My views on the market, tech, and everything else

A Dozen Things You can Learn from Biggie Smalls (The Notorious B.I.G.) About Business

During a recent lunch meeting with a few friends I used the phrase “mo money, mo problems.” One of my friends responded by challenging me to do a Dozen Things post on Biggie Smalls similar to the one I wrote on Rza. My response to the throw down is the blog post for this week. I have made the point repeatedly on this blog that you can learn something from just about anyone. I have written posts on Bill MurrayLouis CK and comedians generally to make this same point. The other point relevant to this post is to not take yourself too seriously. Having fun is under-rated.

1.“If y’all love the music, y’all gonna buy the music.” In my post on Jessica Livingston I quoted her as saying: “Our motto is to make something that people want. If you create something and no one uses it, you’re dead. Nothing else you do is going to matter if people don’t like your product.” Biggie is making the same point as Livingston. The importance of making products people want to buy seems obvious. Unfortunately, too often people get wrapped up in other aspects of startups and can lose track of that basic truth. A founder who is focused on making products people want to buy will succeed far more often than founders who are mostly concerned with things like getting prime speaking slots at major industry conferences or having a hip office with exposed brick walls and water views.

2.“Only make moves when your heart’s in it.” http://genius.com/The-notorious-big-skys-the-limit-lyrics    My blog post last week was about how important it is for the founder of a business to be a missionary rather than a mercenary. Biggie believed that a great business founder or performer needs heart, which includes attributes like passion, determination and grit. Missionaries are far more likely to succeed in business than mercenaries since they have the qualities it takes to overcome hard problems. People with a mission in life “passionately persevere” in the face of adversity when a mercenary would bail out to do something else.

3.“Stay far from timid … and live the phrase the sky’s the limit.” http://genius.com/The-notorious-big-skys-the-limit-lyrics   My interpretation of Biggie’s statement is that he was stressing the importance of making convex bets in life and in business. What you ideally want when making a wager are bets with a big upside and a small downside (convexity). When you find a mispriced convex bet, Biggie’s advice is to “be far from timid.” My post on Nassim Taleb discussed Biggie’s point on mispriced convex wagers more extensively.

4.“Never let them know your next move.” Biggie in this quote is making a point similar to Doug Leone: “Little companies have really two advantages: stealth and speed. The best thing for little companies do is to stay away from the cocktail circuit.” This piece of advice is a bit tricky and controversial since there is another view that it is wise to get feed back early and often. My view is that one can seek early product feedback and yet still follow Biggie’s admonition that there is no need to reveal your next move.

5.“I learn from the other people’s mistakes. I know when to say no.” Biggie’s view here is aligned with the view of Charlie Munger that the best way to learn not to do something that is the equivalent of peeing on an electric fence is to watch other people do it and learn vicariously. In short, it is wise to learn from other people’s mistakes! Like Charlie Munger, Biggie put a lot of effort into when to say “no.” Putting significant resources into a few mispriced bets is a far better approach to business and investing than saying “yes” to too many things. Be patient, but aggressive when it is time.

6.“I’m living every day like a hustle.” https://www.youtube.com/watch?v=0MF6w134W6Y  Biggie knew that there is no substitute for hard work and hustle. Other successful people invariably think the same way not matter what career they have chosen. Writers, for example. need to hustle too. Anais Nin put it this way: “Good things happen to those who hustle.” Stephen King has similarly expressed his view that: “Talent is cheaper than table salt. What separates the talented individual from the successful one is a lot of hard work.” Biggie himself once said:“I can’t never stop nobody, can’t knock nobody hustle. They feel like they can come into it dissing Big and dissing Puff and doing they little thing. If that’s what they choose to do, that’s what they choose to do. Only thing I gotta do is feed [my daughter] Tianna and take care of Ms. Wallace. That’s my only job.”

7.“Your style is played out, Like Arnold and that, what you talkin’ bout Willis.” Biggie is referring to the need for genuine 0 to 1 innovation, which I discussed in my post on Peter Thiel who believes: “Maybe we focus so much on going from 1 to n because that’s easier to do. There’s little doubt that going from 0 to 1 is qualitatively different, and almost always harder, than copying something n times.”  In other words, a person or business should avoid just repeating what others have done if they want to produce a substantial and valuable innovation. The cultural reference in the Biggie quote is to a Garry Coleman (AKA Arnold) tagline from the TV show Different Strokes that repeated itself perhaps a bit too often.

8.“Watchin’ the stash grow, clockin the cash flow.” http://genius.com/2pac-2pac-and-biggie-freestyle-at-table-lyrics  Biggie knew that the only unforgivable sin in business is to run out of cash.  Biggie once quoted the sage Rza on this point: “Cash Rules Everything Around Me.” Cash can provide its holder with significant optionality. It is likely that Biggie had similar beliefs to Warren Buffett on cash:

“Ms. Schroeder argues that to Mr. Buffett, cash is not just an asset class that is returning next to nothing. It is a call option that can be priced. When he thinks that option is cheap, relative to the ability of cash to buy assets, he is willing to put up with super-low interest rates, said Ms. Schroeder, who followed Mr. Buffett for years before she became his biographer. “He thinks of cash differently than conventional investors,” Ms. Schroeder says. “This is one of the most important things I learned from him: the optionality of cash. He thinks of cash as a call option with no expiration date, an option on every asset class, with no strike price.”

9.”That goddamn credit? Dead it.” http://genius.com/The-notorious-big-ten-crack-commandments-lyrics   Biggie, like many other great investors and business people, was not a fan of debt. Charlie Munger has a view that is similar to Biggie’s: “I’ve seen more people fail because of liquor and leverage – leverage being borrowed money.”

10. “Never let no one know how much dough you hold.” https://www.youtube.com/watch?v=kyWTJWrH1aI   Biggie was pointing out that certain metrics do not need to be made publicly available if you are a private business. This is one of the advantages of not going public.

11. “Never get high on your own supply.” https://www.youtube.com/watch?v=kyWTJWrH1aI   I prefer to think of this statement as an admonition from Biggie that people should be more humble so they avoid mistakes. Of course, what this advice actually represents is Biggie warning people about the dangers of consuming the inventory of your own business.  Either way, the advice is sound.

12. “Consignment is not for freshmen.” “If you ain’t got the clientele say ‘hell no’ — ’cause they gon want they money rain, sleet, hail, snow.” http://genius.com/The-notorious-big-ten-crack-commandments-lyrics   Biggie is saying that there are dangers associated with taking on a lot of inventory risk, especially from suppliers who have not yet been paid. If a business ends up with products on a shelf that it can’t sell, the suppliers will want to be paid. Biggie knew that business is business. You must get the basics right to be successful. Managing inventory risk is a core skill in many businesses. You never want to get into a situation where someone says, “Leave the gun. Take the cannoli.” https://www.youtube.com/watch?v=yHzh0PvMWTI


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