Vested Capital
Vested Capital

Episode 4 · 4 months ago

(EP4): Jeff Ponchick Founder Of Repost Network, Sold To SoundCloud, How The Music Rights Industry Works Online

ABOUT THIS EPISODE

The world of music rights is a lot more confusing than I thought. 

There are many stakeholders who are all supposed to get a share of the revenue from music used online - from labels, publishers, platforms, song writers and of course the artist who created the music.

Jeff Ponchick worked in the world of digital music and knew well all the paper work required to make music rights work. 

He decided to start a company that attempted to digitize the music rights process, and thus make it a lot easier for artists to make money from their work.

Like many startup founders, Jeff first tested his idea with a not-so-scalable, very manual process -- working out all the details by hand, sending emails, making phone calls and filling out forms.

He did this for some test artists, who loved the service because it made it so much easier to get paid for their music no matter where it was being used online.

Jeff then brought on a technical partner, and they went to work to create the more scalable version of their service, to digitize the music rights process.

Thus Repost Network was born.

Jeff's idea proved to be a good one. Artists loved the service and of course loved getting paid for their work.

Musicians began to spread the word and Repost Network became a popular choice to help deal with music rights and negotiate with all the different music distributers - from YouTube, to Spotify and SoundCloud.

SoundCloud Acquires Repost Network

The word 'repost' in the name of Jeff's company refers to the goal of SoundCloud users - to get your tracks reposted so you can reach more people. Jeff maintained a close relationship with the SoundCloud team, which eventually led to an acquisition offer.

Repost Network was acquired for $15 Million in a cash and equity deal by SoundCloud in May of 2019. Jeff joined the SoundCloud team, where he still works at the time of recording this interview.

Jeff was very open during this podcast, sharing all the amazing steps that led to Repost Network growing to the point that SoundCloud was interested in an acquisition, and how the deal got done. 

Enjoy the episode.

Yaro

Podcast: https://www.yaro.blog/pod/
Blog: https://www.yaro.blog/

Hello, hello: This is Yaro and welcometo vested capital episode number four featuring my guest Jeff Punchi, thefounder of repost network, which was a company that was acquired by soundcloud just a couple of years ago. At the time of this recording for a totalof about fifteen million dollars, US ten million dollars in cash and fivemillion dollars in equity. This was a bit of an eye opening interview for mebecause I'm not familiar with the music rights industry or music industry ingeneral and how people make money from the rights as jeff explains. There aremultiple stake holders involved with music rights from the publishers, TheSun, writers, the artists themselves, the labels, so there's a lot of slicingup of the Pie of revenue that might be made from using that music for anywherefrom advertising to movies TV series, video series, independent publishing,mainstream commercial publishing and then just where you normally go toconsume music, which might be sound cloud or Yuture and spot ify, Amazon,music, apple, music and so on. So there's a lot going on behind thescenes. Jeff has a great job of introducing us to how it all works andalso why that led to this opportunity to launch his company repost network,which is kind of like a right management tool for music artists,great business idea. He grew it to over one point: two million a month in runrate, he talks about how they got their first customers, how they launched avery basic ghetto version of and when I say get o I really mean I was like anot scalable service that intended to be scalable. So they did it by hand tobegin with, and you'll hear how he explains, how they do that by hand andthen once it was proven to be desirable from their customer base artists. Hethen went and a partner with a technical person to create a moretechnical solution that was scalable. We hear that whole story, the wholerepost network story all the way to the point where they do get acquired bysound cloud. What that deal was like for Jeff in terms of his personalexperience of it, and I also asked f a little bit about his background beforerepost, so you had a failed start up in his history. So there's some lessons tobe learned from that, as well. So great interview from another successful startup founder who had a great exit and is still working for sound cloud too. Sohe's moved on from start up to be an executive, a great music company, soI'll Pisla on that interview in a moment, but first of all, as always,this episode is brought to you by in Box Dono, which is my company thathelps you manage and reply to your emails, your health test tickets andyour social media, inbox messages anywhere you're getting a message, andyou find yourself drowning and all these messages. Each day we provide adedicated email, specialist, a message, communication manager who will go inthere manage the flow of those messages, replied to almost all of them as muchas we can take off your plate as possible. Build systems build aknowledge base, build some SOP standard operating procedures for how to manageeverything to do with your email, so you can get back to what matters mostin your life and your business. That's in box done com all right now. Here istoday's episode with Jeff Pon Chick Hi, thanks for joining me today. So I'mhere with O This right, Jeff Punchi who's, the founder of repost networkand I've been diving into a whole bunch of history of Jeff's business. Justrecently got acquired by sounds out not so recently now a couple years ago gotacquired by sound cloud. If I'm correct two years as of June like thirteenth, Ithink yeah. Okay, now I asked of before, if we're cool, to share some numbers-and he already has these numbers are on line. So it was a fifteen milliondollar acquisition, ten million cash, five million in equity, so you're aproud, Soud cloud owner now as a working for them- and you were doingabout one point- two million monthly run rate. According to some numbersweek, I found any hackers so huge success. I feel like it came out ofnowhere in terms of you just showing up with indy hackers with Tom. This is howgreat this company is. I'd, love to know a bit about your own background aswell, but the first thing I've got to ask you, because I actually had a bitof trouble not being a musician myself understanding what problem that repostnetwork actually solves for people like what was this big idea? You came upwith yeah absolutely so it's funny like there was the initial problem we setout to solve when we started the company and then you know once we sawthat we learned, we started getting more deep with the creators and anartists that we were working with and started solving more of their problemsto be completely honest with technology, so I can kind of go through what thatinitial problem was yeah, please so yeah. So I mean basically the reasonwhy I started the company was back in twenty. I think fourteen thousand andfifteen sound cloud had rolled out monetization for the first time ever.So what that meant is, if you were an...

...artist, a label, podcast er, be muchlike yourself. You could place an advertisement in front of your musicand your channel can generate ad revenues and lear to how, like yourYoutte Channel, does, and at the time I was working in a company called fullscreen, which you know ended up becoming a very large company wasacquired for a hundred millions of dollars, but the best way to sort ofexplain what it wasn't. The time was: a management companies such advertisingagency for, like the largest influencers on you tube, and I was onthe music team there. So I was working with a lot of really up and comingindependent Yutu e craters and having those relationships and kind ofstarting to see them to try and monetize the audiences on sound cloud.There was a really really specific problem that emerged, which was inorder to get that ad to come up. You had to clear all the rights and musicindustry if you're on a musician, I mean it's very challenging for rights,clear and standpoint. There's lots of hoops to jump through, and so I lookedinto it and if you wanted to basically monetize your content, Montie sound,recording you had to clear the publishing and that literally involvedemails and spreadsheets going back and forth through email and literallyactually in some cases, physical male. So if you want to Mohita the song onsound glide, you descend a mail, and so I looked at this and I was like wow-you know like if you're an artist with a major label who has a work, force andunderstands this stuff than great, but if you're, independent or you're, maybeyou know a young artist or you're just kind of coming up and you're stilllearning it was kind of prohibitively difficult to get access to, and sorepos honestly just started out as just a way of solving that problem. So Iinterrupt because this is where I got a bit lost. I remember trying tounderstand this, so why is there so much paper work? Is it because thelabel I've signed up to a label a musician before they will approve mehaving an ad on my own music? They have to go through all that paper work. Isthat because I've signed with the label or is that something else yeah, sorepost acts as like sort of a right solder, similar to like how a labelmight have a deal with sound cloud. We have a deal with as a distributor withsound, clad right and what we're doing is. We are representing that artistrights to sound cloud, usually on the sound recording side in the case of adistributor, but in this instance, son Claud wanted to also make sure that thepublishing rights were cleared, which is a separate type of right, and sothat's not really the way it is done today, but it was just the way it wasdone back then. Does that make sense yeah it kind of. Does it's funny,because you know as a podcast, you just published a show and you can put it atin front of it, and I don't ask anyone permission for anything and if I use athird party tool, it's just me adding some cold, usually to whatever I doright, but with music. It seems different because of the existing labelsystem that was set up. There was always different. Like the publisher,there was the position themselves and there sometimes with another labelinvolved. It seemed to have all these multiple layers and yeah you kind ofhave to Alass Solon for something well yeah. I mean think about it like ifrevenue is being generated from the content, basically, if you're a sound,clod or yout or Potifer, whatever it you're, generating ads or subscriptionrevenue, you know you need to make sure that all those stakeholders get paidright and how you do that. As you understand, okay, who were the peoplewho wrote the song or the people who are the label or the independent ars O,represents the sound recording right, there's like in the music industry.There's just a lot of them. I don't know Av. The right word is like cooksin the kitchen, but you know a lot of stakeholders right and so the less thata dsplayed like kind of tightens all that up and does its best to make surethat everyone associated is getting paid. The more liability they take onright because if you end up paying out the wrong amount and the wrong persondoesn't get paid, you know that could trickle back to the platform rightright. Okay, so you came up with the idea for repost and how did you solvethis problem yeah? So it was honestly. I was just a dashboard product, so webasically launched a site. It was invited only at the time. We actuallydid it in this way, where you, actually, if you wanted to work with us, you'dconnect your sound cloud channel gap. I we scan through your town in Otto,accept to reject your base on. If we thought you can make revenue or not wethat intentionally, because when we started it wasn't fully automated right,like behind the scenes, was like in those first few months me sending thephysical mail in the spreadsheets and emails until we automated all right. Sowe had to find a way to manage, make sure we were working with artistsactually could generate revenue for a business and also manage our scale. ButI did something that can't scale to test the idea: first, correct yeahexactly so we did that that was sort of our like acquisition funnel and thenyeah. We just bought the DASH board where you know, if you're a greater youconnect, your sound clod channel pulls in all your tracks, the API usele. Whatyou want to monies? What what you don't? We just built an interface right likejust a pretty way to input all the rights information for them me to goand mainly register it until my co founder joy came on board and likeactually built the tech to allow and take my more skill and do it on a largelevel, and so that was the Inia problem we were sawing was just how do I getall of my friends and all the artists? I know who you know were having troublemonetize on sound cloud, just access...

...that a little bit more easily and youknow our mission and is our mission before we required it. So it's mymission in our mission and within sound Clat now is help musicians make aliving through their audiences online right, and so we came to thatrealization and realized that mission very early on, like the what happened,was an artist kind of came back to me and said you know: Hey Jap, I was ableto quit my job at starbucks and take music full time because of what you didfor me on sound cloud, and that was like so addicting and it felt so goodthat, like I kind of, was like there was this light El moment and I was likeOh, I think I found my purpose right and like this is what makes me happy,and so since we had that really clear mission of trying to help musiciansmake a living to her on in its online. It was really easy for us to just say:okay. Well, you know we don't want to build a business on the back. I justone of the business. We want to do this in any other way. We can right, and sowe started solving other problems on other platforms like Yout Potii, beport, you know title you name it and we ended up kind of slowly, pivoting orevolving into a different type of business, which is you know what iscalled a distributor and industry o that okay, so is your solution at leastthe first layer when you solve this paperwork problem? Is that simply? Likea case, you said you had a technical kind of CO founder. There is in a caseof kind of creating sort of the an API for for music rights. Is that kind oflike what it is or not? No, no so I mean in a lot of ways we just act as amiddleman right like I'll just flat out, say it so it's you know an artist comesto us. We have a deal with sound clad. We have a deal with spotee cul dealwith apple through our site. We collect your assets, your heart work, your yourfiles, you know the METADATA, the rights information, what percentage ofownership goes where and then we transmit that to all of these differentmusic platforms in you know some of them at there's some standards, someplatforms to it, pretty unique, it kind of depends, and we just basically sendthat rights information to those Potfawatomie, as well as those files inthe content, burnings get generated, gets passed back to us, and then wepass that back to the artist. So it's kind of just- and I think that theelegance of our product or the key of our product is make to me that iselegant in the sense that it all feels like it's the same flow for alldifferent platforms. Right and it's just really easy. You know, despiteeach platform being very different. It actually leads me to questions sowhen you say it sends the information excuse. My ignorance here is it a caseof your system is just sending an email that saying this person just made thismuch money. You need to give this much of this stake holder and this to thistin called, or is it more more technical than that? I would say eightyor ninety percent of the relationships we have with music platforms is through,what's called Dede, so this is like a music industry xme standard as arelates to delivery of edidit and at content more or less. In some cases,yeah, there's literally emails being triggered for okay. You know it mightbe a smaller platform, you know and a weird part of the world or somethingyeah. You just got a sort of hustle, but yeah I mean, I would say, eightyninety percent of it follow that General Standard Day. Okay. Now Iappreciate that now my head's clear on exactly what you do, you're kind oflike that you said a middle person, but also your a technology solution thatmakes everything feel cleaner, simpler one place, one solution so in some ways,you're like a modern version of a technology, only like a cloud basedlabel service for an indear. If that kind of makes sense a little bit, wedon't use the word label. So yeah, like the term, is distributor right, sothink of it is like in the old days of the music industry. Right like label orartists would make a CD. It would need to get put on a truck to get sent totower records, and you know all those other places were like kind of thetrunk. So to speak, but yeah, like you know, a huge portionof the people who work with us are actually labels themselves to so allrecord labels need some important distribution and accounting inprostrator for their royalties and then the other thing we haven't even touchedon is we also have in house marketing. So we have an entire team that helpsall the artists and labels that we work with once this content are in stores toactually get into big playless on spotface, get big influences on tick,Tock, to use your music right and that kind of can scale based on, like youknow, the business relationship that you know we have with that: Okaycustomer artist, so to speak. Ah, that's interesting, I'm assuming thatwould have come later, so maybe I can take. You know this journey from startto finish, so you create that first test version when you're doing it hole.Manuale you bring in your friend a not trees, a CO founder or not. He buildssome of the technical side of that with that kind of like an exene language forfor the music industry like among wherever it needs to be manual itsmanual that's built now at that point, is it a case of word of mouth, isbringing in new musicians and you're just kind of keeping up with demand oris the other way around? You have to start telling people you exist like howdid it evolve from that early day? Yeah...

...totally, so I was fortunate to via myprevious employer right to have a lot of relationships with a lot of largeinfluencers, particularly in the electronic dance, music and him popspace, which is you know, sound clouds like two of their largest audiencesright, so I was able to tap into some existing relationships. But yes, it wasall word of mouth like the first year or two years. I was a salesperson right,so when I think of who I am as a founder and my school said, I'm a verysales focused founder and yeah. All I did all day every day I was just lookat channels on sound cloud and reach out to them directly. Do Phone calls,and then you know the first couple: hirers were more sales people to behonest and engineers, and it was just kind of that was the two Pistons in theengine was just engineers and sales people and ye. Then, of course themarketing and stuff came later, but yeah. It was word of mouth and you knowwe invested really heavily in customer support when we were very early too soone thing is we made that made everyone the team to do support for probablymuch longer than we should have, but you know the one thing I noticed waswinging: All of our competitors across the industry was just the most commonpiece of Peba from Bele as like, or the reason people would leave theirdistributor label as the support was really bad, and so we built chat foryou know we try to get that back to people quickly have really strongrelationships, and so it started to happen, and this has changed sincewe've scaled. But you know in the very early days was you know, a lot ofpeople were just going to social media, saying, like the repost guys werereally cool like I really love working with them and we were. We were actuallyone of the more expensive distributors in the space there were some orcompetitors were charging half as much as we were, but people were stillcoming to us because you know, hopefully it felt like you know we wereyour friends and we were having to educate you and helping you get themost out of your career, and so we really focus on like providing care andlove to the creators that that we worked with, and so I would say thosewere sort of the three three focal points. Okay, so one part of this, I guess wehaven't touched on, to which I can understand the demand side with I'm anartist. I am ready getting a lot of streams on sound cloud or whateverplatform, I'm probably thinking I want to monetize, but I've got one platformlike one distribution tool that will turn on ads for me, there's another onethat might do it. You've got sound, clad that sound cloud you're, not partof yet so you're an external tool to sound cloud as well. I can see how yescustomer service is great, but in the day I'm also thinking. How much am Igoing to make right and that's a big part of this. So how do you fulfill themoney generating so like? Do you have a lot of relationships with AD media type?Companies like what's what's that side of it like yeah, so we're,unfortunately, in most cases, BE HOLDEN TO BE AD sales teams and subscriptionbusinesses at the music platforms that we ultimately deliver the content toright? So you know we do a lot on usum right. We help police rights and helppart US make money on you tube, but we can't control the ads that run onYoutte and we don't have an an how sales team or connections in thoseplatforms o that and honestly, very few next to no companies that we competewith. Do that. You know one of the benefits, though, with sound cloud isbecause we are a platform we have tons of brand relationships like people areadvertising natively on platform, and so you know there are lots ofopportunities where you know they'll come to us and say: Hey we're, Clarobleach, we're going to do this ad spend with you, but you know we want to dosomething a little bit more influence or focus or something a little bit moresince we're taking his music approach to our brand or bleach brand orwhatever this just pulling a brand out of it. Yeah now out of the Hatie, butwe do see the benefit from that and then I think when it comes to growingrevenue, you kind of have to look at it from like a segment standpoint, thoughso. Well, you kind of went to add rat like what we've actually found reallyhelps. People who, I would say, are like artists, starting out or maybe inlike the middle tear a musician, so you're, someone who hasn't you're,maybe hobbies to part time you're, not quite full time. Yet it's honestly bestpractices in a lot of ways right, like understanding which platforms areworking for you. How do you educate an artist or label to understand how to doproper release planning? What are the marketing strategies on the platformsthat matter to you? What are the tools out there that exist, and I think weactually take time to do that? You know you can incrementally build revenue andincrease your revenue a bit by bit over time. That makes sense that doesn'tmean that you know the an artist won't come around every now and then who wework with Er just blows up out of nowhere right and then it's like ascramble to like. Oh, we got to make this person more money and we need toshow more value right like that, like that that exists too, but I think,what's really beautiful about the music space right now, I'm sorry, I'm totallygoing on a ran. It's so much more democratized, there's so many ways forartists to monetize social media is the thing now you know which maybe wasn't athing twenty years ago. There's this opportunity for the Middle ClassicMusician, where maybe you're not going to be the next beyons, but you know youcan quit your day job and take a Pasi full time and that's a growing marketin our space and I think yeah we're very focused on how to a grow. Theharpoit call it ARPA average revenue...

...per artist. We don't like using theword user. You know not growing that Arba and you know helping the impactand ultimately these artists, businesses, okay yeah, I can see it'sbecome more fragmented, but that in some ways has opened up a lot moreopportunities for monetization for musicians, it's not just which labelyou signed to a becoming huge. It's you can make a bit from your instar channel.You can work with you guys, make some more yeah. We remark I Guinea right,like you, can do that through us right and then that's something that, like alot of older school labels or distributors, it's not even a part oftheir strategy right and these things move so quick and these platformschange. So quick. You need to be Nimble and that's why I'm so excited about theentire music space, especially the music. Great States is it's gettingeasier to enter and people who have good product in tech chops candifferentiate themselves and build meaningful businesses, and you know notto say the way I did. But you know I think people will do it even betterthan the way I did so to speak. Well, take us for then so if I can jump backinto the the repost network story, so you said there were some like yousolved this initial problem and then you spotted new needs within theartists that I'm assuming because you had this great customer service, youwere getting a lot of feedback from them. You were really in the trenchesdoing sales calls you would be getting a lot of direct feedback from people aswell. I'm guessing that help and correct me if I'm wrong, but this iskind of what led you to provide more advertising connection type solutionsand then, like you, said as well, the the additional support services. So canyou kind of take us through the evolution of that, like what was thefirst thing you started to do beyond just yeah, I so one of the benefits ofinvesting into support and being really close to our customers early on, is youknow if you get to a point where you have you get to proof of concept withyour business and you have good relationships with your customers.They'll tell you what they want next and it stops being your product anymoreright and your road map just builds itself right. So we were really big,like proponents of that right, like what's actually look at the number of issues that are coming through support,hate of the most common issues and just prioritize building that or feedbackright, and we got really good at that. I think very quickly. Artists expressedus that they wanted marketing help if they were going to work for us,especially given our price point, and so you know that what I came later, thatwas something that you know was something like. I like this issomething that you we're going to be taking a percentage of their earnings.You know for some people, just distribution and accountinginfrastructure wasn't enough. They wanted like a label servicesinfrastructure, and so we looked into that and tested that, and you know thatwas a whole thing to figure out which platforms to focus on, and how do youstand out from competitors on that standpoint? But I remember there wasone point in the business where we kind of you know sound clad in the earlydays. I guess we had platform dependence if that makes sense. Sothere was an issue where we were doing a really good job solving problem forcraters on sound cloud, but we kind of have this moment where we said likelook like you, never want to build a business built on the back, I justanother business. So how do we start solving problems for artists off ofsound cloud and naturally, for me coming from you tube?I knew exactly what to build in a, I would say, like an artist product foryou tube and so, if you're, okay with me getting a little technically or theway in which we make artists money on on Yote s through something calledcontent: Ib, okay and what that is is like. Let's say you bloat a studentfilm with my music in it. Without my permission right, we can take that song.Give it to Google identify every third party usage of that song across theirplatform force an advertisement in front of that your student film, andtake your revenue and give it back to the artist right, and so it's a verylike back end relationship. The hundred percent of the revenue like like ahundred percent in fringed you've infringed on on our clients, rights, and so none ofthat revenue should be available to you. It gets very complex and there's thiswhole back end and we're right soldiers fight over thingsand deals, change and yeah. It can get kind of kind of complex, but you knowthat's a very high level view of it and you know for us something that Inoticed was that artists who did contenta through other labels and otherdistributors didn't really have much. They knew that their music was gettingput into all this content on Yutu and they're getting paid for it, but theydidn't really know what the content was right or anything about where theirmusic was getting used, and so we did was we actually built a dashboard thatwas like? It was kind of a simple solution. It was just hey: we'veclaimed all these videos for you, and here they all are, and we had an artistcome to me and say, like Hey, I actually find out through you guys. Mymusic got us in a tie. Water Park, commercial and it was like on TV, and Iwas able to go after them and like get paid for it. You know what I mean andlike that, like that's great like it's. A very like knowledge is power, kind ofthing, and you were able to make the money and also give people a level oftransparency that they otherwise couldn't get anywhere else right. So Ithink it was like for us, as we started, tacking on a new platforms reallylooking at each platform and like...

...talking to creators and understandingwhat the pain points were and how to give them kind of an edge and then thatultimate, we ended up giving our artist and craters what they wanted anddifferentiating our product, which only helped it kind of created. This, likereally nice fly wheel or if, like you're kind of executing correctly onthose types of things and you're, giving people what they want andthey're getting ahead of their peers, who are working with our competitors.And it's like you can grow the business quite nicely yeah. I could imagine theword of mouth would really kick in with so many different aspects that, becauseI know I do feel quite naive in this and I'm assuming there's musicians whodon't know more than me, but they won't know to the degree that you're talkingabout here with the rights holding in your ability to go after your usage ofyour music, the way you're talking about. But it sounds like there's a lotof behind the scenes, technology and people connections and so on. We neverspend more than I think ten grand in total on paid marketing. Well, it's allword of mouth. It was just. It was like super, not scalable, just like hirepeople to just reach out and talk to artists, and then they talk to theirfriends and there was that and then calling the company repost. So when Istarted the company, I kind of made this assumption that if you were asound, clad artist or a creator on sound cloud which were the type ofcustomers, you wanted to get that you would be trying to figure out how toget more reason. Clad is like a re tweet, you know yea, and so I was like,if we just call it repost and create blog content and dominate the so willwill rank higher and search on Google, and so at the beginning, we, like aquarter of our signings, would come in from just organic free. So once thatkind of got you it kind of steam rolled enough. So it was all yet that enoughto get you to like the one point, two million dollars a month and just toclarify when you say one point: Two million: that's your revenue, which isthe share from all the artists you're taking a cut from. Is that right? Yes,it's a total, and then we take a reb shire on top of that, okay God that'dbe ar that'd, be our like top line revenue of what were what were takingin at the time with that was like what two three years ago, something Ithought yeah and then you pay out the artists from that that fun money yeahwe take a percentage, Yep got it. I haven't really talked much about yourown entrepen urial background. Jeff, so before with repost, you said you wereworking for full screen right. It was there you ever an entrepreneurialbackground. Did you have another business in your past before thecurrent one? I did so before full screen? I went to film school,initially the young fellow and was an editor at first and I ended up gettinglaid off from Disney, more or less because net flix was becoming a thing:a poach, wood, Disney Disney home entertainment. So any time that Bambiwould get re released. I would do like help work on the behind the scenesspecial features and they thought. Oh, this content won't be a thing anymore,because net flix is here which is totally wrong. He ended up like layingand I'm getting way off, and so I ended up at this company called Juke andmedia, which is actually pretty big now, which does viral video licensing. Soit's verging the gap between someone gets kicked in the balls on youtube and it goes viral or whatever they'll like license it and get paidfor that by getting it on to like shows like Tosh, Ponto and ridiculousness,and all these viral video things. And so I started out as a video editorthere and I was going to be like the fourth or fifth employee. So I kind ofgot the experience of you now not being a founder there, but being kind of onthe ground floor of something new. And now it's you know, hundreds ofemployees, offices in La And York, London, still friends with the founder,he's a great entrepreneur. But I learned a lot about content likedigital content, you tube, but I was always editing too and then, while Iwas editing that company I found a software that would be able tosynchronize multiple videos via the audio wave form so of like the a threecamera shoe and they're all shooting the same audio. It would take a lot oftime to like sink them up, but this just scan the audio because they wereall recording the same audio and sink it you that and at his libel moment-and I was like- Oh my God, like everyone's a concert filming with theircell phone cameras. What if you could like turn the audience in the camera,men for the artist using the same technology, and so I was able to getlike a small amount of funding through accelerator called start engine juststill around. We were one of their first. We were their first fund and quit Jukin did that full time built thevideo processor from scratch? Well, we actually license that part of the tech,but we built a process around it. You know it was small company, it failed ittotally felled. We ended up building this really cool tech, but there was nobusiness behind it and yeah like hardest thing. I've ever had to gothrough was like admitting that, like I had convinced a couple people to quittheir jobs and do this full time and then like it, didn't work out, and butit was a huge learning, experience right and made it so that when I wentand did repostirs great and then so you...

...know after about a year or a year and ahalf of that we ran out of money shut it down. I went to full screenoriginally as an editor like kind of tailed between my legs didn't know. Itwas next defaults. Did the thing I knew really well, which is video editing andI got brought in originally because back in the day, back like two thousandand twelve, you know if you got it, if you were a yout burn, you did a branddeal, we say sprint, Sprint would say like well. Why doesn't this look like asprint commercial right? They didn't understand that, like you nowinfluences could do things in their own voices, but back then they didn't. So Iactually got brought into kind of just like help. These influences make bettercontent with, has related the brands, and then just one of the founders cameto me and said: Like Hey, you seem like someone cool. I know you did this thingin music were starting a music for a call. Do you want to move over to thatteam, and I was like yeah and then just learned a lot through that to thatcompany I joined pretty early to. I was maybe like employeth between thirty andsixty something like that, and you know I end up becoming a massive company andso yeah. So I think I've been fortunate personally to be on the ground floor oftwo companies which have like gone from nothing to something pretty big andhave been able to kind of stand back and watch and see what they did rightand what they did wrong. I have the benefit of having started something andfailed. I know what that feels like and learn what to avoid, and thankfully,with reposts that didn't happen again, be completely honest, I'm very lucky. Ithink I think if someone had said your Hay Jaffur, starting a musicdistributor in two thousand and fifteen, when the entire music industry was atthe bottom of you know to do like naps ter into cd or I just completely twothousand and fifteen was the bottom and that it was like the dumbest time inhistory to start like a distributor in music and it's when streaming poppedoff, and I just got very lucky to be in the right place at the right time. Ithink that was like the lowest point in terms of revenues being made for ArgusRight, but yeah and I just went right into it, so I didn't care about themarket. I cared about the problem M. can you think back to because I knowyou you D D, you start repost while still working at full screen or was ita case of I'm just going to go all in and no no. I left whole screen and thenperiod of time I'm buying and started it okay. So then you did kind of dothat whole. This is has to be or have to get a job again when repost networkstarts to work. I don't know how fast that happened in terms of you seeingenough income from it to pay yourself. was that, like your one month? One doyou remember that from the Early Day, yeah yeah, so it was the first sixmonths so leaving full screen is really tough after that, like had no incomeblowing through my saving, right, like I was very lucky to have, you know, hada little bit of cushion to get through that period. It took a really long timefor me to get a deal with sound cloud, so I remember I said like in order feefor me to monetize things for artists. I need to have a business relationshipwith sound cloud. I was in nobody. I was a guy on a couch and I hadconvinced sound cloud how to do a deal with me after they just den to dealwith universal music and Warner, and some of the biggest music companies inthe world. I that was yeah totally yeah. It was really hard. So you know thatand of itself took a really really long time. Can I just ask you: How did youdo that, like? How do you convince a company like sound con to believe inwhat Jeff Pun? Yes says it's going to work yeah totally, so I had a friendwho had sort of a label of sorts, and it was it was kind of at scale, wasvery youtte focused and he had a few hundred artists that he like directlymanaged the monetization for on Youtte, and so I basically came to him and said:like look, Hey, I've got this vision. I want to solve this problem. I want tostart this company, but I can't just go to sound cloud with like nothing. Can Ido a deal with you and basically say if I get a deal with sound cloud I'llmonetize, all your artists on sound clodin will split the net earnings it.Fifty right or I give him like some great deal. You know he might have evengot more than fifty percent and I got less, but it was just like so then Iwas able to go walk in the door once I finally got that meeting was soundcloud. They didn't know who I was and say Yeah I got you know this manyhundreds of artists ready to go and they were like, Oh okay, sure, yeah and so yeah it just you know it was youknow it just just hustled it yeah. It makes sense yeah and then to yourquestion about like by what point were we profitable? So is that like six sodid that for about six months, then it was like. I would say a few months justreaching out to artists on my couch Joey. My Co founder had come on board.He was kind of weekend warrioring it and you know we set up a marketing siteand stuff, and it got to the point where we had. I was getting so manyinbound people trying to work with us and the whole process. I had outlinedaround how hard it was to monetize music. I literally didn't have enoughpowers in the neck like I was like. I was like ripping my hair out, and so Ikind of got to this point where I was like either I raised a little bit ofcapital, or this isn't going to work right because it's not going to skillcomplete enough, which is a good problem to have. But it's also like avery stressful thing to go through and so n I went out. I actually went toample Fila great people to La Venice...

...beach based accelerator incubator, andyou know they. I sat with them and they're like this is great, like youhave a demand curve like you've, no idea how many people come to us, it'sjust a person with a pitch deck. You know, like you, have a business hereand I'm like yeah totally. I just need a couple hundred sand bucks to get thisengineer full time and you know like build this out and they, thankfully didit and then yeah, I think, with Reposte, ended up raising in our first year.Maybe five hundred K, something like that total, maybe a little less, andthen we always focus, but I think culturally, for us. You know the focuswas very much like you know we're here to make artists money and if we can'tmake money ourselves, we shouldn't exist right and there's like we, thetonic competes would just raise, like United Masters had raised, like seventymillion dollars in Google standad raise like fifteen million dollars from likebeans, every manager in the music industry, and we were thus these likelittle little guys, but we were like no, we don't want to go that route. Wedon't want to go and do a series Ay. We want to like make money for artists,and so you know I would say after a year one we were profitable and it wasprobably maybe a team of like four people full time, and I want to seewhen I said profitable, I mean like Raman profitable, you know but yeah I was. It was a little roughthat first like year and a half to be okay, completely, honest yeah. So if wewish, for it all the way to the point where we were actually being acquiredby sound cloud more than Rom and profitable at that point, so what made you consider getting acquired,making the sale? And you know, did you even see that as an in point prior tosound club? Maybe I don't know who approached to there, but was yourvision actually to take it yourself to a hundred a million a year in revenue,or is the case you're happy? Because you get to work with the company andthen they came along at the right time. Yeah look. Sound Club is always like avery natural fit right and San Clad had had a change of leadership, so carrytrainer, and Mike Wisman came in about three three and a half years ago.recapitalized the business, the original founders step down there verymuch change management, and so sound club is heading in, like from myopinion, like a really good direction as being like a growing sustainablelike Raraka go creator Type Company. So to me that was kind of like in the backof my head, always the dream, but yeah look the reason to sell. We don't wantto sell we'd like to me and Joey like we loved at we did it was it. You knowwe're changing artists lives, it was, it was incredibly fulfilling. But whatended up happening is, I think, in the summer of two thousand and eighteen, the distributions face got hot. Ourspace got hot, so POTII did a big private ecquid with distro Kid Apple, aquite another one of our competitors, platoon, and so my phone just startedringing off the hop right from people in private equity and music platformsand named one of the biggest companies in the world on music papers by thelight. So you know when Amazon calls you it's like Whoa, you know, and thenyou know also like major right solders and record labels, and so you know wehad to make a business decision, which was you know either we go out and werun a process to raise some capital or cell or we stand the risk of being thelast person at the dance without a date, and all of our competition is way more as a bigger war chat than usand another part to is, you know, we're not we're not stupid or naive. You knowif they're talking to US they're also talking to our competitors right,because the space is hot, so we ran a formal process. It wasn't initially tosell, but very quickly all the conversations went right to that and soyeah. So you know we ran a process to see what we could get and sound club came to the table and itwasn't our only option. But you know we felt that you know for the team wedealt for what we feel like we need to have to feel fulfilled in our work thatsound claver is the best cultural fit, because you know they are tech, company, musicright. I think you go to a major label. You know they might not respect thetech as much, but you know- maybe that's not the case. I don't know, butthat was my assumption and you know if you look at all the music platformsthat are out there. Maybe excluding you tube, you know it and Yutu is in Bernmusic, Potomu Music's, a big focus for you tube excusing, but it's not like deFocus, it's kind of like the number one platform for independent creators and our mission of helping our Tis makeliving do their Audencia online could really be amplified through the scaleand the data and the information that exists on the sound called platform,and so it was kind of just like once we kind of got to know carry and Mike. Wewere really impressed with them too, as leaders, and we felt like also we couldlearn a lot from them personally in the team couered a lot. It was a goodculture fit and it felt like it was a one plus one equals five investmentthesis, and so you know two years later, I'm very happy with the decision. Youknow we're helping more creaters than before and I'm learning a lot and it'sinterresting you go from like I want to...

...learn to be a started founder. Thenit's like you learn to be an executive at like a bigger company, and you justyou just hear so many of those horror stories of like found ourselves tobigger company and they just they're chained at their desk and they hate it.And that's you know so far away from the truth here and so yeah I'd say likevery happy with the decision over all fantastic. What was he the sale price,a negotiation, because I was probably the first time you ever did somethinglike that right, you're kind of negotiating correctly, if I'm wrong,the largest part of your net worth at the time probably still is, was that,like a you know a challenge for you or I did it just go so easily, because youknew the sound cloud people so well hardest thing. I've ever done. Okay,yeah! I think it's incredibly stressful yeah, it's like a life, it's a verylife changing thing to go through and to send clubs, credit, they're, goodnegotiators right and I'm this guy. Who Don't have a lot of agree. I haven'tgone through an MA process before and it was hard to not feel outmatched alittle bit, but you also look at it and you're like Oh, like this is a reallygood team and it s and going through an Ma experience with other side alsogives you a interesting lesson in like how it will be to work with them too.So that was, I think, valuable and Yeah Super Hart. I mean, I think, there'sthis really funny story when we finally announced the deal Mike Who's now, theCo was a coo at the time flew out to la, so we can announce it to the team andwe announced it to the team, and you know everyone stoked and one's happy.We end up going to like the closest part of the office, to kind of gocelebrate with everyone and I'm sitting at the Bar, and you know it's been likemonths and months of stress and I start to feel like a fever and kind of sickand my body just completely shut down. It was like it was. It was I've nevergone to anything like that. It was just like it was like the way of having gonethrough the deal just it just like fell off me, and I just like I was. I justwent home early and I like crashed for like two days. It was a reallyinteresting lesson in like how to manage stress. I guess how like thatkind of thing can really build up, but yeah yeah, it's interesting to say thatsome of the other guests I found on the show who've also sold companies. Theytalk about the stress of completing a deal yeah from the lawyers side fromdetermining the valuation side is the stress: Jes come from it's so importantto you, but you also are not in control of it ultimately as well right, so isthat kind of what makes it so stressful or that simply just you have to gothrough so much scrutiny and so much looking at numbers, and you know kindof revealing behind the scenes of your company yeah like it's probably different foreveryone right. But for me I mean it's a lot of things right for me. I thinkone of the scariest parts is the fear of the unknown right, like you, don'treally know if what you're doing is going to work right, and you have yourteam that you have to be that you're responsible for you have all of yourclients and customers and art my case artists and labels, to who I love andcare about, and you know for me the whole time I like shit like is thisgoing to get fucked up? You know like as it's you know like? Is this going tobe worse and like that kind of unknown of what it's going to really be like onether side? It was very stressful, the other aspect of it. It's also just alot of work right. It's like you, have to simultaneously run and grow yourbusiness right while negotiating this deal and if the business dips rightlike, if you think about it, if you're on the byers side you're looking forany opportunity, you can to get the price down, as you should right. It'sjust kind of like your running your business you're negotiating this dealyou're going through diligence. It's just an incredible amount of work andso yeah and then there's also the fear of the unknown part yeah and tering othe company and doing a new role so yeah, it's a it's a tough job. OkayJeff got a maybe one more question, maybe two just before we kind of wrapit up here. I know we've got about five minutes left, so you had a big exit solike ten million in cash, five million equity and now all didn't go to Um. Itwas your co founder that was initial investors and maybe some of the team aswell. But I'm assuming a fairly big chunk, did go to you and that's, like Isaid before, probably your largest source of capital of a moment. What didyou do with that money? Was it a case of just reinvesting in something else?Did you buy a couple of toys for yourself? What was the? What was theusage of all that capital yeah? I think like with anything right like you for me, I invested it. Yeah, like youknow, I'm not someone who needs to have a very flashy life. Yeah just make your money workfor you, because you know it one day you might not have a job or be in asenviable as a situation, and you want to make sure you know your your covered.I guess long term. What was your investment vehicles of choice? Are youjust hanging it to someone to manage, or did you kind of do it yourself orsucks a little bit safe Y, a s? Don't yeah! You know I work with a wealthmanager, I'm part of it for the stuff. I want to be more aggressive about. Ido myself I like to play in Crypto. I think it's fun, but I definitely havebeen Montra. Don't invest more than...

...you're willing to lose it's a little,especially with recent events right. It can be a little ball of out a littlebit so yeah. You know it's! No! YOU gotta! You got to spread it. You got adiverse about your assets and never put your egone basket and awesome so andjust come. The rap up question now that you're inside would sound cloud andyou're still I'm assuming that the boss of the repost network, part of soundcloud. What is is a case of just doing the same thing, but on a grander scale.So it's two things so one the first one is part of our investment thesis whenwe were required was we built distribution from the ground at, but wewere selective about the artist. We were working with sound clouds, thelargest open audio platform in the world right, so the amount of craterson the platform. As you know, it's millions and millions of craters, sopart of it was Lelahs kind of stripe, down version of our product for asubscription sasite, basically as a subscription fee, and offer it to allthose artists. More kind of in that, like, as I was saying earlier, likehobbyist a part time range right, so just real, quick, easy way to just getyour content in the stores and make money. So you launch that last and thenalso allow them to monetize their music on sound Clod to so. We launched thatabout a year ago. It's going very well, it's not a matter of how much skill dowe want to take on or how much skill is there? It's a matter of how much do wewant to take on. So we are, you know, kind of slowly taking larger bites outof sound cloud, and you know getting more customers and things like that,and there are ways to kind of point sound clods funnel into that at scaleoffering. The second is yeah exactly what you said: Pouring jet fuel on thefire, so to speak so using the data on sound cloud, as well as the data forour off platform distribution to identify the next global super starsand or jus artists. We should invest in, and so you know, I receive a tenfifteen million dollar advance fun, an artist marketing team, a team ofproject and account managers, as well as the sales team, and you know we'rebasically just using that for sharp edges. Understanding, what's happeningon the sound GLOB platform, signing it like a distributor or maybe even alabel wood early on and then putting them into an infrastructure where wecan help them grow their career in a really meaningful way, while alsoparticipating in that upside. So yeah, it's doing what we did, but with a lotmore people and money and sore resources, which is just Super Fun,because I think on like the product side of being a founder. It's like youalways as someone who I care very deeply about our products. You want asmany people using it as possible, so we're achieving that with that scaleside and then, with the other side of what we're doing it kind of feels likewe got that series a or series B investment and we're just like scalingit up and helping more creators in a really hands on way, and so that's theblest. That's basically what I ever see, yeah in fact that you're still theretwo years later, shows that you're still enjoying the work. It's not justabout the money. It was something you really enjoy doing. It has a good aboutthe work right, like I'm, very grateful and very fortunate to have found apurpose like I said earlier like that feeling of just helping someone takemusic. All Time is I'm addicted to that and yeah like it wasn't about money. Itwas just about finding the place. That would let me do that on a larger scaleand let me learn to become a better entrepreneur executive in the process,and you know I think, as long as that there then I'm as happy as a clam. Well, I appreciate your taking a timeto enlighten me a little bit. I have to say the music and Industry for RightsHolding and so on. It is a little bit opaque. I guess in the sense, it's allthe stuff happening behind the scenes. You don't really know about it. Now yougo to Yutu, listen to a song, you don't really realize how or who is makingmoney from that process, and I still don't really know, but I can see thereis actually a lot going on and I can see why your platform worked in thefirst place with the initial idea. So thanks for sharing of any other website,you want to send people to sancom check it out. Listen, LISTEN TO MUSIC THERE!I you, the first guest they'll have was website, is Songolo and that's that'svery cool yeah. I now appreciate the time thanks. Jeff Cot have a good dayright and there you have it that episode withJeff Punchi. I hope you got as much out of it as I did. I was certainly notaware of all that behind the scenes, slicing and dicing of revenue with allthe different stake holders and would never have thought about this as abusiness opportunity either. You certainly had to be in that world tosee that opportunity, which might actually lead to some ideas for youhopefully as well. You might be thinking, there's some ideas, someproblems to be solved within an industry that from the outside no onewould see, but because you're on the inside, you can see the problems.People have and you can potentially start a business just like jeff did. Ifthis episode was helpful for you, maybe you're thinking about a family memberor a friend or a colleague who is in the music industry or is also anentrepreneur. A start up founder is thinking of starting their own business,whatever the case may be, if you think this was a helpful interview, pleaseshare it with them. Send them the link to the vested capital. PODCAST tellthem to go to episode for with Jeff Pun...

Chick, and they can listen to the wholething for free. As always, they can find this podcast and all the previousepisodes by googling vested capital or searching for Yara ro inside anypodcast APP. You might have. I said Google will bring in to the website theGoogle podcast player. You can also search in there. You can search in thespottily player, the Amazon player, the Apple Player, the so many players arepodcast. All of them will have vested capital available if you just searchfor it and once you do that hit subscribe, so you get all the episodesas I release them, as well as the entire back catalogue of interviews.I've done with amazing guests, just like Jeff, okay, that's it for me, myname is Yaro and I will talk to you on the next episode. Bye, bye,.

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