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10 Business Lessons from the Beatles

Posted By Downtown Josh Brown On December 4, 2013 @ 7:30 am In Music,Weekend | Comments Disabled

10 Business Lessons from the Beatles
Joshua M. Brown

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Joshua M. Brown [1]

Given how many thousands of words about finance-related topics I read each day in my role as wealth manager and Certified Financial Pundit (CFP), sometimes the last thing I want to do is get myself caught up in a book about markets and money.

But even when I find myself reading something totally unrelated to business, I quickly begin noticing the investing and finance-related lessons inadvertently contained within – no matter what the topic is. I cannot seem to help it. Genius or future mental patient? You decide! Just kidding, don’t judge me.

Anyway, with that in mind, today we’re going to look at the ten best business lessons one can learn from the history of the world’s most successful rock n’ roll band, the Beatles. 2013 marks the 50th anniversary of their debut album, Please Please Me [2], and if you’re not terribly familiar with the history, now is a great chance to get up to speed.  Please Please Me The Beatles [2]

In writing this piece, I’m leaning heavily on author Bob Spitz’s masterpiece The Beatles: The Biography [3] – a 1000-page definitive biography of the band that spans 30 years and sprawls across the globe from Liverpool to Hamburg to Los Angeles to India.  Spitz has collected every meaningful turning point, momentous occasion, backstage anecdote and intimate reflection thanks to seven years of researching and interviewing the people who were there.  And interwoven throughout his rags-to-riches narrative are several fantastic lessons that anyone in the world of business can learn from.

Below are what I consider to be the ten most important of these lessons from the rise and fall of the Beatles:

10. Collaborate!  There’s a great moment that takes place in the late 1950’s after a performance by John Lennon and his schoolmates when he is introduced to Paul McCartney, a kid from another Northern England suburb with an obsession for American rock n’ roll.  Lennon, who can barely handle three chords, tells Paul to play a bit. Paul’s intrinsic confidence and mastery of the guitar (hard-won after playing til his fingers bled in the aftermath of his mother’s death) would end up bowling the teenaged Lennon over and an instant bond was formed. Later on an even younger guitarist, George Harrison, will “audition” for an approving John Lennon atop a double-decker bus. John is the undisputed band leader at this point, but he’s smart enough to snatch up and collaborate with the more talented people he comes across early on.

Takeaway: Are you surrounded by the right people, people whose own talent inspires you and pushes you to develop your own skills?

9. Pay your dues away from the spotlight.  John’s pre-Beatles high school band, the Quarry Men, played every available gig in the late 1950’s and early 1960’s. This included country clubs, school dining halls, claustrophobic basement bars, and other less-than-ideal venues. The conditions, along with the equipment and acoustics, were laughably bad – which is how the band picked up its chops. You really had to turn up the musicianship and charm to win the crowd in those situations. Later on, in the rough and tumble Reeperbahn section of Hamburg, Germany, things would even get sketchier. The boys played and then slept in a pornography theater seven nights a week, making their beds in a windowless, airless concrete cell behind the screen. Their sets were often six-hour, amphetamine-fueled marathons but this is how they got lean and mean, making the most of this time in the crucible. Upon their return home, there wasn’t a room in Northern England or London that they couldn’t destroy, even while drinking, smoking, fighting and eating onstage.

Takeaway: Are you doing unpleasant, unrewarding work now because you know it will pay off in the future. Are you rightly considering this to be the training you’ll need for the next phase? Are you still hungry?

8. Find an advocate.  The first guy to recognize the raw talent and potential of the boys was named Brian Epstein, a black sheep scion of a furniture empire who happened to have a counter in his parents store at which he sold records. Epstein agreed to manage the band at a low point, when it couldn’t get a gig in front of a receptive audience anywhere in England. The would-be impresario freezes everything in his life to promote the boys and get them work, even abandoning his real job at the store. His dogged persistence, based on little else other than faith and hope, will eventually open the last door after every other one is slammed shut. Later on, the band will become the first to harness the power of a grassroots fan club, giving exclusive things to their number one supporters so as to build their platform atop a sturdy foundation of adulation and advocacy.

Takeaway: Who are your advocates and best customers? Are you doing enough to show them your appreciation? Are you actively trying to win over more fans who will spread the word of your products and services?

7. Your breaks will come from whence you least expect them.  In the summer of 1962, there isn’t a music label in the entire country that will pay a lick of attention to the Silver Beetles (their new name while playing backup for a pop singer through Scotland).  Finally, as a last resort after a last resort, Brian Epstein manages to introduce them to the head of Parlophone Records, a division of EMI that was mainly in the business of recording comedy albums. George Martin is more impressed with their charisma than their playing during this first in-studio meeting, but he is intrigued enough to give it a shot. The good news is that Parlophone has nothing to lose! No one is expecting any noteworthy music from the label anyway. You know what happens next…

Takeaway: Have you considered every option available to you in promoting your business? Even those that don’t initially seem like a good fit? There’s a lid for every pot, keep trying.

6. Give up something – but not too much!  Every entrepreneur has that story about the time they almost gave away everything because of how desperate they were getting during the early struggle to make it.  The founders of Home Depot almost sold a controlling amount of equity to Ross Perot early on – if they would only have agreed to his demand that they drive a Chevy instead of a Cadillac. The founders of Google were offered $3 billion from Yahoo in 2002, just a few short years later the company would be worth over $150 billion. The Beatles cut a deal early on – partly out of exasperation and partly out of Brian Epstein’s ignorance – that got them on the telly in front of a national audience. But it also cost them a massive amount of money down the road. To secure air time for the Beatles, Epstein essentially signed away the bulk of their royalties to music publisher Dick James, a nobody who would go on to reap untold millions in profits off the band’s back. Similar deals would be cut between the Beatles and dozens of record distributors, slick merchandisers and other vultures. John and Paul would never regain what they had given up during this early period. The ownership of their intellectual property – the songs themselves – changed hands several times without their input.

Takeaway: It’s tempting to give up a part of what you’re building in exchange for capital, favors or introductions – and sometimes it’s a worthwhile tradeoff – but have you really thought it through? Do you fully grasp how much of your future you’re mortgaging today? Will you regret it or look back approvingly on the necessary sacrifice.

5. Don’t make the same mistake twice.  One of the great anecdotes in all of music history centers around Dick Rowe, the “man who turned down the Beatles.” To be fair, everyone in the country had turned down the Beatles but the lesson here is worth considering regardless. The legend goes thusly: It’s New Year’s Eve, 1961 is giving way to 1962 and the boys are packed into a van and driven down to London, a ride that takes them half a day and lands them in Trafalgar Square at 10pm.  The next morning, they play 15 songs for Decca Records which Epstein had secretly arranged and paid for to be recorded.  The tape gets to Dick Rowe who nonchalantly utters this unforgettable rejection: “Guitar groups are on their way out, Mr. Epstein.”  Less than two years later, as the early stages of Beatlemania are gripping London, Dick Rowe bumps into George Harrison at a concert. All is forgiven by now, of course, but the label executive mentions to Harrison that he’s on the lookout for talent. George mentions the Beatles’ friends, the Rolling Stones, and before he can get the rest of the sentence out of his mouth, Rowe is off like a shot. The story goes that Mick, Keith and the Stones had a record deal that night.  Dick Rowe went on to sign some of the biggest acts of the era – and he certainly didn’t dismiss anyone quite so easily ever again.

Takeaway: Everyone makes an error or overlooks a great opportunity but only a fool does so repeatedly. Are you thinking carefully about the things you’re rejecting or are you merely slamming down the rubber stamp. Are there opportunities you’ve been taking for granted?

The Beatles: The Biography [3]4. Give the people what they want – but keep it about the work. So now you’ve found a measure of success and your customers and colleagues love you. Welcome to everything you’ve ever dreamed of, now it is yours to screw up.  In February of 1964, the Beatles land at New York’s JFK Airport en route to fulfill an agreed-to obligation for the Ed Sullivan Show and a host of other live performances from Cleveland to Washington D.C. They are media darlings and literally falling over available girls as Beatlemania is in full swing. The only problem is, they feel completely foolish shaking their heads and enduring the deafening wall of screams night after night. The music cannot even be heard anymore, at this point the Beatles are more akin to a traveling circus complete with riots and fainting than does it resemble a performing band of any sort. On their second pass-through of America, the attention turns dangerous and the spectacle has become so loud that the boys find themselves deliberately skipping chords on stage at Shea Stadium just to see if anyone will notice. They don’t. On their way home to England after years on the road, the decision is made: The Beatles would never play live again and would henceforth become a studio band. Turns out, record sales would only increase based on that decision – rather than fading away as the crowd to turned on them, the Beatles focused on quality, producing Revolver, Sgt Pepper’s, Magical Mystery Tour, and the White Album without performing any of the new songs to a screaming mob.

Takeaway: What got you to a position of success was probably not publicity, more likely it was the quality of your work or the originality of your ideas. When in doubt, go back to the well and continue to create and sweat in seclusion. Don’t chase the spotlight, chase inspiration and performance, the spotlight will find you soon enough so long as you continue to earn it.

3. Stick to core competencies. The funny thing about runaway success is that it tricks the recipient into believing implicitly in transference – the idea that because they’re good at one thing, they should also naturally be good at something else. Think about Michael Jordan in his Chicago White Sox uniform or Microsoft’s myriad failures outside of Windows and Office software.  Or think of the Beatles’ ill-fated Apple Corps conglomerate, which to outsiders must have seemed like an elaborate scheme to destroy as much capital as possible in the stupidest available ways.  Apple, which began as a giant tax dodge for the band members who were sick of paying 94% in income tax, began as a dysfunctional clothing boutique and grew to encompass recorded music, movie-making, electronics and whatever else people off the street pitched at McCartney or Lennon. Drugs played a huge part in the decision making and no one involved at any level within the company had any prior experience to bring to their roles. Stealing was pervasive as was petty infighting and a poisonous nepotism that laid bare the ugly side to working with family and friends. Millions of pounds were flushed down the toilet before outside managers were brought in to take control and stop the madness. All of it was disbanded in the end save for the music department – no surprise.

Takeaway: Branching out and experimenting is a good thing, but within reason. One of the most important aspects of success recognizing what it was that made you successful in the first place and focusing on that. Refining and improving an existing winner is usually more advisable than trying to conquer foreign realms outside of your expertise.

2. Hold it together when times get tough. The Apple Corps debacle, combined with John’s ongoing subsistence on acid and heroin, had left the Beatles weak in the eyes of the outside world for the first time since they began. Wasteful spending and dalliances with questionable Eastern religious gurus didn’t help matters at all. By the time Lennon’s new controlling lover, Yoko Ono, came into the picture, the band was already fracturing from within. Contentious recording sessions, domineered over by a despotic Paul McCartney and sabotaged by the interloping Yoko, will take these fragile relationships right to the edge.  But Paul will end up salvaging things just long enough to complete the Abbey Road sessions, producing a daring masterpiece that hinted at an embarrassing amount of talent to spare. The so-called “Quiet Beatle”, George Harrison, steals the show on Abbey Road with the tracks Something and Here Comes the Sun - it was as if they were saying to their peers “See! We’re still here! And in fact our third best songwriter is better than any one of you.” Amid toxic vibes and emotional quicksand all around, the Beatles had done it again. Keeping the train on the tracks wasn’t easy – but it had proven to be worthwhile.

Takeaway: When the going gets tough, the tough grit their teeth and go back to work. Are you giving up on a situation just because it’s gotten too hard? Is there salvageable value in your smoothing over the wrinkles and fighting through a rough patch?

1. When all else fails, walk away on your own terms. In the end, the stress of growing apart became too much to bear. George had once threatened to quit after a bout of bullying from Paul, even Ringo had once fled the studio for the beaches of Spain, but never had a resignation been delivered with such finality as the one from John Lennon that ended it all. There was nothing left to say anymore and the boys knew it. But this represented a major business problem for the band, Apple Corps and all of the people who depended on the entity. More equitable royalty negotiations with various Beatles partners and predators were still underway and the outward appearance of disarray threatened to disrupt these deals. It was imperative, the Beatles agreed, that no news of their break-up become public just yet. Even John, who had become virtually impossible by September of 1970, was on board with the ruse.  But little did the Beatles know that the shrewd McCartney had one last move to make. The breakup of the Beatles was utterly devastating to Paul, more so than for the others. Paul was the engine that drove the band from project to project, the public face of the group and in many ways the heart and soul. He grieved his band’s end for six months even while plotting the release of his own record. And just when it was time to strike, Paul announced to the Daily Mirror that he – he - had left the band. It was a masterful stroke that rocked the others back on their heels and positioned him for control of the narrative that would follow. To McCartney, it was a shame that it was over, but he was certainly going to go out on his own terms at the end.

Takeaway: Break-ups and the dissolution of partnerships can be painful but emotions are your enemy when planning for the aftermath. Creating your own exit allows you the power to shape outside perceptions. Do you want to come out looking like the stronger and more valuable party? Then what’s your exit strategy?

One final Beatles lesson that hardly requires any further explanation: All you need is love. And maybe some startup capital.

Downtown Josh Brown

See The Beatles: The Biography [3] by Bob Spitz

 

Joshua M. Brown is a New York City-based wealth manager for individuals, corporations, pension funds and charities. He is also one of the most well-known bloggers and financial commentators in the nation as well as a contributor to Forbes and CNBC, and author of Backstage Wallstreet [4]. Josh’s website is located at TheReformedBroker.com [5] and you can follow him on Twitter @reformedbroker [6]


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2013/12/10-business-lessons-from-the-beatles/

URLs in this post:

[1] Image: http://money-markets-blog.amazon.com/blog/author/Joshua+M%252E+Brown

[2] Please Please Me: http://www.amazon.com/dp/B0025KVLRO

[3] The Beatles: The Biography: http://www.amazon.com/dp/B00852YXOY

[4] Backstage Wallstreet: http://www.amazon.com/dp/007178232X

[5] TheReformedBroker.com: http://thereformedbroker.com/

[6] @reformedbroker: http://twitter.com/reformedbroker

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