In this episode we launch the annual Swimming with Narwhals startup competition! Listen to expert advice from previous winners Karen Allen of Infinite Album and Ben Bowler of AUX, as well as investment insights from VCs Bruce Hamilton and advisor Cliff Fluet.
Shout outs from this weeks episode!
Bruce Hamilton, Everybody Ventures
Cliff Fluet, Eleven Advisory
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Episode Transcript
Machine transcribed
0:00:06 - Dmitri
Hey, everyone, it's narwhal season. Welcome back to Music Tectonics, where we go beneath the surface of music and tech. I'm your host, Dmitri Vietze. I'm also the founder and CEO of Rock Paper Scissors, the PR and marketing firm that specializes in music innovation. Hey, the reason it's Narwhal season is because we've launched our annual Swimming with Narwhal startup competition and we just hosted a seismic activity online event to celebrate. And the information was so good we decided to post it here as a podcast. Two amazing startup founders, karen Allen of Infinite Album and Ben Bowler of AUX A-U-X, shared some helpful tips from their experience as founders, and we got hot takes and stellar advice from VC Bruce Hamilton and advisor Cliff Flouet. Check it out and if you run a startup, send in your pitch application by August 12th 2024, so we can help get your name and company in front of some of the coolest investors in music tech. All the info is at musictectonicscom. Now to the episode. Hey, welcome, welcome, welcome to our July seismic activity startup. Start your engines. We are really absolutely thrilled to have all of you here. Thank you for making the time.Â
I'm Dmitri Vietze, the founder and CEO of Rock Paper Scissors, the PR firm that specializes in music tech and music innovation and also the founder of the Music Tectonics Conference, and the conference is back on the beach this October 22nd to 24th in Santa Monica, california. So please mark your calendars. You can always reach out to me, shaley Eleanor, if you want to be a part of the conference. Badges are for sale. We hope you can be there. We are talking to partners now about doing activations there as well. Every month we do a seismic activity like this. Our goal is to bring together the awesome music innovation community to create more communities, create opportunities for you guys to meet each other, connect, hear from leaders in the space, hear from innovators, and today's event will be no different. But our next event will be on September 11th at 10 am Pacific, 1 pm Eastern. That will be the Music Tectonics pre-conference and it's actually the semi-final for the Narwhal, the Swimming with Narwhal's Music Tech Pitch Competition. So mark September 11th on your calendar. That's open to everyone with a badge to our conference in person in October. So be sure to snap up your badge before then and be a part of that event.Â
It's going to be awesome and I guess I should announce technically that the Music Tectonics Conference is hosting the fifth annual Swimming with Narwhal Startup Pitch Competition. It's our fifth year, sixth year of the conference, fifth year of the competition. It's an opportunity to showcase your company across the music tech ecosystem in front of some of Shayli, biggest decision makers in the industry. This year our semifinal judges include Sun Jen Young of Influence Partners, deke Veligandula from Waverly Capital and angel investor Kristen Grant with Westcott Multimedia. So part of the great thing about the startup competition is you get exposure to a wide variety and diversity of investors, not only for our semifinalist judges but also for our judges in person at the conference and so forth. We also have another line of judges that look at stuff before people become semi-finalists and all those judges are involved in the music tech and entertainment tech media tech investment community. So applications for this 2024 competition are officially live Head over to musictectonicscom slash pitch dash competition. We'll throw that in the chat to apply to pitch in this year's edition. Eleanor here from my team will be sharing more details about the competition at the end of the tail end of this event. So make sure to stick around for that.Â
But our goal today is to give you a little exposure not only to the competition. Some of the startups that have been involved in the past, some of the advisors and investors that are a part of the music tech tonics community. We've had them on the podcast, we've had them at conferences, at live events and so forth, so that you get a deep dive to not only learn about the competition but also to hear from folks that are involved in this community. And I'm really excited to bring together two startups that have won the past competitions, as well as investors and advisors, to help share some insights on what's going on right now in the music tech and music innovation space. So I'd like to bring on stage with me Ben Bowler from Aux.Â
Ben Bowler from AUX. Ben is an experienced music tech founder with two successful startups under his belt, as well as a stint working at Universal Music Group in the UK. His current startup, aux that's A-U-X has developed and trained a generative AI model to create infinite high-quality samples and loops for music producers to use in their tracks. He's also the winner of last year's Swimming with Narwhals competition. Thank you for being here, ben. Hey, how's it going, dmitry? How you doing? All? Good, yeah, excellent, good, awesome. So what's new with AUX since last year's Music Tectonics?Â
0:05:19 - Ben
Well, when we were at the conference we were really kind of demoing In the pitch. We actually really kind of demoing in the pitch. We actually did a live demo of the super, super early version of LoopLM, which is our generative AI model. I actually produced the track live on stage for the panel. But since then we've really improved it like levels and levels and levels. Last week we just launched our version 1.0, our official 1.0 release, Dmitri has stereo samples, full 44.1 kilohertz samples, and we've licensed even more samples to train on. So now the range of genres that our model can produce is much bigger than it used to be, expanding out to some of the new genres that our users have been searching for.Â
0:06:02 - DmitriÂ
Congrats on that progress. Yeah, it's great to see you continue to iterate on being able to kind of diversify genres and sounds. I'm sure your user community is loving all that possibility. Just give them more opportunity for creativity. How did the Music Tectonic startup pitch competition impact your work and AUX?Â
Ben
I mean, obviously, the first part is the kudos we got at the event. I've still got the trophy here and the narwhal is actually hiding in my uh, in my pallant there. It's been there for the last year in the back of all my calls and conference pictures?Â
Dmitri
Yeah, With the beads on as well. So, yeah, that was it. There's a big, uh big element to it, just the kudos of of being given the award, I think. More kind of concretely, we got a lot of press off the back of it as well, from around the world, and not just in the UK and where we're based. We also made good connections with investors and partners. Again, particularly because we're a UK startup, it was a great way to reach out to US investors. Us partners really get a foothold there, start to think about how we're going to be based there from the marketing side of the business as well, and I suppose, finally, really it was something that we can shout about. So we shared it with investors, we shared it with partners, we shared it with our users as well, and that got them excited about the new product that we were going to bring to them.Â
0:07:18 - Dmitri
Awesome. Well, I'm really glad to hear about that impact. I mean, we didn't know what we were doing when we started the competition. We just literally wanted to do kind of. The stuff that you said is just give people a reason to sort of expand their network, for people to hear about what they're up to and to, yeah, leverage the fact that these judges that are investors had kind of said, hey, this is actually pretty cool. Let's you know, let's look into this. So I'm glad that's working out. What advice would you give a startup founder who's planning to apply for Music Tectonics Swimming with Narwhals this year?Â
0:07:47 - Ben
I think for me it's a skill that's useful for applying for the competition and taking part in it, but it's also something that's kind of essential for being a startup founder or someone who's running a company, which is kind of getting your pitch down and the structure of it really compelling in a really compelling way. So there's a lot of tools out there. If you just Google, you know pitch templates. There's a lot of guides out there. There's one called the guide Kawasaki 10 slides, which is one of the most common ones out there. There's also a lot of variations as well, and that will help you kind of get your story into a kind of coherent story.Â
Because if you're passionate about what you're building, which most of us are, if we're in this space building music technology, you can talk for hours about what you're doing without saying a lot to people that don't know what you're trying to talk about, right? So I think the three key things that pull up you pull out of all of those templates for me is um, grabbing attention first. So you should be able to, in the first sentence of your application or your pitch, highlight why what you're doing is special and interesting and unique, right? Grab that attention so that you know whoever's reading it or whoever's watching the pitch wants to continue to read the rest of it or watch the rest of it.Â
The other part, the second one I would say, is your unfair advantage. What is it that you're doing in your product that is unfair? That you have better skills to do, or you have access to companies to work with from previous experience working in another company, or access to a certain data set or user base that other people don't have. And then the final part is about you or about your team, if you have one at this stage. Talk about why you're the right people to do it as well, because you are the startup at this stage. So it's important to get across why you're the right people to do it as well. Um, because you're, you know you are the startup at this stage. So it's important to get across why you're the perfect person or the perfect team to to um, to make the startup happen.Â
0:09:33 - Dmitri
I love that, ben. We do a how to start up series on the music tectonics podcast and we've been interviewing a variety of advisors and investors on that, and Xavier Peters from lean square, which is the VC associated with Wallifornia which just wrapped up. When I interviewed him at South by Southwest on the episode, he said we invest in people, not companies. He said if you have good people and a bad idea, they'll actually win and survive. If you have bad people and a good idea, when things don't work out with the idea, you're kind of screwed as an investor. So I'd like that you include that aspect of team too. This is actually great, ben. I think you're really sharing some great, great tips here for folks. I appreciate you doing that. What are some challenges you faced as a startup when we widened out in the current music industry? What have been some challenges for you?Â
With my previous company, we did a B2B business been some challenges for you. With my previous company, we did a b2b business and so we focused on working directly with music companies to provide services for them, and with my current business, orcs, we're going directly and supporting artists and creators and giving them tools to make the music in the first place right in terms of kind of the really current part and the ai part as well, because that's obviously top of mind at the moment and it's what we're really focused on right now. Obviously, the big challenge is it's kind of linked really it's about not getting sued. So you know, you see the news, there's all the news about Suno being sued by by all the record label, the big, the major record labels. So you can kind of turn that to your, be your advantage really I think. So if you're starting a company in AI, it's a great time to do it.Â
There's a lot of research out there that's driving all this innovation and it's all out there to be used and to be taken and adapted to the problems you want to solve in music or in other areas of the industry. But you know, be it reporting or marketing or anything like that not just generative music, generating songs right, but the key kind of differentiator you should have there is you should make sure your data set is buttoned up, make sure it's it's licensed, to make sure you go and either if you find a data set that you can use from the company you're working currently, or you reach out to companies that have the data sets you need to build a product and you license that proactively, then you're going to be in a very competitive position compared to these companies that are going to be, you know, being reached out to by lawyers. So, yeah, it's a great time to work in music AI, but the key differentiator you need is to figure out the data set, part of it as much as the algorithm and the problem you're trying to solve.Â
Amazing, ben. This has been an epic 10 minutes, I think, of great advice from your experience. It's great that you've had previous startup advice. It sounds like you've actually pivoted from company to company as a result of some of those lessons learned.Â
And I've definitely heard about that licensing cost of licensing issue a lot in the music tech space. I think it's made it challenging for a lot of startups, made it challenging for a lot of investors not to totally promote the Music Tectonics podcast. But we also had Vicki Nauman, the startup and licensing advisor, on the podcast and she has this concept of the minimum viable licensing concept where you figure out what's the least you could get away with not break any laws or be unethical, support the creative community, but also get your stuff done. But now you flipped it by saying how can we just help creators? You know like we don't have to. It's not about the listening experience, it's about the creation, which is cool, and I love that you're taking that learning and applying it to the AI training set as well to say, well, we also need to be aware there. So this has been super valuable. Thank you so much for joining us. Appreciate it, ben. Awesome. Cheers to the retreat.Â
Next up, I'd like to bring up Karen Allen. Join us on stage here, karen. Karen is the CEO and co-founder of Infinite Album, which creates infinite streams of AI-generated, game-reactive, copyright-safe and monetizable music for gamers. She authored Twitch for Musicians, a guide for artists on how to livestream on Twitch, and has held executive positions at Tag, strategic Mobile Ecosystem Forum and the RIAA. Welcome back, karen.Â
0:13:31 - Karen
Thank you, it's good to be here.Â
0:13:33 - Dmitri
Yeah, I appreciate you taking the time. So I'm curious from you. You've been in the music industry for a bit. It's been a couple years since you were in the startup competition what sets the music tectonics swimming with Narwhal's pitch competition, apart from other competitions that you've participated in.Â
0:13:50 - Karen
Yeah, first of all, it's fun. That's the big difference. These competitions can be very stressful, they can be very insanely competitive, and not to say that this one is not a competition, because it's straight up is there is a winner. But the space you make for startups to come together and pitch is a lot more. I don't know less formal and a little more supportive feeling when you're doing it. In my case, I was the one that pitched from our company and, if I recall correctly, this was even like one year post pen. What kind of during pandemics. It was all online even too. Yeah, so, um. So I thankfully did not get on stage.Â
0:14:33 - Dmitri
I could do it all through zoom you got one in a metaverse type thing.Â
0:14:37 - Karen
Yeah, yeah, I think it was a metaverse or a zoom or something along those lines. Yeah, so so the one thing I didn't have I didn't have the benefit of then walking, you know, amongst the people afterwards and getting direct feedback and so forth, but I got a lot of inbound interest from it email and so forth and it was sort of our first coming out honestly to the music industry with this sort of phase of Infinite Album. Prior to this, we had been focused pretty exclusively on B2B and wanting to work with VR companies and gaming companies, and then the pivot was made to build products for gamers as a first step into virtual goods. And this was sort of our coming out to the actual industry that you know we're. We're, we're open for business to do deals with artists who want to get their hands, get their, get their music in the hands of gamers in a way beyond just a sync.Â
0:15:41 - Dmitri
Yeah, Pretty cool way to kind of get the word out. I think you know a good way to like quickly hit a lot of folks and give an excuse for us to spotlight you, and if I remember correctly, it was the kind of the votes from the crowd. It was like our audience choice award that brought you to attention, which was super cool to see too, yeah, and you've been to music tectonics events. What kind of business can startups expect to get done at the conference?Â
0:16:09 - Karen
Yeah Well, we had a booth last year, which I would recommend. It was super helpful. I wasn't sure what to expect because I know that the panels are so packed Right, so I wasn't sure what to expect with the actual exhibit hall, but it was really fun. We were around the pool, so it was super casual. There actually were quite a few people out there during the day and we had some really high value contacts coming by too. Like people, pretty serious people from pretty serious gaming companies that we were looking to do some business with came by and it was nice to be able to have a full demo up right, like, bring the good speakers and have the, you know, have the big flat screen and really just kind of walk them through everything, as opposed to, oh, look at my phone real quick and watch the YouTube video. It's just a whole different experience. So that was really great. Um, the panels are always super topical. Um, there are some conferences that I find this kind of recycle their panel ideas and you guys don't you kind of start from a blank piece of paper every single year, and that's really appreciated because you really do stay on topic with what's important. So I'm just sort of paying attention to who's going to those panels, who's on it.Â
I've done so many conferences. I was a biz dev consultant, strategy and biz dev consultant for many, many, many years. My job was to take startups to conferences and I will always say, doing your research ahead of time. Who's going? Definitely like who are the sponsors that you want to talk to, who are the speakers you want to talk to. But also like, look on LinkedIn and see who's talking about going, look for the hashtag you know on LinkedIn and see who's talking about it and see if that's who you want to meet with.Â
But if you can set up any meetings ahead of time, or at least any visibility ahead of time. So when you approach somebody, you're like, oh yeah, I hit you on LinkedIn, even at the cocktail. You know that's a little better than just going totally cold. But you know, really be be clear about your objectives when you, when you go, be clear about your objective in your pitch as well.Â
So, like you're, think about who you're pitching to, cause, like for us, you know we are AI, music and gaming, so I could go in three different directions with my pitch, but my audience there is music and gaming, so I could go in three different directions with my pitch, but my audience there is music people and what I want out of that is for artists to sign with us, and you know I want that's a huge thing. I also want anybody else who's there working with sort of AI gaming especially gaming companies to show up. I want them to be super impressed with what we can do with music. So I really thought about like who's going and who do I want to hit me afterwards and I sort of spoke to them at the same time that I was doing the pitch.Â
0:18:53 - Dmitri
Well, thanks for sharing these insights. We just have a couple more minutes. What are some challenges you faced as a startup in the current music industry when we widened?Â
0:19:01 - Karen
Yeah, I think the harder thing right now is raising. It's just's just a really, really tough market to raise, even though we are AI music and that's super topical right now. In the last year or so, the money for AI was really going towards infrastructure you know, the large LLMs and like the open AIs and like that's where a lot of it was going. Now I understand it's going a little more towards, you know, end products, which is what we are. So hopefully it'll turn around. But it's been really tough, really really tough to raise and it's just always the typical startup problem of you know, what I really should be doing is operating and building my business and what I end up doing is chasing money, you know, and chasing angels and chasing deals and, you know, going to conferences and, you know, trying to get that side going. So um that's.Â
That's the toughest part, honestly, is yeah, I mean we're a category creator. It's always tough being the first one in, and that's you know. I was a category creator when it came to live streaming too. Right, I mean, I would go to the CD Baby conference and like no one knew what Twitch was. And here I am walking around with my little flowers about my little book, talking about Twitch, saying it's a good opportunity for you. Like, it's always tough being the first person in the pool. But I honestly, solidly believe and I will fucking fist fight anyone who disagrees with this that the next big moneymaker for the music industry is a virtual good in games and it has to be a virtual good that the licensing can participate in, because you don't need a music license to buy a t-shirt and right now the money being made for artists on games is in t-shirts. You know, it's Virch, it's the black, pink costume. That's where the money is being made.Â
Love it yeah.Â
0:20:44 - Dmitri
This is great, karen. Thank you so much for bringing your always great and positive energy and sharing insights with other startups. This has been a blast. Everyone here, the chats are going crazy. I love seeing these companies that are in our chats. I can't wait to see which ones of you end up on stage at one of these events, during the competition afterwards, et cetera. Again, karen Alan, thank you so much for joining us and looking forward to seeing you in October. Next up, we're going to move into our investor segment. We've got here Bruce Hamilton. He's the general partner of Everybody Ventures, an early stage venture capital firm investing at the intersection of pop culture, consumer and technology with the best hair on the call. He's a music industry expert and serial entrepreneur, having worked with artists like Travis Scott and Fifth Harmony. Hey, bruce, good to have you here.Â
0:21:33 - Ben
Hey Dmitri, Thanks for having me. How are you doing?Â
0:21:35 - Dmitri
I'm doing great. I appreciate you joining us. You've been a great supporter of Tectonics and love getting your insights, so I'm going to dive in. We've got about 15 minutes before we bring Cliff into the mix. What should startups have ready when they attend a conference where they're going to meet investors?Â
0:21:51 - Ben
Have your elevator pitch ready and like I truly mean elevator pitch like have it be between 30 minutes, 30 seconds to a minute and like really have it at the length. Of think, for example, you're jumping an elevator with someone, how would you quickly, would you pitch them in the elevator ride? That's why it's called an elevator pitch. Uh, there's been many times. I actually remember the very first music tectonics that I spoke at I was. It was the only time. It was one of the few times I was invested.Â
I just felt overwhelmed by the amount of pitches. All right, I'm sorry some people, no, it's good. That's why I keep coming back. Um, but no, it's, it's good. But then there's times where you know people are giving like two to five minute pitches and you know, when there's like a line of 20 people waiting to talk to you, it gets a bit overwhelming at scale. So if you can bring it down to like 30, 30 seconds to a minute, really, you know going over briefly describing what your company does, your highlights, traction, milestones, and try to end it with something that perks an investor's ears, whether it be strategic partnerships or how much revenue do you generate or how many users that you've organically got Just something that sticks in the back of my mind. I'm like all right, I remember that company. I'm definitely going to be paying attention to their email as soon as I get it and also follow up right after the conference. So either the next day or two, make sure to follow up with email. But, yeah, avoid two to five minute long pitch piece.Â
0:23:25 - Dmitri
Cool, very straightforward, very tactical. Appreciate that. What's something that you specifically look for that might be different from other investors, because I've heard through some of my interviews with you and others, don't treat all investors the same. You got to show some recognition of what they're trying to do, what their thesis is, what kind of portfolio they're going to build, what type they're trying to build, etc. But what but what do you look for specifically?Â
0:23:47 - Ben
I think what makes me a little bit different is, I guess, from coming from music, especially coming from, like, the A&R side. A lot of what I was doing was not only data-driven but also just coming from a gut instinct. But that gut instinct is built on being amongst the people and kind of understanding what's happening outside from a cultural sense. So what I look for is, like what's the cultural impact of what it is that you're building? Yes, the data is there, that's cool too. But when the data is not there, what are you going to look for?Â
So I look for cultural impact. How is it going to impact society? Is it a trend? Is it a passing fad? Is what you're building like an actual business or is it just a really cool feature that you know spotify or apple music is a couple weeks away from pulling the trigger on um. So yeah, I mean I think I pride myself on just really being amongst people and like really having my finger on the pulse of society and pop culture and knowing kind of what's coming next or like what's going to be around. So when I see things, I'm like, okay, right here, things I like, I'm like I can see people using this like at scale.Â
0:24:58 - Dmitri
I think it's so interesting. You've talked to me about this before, about sort of like being on the kind of what is the connection to culture? What's the impact going to be on culture? It's interesting because I think a lot of startups struggle with the data side. They're too early to demonstrate what the financial impact is going to be or what the track record has been, and it can be really tough to identify things like total addressable market for new categories or category killers or innovation or a highly saturated market as well. You know, like, how do you fit into that as well? So I really love that you have that aspect that sort of makes you think as a startup founder well, if I can't yet show numbers, how do I talk about this? That shows impact in another kind of compelling way, a way that can get other people on board. So I love that you talk about it that way.Â
0:25:46 - Ben
It might be easier if you don't have the data. It might be easier to approach it from a cultural impact.Â
0:25:52 - Dmitri
Absolutely yeah, because there's a little fiction involved or a little projection of the future involved, a little bit of capturing people's imagination. I've heard that too, where where investors talk about you know, if you can't show the hockey stick, maybe don't show any data because because you know you you can't show the hockey stick. Maybe don't show any data Because because you know you might be early enough that you help people kind of imagine where it can go, rather than showing that you already don't have any traction or or something like that, which is a moment to pivot to. Hey, bruce, how would you describe the current market for internet entertainment tech investment?Â
0:26:28 - Ben
That's a hard question question because it's good and bad at the same time. It's good because a lot of VC firms now see the value in entertainment tech. So obviously gaming is super massive it's bigger than TV and music combined and the creator economy is projected to be a 500 billion dollar market in the next, I think by 2027, according to golden sacks. And so me, especially these these I talked to they all know the value in this space and they're all looking at these companies.Â
It's bad because the market's kind of shit at the moment and so even firms that maybe two years ago were doing, you know, for example well, I'm not going to listen to specific firms, but you know firms that were maybe doing 15, 20 deals in Q2 in like 2021 are probably now doing five to six deals in 2024, just because there's just not a whole lot of liquidity for LPs to invest in funds.Â
And so I think the market is starting to like bounce back a little bit, and so firms are like really trying to make sure like they're getting this, this shot, right, because we're all we're. You know we're doing calculated gambling at the end of the day, like we're just taking all the data that we have and then just doing calculated gambling and so we're just trying to be like really sure, like this is going to be the right bet to make our lps their returns yeah, so you're saying it's just kind of been a people maybe had some bad shots in the recent past and so now, as they come back into the market to start investing more, they're being more cautious.Â
Yeah, I mean I'll go with the hot take out there. I blame crypto, I blame crypto and I blame NFTs. Everybody was investing in these crypto NFT companies and Web3 at super high valuations. Most of them have been marked down to zero or shut down and so that money is just gone. So now there haven't been a whole lot of massive liquidation events recently, so there's not a whole lot of money that LPs are throwing out. And then now I'm sure you guys may have seen like some of the LPs are now going to the larger, bigger names to throw money into because it's a safer bet. For example, there was a study that went out that A6Z got 80% of all LP funding in Q1. Of 2024?.Â
Yes, oh wow, which is a lot. 80%, which is a lot. And so, yeah, people are going to these bigger names now because they want to know for sure that they'll, they'll get their return. But, yeah, I, I blame the crypto nft market. I'm sure some people in the chat are gonna hate me for saying that, but and a lot of vcs say it too, they won't say it out loud, but a lot of people blame the crypto web 3 login for that I mean hype cycles definitely have an impact on the next cycle, right, right, and that's interesting to watch the AI cycle right now, because clearly it's on the top of everybody's mind and at the tips of everyone's tongues.Â
0:29:36 - Dmitri
It does feel a little different. It seems like there's a little less speculative plays in AI, but, of course, you always have to be aware of companies that are pitching themselves. On the latest hype term, we remember Metaverse, until Facebook decided to call themselves meta. That came before the web three stuff in a way, and and then, you know, apple's vision pro still came out, you know, so it's, you know, some of these things kind of cycle back around, maybe without the, without the hype as well, but I think it's a good point. Do you have a sense of when things might pick back up to 2021 levels or 2022 levels?Â
0:30:16 - Ben
I mean I would say I mean give it like another year or two that the market's going to bounce back as we get more liquidation, events and companies are getting acquired, like more money is going to start flowing back out there and investments are going to pick up as usual.Â
So if you're getting passed on, it's not because your company is not good. Sometimes there's just not a whole lot of capital to put out there, so we have to be very strategic on where we're putting the capital. Yeah, makes sense. And so we have like now we're down to like a limited number and you know the statistics say like in venture you're looking for, you know, one out of 10, or you're probably going to have a really big exit, but like seven out of that 10 are probably either going to break even or like crash. And so you're really looking for like that three out of 10 that are like really going to make a return for the fund. Yeah, so it's not. Yeah, so it's not because you're you're we don't believe in you as a founder or your company's not good. We just don't think it's the right investment for us at this particular moment.Â
0:31:22 - Dmitri
Yeah, got it. What? What sectors in the music space excite you right now? I know you're wider than music, I know you come from music, but your investment thesis is wider than music. But what in the music space excites you right now?Â
0:31:35 - Ben
I haven't seen a lot of music discovery and I think there's a lot of opportunity for music discovery. I've talked to a few labels and they're always open for music discovery, for fans of finding new ways of finding music. Obviously, superfan is a hot wave. It's very interesting because many have tried and many have failed. No one's gotten it right yet, but there is a market for it, so it's just. Maybe one day somebody will be able to climb that hill and say we figured out the superfan model.Â
0:32:04 - Dmitri
Hey, we've got a question from Jason Wilber, who's participating here today. What do you think has been lacking in previous startup superfan products or monetization attempts?Â
0:32:16 - Ben
I think the main thing is them trying to convince fans to then jump onto another platform. So they're already on Instagram, tiktok, twitter, so then they convince fans to jump into another platform and also convince artists. You got to make content for another platform, ask a record label to manage another platform. It's a lot, and so if you can figure out a way where it just seems organic, even if you have to go to another platform, it's fun and there's something engaging. But what can they get on your platform that they can't already get on the existing platforms? I think that's been a really hard question to answer.Â
0:32:58 - Dmitri
Yeah, that's a really great point. So that's kind of a challenge to anybody that's building. A super fan app or platform right now is what's going to engage people? And it's two-sided right. You got to get the artists on there and you got to get the fans on there and you're competing with some of the biggest tech companies in the world. So I think that's a that's a a great, a great question to ask. It's really a challenge to anyone that's building. I assume Jason asked that because he's aware of a super fan, super fan product. It's like okay, so what do we need to do here? Product that's like okay, so what do we need to do here? Bruce, this has been great. I always love your receptivity of helping startups think about all these things, so thank you so much for always embracing the music tectonics community and being a part of it. I'm looking forward to hanging out with you in Santa Monica in October. Thanks for being here, bruce.Â
0:33:45 - Ben
Thanks for having me. I'm excited for Music Tech Times. Thank you.Â
0:33:57 - Dmitri
All right. Next up we're going to bring up Cliff Fluet. He's a veteran lawyer and strategic advisor to incumbents and insurgents in the digital media space. He's one of the architects behind Music Tech UK and is a partner at the law firm Lewis Silkin and the managing director of Eleven Advisory. Hey Cliff, how are you doing? I'm very good. Dmitri, how are you? I'm great. We've already referred to you a couple times here, talking about past interviews and seeing you at other conferences and so forth. Thanks so much for being here. What's the first thing you check on with a startup who says they're looking for investment?Â
0:34:30 - Cliff
Yeah, I mean it's an excellent question because that's often how startups present themselves, perhaps to Bruce or Karen, whatever. So I'm looking for money. I'm looking for money To which you want to say, look who isn't. But the more serious answer is actually, you know people say, well, do I need a business plan, do I need a legal document, market research, pitch, deck advisors, deck advisors, etc. Etc. All of that needs to come down the pipe.Â
But actually it's one of the things that bruce said in relation to what is your narrative. You know you'll ask people, you know what is the narrative, what are you trying to achieve? And they'll tell you what it does. And then you push them a bit further and they say how they do it. But really it's back to that kind of Simon Sinek kind of what, why, how? It's the why, why are you doing this? Why should you exist? What are you doing better than everyone else? And it's remarkable how many people can't answer that question when that's put to them.Â
So it's for me, the most important thing is defining your narrative, which sounds a bit airy-fairy and a bit, you know, kind of out there and whatever. But in truth it's really really hard work. You know it's often locking yourself in a room for a couple of days and really breaking it down into constituent parts and working out what you need to do and what you need to do, because then things like what is your business plan, how do you structure it, how do you market research, et cetera, et cetera, et cetera, those elements, how do I build? How do you know what your KPIs you need, what key performance indicators do you need, until you don't even know what you're doing, why you're doing it, how you're going to get there. So, for me, I'll often and people say, look, just show me the money. And at which point I good luck on your cause. You know, and and often the conversation ends there, so often as well it's that ability to actually step back and you know and understand and look.Â
My result is I don't have all the answers, but I will have a bunch of questions, and these are often questions that you'll find that the startups themselves haven't done. Or and again, you know I've had all the comebacks oh, it's all about copyright. It's all about copyright, or it's all about you know, I'm going to rewrite copyright with Web3, or AI or the internet, or I'm going to make the label C, or I'm going to make everything transparent. That's all great and I wish you all the very best on your endeavors.Â
Whereas actually, really, the question is is that if you do not have an essential reason to exist, you're not going to persuade anyone to give you a dime certainly not bruce, certainly not his other people but also you're not going to know where to go. You're not going to know where to put the scarcest resource, which isn't money, which isn't gpu power, isn't it's time. What kills every startup is time. What kills us all, it's time. Right, you know? Um, so the real question, a lot of time is that you realize that if you do the hard work with regards to your narrative, after that you do need to build out your team, and what the guys at waltifornia said were absolutely right with regards to the people around you and the people advising you. You do need to have a business plan, you do need to, but without the narrative, none of those, those things flow. Or I can look at a deck really, really clearly. These people are just doing stuff.Â
0:37:35 - Dmitri
It seems like, in a way, you're sort of saying a lot of times people approach investment in a very transactional way and that having that clarity around why you're really doing this, what's the true impact of what you're doing, can resonate with investors and it can sort of seep through everything else you do, from the pitch deck to the pitch, to the actual first features you create.Â
0:37:54 - Cliff
Yeah, and again, the difference is it depends on the marketplace, right? So if you're into a marketplace of plumbing supplies, it's all super clear how it's structured, how it's built, and then it's a lot about price or it's about you've got an opportunity to look at usp and competitive advantages in relation to music tech. That means as little to people as pet tech or femtech or whatever. It needs to have a narrative, it needs to have a right to exist, and often you're dealing with the music industry.Â
There's no such thing as the music industry, right? Uh, there's, there's, as I said, you know, there's this complicated ecosystem of overlapping rights of people that some days get on and other days don't want you at all there, right? So you've got to have more of a reason to exist. The idea that you're entering this some sort of nba style marketplace, it's great, but I just haven't seen it happen. So I've seen that when startups have got that clear narrative, when they've got that clear plan, they've got an opportunity with, again, opportunities to pivot, grow, develop license, do this other stuff, prove themselves in other verticals and then come to music because those pesky music rights or the market isn't ready. All of those things flow from that, but, but. Without that narrative I find it really gets stuck.Â
0:39:08 - Ben
Yeah.Â
0:39:09 - Dmitri
You know, I feel like sometimes people come with a great idea. They may have some clarity. Maybe clarity is part of the problem, but what they haven't quite fit, or the feedback they get back from investors, are product market fit hasn't been found yet. What are some of the best ways to identify product market fit? Cliff?Â
0:39:28 - Cliff
Well, there's the kind of mechanical ways you can look at traction or you look at the wonderful MRR or ARR or anything like that. But I tend to find particularly and again I'm on the assumption that most people are around music tech or where those things meet, as it were Probably the best definition of product market fit is genuine partnership and collaborations, cause that proves that you've actually onto something that helps someone else. So Ben very kindly referred to a conversation very, very long time ago where I explained about these music rights and why he didn't want to put his head in that particular jaw. There is these two buckets right that you are put into when it comes to the music industry. You're a maker or you're a taker, right, so you can work out which of those two suno and udio are seen as they're seen as takers, right, so being a maker and then that, then one of the best demonstrations for that are partnerships and collaborations.Â
If you're working with management companies or independent artists or I don't know, beats makers or whatever all those people that can actually demonstrate value, that for me, when it comes to music tech, is probably the best demonstration of you've got some product market fit Now, whether or not you're going to get with a label or not. I mean, you know, the odds are somewhere in the orbit of prayer. I'm I'm joking, but only just just in terms of doing that. So that isn't where you necessarily want to go, but actually genuine partnerships that can demonstrate an ad value for me demonstrates the best kind of product market fit. And then after that, that's when you want to say right, what is your monthly recurring revenue doing? What is your annual return? What are the partnerships? How are you growing? How are you rolling it internationally? Those sort of things which in other businesses and your plumbing and your widget businesses, would be your classic ways of measuring it and doing quant surveys and et cetera. That more qualitative aspect when it comes to music tech.Â
0:41:35 - Dmitri
I think is absolutely right. You know, something that I've seen like traditionally in pitches for investors is understanding and expressing the total addressable market. What's the potential here? What's the cut that you're going to be able to get to that total addressable market, et cetera. I don't know. Maybe you're going to tell me this is an expired concept or that investors already know what the total addressable market is, that it's been studied and reported. Maybe we're mature enough, but I think maybe one reason people talk about it or still think about it is because they think they're opening up a new lane, a new category for monetization and music. So my question was how can startups address the challenge of stating the total addressable market?Â
0:42:06 - Cliff
Again back to my. I think I've got an idea of setting up a plumbing business, right. But it's a classic question in relation to what is your total addressable market? Vcs particularly get very, very excited about doing it. The problem for me, you know it's totally arbitrary and meaningless, right? It's TAM. You know they just take several numbers and usually multiply them, right? Oh, I've got a thing that's to do with this and therefore I'm going to have the size of the recorded music industry. What you're doing has nothing to do with recording music. Why are you throwing that number in? Because it's big and there's this view. So, really, the question for me, particularly in relation to music tech, is what is the focus? How are you going to capture value? How are you going to create new value? So you know karen's great point earlier I'm totally obsessed with virtue.Â
Totally obsessed with virtue, something the music industry is missing a mile. I work with some of the biggest developers on roblox right now. The amount of money that's going on on digital work I mean, I know we're not allowed to call it the metaverse anymore, but you just say digital worlds, oh yeah, yeah, that's a thing. The amount of commerce in digital worlds is vast. That's not an addressable market. It's a whole new market. So I think the real question is how are you going to demonstrate value? Right, what is the total addressable value? What is the opportunity to be able to create and curate new opportunities?Â
That, for me, is what is missed so much in relation to that, because I mean, you know, it's like I've seen three measures of what the value of the creator economy is going to be right, and one of them went up to a trillion. Right, it's getting a bit austin powers at that point. You know, just in terms of that number, what does that number even mean? But if you are demonstrating that, actually there is a huge opportunity to look at this. I know totally avoided market. Right, this is all this value over here. That's there. That is much, much more interesting to me than coming up with some number which you know. So I'm not going to be convinced by it. Yeah, okay. Now if you are looking to disrupt a particular segment of a particular mature market and you can't even say how big it is, as it were, then I'm going to call bullshit on your deck. But the vast majority of music tech, innovative businesses aren't doing that.Â
0:44:17 - Dmitri
Gotcha. So, while I've got you, I'm curious, and you could go anywhere with this, but what growth areas do you think will emerge in music tech in the coming years or music innovation?Â
0:44:30 - Cliff
Well, look, I mean, you know really as everything if you try and solve some of the biggest problems in the music industry. You know discovery, monetization, royalty chains, fan opportunities, etc. I've said it before and I'm sure I will be saying it later today of all the industries and verticals I work with, the least curious about their fans and their audience is the music industry, the least curious about their fans and their audience is the music industry.Â
You know I've got clients in automotive and fashion that spend millions, tens of millions in understanding their audiences and personalizing and adapting for them. Music industry nah, we'll tell them what they want.Â
0:45:10 - Dmitri
That's so interesting. Why do you think that is?Â
0:45:15 - Cliff
Because we live in a world where we were on Mount Olympus and we gave the people what they wanted, and now we have these strategies and these tactics as well.Â
Just look at the numbers on TikTok. What people find most engaging isn't necessarily something that people have slaved over or curated or spent millions of dollars building and promoting and putting out there. It's stuff that's pitched up to sound like, you know, cartoon characters from the 70s. So what we really need to be doing is focusing upon what do people actually want? What does the opportunity show them value? How can we do this? In discovery, personalization, virtual instruments, all of these areas there are so much. In terms of the waterfront, there is no need for another. Spotify in the way, there's no need for another.Â
0:45:59 - Bruce
Coke.Â
0:46:02 - Dmitri
Interesting. What about areas in music that you think are overhyped, things that you're seeing pitches come through, things that you now run the other way? Are there any areas that you sort of advise like, ah, maybe you don't want to go that route?Â
0:46:15 - Cliff
well, I mean ones that want to fix the music industry. The music industry is not. It's not something that wants to be fixed. It's not what happens to me selves and, frankly, it shouldn't be either, just doesn't have to be. Um, the real opportunity is how do you make solutions that work for the industry rather than try to solve it? So I just get too many people who don't know how it works, how it's joined together, how the rights work or all this stuff, telling me how it's going to be and it's like good luck with that. I am still, however, on a weekly basis, someone will come along with something surprising, something you haven't thought of, something that's been there. That's a genuine innovation. But look, you know, I mean it's, it's. I teach a lot of courses to students around the world and you sit them in the room and you do a hackathon and they still come up with Spotify as an idea Like this is nearly 20 years old.Â
0:47:09 - Dmitri
Well, we got a nice shout out here as best panel ever from Charles Alexander here, and if you've been enjoying Cliff's or Bruce's hot takes or any of their kind of expertise here, both of them have interviews on the how to Start Up series on Music Tectonics. So go to your favorite podcast platform and look up Music Tectonics and search for Cliff Luet and Bruce Hamilton Cliff. This has been awesome. I really appreciate you coming in and sharing some time with us All. Right now I'm going to hand the mic over to Rock Paper Scissors and Music Tectonics Marketing Director, eleanor Rust. Let's bring Eleanor up. Hello, hey, thanks for being here and thanks for all the work that you and Shaylee do on Music Tectonics. I'd love for you to share with everybody what's going on with the Swimming with Narwhal Pitch Competition applications.Â
0:47:59 - Bruce
Sure thing. This is always a very exciting time of year for us that we get to meet new Narwhals and welcome them to the fold. So our applications for 2024 are live now. I think Shaley's going to drop into the chat a link to the page on our website with all the information. Applications are due August 12th, so you have a little time to get yours in. There are some eligibility requirements, but one I want to highlight is that you've got to buy at least one badge. That's really the only application fee, which honestly, great deal. The process.Â
Now, when your application comes in, it's going to get reviewed by the investors and advisors on our selection panel. Then 10 semi-finalists will pitch at an online pre-conference in September and the jury there is all investors who have a special interest in music and tech. Dmitri shouted them out earlier. We have Sunjen Young of Influence Partners, deke Velagandula of Waverly Capital and Kristen Grant, an investor who's with Westcott Multimedia. So they're going to judge every pitch at this online event on originality, product market fit and potential for success. They're going to select four finalists to pitch and demo at the conference in person in Santa Monica. But last year we had a tie, so we ended up with five contestants in the final round, it could happen again. So what all applicants get because we want to make sure this experience is valuable for everybody who weighs in when you get to the conference, you'll get a special piece of Narwhal swag for your badge. In past years it's been a little pin. We just want to welcome you into the community and send a signal to other attendees that you're in startup mode and that we want to welcome you into the music tectonics community Now new in 2024,.Â
We've added a special part of the event on the third day of the conference, october 24th, at Expert Doja, we're going to be doing matched networking with advisors and investors only for Narwhal applicants. So whether you make it to the semifinals or the finals, you'll be able to meet one-on-one with investors and advisors. I also want to highlight the UMG Startup Bootcamp. The UMG Digital Innovations team for the last few years now has made an incredible programming slate at their offices, also on the last day of the conference. It's an amazing opportunity to connect with a major label and learn directly from the source how to work with them and what they need to see from startups that they partner with. So everyone who's attended in the past has really loved it. It's been super valuable and we're really excited to have them back again. Um so um, I am going to stay on for a few minutes if you have questions specifically at the Narwhal competition, but I will send it back to Dmitri.Â
0:50:46 - Dmitri
Awesome. Thank you, eleanor, and thank you everyone Ben, karen, bruce Cliff amazing information shared. Really appreciate you putting the time in to be with us and continue to build this music innovation community. I'm Dmitri. Rock Paper Scissors is my company. We do PR and marketing for music tech and music innovation companies. Don't hesitate to reach out to me or Jade Preboy, who's here on the call. Jade at rockpaperscissors.biz can also help you with any PR and marketing needs.Â
Again, we're taking a break in August for the Seismic Activity. We'll be back September 11th with our pre-conference and the semi-final pitch competition and that's open to all Music Tectonics badge holders. Do, if you're a startup, apply for the competition. If you're going to come to the conference anyway, you might as well get all the benefits to come with. Come to the conference. We work so hard to build value for you. So mark October 22nd to 24th in Santa Monica, california. We've got some great hotels a handful of hotel rooms still available. Check those out. We're still in the early bird ticket mode. So 250 bucks for a three-day conference. Get to walk in the door at UMG and hear directly from them, plus hear from all the types of people you've heard on the call today. Really appreciate all of you. Stay in touch.Â
Musictectonicscom, rockpaperscissorsbiz. Thanks again. Presenters Appreciate you guys. Thanks for listening to Music Tectonics. If you like what you hear, please subscribe on your favorite podcast app. We have new episodes for you every week. Did on your favorite podcast app. We have new episodes for you every week. Did you know we do free monthly online events that you, our lovely podcast listeners, can join? Find out more at musictectonicscom and, while you're there, look for the latest about our annual conference and sign up for our newsletter to get updates. Everything we Do explores the seismic shifts that shake up music and technology, the way the Earth's tectonic plates cause quakes and make mountains. Connect with Music Tectonics on Twitter, instagram and LinkedIn. That's my favorite platform. Connect with me. Dmitri Vietze, if you can spell it, we'll be back again next week, if not sooner.Â
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The Music Tectonics podcast goes beneath the surface of the music industry to explore how technology is changing the way business gets done. Weekly episodes include interviews with music tech movers & shakers, deep dives into seismic shifts, and more.
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