keep at it, even at the expense of his safety. The day after a big contest win, Hawk was back on the ramp trying something new. When he scouts young skaters who will make it, he looks for intensity on their faces, with no sign of joy.
9. Commit Past Consequence. Hawk had never landed a 900, even in practice, before the 1999 X Games. His last full attempt, in 1994, broke a rib, and he then had to pick up his son from preschool. In a 20-minute best-trick event he had already landed his varial 720, and the announcer, Dave Duncan, dared him to try the 900. By about the 6th attempt his speed and spin were consistent, so he committed, telling himself he would either make it or be carried out unconscious.
10. Giving You Can See. Hawk started his foundation with his brother and sister in 2002 to fund skateparks, which had been his refuge as a misfit kid in the early 1980s. Early grants of $5,000 to $10,000 mostly gave local projects an endorsement that pushed them through city approval. He wrote 10% to 20% of his endorsement deals into payments to the foundation. Skateparks give donors concrete proof of where the money went, which Hawk says makes them more engaged than donors to research.
11. Bet on People and Passion. Hawk's angel investments, including Nest, Blue Bottle (through Kevin Rose), Liquid Death and DocuSign, came through Silicon Valley friends. Restaurants have been his riskiest bets: he lost money on 2 Counter Burger locations in San Diego. What works, he says, is a business he cares about and can help with beyond money, or one run by a short list of people he trusts. When that group calls, he invests even in areas he knows nothing about.
12. Find Your Kickflip. After breaking his femur, Hawk went back to skating too soon, the bone shifted and he needed surgery to reset it 8 months later. When he finally landed a kickflip again it was ugly, scary and painful. His point is to reach that first sloppy version, because it opens up what comes next. Closing in on 58, he still tries new tricks and once had to squeeze a video shoot into a single hour of his calendar, which convinced him to protect his skating time.

Watch the full video at https://www.youtube.com/watch?v=bx-smH0QJqE.