Adapting To Change

Homework

If you watch the following video with Trent Reznor, it’s about 40 minutes long, you’ll likely understand the rest of this post. But, for the TL;DL crowd, the interview had a lot of undertones to it that I really thought needed to be elaborated on. Not only do they pertain to what he’s doing within the music industry; what he discusses has to do with, at the very least, the tech industry. I see it as a fundamental shift in the way business is being conducted. At any rate, take a glance, and there will be more after the video.

Thoughts

First- Trent Reznor is the f*ing man.

Second- Trent Reznor is the f*ing man.

Third- there is new information coming out lately about how we’re in a time of mergers and acquisitions (M&A). M&A is a way to grow your company in size (employment), in revenue and, if you did your homework correctly, in profit. Ultimately the point of the larger companies is to make themselves money. They need to sustain the business styles they have grown into. Younger companies tend to be far less concerned about the profit engine as they are a bout their idea. Pay attention here. If you listened to what Trent said about record labels and artists then this should sound familiar. However, his thoughts don’t just apply to the recording industry.

Small businesses tend to be focused on producing some idea that changes the world, makes it a better place to live in, or makes my cheese burger taste even that much better. They are _not_ focused on whether the special sauce will be cheaper if they use Angus vs norm. In fact, a lot of smaller companies will make a deliberate decision to go for quality. They know it will cost more, but often that deliberate decision is an important differentiator in the market.

However, the businesses doing M&A tend to be focused on things that generate profit. They need to feed the meat grinder and produce dollars. After all, they have investors to satisfy. But, and this is where Trend hits the nail on the head, if you want to keep your vision, in most cases, you need to stay away from the M&A scene. If you’re looking to just make some cash or want a much larger exposure to the market knowing that you may lose some of that “somethin’, somethin’” then M&A may be right for you.

Something to keep in mind here is that the internet does allow for a great “grassroots” style exposure method. While the phrase it overused and overassumed, “your stuff could go viral!!! OMG!”

Fourth- in the interview Trent provides some notes about what artists starting out can and should do. This is not unlike the technology industry. Now-a-days there is often very little capital required to start. You can literally buy a domain and hosting for 21 dollars a month, throw up a blog, software, etc. and you’re on your way. The most expensive equity at that point becomes sweat equity. Here is something to note, investors tend to like it if you require less money from them and can produce something which will make them rich. Seems to make sense yea? If you can show that you work your ass off, made this product in your “free” time, and then have plans for the future, you’re well on your way to getting some funding.

Keep in mind that getting funded is much like acquisition. While the investor will be much more likely to care about your vision they are still concerned about the profit engine. However, because it doesn’t feed into some conglomerate view of the bottom line, there is a bit more attention on the details that make your company tick.

Fifth- things are changing. The way that business is done is changing. This is somewhat hidden in my fourth note. Trent noted a distinct difference with the way artists need to operate now from when he was coming into the industry with Nine Inch Nails. The technology that exists today makes it so that the companies today that are really taking off are just starting as hobbies or side projects. There are a ton more as well. The point here is that these companies are utilizing the infrastructure to make something really interesting and really useful, but most importantly, something that they themselves want to use. This is where I see technology companies going.

There are a few things about this topic I haven’t elaborated on. If you make something that you yourself want to use then you will likely lack passion, devotion, and when the chips are down it’ll be easier to cashout than to dive back on in. Starting projects, companies, or ideas is hard work. It requires a ton of time and effort. You’ll get to a point where it will feel better to just throw it away. But, if what you are doing is worth it to _you_ then you will pour that extra cut of “oomf” and push through it. And, IMO, if investors overlook this crucial element, they don’t deserve the profit you would make them.