Scott H Young

Be a Rockstar, Not a Record Label: Build an Unscalable Business


A common piece of advice given to entrepreneurs is creating scalability. In the widely published book, Rich Dad, Poor Dad, Robert Kiyosaki recommends building a business that can run without you. This way, your assets generate money without you having to work. You can insert a fantasy about earning millions of dollars while you sip margaritas on a tropical beach.

I disagree. I think there are considerable advantages in creating a business that can’t run without you. It provides a competitive advantage that can’t be copied: you.

ScottHYoung.com, StevePavlina.com, ChrisGuillebeau.com

Both my birth certificate and this website address share the same name. That wasn’t a strategic move on my part. The rush to get started blogging overrode any branding decisions on my part.

After starting, I soon regretted my eponymous website title. Starting a website with my own name seemed to violate the spirit of scalability. If I tied my name to a website, then I would always be tied to this business. It would never become the fully automated, revenue generating, margarita-enabling asset all those entrepreneurship books had suggested was best.

Today, my views have completely reversed. Far from being a handicap, I think my unavoidable involvement in this website is one of its greatest strengths. It may limit me from infinite limits of scalability, but it has made being a full-time entrepreneur far easier to obtain.

The advantage doesn’t come from the website address. Leo Babauta is intrinsically tied to the success of Zen Habits, even though his blog doesn’t share his name. By tying himself to his business, all of his content is delivered with his voice, something no other website can do.

The Record Label Business Model

A record label has a traditionally large business model. It makes money from selling music created by other artists. The advantage of a record label business model is scale. There is no theoretical limit to the capacity of a record label. It can always sign more artists, hire more staff and sell more albums.

If you started a record label, it could run without you. That’s assuming you have hired the right talent to take your place, of course. But, as the creator of a record label there isn’t anything intrinsic you provide to your end customers that would be immediately noticed by your absence. A record label is the kind of business model suggested by Kiyosaki and other authors.

The Rockstar Business Model

A rockstar (or any artist for that matter) has a very different business model. She makes money from selling her music. Although she has scale in distributing her albums, she doesn’t have scale in producing them. She still has to write the songs and create the music herself.

A rockstar can never be completely separate from the business. You could get other artists to perform under your name. Robert Ludlum still has books being released under his name even though he died in 2001. But, even if you do, something is missing from the business when you remove the rockstar.

The main advantage of a rockstar business model is you have a monopoly on a key resource: you. When production becomes unscalable, that also means there is reduced competition. Competitors can only mimic you, they can never fully replace you. I can try to write articles like Leo, but I can never replace Zen Habits.

This is why rockstar entrepreneurs can scoff at the notion of competition. It’s because they have a monopoly on their creative voice. Unlike a record label business model, there is a core part of their business that can never be reproduced.

Rockstars Create Their Own Labels, Big Businesses Become Rockstars

I’m drawing a somewhat artificial line between big business and artists. Robert Kiyosaki created a business franchise based on his books that looks more like the work of a label than a rockstar. Similarly, big companies like Apple are trying to create a unique brand that can’t be replicated.

But at some point these efforts break down. I’d rather read a book written by Robert Ludlum than some unknown author using his storyline formulas. And companies like Apple don’t have a true monopoly on their voice when their human talent can be bought by another company.

Capitalism likes to centralize. So unless you have some distinction that can’t be merged into a conglomerate, its harder to compete against giant corporations with vast distribution networks and economies of scale. Rockstar businesses avoid some of the centralizing logic of capitalism by having such a distinction.

Know Why You Want to Start a Business

In retrospect, I’m glad I created a website that expresses my ideas, rather than a revenue-generating asset which can easily swap writers. First, it has made it easier for me to do this full time. Second, it has allowed me to create freely and connect more directly with readers, something I enjoy.

My goals for starting a business is to create an outlet to share my ideas without the intermediaries of a boss or freelance clients, and to earn an income doing that. Creating a lifestyle business that fits those goals means it will be harder for me to turn this into a massive revenue generator that is independent from myself.

Most people understand the difference between being a stock broker and a school teacher. One has security and time for family. The other has a huge income.

But I think fewer people are aware that the same approach applies to the type of business you plan on starting. If your goals don’t match the model you are using, you may make success harder for yourself.


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19 Responses to “Be a Rockstar, Not a Record Label: Build an Unscalable Business”

  1. This is great, Scott. Thanks so much for the mention, but more importantly, your advice is spot-on. A couple of times I’ve also regretted starting with my name as the URL (especially since my name is hard to say and spell), but I came to the same conclusion you did.

    I put this on StumbleUpon; hopefully a few more readers will join the party.

    All the best from Suriname,

    Chris

  2. Valentino says:

    I agree with this theory.. I’m a freelance webdeveloper from 3 years now and I’m just re-branding my activity to focus on “me”.

    Until now I’ve struggled to build a company-like facade.
    But I noticed clients like to work with me. I contacts theme with “word-of-mouth marketing” because clients and ex-clients are friends too.

    So, I’m starting to put my name on business cards, and my personal visions of work.

    I regret not getting this point before.. It’s also more enjoyable!

  3. Spencer says:

    Great article Scott H. Young.

    I agree that people like to do business with people they like. Notice I did not say with a snap name or colorful banner. Although those thing do add value to the name behind the color and snappy name.

    My new blog is being set up the same way. I will use a web address that is not my name, however it will state, Spencer McDonald presents … That way I become the brand name of my website and my products, like leadership and sales seminars will be identified with my name.

    Keep writing Rockstar and I’ll keep reading.

  4. Peter Tóth says:

    Hi Scott,

    I had same dilemma as you had. Should I put my name as url for my self development blog? What If I want to sell it? At the end I didn’t not use my name as url of blog but I am in same situation as Leo. Everybody think about me and my site as two non separable things.

    Do I regret? Not at all!! What you already know but I don’t feel you tell it here is you have to love what you do. Rock star model is not for those who doesn’t like to do what want to make money from.

    We both like writing, we both like to use blog as our medium to teach others. That is why we can do ,,rock star” business.
    Because we love what we do and we do it constantly we can produce and provide much much more value that some of other businesses.

  5. Scott Young says:

    Valentino,

    Authenticity and personal connection are even more powerful in an online-world where so many people have neither.

    -Scott

  6. Vlad Dolezal says:

    Adding to your list, VladDolezal.com :p

    Aside from that shameless plug, I completely agree. I found that my bent asset in blogging has been… well… me :D

    But the thing is… you CAN make your business be completely centered around you, and still be scalable. It’s just about how you approach it. If you give 1-on-1 consultations, it won’t work. If you give speeches in front of thousands of people, record CDs and DVD and… well… publish a blog :) … then you’re fine. But I think you already knew that.

    Anyway, good luck with your journey of becoming a blogging rockstar!

  7. R Damm says:

    Sorry Rockstar but I have to disagree. I don’t visit a web site to read about the author.
    (You need to be a famous Rockstar author for this to happen)
    I don’t really care who “Scott H Young” is. What I do care about is “Getting More from Life”
    As a consumer I think the title should reflect the article and the content that I can expect in the future.
    Don’t get me wrong, I have enjoyed your writing, but I think you need to focus your writing on the title and not your name.
    (Just until you are a famous Rockstar author)

    Thanks
    Rob

  8. Scott Young says:

    Rob,

    You missed my point.

    I wasn’t saying that naming my blog “Scott H Young” was a good idea. Or that people cared about me. They don’t.

    What differentiates a rockstar from a record label isn’t the fame of the rockstar, but that they can’t be replicated. Other blogs can mimic the content style of this website, but they can’t replicate it perfectly unless they have me.

    Zen Habits isn’t about Leo Babauta, but without Leo, there wouldn’t be Zen Habits. His writing style is a competitive strength that only he has access to.

    And no, I don’t by any means consider myself a rockstar.

    -Scott

  9. Joel says:

    Hi Scott,

    Great post. I don’t know if you’ve seen this or not, but Gary Vaynerchuk just talked about something similar (effort and whether or not it is scalable). You might like it: http://garyvaynerchuk.com/post/295412661/is-effort-enough-to-scale-i-think-way-too-many

  10. Eric Normand says:

    Scott,

    One of the things that bothers me about corporate practice is that some franchise will move into a neighborhood and put some mom-and-pop places out of business. After they’ve destroyed all semblance of neighborhoodiness, they then will preach that they love neighborhoods and friendliness. So they change their practices to be more community oriented. Then everyone goes along with it!

    Be a rockstar!

    Don’t fake rockstarness after you’ve decided to give it up.

    keep on rockin’, Scott!
    Eric

  11. johnregis says:

    Learning a lot about entrepreneurism (is that a word) from you Scott. Nice one.

  12. I like this stuff you post here! It tells us, how many people would establish a business on what they love? How many people would say that their dreams of having business they love are reach? If you want to have a successful business and career, you should not depend to other people efforts and jeopardize your money to be taken away from them. YOU should be the one to handle your business. You should have creativity and it starts from YOU! Don’t stop believing that you can reach something out from your originality!

  13. Kelso says:

    Is knowing why you want to start a business.. a valid reason “I dont want to work for a boss anymore?”

  14. An individual of my favored issues about blogging is this community of bloggers. We aren’t cut-throat. We share successes and miseries. And when one thing works, we really don’t retain it to ourselves – we want it to operate for all of us. I adore blogging and hope that it becomes full-time an individual day, but I appreciate the mastering and growing (the journey) and am a really patient man.

  15. Gabriel says:

    I think a great question people should ask here is:

    Would you rather work with a large corporation or personally with an individual?

  16. JJN says:

    While I suspect your response based on the article, could you argue, as Rockefeller said, that he would rather “earn 1% off of 100 persons efforts than 100% of your own”?

  17. I want to create a record label or to be a rockstar because i’m up coming artiste singer,rapper and songwriter

  18. Hi Scott, your texts has given me lots of insights on beeing an entrepreneur. Thank you for that :)

  19. Paul Esser says:

    It really does not matter in my opinion. Both have advantages and disadvantages. What matters and is making the difference is the personal connection with people and really help. You can’t copy that. It does not matter how you came to this planet and what name your parents choose :) Be yourself and let your own voice speak.

    Enjoy life, learn and have fun!

    Paul Esser

Debate is fine, flaming is not. Pretend that this comment form is a discussion taking place in my house. That means I enjoy constructive criticism and polite suggestions. Personal attacks, insults and all-purpose nastiness will be removed especially if it is directed at other readers.

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