By DYAN MACHAN
She's on track to earn $100 million this year, she's won five Grammy Awards, and she's the most-googled person of all time. And now Lady Gaga has earned another distinction: entrepreneurial icon. Her meteoric rise from NYC club-scene nobody to marketing juggernaut recently inspired a business school case study, in which a very earnest professor draws on Gaga's life story to impart lessons to executives. We translated a few of those lessons from academese into English for small-business owners -- refreshingly, few of the lessons involve wearing 11-inch heels. And we asked a couple of more-modest business-launchers whether the Laws of Gaga ring true for them.
Lesson One: Position yourself as the underdog.
Gaga uses her personal story about growing up as an outcast and a school-bully victim to create empathy and connect with her fans, says Martin Kupp, program director of the European School of Management and Technology in Berlin and coauthor of the case study "Lady Gaga, Born This Way?" Gaga, whose real name is Stefani Germanotta, also frequently references her father's blue-collar origins (although he eventually became an Internet entrepreneur, and she grew up in comfortable surroundings). "I was never the winner," she has said. "I was the loser." Today Gaga, who was not available for an interview, plays up that image, making it the linchpin of an emotional connection with her fans.
Todd Hills, 47, founder of the online pawn business Pawngo.com, says he can relate to the approach. His own early career involved a "loser" experience: His family's horse ranch, which he was counting on for his future livelihood, went bankrupt when he was 22. Opening his own chain of pawnshops gave him the ability to "help people," he explains. Today, having taken the business online, he connects with customers through a video on his website that highlights how misfortune struck him and reassures them there's no shame in stumbling. "Businesspeople get so wrapped up in their charts and business lingo, they forget to make an emotional connection," Kupp says.
Lesson Two: If the rules don't work, rewrite them.
Germanotta knew talent wasn't enough to draw attention in a crowded music landscape. Adopting a catchy name helped (the Gaga sobriquet came from a song by glam band Queen); so did her outr sense of fashion. But perhaps most important, she worked at first without help from a very skeptical recording-industry establishment. One label turned her down; another dropped her, reportedly after one of its executives made a cutting-his-throat gesture while listening to one of her tracks. So Gaga fed her music and promotional info directly to her fans, via social media. An early-adopting Twitter user, she communicated with her followers an average of five times a day and used the service to announce the release dates of her new albums. Kupp says it's all an example of how upstarts need to ignore the standards set by large, risk-averse corporations: "If you don't break the rules, you won't make it," he declares.
What can an entrepreneur learn from an outlandishly costumed pop idol? Plenty, it turns out.
Identify With the Little Guy
Lady Gaga Version: Identify yourself in interviews as a "loser."
Mere-Mortal Version: Assure your customers that you relate to the problems they face. Todd Hills, himself a bankruptcy survivor, uses an I-feel-your-pain video to promote his online pawn business.
Lady Gaga Version: Record labels hate you? Use social media to promote concerts and recordings and, eventually, leverage that into a major-label deal.
Work Around the System
Mere-Mortal Version: Banks mistrust you? Raise money from friends and neighbors, as Kristy and Coulter Lewis did, via online fund-raising platforms, to launch their natural-popcorn line.
Create A Community
Lady Gaga Version: Use your Twitter following to continually thank, thank, thank the fan base. (She also calls fans her faith and her religion.)
Mere-Mortal Version: Solicit suggestions from customers, and respond to their complaints. Blogs help; so do Facebook and Twitter accounts.
Kristy and Coulter Lewis, a married couple who live near Boston, have had to work outside the system to raise money for their natural microwave-popcorn company, Quinn Popcorn. They carry a steep mortgage and are still paying off student loans, so getting bank financing was a very long shot. Several months ago, Coulter made a video featuring an emotional appeal for funds and posted it on Kickstarter, an online platform used mainly by artists to raise money for creative projects. Within days, $10,000 was pledged to their cause -- with no need to pay the money back. "It's out of the goodness of [donors'] hearts," gushes Kristy. Through continued pledging, Quinn Popcorn has now raised $23,000 from nearly 650 backers. The company has been able to pay its suppliers for start-up materials, and it will soon begin selling its popcorn on Amazon.com and in selected Whole Foods stores.
Lesson Three: Build a community.
For Gaga, it's almost a higher calling. She has referred to her fans as her faith and her religion -- that is, when she's not calling them "my little monsters" (and herself "Mother Monster"). With nauseating frequency, Gaga credits her fans for supporting her, and her social media community -- 12.5 million Twitter followers and counting -- helps her boost music sales, along with anything else she promotes.
Kristy Lewis, the popcorn entrepreneur, can only dream about those kinds of numbers. But she also feels a great indebtedness to her backers, one that inspires her to update her company's blog almost daily, no matter how exhausted she may be at 2 a.m. In return, her blog followers and Facebook friends have helped her choose flavors for her popcorn (peanut butter honey, for example, was dismissed as "too messy"), and they've pitched in on the couple's Kickstarter campaigns. The experience has made Kristy evangelical about her business: "It's more than a product; it's a way of connecting with people and friends."
But would Kristy go so far as to wear a raw-meat dress, as Gaga did at the 2010 MTV Music Awards, if it were good for the brand? "Yes, I would," Kristy says, "but I'm not sure how I would feel about it, since I haven't eaten meat for the longest time." As for Hills, of Pawngo.com, no meat suit, but he tells us he would consider a Batman costume.