Ownership Has Its Privileges

Walk down Nashville’s Lower Broadway any night of the week, and you can hear aspiring artists
belting out cover tunes from Elton John to Garth Brooks.

In many cases, these musicians come to Nashville to be discovered but pay their rent using the
tips they get by playing other people’s songs. Most are lucky to eke out a modest living while the
stars they impersonate run thriving empires.

Forbes estimates that Luke Bryan, country music’s highest-paid star last year, earned 52
million dollars on the back of his stadium tour and duties as an American Idol judge and Chevy

What’s going on here? Is Bryan that much more talented than the dozens of artists playing his
songs in Nashville every night?

Probably not.

The difference comes down to who controls the product. In Bryan’s case, he owns the music and
the personal brand he has created to perform it. The cover artist is just reselling his stuff.

The Value Of Your Brand

The music business can be a helpful analogy in explaining why creating a unique brand is such a
big contributor to the value of your company. Acquirers want what they could not easily copy. If
you’re reselling other people’s products and services, an acquirer will likely argue that there are
probably dozens of competitors driving down your margin next to nothing. Further, they may
even conclude that they too could earn a license to resell whatever you’re distributing and will,
therefore, place little value in the company you’ve built.

However, if you have something exclusive – a unique product or brand that makes people
believe what you do is different – an acquirer will pay more, arguing it is difficult to reproduce
what you have created.

If you find yourself reselling other people’s products or services, you can still drive up the value
of your business by creating a brand around the way you do it. You could argue that Peloton is
just selling a stationary bike. Still, it is the unique company they have created around the bike –
including the community of riders that subscribe – that has recently driven Peloton’s value north
of $7 billion (almost eight times trailing twelve months' revenue at the time of their recent Initial
Public Offering).

To drive up the value of your company, own the stuff you sell. If that’s not possible, create a unique brand that makes consumers feel as if you do.


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