Bing Crosby: Entertainer & Successful Investor

To most people today the name “Bing Crosby” means “White Christmas”, the song that has been synonymous with the holiday season for over 75 years (even in the middle of a very non-white Australian summer!) However, Harry Lillis Crosby was much more than one of the first cross-media superstars. Crosby was also an astute investor, both inside and outside the entertainment industry.

Inside show business, Crosby came across an advanced German magnetic tape recording system shortly after the war. He immediately saw a personal and commercial opportunity. Bing Crosby was an avid golfer and resented the fact that he had to perform his syndicated radio shows – live – at least twice, on any given day, to accommodate America’s various time zones. The networks did not believe that the then prevailing electrical transcription technology could provide adequate quality for the radio retransmission of a pre-recorded program. The quality may have been considered fine for use by US troops in battlefield conditions but the fact was that the system, using 16” phonographic discs, had been developed 25-years earlier and was simply not up to the job.

Crosby learned of the AEG Magnetophone K-4 from an engineer who had brought one back from Europe at the end of the war. This German technology used magnetic tape. While members of US Institute of Radio Engineers were impressed with the quality produced by its recordings, none were brave enough to embrace the system. Definitely NOT Early Adopters! But that was not the case with Bing Crosby. He immediately saw its potential; with two provisos: Would he be able to acquire sufficient numbers of the machines to produce and edit his show? And would be able to access a reliable supply of the magnetic tape required to run the system?

The engineer who had brought the AEG unit back from Europe had made several improvements to the unit and reconfigured it to use standard US electrical components thereby simplifying manufacturing and reducing cost. However, Ampex, his business, was unable to raise the US$50,000 (about US$538,000 today) needed to go into production. Crosby wrote him out the cheque. But he didn’t stop there: Crosby then invested in a company called Minnesota Mining & Manufacturing that had developed a new magnetic tape suitable for use with the AEG/Ampex machine. This tape became the global recording industry’s standard for audio recording – at least until the advent of digital technology in the late 1970s. Today we know that company as “3M” and the tape as “Scotch”.

Bing Crosby then invested in the development of a derivative video recording process, while also putting money into another system being created by Ampex. In the end the Ampex system proved superior. Crosby simply closed his company’s video recording R&D program and pre-purchased the first Ampex machine. The Crosby technology later proved ideal for use in certain military applications. Sticking to the market that he knew, Crosby sold that part of his organisation to 3M who subsequently won a contract to supply the US Air Force.

Bing Crosby’s legendary partnership with comedian Bob Hope extended beyond the film set. The pair made several lucrative investments together including one in a Texas oil well that made them both US$3.5 million in 1949 alone (worth over US$37,500,000 today!). At this point, all they knew about oil was where the petrol went in their limousines. They went into partnership with a couple of experienced oil men who understood the business. The Bing Crosby-Bob Hope oil partnership hit pay-dirt in Texas again five years later, so when oil was later found on Crosby’s Nevada property, fellow entertainer Dean Martin wryly observed, “I’ll bet even Crosby’s cattle have oil.”

Both Bing Crosby and Bob Hope also made fortunes from investing in real estate, particularly properties on and beyond the boundary of built-up areas. One site was run as an elite trailer-park just outside of Palm Springs. “Blue Skies” was marketed as a place suitable for what we would call “glamping” today. Bing Crosby held the property for a decade before selling up. Crosby didn’t buy at city prices, but he sold at city prices! By holding and waiting for the city to grow to where his land was located, he and his partners enjoyed substantial capital gains.

Bing Crosby was both a pioneering entertainer and a shrewd stakeholder. The principles that he applied to his investments are the same that we use to evaluate our projects.

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