MF DOOM: three lessons on business and finance

On New Year’s Eve, FT Alphaville heard the news that MF DOOM — a metal-mask-wearing…

On New Year’s Eve, FT Alphaville heard the news that MF DOOM — a metal-mask-wearing rapper famed for his loquacious flow — had died at just 49, on October 31.

Like Rakim before him, MF DOOM was often referred to as the “rapper’s rapper” — held in such regard by his peers that his industry reputation outweighed his popularity. He will be sorely missed by this FT Alphavillain, even if we’re not, much as we might like, an MC.

So why we are writing about MF DOOM? Well, as a self-styled supervillain, he regularly discussed business in his songs. It’s hard to be a mastermind criminal without a rich source of funding, as you may well know.

With that in mind, here are three loose business and finance lessons from the metal-faced rapper with “more sole than a sock with a hole”.

Madvillain (MF DOOM & Madlib) — Shadows of Tomorrow ft. Quasimoto

Yesterday belongs to the dead
Tomorrow belongs to the living
The past is certified as a finished product
Anything which has ended is finished
That which is perfect is finished

In finance as in life, MF DOOM seems to be suggesting that all data is inherently backward-looking and therefore dead, or irrelevant, to the future. To base any forecasts on that which has passed is to avoid this fact. So when plugging in the terminal value in your discounted cash flow model — whether it be the growth rate, profit margin or working capital requirement — take into account that you’re probably going to be extremely wrong. Really, in our view, this song is as much a paean to the equity risk premium as it is an ode to Sun Ra.

MF DOOM — Rapp Snitch Knishes ft. Mr Fantastik

Rap snitches, telling all their business
Sit in the court and be their own star witness
Do you see the perpetrator? Yeah, I’m right here
F**k around, get the whole label sent up for years

MF DOOM wasn’t just a ruminator on the temporal issues in finance, but also on the practicalities of running a (criminal) operation. The lesson of Rapp Snitch Knishes isn’t just that the anyone in your black market enterprise can rat you out to the authorities, but that if you choose to do it yourself, it’s best to do it on your own terms. Think, for instance, of the $114m SEC whistleblower award given out recently or, in a lesser sense, the co-operating witness in the Wirecard case.

Madvillain — All Caps

All bets off, the villain got the dice rigged
And they say he accosted the man with the sliced wig
Allegedly, the investigation is still ongoing
In this pesky nation he gots the best con flowin’
The pot doubles, now they really got troubles
Madman never go pop like snot bubbles

Running a criminal enterprise isn’t just about controlling those who will speak out, but also about making sure you don’t draw undue attention to yourself. This is a particularly acute issue if you’re a publicly listed company. Fantastic but fake results draw in investors who are willing to turn a blind eye to suspect accounts receivable balances, a web of subsidiaries with no clear economic need, or margins that are too good to be true. In turn, this may cause the share price to outperform the market, and the problem with that is you attract scrutiny and FUDsters. So, to avoid going “pop like snot bubbles”, make sure you keep your operation as low-key as possible.


Related Links:
Hip-Hop Needs No Other Supervillain After MF DOOM — Verge
Strange Days: Remembering MF DOOM — GQ
Remembering MF DOOM — The Ringer