Episode  MSP67  Chasing the Dream: Start Ups & The New Rock & Roll
Episode  MSP67  Chasing the Dream: Start Ups & The New Rock & Roll
The Dream is fame, riches, untold power. Why do thousands of people dedicate years of their lives to making it, despite the tiny odds?
Produced and co-presented by Jeff Sandhu for BFM89.9
These shows are dictated to and transcribed by machines, and hurriedly edited by a human. Apologies for the typos and grammar flaws.
Whenever a new trend emerges, or the Zeitgeist shifts, that new fad is often branded ‘the new rock and roll’. Calling start-ups the new rock and roll isn’t a novel phenomenon. Even for MSP, it’s old news. But are the parallels between music and tech stronger and stranger than we think? Clearly, Matt thinks so, or I wouldn’t be doing this introduction.
Matt, It’s not unusual for you to base these shows around an article you read somewhere. What is unusual is that today’s show is based around an article you wrote. Are you trying to be Donald Trump and Fox News?
· It’s tempting, isn’t it? Closing the loop. Becoming your own source of information.
· It’s not as weird as it sounds. I write less than I did – mainly because there aren’t so many places to write for locally, so now it’s mostly on the Kulturpop website and medium.com.
· Normally, when there’s a show+article link it’s the other way around.
· The show comes first and then I write something about one aspect or another.
· This was a piece I had no intention of turning into the musical theatre that is our show.
· And normally, when I write something and hit publish, I promptly forget about it, but this one has been fermenting in my brain.
Sure. But as I said in the intro. Everything is the new rock and roll. And start-ups have been the new rock and roll for a long time.
· That’s absolutely true. Comedy was the new rock and roll for a while.
· Video games were the new rock and roll.
· Given the amount of money floating around, sports stars are very much the new rock and roll stars.
· I think hedge fund managers dreamed of being seen as rock stars.
· I may be stretching it to say that 3D printing was the new rock and roll.
The new prog rock, maybe…
· Everything starts with its genesis, so I’ll take that.
· And look where we are today; start ups and tech companies and social media influencers dominate the landscape.
But saying they’re the new rock and roll isn’t new. We’ve been saying it for a long time.
· Sure. But when we said it, we really just meant that these things were trends.
· When People were buying playstation discs instead of CDs, suddenly video games were the new rock and roll.
· Comedians were packing out stadiums and getting booked at summer festivals, so comedy was the new rock and roll.
· Sportspeople are raking in hundreds of millions and the stars are feted and treated like VIPs everywhere they go, so sports were the new rock and roll.
· Ditto influencers – and I guess, bloggers before them – they’re celebrities, so influencers are the new rock and roll.
· To the point where, for all the attention it gets, our collapsing biodiversity is the new rock and roll.
I don’t think we should describe that last one as anything except a catastrophe…
· And that’s kind of the point.
· Of course, biodiversity isn’t the new R&R.
· None of these things is. It’s a lazy shorthand for something being popular.
· Which is where it’s a little bit different from start ups.
Do you mean more from a business perspective?
· Absolutely. There seem to be some parallels between the two industries: music and tech start ups.
· When you’re a comic you keep most of the money you earn.
· The same goes for sports stars and influencers.
· Yes, you have agents and managers and all the rest of it who all take a percentage.
And start-ups differ how exactly?
· In the other examples, say as a comedian, that entourage, that support staff, takes a percentage of what you earn.
· In music and start ups it’s the other way around: the star or the person with the idea takes a percentage of their own product.
· Let’s say you’re Cardi B.
I don’t think anyone is going to take me for Cardi B.
· Alright then, I don’t know, Calvin Harris then.
· You have a deal with a record company for your recorded work.
· Every time one of your songs is bought, downloaded or streamed, you get a percentage of what that song earns.
· What percentage depends on how big a star you are and how canny your lawyers and managers are.
· And that’s where the similarities with start-ups really begin.
Because start-ups often rely on other people’s money?
· Exactly. We’ve kind of become used to the start-up model being one where you run for a few years without making any real income and look for external sources of money.
· Those investors get a chunk of your business in return unless you’re prepared to bootstrap your company, grow less fast or, for a really wacky idea, you have a company that generates revenue and profits.
How does that compare to the music industry?
· The music business is a bit less wonkish.
· The record company fronts a lot of your costs.
· They advance you the money to make your records and videos.
· And to cover your living costs.
· Depending on your deal, it’s likely that marketing costs will be split between you and the company.
· I’m simplifying here. Music contracts are typically incredibly complex.
· And 360 deals are more common place now, where the record company also takes a cut of your live and touring or merchandising income.
And all that upfront money has to be paid back?
· It’s not free money. It comes with caveats. You have to pay it back out of the money you earn.
· And remember, you are only earning a few percentage points.
· So those debts can get pretty huge, pretty quick.
How does that link us back to the worlds of tech and start ups?
· Because it’s a numbers game.
· You’re racking up debts in both industries, but it’s at a low risk.
· By and large, if you fail, whether you’re signed to a music label or you’re looking to break the NYSE, no one is going to ask for their money back.
· One of the reasons these companies ask for high percentages is because you’re a high risk.
· If you weren’t, then high street banks would be handing out loans to anyone who said they could be the next Nicki Minaj or Jack Dorsey.
And the real world isn’t like that?
· Well, no. Nicki Minaj would be a lot less entertaining if there were hundreds of her.
· Imagine a world where anyone could say they wanted to be Coldplay.
· Or a Bono convention. There simply aren’t enough world leaders for everyone to meet.
· And the simple fact is, most of us would make horrible music.
· In the same way that most of us would suck at pottery or astro-physics.
· There’s no recipe for sure-fire success and that’s something that all the business ventures share.
So the music industry and the start up scene share an appetite for risk?
· As I said, this is a numbers game.
· Making pennies on the dollar.
· Otherwise the investments don’t make sense.
· That one success not only has to pay for the 20 other failures, it has to make soaring amounts of money.
· But their risk is spread, and overall, their investments are small in relation to their overall turnover and profit margins.
It’s actually the artists and the entrepreneurs who have a larger appetite for risk?
· Yes. And also their employees in the case of the people who are working for start-ups.
· Because by and large those guys are trading larger salaries at a more established company for a share in the sale profits of the start-up.
· But one thing they all have in common is that they really need it to work.
· Usually, there is no plan B for them, no hedge.
· This is what they have committed to for the next 3, 4, 5 years…
Whereas for a record company or VC firm it’s a portfolio play?
· Exactly. By and large the money they give is progressive.
· In the record company’s case, they can pull out pretty much at any time if it looks like the artist isn’t performing as expected, or if the market has moved onto another trend.
· For a while mash-ups were huge. All the music companies were signing and releasing tracks Now, the market has moved on and its mostly underground producers putting out bootlegs on YouTube.
· It’s the same with start-ups. The VC will give you funds designed to see you through that round.
· If you hit the targets and the development looks solid, they may invest again or help you to find investors for the next round.
· But they have that ability to walk away.
So far, you’ve painted a picture of the similarities between these industries, but they are very different.
· Sure. We’ll get to the biggest similarity after this but you’re right.
· Financially they’re very different. Not so much in terms of the firms backing them.
· VCs and record companies have sound financial underpinnings, they tend to be cash rich, which is good, because they’re investing cash.
· But certainly the way the money behaves once it’s been invested is really different.
· Giving money to an artist helps them to make tracks and videos and tour, but it doesn’t directly make the artist more valuable.
· But when you give a start-up firm money, even if it isn’t making any, somehow it gets more valuable.
That’s just how the game works…
· It is odd though.
· It’s the value of an intangible asset: potential.
· Your company loses money. People give you more money so you can keep making losses, and somehow that company increases in value.
· Your initial angel investor may grab 50% of the company in exchange for a round of Starbucks and a couple of turkey subs.
· If your company appears to be progressing successfully, which in most instances means accruing users rather than profits,
o everyone’s stock is diluted with each fresh funding round,
o and people are willing to pump in even larger sums of money for an even smaller percentage.
· And hey presto, your unprofitable company, which may be profitable
o in the same way that one we may figure out what dark matter is and where it goes during the day
o suddenly this unprofitable company is worth billions on the basis that someone has covered a percentage of your operating losses.
I guess you’re mentioning dark matter because you’re planning a show on it?
· Yeah. Whenever we have difficult subjects, I try to seed them into the conversation a few weeks before, to try and make them seem more interesting and mysterious.
· Gives people a bit of time to adjust.
After the break, we’ll be entering the dark world of The Dream.
What’s The Dream?
· For all the similarities we outlined before the break, The Dream is where the music industry and start-ups start to merge.
· The Dream is something intangible. Stardom, impossible riches.
· It doesn’t matter that the odds of winning the lottery are roughly the same as hitting gold in either of these industries.
In a predatory way?
· I mean, the system has evolved so that the odds are never on side of Dreamers.
· As I said earlier, to a music company or a VC, you’re just a product, one of many they hope will succeed.
· They stand to lose a little money but your world revolves around this project.
· And there’s a timeframe that’s kind of common to both industries.
· Yeah. If you’re starting out in the music industry.
· You might be a rapper. An indie band. An EDM producer.
· We hear that phrase ‘an overnight success’.
· Adele was an overnight success. So was Facebook.
· But that’s an outward perspective and a media narrative.
· Whether you’re coding or recording demos, It generally takes years of effort to be an overnight success.
· My demonic powers mean I have no need of puny human success.
· It is interesting that these femonic myth have sprung up around the music industry.
· The idea that musicians and rock stars have sold their souls to the devil.
· Because their music and success seems to come out of nowhere.
· Starts up and music have that in common.
· We were all quite happy with Friendster and MySpace.
· It might look like it but it’s not a straight line from those companies to Facebook.
· We were happy with predictive text messaging on feature phones, so how do you get from there to Twitter?
· When you look at them with hindsight, those journeys seem so obvious and inevitable now.
· But they certainly weren’t ordained.
In other words, a lot of hard work and time goes into overnight success?
· Yeah. You know, a band might have been together for years before it gets signed to a label and we get to hear the music.
· Digital platforms have upended things a little, but there’s still an issue of discovery.
· Unless you’re really lucky, your song will be one of hundreds of millions floating around online.
· So most people still go through that process of getting some musicians together, practising, writing some songs. Developing your sound.
· Playing live, finding a following.
And you still don’t have a record deal?
· You’re probably looking at a couple of years, probably a lot more, before you go from setting up the band to the ink on the contract drying.
· Then there’s recording and fitting into the company’s release and marketing schedules.
· Even if your first single is picked up, it may take weeks or months for it to gain momentum.
And the start-up scene is the same?
· It’s kinda similar.
· For starters it’s usually a group of guys who have The Dream.
· It doesn’t matter if it’s music or business.
· It usually involves a lot of sitting around on sofas, eating junk food and watching bad TV.
· And telling other people, usually parents and partners, that the sitting around is actually work and development.
· You may even be guilty of using that cringey phrase, ‘this is our process…’
It’s like an episode of That 70s Show?
· Yes, which is why that show is so excruciating to watch for many people.
· These are the basic ingredients for The Dream.
Which comes first? The Dream or The Idea?
· Definitely The Dream. The Dream is to do something big, together.
· The Dream is usually pretty simple in essence.
· The Idea is rarely the first idea.
· Most ideas will quickly be shot down and mocked by the rest of the group.
· Which is the correct process: most ideas are bad. Superficial, half-baked and lazy.
· Occasionally they’re terrible.
· That’s not cynicism, that’s logic.
So The Idea, is probably number 3 or 5 or 7?
· There may be hundreds of ideas.
· Ideas often happen late at night.
· And morning brings realization that is was less an idea and more of a feature.
· Paul McCartney had the idea for The Beatles Let It Be half-in a dream.
· But we’re not Paul McCartney. Most of us would be happy to be Guy Berryman.
Who? The Coldplay bassist?
· Exactly. He’s the perfect example of someone who has worked The Dream to his advantage.
· He’s a founding member of one of the biggest bands in the world, but I imagine he rarely gets troubled for autographs when he’s buying disinfectant in Tescos.
Back to The Idea…
· There may be hundreds of ideas.
· And it may take hundreds of ideas for you to realise that it was the first idea, or the 3rdidea or 375thidea that was the one.
· Or at least it’s the best you’re going to come up with.
· For some people that idea is Let It Be. Or Twitter.
· For others, it’s some random cypto app or LadBaby’s single We Built This City on Sausage Rolls – that’s really exists by the way, you can Google it, although it might not be the best 5 minutes of your life.
· What they all have in common is that once it’s been decided on, everyone agrees to dedicate their life in the pursuit of The Idea.
But these are the successful ones…
· Yes. For these guys The Dream is a tangible thing.
· Even for Dreamers who get signed, or secure funding, most of them will fail.
· The vast majority of Dreamers will never even get that far.
· They’ll spend weeks and months and years giving their lives to The Dream.
· Never once doubting that they will be the next big thing.
· Years in poor housing, working insane hours, eating terrible food.
· Years of putting off their lives, sacrificing everything for the group and The Idea and The Dream.
It sounds pretty high pressure and intense…
· Which is why, whether you’re Facebook or The Beatles, someone always leaves the band amid petty fights and squabbles and arguments over percentages.
The Dream has a cost?
· Its biggest cost is time.
· As we were saying, the majority of dreams come to nothing.
· You might get a tiny bit of success along the way. A top ten app in Azerbaijan, or a hit single in Greece.
· Enough to make you think it’s worth hanging on for another few months. But it’s like the one-armed bandit that pays out a small win just as you’re thinking of stopping.
· Your eyes keep seeing the jackpot signs.
And it’s not always the best ideas that win…
· Luck and timing are crucial.
· It’s not always the best ideas that win out. As any fan of Mary My Hope will tell you.
· Exactly. The best band you’ve never heard of.
· If Larry Page and Sergey Brin had been a lot more focused on dungeons and dragons, we might still be Jeevsing instead of Googling.
· If Facebook had been a year later, we might all be on Mattbook.
· Or using MattHooks instead of Tinder.
· What would have happened had Paul McCartney might turned over and gone back to sleep instead of heading for the piano?
· A few tiny changes and our world would look very different.
What happens when that failure closes in? When the money runs out, the doors are closed or the guitars are repossessed?
· I think that may be the cruellest part of all of this.
· Rather than signalling that you should go and so something more useful to society, like make sandwiches somewhere, these Dreamers often pile straight back onto the roundabout again.
· How many times have you spoken to people who are on their 3rdor 4thstart up?
· Not even as part of The Idea’s Dream Team, just as employees.
· It’s a running joke in shows like Silicon Valley:
o the old timer giving it one last shake after being part of countless failed start-ups.
o Whose presence there tells co-workers that the venture is probably doomed to fail?
· The music scene is full of those same unsuccessful veterans. Chasing something that came alive in them in their teens.
· Unable to move on and into the normal world. To build a life or a family. Or, the pinnacle of life’s achievement, own a cat.
Let’s assume that we’ve successfully proven that start ups are the new rock and roll. I guess the last question is: are they just wasting their time?
· I don’t know. I mean, yes, most of them are.
· But we still need those dreams.
· “Thank U next” by Ariana Grande is one of the most heavily streamed songs so far this year.
· It’s not a song that means much to me, but the hundreds of millions of plays it’s had show that it means something real to millions of people.
· The same with Facebook. It means something to the 2bn people who use it.
· Those Dreams weren’t wasted.
And the failed Dreams?
· That’s the problem isn’t it. For some Dreams to succeed, we need others to fail.
· It’s as much a numbers game for us as consumers as it is for the people funding the ideas.
· The only thing we can really do is to occasionally raise a glass and toast those who served:
o To celebrate the apps that didn’t make the grade, the software that arrived too early or a little too late.
o The musicians whose songs never find the audience they deserve.
· Because, their lives, their unheroic failures, are a cost of the success of the ones whose Dreams do come to life.
· So, for those who are about to code, we salute you.