Achieving Massive Growth (Qloud story 11 of 14)

This is post #11 about the Qloud experience.  The previous post was about about the launch of Qloud.  You can read that here

Once we launched, we grew extremely fast. I have to say that being part of a company that is blowing up is really really fun. Everyone is constantly happy. As a product person, this is what you work for and when it happens, it feels great.

We did some things that were shady and other things were legit and very smart. Some things we did:

  1. We wouldn’t let you use the application unless you invited 25 friends. We had a nice UI that let you quickly select 25 faces and then it would open. While extremely annoying, it worked really well.
  2. We integrated deeply into the new feed. We knew all of our users play history, including from iTunes and we’d launch really interesting news feed items to friends that read, “Of all the songs played last week by your friends, here are the 3 not in your library. Click here to play.” This is great music discovery, right in your news feed.
  3. We started understanding and using the link sharing networks. Lots of other apps were selling the ability to recommend users download other apps. You could buy space there and buy installs. We experimented a lot with all of them.  Some were pretty cheap and effective.  Interestingly, Steve Case really dug into this too. For someone with his success, we was not afraid to get into the weeds. I also give a lot of credit to our lawyer and BD guy here, Jim Delorenzo (now head of Sports at Amazon), for this success as he really figured it out.

I give Noah R-S (now Chief Product Officer at DailyMail) a lot of credit for hacking Facebook. He understood it at a level that probably only a few dozen in the world did.

We also started exploring a business model

Our growth was so fast that we’d get lots of calls from record labels and lawyers asking to shut us down. They saw the streams happening on Qloud and wanted it to stop. It took them a while to realize that we had co-opted YouTube for the streams.

Qloud and Facebook’s Platform (9 of 14)

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 leveraging Facebook’s platform. Sometimes the bright and shiny new thing in the industry is worth going after.


The next post is about the actual launch. Check that out here.

Music Technology in 2007 and Our Use of YouTube (8 of 14)

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…

 

In the Abyss: Running out of money (Qloud 7 of 14)

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.

Continue reading In the Abyss: Running out of money (Qloud 7 of 14)

Inspiration Strikes: Pivoting (Qloud 6 of 14)

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:

  1. On-demand music.  They see a track, they want to click and play it right then and right there (in the browser)
  2. Major label music – all the popular stuff for the 4 major music labels
  3. Indie label music – all the niche stuff from the dozens of indie labels
  4. Unlimited music – they wanted no limit to what they could do (unlike radio stations)
  5. 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: 

  1. How do you build a business around free music?  (answer: you can’t)
  2. How do you make the record labels happy if you’re not charging?   (answer: you can’t)
  3. 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. 

 

Developing in Romania (Qloud 5 of 12)

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.

Continue reading Developing in Romania (Qloud 5 of 12)

Launching the world’s first real music search engine (Qloud 4 of 14)

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.  

  1. Consumers have unlimited music at their fingertips
  2. With this amount of supply, they are overwhelmed and not sure what to listen to
  3. 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. 

You could search for Music, Tags or People using a variety of parameters

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. 

On the Case: Getting Investment from Steve Case (Qloud 3 of 14)

This is post #3 about the Qloud experience.  The previous post was about our initial fundraising experience in Silicon Valley and DC

Seven months into the Qloud process we secured financing from Steve Case’s fund called Revolution.  We were psyched and pushed ahead on the product.

A couple of cool things happened with this such as we got to work in Revolution’s office.  The office was right in Dupont Circle (walkable for me) and was really beautiful. Super pimped out.  We worked on the same floor as Case and the Revolution team.  Other people on that floor were folks running Club Med, Fannie Mae, and Carly Fiorina who had just left HP.

We had one big office in Revolution

I thought at the time that signing on a big name like Steve Case would help in our product adoption and marketing (“New Music Service from Steve Case!”), but it didn’t work that way at all.  We weren’t allowed to use his name as PR.   Similar to how VC’s don’t want to invest/help until you show traction and growth, Revolution didn’t want to associate themselves with us until we had some success.  It’s funny how that works.  Only once you’re loved will others express their love of you.  Continue reading On the Case: Getting Investment from Steve Case (Qloud 3 of 14)

Qloud Fundraising: Striking out in Silicon Valley (Part 2 of 14)

This is post #2 about the Qloud experience.  The previous post was about jumping ship and starting the company

Once we started Qloud, we started building the product and also started fundraising.  From day one, looking at our finances, we knew that we had 6 months to get the company to a place where we could raise outside capital.  Not only did we need to get the product built and working but we needed to hone our pitch.  We came up with what we thought was a compelling vision and set out to talk to investors.

Our pitch was that what we learned at Ruckus was that music discovery was a huge problem.  Talking to students it was clear that all discovery was word-of-mouth.  Qloud was going to be a way to allow people to find new music without having to ask your friend down the hall.  We were going to do that in 2 ways:

  1. we would offer a music search engine where you could search by tags and by demographic.  For instance, i want all the music tagged “happy” that is being listened to the most by men age 18-20 who live in Los Angeles.  This would return a list of songs that you could then sample.
  2. we would allow people to tag music inside their iTunes.  By creating a tag cloud, we would enable on-demand playlists for “happy” or “summer” or “breakup” inside the player.  This tagging and information from the iTunes would power the search capability provided in step 1.

Continue reading Qloud Fundraising: Striking out in Silicon Valley (Part 2 of 14)

From VP to the Futon: Living in the Basement (Qloud 1 of 14)

This is the first of some posts about the story of Qloud.  It’s now been over 8 years so I should start sharing the stories.  This first post is about how Toby and I made the leap to quick our jobs and start Qloud. 

Leaving Ruckus

Ruckus, a music startup, was failing as a startup.  Mostly because music subscriptions weren’t something that University students wanted.  They wanted music for their iPod.  We were giving them free music that didn’t work with their iPod.  So, it was time for a pivot as a business.  Toby and I did some research and found that music discovery was a big missing element in these student’s lives.  With unlimited music, they didn’t know what to download.  They couldn’t think of anything.  So, we wanted to give that to them.  And we wanted to do it on our own.  The fact that we came up with this idea while at Ruckus led to them trying to sue us later, but that’s another blog post.

I had started a company in college (HanoverDelivers.com) but i was a student then and starting it carried no risk.  I was now a 29-years old and leaving Ruckus meant leaving a good salary and a good job in a VC-backed startup.  I debated it for a while.  Ultimately, I ended jumping because it was a challenge that I wanted to take on.  Naively, it seemed like fun. 

The Basement

So, I jumped.  Toby and I started Qloud on Jan 1, 2006.   We had no office, no revenue and no product.  I had to reduce my expenses so I sub-letted my apartment and moved into Toby’s basement.  

Qloud office
Here's our basement office

Toby lived in the ‘burbs and had two young kids (age 3 and 5).  Every day, I would wake up early, work all day in the basement with Toby, come up for dinner with the entire family, play around for a little while and then retire to the basement to read, work more or just sleep.  I quickly became uncle Mike to the girls.  It was a really enjoyable time even though I was single and lacked any good dating prospects. 

Evie and Lucy in May 2006

We started right away.  We built some wireframes, did a deck (that’s what AOL taught us to do) and hired a few Romanian developers (Luci, Sergiu and Mitza).  One thing I noticed right away once we were focused on our new company is that I never, ever, thought that I should have stayed at Ruckus longer.  If you ask anyone who has quit their job and started a company they never will say that they left too early.  

I also am grateful that I was single and in my twenties. I had no expenses.  I had no expectations of money. I could take major risks in my life. I could focus all my energy on the company.  I think about my life now – with wife, kids, house, etc. – and while I’m much better at the startup game, I’m less likely to take risks like that.  My advice to anyone who is thinking of starting a company is to do it as soon as you can.  You won’t learn what it’s like without doing it.  You just won’t.  So start as soon as you can. 

We often worked outside