Business management from the School of Rock

The Beatles split up after a mere seven years at the top, while the Rolling Stones are still going. One startup flashed brightly and burned out; the other established itself as a long-running corporation https://t.co/GQyXnAcqIE From @1843mag

— The Economist (@TheEconomist) September 26, 2020

From the article:

Successful startups have to make a difficult transition from being a gang of friends working on a cool idea to being managers of a complex enterprise with multiple stakeholders. It’s a problem familiar to rock groups, which can go quickly from being local heroes to global brands, and from being responsible only for themselves to having hundreds of people rely on them for income. In both cases, people who made choices by instinct and on their own terms acquire new, often onerous responsibilities with barely any preparation. Staff who were hired because they were friends or family have their limitations exposed under pressure, and the original gang can have its solidarity tested to destruction. A study from Harvard Business School found that 65% of startups fail because of “co-founder conflict”. For every Coldplay, there are thousands of talented bands now forgotten because they never survived contact with success.

The history of rock groups can be viewed as a vast experimental laboratory for studying the core problems of any business: how to make a group of talented people add up to more than the sum of its parts. And, once you’ve done that, how to keep the band together. Here are four different models.

FRIENDS

“We can work it out”

The Beatles invented the idea of the band as a creative unit in the 1960s. John Lennon’s and Paul McCartney’s artistic partnership enabled them to vertically integrate the hitherto separate functions of songwriting and performing. The band had no designated frontman; all four Beatles were capable of singing lead. Though Lennon was the de facto leader in the early years, one of the band’s innovations was not to call itself “Johnny and the Beatles”, as was conventional at the time. Partly because promoters and journalists found this new entity hard to grasp, friendship became central to the band’s image. John, Paul, George and Ringo were presented to the world as a gang of inseparable buddies. Their voices blended thrillingly. They cut their hair and dressed in the same style. They talked – oh how they talked – in synchrony. “We’re really all the same person,” said McCartney in 1969. “We’re just four parts of the one.” [...]

Business disagreements were intensely personal because, for the Beatles, everything was intensely personal. What were Starr and McCartney disagreeing about so violently? A marketing plan! It was because the Beatles were such good friends to begin with that they fell out irreconcilably.

AUTOCRACIES

“I won’t back down”

Tom Petty and the Heartbreakers were formed in 1976 by five musicians from Gainesville, Florida, who had moved to Los Angeles in search of stardom. Petty was the group’s lead singer, songwriter and driving force, but the band split its income equally. Petty was talented enough to make it alone, but he loved being in a band: it gave him a sense of belonging after a fraught childhood scarred by violence. The Heartbreakers had an ethos of all for one, and one for all. By 1978 they had released two albums that sold well. Their next, “Damn the Torpedoes”, would go triple platinum and propel them into the big league. But before that happened, the band’s leader faced a tough decision.

The Heartbreakers had a new manager, Elliot Roberts, who, at 35, was already a grizzled veteran of the industry, having managed Neil Young and Joni Mitchell. The first thing Roberts did was sit down with Petty and tell him that he needed to be more selfish. “You can’t do this deal where you’re giving every­body in the band an equal cut of money,” Roberts said, “because there’s going to be a big problem at some point. You’re going to feel really bitter and used. I’ve been down this road with bands before. It explodes, and everyone walks away.” Petty listened. The days of equal shares were over.

His bandmates felt a stinging sense of betrayal. [...] Others have followed a similar pattern. On stage, Bruce Springsteen celebrates the ties that bind him to the E Street Band, but in his autobiography he is matter of fact: “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.

Even at a time when flat decision-making structures are fashionable in business, some companies are successfully run as Springsteen-style autocracies. In 2009, Cisco’s then ceo John Chambers told the New York Times, “I’m a command-and-control person. I like being able to say turn right, and we truly have 67,000 people turn right.” After returning to the helm of Apple in 1997, Steve Jobs almost single-handedly wrenched the firm out of stagnation. [...]

DEMOCRACIES

“Everybody hurts”

In 1979, Michael Stipe, a college student in Athens, Georgia, was browsing in a downtown record store called Wuxtry when he got talking to the clerk, a college dropout and amateur guitarist called Peter Buck. The two men bonded over a love of underground rock and soon decided to form a band, recruiting two fellow students, Bill Berry and Mike Mills. Thirty-two years later, their band, R.E.M., broke up amicably, ending one of the happiest collaborations in rock history.

Another regular at Wuxtry Records was Bertis Downs, a law student. An early fan of the band, Downs became R.E.M.’s legal adviser and manager. He told me that r.e.m. 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.”

Underpinning r.e.m.’s flat governance structure was an egalitarian economic one. As Tony Fletcher explains in “Perfect Circle”, his biography of the band, each member received an equal share of publishing royalties, regardless of who contributed what to each song. The same was true of their recording and performing royalties – although here equal splits are normal. [...]

R.E.M. 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. [...] 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.

FRENEMIES

“It’s only rock ’n’ roll”

Charlie Watts’s forceful rebuke to Mick Jagger [told in the first paragraphs of the article] came at a difficult time for the Rolling Stones. In the 1980s they came as close to splitting as they ever have. Their last album, “Undercover”, had sold disappointingly. Jagger embarked on a solo career and seemed to be seeking an escape from the band, possibly because he was tired of dealing with Richards, who had shaken off a debilitating dependence on heroin only to replace it with one on alcohol. But Jagger’s solo albums flopped, and he returned to his old partner. The two came to an accommodation. By the end of the decade, the Stones were back on the road again, promoting a successful new album. They have been touring – and the money has kept pouring in – ever since.

“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. [...]

Ernest Bormann, a scholar of small-group communication, said that every group has a threshold for tension that represents its optimal level of conflict. Uncontrolled conflict can destroy the group, but without conflict, boredom and apathy set in. Simon Napier-Bell told me that bands who don’t fight tend to be creatively moribund.

Trade-offs?

One of the most striking differences between the Stones and the Beatles is that the Beatles split up after a mere seven years at the top, whereas the Stones are still going. One startup flashed brightly and burned out; the other established itself as a long-running corporation.

Perhaps there is a trade-off between creativity and stability. The Stones had ceased to be musical innovators by the end of the 1970s, but survived the waning of their creative powers by reaching a professional arrangement that enabled them to exploit their earlier innovations. The business they most resemble is Microsoft. The Beatles made only seven years’ worth of albums before splitting, but those albums represent the greatest body of work in the rock canon. Their emotionally intense collaboration maximised their creative potential, but made the group fragile. [...]

Marie-Louise von Franz, a psychoanalyst, wrote that “whenever one is in a group…one has to draw a veil over a part of one’s personality.” Gains from collaboration are traded off against self-expression. Occasionally, she said, it’s the other way around: a group can become united in spirit and each individual expresses themselves more fully than they would be able to by themselves. A “superpersonal harmony” prevails.

That, I believe, is what David Hays and I had, superpersonal harmony. See my brief eulogy: How Now I and Thou: In Memory of David Glenn Hays. See also Breaking Bread Together, Two Examples Very Different for a short account of how Dave ran his research group.