Rockstar or Musician, rarely both.

rafer:

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I will grant that your proposal is probably a better way of making money,
but what many entrepreneurs are after is not money. I guess it’s not unlike
musicians that want to be rockstars. Yes, they want to make money, but I
would bet having millions of people enjoy their music is worth so much to
them that they don’t mind handing over most of the revenue to labels, even
though they could probably run more efficient businesses by staying indie.

Above originally posted as a comment by kortina on blog.kortina.net using Disqus.

Rafer sez:
Now we’re getting somewhere. What almost always happens to the musicians’ work product when they are signed by labels? Does it improve, remain unique, etc.? Rarely. If it’s about fame, feel free to become a Rockstar. If it’s about distribution, being clever is more useful that being VC funded. This is currently my favorite example.

If it’s about product/service quality and customer EVA rather than packaging, also stay indie. This topic is an active part of my Lookery sales pitch to big ad agencies and ad networks. Lookery charges flat fees for our data. The big prospects are so conditioned by heavily funded startups that they ask me, “Why don’t you charge revenue participation or exchange pricing like everyone else.?”

Me, “We’re a vendor, not a ‘partner.’ Because my angel investors make money on their investment even if I don’t hire a dozen super-aggressive sales people and attempt to glom my customers’ margins. When a startup with a $100M venture capital valuation walks in here, they are executing against a business plan to become worth a billion dollars. Where do you think that a lot of that value is going to come from?” Watching the gears tick over in their head as they make sense of their last dozen meetings is always fun.