Good Gawd: Unconventional Startup Wisdom From The Hardest Working Man In Show Business

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A version of this article previously appeared in Forbes.

Despite his non-existent education and numerous personal demons, James Brown was a gifted entrepreneur who reveled in proving Conventional Wisdom wrong. In the early 1960’s, it was generally believed that soul music needed to be watered down (think Motown) in order to crossover to white consumers. It was also considered gospel that artists should not produce live albums, as such records would reduce concert attendance.

James proved the record industry experts wrong, on both counts.

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The Godfather Lays Down The Law

James Brown’s Live At The Apollo album is perennially rated one of the Best Live Albums of All Time, yet it was almost never made. Syd Nathan, owner of Brown’s label, refused to finance a live album, as he was concerned it would limit James’ popularity on the road, which in turn, would suppress sales of future singles, which was the label’s primary revenue source. Syd, along with most industry executives, also did not believe there was a market for albums comprised of songs that had already been released.

Conventional Wisdom: James, if you record your live show, people will have no reason to get off the couch and see you at a club. Besides, who’s going to buy an album of songs they already own? Forget it.

James knew better and ignored the industry experts. Using his own money, he leased the necessary recording equipment, hired the sound engineers and rented the Apollo Theater. Once the show was recorded, Syd Nathan refused to release it, relenting only when it became obvious that Brown was going to fund its distribution himself. Greed won out and Mr. Nathan finally released Live At The Apollo in May 1963, seven months after it was recorded.

The album’s success was instantaneous, reaching number 2 on Billboard’s mainstream Pop charts, which measured the record-buying habits of a predominantly white audience. The album’s success outside of the R&B market proved that James’ unvarnished sound had universal appeal, which impacted the way Soul and R&B music was marketed for the next twenty years.

Radio And Baseball

The first radio broadcast of a professional baseball game was on August 15, 1921. However, it wasn’t until 1935 that owner of the Chicago Cubs agreed to allow his team's entire season to be aired on the radio. Why the 15-year delay?

Conventional Wisdom: Owners, why would someone pay to attend a game when they can listen to it for free in the comfort of their home? If you broadcast your games, your stadiums will soon be empty.

America was still battling the Great Depression in the mid-1930s and gate receipts represented the majority of the owners' revenue. Thus, their desire to protect this important cash stream is understandable.

Despite Conventional Wisdom's notion that radio would destroy attendance, it actually drove it higher in every city that rolled out season-wide broadcasts. Yet, despite the empirical evidence of radio’s success, several teams continued to refuse to broadcast their games for another three seasons. Sometimes Conventional Wisdom dies a slow death.

What the owners did not initially realize was that radio provided rural fans an immersive experience that was previously not possible. Instead of simply reading box scores and newspaper accounts of the prior days’ games, radio broadcasts allowed fans to experience their team's dramatic ups and downs in real time.

The visceral nature of radio allowed fans to establish personal attachments to players which motivated them to drive great distances to attend games and experience first-hand what they had previously only imagined through their mind’s eye.

Bootlegs To Bigtime

Record executives were dumbfounded that the Grateful Dead openly encouraged their Deadheads fans to record their shows and share the resulting bootlegs.

Conventional Wisdom: Jerry, if you let fans record your shows, it will supplant the market for concert tickets and commercial recordings.

Even through their ganja haze, the Dead knew better.

By allowing fans to trade and sell recordings of its shows, the Dead's cult status was significantly enhanced. Some fans began to collect show recordings. Others began following the band on tour, proudly boasting the number of Dead shows had attended, which drove up ticket sales. These hardcore fans also devoutly purchased the Dead's commercial releases and other licensed products (T-shirts, bumper stickers to put on their Cadillacs, etc.), proving yet again, the so-called experts were wrong.

You can’t control the vagaries of the startup world, but you’ll have a head start over most people once you understand that Conventional Wisdom is often unwise. When everyone is zigging, go zagging.

You can follow John on Twitter: @johngreathouse.

Image credit: AP Photo/Kevork Djansezian

John Greathouse is a Partner at Rincon Venture Partners, a venture capital firm investing in early stage, web-based businesses. Previously, John co-founded RevUpNet, a performance-based online marketing agency sold to Coull. During the prior twenty years, he held senior executive positions with several successful startups, spearheading transactions that generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara's Faculty where he teaches several entrepreneurial courses.

Note: All of my advice in this blog is that of a layman. I am not a lawyer and I never played one on TV. You should always assess the veracity of any third-party advice that might have far-reaching implications (be it legal, accounting, personnel, tax or otherwise) with your trusted professional of choice.

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