Hi {{first_name}},

One week ago, IO Interactive launched First Light, a brand-new James Bond game that has already broken records, hitting an 88 on Metacritic, the site that gamers and media alike trust. 

That’s the highest-rated Bond gaming title since GoldenEye in 1997. Tied for third-best game of 2026 so far.

One early reviewer called it a ‘sure-fire Game of the Year contender.’

I co-hosted the launch party with Delphi Interactive at their headquarters in California. Delphi is the publisher that secured the coveted Bond license, working through MGM and the Broccoli family, who held creative control of 007 at the time. They brought IO in as the studio and designed the deal that made all of it possible.

Everyone at the party really wanted to talk about that 88. That number feels like the story. Illustrating the work and the diligence that went behind the deal that brought this game to the masses.

Although that isn't the number that determines who gets wealthy from the success of the game. That would have been set in motion years ago, before a single design or line of code was written. It lived in the deal’s waterfall.

The waterfall is the clause-by-clause architecture that decides, in advance, how value flows back to each party when a deal performs. Get the waterfall right and a great outcome becomes a great return. Get it wrong and you could back a winning deal and still lose in the end.

There’s a talent to reading it. You look at the asset, the operator, the market. Underwriting the upside and signing onto something someone else designed.

I’ve orchestrated enough deals in my time to develop a sense for what I’m looking for. And I’ve seen what happens when the waterfall is taken for granted. You need to know where the water comes from and where it pools before it reaches the river below.

This week I’m covering what accredited investors need to read before the excitement hits.

— Walker Deibel
WSJ & USA Today Bestselling Author of Buy Then Build
Founder, Build Wealth

The same deal can hand one party a generational return and another a paycheck. The variable that decides who receives what is set before the deal even starts to perform, ideally written into the documents on day one.

The paperwork fixes the order of payment, and that order can tell you almost everything about the health of a new deal.

Two investors put money into the same private deal. It performs exactly as promised. One earns 9%. The other earns about 2x of that. Nothing about the assets explains the gap.

Here's the order:

Put real numbers on it. You and other investors put in $50M, the deal exits five years later for $100M, and the cash falls through the tiers in order.

That sequence is the waterfall. Where you sit in it tells you what you'll eventually capture.

Three of the four positions lives inside the flow. The laborer is paid for time: wages, billing, fee-for-service, sized to rate. The operator is paid on performance: salary plus carry or equity that scales with the business. The capital is paid for risk: debt, preferred, or common, each with its own place in line. All three negotiate hard for their terms. None of them sets the sequence they're negotiating inside.

The fourth position is the architect. This is the person or entity that decides who holds the IP, who holds operating control, who carries the financing risk, and how the waterfall moves value back over time. All of it settled before the other positions could start, before the capital wires a single dollar. The architect holds the most leverage in the deal, which is exactly why you want to know who it is before you sign.

The Architect Designs It All

Every party has a different exit horizon and a different definition of a good outcome. The architect aligns those incentives, shaping the threshold curve so the operator's interest points the same way as the LP's for the full life of the deal.

They decide where value compounds. Operating value compounds at the operating entity. Strategic value compounds somewhere else, usually a holding company that owns the IP, the brand, the distribution rights, the rollup optionality. Delphi, mentioned earlier in the newsletter, is the example. The development work and the per-title economics settle at the operating layer, while the platform position, the cross-title economics, and the franchise-pipeline optionality compound a layer up, where Delphi sits. The same operating result lands as a different amount of value depending on where the architect lets it settle.

They also hold the deal together across cycles. Markets move, operators tire, capital partners exit. The consent thresholds, conversion mechanics, drag and tag rights, and buyout options are what keep the design intact when the people inside of it change. It's what keeps a deal compounding in year seven, after the original team has rotated out and the capital is running on new timelines.

The architect sits at the top of the waterfall, designing the system so every other position can be paid in turn.

Image: Casper Daugaard and Walker Deibel at the new 007 First Light launch party.

Last week 007 First Light sold 1.5 million copies in its first 24 hours, the fastest launch in IO Interactive's history. The best-reviewed Bond since GoldenEye. At roughly $70 a copy, day one alone moved an estimated $105 million.

That's the big exciting takeaway that we talk about over drinks. The waterfall underneath is another story.

IO Interactive carries the development and co-publishing credit on the 007 game. Casper Daugaard built Delphi Interactive, the publisher, and soon sought out a developer. He identified IO Interactive as the right operating team before he even had a rights conversation to tap into the franchise. 

That verbal commitment from IO was the main asset he brought to the meeting with MGM, and through MGM to the Broccoli family, which at the time held creative control of the James Bond franchise. IO's transparency and commitment to the franchise’s integrity was what made it possible for the Broccoli family to come to the table and feel confident in the whole conversation. 

The Sequencing Wasn’t Incidental.

It was the team's first architectural move. To design the terms and conditions under which IP holders would be prepared to say yes before ever asking them the question.

The developer fit was specific. Bond is a legendary and beloved character that punishes careless stewardship. IO Interactive had spent two decades building the most critically respected stealth-action mechanics in the industry. They had also bought themselves out of Square Enix, a holding company and game publisher, in 2017 specifically to retain creative independence. This provided the opportunity to arrive at the table already operating as equity participants rather than work-for-hire labor. A smaller focused studio would have more skin tied to the outcome than a larger studio would for a similar franchise. Each of those choices aligned the operating team to exactly what the IP needed.

The Capital Came Next

The next move in the architect’s playbook was for Delphi to line up the initial development capital which sat in first position on cash recoupment. When development ran longer than originally projected, IO's other popular game, Hitman 3, generated the cash flow that allowed IO to stay at the table as a co-publisher with substantial capital of their own to contribute. The original waterfall was able to stay intact. Delphi's first position held through a near seven-year development cycle, a co-publisher entering mid-deal, and a transfer of 007 creative control from the Broccoli family to Amazon.

The Waterfall in Action

On the day First Light launched last month, Delphi recouped its full invested capital ahead of everyone else in the waterfall. 

Return of capital, first. Exactly as the initial documents planned.

Just as the 88 Metacritic score was the result of decisions embedded in the operating model years earlier, the launch-day recoupment was the result of decisions embedded in the capital model years before a single copy was sold.

I’ve partnered with Casper for years. BuildInteractive II, our SPV into Delphi, closed on the largest raise in Build Wealth's history the same week First Light launched. The architecture he designed for this deal is the clearest live illustration of everything this issue is arguing. 

The estimated $105M day-one headline is what you talk about over drinks. The waterfall that produced it is what you build.

You can always sign up to see our future deals here: BuildWealth.InvestNext

A deal lands in your inbox. Before you scroll to the returns slide (which is everyone’s favorite slide) run these five questions. At the end you'll know which seat the deal is offering you, and how much of the upside that seat actually touches.

1. Who designed this deal?

Somebody made every decision that matters before the operating team showed up. That's the architect. It might be the named GP. It might be a sponsor sitting a level above the GP. Or it’s the operator who drew up the original deal and went looking for capital. The LP agreement won't always say. 

Trace the decisions back and you'll find them. If you can't do that fairly quickly, then either the deal is documented sloppily, or someone is being kept off the page.

2. Where does value compound, and on what clock?

Operating value piles up at the operating company. The bigger money like IP, brand, distribution rights, rollup optionality, will pile up somewhere else, usually a holding company sitting above it. The documents show you which entity owns which kind of value if you read them in order. A holding company that compounds for fifteen years above an operating entity that pays out much sooner is a different deal from one where everything moves on the same clock.

3. Where is the architect's own money?

Follow their check. They designed the deal, so they know exactly where the upside is focused, and that's where they'll have put their own capital. Look in three places: the IP or holding company layer, the operating company, or right beside the LPs in the passive seat. See what they did with their money before you decide what to do with yours.

4. Can you move into the compounding seat, or only the exit?

Operating capital usually has an exit on the calendar, somewhere around 3-7 years. The holding company compounds longer, maybe even forever. The question is whether you're allowed to choose. 

Look for rollover rights into them when the operating side exits, conversion terms that carry you from the passive seat toward the architect's over time, or carry that vests only after the operators are gone. If any of these exist, the architect is inviting sharp LPs into the compounding position.

5. What would break the alignment?

Every deal of course looks aligned at the time of closing. The real test is what comes later. Three cracks show up again and again. The operator hits their carry number in year four and then coasts. The sponsor needs cash before the holding company is ready which can force a sale or refinance at the worst possible moment. A capital partner pulls a redemption the architect never stress-tested, and the deal has to swallow an exit it was never built for. 

The first two examples are common enough that anyone who's run a few deals has a defense ready. The third is the one that separates an architect who's lived through a cycle from one who's only modeled it.

Run these five questions across the next deal that pops into your inbox or slides across your desk. Most will fail at least one but the ones that pass are worth paying attention to.

Every seat at the table is paid in a different order. Find yours before you decide to sit down.

"The house doesn't beat the player. It just gives him the opportunity to beat himself." — attributed to Nicholas "Nick the Greek" Dandolos.

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This is not financial advice. Illustrative output of a reasoned thought experiment. Not a backtest, guarantee, or prospectus. Actual results vary based on market conditions, fund selection, timing, fees, taxes, and factors not modeled. Private credit, CRE, and leveraged strategies involve significant risk including loss of principal. Consult a qualified financial advisor.