Whether a start-up survives more than five years is essentially a coin toss, according to data from the US Small Business Administration. But what explains extreme longevity, such as when a business survives for 50 years or more as an independent company?
The success story of the blues music label Alligator Records offers some answers to that question.
A young blues music fan and record-store employee named Bruce Iglauer started the Alligator label in 1971 when he invested $2,500 of his own savings to record the band Hound Dog Taylor and the Houserockers. Fast forward to 2021, and Alligator has been busy celebrating its 50th anniversary, culminating in an outdoor festival last month in Millennium Park in downtown Chicago.
Imagine all the shifts and transformations a small independent company must have endured to stay in business for 50 years. After all, a 2020 article in Harvard Business Review praised the importance of strategic change, claiming that “[r]esearch shows that new ventures that reinvent their businesses—even multiple times—cut their chances of failure by conserving resources while continuing to learn more about customers, business partners, and new technologies.”
Alligator must have changed direction so many times over the years that its management team must seem like strategic contortionists, right?
What makes Alligator Records rare and special is not simply that it has survived for 50 years, especially in an industry whose current business models would seem like science fiction to a 1971 music fan. No, what makes Alligator stand out is precisely how much it hasn’t changed. Factors such as focus, consistency, and persistence made all the difference at moments when Alligator could have embarked on a fundamentally new direction or could have given up entirely. Instead, the company is still an independent blues music label, and that now former record-store employee, Bruce Iglauer, is still in charge as the hands-on CEO.
What’s the secret?
There is a success blueprint for what Iglauer has accomplished, one which he has followed and embodied implicitly. Alligator Records exemplifies what management expert Hermann Simon refers to as a Hidden Champion. They are small and mid-sized companies that flourish outside the mainstream by conquering a niche in a global market. They thrive by remaining close to their customers, by relying on their own expertise, and by creating what Simon originally described as a “mutual interdependence between the company and its employees.” Hidden Champions fiercely defend their independence and often have leaders who remain at the helm for a generation, even longer.
Simon first uncovered the Hidden Champions success formula as he was trying to understand why West Germany had become so successful at exporting after World War II. Since he first introduced the concept in the early 1990's, Simon has identified over 3,000 of these market leaders all over the world, not just in Germany.
He has also identified what the leaders of Hidden Champions have in common. That list of five characteristics – as cited in a 2018 article in Forbes – reads as if it were written as an outline to a biography of Iglauer.
Unity of Person and Purpose:Iglauer’s mission in 1971 was “to carry Chicago’s South and West Side blues to a worldwide audience of young adults like me.” That captured not only the global nature of the mission, but Iglauer’s own identification with this target audience. When I interviewed Iglauer in 1987 at his office on Chicago’s North Side, he explained that the impetus to start Alligator came from a burning desire to capture that sound he heard in the now long-extinct blues clubs in Chicago. “I decided that I was going to show people that this music had a larger audience than anybody thought,” he explained. “I had a perception of a particular audience that I felt that most people who were into blues at that time … were losing.”In his own book Bitten By The Blues, published in 2018, he told a similar story: “The huge talent pool of the Chicago blues scene inspired my vision of the role Alligator could play in bringing world-class bluesmen and blueswomen to a new audience.”
Single Mindedness:How strong does the passion for blues still burn within Iglauer, who is now 74 years old? Let’s put it this way. September 18th – the day of that commemorative blues festival mentioned above – was officially proclaimed “Bruce Iglauer Day” in Chicago. Where did he go after the last shows ended that night? He went exactly where one would expect him to: the merchandise tent, where he interacted with fans and helped his artists sell their CDs. He and I had a chance to talk, mostly privately, but he did mention how much of a struggle the artists have faced since the COVID pandemic hit in March 2020. The backbone of blues music is live shows and fan interaction, two things that COVID has almost completely shut down, so he enjoyed the opportunity to help the artists reconnect with fans.
Fearlessness: This characteristic is not synonymous with recklessness, but rather a willingness to take risks with the confidence that they will succeed. To pursue Iglauer’s mission, Alligator had to adapt many times and confront potentially existential challenges, especially the music industry’s transition from physical to digital distribution. But Iglauer’s greatest fear, as expressed in his book, was about the music itself, “that, without the infusion of new and visionary artists creating contemporary blues to speak to contemporary audiences, the blues will become like traditional New Orleans jazz, a museum piece, like a prehistoric insect preserved in amber.” That explains a tweak to the company’s original mission, which remains largely intact: “Now it has become a mission to find and record the musicians who will bring the essence of the blues—its catharsis, its sense of tradition, its raw emotional power, and its healing feeling—to a new audience, the blues audience of the future.” The mix of established and newer artists at the September 18th festival shows that the new mission is succeeding. That show featured artists such as Billy Branch, Nick Moss, the Cash Box Kings, L’il Ed and the Blues Imperials, Wayne Baker Brooks, and Shemekia Copeland.
Stamina and Perseverance:Iglauer did not have a business degree or an MBA when he founded Alligator. He had majored in theater at Lawrence University, a small college in Appleton, Wisconsin. As he writes on his book: “I never, ever wanted to be a businessman. I viewed businessmen as money hungry and sometimes ruthless. But I had to learn to be one, and a good one, to survive. I learned that a business can be run with goals beyond profit, and that money can be an effective tool to reward creativity and build a bridge between cultures.”
Inspiration of Others:Many Alligator employees have been with the company for decades. That is another hallmark of Hidden Champions: very little churn, in part because of the omnipresence of a charismatic leader. Iglauer’s inspiration also spread to the artists he worked with. In his book he says that “I’ve always told artists, ‘I don’t want you recording for Alligator unless you want to make an album that you can play for your grandchildren and say, ‘That’s my best music.’”
Iglauer once told me that “I saw and believed – and still believe – that the market is an expandable market. Many, many more people would listen to and like blues if they ever heard it in the first place.” It’s been almost 35 years since that statement, but it still rings true. There is still work to be done, and Alligator is poised to lead the effort to keep the blues alive.
The Greek philosopher Heraclitus said that "change is the only constant in life." While the music industry and Alligator have weathered countless changes over the last 50 years, Alligator proves that there is also value in staying focused, consistent, and persistent.
Frank Luby is co-founder and CEO of BluesBackroadsBaseball LLC. His book "Blues Flashbacks", available on Amazon, was nominated for the 2021 Association for Recorded Sound Collections (ARSC) Awards for Excellence in Historical Recorded Sound Research.