Speaker 1: Get technology with tech Stuff from dot com. Hey there,
Speaker 1: and welcome to tech Stuff. I am your host, Jonathan Strickland.
Speaker 1: I'm a senior writer with how stuff Works dot com,
Speaker 1: where we explained how the universe works one topic at
Speaker 1: a time. And as you probably know, I am one
Speaker 1: of the people in charge of the computer and Electronics channels,
Speaker 1: senior writer for those channels, so I cover all stuff
Speaker 1: what goes beep, as my former co host Chris Palette
Speaker 1: would say, and uh, today we're going to talk about
Speaker 1: a web based service, one of the really popular ones
Speaker 1: that has suffered some problems recently. In August, this particular service,
Speaker 1: the streaming music service SoundCloud, wasn't really serious trouble. The
Speaker 1: company was teetering the brink of collapse. It was in
Speaker 1: desperate need of investment money to stay afloat, and for
Speaker 1: about twenty four hours, the tech world, including myself, watched
Speaker 1: to see if a rescue line would be thrown to
Speaker 1: the company or if it would sink, leaving the people
Speaker 1: who still use the service completely stranded. I guess marooned.
Speaker 1: Perhaps I should keep using the ocean metaphors. As it
Speaker 1: turns out, SoundCloud lived to stream another day, but I'm
Speaker 1: getting ahead of myself. Where did the service come from,
Speaker 1: and what's the story behind it and how did it
Speaker 1: get so close to going under and what pulled it back?
Speaker 1: At least for now, well ten years before SoundCloud found
Speaker 1: itself in this precarious position, it was born Alexander Leong
Speaker 1: and Eric wall Force. And I know I'm butchering their names.
Speaker 1: They're both Swedish, and my Swedish is as as bad
Speaker 1: as any of my completely unfamiliar languages. Right, I know
Speaker 1: I'm going to butcher names. I apologize from this point
Speaker 1: forward for all of that. I just know that I'm trying.
Speaker 1: I might be failing, but I'm putting forth an effort.
Speaker 1: So Leung and wall Force joined forces to create these
Speaker 1: streaming service SoundCloud. But let's learn a little bit more
Speaker 1: about both of them before we get into the company itself.
Speaker 1: So Alexander Leong was born in the United Kingdom, but
Speaker 1: he spent his childhood in Sweden. From the sounds of it,
Speaker 1: he was quite the little brainiac. He attended Stockholm University
Speaker 1: from two thousand one to two thousand four, and there
Speaker 1: he studied such diverse topics as literature, politics, international relations, philosophy,
Speaker 1: and film music. He went on to study marketing at
Speaker 1: the Stockholm Technical School from two thousand five or so,
Speaker 1: and then he took more courses in human computer interaction
Speaker 1: at the at the Royal Technical Institute. And this guy
Speaker 1: would leave me in the dust unless we were to
Speaker 1: get into a real deep discussion about Chaucer or Milton
Speaker 1: or Shakespeare. I bet I could hold my own in
Speaker 1: those cases. But it sounds like he was really interested
Speaker 1: in a huge spectrum of topics. Now, while he was
Speaker 1: learning all this stuff, he was also working in a
Speaker 1: sound design company called A L. C. Lud Design from
Speaker 1: two thousand to two thousand three. He was a sound
Speaker 1: designer and composer for that company. So he was filling
Speaker 1: his brain with tons of different subjects while also working
Speaker 1: as a creative professional. Now, he got that job because
Speaker 1: he recorded an album. He was a musician and decided
Speaker 1: to record his own music and it got some notice
Speaker 1: in the professional world, and this company said, hey, why
Speaker 1: don't you work for us in sound design? Sounds like
Speaker 1: you're really talented. Uh. He would actually go on to
Speaker 1: say that he was making quote very very very very
Speaker 1: bad music end quote. He did not He really downplays
Speaker 1: the quality of the work he did back when he
Speaker 1: was a kid, but it was good enough for him
Speaker 1: to land this gig, so he was working at the
Speaker 1: same time as he was studying. Now after his studies
Speaker 1: were over, Alexander moved on to work with SF Anytime,
Speaker 1: which was a video on demand service that serves customers
Speaker 1: in Sweden, Finland, Norway and Denmark. Uh And I looked
Speaker 1: into SF anytime while I was researching this podcast. I
Speaker 1: wanted to see what it looked like. And the library
Speaker 1: is really impressive, though there are a lot of boomlouts,
Speaker 1: like a lot of them. Alexander's job at s F
Speaker 1: Anytime was as a business and product developer. While he
Speaker 1: was working with s F Anytime, he also founded his
Speaker 1: own cross media production studio called Young Studios, and he
Speaker 1: founded a company called acril P, a media production agency.
Speaker 1: So as that media production agency, he worked with some
Speaker 1: clients of some renown a few companies you've probably heard of,
Speaker 1: like Coca Cola and MTV and Phillips. And this guy's
Speaker 1: resume makes me tired just from reading it. So he
Speaker 1: had founded two studios, plus he was working at SF
Speaker 1: Anytime all concurrently, so he's doing all this work around
Speaker 1: the same time. He left SF anytime in two thousand
Speaker 1: and six, he stuck with the companies he founded acrol
Speaker 1: P and Young Studios until about two thousand seven, and
Speaker 1: it was in two thousand seven that he partnered with
Speaker 1: Eric Walforce to form SoundCloud. So now let's go and
Speaker 1: talk about Eric. We've learned about Alex. Let's learn about Eric. Well,
Speaker 1: first of all, there's less information that's publicly available about
Speaker 1: Eric than there is about Alex. He was also raised
Speaker 1: in Sweden. His grandfather was a member of the clergy
Speaker 1: and his mother directed his local churches choir. Though Eric
Speaker 1: would say that as a kid he resented being dragged
Speaker 1: to church, he found it to be intolerably dull. It
Speaker 1: was only later, as an adult that he began to
Speaker 1: develop an appreciation for religious music. He says that even
Speaker 1: secular people can have an interest in that style of
Speaker 1: music and its complexities and harmonies, and the various aspects
Speaker 1: of religious music that you can encounter, particularly things like
Speaker 1: intricate chance that can date all the way back to
Speaker 1: the medieval era. He would attend the Stockholm School of
Speaker 1: Economics for three years, and then he also earned a
Speaker 1: master's of Science degree from the Royal Institute of Technology
Speaker 1: in Stockholm. He later would move to Berlin, Germany. He's
Speaker 1: an avid supporter of various nonprofit organizations and he does
Speaker 1: a lot of volunteer work now. In the mid nineteen nineties,
Speaker 1: he worked as an interaction designer for a company that's
Speaker 1: called Gate five. Gate five was a company that designed
Speaker 1: location based services for mobile devices that included stuff like
Speaker 1: mapping programs, route planning software, personal navigation tools, and content management.
Speaker 1: In two thousand six, Nokia would go and acquire Gate five.
Speaker 1: In addition to his work and technology, he also pursued
Speaker 1: a love of music. He is known as fours fo
Speaker 1: r s S a musician who creates music tracks that
Speaker 1: are experimental in nature. Typically, his work fuses different elements
Speaker 1: to make something new. You might find a piece that
Speaker 1: combines elements of jazz, house music, ambient music, and Gregorian chant,
Speaker 1: for example. Or there's a piece I love called funk
Speaker 1: for Nerds that makes great use of piano, bass, guitar, cello, percussion,
Speaker 1: and glitchy digital sounds to create a really cool vibe.
Speaker 1: You can actually find it on SoundCloud. So wall Force
Speaker 1: and Leon met at the Royal Institute of Technology and Stockholm,
Speaker 1: and the thing that first united them was a common problem,
Speaker 1: and it was not a problem that involved music, despite
Speaker 1: the fact that both of them were musicians and both
Speaker 1: of them were avid seekers of music online. The initial
Speaker 1: problem that brought them two together had to do with
Speaker 1: the Mac operating system. Now, as le Young would explain,
Speaker 1: he says, I was having this problem where I couldn't
Speaker 1: sink my calendar with I cal the school's calendar feed.
Speaker 1: And I go up to this guy with a Mac
Speaker 1: laptop and I'm like, hey, I notice you have a Mac.
Speaker 1: Do you know how to do this? And no joke,
Speaker 1: He's sitting there trying to get the exact same thing
Speaker 1: to work. And that's how Eric and Alex met. They
Speaker 1: met over the difficulty in sinking their personal calendars to
Speaker 1: their school's calendars using Max software. Just think, if this
Speaker 1: school had been using PCs instead of Max, SoundCloud might
Speaker 1: never have existed. It was only through this chance meeting.
Speaker 1: Who's to say if that's true or not. I mean,
Speaker 1: the chance meeting part is probably true, but the whole
Speaker 1: PC thing is me just being silly. Before long, both
Speaker 1: young men were running into a different, but equally frustrating problem.
Speaker 1: Each was interested in composing and recording music, which they
Speaker 1: could do that was pretty much easy for them. They
Speaker 1: had all the tools they needed in order to compose
Speaker 1: and record stuff. But then, how where do you publish it?
Speaker 1: How where do you host it? How do you get
Speaker 1: people to discover the work you've created so that they
Speaker 1: can actually listen to it and hopefully enjoy it. They
Speaker 1: decided that it was a problem that they could solve
Speaker 1: themselves by making their own platform. They decided it was
Speaker 1: going to be a web based music service that would
Speaker 1: allow people to upload their tracks and then share them
Speaker 1: with the rest of the world, and it would give
Speaker 1: amateurs and independent artists the opportunity to reach audiences and
Speaker 1: share their work, as well as discover other work that
Speaker 1: might serve as inspiration for further musical exploration. It could
Speaker 1: allow for collaborations and remixes and all sorts of creative expressions,
Speaker 1: and it wouldn't have all the hoops you'd have to
Speaker 1: jump through to get your music onto some other services
Speaker 1: like Spotify. They decided to call this new service SoundCloud,
Speaker 1: as it would store audio tracks in the cloud of
Speaker 1: the Internet. So this was an idea to help democratize
Speaker 1: music publishing. Obviously, if you're a musician, the traditional route,
Speaker 1: especially before the web based days, was that you had
Speaker 1: to get discovered by a music label and have that
Speaker 1: music label sign you to an agreement where they would
Speaker 1: produce albums or otherwise, you know, publish your your work
Speaker 1: so that a larger audience might be able to find it,
Speaker 1: and it would be up to the music label to
Speaker 1: promote that and maybe you go on tours to support it,
Speaker 1: that sort of thing. But not everyone has access to that.
Speaker 1: Only a very few people ever are lucky enough to
Speaker 1: follow that particular pathway. If the web opened up the
Speaker 1: opportunity to get discovered in brand new ways, entire audiences
Speaker 1: could find your work based upon your efforts to get
Speaker 1: it out there. You could publish your work to the
Speaker 1: web and get that link out and through viral sharing,
Speaker 1: you could actually become a known quantity and you never
Speaker 1: even had to speak to a music label in order
Speaker 1: to do this. Now, there were some questions about how
Speaker 1: would you make money from that if you were hoping
Speaker 1: to make music your career, But from a perspective of
Speaker 1: actually getting out in front of people, it suddenly became
Speaker 1: way easier. If only the platform were there, and that's
Speaker 1: what Alex and Eric sat out to do. They wanted
Speaker 1: to make a platform where the average person could upload
Speaker 1: audio and find an audience. That was their goal. So
Speaker 1: they got to work and they started to build out
Speaker 1: this company. They chose Berlin as their headquarters. While Course
Speaker 1: has said that they chose Berlin because it was a
Speaker 1: city that was friendly to businesses, meaning there were fewer
Speaker 1: barriers to get around when you're getting started, and also
Speaker 1: because Berlin is a city filled with creative people, including artists, musicians, actors,
Speaker 1: and more. Designing the service itself was no small task. Obviously,
Speaker 1: you're talking about anything that's based on the web. There
Speaker 1: are multiple components that go into play. It included designing
Speaker 1: the back end of the service, which meant you had
Speaker 1: to go out and buy hardware that would host the
Speaker 1: actual files and interface, or you had to rent that
Speaker 1: space from some other company to actually hold all the
Speaker 1: physical audio files that would be uploaded to the service.
Speaker 1: It also meant creating the user interface, something that would
Speaker 1: allow people to easily navigate the site, upload audio, discover
Speaker 1: audio tracks, and all of that would take several months
Speaker 1: of work. So they started in two thousand seven, but
Speaker 1: It really wasn't until two thousand eight that they were
Speaker 1: ready to unleash SoundCloud and allow people to come in
Speaker 1: and use it once they get the beta testing phase.
Speaker 1: One goal the two had from the very beginning was
Speaker 1: to target a global market. They could have just focused
Speaker 1: on a service that would cater to Europe or two
Speaker 1: areas like Sweden, Finland Norway, the areas they had been
Speaker 1: working in up to that point, but they were very
Speaker 1: sure that there were artists all around the world who
Speaker 1: were feeling the same sort of frustration that they had
Speaker 1: experienced of not having a way to get their work
Speaker 1: out to an audience. And this wasn't limited to musicians.
Speaker 1: Any sort of audio work would apply on SoundCloud, so
Speaker 1: you didn't even have to make it be music. It
Speaker 1: could be anything. It could be spoken word, it could
Speaker 1: be poetry, it could be a lecture series. Any of
Speaker 1: that was fair game for SoundCloud, and the two set
Speaker 1: their sites pretty high. They wanted something that people around
Speaker 1: the world would be able to take advantage of. To
Speaker 1: get funding to run the business, the two held a
Speaker 1: couple of rounds of seed funding. Now the full numbers
Speaker 1: for the seed funding have never officially been disclosed, but
Speaker 1: This typically is a relatively small amount of money that
Speaker 1: a company will will get from angel investors early, early
Speaker 1: in the right in the phase. It's typically when you
Speaker 1: don't even have anything to show yet, but you have
Speaker 1: a plan. You're able to articulate that plan, explain how
Speaker 1: you're going to carry out that plan, and you can
Speaker 1: usually get a small investment up front, and again relatively small.
Speaker 1: This These are amounts of money that I would consider
Speaker 1: enormous on a personal scale, but on a company scale,
Speaker 1: when you think about all the stuff that goes into
Speaker 1: running a company, it's not that much money in the
Speaker 1: grand scheme of things. So based upon interviews, it sounds
Speaker 1: like the first couple of rounds of seed funding gathered
Speaker 1: around a hundred fifty thousand euros in one round and
Speaker 1: two hundred fifty thousand euros in the second round. Again
Speaker 1: significant to an individual, but in the big scale, it's
Speaker 1: not much that gave SoundCloud the starting capital and needed
Speaker 1: to launch. In two thousand and eight, Leon would become
Speaker 1: the CEO of the company and wall Force would take
Speaker 1: on the role of chief technology officer. The co founders
Speaker 1: were able to get the project running on that amount,
Speaker 1: but they realized they would need to scale up, and
Speaker 1: they would need more money in order to do so.
Speaker 1: If they wanted to be a truly global entity, right
Speaker 1: and to offer more services to users and to have
Speaker 1: all the space they would need to hold all the
Speaker 1: files people were uploading, they're gonna need more money than
Speaker 1: just that seed funding round. So they had the decision
Speaker 1: to make do you concentrate on generating a revenue model,
Speaker 1: so a business plan where you're actually going to be
Speaker 1: making money so that you can make your business profitable,
Speaker 1: or do you first worry about scaling up and getting
Speaker 1: enough users so that when you do develop your business plan,
Speaker 1: you're really in good business and you've created something that
Speaker 1: works at the scale you are at, as opposed to
Speaker 1: making something when you're small and then having to adjust
Speaker 1: that as you grow. So they weighed these options. They said, well,
Speaker 1: do we want to make money now or do we
Speaker 1: want to get really big and then figure out how
Speaker 1: we're gonna make money. They decided to go with option
Speaker 1: number two, which would mean that they would need to
Speaker 1: hold a major round of investment funding to get enough
Speaker 1: to scale at the business. In April two thousand nine,
Speaker 1: SoundCloud would hold a series a round of investment funding.
Speaker 1: So what the heck does that mean? Well, I'll tell you,
Speaker 1: but not right now. First, let's take a quick break
Speaker 1: to thank our sponsor. All Right, I promised you guys
Speaker 1: to tell you what Series A funding means. And this
Speaker 1: does tie into technology. It's it's beyond technology because this
Speaker 1: is for any sort of company. But there are a
Speaker 1: lot of technology companies out there, startups that have gone
Speaker 1: through multiple rounds of funding, and I think it's useful
Speaker 1: to understand what is going on so that when you
Speaker 1: hear about these different companies and you hear about how
Speaker 1: many rounds they've been through, you can start asking some
Speaker 1: tough questions such as does this company actually have the
Speaker 1: potential to become an entity that will pay back on
Speaker 1: that investment. So Series A rounds are typically the first
Speaker 1: significant round of venture capital financing. This is beyond those
Speaker 1: seed finance rounds, which were really just to get the
Speaker 1: business started. Series A and future rounds are more about
Speaker 1: growing a company so that it can scale up to
Speaker 1: a certain level. So in return, the investors get a
Speaker 1: type of steak in the company they're investing in. You know,
Speaker 1: usually it's a top of preferred stock called Series A stock.
Speaker 1: And while there are some variations in this, typically, if
Speaker 1: you were to buy Series A stock in a private company,
Speaker 1: should that private company ever hold an initial public offering
Speaker 1: and turn into a publicly traded company, your Series A
Speaker 1: stock would convert into common stock. So if you owned
Speaker 1: a certain percentage of the company because you had funded
Speaker 1: it in this round of venture capital funding, you would
Speaker 1: get that equivalent amount of ownership in common stock if
Speaker 1: that company went public, and then you could say, all right, well,
Speaker 1: I'm ready to walk away. Maybe you're making a profit
Speaker 1: now because the amount of investment you made versus the
Speaker 1: amount of value the company has once it goes through
Speaker 1: its I p O. You might have made a mint
Speaker 1: or maybe you lost money on it. It It all depends
Speaker 1: on how well the company is received when it goes
Speaker 1: through that I p O process. It's a moot point
Speaker 1: with SoundCloud, it stayed private. It's probably a good idea
Speaker 1: to take a little tangent here and talk about the
Speaker 1: realities of getting money in the startup space as a
Speaker 1: startup company, because there's so many tech companies these days
Speaker 1: that trace their roots back to being a startup. I mean,
Speaker 1: there are some big, monolithic companies that have been around
Speaker 1: for decades or even a century or more in the
Speaker 1: technology space. But so Cloud provides a good example of
Speaker 1: how this can work, though I'll explain how some details
Speaker 1: have changed over the years to make it more complicated today.
Speaker 1: So we begin with this round of seed funding. This
Speaker 1: is typically a relatively small amount of investment money in
Speaker 1: the grand scheme of things, and we're talking about a
Speaker 1: few hundred thousand dollars, typically enough to get a business
Speaker 1: up and running from basically nothing at all. Now, unless
Speaker 1: your new business has a killer way to generate significant
Speaker 1: revenue right out of the gate, you're probably not going
Speaker 1: to be profitable at least at first. You might need
Speaker 1: to scale up before you can put your business plan
Speaker 1: into play. So it's kind of like that that joke
Speaker 1: about making it up in volume. In this case, the
Speaker 1: volume you're talking about is not a volume of products,
Speaker 1: but the volume of customers. You may need a certain
Speaker 1: number of users before you can unveil your revenue generating
Speaker 1: plan to make it a profitable business. And until you
Speaker 1: get that number of users, you're going to be in
Speaker 1: a losing proposition. So you may want to scale your
Speaker 1: business up before you try and make generate revenue Uh.
Speaker 1: This obviously varies from business to business, and it absolutely
Speaker 1: depends upon that revenue strategy. So you might say, once
Speaker 1: we hit a million users, we will start to make
Speaker 1: more money than we spend, and that is a good thing.
Speaker 1: Only of course, your specific number of users could be
Speaker 1: different from that, and if you don't have any means
Speaker 1: of generating revenue, it doesn't work at all. So you
Speaker 1: would start burning through your cash reserves faster as more
Speaker 1: people start using your service, because you have to meet
Speaker 1: the demand of more users. And if you have no
Speaker 1: way of making money, you're burning through that cash at
Speaker 1: an increasingly faster rate. So it becomes a double edged sword.
Speaker 1: You're getting more popular, but you're not creating a way
Speaker 1: to make money based off that popularity. And meanwhile, that
Speaker 1: popularity is placing a greater demand on your resources. So
Speaker 1: you might keep your business going for a year or
Speaker 1: more on that seed funding alone, depending upon what you
Speaker 1: are doing and how wisely you are spending the money.
Speaker 1: After that, assuming you aren't yet profitable, which is a
Speaker 1: pretty safe assumption with many startups, you would hold that
Speaker 1: series A round of funding. Series A funding is typically
Speaker 1: on a much bigger scale than seed funding. Seed funding
Speaker 1: is on the order of a few hundred thousand dollars,
Speaker 1: whereas Series A can range between a couple of million
Speaker 1: to fifteen million dollars. That's the range of averages. SoundCloud
Speaker 1: had its Series A funding and netted the company about
Speaker 1: two and a half million euros, so roughly around three
Speaker 1: million dollars. That was not enough to or that was
Speaker 1: rather enough to not only keep the company in business,
Speaker 1: but also to allow it to grow at that time. Now, sometimes,
Speaker 1: such as with the case of SoundCloud, a company must
Speaker 1: hold further rounds of funding in order to stay in
Speaker 1: operation while it attempts to generate enough revenue to support
Speaker 1: itself and become profitable, or maneuver itself in such a
Speaker 1: way that someone else acquires the company. A lot of
Speaker 1: startups have begun with their goal not being to generate revenue,
Speaker 1: but to become so enticing that a larger entity comes
Speaker 1: along and says, hey, that's a nice business you got there,
Speaker 1: how about I scoop it up for you know, like
Speaker 1: a billion and a half dollars. How's that sound And you,
Speaker 1: as the founders at the startup, would say something like, yes,
Speaker 1: that sounds wonderful. Please cut me a check. So there
Speaker 1: are startup companies that, when they get going, the founders
Speaker 1: their plan is to get big enough so that someone
Speaker 1: else will come along and acquire them, and then they
Speaker 1: don't have to worry about making the business profitable because
Speaker 1: they will have made their money by being purchased by
Speaker 1: someone else. But there are plenty of other cases where
Speaker 1: the founders set out from the start to say, we
Speaker 1: want to own our own business, and we want to
Speaker 1: make sure we can make the business profitable. So you
Speaker 1: see all the different variations. It's not like everyone sets
Speaker 1: out just to get acquired. So SoundCloud is one of
Speaker 1: these companies that has held held multiple rounds of funding.
Speaker 1: And again, the more rounds of funding a company holds
Speaker 1: in order to stay solvent so that keeps doing business,
Speaker 1: the more challenging it can be to convince investors to
Speaker 1: hand over that kind of money, because if you've been
Speaker 1: around for in the case of SoundCloud, a decade, and
Speaker 1: you haven't turned a profit, there may eventually come a
Speaker 1: question of will you ever turn a profit? Will I
Speaker 1: ever get a return on this investment I am making?
Speaker 1: Or is this throwing money away on a sinking ship
Speaker 1: that is doomed to be at the bottom of the ocean.
Speaker 1: To go back to my metaphor from earlier, SoundCloud held
Speaker 1: a Series B round in two thousand eleven, which is
Speaker 1: exactly what sounds like. It's like a Series A, except
Speaker 1: obviously it's the next one. And they held a Series
Speaker 1: C in twelve, and a Series D and fourteen, and
Speaker 1: a Series E T sixteen, and this year, just as
Speaker 1: we were wondering if SoundCloud was going to fall apart completely,
Speaker 1: it held a Series F round of funding. The amount
Speaker 1: raised in those rounds range from ten million dollars back
Speaker 1: in Series B all the way to an astounding one
Speaker 1: hundred sixty nine point five million dollars with Series F.
Speaker 1: That was the largest round of investment fundraising by far
Speaker 1: in Soundclouds history. Was the one that happened August, with
Speaker 1: a hundred sixty nine point five million dollars in investments.
Speaker 1: The company also held two rounds of debt financing during
Speaker 1: that same span of years. The first was in January
Speaker 1: sixteen and the second was in March seventeen. Collectively, they
Speaker 1: raised about a hundred million dollars for this debt found financing,
Speaker 1: so all told, if you were to count both the
Speaker 1: debt financing and all the investment money the company raised
Speaker 1: four hundred sixty million dollars or thereabouts in various rounds
Speaker 1: of fundraising and debt financing. Four sixty million dollars has
Speaker 1: gone into this company without it being able to turn
Speaker 1: a profit. Uh, the reason for not being able to
Speaker 1: turn a profit is pretty complicated. There are actually quite
Speaker 1: a few. Now I'm gonna step away from SoundCloud again
Speaker 1: just for a second to mention the fact that startups
Speaker 1: today are facing a really interesting challenge. On the one hand,
Speaker 1: there are so many different angel investors out there, people
Speaker 1: who have the money to pour a good investment into
Speaker 1: a small start up just as it's getting going. So
Speaker 1: there are a lot of For example, there are a
Speaker 1: lot of people who have founded other companies who are
Speaker 1: now flush with cash, and often they are looking around
Speaker 1: to see what other interesting ideas are out there, and
Speaker 1: the ones that they really like they might support financially
Speaker 1: in a round of angel investment funding. So this would
Speaker 1: be that seed funding early on. So there's lots of
Speaker 1: seed funds out there. If you are getting your startup going,
Speaker 1: it's not that difficult to get that initial amount of
Speaker 1: money that that's smaller round of funding, but obviously that's
Speaker 1: only going to keep you going for so long before
Speaker 1: you either need to be turning a profit or you
Speaker 1: need to seek out a Series A uh venture capital round.
Speaker 1: Here's the problem. Series A is way more competitive. Series
Speaker 1: A investors are far more cautious when they're looking around
Speaker 1: at properties they might invest in. So it's very easy
Speaker 1: to get that initial investment and you might stick around
Speaker 1: for a year or so, but then trying to get
Speaker 1: a Series A round is much more difficult. So there
Speaker 1: are a lot of companies that get started to have
Speaker 1: a promising beginning, like they get a lot of interest
Speaker 1: right out of the gate, but they are not able
Speaker 1: to sell themselves to investors at a later date, and
Speaker 1: thus they end up going away. There are countless numbers
Speaker 1: of startups that could have been huge if they had
Speaker 1: secured a Series A round. Now, there are a lot
Speaker 1: of people who say that this is not a bad thing.
Speaker 1: It means that there's kind of a quality control, but
Speaker 1: it comes after you've already reached the point of launching
Speaker 1: a company. So from the person who launched the company,
Speaker 1: from their perspective, it's really kind of dark and scary.
Speaker 1: You don't know if you're going to be able to
Speaker 1: get that next round of funding to keep your business
Speaker 1: alive and scale it up to the size you wanted
Speaker 1: to be. But from an investment point of view, you
Speaker 1: might say, well, this is a good thing because it
Speaker 1: cuts down on all the companies that would have continued
Speaker 1: on for years and years and years without ever turning
Speaker 1: a profit. And some people would say that SoundCloud falls
Speaker 1: into that category of a company that has gathered more
Speaker 1: investment money than perhaps it was warranted, that perhaps it
Speaker 1: would have been better to see SoundCloud be a noble
Speaker 1: failure early on, rather than continue on for years and
Speaker 1: years and years, continuing to gather investment funds but yet
Speaker 1: not being able to turn a profit. Is that really
Speaker 1: the case. It's hard to say, because the story of
Speaker 1: SoundCloud isn't over yet. Getting back to that story, in
Speaker 1: two thousand nine, Wired cited SoundCloud as a credible threat
Speaker 1: to another music based social platform that was online, one
Speaker 1: called my Space. Hey do you remember my Space? I
Speaker 1: did an episode about it. Actually, I think I've done
Speaker 1: more than one episode about my Space. But yeah, my
Speaker 1: Space used to be a thing, guys, and SoundCloud helped
Speaker 1: bury it. Though. I really think any reasonable person would
Speaker 1: point at Facebook as the real reason my Space ultimately floundered,
Speaker 1: and these days no one really talks about it at all,
Speaker 1: even though it's tried to reinvent itself a couple of
Speaker 1: times since then. SoundCloud, I would say it would be
Speaker 1: an additional blow, like a little kick on my Space
Speaker 1: when it was down after Facebook had delivered the massive
Speaker 1: body slam. So SoundCloud had all the musical aspects of
Speaker 1: my Space more or less, something that could duplicate my
Speaker 1: spaces ability to allow artists to upload their music to
Speaker 1: a platform, and SoundCloud actually made it much easier for
Speaker 1: you to get your music everywhere else because of their approach.
Speaker 1: They were also seeing a lot of success with recognized
Speaker 1: artists joining SoundCloud groups like Sonic Youth or musicians like
Speaker 1: Moby We're using SoundCloud to promote tracks or entire albums.
Speaker 1: Beck was also using SoundCloud to reach fans online. And
Speaker 1: one of the things that really set SoundCloud apart was
Speaker 1: that you could embed a SoundCloud player into another website.
Speaker 1: You would just get some code that you would put
Speaker 1: into the HTML of your website, and that would create
Speaker 1: a little player inside the confines of the website you
Speaker 1: had built and within that player, you could play the
Speaker 1: tracks that you were uploading to SoundCloud. That gave SoundCloud
Speaker 1: a huge advantage because it could be everywhere instead of
Speaker 1: forcing users to go to a centralized location to experience music,
Speaker 1: So you didn't have to log into SoundCloud to listen
Speaker 1: to SoundCloud files. You could encounter a SoundCloud file on
Speaker 1: any website at all. If you had a band and
Speaker 1: you wanted a few of your songs to be available
Speaker 1: on your website for people to listen to, the just
Speaker 1: stream it while they're they're viewing your site. You could
Speaker 1: use a SoundCloud embettable player to stream that music and
Speaker 1: your fans will be able to listen to it. On
Speaker 1: top of that, uploading a track to SoundCloud would generate
Speaker 1: a unique u r L that you could then share
Speaker 1: on various social platforms like Twitter, and that helped musicians
Speaker 1: promote specific tracks and encouraged sharing online. Making music is
Speaker 1: already challenging, but making your music discoverable is an even
Speaker 1: bigger challenge. There's so much con tent going up online
Speaker 1: all the time, and finding a way to reach your
Speaker 1: potential audience gets harder with every minute of content that's
Speaker 1: uploaded to the internet. These strategies helped put SoundCloud on
Speaker 1: the path to becoming the YouTube of audio files. Every minute,
Speaker 1: twelve hours of audio content joined the vast amount of
Speaker 1: audio already on SoundCloud. Now that is dwarfed by the
Speaker 1: amount of video content that's going up on YouTube every minute,
Speaker 1: but still pretty impressive all on its own. One of
Speaker 1: the neat features in SoundCloud is that you can leave
Speaker 1: a comment about an audio track and even have that
Speaker 1: comment associated with a specific moment in the track itself.
Speaker 1: So the tracks on SoundCloud are represented as wave forms.
Speaker 1: You see the wave form and you see the progress
Speaker 1: go from left to right as you play the track.
Speaker 1: It starts to highlight the track as it's going down
Speaker 1: the timeline of this audio track. Meanwhile, you can leave
Speaker 1: a comment at any point along the track to say
Speaker 1: something about how that track made an impression on you
Speaker 1: or what you felt about the choices the artist was making,
Speaker 1: and it will actually show up at that point along
Speaker 1: the track, and people can read your comments and see
Speaker 1: what you had to say about it and digested and
Speaker 1: decide whether they agree with you or they don't agree
Speaker 1: with you. And it's actually a really cool feature. I
Speaker 1: like it a lot because people can get feedback not
Speaker 1: just for the audio track, but for the specific decisions
Speaker 1: that went into making that track what it was, whether
Speaker 1: it was spoken word or a lecture or music or whatever.
Speaker 1: And those moments of creativity that resonate with the audience
Speaker 1: can stand out. If you are a musician and you
Speaker 1: create a music track and you change up the tempo
Speaker 1: or you insert a new instrument and people respond to
Speaker 1: that moment within the track, you know that you did
Speaker 1: something right, and you might explore that further with future songs,
Speaker 1: or you might get some criticism and find out the
Speaker 1: stuff that people don't like. Now, in my experience, those
Speaker 1: comments tend to be less helpful and more aggravating because
Speaker 1: of the nature of the way people tend to word them.
Speaker 1: There are nice ways to offer criticism, is what I'm
Speaker 1: getting at. It's just that most people don't exercise that.
Speaker 1: They go with declarative statements that aren't terribly helpful and
Speaker 1: often are hurtful. By May, SoundCloud had hit a million users.
Speaker 1: In those early days, there was no advertising on the site,
Speaker 1: so you could have an ad free experience when you
Speaker 1: came there, and then basic accounts were free. Those free
Speaker 1: accounts did come with some restrictions. You had a limit
Speaker 1: to how many songs or audio tracks you could upload. Really,
Speaker 1: it was in the amount of time collectively that all took.
Speaker 1: So your basic free account would include a hundred eighty
Speaker 1: minutes of audio that you could upload. After you hit
Speaker 1: a hundred eighty minutes, you hit your limit. Or it
Speaker 1: also would put a limit on how many contacts you
Speaker 1: could have within SoundCloud. So if you wanted to have
Speaker 1: a bunch of contacts and then every time you upload
Speaker 1: a new piece of audio it informs those contacts that
Speaker 1: you've got something new there, you had a bit of
Speaker 1: a limit there. If you had the Basic Free account,
Speaker 1: you could choose to enter into a tiered premium account selection.
Speaker 1: SoundCloud would get a lot of feedback on this. People
Speaker 1: would argue that the various tears were kind of confusing
Speaker 1: and messy, and that it made it more complicated than
Speaker 1: what was necessary. But if you went to the premium account,
Speaker 1: it would ease up on restrictions. At the first level
Speaker 1: of Premium, users could upload up to six hours of
Speaker 1: audio content at the basic Premium level, so three times
Speaker 1: what you were rather two times what you were able
Speaker 1: to do previously with the Basic Free or you could
Speaker 1: splurge and you can go all the way. With SoundCloud
Speaker 1: Pro unlimited. That meant that you could have unlimited audio
Speaker 1: time to upload, so you can upload as much as
Speaker 1: you wanted to do. There was no limitation there. But
Speaker 1: in those early days, there were no other means of
Speaker 1: generating revenue. That was it. You just had these premium
Speaker 1: subscription based things, and it really premium accounts that you
Speaker 1: could uh enter into. But that was the only way
Speaker 1: that SoundCloud was generating revenue in the early days. In
Speaker 1: two thousand twelve, the website underwent a major redesign and
Speaker 1: one of the features that the company introduced was called repost,
Speaker 1: and boy did this feature cause some huge problems. A
Speaker 1: repost is pretty much what sounds like. It's like a
Speaker 1: retweet or tumblers reblog feature, and the intent was good.
Speaker 1: It was meant to help users share music discovery viral
Speaker 1: e through the platforms. So you know, you discover a
Speaker 1: track you really like and you repost it, and then
Speaker 1: the people who follow you see that track, maybe they
Speaker 1: like it, they repost it, it goes to the people
Speaker 1: who follow them, et cetera, and that way music discovery
Speaker 1: could filter through the entire system, but people began to
Speaker 1: abuse use the system almost immediately. Some artists would repost
Speaker 1: their own tracks frequently because it would push it to
Speaker 1: the top of all of their followers feeds. So let's
Speaker 1: say you're following a band. Uh, let's say it's ilor
Speaker 1: Again the Monsters. That's a reference to a live stream
Speaker 1: I did earlier today about Tetris so I Lori Agan
Speaker 1: The Monsters has their new surf album out and they've
Speaker 1: got this one track that they're really promoting. Um, let's
Speaker 1: call it Soviets in the Sand. Soviets in the Sand
Speaker 1: as their new track, and they want to get a
Speaker 1: lot of reaction to this track. So they post the
Speaker 1: track and their followers see it. But you know, if
Speaker 1: you're following lots of bands, it's just like Facebook, those
Speaker 1: notifications can push that initial announcement further and further down
Speaker 1: the page, making it less likely that you will actually
Speaker 1: see it. So the next day Elrigan the Machines, they
Speaker 1: repost Soviets in the Sand and so now it pops
Speaker 1: up at the top of everyone's feet again, and they
Speaker 1: do it again and again and again, and that way
Speaker 1: it keeps on popping at the top of the feed.
Speaker 1: This is a form of abuse, especially if you are
Speaker 1: not following a whole lot of bands. It just means
Speaker 1: that you keep seeing the same track getting posted by
Speaker 1: Ilrigan the machines over and over again. Is not a
Speaker 1: good user experience. So what was intended to be a
Speaker 1: way to help music discovery flourish on the service turned
Speaker 1: out to be a massive pain in the butt. On
Speaker 1: top of that, you had some artists that were ending
Speaker 1: up making deals with other artists. Uh, they were essentially
Speaker 1: creating an arrangement of I'll repost you if you re
Speaker 1: post me, and that way they were artificially boosting these numbers. Uh.
Speaker 1: There were people who are offering to repost tracks for money,
Speaker 1: so essentially paid for impressions of different audio tracks. There
Speaker 1: were people who are paying for listens to tracks because
Speaker 1: if you're a musician and you've got a track out
Speaker 1: on SoundCloud, you might want a music label to take
Speaker 1: a look at your your tracks, and if you have
Speaker 1: huge numbers, that's going to look pretty attractive to that
Speaker 1: music label. It might mean that you get signed. So
Speaker 1: there were artists out there that were paying a fee
Speaker 1: so that they would get an artificial boost to their
Speaker 1: their listen numbers to help out with that, and it
Speaker 1: all boils down to gaming the system in one way
Speaker 1: or another. The problem would persist for years before SoundCloud
Speaker 1: managed to address it, and in the meantime, many artists
Speaker 1: and users began to look at alternative services. They did
Speaker 1: finally come up with a solution to the repost problem
Speaker 1: in two thousand fifteen, so three years after they had
Speaker 1: launched it. That's when they established limits to the number
Speaker 1: of reposts you could actually do, and they stated that
Speaker 1: breaking the rules could lead to banning or suspending accounts.
Speaker 1: Well back in two thousand fourteen, so this is after
Speaker 1: the repost feature had been launched, SoundCloud began to introduce
Speaker 1: advertising on its website. This was a big move soundclass.
Speaker 1: SoundCloud at the time was boasting about dred seventy five
Speaker 1: million listeners. That puts SoundCloud behind YouTube make but it
Speaker 1: made it the second biggest streaming service in the world
Speaker 1: at that time. But they had no system too to
Speaker 1: pay out royalties to artists who are using the service
Speaker 1: to reach an audience, So for the early years, artists
Speaker 1: pretty much accepted this as just part of the system.
Speaker 1: SoundCloud gave them a chance to find an audience in
Speaker 1: the first place, but there was no direct monetization that
Speaker 1: they could take advantage of in that model. But over
Speaker 1: time there was a growing expectation among artists and music
Speaker 1: labels that they should be able to receive compensation in
Speaker 1: the form of royalty payments. And that makes sense. You
Speaker 1: might make music because you love it, but if you
Speaker 1: want to make it your career, you gotta get paid,
Speaker 1: because most landlords are not going to accept a song
Speaker 1: in place of the rent. For more on this topic,
Speaker 1: see the musical rent. Actually, don't get me started on
Speaker 1: that musical. I get really grouchy about it. So back
Speaker 1: to SoundCloud. The company itself had reached a valuation of
Speaker 1: seven hundred million dollars, but that was from the perceived
Speaker 1: value of the company, not its ability to make money.
Speaker 1: It still wasn't making money. It was making money from
Speaker 1: advertising and from premium subscriptions, but not enough money to
Speaker 1: offset the costs of operations, so it wasn't making any
Speaker 1: sort of profit. Premium subscriptions has only gone so far,
Speaker 1: and the company was already in the midst of holding
Speaker 1: numerous rounds of venture capital investments. Meanwhile, music labels were
Speaker 1: starting to place larger demands on SoundCloud. The labels wanted
Speaker 1: the reach of the service, but companies rarely are pleased
Speaker 1: to give away their products for free, and so SoundCloud
Speaker 1: turned to web advertising, that traditional revenue generator of the web,
Speaker 1: and ads would play after a user listen to a
Speaker 1: certain number of tracks. You listen to a couple, you
Speaker 1: would get an ad. And when the ads first launched,
Speaker 1: it appeared only on the US version of sound Cloud
Speaker 1: and the various SoundCloud mobile apps. So some of the
Speaker 1: advertising was visual advertising, you know, the kind of ads
Speaker 1: you would discover on any sort of app or web page.
Speaker 1: Some of them were audio ads that would play in
Speaker 1: between tracks. It all just depended upon what version of
Speaker 1: SoundCloud you were listening to and where you were. Later on,
Speaker 1: they would actually roll out this advertising strategy to other
Speaker 1: regions besides the United States. Now, alex had made it
Speaker 1: a point to make sure that artists had control over
Speaker 1: when advertising would play, so they could actually choose to
Speaker 1: have some tracks play free of advertising entirely. They could
Speaker 1: turn off ads for whichever tracks they wanted. SoundCloud also
Speaker 1: planned out a subscription plan that would allow users to
Speaker 1: pay a monthly fee and in return, they would go
Speaker 1: back to an ad free experience when using SoundCloud, so
Speaker 1: something similar to what you can find on other music
Speaker 1: streaming services. You can listen to them for free and
Speaker 1: get ads, or you can pay a subscription fee and
Speaker 1: get unlimited listening without any ads. It's pre standard throughout
Speaker 1: streaming services now. At that same time, big music labels
Speaker 1: were in talks with SoundCloud about taking some percentage of
Speaker 1: the company in return for supporting it. This put the
Speaker 1: service in a delicate situation. So how do you balance
Speaker 1: the need to generate revenue to stay in business while
Speaker 1: also keeping your service as close to the vision you
Speaker 1: promised your users as you can? And SoundCloud ended up
Speaker 1: getting a couple of opportunities, but we'll talk about those
Speaker 1: in just a second. First, let's take another quick break
Speaker 1: to thank our sponsor. In two thousan fourteen, SoundCloud got
Speaker 1: the attention of a little company called Twitter. So talking
Speaker 1: about companies that have had to hold multiple rounds of
Speaker 1: venture capital fundraising, Twitter is another poster child. But anyway,
Speaker 1: Twitter was looking to expand its services, and it already
Speaker 1: tried to build a music product that would keep people
Speaker 1: using Twitter longer per visit. It was called hashtag mu
Speaker 1: sick and if you don't remember it, that's not a
Speaker 1: big surprise because it didn't get a lot of traction
Speaker 1: when it launched. Hashtag Music was a supplemental app that
Speaker 1: was supposed to focus conversations about music and musicians on
Speaker 1: Twitter and improve the ability to discover and share music.
Speaker 1: But Twitter ran into a problem. There were already a
Speaker 1: whole bunch of music centric services that were already on
Speaker 1: the market, And honestly, at some point you just reach
Speaker 1: a level of saturation which you're not likely to switch
Speaker 1: from one app to another or add yet another app
Speaker 1: to your growing list. So a new app has to
Speaker 1: be incredibly compelling to convince people to adopt it beyond
Speaker 1: that initial curiosity phase. See also every social networking site
Speaker 1: that isn't Facebook or Twitter in the United States. Well,
Speaker 1: hashtag Music had started off as a different music discovery
Speaker 1: service called We Are Hunted, which Twitter acquired back in
Speaker 1: two thousand twelve. So, with the door closing on hashtag Music,
Speaker 1: but are still eager to get into that music sharing space,
Speaker 1: the company turned its sights to SoundCloud. Now, this next
Speaker 1: part of Soundclouds history is shrouded in mystery, or at
Speaker 1: least it was never made totally public, but the two
Speaker 1: companies definitely entered into negotiations to talk about an acquisition. However,
Speaker 1: it ultimately went nowhere and Twitter decided to back out
Speaker 1: of the agreement. The general consensus is that Twitter had
Speaker 1: made an offer based more or less on the seven
Speaker 1: hundred million dollar valuation of SoundCloud, but that the company
Speaker 1: wanted something closer to a billion dollars and Twitter said thanks,
Speaker 1: but no thanks, and went on its merry way. And
Speaker 1: it became something of a joke in interviews to ask
Speaker 1: either Alex or Eric about the Twitter deal and they
Speaker 1: would respond with an exasperated no comment. Other troubles would
Speaker 1: follow in two thousand fifteen when labels like Sony Music
Speaker 1: began to remove some artists work from sound Cloud. So
Speaker 1: apparently Sony felt that the company was getting less than
Speaker 1: what it was worth to have the artist music hosted
Speaker 1: on SoundCloud service. Also, there were issues with users uploading
Speaker 1: music that you know, didn't belong to them, so, in
Speaker 1: other words, there were copyright infringement problems. YouTube has also
Speaker 1: experienced this sort of thing like a lot, and that
Speaker 1: also falls into issues with remixes and mashups. Who owns
Speaker 1: the copyright to that and the copyright infringement issues so
Speaker 1: quick aside, I think it's a cool point here to
Speaker 1: share uh that. I think sharing a link to an
Speaker 1: artist's work is great. So if there's an artist you
Speaker 1: like and there's a link to a legitimate SoundCloud file
Speaker 1: or YouTube video and it leads to that music, by
Speaker 1: all means share it. It helps get the word out,
Speaker 1: and obviously if it's an official U SoundCloud or YouTube stream,
Speaker 1: then everyone's cool with it. I do not think it's
Speaker 1: super cool to upload audio that doesn't belong to you
Speaker 1: and share it that way, because artists put a lot
Speaker 1: of work into creating stuff, and even if they don't
Speaker 1: choose to monetize it themselves, it's at least respectful to
Speaker 1: point folks toward an official source rather than pirates stuff. Now,
Speaker 1: I often will hear the argument that sharing creates exposure,
Speaker 1: but exposure ultimately means nothing to an artist if they're
Speaker 1: not if they're actually trying to make a living off
Speaker 1: of their music, Because you cannot pay the rent with exposure.
Speaker 1: You can't say to your landlord, hey I'm not gonna
Speaker 1: pay rent this month, but don't worry, I'm gonna talk
Speaker 1: this place up to everybody, So you're gonna get great exposure,
Speaker 1: all right, rant over Sony withdrew artists from SoundCloud in
Speaker 1: two thousand fifteen, which was the same year that Universal
Speaker 1: Music Group began working on a licensing agreement with SoundCloud
Speaker 1: in return for what Business Insider reported was a quote
Speaker 1: significant chunk of equity end quote in the company. Now,
Speaker 1: this would allow other people to actually do those remixes
Speaker 1: and mash ups because of the licensing agreements, and it
Speaker 1: also followed in the footsteps of Warner Music. Warner Music
Speaker 1: had actually made the same sort of agreement back in
Speaker 1: November two fourteen for a five percent stake in SoundCloud.
Speaker 1: The negotiations with Universal Music Group took some time. It
Speaker 1: started in but it wasn't announced as an official partnership
Speaker 1: until January. The agreements did have some benefits for users
Speaker 1: because with those mashups and remixes, getting the licensing meant
Speaker 1: that people could actually practice their their skills and upload
Speaker 1: work without fearing of being pulled down for copyright infringement.
Speaker 1: So people were all on the up and up here now.
Speaker 1: It did also mean that if you own the copyright
Speaker 1: to a certain song, you could get the monetization for
Speaker 1: that instead of the person who made the remix. That
Speaker 1: was an issue. So there was still kind of a
Speaker 1: mess because has not everybody had the same deal, and
Speaker 1: sometimes you might be mixing artists from two different labels.
Speaker 1: So it wasn't like everything was smooth sailing from that
Speaker 1: point forward. Around that time, Spotify began to express an
Speaker 1: interest in acquiring SoundCloud, but it would also back off
Speaker 1: from the deal, kind of following Twitter's lead in a way.
Speaker 1: It was because Spotify was looking at an initial public
Speaker 1: offering and getting involved in an acquisition just before an
Speaker 1: i p O would mean that it could potentially scare
Speaker 1: off investors. So Spotify ultimately said, you know what, while
Speaker 1: I would like to remove competition from this field and
Speaker 1: get access to some of SoundCloud's technology, I'm not sure
Speaker 1: it's worth the risk to investment if we actually go
Speaker 1: for an i p O. Now. During all of this,
Speaker 1: SoundCloud still managed to really shoot itself in the foot
Speaker 1: when it comes to try and to find a profitable
Speaker 1: business model. In July, the company had to lay off
Speaker 1: of its staff. That meant one seventy three people lost
Speaker 1: their jobs, and SoundCloud closed down two of its offices,
Speaker 1: the ones in London and San Francisco, which meant that
Speaker 1: only its offices in Berlin and New York City would
Speaker 1: remain open. At that time, SoundCloud would only say that
Speaker 1: the company had enough money to last through the fourth quarter,
Speaker 1: of which many took as a sign that the company
Speaker 1: would be out of money by the end of the year.
Speaker 1: Tech pundits then began to suggest that the vultures were
Speaker 1: circulating SoundCloud as a result. In augusteen, SoundCloud was known
Speaker 1: to have entered talks with potential investors about another round
Speaker 1: of venture capital funding. This would be Series F of funding.
Speaker 1: It was at this time that people in the technosphere
Speaker 1: began to say that unless someone swooped in, SoundCloud was doomed.
Speaker 1: But swoop they did, and boy hawdy it was with
Speaker 1: a big change. The swoop happened in mid August. An
Speaker 1: investment bank headquartered in New York called Rain grew coup
Speaker 1: and a Singapore state owned investment fund called tim Asek
Speaker 1: provided the moolah that was that hundred sixty nine point
Speaker 1: five million bucks i mentioned earlier in this episode. With
Speaker 1: this investment also came some changes at the top for SoundCloud.
Speaker 1: There were demands for some changes at the executive level,
Speaker 1: so Eric Walforce would transition from Chief Technology Officer to
Speaker 1: a newly created position, Chief Product Officer. Artem Fishman, who
Speaker 1: was once a vice president of engineering over at Yahoo,
Speaker 1: would assume the role of CTO. Alex Leung would step
Speaker 1: down as CEO and become the chairman of the board.
Speaker 1: In his place will be Carry Trainer. Trainer was the
Speaker 1: CEO of Vimeo once upon a time, and Video is
Speaker 1: the video streaming service that's a competitor with YouTube. This
Speaker 1: has led some people to speculate that video content might
Speaker 1: find its way onto SoundCloud, but there's been no confirmation
Speaker 1: of that so far as of the recording of this podcast.
Speaker 1: At this time, SoundCloud has around eighty eight million active
Speaker 1: users according to similar Web, and earlier report in twenty
Speaker 1: seventeen showed that SoundCloud had lost more than one hundred
Speaker 1: million users over the course of a year, and those
Speaker 1: users were moving on to other platforms like Pandora and Spotify.
Speaker 1: So is that a hundred sixty nine and a half
Speaker 1: million dollar investment a wise one in the wake of
Speaker 1: seeing how many users have abandoned SoundCloud over the past year.
Speaker 1: I don't know. I'm not wealthy. I don't make those
Speaker 1: kind of calls. From my outsider perspective, I would be
Speaker 1: very hesitant to make such a huge investment. However, that
Speaker 1: being said, SoundCloud does have some valuable technology, and there
Speaker 1: are a lot of artists who have used it effectively
Speaker 1: over the years, and there are a lot of people
Speaker 1: who still use the service, so maybe it can come
Speaker 1: back from that precipice it was teetering over. That being said,
Speaker 1: my Space tried to do the same thing a couple
Speaker 1: of times, and it's still kind of an also, Ran,
Speaker 1: I don't hear anyone talking about my Space anymore, so
Speaker 1: I don't know if this was a wise decision. I
Speaker 1: guess we'll have to wait and see, and maybe in
Speaker 1: another year or so we'll see another attempt to run
Speaker 1: around of financing, or maybe they'll actually turn things around
Speaker 1: and make it a profitable company and it will be
Speaker 1: generating enough revenue so it can operate on its own.
Speaker 1: But so far, that is the story of SoundCloud. It's
Speaker 1: not the end, and I'd be lying if I said
Speaker 1: I wasn't kind of hoping for a different result when
Speaker 1: they were holding this most recent round of funding, only
Speaker 1: because it would have been convenient for me to say
Speaker 1: the end on a podcast. I certainly don't wish anyone
Speaker 1: to be out of a job. I don't want SoundCloud
Speaker 1: to go away, but it would have been awfully convenient
Speaker 1: for me in my podcast. So that's it for this episode. Guys.
Speaker 1: If you have suggestions for future episode topics, send me
Speaker 1: a message. Let me know. The email addresses tech Stuff
Speaker 1: at how stuff works dot com, or you can drop
Speaker 1: me a line on Facebook or Twitter. The handle of
Speaker 1: both of those is tech stuff hs W. Remember I
Speaker 1: stream live, so if you want to see me record
Speaker 1: an episode live on the air and ask questions, including
Speaker 1: questions that have nothing to do with whatever I'm talking about,
Speaker 1: you can do that. Go to twitch dot tv slash
Speaker 1: tech stuff, join the chat room. I'm always happy to
Speaker 1: chat with you, guys, and I'll talk to you again
Speaker 1: really soon. For more on this and thousands of other topics.
Speaker 1: Is it how staff works dot com.