The Notorious CEO: Ten Startup Commandments from Biggie Smalls

biggie

As you may have noticed from our video anthem Business Intelligence, we enjoy our fair share of rap music here at RJMetrics.  It’s not a coincidence that many rap stars are also successful entrepreneurs, and lyrics about business and entrepreneurial ambition are rampant in the genre. 

Yesterday, my iTunes shuffled its way to “The Ten Crack Commandments,” a classic and often-referenced track from The Notorious BIG’s 1997 double-album “Life After Death.”  The track is meant to be a crash-course for would-be crack dealers, but Biggie’s ten commandments actually add up to some pretty sound business advice for any industry.

I list each of the Ten Crack Commandments below, along with its underlying message for modern business operators.

“Rule nombre uno: never let no one know how much dough you hold”

For most companies, there isn’t a tremendous amount of upside to disclosing financials.  As such, few privately held companies choose to do so.  As Biggie says, broadcasting your financial performance can “breed jealousy,” increasing operational risks and arming your competitors with a more informed sense of your company’s weaknesses.

“Number two: never let ’em know your next move”

Innovation drives long-term business value.  If your company prematurely discloses its strategic plans, it gives your competitors a head-start on emulating or surpassing your innovative strides.  It may be tempting to post your 12-month plan on the company blog, but beware the strategic edge it provides to your competitors once it’s out there.

“Number three: never trust nobody”

A healthy sense of paranoia is a valuable asset for business operators.   Businesses should take steps to protect their intellectual property, including protection through patents or well-protected trade secrets.

“Number four: never get high on your own supply”

Even if you are the only shareholder in your business, you should separate what’s best for you personally from what’s best for your company.  If you make suboptimal business decisions for the sake of bettering your personal life, your company will be less likely to succeed.  

Another interpretation of this rule is to resist developing a strong emotional commitment to your own ideas.  If you’re too wrapped up or emotionally invested in any aspect of your business, it won’t be easy to modify that idea when it leads you to a better opportunity or strategy.  Sunk costs are sunk, and strategic decisions should be made as such.

“Number five: never sell no crack where you rest at”

Biggie is right: your family members are not real customers, and serving them can often do more harm than good.  They will provide an unrealistic sales experience and their feedback will often be skewed by the preexisting relationship.  Also, if you have a desirable product they may feel a sense of entitlement to a discount or freebies.  Granting such requests can hurt your bottom line, but denying them can strain your personal relationships.

“Number six: that credit… forget it”

Biggie is warning about the risks of issuing credit to customers before you have enough scale to hedge the associated default risk.  The broader lesson here is to place a strong focus on cash revenue generation while your business is working toward sustained profitability.  Getting cash in the door is extremely important, and anything that delays cash flow will slow down your forward progress.

“Seven: keep your family and business completely seperated”

This one doesn’t need much translation: work and family don’t always mix well.  While there are many successful family businesses out there, the cost of things going sour becomes far greater when family is involved.  Don’t work with your family simply out of convenience– only do it if the increased upside truly outweighs the true costs of failure.

“Number eight: never keep no weight on you”

Here, Biggie is driving home the importance of physical security.  Sensitive passwords, documents, products, and prototypes should never be stored or transported (either digitally or physically) in a format that could be compromised.

“Number nine: if you ain’t gettin bags stay [away] from police”

The company you keep can be misinterpreted by your customers and competitors, and sending the wrong message can put these relationships at risk.  Keep strategic conversations as silent as possible until things are set in stone and it is optimal to make an announcement (if ever).

“Number ten: consignment [is] not for freshmen”

Accumulating debt prematurely is a bad move for any business.  Both debt and equity financings consume company time and may drive startups to overspend before their plans are fully-baked.   They also put a greater pressure on financial performance, which is only a good thing when a company is confident in their product’s maturiy and ability to generate returns.  Biggie says it best: “if you aint got the clientele say ‘hell no’ — ’cause they gon want they money rain, sleet, hail, snow.”

“Follow these rules, you’ll have mad bread to break up”

This song predates mainstream internet usage but still translates well into the language of today’s web economy.  I hope at least some of these commandments strike a chord with other entrepreneurs out there.  Until next time, keep it real.

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28 Comments

  1. Posted August 10, 2009 at 9:41 am | Permalink

    awesome song, awesome write up. shame people hear whats on the radio and disregard all rap as mindless thumping. which I admit, most rap on the radio is. RIP BIG.

  2. Posted August 10, 2009 at 9:53 am | Permalink

    so true its about time we looked at hip hop from this perspective, the world has much to learn from these modern day prophetic poets

  3. Posted August 10, 2009 at 10:00 am | Permalink

    Ah, one of my favorite biggie songs. Great article.

  4. Posted August 10, 2009 at 10:52 am | Permalink

    Great article! Never underestimate those with street smart schooling! 🙂

  5. Posted August 10, 2009 at 11:39 am | Permalink

    “Number five: never sell no crack where you rest at”

    I think the message in #5 is not that you shouldn’t sell to your family, but rather that you shouldn’t sell to *anyone* out of your home, or else you’ll have crackheads coming to your house, and everyone will know where you live. Pretty soon the cops will be watching you, and it’s a bad scene.

    Without a healthy work-life balance, your business will invade your personal life, and you’ll never have a moment’s peace. I think the takeaway for startups is that, while it’s tempting to work out of your home, make sure that you still draw boundaries. Keep work time and personal time separate, so that you don’t get overwhelmed and burnt out. A lot of founders find it easier to work out of cafes or cube-sharing offices for this reason.

  6. Posted August 10, 2009 at 11:56 am | Permalink

    Awesome! That’s a way better angle on that one, thanks for chiming in!

  7. Posted August 10, 2009 at 12:21 pm | Permalink

    Lesson #11 should be “Go back to school and study grammar.”

    I get the point, but about half of these statements are double-negatives, implying the exact opposite of what is intended.

  8. Posted August 10, 2009 at 12:25 pm | Permalink

    I should have shared this song in my “Creating New Ventures” class I took last year.

    I love Rap/Hip-Hop when the songs actually mean something. Today’s rap music (on the radio) is missing there. There are many great rappers still out there, but they don’t get any air-time.

    Bring back Biggie and 2pac.

  9. marissa
    Posted August 10, 2009 at 12:27 pm | Permalink

    so so great. classic. thoroughly enjoyed this

  10. Ciaran
    Posted August 10, 2009 at 1:36 pm | Permalink

    I love this, and have been saying this to colleagues and friends for years! I also interpret number 5 as expressing the importance of maintaining a healthy home/ work balance. There is a lot of potential for entrepreneurs to burn themselves out and setting this boundary helps to mitigate that risk.

  11. Posted August 10, 2009 at 2:01 pm | Permalink

    Real Talk.

  12. Posted August 10, 2009 at 4:17 pm | Permalink

    1) Great rules to keep in mind through the startup process
    2) Brilliant use of Biggie lyrics…

    Nice post, I’ll be checkin back often after this gem.

    Cheers,
    Ryan

  13. Posted August 11, 2009 at 4:37 am | Permalink

    This post was pretty ill!
    Respect to ya dude!
    I loved it!

  14. brent
    Posted August 11, 2009 at 10:16 am | Permalink

    Stick to the Yanni CD’s and cassettes daveconrey.

    This is a brilliant post. I will be keeping up with this blog from here on out.

  15. Posted August 11, 2009 at 3:28 pm | Permalink

    Nice list and that reminds of this classic: http://www.youtube.com/watch?v=Tqmdph5DPHA

  16. Posted August 12, 2009 at 12:35 pm | Permalink

    Great post but you interpreted commandment five wrong as pointed out by Isaac Z. Schlueter. Also i disagree with you assesment on numbero uno.

    In their paper titled “bringing the future forward: The effect of disclosure on the Returns-Earnings Relation”, Lundholm and Myers (2002) hypothesize that the disclosure activity of a firm can “bring the future forward” by revealing information in the current period that changes expectations about future earnings.

    In short, the more information an organization discloses on its financial state the more their current returns will reflect future earnings.

    Lundholm and Myers also find that changes in a firm’s disclosure activity are positively related to changes in the amount of future earnings news reflected in current returns. Meaning that, high disclosure activity coincides with a high amount of future earnings news reflected in the current returns. According to this argument, disclosures affect the ability of investors to predict future earnings.

    So as you might want to hide your financial details from your competitors, companies who have listed stock actually benefit from full disclosure.

  17. Jason
    Posted August 12, 2009 at 10:07 pm | Permalink

    #9 Lyric is: “if you ain’t gettin’ BAGGED stay [away] from police”

    This is a clever and smart write up.

  18. adam
    Posted August 12, 2009 at 11:55 pm | Permalink

    “Number eight: never keep no weight on you” should be interpreted more closely. I suggest something like: here biggie is commenting on the importance of legal security. Making sure that you are covered in case of legal problems is of utmost importance. And if you are doing anything cuestoinably leagal, make sure the paper trail leads to your underlings.

  19. Posted August 18, 2009 at 9:07 am | Permalink

    Very Clever write up! Now I gotta go pull up that Ready 2 die album and study it closer!

  20. David
    Posted August 18, 2009 at 5:21 pm | Permalink

    nice article. While some of the points are being argued (I am not opposed to them), I believe that this illustrates, that at its core, business is business.

    They all operate on the same principle regardless of scale, industry, or legality.

    Hmmm…could be a great illustrative example to students. An artist students likely listen to, and an adult validating this artists’ lyrics as valid lessons & knowledge. Sounds like a good ‘bridging the gap’ tactic.

    David

  21. Christo
    Posted September 11, 2009 at 6:56 pm | Permalink

    Check out the economy of crack: http://www.ted.com/talks/steven_levitt_analyzes_crack_economics.html

    Funny and insightful

  22. Posted December 17, 2009 at 2:56 pm | Permalink

    This is for really a straight up down to the core awesome post. Keepin it real hommie.

  23. Posted December 17, 2009 at 3:50 pm | Permalink

    I love this post! These are all some really great tips from a really great hip hop artist.

  24. ziombi
    Posted December 27, 2009 at 8:46 am | Permalink

    point of correction: ‘never sell crack where you rest at.i don’t care if they want an ounce tell ’em bounce..’ this one is more in support of crack commandment 7.ie, you’re not supposed to bring your customers home…

  25. Posted April 30, 2010 at 1:29 pm | Permalink

    East Coast! Awesome article.

  26. Alexandre
    Posted June 13, 2010 at 9:11 am | Permalink

    Great, i always looked for the meaning of those rules……thx for u all
    Biggie was a prophet….the only regrets i’ve, it’s only tha ,when he alive nobody consider……that

  27. Importilla
    Posted July 14, 2010 at 3:25 am | Permalink

    Great ..i have always sort for the other side of the meaning of most rap lyrics. thanks

  28. Kevin
    Posted October 17, 2010 at 11:02 pm | Permalink

    Number 5 “never sell no crack where you rest at”, could also be interpreted as a away to stay under the radar of the police if people keep showing up to your house to get a fix there is a much more likely chance of your house getting raided then getting sent to jail.


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