In 1985, my sophomore year at Yale, I formed a band with my roommate, and thus began my career as an entrepreneur. We named our band Senator Flux. In those days, picking your band name was equivalent to finding a domain name today.
Garage, indie, college, alternative, post-punk -- whatever you call it, the music scene was a training ground for the Gen X entrepreneurs who built the web of today. Do Facebook, Google and Amazon owe more to the culture of Lou Reed and Jonathan Richman than Bill Gates and Steve Jobs? I submit that they do.
Here are six experiences -- including a happenstance encounter with a pre-Nirvana Dave Grohl -- that helped prepare me for the startup world of today.
1. Bootstrapping. We decided to make a record. We needed almost $1,000 for the studio time, mastering, vinyl pressing and packaging. So I hitchhiked to a Rainbow Gathering in Pennsylvania, bought a few sheets of acid for $100 each and sold them back in New Haven for $5 a tab. I now had enough for the record.
Technology entrepreneurship isn’t all that different. In the early days of my firm, Geostellar, we pulled together the money for our solar marketplace by selling the raw data we produced to established companies for their multi-channel marketing efforts. Bootstrapping is almost always the best way to get started.
2. Funding. We released the record, Some New Ruins: The Yale-New Haven Compilation and sent it to various fanzines and dropped off stacks with distributors in New York and Boston. In less than a month, we got a letter from a record label in Amsterdam asking if we’d record some albums for them, and signed a recording contract a few weeks later.
It all seemed too good to be true. The economics of venture funding and music publishing are remarkably similar. You’re part of a portfolio and it’s not likely that you’ll ever make real money for yourself unless you have a huge, outsized hit. But it's a fun ride and sure beats working for a living.
3. Screwing over the co-founder. As our sound evolved, I realized the band’s co-founder and my former college roommate didn’t really fit anymore, so I told him we were going to make the second record, Spectacles, Testicles, Wallet & Watch, without him. I told him this just at the beginning of the summer when we were about to start recording and it was too late for him to make other plans. It might have been the right thing to do, but I did it in the worst possible way.
This seems to be a theme with startups. Mark Zuckerberg could have dismissed his Facebook co-founder without trying to cheat him out of his stock. Snapchat, Twitter and many others ruthlessly removed cofounders without providing upside in the case of success. Startup co-founders are a lot like bandmates. “Creative differences” are less the exception than the rule.
4. The road show. After one of our music videos made it on MTV, the band convinced me to drop out of grad school, move back to D.C. and go on tour. I booked the whole thing myself, sending out CDs and press kits and working the phones with booking agents across New England, the Midwest and Canada. We slept on a lot of floors.
This experience was remarkably similar to raising money. In the early days of each of my companies, I sent out slide decks, followed up with phone calls and worked to book a partner pitch. Lacking funds, I couch-surfed with friends and slept on many floors.
5. Things change -- fast. For our fourth release, Storyknife, we used the record company advance to build a recording studio in the basement of the band house and used it to record other D.C. bands for extra cash while we worked on our own songs.
Dave Grohl, who grew up in Arlington, Va., and played with Scream before joining Nirvana, showed up at our door one day with a rough mix of Nevermind they’d recorded the week before in LA. He popped it in the tape deck and we sat in the living room and listened deeply. It was really good. We had no idea it was “knock Michael Jackson off the number-one spot on the Billboard charts” good. But it changed everything.
When Nevermind hit, the major labels swarmed Seattle and signed everyone they could from the indie label Subpop. Pearl Jam, Soundgarden and Alice in Chains became the center of post-punk universe. We knew it was over when the New York Times was endlessly analyzing grunge as a cultural movement. D.C. was left in the dust.
I had a similar experience at my first venture building websites and apps for companies such as NPR, the Baltimore Sun and the Coca-Cola Company. I got an email in 1995 from David Filo, co-founder of Yahoo!, asking if he could publish a link to the Democratic National Committee site I’d built on Yahoo! About a year later, the company took off.
The people I played with on the MOO (an online social community), debated on newsgroups and met at the first web conference in CERN Switzerland were raising capital and dominating the NASDAQ charts. And they were all in Silicon Valley. Back here in D.C., we still have Steve Case.
Venture capitalists are the major labels. NASDAQ is Billboard. Startups are bands. Deja vu all over again.