Tag Archives: Startups

The Lie of “Live Won’t Save Music”

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The Introduction

Yesterday, I posted my second article inspired by Fred Wilson’s comments to Jason Calacanis during LAUNCH, wherein I focused on his comments about Kickstarter regarding the music and movie industries. The post itself became too long to explain the economics of the paradigm (of the music industry, at least), so I figured it would be better to do so here in a more focused post. So let’s jump in.

The Lie

In the music business, there’s a well-known adage: “Live won’t save music.” This is the argument that many within the established major label machine use to fend off the assertion that free distribution of music would actually help the music industry in the new digital era. The argument is that artists can’t make enough on a live performance to offset losses they would see by distributing their music for free. And in some cases this is true; income from live shows may not be able to offset those losses…for the major label artists, who have huge stage crews, large arena shows, and a long list of people to pay back (not least of which is their record label). 

The Secret

What industry professionals don’t tell you is that live shows are where artists have historically always made most of the money that goes into their pocket. Money from album sales most often gets paid back to the record label and company, whose “signing” of the artist was simply a monetary advance in the first place. In 1993, well-known artist/producer Steve Albini took aim at the expenses squeezed from artists in his essay “The Problem With Music.” Excerpts from the essay clearly detail how the real economics worked behind the scenes.

The Simple Economics

This simple economic reality means two things: 1) That it’s true that major label artists like Beyoncé and Robin Thicke may very well have a hard time making any real money from live shows and will possibly need to continue to rely on the age-old system’s business practices, and 2) That newer, increasingly independent artists can leverage this new business dynamic to their advantage. Whereas their major label peers are essentially tied to the old system (and streams) of revenue, newer artists who are either fully independent, or have contracts with smaller indie labels which afford them more control, don’t need to sell 150,000 albums or fill an arena tour to make a profit. In fact, they will have an easier time of it, precisely because their “stage crew” many times may only consist of a friend from high school watching the merch table.

And this is where Wilson’s comment comes into play, and is exactly right; crowdfunding platforms like Kickstarter and Indiegogo provide a way for artists (both inside and outside the music sphere) to secure funding for that next tour without being on the hook for ~$400,000 in album distribution and tour expenses.

In fact, there are many artists now exploring the possibilities of free precisely as a way to use their music as a means of marketing to jack up the money they’re able to raise on sites like Kickstarter. By using their music as a “free sample” of their brand, artists are able to explore the dynamic of giving their prospective fans a reason to come out and see them live, buy a shirt, bring a friend—all things that are better for them than the money for one album sale anyway. Music is increasingly being used by these artists as major means of marketing and branding, rather than solely as an end commodity for sale.

You can’t argue with math, and here’s reality: How many times are you compelled to and/or do you buy a song or album? Just once. Why would you buy it again unless you had to? But if you examine the same dynamic with respect to going to a show, or buying a t-shirt, suddenly the answer is “as many times as you want.” It becomes a self-feeding cycle, wherein new possibilities are presented by the power of crowdfunding, and not having to go to a major label for the financing. It boils down to simple arithmetic.

The Album You Had to Buy Over and Over Again

It’s worth noting, also, that the established music industry got used to people buying the same album(s) over and over again because they had to. With each subsequent technological change, that Led Zeppelin album you loved so much became obsolete, and thus you needed to shell out more money for something you already had. Buying music on ’45’s became buying the same music again on LP’s, then again on cassettes, again on CD’s, and then again as basic mp3 files (usually off iTunes).

But something happened during that last transformation: music became distilled down to only the information, sans any physical product, and with the power and reach of the internet, distribution costs dropped to zero. Suddenly, the ability to reproduce and distribute music became the cost of 10 minutes of your time, and didn’t even require the kind of distribution networks that record labels had spent decades building, growing and protecting.

And who was it who lost out the most? The demographic that gleaned most of their revenue from physical album unit sales—the major record labels. But the artists now had a new reality in front of them: mass distribution, but without having to indenture themselves to the “physical CD sales-dynamic.” They were (and are) free to make money where they always have: in the live sphere with grass-roots ticket sales and merchandise sales. Thus it becomes clear that the statement “Live won’t save music” is inherently a biased lie. Live won’t save the old music industry, but those within the industry who are adapting to the new terrain are doing just fine exploring the new possibilities before them.

The New Free/Live Dynamic

Those are the people I would place my bets on. They have no stake in the old paradigm, and are happy to push it aside to see what the new free/live dynamic can do for them. This is where the real money in the music industry will be in the next decade. Not grasping with frail fingers at a business model quickly fading away, but exploring with wide-open eyes the opportunities that “free/live” afford both those in the music trenches, and their prospective fans. Don’t be fooled; there’s still a ton of money and opportunity in the music industry. You just need to know where to look.

Why I Practice Singing As Much As Pitching

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Image courtesy of HamptonsAudioVisualRentals.com

 

Years before I started practicing my business pitch as a CEO, I was practicing how to do two other things in front of people: speak publicly and sing. Exercises in public speaking began as early as grade school, and served me well during science fairs and group presentations. However short-lived my science career turned out to be (another story for another time), the science fairs on the county and state levels bolstered not only a comfort, but an enjoyment in speaking before a crowd.

As I entered high school, though, I began to do something else just as seriously: I began to sing. I began to practice singing as often as I could, and not just in the shower. I was practicing with headphones, a microphone and amplifier setup so I could know exactly how my voice sounded coming through a loudspeaker (of sorts). I was doing the band thing with my friends, and we were going to conquer the world. That meant I needed to be able not only get up in front of a crowd and make some sort of sound come out of my mouth, but I needed to be able to control it.

I needed to be able to control every aspect of my voice: the tone, the inflections, the power, the breath, the range, and the melody. That’s what it took to be a lead-singer and/or rockstar, and that’s what I was going to do. I couldn’t have known it at the time, but all that practice for my music career—understanding the qualities of my voice and what it was (and wasn’t) capable of—is proving invaluable well beyond my intended career as a musician.

I’ve blown my voice out numerous times in the past exploring new ranges, techniques, pronunciations, and vocal styles. I’ve had days where people inquired about my “laryngitis.” But it’s ok, because a day later I’m all ready to go again, and each time I nail a new song and find the delivery that works for my voice, I get to know my own talkbox a little better. With that discovery comes a deeper understanding of how my voice sounds to other; its melody, its tone, its inflections. (It also has helped with my breathing, which is something I believe every public speaker should continually work on).

But the most important thing I’ve grown to have a deeper understanding of is the power and range that my voice can have. That’s something that transcends the rock stage and applies directly to my trajectory now as a CEO. Speaking comes with the territory, and having a notion of my range and potential power is like having an ace up my sleeve. I know how far I can push myself before my voice disappears under too much strain, and I what I can now do to avoid that blowout.

I practice singing any number of things as I continue to test my voice and its boundaries: post-grunge, alternative rock, ska punk, pop, metal, classic rock, rap, reggae, male vocals, female vocals—anything that piques my taste and can give me more of an edge. In retrospect, practicing singing has been as much of an advantage as practicing my business pitch. I would suggest to anyone who spends time speaking in public to start singing—really singing: really try to nail that melody, try to match and control your breathing, find the inflections that work best for you, and find your own power.

Besides, we all wanted to be rockstars at some point, right? Maybe there’s still time for some of us—maybe all of us.

Fred Wilson Believes in Things That Everyone Else Thinks Are Wrong (But Are Actually Right)

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A couple of weeks ago I attended the LAUNCH Festival in San Francisco, where I saw a number of amazing speakers over a three-day period. Needless to say the cross-country trip from Atlanta was worth it. However, despite the fact that there were numerous speakers whose points have stuck in my head since then (particular favorites of mine were Yancey Strickler (Kickstarter), Jeff Weiner (LinkedIn), Chris Sacca (VC) and Tony Hawk (yes I’m a huge fan of skating and the Brown Brigade)), the speaker whose comments were most easily accessible to me was Fred Wilson (Union Square Ventures).

Since the wrap-up of the festival, Jason Calacanis has published a couple of posts and tweets noting the fact that his fireside chat with Wilson was one of the most popular interviews of the whole event. This I readily believe, as I sat with rapt attention as Wilson discussed a number of topics. Actually, Wilson made so many good points during his chat that I need to dissect it through a number of posts rather than in just one.

Of particular interest to me though was one thing that Wilson said. It clearly demonstrated to me his line of thinking when it came to identifying new companies that he liked to become (or was likely to become) involved in: “Believe in something that everyone thinks is wrong (but actually turns out to be right).”

That terse statement, which Wilson actually attributes as something Bill Gurley once wrote, underscored his thinking when it comes to herd-mentality and how he identifies opportunities. While I’m sure there are certainly other factors at play, the qualifier word “wrong” is an interesting choice for his (Gurley’s) adage; it implies quite clearly that he identifies opportunities not only in areas or with companies that might be viewed as rare or unconventional, but ones which may be entirely against the grain of “logical” thinking at the time. This by extension highlights the fact that one can expect Wilson’s current and future investments to be in areas or companies wherein others might not dare even entertain the notion of involvement. He benefits from the fear factor that clears the road in front of him to make it an open highway while others see the words “do not enter.” [1]

Though I’ve followed Wilson’s blog for some time now, since LAUNCH I’ve been reading his posts with this new thought in mind. With each new post I read, there’s now that nagging question in the back of my mind: “what’s the thing in this post that Wilson has identified that others think is flat-out wrong (but is actually right)?” There isn’t always a phrase with a blinking sign screaming “it’s me!” but the point remains that with each subsequent post comes a learning opportunity to go back and reexamine a possibility that I might have dismissed earlier as a “do not enter” sign.

I’m interested to see Wilson’s posts over the next month or so. I’m curious to see what piques his interest enough to blog about it that others may have already dismissed or avoided. I suspect that Wilson’s thought process might very well be as alternative as his Egon Schiele-esque Twitter profile pic (by the way Fred, kudos on that; art-history nerds like me rejoice in the fact that so many within the tech industry use so much modern art imagery). I believe that’s precisely how he’s able to identify opportunities that others miss, or dismiss altogether.

 

Thanks to Dad for reading drafts of this.

 

Notes


[1] Wilson also stated that he had been on the board of a non-profit called DonorsChoose for a few years, which, as he put it, “does exactly, exactly what Kickstarter does” for teachers and public schools. As a result of his involvement with this previous venture, which was raising between $30-40M at the time, Wilson notes that he had a bit of an inside look at the very sort of mechanism upon which Kickstarter was building.

Mean People Fight; Creative People (Sometimes) Argue

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In his essay “Mean People Fail” a few months ago, Paul Graham has provided more food for thought (for me, at least) than much of anything I’ve read of late. [1] The essay itself is a clear caution against acting nastily to others, as such actions can impede or prevent one’s intended goals. Most of the themes discussed therein I agree with readily as they are so common-sense that to disregard such proposals seems utterly preposterous.

There is, however, one area which Graham touches on lightly that I feel needs a little more attention. Graham’s short paragraph on fighting is truthful (I believe) in its intended message and account of reality. However, we all speak from our own experiences, and I feel that the term “fighting” may be too broad a term, particularly for an industry as genuinely artistic and creative as startups and tech. While I understand Graham’s point here (he is undoubtedly using the term “fighting” to refer to pointless disagreements, high tempers, and accusatory tones that lead nowhere), I think a deeper examination is warranted.

I fear the term “fighting” may be overrepresented in cases where the term “arguing” fits more appropriately. In an industry where creativity and outthinking the competition are not only realities but necessities for successful startups, it may very well be in times of arguing differing views that an answer or pivot point presents itself. Good answers and opportunities do not always appear within the vacuum of “a good day” and sometimes take a little more pressure to fully crystalize.

Much like the music industry where arguments between band members or artists and producers can (and many times do) produce the best creative results, arguing is not only a luxury but a necessity. The creative frustration can at times reach a critical mass before a meltdown occurs. But if the proper alternative lines of thinking are presented at the right time, then that critical mass not only returns to normal, but can yield a result not viewable before the high rise of creative pressure and focus. It is this creative force which drives many musicians, and which I’m sure can be likened to the creative drive to build that drives those within the tech space.

Creation is a messy, dissonant, sometimes quite frustrating process. But it’s precisely that power and sheer will to succeed that many of the great ideas (albums) are born from. Graham is not wrong about his discussion of fighting; pointless accusations and infighting drain a startup’s (as well as a band’s) lifeforce and ability to thrive (it’s this definition of “fighting” that I am convinced Graham is referencing in his essay). A band, like a startup, is very much like a marriage: both are living, breathing organisms, requiring constant care, adjustment, and which, at times, can become arenas for argument and restructuring. But, though the prospect of adjustment may pose a distasteful reality for a startup team, it could lead to bigger and better things. Then you go from being Iron Maiden with Paul Di’Anno to being Iron Maiden with Bruce Dickinson. [2]

 

Thanks to Mom, Dad, Charles Jo, Terrence Yang, and Scott Menor for reading earlier drafts of this.

 

Notes


[1] This essay does not reflect the beliefs of Paul Graham or any of those mentioned in his “Thanks” section, except where the original essay’s thesis was referenced. These are merely my own thoughts on the the thesis that Graham presented in his original text.

[2] Though I prefer the lead vocals of Bruce Dickinson, I quite like the Paul Di’Anno releases of Iron Maiden (1980) and Killers (1981) as well, since both albums are notable in their own rights. However, it is indisputable that Iron Maiden grew to new heights under Dickinson’s leadership, thus the point of the example in the essay.

No, Everyone in Management Is Not a Programmer

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Just over a couple weeks ago on New Year’s Day, Techcrunch ran an article entitled “Everyone in Management Is a Programmer.”

Though I’m sure that the author, Adam Evans (co-founder and CTO of RelateIQ), had only the best intentions in trying to show programmers that any of them could cultivate the skills necessary to be effective managers, I think the way he’s attempting to go about illustrating his point is limiting when examined within the greater context of tech and business.

In targeting programmers and/or coders in the title of his article, Evans, whether he means to or not, excludes from his discussion those of us who might not have the technical abilities of programmers. While I agree with Evans’ attempt to encourage tech-savvy people to step out of their comfort zones and become successful managerial material, I disagree with his implied suggestion that one must have technical prowess to become a successful manager, and by extension, a founder, CEO, or any other executive within the tech field. The concept leaves out a whole slew of professionals within the tech space who do not consider themselves coders, but who still bring to the table skills that are just as important as programming knowledge.

I certainly understand Evans’ thought process and commend it: those who identify as programmers can certainly cultivate the skills to become effective managers and break out of their comfortable and familiar role as “the tech person.” But I think the ability to better oneself comes from drive and dedication derived from one’s inner character, not from the specific function which one performs at any particular time, whether it be coding or something else. While laudably encouraging programmers and coders to step outside of their comfort zone and become managers, Evans goes to the opposite extreme by suggesting that only programmers and coders can aspire to managerial positions.

It is teamwork that builds great companies. Great managers are those members of the team who lead others, who motivate the other team members and drive the enterprise forward. Yes, programmers and coders are important players on the team, but they are not the only players. Those involved in marketing, finance, public relations, design and layout, legal, and public speaking are also members of the team, and with the requisite leadership skills may realistically aspire to become great managers as well.

Perhaps one of the best recent examples of how the “coding persona” need not be the only one in a company’s top tiers is Ruben Harris’s article “Breaking Into Startups” which was posted a few days ago. The article received a lot of attention (and rightly so, in my opinion) as it describes Harris’s transition from a finance/banking background in Atlanta to a position at a tech startup in Silicon Valley. At this point, I’ve read Harris’s piece a few times already—it’s well-written and insightful, encouraging without becoming preachy. (Truly the mark of a great writer is when the reader of the piece feels as if the piece were written specifically for them). I think my personal most significant takeaway from the article is how Harris demonstrates that it was his desire and networking prowess (and the financial/marketing knowledge he knew he could bring to the table) that led to his successful introductions and subsequent job opportunities.

Evans’ thesis is flawed for a second reason; the belief that people can be programmed the same way as a computer code is flatly false. Concerning this thought process, firstly, no, they can’t—people are not computers precisely because they can be unpredictable and do not work within the same dynamics as a programmable machine and/or line of code. It is this unpredictability and ability for non-linear thinking that creates the very pool from which innovation and unique thoughts spring. To assume that this can be contained, measured, predicted, programmed—well it’s about as predictable as Ian Malcolm’s chaos theory-dinosaur point in Jurassic Park. [1]

Secondly, to attempt to “program” a person (whether that person is your customer, VC investor, employee, team member, etc.) does not reflect well on one as either a manager or a person. Rather than a productive quality, it more than likely comes across to other people as a need to resort to forms of manipulation in order to move one’s business ahead—not a realization I would want to have if I was an investor, employee, potential partner, etc.

Evans’ article takes a good step by encouraging programmers and coders to move into managerial positions. His appeal to coders I think carries with it a deep respect for those whose work he understands first-hand, and whom he seeks to benefit by sharing his own experience and knowledge. However, not everyone in management is a programmer, and people cannot be “programmed.” Successful managers—whether or not they are programmers—are those who find ways to motivate their peers (employees, teams, investors, customers, etc.) that come across as win-win situations, not as attempts at “programming” and predicting their actions in the future.

My respect to Evans for attempting to help his fellow programmers move out from their comfortable places behind the keyboard to take more active, managerial roles in their companies. I think his intentions will serve his team and company well. But I caution against alienating those who are not coders. Rule number one of any business: never seek to speak to one portion of your customers at the expense of alienating another. Those of us who are not coders are still here, and we are still integral in the equation. We build the same kinds of companies and assume the same levels of leadership; we just do it differently.

 

Thanks to Dad for reading early drafts of this essay.

 

Notes:

[1] Dr. Ian Malcolm, the mathematician character in Michael Crichton’s novel Jurassic Park (1990), was a characteristic cynic, though no more so than when he scoffed at the idea that the park’s creator, John Hammond, thought he would be able to “control” nature. Malcolm demonstrated his cynicism mathematically through explanations of fractal design and chaos theory as they pertained to nature and the growth of life.

10 Things Startups and Local Bands Should Avoid Screwing Up On

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For those who may not know, we in the music industry are quite fond of lists. Best albums, best songs, best guitar players, etc.—we love to compile and compile. And we love to argue our points a thousand times over, and then a few more thousand times after that. It makes for good dialogue.

One of the more popular lists to compile now, though, has a bit more meaning behind it (in my opinion) than the writer simply touting his or her new favorite picks for the week. Lately, the list of annoying things that (local) bands do has been getting longer and longer, and they’re becoming more prevalent within the community. A good (though albeit too lengthy) example is the one that MetalSucks compiled back in 2008 which I’ve seen making its rounds again in the new year.

As I read through it again, however, it occurs to me that many of the points that are being made might very well apply to startups within the tech sphere as well (or any other industry for that matter). Malicious intentions not withstanding, numerous points jump out at me as translatable in an almost eery way. Thus I will take what I think are 10 of the most important points and translate them from the independent (local) music arena to that of the startup tech world. Let’s begin:

1. Bands who feel a need to bang on their drums and guitars in an annoying display of a lack of talent before the doors to the club have even opened = Startups that feel a need to tell you they will have the next big thing before they have written a line of code or made any effort to set up a structural base for a company. You’re not fooling anyone, and just come off as delusional and annoying until you have an actual product to play/build/sell. (The term “stealth mode” comes to mind).

2. Bands who have more roadies than actual band members = Startups that have more employees/cofounders than are actually needed to get the job done and run a company efficiently. You’re only hurting yourself in the end and people actually look at those extra cooks in the kitchen as a detriment too early on. 

3. Bands who arrive at the club and state that they’ve talked to “someone” about a paying gig, but when asked who, can’t remember the person, all the while insisting that it was “just someone who worked at the club” = Startups who try to “network” by insisting they have a mutual contact and that the person has totally introduced you once before. Again, you’re not fooling anyone, and in fact are coming off as scheming and dishonest. Take the time to build the relationships you want to cultivate rather than trying to take the shortcut to your end goal. 

4. Bands whose draw is so bad that even their guests don’t show up = Startups who have absolutely no feedback at all because not even their friends want to use and try out their product. If you can’t at least sell your music or product to your friends, you have a major problem. 

5. Bands who have no guests because they have no friends = Startups who have no users or support because they too have no friends. This one is arguably an extension of #4. Takeaway: have a product that’s at least good enough for your friends to want to use it. (Double takeaway: don’t be a tool; have friends who want to champion you). 

6. Bands who show up wearing “All Access” laminates at a club where “all access” means just about nothing since it’s just a stage and soundboard area = Startups who wear what they think they’re supposed to (maybe hoodies and quirky shoes) and act they way they think they’re supposed to (take this to mean whatever you will) in order to be “real” founders. Posing isn’t just an insult in the punk vein of the music industry; poseurs are everywhere and they are most easily identified as the people who seem really deep until you start interacting with them. Then you realize that they sing the song and dance the dance, but that’s about it. You don’t want to have this reputation as a band, and you certainly don’t when you’re a startup looking to break out amongst the competition. 

7. Bands who market themselves as “We’re ________, but with a mix of ________ and a hint of _________’s vocal/guitar sound” (Example: We’re just like Nirvana, but with some Green Day-style vocals and killer Van Halen guitar licks) = Startups who market themselves as “We’re _________, but for ________” (Example: We’re like Netflix/Uber/Facebook, but for candy/socks/refrigerators). No you’re not, and you’re cheapening both these companies and yourselves by suggesting so. If you have a similar business model, say that, but don’t speak in all analogies (especially since you want to distinguish yourself anyway). 

8. Bands who can’t play longer than a 10-minute set = Startups who have no idea how to last longer than a few months (i.e. have not thought about any structure or organization of the company beyond the writing of the code). This tells investors, customers, and your peers that you’re not capable of sitting down with a pad and pen and planning out how to take your idea from: an idea => a working prototype => a viable, long-term business. This is a particularly essential thing to figure out before you take any financing (think of it as having more than 3 songs before you get up on that stage).

9. Bands who don’t even have enough respect for their fans and musical peers to stick around for the whole show after their set is finished = Startups who don’t even have enough respect for their peers to reciprocate feedback when they receive it. Seriously, this is both a stupid and jerk move. Firstly, it earns you a poor reputation as someone who won’t reciprocate the good will shown to you because one of your peers may end up “competing” with you sometime in the future. Secondly, it’s stupid because you lose out on anything you might have learned from the experience to make your own startup a better company. 

10. Bands who grow supermassive egos and forget their fans and musical peers when they get a little taste of success = Startups who grow supermassive egos when they taste a little success and seem to forget their early supporters. Regarding bands/artists, yes this does happen (I’ve experienced it myself) and no, it doesn’t end well. Don’t forget the people who came out to your show before anyone knew you, or the other bands who took you on tour when you were nobody. Regarding startups, it may happen a little less often (in particular ways), but I can’t imagine it doesn’t happen at all (again, I’ve experienced it myself). Don’t forget your early supporters and believers, and certainly don’t ever forget your core customer-base. When the smoke clears, they’re most likely the only people who will stand by you (unless you’re very lucky).   

These are just a few points that occurred to me to have crossover appeal and application. Certainly more exist, though I think these are the some of the most obvious. In many ways being in a startup is like being in a new local band (who would’ve thought?)—we should all strive to avoid these pitfalls. Otherwise, we’re just that crappy local band that everyone wishes would just finish their set and get off the stage.