We are in the age of start-ups, often a bunch of friends getting together to dream up an idea and build a venture out of it. But once the idea gets commercialised, the dynamics among friends turned co-founders play an important role in scaling the business up and critically determine the longevity of the venture. In this four-year old piece from 1843, the Economist’s magazine for longform narrative journalism, the author Ian Leslie looks into the world of rock bands to see if we can pick up some lessons. Because rock bands have similar origins i.e, friends who enjoyed making music together then collaborating to form a band which if commercially successful faces the challenges of a typical commercial start up venture. In this fun yet insightful read, Leslie picks four case studies of iconic rock bands, each with a different band hierarchy and consequent repercussions on the band’s longevity and helps draw lessons for management in the business world.
First, he uses the Beatles case study to show how just great friends don’t necessarily build a lasting collaboration. “There are sound reasons to mix friendship with business. Researchers who study workplace environments have found that employees who have friends at the office feel more motivated and generally happier in their job. When Jessica Methot, a professor of human resources at Rutgers University, investigated the effects of friendships at work, she found that those with more workplace friends felt better about coming to work and earned better performance evaluations. This she expected. But she also found that they were more likely to report feeling depleted, over-worked and lacking energy. She reckoned that was because of the emotional labour involved in reconciling the potentially incompatible roles of co-worker and friend.
When you have more close friends at work, professional conflict becomes more emotionally punishing. How do you feel when you need to inform a friend they’ll be taking a pay cut? And how do they feel? As Methot puts it, “The closer [co-workers] become, the more sensitive they are to what’s happening at work. Betrayal seems exponentially more severe.”
…Working with friends is exhilarating when business is going swimmingly, but it can be hell when things go wrong.” Which is how the Beatles disintegrated as their financial problems morphed into personal disputes, after only 7 years of collaboration.
Second, he turns to Tom Petty and the Heartbreakers and Bruce Spingsteen’s E Street Band where both Petty and Spingsteen emerged as the first amongst equals. The article quotes from Spingsteen from his autobiography ““Democracy in a band…is often a ticking time bomb. If I was going to carry the workload and responsibility, I might as well assume the power. I’ve always believed that the E Street Band’s continued existence is partially due to the fact that there was little to no role confusion among its members.” By which he means, there is no confusion over who’s the boss.”
Indeed, Petty changed the band’s equal share philosophy to him acquiring supremo status which whilst disruptive helped the band last longer than most bands of its time. The article quotes Petty’s biographer ““Bands start off as exercises in us-against-the-world idealism, in which success lifts all to equal heights. The ones that don’t break up before they reach a recording studio are the ones that adjust their philosophy in order to become a business. A redistribution of power is necessary.” Petty’s decision was hard for everyone, he said. “But there they were, decades later, still together when so many other bands were on the garbage heap.”
Third, he picks REM and Coldplay as rare examples of democracies that worked well and lasted long. Interviewing REM’s band manager, Leslie writes: “He told me that REM operated as an Athenian democracy. “They all had equal say. There was no pecking order.” This was not majority rule: “Everyone had a veto, which meant everyone had to buy into every decision, business or art. They hashed things out until they reached a consensus. And they said ‘No’ a lot.”
…REM is one of a handful of bands that has successfully contravened Springsteen’s rule. Another is one of the biggest bands in rock history, Coldplay. In both cases, members receive equal shares of all income and have had a roughly equal say in band matters. Neither of them ever needed to fire or replace a founding member.”
As a parallel in the world of business: “Finding the right combination of personalities pays off. As an investor, Garry Tan says he probes the relationship between a startup’s founders as much as he does its business model. When he meets a team looking for investment, he is alert to hints that they are not on the same wavelength. If they are interrupting and talking over each other, he worries; if they are tuned into each other’s mannerisms and turns of phrase, he gives them a better chance of surviving a crisis. “The relationship needs to be deeper than the project,” he told me.
The democratic model depends on individual members believing that each has the group’s interest at heart, not just their own.
…Finally, it helps to have a shared vision of success. Coldplay knew they wanted to be the biggest band in the world; each member had the same clear-eyed ambition. Their equal income split works like equity shares: every partner has a direct interest in keeping the band together.”
The final case study is of The Rolling Stones, perhaps the longest lasting band ever (six decades and they are still on tour in 2022 with Jagger and Richards due to turn 80 next year).
““In bands that survive a long time, there’s often an agreement to disagree,” says Simon Napier-Bell, a manager of multiple bands, including the Yardbirds and Wham! “People who don’t get on can get on in an interesting way.” It was possible for the Stones to come to such an arrangement precisely because they were never as close as the Beatles. It’s not that Jagger and Richards weren’t friends, but friendship was never as central to their image. When it comes down to it, they are there to work.
The Stones also have a clear division of responsibilities, a necessity for startups hoping to grow into stable companies. At Facebook, Mark Zuckerberg used to be responsible for everything, but now focuses on the product while Sheryl Sandberg leads the business. In “Life”, Keith Richards portrayed Jagger as a cold, soulless character who cares more about money than music. But it is Jagger’s leadership of the business side of things, and Richards’s acceptance of that leadership, that has kept the Stones rolling for so long. In crude terms, Jagger is chief executive, Richards is chief product officer. Robert Greenfield, a biographer of the Stones, told me, “Mick is a brilliant businessman as well as a great singer. Keith never gave a fuck about the money.” Jagger’s finance and accounting courses at the LSE perhaps did help after all.
Leslie concludes with a brilliant passage comparing and contrasting the Beatles and the Stones on musical and commercial success. The passage ends with these lines: “If the rock group is a modern myth, then perhaps we venerate the Beatles most of all because they seem to embody the possibilities of perfect harmony. But in the fallen world of business, it may be better to be guided by the Stones.”
If you want to read our other published material, please visit https://marcellus.in/blog/
Note: the above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India as a provider of Portfolio Management Services. Marcellus Investment Managers is also regulated in the United States as an Investment Advisor.
Copyright © 2022 Marcellus Investment Managers Pvt Ltd, All rights reserved.