1997 was one of the most pivotal years in nerd history.

That spring, Wizards of the Coast (makers of Magic: The Gathering) was deep in negotiations to acquire TSR, who made Dungeons & Dragons.

Lorraine Williams, CEO of TSR, had done an admirable (and controversial) job stewarding the struggling D&D manufacturer through a turbulent decade, but her company was going bankrupt fast and in need of a buyer.

Peter Adkison, CEO of Wizards of the Coast had done his due diligence and was interested in making an offer to acquire TSR, which would include D&D and its other IP.

And then something funny happened.

As laid out in Ben Riggs's Slaying the Dragon: A Secret History of Dungeons & Dragons, Williams made a final stand:

You see, Willams and her family owned the IP of Buck Rogers, a sci-fi phenomenon from the 1920s about a man sent 500 years into the future. It featured ray guns, monsters, daring adventures, the whole deal.

(Buck Rogers inspired young George Lucas as he developed his space adventure screenplay about lightsabers and The Force.)

There was just one slight issue: Buck Rogers hadn't been relevant in decades.

Adkison's response to could be taught at Harvard Business School:

This is one of the best examples I've ever seen of a very specific cognitive bias: Richard Thaler's "endowment effect:"

When we own something, we tend to overvalue its significance.

Here we have a company, TSR, tens of million dollars in debt. They were hemorrhaging money after years of poor forecasting, mismanagement, and failing to adapt to a changing tabletop landscape.

They were sinking faster than Wile E. Coyote using an anvil as a parachute.

And yet, Williams valued Buck Rogers so highly that she was willing to torpedo any deal if its IP needed to be included.

Fortunately for nerds everywhere, Adkison couldn't have cared less about Buck; he even used this information to his advantage and knocked a decent chunk off the final purchase price of D&D!

Once we learn about the endowment effect, we see it everywhere:

• People want to sell their house for far more than somebody is willing to pay for it...including themselves if they were the one buying it!
• People will price things an absurd valuation, and would rather NOT sell it - even when they need the money - instead of admitting it's only worth what the market is willing to pay for it.
• Watch any episode of Hoarders! People with households of literal junk that are shocked when their "valuable" collections aren't worth any money at all. Those poor collectors of empty cat food cans.

Things are worth what people are willing to pay for them, not what we think they're worth.

The person who cares less usually ends up with the upper hand in any negotiation.

And nobody cares about Buck Rogers.*

-Steve

*My sincere apologies to George Lucas and the five other hardcore Buck Rogers fans.

###

1831 12th Ave S #271, Nashville, TN 37204
​Unsubscribe · Preferences​