This is post #9 about the Qloud experience. The previous post was about about how we used YouTube as a music engine. Read that post here.
The year is 2007 and we’re building as fast as we can our new music service. It’s going to be a full-powered music streaming service on top of a collaborative music search engine and it’s going to be sweet.
Before we launched I went out to lunch with Sean Parker (known by many of you as Justin Timberlake in the movie The Social Network). At the time he had left Facebook and was about a year into his new VC gig at Founders Fund. We sat down to lunch and the subject immediately turned to our upcoming launch. He asked, “Hey, do you know about Facebook’s platform?” I didn’t and he went to explain it to me. Basically FB needed a way to expand and what better way than have companies build their product in to Facebook. While the 3rd party companies would provide the development, Facebook would allow you to message and add their users as your users. It sounded cool.
I went back to the team and explained this upcoming launch. I got in touch with Dave Morin (yep, the Path founder used to be head of Facebook platform) and he gave us access to the platform. Our plan was to build a subset of our service on Facebook and gain some early users. Then, when we launched our new website we could make a claim that says, “We already have 10,000 users on Facebook.”
It did not go that way at all.
Launching on Facebook right when the Platform was launching was probably one of the best things we did. Because it was new, it had a bunch of early adopters. It also had a bunch of loopholes that allowed us to market and message millions of users. If you remember getting a ton of requests to join some stupid game, that was the platform. We used to do things like “You can’t install our app unless you invite 30 friends.” and people did it.
Of course Facebook wasn’t happy about this, but we weren’t going to stop. Kudos goes to our colleague Noah who really figured out how to growth hack the crap out of it.
Lessons learned: at both Kapost and Qloud, we grew because we attached ourselves to a tidal wave in the industry. In Qloud it was the Facebook platform and Kapost it was Content Marketing. Facebook eventually would shut down the platform but not until much later. Heck, even Zynga used it to become a billion dollar company. Sometimes the bright and shiny new thing in the industry is worth going after.
One of my little pet peeves is how people use their dock on their Mac.
Here’s my logic. What do you do most on your computer? You read web pages from top to bottom. Because of this, your page is maximized from top to bottom and you spend most of your time scrolling. There is usually extra space to the sides of the page.
Why then, do you take up extra space on the bottom of the page with a dock? You are constrained vertically but have surplus horizontally. It makes so much sense for you to have your dock on the left or the right.
If you have it on the bottom and set to hide that solves most of the problem, but because you scroll so much up and down, you can hit your dock by accident a bit. But it works.
My rant for the day.
Verizon is buying AOL for 4.4B. It could be about ad-tech. It could be about mobile. It could be about content. I’m not sure why it’s happening and i’m pretty sure that it’s not going to work out well for Verizon. But, more than anything to me, the sale feels like an epilogue to part of internet history.
I’ve been hearing frequently that the best business model you can have is to be a marketplace. I heard it on this podcast from a16z “The Marketplace Rules” and again today when i read the HBS article called “What Airbnb, Uber, and Alibaba Have in Common“
The article states that there are 4 types of businesses in the world:
- Asset Builders: These companies build, develop, and lease physical assets to make, market, distribute, and sell physical things. Examples include Ford, Wal-Mart, and FedEx.
- Service Providers: These companies hire employees who provide services to customers or produce billable hours for which they charge. Examples include United Healthcare, Accenture, and JP Morgan.
- Technology Creators: These companies develop and sell intellectual property such as software, analytics, pharmaceuticals, and biotechnology. Examples include Microsoft, Oracle, and Amgen.
- Network Orchestrators. These companies create a network of peers in which the participants interact and share in the value creation. They may sell products or services, build relationships, share advice, give reviews, collaborate, co-create and more. Examples include eBay, Red Hat, and Visa, Uber, Tripadvisor, and Alibaba.
And of those four, the Network Orchestrators are rewarded the most in the market:
Because they actually generate better business numbers:
It makes sense as these businesses can scale faster and more efficiently than any traditional business. I’m always a bit amazed that eBay isn’t more recognized as the leader and pioneer in this category. What they did 15 years ago is what many of the marketplaces are trying to replicate today. Kudos to them.
That’s it. Just wanted to share the article…
Yesterday, Kapost announced that it closed another $10 million dollars, some of it from Salesforce. Salesforce is the arguably the biggest and most badass B2B company on the planet so to get an investment and endorsement from them is huge.
This is a great accomplishment for the team. It’s never easy raising money and this round took around 4 months to put together (maybe more)
Also, Megan over at Techstars shot a video of us in the office and just pushed it out. Here it is:
This is post #8 about the Qloud experience. The previous post was about about running out of money and pivoting.
The year is 2007 and Toby and I have a great idea to build a comprehensive music service. There were no web streaming services at the time. Some of the players were:
- eMusic – a service for indie artists where you could download mp3’s.
- PressPlay – a Sony sponsored music service that has only 2 labels and also required a download
- Rhapsody – a pretty good service that required a player download and costs $20 a month
We started building the service and went around to all the music labels and providers we could find to license the actual tracks so we could serve up the songs to our users. Turns out that’s not easily done in 2007. To get music you have to strike individual deals with each individual label. Those deals require time (which we didn’t have) and money for upfront payments (which we didn’t have). Hmmm.
Luckily we figured out a nice loophole. Google bought YouTube in 2006. Right before that acquisition YouTube gave equity to the music labels. In exchange for this equity, they struck a deal that forbid the labels from suing YouTube for 2-3 years (I’m not sure of the length). This was a little-known fact, but it was true.
It is also true that almost every music track in existence is available on YouTube. This was pre-Vevo. So, we decided that our backend streaming service will actually be powered by YouTube. Nobody had every tried this, but it allowed us to (a) serve all our music for free; (b) be legal; (c) embed our music right into a browser without asking uses to download a player.
We did one other smart thing. Turns out there are many many videos for each song. Some are correct and some aren’t. We didn’t have time to go through millions of tracks, so we build into the service the ability for users to mark which YouTube video is correct for that track. They could play up to 10 different videos and vote for their favorite. By default, we play the video with the most votes. This tuned out to work really well. Once we launched our users would spend hours voting on videos and helping us curate our library.
We build the service in 4-5 months. Now we just needed to launch. Read about how that went in the next post…
This is post #7 about the Qloud experience. The previous post was about about our massive product pivot.
We launched our initial product and the public reaction was terrible. The usage was low. See what happened and how we felt in the bog post: Launching the World’s First Real Music Search Engine.
It’s now the Spring of 2007. We’ve been doing the company for a little over a year and we were running out of money. We had rounds of funding spelled out in our deal with Revolution, but for the next round they could fund us or not at their discretion. When we brought up the subject to them, they decided to not fund us.
This is post #6 about the Qloud experience. The previous post was about Developing our service in Romania.
We had launched the world’s first music search service that searched on tags and usage. It was revolutionary. The problem was that nobody cared. The amount of use we had was small. Granted, we didn’t iterate on it much and maybe over time usage would have increased, but out of the gates it was DOA.
The few thousand customers we had we talked to and grabbed feedback from. They wanted more. Just a list of songs wasn’t enough. They wanted everything. Specifically:
- On-demand music. They see a track, they want to click and play it right then and right there (in the browser)
- Major label music – all the popular stuff for the 4 major music labels
- Indie label music – all the niche stuff from the dozens of indie labels
- Unlimited music – they wanted no limit to what they could do (unlike radio stations)
- Free. They didn’t want to pay because the alternative at the time (Kazaa, Bit Torrent, etc.) were all free
So, we decided to focus on delivering a full-featured music streaming service instead of a music search service. It was a bold move, but desperate times call for desperate measures.
It turns out we were right. This was the right direction as you’ll see in a later post. However, it created different problems such as:
- How do you build a business around free music? (answer: you can’t)
- How do you make the record labels happy if you’re not charging? (answer: you can’t)
- Technically, how do you get the music to serve to the users? We’ll address in a later post.
I learned a valuable lesson here in that you shouldn’t be afraid to drastically change your service if your usage is low. Don’t hang on to past work just because of the sunk costs. I’ll credit Toby for being super bold. Toby is not one to do things half-assed. He likes to pick a direction and go full steam in that direction. It’s tough to make a decision to throw away a year’s worth of work.
This would come in handy later when we did something similar at Kapost.
This is post #5 about the Qloud experience. The previous post was about launching our first product – a music search engine.
When we started building Qloud we found some developers in Romania. This wasn’t just Bucharest, this was a town 8 hours NW of Bucharest in the mountains of Transylvania. We started with 3 or 4 developers and they fit our budget nicely ($15/hr back then). The early guys were Luci (team lead), Sergiu, Mitza, Dragos and Szaby. The owner of the company was Dan Masca.
Dan is a fatastic guy. He also sort of runs the town. It seems that he employs about 1.5x more people than he needs to just because he wants them to have jobs. He also buys computers for many of the local business and schools. Walking the streets with Dan, you get the idea that he’s something of a saint in that town.
The developers were also great. We talked with them every morning at 8am EST for about 2-4 hours about what we were building. There was no language barrier. In fact, when we started Kapost in 2009 we started it with Szaby and Mitza. Those two are studs. Mitza left Kapost after 4 years to start his own company and Szaby is still with us and one of our most trusted and senior developers.
In 2006, once we raised money, we thought it’d be good for the team if we all met in person and got to know each other. Thus, Toby and I flew to Romania to see them. We flew into Bucharest and then took a train to Targu Mures.
This is post #4 about the Qloud experience. The previous post was about our getting funding from Steve Case.
Qloud’s initial product was a music search engine. It was based on a few assumptions.
- Consumers have unlimited music at their fingertips
- With this amount of supply, they are overwhelmed and not sure what to listen to
- There is no way to easily find music. Almost all discovery is social and person-to-person
Our solutions was to provide a music search engine. All existing music search engines then (and today) are based on song title and artist name. So, if you search for “dance” you’ll get Steve Miller’s “Dance Dance Dance” which isn’t actually a dance song.
So, how were we going to do this? We were going to capture demographic, play counts, and tag data from users from an iTunes plugin. Then with that data, we’d allow people to search for music. You do a search like “What is the most played song tagged ‘dance’ by 24 year olds?” and we’d display the results. It was pretty damn cool. You could find lots of good music and really see the different music being played by different groups.
We launch in the fall of 2006 and we were excited to see what happened. Ultimately, like many startups, we thought it was cooler than everyone else. We got thousands of users but none of them stuck or were passionate about it. Why? There was one problem – the users wanted to play the songs that we delivered. We just listed the songs and provided a 30-second preview. That wasn’t even close to being enough.
Back in 2006, you couldn’t easily license full tracks of music to be played in the browser. There were a few companies (like Muse) who had 30-sec clips but nobody had full tracks. That’s what people wanted. Eventually we gave it to them, but that’s a later post.
Ultimately, it was a disappointing launch and our investors started to lose faith in us and our vision. I think we were victims of not thinking large enough. We set out to solve a problem, but that problem wasn’t big enough. Providing a good music search was cool, but what people wanted was a more complete solution. We were a bit naive.