Media Tech Entrepreneur turned Venture Capitalist with Shachar Oren of Sound Media Ventures

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Hi, Karen Ranz here.
Welcome.

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To the Compassionate Capitalist
Show, this is not the normal

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intro.
This is a teaser explaining the

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upcoming show.
The upcoming show that you're

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about to listen to is a reboot
of a prior episode of my

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interview with Shahir Oren.
It is relevant still today

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because it is a story of his
journey of building a tech

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company and selling it to a
company and then starting his

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own boutique Super Angels VC
firm.

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Isn't that a dream that we we
all wish we had could do and

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that big company that bought his
company would not be a name

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brand today if they had not
integrated Orange Tech into

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their value proposition for
their product.

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He did this all by bootstrapping
with a ton of grit and super

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sized belief in what he was
doing and where he was going.

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And when he couldn't get the
outside capital he needed, he

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did the good oldfashioned way of
growth hacking it.

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And you'll hear about that and
basically growing off of

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revenue, really thin streamlined
operation so that he could do

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that, get the traction, get the
stuff, get the proof that he

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needed so that he could raise
capital.

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Just not as a seed company.
And I'll tell you, I think part

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of the reason why it was
difficult for him to get outside

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capital and in fact he came
through my Angel investor group

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at one point in time and I I
tried to advise him on stuff and

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I too didn't truly understand
what he was trying to do with

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his technology.
He he a lot of times tech

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technologists and inventors get
caught up in the science and the

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tech of what they're doing and
they don't understand the real

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value proposition and how to
articulate that.

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And it it comes with time and
sometimes it comes with flushing

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out the actual value
proposition.

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But I think he also had a bias
against his accent.

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It's just human nature.
And that's one of the benefits

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of crowdfunding.
Either raising capital under

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crowdfunding or investing under
crowdfunding is because often

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times those biases are removed
because you're focused on just

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what the value proposition is
and the structure, the offer and

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how they're going to make money.
So I debated on on this teasing.

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You a little further with what
the company and product was

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because you know well I wanted
you to.

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Listen to the whole thing.
But I'm going to go ahead and

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tell you because maybe I'll make
you listen to it even more if

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you own a peloton.
And and also part of the reason

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why I brought this one back is
my live stream earlier this week

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talking about inflated
valuations and how venture

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capitalists can ruin the the
trajectory of a company.

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I'm working on that the life
cycle trajectory of companies in

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my new book about scaling.
And so it's been a top of mind

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lately.
And anyway, we, you know when

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you do that Peloton is under the
examples that I referenced in

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this live stream earlier this
week.

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And so if you know that because
you've, you know, own one or

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you've seen a promo video that
customizing the song, the

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motivational entertainment is a
big feature of Peloton, well

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that's Orange Tech.
So listen up and I'll say one.

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More thing.
One more thing.

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Thank you.
I wish I had like a some kind

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of, you know, something.
Thank you for listening and

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sharing this podcast.
If you've been listening to The

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Compassionate Capitalist Show
for longer than six months, then

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you know this podcast is over 10
years old.

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The name changed a few years
into it and became The

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Compassionate Capitalist Show,
and I've recorded well over 500

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episodes.
I've purged a few over the years

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when it decided it was time to.
Because they just, they weren't

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relevant, they were timely or
they have wrong information in

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them or they were specific to
some time event that was

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happening.
That is no longer important to

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my to my audience and what I'm
trying to build with this

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compassionate capitalist
movement and helping people

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understand the value and the
power of investing in

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entrepreneurs.
And so when I had to make a

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decision to migrate off my old
podcast platform because it just

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was really old tech and not
doing what I wanted it to do,

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and I moved over here, I had
over 300 episodes and 155,000

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listens.
Long story short, I lost all of

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that in the migration.
It's just the way it is with

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tracking RSS feeds.
They're unique to the platform.

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So when you move a platform,
there is no more information

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because that old platform
doesn't exist anymore.

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But the good news is, and why I
am putting out this huge thank

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you for all you that have
returned and those that are new

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listeners.
I'm now averaging about 400

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downloads a day with just about
60 episodes, Mostly new

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recordings, but all weave in the
most popular and relevant from

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the archives and bring them back
to you.

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And with that, here is my
standard intro and promo for the

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launch of the Compassionate
Capitalist Wealth Maximizing

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System.
If you've heard it before, Fast

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forward about 3 minutes and you
should be good to go to hear my

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interview with Shahaoran,
founder of Neurotic Media and

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managing member of the Sound
Media Ventures.

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Welcome to the Compassionate
Capitalist Radio Show with host

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Karen Rands.
A compassionate capitalist is

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someone who invests their money
into entrepreneur endeavors to

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bring innovation in the market,
impact their community, create

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jobs and generate wealth for all
those involved.

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Karen and her guests share
insights and best practices for

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entrepreneurs to succeed and
scale their business and

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investors to share.
And that success?

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Read out all the risks.
And now?

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Sorry to interrupt.
Karen here.

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Real quick.
I want to share some good news

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with you as a listener of this
show.

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You know that being a successful
entrepreneur is the number one

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way to create wealth.
But have you thought about the

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wealth you can create by being
an investor in entrepreneurs?

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Probably not, because if you
knew, it was the 2nd greatest

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way to create wealth.
You would be doing everything in

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your power to figure out how to
invest in entrepreneurs with

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competence and confidence.
So why not?

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Maybe it was because it was
illegal and a secret for anyone

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not already in the secret
Society of the Super wealthy

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investor clubs to be invited to
invest.

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That's right.
If you haven't heard my story,

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given my influence now, you
would be surprised to hear I had

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never heard the term Angel
investing.

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Until after I left my corporate
career and walked into my first

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Angel investor meeting, it
really was like walking into a

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secret society.
Not a dark room with candles and

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shadowy figures, but secret
because of the laws that made it

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illegal for Main St. investors
like you and me to be invited to

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have a seat at that table of
plenty.

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And really, the power those
investors had to pick and choose

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the founders.
And the companies, they

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believed, had the potential to
be the next big thing and invest

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to own a piece of that company
as a silent partner and Angel

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investor until the rest of us
knew about that company.

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Only after they had gone public.
They had the money.

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They made the rules.
But not anymore.

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That all started to change in
2012, just a decade ago.

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You can now invest and own a
piece of multiple companies and

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share in their success as those
entrepreneurs grow their

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business and exit rich.
What that means to you?

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Whether you are a busy
executive, a successful business

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owner, a real estate investor or
someone thinking of starting a

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business, you now have the power
to invest like high net worth

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investors have for decades, but
without all the risks of being

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the founder.
And with not as much money

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required to make those
investments, whether this is the

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business down the street that is
expanding or the next big tech

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company creating positive
impact.

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That's right, it's now legal for
anyone to invest in an

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entrepreneur's business.
And I'm on a mission to reveal

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the secrets of Angel investing
by teaching you the step by step

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process to build a portfolio
using my Angel Profitability

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Blueprint.
You know, I went on to own that

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same Angel investor group and
played the secret society games.

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As we even made sure we shut the
doors in the rooms.

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We had the investor pitch
dinners for fear that any random

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Joe walking by might hear about
the opportunity being presented

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in that room.
Really kind of funny to me now,

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but taking what I learned
working with those investors for

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nearly 20 years.
Building upon the lessons and

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tools provided in my best
selling primer, Inside Secrets

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to Angel Investing Step by step
Strategies to leverage private

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equity investment for passive
wealth creation, I'm launching

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the Digital on Demand investor
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You can learn how to create a
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That has the potential to

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generate more than three times
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So go to dothedeal.org, sign up

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You'll also receive a free gift,

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Don't miss out on this
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Towards financial freedom and
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You can find it in the show,
notes dothedeal.org.

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And now.
So welcome to the Compassionate

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Capitalist podcast and video for
those that are watching on

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video.
Thank you for joining us again

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today for our our weekly session
where we talked to entrepreneurs

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and investors that and service
providers and all those that are

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actively working on and trying
to promote.

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The creation of wealth through
successful business entrepreneur

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endeavors and for those
investors that take the ride

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with them and help fuel the
acceleration of that company

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from launch to growth.
And what is the what are all the

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best practices all along the
way.

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And part of what we do is the
show for those that listed on a

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regular basis is that we like to
dive into different sectors.

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And and understand what what is
work, what is hot in that

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sector, what is what are some of
the problems that are being

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solved in a certain sector.
And today we're going to talk

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about media, tech or in other
technology of media and

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entertainment.
And it's always a really unique

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and great opportunity when I
have a guest that not only has

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it has walked the walk and can
talk to talk, but is still doing

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it today.
And going from being a very

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successful entrepreneur and
having a vision and an idea and

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taking it all the way through to
being able to sit on the other

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side of the table as a as a an
investor, an Angel investor and

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A and a venture capitalist.
And so I'm going to tell you my

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my guest, he's here is going to
wait for those that are are

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watching.
Sir Oren.

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He is the founder and CEO of
Sound Media Ventures.

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It's a venture capital firm that
invests in companies at the

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Nexus of media and technology.
The fund pursues early stage

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targeted investment
opportunities primarily in

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scalable technologies, powering
and media tech and a number of

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the elements that that fall
within that technology platform.

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It can be.
It's amazing the stuff that

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solves problems in the media and
entertainment spirit from a

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technology standpoint in media
and entertainment industry, and

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we're going to dig into that as
we go through our conversation.

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He has a fascinating history of
using his job, starting out at

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the low at the a local college
radio station into the

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promotional side of music
industry and really

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understanding some of the issues
that were going on that.

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But then it's getting an idea
for a business and his

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inspiration to actually start
that business in the midst of

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the Great Recession.
So Shahar founded and built and

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led neurotic media.
It it was a high tech music

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platform that served global
Fortune 500 brands for 18 years.

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Johar led the successful exit of
Neurotic media to Peloton

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Interactive back in 2018 and for
the last decade.

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Overlapping all of that, Johar
has also offered Executive

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Council for Pro Pro Bono for
incubators, educators, startup

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founders, and currently serves
as the president of Georgia

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Music Partners.
And advises several executive

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leaders in the technology,
media, entertainment, including

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Tech Stars Music, Georgia Tech's
Create X and the College of

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Creative Design ATDCGSU Main St.
as well as the founders of

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several media and technology
startups.

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And he's now sits on the other
side of the table as an Angel

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investor and the founder of
Sound Media Ventures.

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Welcome to the show, Shahar.
How are you?

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I'm great.
Thank you for having me, Karen.

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Hello everybody.
Yes.

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So you have specific unique
insights into these concepts of

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growth, hacking, lean, startup,
bootstrapping, raising capital,

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getting to an exit because of
your experience with neurotic

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media.
And I.

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And I think it's really so
valuable for the entrepreneurs

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that are listening out there to
understand a little bit of your

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journey of what you experienced
with that because when we first

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met.
You were raising capital but it

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00:15:30,670 --> 00:15:33,870
turned out to be you know
difficult even though you had

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really strong intellectual
property, you had great

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00:15:36,510 --> 00:15:40,630
technology and great traction.
So you know for the afternoon

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00:15:40,870 --> 00:15:43,710
the entrepreneurs that kind of
get stuck with this idea of

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00:15:43,710 --> 00:15:47,590
progressing their company, what
one might call that lean startup

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right with investor capital,
they feel like they can't do

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anything till they get money to
do this or that.

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The other you solved all of
that?

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In the way that you brought it
to market and built a huge value

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of proposition for that led up
to your exit and your story.

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The stories you told me are just
fascinating.

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So you know it's been a few
minutes talking to our audience

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about this idea of of getting
started growing with actual

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customer revenue and you know
share with them on how you know

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00:16:17,370 --> 00:16:20,210
you how you were able to
generate millions in revenue

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00:16:20,210 --> 00:16:21,770
without the benefit of seed
capital.

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Sure.
It's a it's interesting because

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I'm pretty envious of the
reality in the marketplace today

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because in relative terms
there's so much investment

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capital, VC Angels in Atlanta,
the local market and I've been

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00:16:40,960 --> 00:16:46,440
in Atlanta since 1990.
The market has changed so much,

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especially even in just the last
five years.

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So when I founded Neurotic Media
in 2001.

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The bubble just crashed and we
were coming out of that and

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creating a new company and there
was there was no VC.

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00:17:04,530 --> 00:17:08,329
There was only one VC in Atlanta
and it was not an Angel VC.

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They were investing in a later
stages.

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I started the company with an
SBA loan and my own sweat equity

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00:17:17,450 --> 00:17:23,030
and some savings and.
We had to be customer focused

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and figure out a way to be
generating revenues from from

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month number one.
And we ended up growing

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organically with a lot of grit
and a lot of years of several

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years of sweat equity.
And only in 2000 and seven 2008

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did we find traction with some
investors.

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And this is in the height of
another recession.

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There was there was still not a
lot of folks to talk to in

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Atlanta.
So at the time we only raised

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which today is extremely modest.
Our raise was about 1.5 million

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and we were already making
almost a million a year in

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revenue and the expectation at
the time investors put us

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00:18:12,210 --> 00:18:16,530
through the ringer, we needed a
80 page business plan and the

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technical white paper and.
A former?

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I mean, ask those things from a
founder.

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00:18:23,710 --> 00:18:26,390
Nowadays, everybody laughs at
you Like you want me to do what?

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00:18:27,190 --> 00:18:30,790
That's why I laughed.
You're lucky to get three years

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00:18:30,790 --> 00:18:35,430
projections, but you know, and
so it was a totally different

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00:18:35,670 --> 00:18:38,830
environment for raising money.
And in Atlanta there were not a

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00:18:38,830 --> 00:18:43,470
lot of people to talk to.
So the discipline expected of us

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00:18:43,590 --> 00:18:47,070
as founders.
And and I was a member of a TDC

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00:18:47,070 --> 00:18:49,070
at the time.
So I was networking with a lot

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00:18:49,070 --> 00:18:53,270
of other founders from other
industries at a TDC, which is an

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00:18:53,270 --> 00:18:57,550
incubator in Georgia Tech.
Everybody was in the same boat,

294
00:18:57,550 --> 00:18:58,870
Everybody was seeing the same
stuff.

295
00:18:58,870 --> 00:19:01,910
It was really hard.
The process of raising money was

296
00:19:02,550 --> 00:19:06,750
a lot harder and the result
evaluations were depressed.

297
00:19:06,750 --> 00:19:09,390
It was hard to find money in
town.

298
00:19:11,270 --> 00:19:13,310
It's totally different today.
It's a wonderful.

299
00:19:14,130 --> 00:19:17,730
Space today for founders, I
think nationally, but we

300
00:19:17,730 --> 00:19:21,570
certainly see that here in in in
Georgia and in Atlanta where

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00:19:21,930 --> 00:19:29,050
gosh, there's probably about 20
plus funds, micro funds in

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00:19:29,050 --> 00:19:31,930
Atlanta alone.
Many of them are journalists,

303
00:19:32,250 --> 00:19:36,690
some of them are market specific
like Sun Media venture is and

304
00:19:36,690 --> 00:19:39,490
Sun Media Ventures is.
And there's so many

305
00:19:39,490 --> 00:19:42,450
opportunities for founders to go
raise money.

306
00:19:42,970 --> 00:19:46,330
And the valuations are a lot
higher, but we had to apply a

307
00:19:46,330 --> 00:19:53,010
lot of grits to the process and
we learned how to have this

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00:19:53,010 --> 00:19:56,330
discipline of being revenue
centric because we kind of had

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00:19:56,330 --> 00:19:57,850
no choice.
Right.

310
00:19:58,370 --> 00:19:59,650
Yeah.
So talk about that, cuz that was

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00:19:59,650 --> 00:20:02,530
one of the things I thought was
so interesting, how you figured

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00:20:02,570 --> 00:20:08,170
out how to engage customers to
fund your growth and even your

313
00:20:08,170 --> 00:20:11,130
technology developments and your
iterations as you went along the

314
00:20:11,130 --> 00:20:15,210
way.
We did so because we we were so

315
00:20:15,210 --> 00:20:18,970
nimble and agile in the way we
developed every step of the way

316
00:20:18,970 --> 00:20:22,690
we had to engage with customers
and drive the value for the

317
00:20:22,690 --> 00:20:26,530
customers and we we were a B2B
music platform.

318
00:20:27,330 --> 00:20:31,130
So the path for us was to deeply
understand the potential

319
00:20:31,130 --> 00:20:35,090
customers and then present them
with strong proposition about

320
00:20:35,090 --> 00:20:39,170
what we're going to build.
I already had and this is going

321
00:20:39,170 --> 00:20:43,280
back to my activity in the
digital space circa 1998.

322
00:20:43,600 --> 00:20:46,000
I had a good network within the
industry to leverage.

323
00:20:46,840 --> 00:20:49,880
And so we leaned on those
relationships to kind of sit

324
00:20:49,880 --> 00:20:52,000
with folks and say hey, what do
you need in the marketplace?

325
00:20:52,000 --> 00:20:54,680
What do you want to build, what
would you pay us to build?

326
00:20:56,320 --> 00:21:00,880
The major record companies
engaged us in the middle of that

327
00:21:00,880 --> 00:21:03,920
decades to build what they
defined at the time as an iTunes

328
00:21:03,920 --> 00:21:09,280
in a box, white label
opportunity, iTunes like

329
00:21:09,280 --> 00:21:14,630
services and beyond B to B music
services that they can white

330
00:21:14,630 --> 00:21:16,790
label for a variety of different
purposes.

331
00:21:17,070 --> 00:21:20,190
So they had a need and we knew
how to build it and there was a

332
00:21:20,190 --> 00:21:23,270
lot of trust created over the
course of a few years of a

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00:21:23,270 --> 00:21:25,310
variety of different services
being provided.

334
00:21:25,790 --> 00:21:29,990
We were able to go to the labels
and say we're the right party to

335
00:21:29,990 --> 00:21:34,630
build you this platform and we
are asking you to advance us two

336
00:21:34,630 --> 00:21:41,290
years of service fees and we
were able to fund at least the

337
00:21:41,290 --> 00:21:47,370
beginning of the platform with
customer advances towards fees

338
00:21:48,010 --> 00:21:50,250
with the.
And it was a big risk, it was a

339
00:21:50,250 --> 00:21:53,370
big gamble.
First of all, it was just one

340
00:21:53,370 --> 00:21:56,570
nugget of the money we needed.
I needed to borrow a lot more,

341
00:21:56,650 --> 00:21:59,250
which was a lot of personal
borrowing and you know

342
00:21:59,250 --> 00:22:02,770
enterprise borrowing taking the
risk on borrowing a lot of

343
00:22:02,770 --> 00:22:05,090
money.
Also the financials only make

344
00:22:05,090 --> 00:22:08,770
sense if we expanded the
clientele beyond those record

345
00:22:08,770 --> 00:22:11,950
companies.
So we had a long term plan of

346
00:22:11,950 --> 00:22:15,550
hey if if we can leverage this
opportunity to build this tool.

347
00:22:15,550 --> 00:22:18,870
We believe that we can sell a
lot more of it to other clients

348
00:22:18,870 --> 00:22:20,950
once it's built and we aggregate
the catalog.

349
00:22:21,590 --> 00:22:25,990
So it was a multi year gamble,
but we we got it funded

350
00:22:25,990 --> 00:22:28,470
initially with clients money
which is non deludive.

351
00:22:29,870 --> 00:22:33,710
We got the mission done.
It was a lot about execution and

352
00:22:33,710 --> 00:22:36,790
we got, we got it done.
We came out of the recession by

353
00:22:36,790 --> 00:22:41,570
2010 after we also raised a
little bit of money from local

354
00:22:41,570 --> 00:22:46,450
Angel groups.
So we're able to really fulfill

355
00:22:46,450 --> 00:22:48,450
on the promise of what we're
trying to build for our clients.

356
00:22:49,090 --> 00:22:54,010
We came out of that process
eight years into the company and

357
00:22:54,010 --> 00:22:58,890
one pivot later into a real SAS
model with APIs and whatnot.

358
00:22:58,890 --> 00:23:03,750
But we came out of the recession
and profitable, and from 2010

359
00:23:03,750 --> 00:23:08,830
until we exited in 2018, we were
constantly growing as a size and

360
00:23:08,830 --> 00:23:11,150
eventually kind of found our
hockey stick and got really,

361
00:23:11,150 --> 00:23:12,270
really scalable.
Yeah, so I.

362
00:23:13,790 --> 00:23:18,550
Was going to say all along that
growth is painful too.

363
00:23:19,070 --> 00:23:22,310
Growth is also expensive, so
even as we were profitable and

364
00:23:22,310 --> 00:23:25,070
growing, we needed to come up
with with innovative ideas of

365
00:23:25,070 --> 00:23:29,950
how to fund the technology costs
during the growth period.

366
00:23:30,510 --> 00:23:32,240
Absolutely.
And we kept going back to

367
00:23:32,240 --> 00:23:34,600
clients as well.
So at that point, it was beyond

368
00:23:34,600 --> 00:23:36,560
just regular companies.
We had all sorts of SAS

369
00:23:36,560 --> 00:23:39,560
customers and we had SAS
customers that were already on

370
00:23:39,560 --> 00:23:44,200
board for 8/10/12 years each and
they were paying a monthly

371
00:23:44,200 --> 00:23:48,080
retainer for years.
So we would go back when

372
00:23:48,080 --> 00:23:50,400
whenever we needed a bump to
build something on the

373
00:23:50,400 --> 00:23:53,080
technology side, we would go and
say, hey, here's what we're

374
00:23:53,080 --> 00:23:54,840
doing.
Technically it, it may or may

375
00:23:54,840 --> 00:23:57,480
not be in your wheels, but
you're going to benefit from it

376
00:23:57,480 --> 00:23:59,880
as well.
And and you've seen that in the

377
00:23:59,880 --> 00:24:02,000
past, you know that what we're
doing right now is going to

378
00:24:02,000 --> 00:24:08,640
benefit you if you're willing to
advance us your next 12 or 18

379
00:24:08,640 --> 00:24:12,920
months of monthly recurrent fees
which are not in your budget

380
00:24:12,920 --> 00:24:17,200
anyhow, you're paying us anyhow.
We'll give you a 10% or 15%

381
00:24:17,920 --> 00:24:22,960
discount if you advance us the
money and customers always chose

382
00:24:22,960 --> 00:24:27,760
to do it because of the savings.
Yeah, over time we started going

383
00:24:27,920 --> 00:24:30,400
for non dilutive and very
minimal.

384
00:24:31,800 --> 00:24:33,720
Well, there was no interest.
It was not really a loan.

385
00:24:33,720 --> 00:24:39,360
We were just you know giving up
a little bit of our income in

386
00:24:39,360 --> 00:24:41,160
order to get the money when we
needed it.

387
00:24:41,400 --> 00:24:43,600
Cash is king at that point.
You need to build something,

388
00:24:43,600 --> 00:24:45,360
solve a technical problem, you
need the cash.

389
00:24:45,840 --> 00:24:48,680
So it was a non dilutive way to
continue and expand our cash

390
00:24:48,680 --> 00:24:51,600
flow to invest in the technology
and in the growth of the

391
00:24:51,600 --> 00:24:54,040
company.
But we we got it done

392
00:24:54,040 --> 00:24:56,830
efficiently over the years.
Well, it's a great strategy

393
00:24:56,830 --> 00:25:00,470
because yes, you're taking a
discount, but people offer

394
00:25:00,470 --> 00:25:03,510
discounts all the time for
things, you know, for people to

395
00:25:03,670 --> 00:25:06,390
sign up and stuff.
But you know, you've got this

396
00:25:07,150 --> 00:25:10,510
growth in revenue that will come
from the new functionality

397
00:25:10,630 --> 00:25:13,270
that'll make up for that
discount that you gave existing

398
00:25:13,270 --> 00:25:15,550
customers.
But you didn't give have to give

399
00:25:15,550 --> 00:25:17,750
up equity.
You're not paying interest on

400
00:25:17,750 --> 00:25:19,270
that.
It's not on your balance sheet

401
00:25:19,270 --> 00:25:21,350
dragging you down.
Well, you got to pay out every

402
00:25:21,350 --> 00:25:25,270
month on something, right?
You just got cash in and.

403
00:25:25,390 --> 00:25:28,550
You're paying your developers
and things, but in general you

404
00:25:28,550 --> 00:25:32,670
know a SAS solution is going to
have a high margin on it that

405
00:25:32,710 --> 00:25:34,270
you've got a little bit of
wriggle room.

406
00:25:34,310 --> 00:25:38,390
So I think that was just a a
brilliant strategy to do what I

407
00:25:38,390 --> 00:25:42,670
wish more customer or more
entrepreneurs would believe in

408
00:25:42,670 --> 00:25:47,270
what they're doing and do take
those kinds of bold moves in

409
00:25:47,270 --> 00:25:49,510
order to move forward and create
a value in it and.

410
00:25:49,980 --> 00:25:53,380
It it creates a situation that
you because you because like you

411
00:25:53,380 --> 00:25:55,660
keep emphasizing and you didn't
have to dilute it.

412
00:25:55,660 --> 00:25:58,700
So you get to keep more at the
end of the day when you get

413
00:25:58,700 --> 00:26:01,220
ready to exit.
And so let's let's switch over

414
00:26:01,220 --> 00:26:03,260
and let's talk a little bit
about that because most

415
00:26:03,260 --> 00:26:06,660
entrepreneurs and founders, you
know, they start a company not

416
00:26:06,660 --> 00:26:09,940
just to invent something cool,
but to do what you've done.

417
00:26:09,940 --> 00:26:13,220
We just create great wealth from
their innovation and hard work

418
00:26:13,580 --> 00:26:15,620
right there.
And that's the exit.

419
00:26:16,170 --> 00:26:19,170
You know, often entrepreneurs
will dream of an IPO, but most

420
00:26:19,170 --> 00:26:21,570
often the exit comes through the
sell of the company.

421
00:26:21,970 --> 00:26:25,970
And now you sold your company to
Peloton, who you know.

422
00:26:25,970 --> 00:26:29,330
Really, in recent years people
have become massively aware of,

423
00:26:29,330 --> 00:26:34,290
you know and and I and I like to
think that part of the reason

424
00:26:34,290 --> 00:26:39,170
why they became such a dominant
solution, it wasn't just because

425
00:26:39,170 --> 00:26:43,400
it was a bike, but it was the.
The experience of that bike and

426
00:26:43,400 --> 00:26:47,440
I think your technology from
neurotic media probably was a

427
00:26:47,440 --> 00:26:51,240
real integral factor of them
being able to accelerate their

428
00:26:51,240 --> 00:26:53,840
business model.
And and what's interesting is

429
00:26:53,840 --> 00:26:57,280
that they didn't come knocking
on your door necessarily to say

430
00:26:57,480 --> 00:27:00,160
we need this and this is what's
going to propel us to the

431
00:27:00,160 --> 00:27:03,120
future.
It was almost your vision of how

432
00:27:03,120 --> 00:27:06,960
they would use it as a customer.
They gave them the vision that

433
00:27:06,960 --> 00:27:10,400
ultimately led to the exit.
So talk about that process of

434
00:27:10,400 --> 00:27:12,090
how.
How that happened, because it

435
00:27:12,090 --> 00:27:14,570
didn't happen overnight.
It was you know and it's a

436
00:27:14,690 --> 00:27:17,010
really a fascinating piece of
your story.

437
00:27:18,250 --> 00:27:21,810
It is.
And you know we're we play a

438
00:27:21,810 --> 00:27:28,410
very specific role within that
ecosystem and the vision is all,

439
00:27:28,410 --> 00:27:30,970
I mean the Peloton team is an
amazing team.

440
00:27:30,970 --> 00:27:35,690
It's an amazing product and
amazing service and users, you

441
00:27:35,690 --> 00:27:37,490
know, the members are so
passionate about it.

442
00:27:38,410 --> 00:27:40,290
We just really got lucky and
interesting.

443
00:27:40,890 --> 00:27:42,490
Think about this.
Yes, exit.

444
00:27:42,690 --> 00:27:44,770
Exit is king.
Exit is what it's all about.

445
00:27:44,770 --> 00:27:48,410
It's all about the exit for an
entrepreneur and it's also about

446
00:27:48,410 --> 00:27:50,210
the journey.
I truly believe it.

447
00:27:50,210 --> 00:27:53,090
It's very much about the journey
and hopefully you do have a

448
00:27:53,090 --> 00:27:57,930
great exit in the end.
We were always cognizant.

449
00:27:57,930 --> 00:28:02,690
I had great mentors and advisors
early on, which is phenomenally

450
00:28:02,690 --> 00:28:06,290
important for for an
entrepreneur to identify and

451
00:28:06,290 --> 00:28:11,860
lean on, on really wise mentors
and advisors and then also to

452
00:28:11,860 --> 00:28:16,860
find and develop and promote the
right team around you.

453
00:28:18,060 --> 00:28:20,940
It's the success of a company.
It's all about the teamwork and

454
00:28:20,940 --> 00:28:24,860
the talent that you bring in and
and foster within the culture

455
00:28:24,860 --> 00:28:31,260
within the company and the so.
So first of all I was always

456
00:28:31,300 --> 00:28:33,060
acutely aware that I didn't have
to.

457
00:28:33,060 --> 00:28:36,620
Neurotic media didn't have to be
the biggest animal out there to

458
00:28:36,620 --> 00:28:38,580
be successful from an exit
perspective.

459
00:28:39,300 --> 00:28:43,660
We actually because we we had an
18 year run and we saw several

460
00:28:44,020 --> 00:28:46,660
competitors that came and went
during the years.

461
00:28:47,140 --> 00:28:50,220
Often times they raised way too
much money over capitalized

462
00:28:50,460 --> 00:28:54,020
which normally then when you
over capitalized 2 years in it

463
00:28:54,020 --> 00:28:59,620
leads to the VC's taking over.
The founders lose control and

464
00:28:59,620 --> 00:29:02,900
disappear and the company ends
up.

465
00:29:03,220 --> 00:29:06,700
Even if the company raises $100
million, the founders live with

466
00:29:06,700 --> 00:29:10,750
nothing and eventually it melts.
There's a loss for the

467
00:29:10,750 --> 00:29:12,670
investors.
We've seen that happen several

468
00:29:12,670 --> 00:29:17,550
times to our competitors and we
at that stage when many of our

469
00:29:17,550 --> 00:29:22,510
competitors over capitalized.
In 2007 when we raised 1.5

470
00:29:22,510 --> 00:29:26,430
million in Atlanta, we had three
or four competitors at the time

471
00:29:27,190 --> 00:29:31,350
in other markets, bigger markets
that raised 50 to $70 million

472
00:29:31,350 --> 00:29:35,110
each, which really was what kept
us up at night.

473
00:29:35,660 --> 00:29:37,900
We're going to lose our pain.
So this big client competitors,

474
00:29:37,900 --> 00:29:42,540
how we're going to win, they you
know they tend to then when they

475
00:29:42,540 --> 00:29:46,420
raise too much money, they spend
it very, very fast on on

476
00:29:46,420 --> 00:29:49,460
whatever the VC's think they
need to do literally within 12

477
00:29:49,460 --> 00:29:52,660
months and they kind of burn
through it and then crush and

478
00:29:52,660 --> 00:29:57,180
burn basically.
And so we over time with our

479
00:29:57,180 --> 00:30:01,980
slow momentum, we eventually
became a leader in the space.

480
00:30:01,980 --> 00:30:05,350
All the competition disappeared.
It was like the story about the

481
00:30:05,350 --> 00:30:10,230
rabbit and the the turtle.
We were the turtle and we won

482
00:30:10,230 --> 00:30:15,230
the race.
And so I always now encourage

483
00:30:15,630 --> 00:30:18,630
when I work with the
entrepreneurs we found us today,

484
00:30:18,630 --> 00:30:22,470
I I work with them early on in
the process on the waterfall

485
00:30:22,470 --> 00:30:26,870
that shows them how raising
money in different stages of

486
00:30:26,870 --> 00:30:32,100
their company in the next five
years going to affect what they

487
00:30:32,100 --> 00:30:34,060
personally get out of the hard
work.

488
00:30:34,340 --> 00:30:37,460
Because I want them to realize
what over capitalization for

489
00:30:37,460 --> 00:30:38,860
business looks like for the
founder.

490
00:30:40,260 --> 00:30:43,660
So they don't make mistakes and
don't you know overshoot what

491
00:30:43,660 --> 00:30:47,020
they need financially and really
think about the process of

492
00:30:47,020 --> 00:30:50,980
valuation versus capital leading
to an exit and what that means

493
00:30:50,980 --> 00:30:54,860
to them as an early investor our
interests are aligned.

494
00:30:54,860 --> 00:30:57,860
I want to make sure that they
know about this because it

495
00:30:57,860 --> 00:31:02,700
benefits us so.
So by the time we ran into

496
00:31:02,700 --> 00:31:06,020
Peloton, it's interesting
because we never when we were

497
00:31:06,020 --> 00:31:08,660
looking at our potential exit
from erratic media and over the

498
00:31:08,660 --> 00:31:11,500
years we would, we would
contemplate who would be our

499
00:31:11,500 --> 00:31:16,260
exit as a B2B company.
We we never saw ourselves it

500
00:31:16,260 --> 00:31:18,820
wasn't big enough to go off to
an IPO or the market was never

501
00:31:18,820 --> 00:31:21,900
big enough to support an IPO for
B2B music company.

502
00:31:22,540 --> 00:31:24,340
So who's going to buy us and for
how much?

503
00:31:25,180 --> 00:31:29,460
And over the years we banked on,
well, a big retailer and then we

504
00:31:29,500 --> 00:31:33,070
thought maybe a big carrier or
big technology company.

505
00:31:33,310 --> 00:31:36,030
Or a publisher.
Or yeah, we never thought it was

506
00:31:36,030 --> 00:31:39,630
going to be a fitness company.
Nobody really saw this coming A.

507
00:31:39,790 --> 00:31:44,470
Customer explosion of Yeah, but
we never thought that a fitness

508
00:31:44,470 --> 00:31:45,990
company would be a major
customer.

509
00:31:47,030 --> 00:31:51,750
So by the time Peloton came to
talk to us, they already created

510
00:31:51,750 --> 00:31:55,950
a monster.
They were already a Unicorn and

511
00:31:56,070 --> 00:32:00,290
they knew that they needed to
take a sledgehammer to a

512
00:32:00,290 --> 00:32:03,530
challenge.
They recognized that music was

513
00:32:04,090 --> 00:32:08,010
part of the NDA of what the
service was about, and they

514
00:32:08,010 --> 00:32:11,690
needed the source of truth for
everything within.

515
00:32:12,130 --> 00:32:14,370
How they were fitting music
through the system all the way

516
00:32:14,370 --> 00:32:16,850
down to reporting that they
needed an end to end solution

517
00:32:16,850 --> 00:32:20,890
for music.
And they they came to us with an

518
00:32:20,890 --> 00:32:23,050
RFP.
They went to the marketplace

519
00:32:23,050 --> 00:32:25,850
with asking folks to.
Quarter this thing okay and they

520
00:32:25,850 --> 00:32:27,130
say you know we need this, we
need that.

521
00:32:27,130 --> 00:32:32,220
They had a certain vision and a
lot of it was the sole member

522
00:32:32,220 --> 00:32:33,860
centric.
They knew what they wanted to

523
00:32:33,860 --> 00:32:35,820
create.
As far as membership experience,

524
00:32:35,820 --> 00:32:40,940
it was a phenomenal vision.
Where we were able to add vision

525
00:32:41,580 --> 00:32:47,540
is to really show an elegant and
scalable and automated option of

526
00:32:47,540 --> 00:32:51,420
how to execute on the vision
that removed a lot of manual

527
00:32:51,420 --> 00:32:56,500
elements from the process and
created a a really exceptional

528
00:32:57,460 --> 00:33:01,470
ecosystem soup to nuts a real
supply chain for them that

529
00:33:01,550 --> 00:33:03,910
doesn't, nobody else is doing it
that way in the marketplace even

530
00:33:03,910 --> 00:33:06,990
today.
It's born on just an exceptional

531
00:33:06,990 --> 00:33:10,030
solution and they got very
excited about that vision.

532
00:33:10,310 --> 00:33:14,110
So that conversation organically
pretty quickly developed into a

533
00:33:14,110 --> 00:33:19,510
conversation about an
acquisition and and then you

534
00:33:19,510 --> 00:33:23,310
know the team is still there,
super proud of the team and what

535
00:33:23,310 --> 00:33:25,890
they've built within the
organization.

536
00:33:26,410 --> 00:33:30,410
I still don't vote for the
obligatory year to get a vision

537
00:33:30,410 --> 00:33:33,210
executed, move the team and the
technology over.

538
00:33:34,930 --> 00:33:38,090
So that's interesting.
So they they didn't just buy

539
00:33:38,090 --> 00:33:41,330
your tech, they bought the team
to continue momentum and

540
00:33:41,330 --> 00:33:45,650
movement in the advancement and
innovation within that element

541
00:33:45,650 --> 00:33:48,250
of what your your technology
brought to them.

542
00:33:48,250 --> 00:33:50,850
So that's good, because that's
another thing that entrepreneurs

543
00:33:50,850 --> 00:33:54,280
often worry about is.
You know, they're just buying us

544
00:33:54,280 --> 00:33:57,440
for the tech because it's easier
to buy than to build it.

545
00:33:57,760 --> 00:34:00,320
But they wanted the team too.
And then a lot of founders

546
00:34:00,320 --> 00:34:02,320
really struggle because they
don't want to, they don't want

547
00:34:02,320 --> 00:34:07,440
to have the team not benefit
from the hard work that they've

548
00:34:07,840 --> 00:34:11,440
put into it all those years.
So I'm glad to hear that was a a

549
00:34:11,440 --> 00:34:14,400
key component that was probably
also part of your deciding

550
00:34:14,400 --> 00:34:17,630
factor to sell.
Absolutely.

551
00:34:18,630 --> 00:34:22,150
You know we looked at various
options and this was the option

552
00:34:22,429 --> 00:34:25,870
exit option where we felt so
excited about the brand.

553
00:34:26,310 --> 00:34:28,469
When we looked at different
options of where do we want to

554
00:34:28,469 --> 00:34:32,270
exit at the time already there
was so much buzz about Peloton

555
00:34:32,270 --> 00:34:34,389
and when we looked at
opportunity and talked to the

556
00:34:34,389 --> 00:34:38,989
company and studied the brand,
we thought what a great place to

557
00:34:39,030 --> 00:34:42,550
to, to to go to work with to
join.

558
00:34:43,110 --> 00:34:46,560
I knew that for the for, for my
team, it would be a huge

559
00:34:46,560 --> 00:34:49,239
positive experience.
Everything but the Peloton brand

560
00:34:49,239 --> 00:34:51,320
is so positive.
It's an empowering brand.

561
00:34:51,320 --> 00:34:56,080
You just if you look at just
what what you can see publicly

562
00:34:56,080 --> 00:35:00,160
and in so in social networks and
in the peloton social channels,

563
00:35:00,160 --> 00:35:03,640
on Facebook and other social
places, it changes people's

564
00:35:03,640 --> 00:35:07,360
lives for the better on so many
levels, which is why there's so

565
00:35:07,360 --> 00:35:09,160
much passion by the members for
the brand.

566
00:35:09,720 --> 00:35:12,570
And when we looked at all this,
we thought, you know, this is

567
00:35:12,570 --> 00:35:14,330
just fantastic, this is so
exciting.

568
00:35:14,330 --> 00:35:18,210
We would, you know we would.
I was excited to see all of the

569
00:35:18,210 --> 00:35:23,770
hard work we've put into it
serve a growing amount of

570
00:35:23,770 --> 00:35:26,850
members in such a unique way.
And knowing that the technology

571
00:35:26,850 --> 00:35:30,850
and capabilities and the team is
not part of this bigger family

572
00:35:32,030 --> 00:35:33,470
which has grown by leaps and
bounds.

573
00:35:33,470 --> 00:35:37,350
And even our team here in
Atlanta that specializes, that

574
00:35:37,350 --> 00:35:40,790
focuses on the Peloton
technology side for music.

575
00:35:40,790 --> 00:35:45,190
The music technology arm has
grown and the team is just,

576
00:35:45,190 --> 00:35:48,470
they're doing great and they're
so pleased with where they are

577
00:35:48,470 --> 00:35:50,790
now.
Yeah, from a career perspective,

578
00:35:51,230 --> 00:35:54,870
I just couldn't be more happy
for everybody involved and proud

579
00:35:54,870 --> 00:35:57,090
of what they're doing.
Yeah, that's great.

580
00:35:57,090 --> 00:35:58,970
That's a really good story
because I think it's really

581
00:35:58,970 --> 00:36:02,330
important for entrepreneurs to
understand, you know, the

582
00:36:02,330 --> 00:36:04,610
destination.
And the reason why investors

583
00:36:04,610 --> 00:36:07,170
invest in entrepreneurs is
because they expect to have an

584
00:36:07,170 --> 00:36:09,570
exit like that.
But so often you know, they

585
00:36:09,570 --> 00:36:12,890
think of the obvious exits like
you mentioned at the beginning

586
00:36:12,890 --> 00:36:16,650
and not always necessarily a
customer or somebody that would

587
00:36:16,650 --> 00:36:20,330
take their novel tech and use it
in a slightly different way like

588
00:36:20,330 --> 00:36:23,370
you say in a consumer product
for the fitness industry.

589
00:36:23,790 --> 00:36:26,590
And you know transform what
they're doing in their business

590
00:36:26,590 --> 00:36:29,470
because they had an idea and
they needed your tech to do

591
00:36:29,470 --> 00:36:32,470
that.
So after your successful exit,

592
00:36:32,750 --> 00:36:35,710
you spent some time and and I
guess along the way you have

593
00:36:35,710 --> 00:36:39,670
been mentoring and accelerating
companies and seeing interesting

594
00:36:39,670 --> 00:36:44,030
and compelling media tech.
When we recently, we

595
00:36:44,030 --> 00:36:47,350
participated as judges at the
annual Siege Business Plan

596
00:36:47,350 --> 00:36:49,510
competition.
For those listening that aren't

597
00:36:49,510 --> 00:36:53,010
familiar with that, it's the.
It's a it's a conference for

598
00:36:53,010 --> 00:36:56,090
gay, for people that are
inventing games and

599
00:36:56,090 --> 00:37:01,050
entertainment here in Georgia.
So it's an annual convention or

600
00:37:01,330 --> 00:37:03,290
it was done virtually this year.
Business plan and there's a

601
00:37:03,290 --> 00:37:05,050
business plan competition.
That's an element of it.

602
00:37:05,650 --> 00:37:07,650
So I was struck by some of the
entrepreneurs there.

603
00:37:07,650 --> 00:37:11,410
They seem to focus on just
better mouse traps, right, for

604
00:37:11,410 --> 00:37:14,370
their innovation rather than
some kind of transformational

605
00:37:14,370 --> 00:37:16,890
innovation that moves an
industry forward.

606
00:37:17,480 --> 00:37:19,560
Your background, you know has
music in it.

607
00:37:19,560 --> 00:37:23,040
Your company was music tech.
You've pivoted your business,

608
00:37:23,040 --> 00:37:26,960
you know at the onset in this
platform for business to

609
00:37:26,960 --> 00:37:30,200
business, right.
You saw this opportunity.

610
00:37:31,280 --> 00:37:35,360
So you know, share your and and
you don't have to necessarily go

611
00:37:35,360 --> 00:37:38,120
into the whole nature of what
you know streaming music was

612
00:37:38,120 --> 00:37:42,400
back then, but share your
insights into the experience of.

613
00:37:42,900 --> 00:37:46,580
You know the value proposition
of creating a different way of

614
00:37:46,580 --> 00:37:49,860
doing business, right?
A platform, because ultimately

615
00:37:49,860 --> 00:37:52,020
that's kind of what you look at
from an investment standpoint.

616
00:37:52,220 --> 00:37:56,180
But as an entrepreneur, the
value of creating something

617
00:37:56,180 --> 00:38:01,300
that's not just a better
mousetrap in doing stuff, well,

618
00:38:01,300 --> 00:38:07,900
the the underlying idea I
believe for for founders that

619
00:38:07,900 --> 00:38:14,430
are really, really looking for
big value creation in a short

620
00:38:14,430 --> 00:38:20,310
period of time, what we call a
quick IRR or significant annual

621
00:38:20,310 --> 00:38:22,550
growth.
To do that you need to

622
00:38:22,550 --> 00:38:25,350
fundamentally, usually
fundamentally disrupt or make a

623
00:38:25,350 --> 00:38:28,830
big difference in an industry,
whatever your segment is.

624
00:38:31,990 --> 00:38:35,230
If there's a lot, there are a
lot of businesses that one can

625
00:38:35,230 --> 00:38:38,070
create that are valid businesses
that are going to generate a lot

626
00:38:38,070 --> 00:38:41,580
of cash.
Maybe, you know, doctor's

627
00:38:41,580 --> 00:38:44,700
offices, lawyer's offices.
There's a lot of different

628
00:38:44,740 --> 00:38:47,540
businesses in all across
industries where you can

629
00:38:47,540 --> 00:38:50,140
generate, you know, 7 or even 8
figures a year.

630
00:38:51,060 --> 00:38:52,460
Everybody takes a nice living
home.

631
00:38:52,460 --> 00:38:57,540
It's what we call a lifestyle
business and that's fine for

632
00:38:57,540 --> 00:38:59,460
those kind of businesses, you
don't necessarily need venture

633
00:38:59,460 --> 00:39:02,700
capital.
You can usually build them with

634
00:39:02,700 --> 00:39:07,260
some with maybe some grit
applied as well, but ultimately

635
00:39:07,260 --> 00:39:10,990
if there's real value in that
business, you can get a non

636
00:39:10,990 --> 00:39:16,790
deluded loan specific banks,
maybe friends of the family,

637
00:39:17,230 --> 00:39:20,910
maybe some angels would invest
in those type of businesses, but

638
00:39:20,910 --> 00:39:23,070
it's not suitable for venture
capital.

639
00:39:23,830 --> 00:39:30,270
Venture capital usually seeks
significant potential rate of

640
00:39:30,270 --> 00:39:33,550
return on an annual basis.
We're sort of hunting for

641
00:39:33,550 --> 00:39:40,780
unicorns and we we are aware
that statistically speaking most

642
00:39:40,780 --> 00:39:45,220
of the bets would fail 1 intend,
2 intend would succeed and go

643
00:39:45,220 --> 00:39:50,940
big, and that's if we're lucky.
So it's a it's a bit of a

644
00:39:50,940 --> 00:39:54,660
gambling game and high stakes
gambling game.

645
00:39:54,660 --> 00:39:58,420
So it forces us to ensure that
every investment we make, we

646
00:39:58,420 --> 00:40:02,980
have to go into it with certain
conviction in the size of the

647
00:40:02,980 --> 00:40:06,380
opportunity and the ability of
the management team to execute

648
00:40:06,380 --> 00:40:10,580
on a vision that's sizeable.
That provides significant annual

649
00:40:10,580 --> 00:40:14,460
growth and significant exit
potential.

650
00:40:14,460 --> 00:40:19,700
That provides a pretty hefty
multiple and it depends on which

651
00:40:20,460 --> 00:40:23,260
stage of the company you invest
in.

652
00:40:23,700 --> 00:40:27,900
So the earlier stage, the more
risk and the higher the return.

653
00:40:29,740 --> 00:40:33,740
There's different teams, bigger
VC teams that invest in what we

654
00:40:33,740 --> 00:40:37,560
call further down downstream,
which is Series B, Series C,

655
00:40:37,560 --> 00:40:41,360
where a lot of the risk is
already off the table because

656
00:40:41,360 --> 00:40:44,800
usually in those bigger rounds
the company is well established

657
00:40:45,160 --> 00:40:47,400
and the product is well
established and the revenue is

658
00:40:47,400 --> 00:40:49,600
well established and you really
investing in growth.

659
00:40:50,200 --> 00:40:53,200
So you're not necessarily
looking for the same huge

660
00:40:53,200 --> 00:40:59,800
multiple.
And when you invest early on,

661
00:41:00,280 --> 00:41:02,880
you're looking for pretty
significant multiple opportunity

662
00:41:04,400 --> 00:41:06,680
because you're taking a lot more
risk, Right.

663
00:41:06,680 --> 00:41:09,720
Right.
So, so founders need to

664
00:41:09,720 --> 00:41:14,320
understand that before they set
themselves up to starting to

665
00:41:14,320 --> 00:41:16,880
talk to venture capitalists or
even angels.

666
00:41:17,640 --> 00:41:22,120
The story has to take that
approach into consideration.

667
00:41:22,120 --> 00:41:25,560
They need to put themselves in
the investor seat and realize

668
00:41:25,560 --> 00:41:27,960
that we're looking at hundreds
of opportunities.

669
00:41:28,280 --> 00:41:32,080
You're basically competing with
other opportunities when you

670
00:41:32,080 --> 00:41:35,150
talk to an Angel investor.
Yeah, that's one of the things I

671
00:41:35,150 --> 00:41:39,110
always tell entrepreneurs, it's
like you're, you know, you are.

672
00:41:39,790 --> 00:41:43,070
It's a, it's like a a beauty
contest, right?

673
00:41:43,630 --> 00:41:46,990
When I sometimes when I do some
of my education on this, I say,

674
00:41:46,990 --> 00:41:52,390
you know, how does a female
Peacock pick a a male Peacock?

675
00:41:52,390 --> 00:41:55,750
Because they're all pretty.
But there's like, which one,

676
00:41:55,750 --> 00:41:57,270
right?
It's like there's and that's

677
00:41:57,270 --> 00:41:59,150
when when investors are looking
at deals.

678
00:41:59,680 --> 00:42:02,680
Every deal says I'm going to,
I'm going to be the best.

679
00:42:02,680 --> 00:42:04,240
I'm changing this, I'm doing
this.

680
00:42:04,240 --> 00:42:08,600
And so they have to to figure
out which one that looks great

681
00:42:08,680 --> 00:42:12,280
is the one that's really going
to do what they say or change a

682
00:42:12,280 --> 00:42:16,440
market or shift a market or have
this kind of compounding effect

683
00:42:16,440 --> 00:42:19,000
because of.
And there's also that risk of,

684
00:42:19,240 --> 00:42:21,600
like you talk about the reason
why some of them don't make it

685
00:42:21,600 --> 00:42:27,080
is because they're so much
involved with creating a market.

686
00:42:27,570 --> 00:42:32,170
Or wedging into a market and
displacing how the status quo,

687
00:42:32,530 --> 00:42:34,530
how somebody might do stuff like
that.

688
00:42:34,530 --> 00:42:38,410
So you know, one of the things
that I also want you to to talk

689
00:42:38,410 --> 00:42:41,210
about is because I think you
have some real unique insights

690
00:42:41,210 --> 00:42:43,890
and some of the stuff that you
shared already and and kind of

691
00:42:44,090 --> 00:42:46,930
you know your focus is that and
the end this thing about media

692
00:42:46,930 --> 00:42:50,170
and entertainment, right.
You know investors flock to

693
00:42:50,170 --> 00:42:55,210
software, tech, cloud based s s,
Internet of Things, fintech, all

694
00:42:55,210 --> 00:42:58,020
these catchphrases.
Yet media and entertainment

695
00:42:58,020 --> 00:43:01,300
seems to be a category that they
that struggles to get mass

696
00:43:01,300 --> 00:43:05,780
attention of investors as groups
and V CS and so and so the

697
00:43:05,780 --> 00:43:09,260
entrepreneur make that fine
define themselves as a media and

698
00:43:09,260 --> 00:43:12,660
entertainment company and then
investors go up media and

699
00:43:12,660 --> 00:43:14,780
entertainment, right we're
underneath it.

700
00:43:14,780 --> 00:43:19,700
There's a tech that is good that
is that is solving a problem

701
00:43:19,700 --> 00:43:22,580
within the media and
entertainment sector.

702
00:43:23,180 --> 00:43:25,340
So you have a unique
perspective.

703
00:43:25,760 --> 00:43:28,360
In the in sort of the
investments you've already made

704
00:43:28,640 --> 00:43:31,720
in some of the companies that
you've mentored in the roles

705
00:43:31,720 --> 00:43:34,280
that you play now on the side of
the investor table.

706
00:43:34,520 --> 00:43:37,520
So talk about understanding the
tech behind media and

707
00:43:37,520 --> 00:43:40,360
entertainment, and how do
entrepreneurs overcome the

708
00:43:40,360 --> 00:43:44,400
stigma of a startup in that
space when they're really

709
00:43:44,400 --> 00:43:46,800
actually are.
They're not just entertainment,

710
00:43:47,040 --> 00:43:49,760
they're actually in the
technology side of that and.

711
00:43:50,070 --> 00:43:52,150
And you know, maybe something
interesting that you've seen or

712
00:43:52,150 --> 00:43:55,470
a problem that you're hoping
somebody will solve that you've

713
00:43:55,470 --> 00:43:58,110
identified from your experience
in the industry.

714
00:43:59,590 --> 00:44:02,270
There's there's a few issues
that are of interest to us that

715
00:44:02,270 --> 00:44:05,270
we're talking to companies that
kind of solve for them and we're

716
00:44:05,270 --> 00:44:08,230
trying to get into those deals.
So I cannot get into specifics,

717
00:44:08,230 --> 00:44:13,910
but we're very bullish about the
opportunity in general because

718
00:44:14,990 --> 00:44:17,270
I've been in the space now for
two decades plus.

719
00:44:18,400 --> 00:44:21,800
It has changed so much in the
last 20 years and it seems like

720
00:44:21,800 --> 00:44:24,680
over the year that the rate of
change keeps accelerating.

721
00:44:25,160 --> 00:44:29,240
What's happening in the space
today with some of those novel

722
00:44:29,240 --> 00:44:32,720
technologies, with blockchain,
with a I, with robotics,

723
00:44:32,720 --> 00:44:40,760
Internet of Things, 5G, machine
learning, ARVR, there's so much

724
00:44:40,760 --> 00:44:45,480
fundamental, so many fundamental
shifts are happening in how

725
00:44:45,480 --> 00:44:50,590
consumers, fans are tapping into
media broadly.

726
00:44:50,990 --> 00:44:52,350
And we look at media very
broadly.

727
00:44:52,470 --> 00:44:55,830
Yes, it's music and video and
but it's also communication,

728
00:44:55,830 --> 00:44:59,670
education, fitness, art, it's
all media.

729
00:45:00,470 --> 00:45:01,870
So we had some of the
adventures.

730
00:45:01,870 --> 00:45:06,270
We look at media broadly and
we're looking at those type of

731
00:45:06,270 --> 00:45:09,990
technologies because we believe
that they allow founders to

732
00:45:09,990 --> 00:45:15,150
create a lot of unique value and
innovate and create meaningful

733
00:45:15,150 --> 00:45:18,590
changes fast and usually faster
than big companies would do it,

734
00:45:19,030 --> 00:45:22,270
which leads to growth and
potential big exit

735
00:45:22,270 --> 00:45:24,950
opportunities.
So we're not looking at nice to

736
00:45:24,950 --> 00:45:30,110
have models or this exists for
the last 20 years, but I did it

737
00:45:30,110 --> 00:45:34,110
a bit better.
That can be a nice lifestyle

738
00:45:34,670 --> 00:45:36,950
sort of business like Okay,
you're doing something better

739
00:45:36,950 --> 00:45:40,110
and that's a, you know, there's
all these other companies that

740
00:45:40,110 --> 00:45:44,870
make 10 million a year.
Yeah, it's a basic.

741
00:45:41,230 --> 00:45:43,630
So now you can maybe can disrupt
them and you'll make 10 million.

742
00:45:44,910 --> 00:45:48,550
It's not a, it's not a home run,
not a home run.

743
00:45:49,750 --> 00:45:52,070
So we're looking for those home
runs and and So what we're

744
00:45:52,070 --> 00:45:56,110
looking for our opportunities
that fundamentally change how

745
00:45:56,110 --> 00:46:03,070
media broadly is created,
distributed and monetized and

746
00:46:03,070 --> 00:46:06,230
the underlying technologies that
are platform scalable in nature.

747
00:46:06,670 --> 00:46:09,860
We're not looking at the media
itself, that's a different sort

748
00:46:09,860 --> 00:46:13,100
of thesis.
So not investing in media per

749
00:46:13,100 --> 00:46:16,780
se, but the underlying
technologies and and there's a

750
00:46:16,780 --> 00:46:19,700
lot going on in the space, a lot
of exciting opportunities and

751
00:46:20,700 --> 00:46:24,420
and you can look at me, we've
got a small portfolio already on

752
00:46:24,420 --> 00:46:29,380
our website, it's Sun Media dot
VC and you can see the kind of

753
00:46:29,380 --> 00:46:32,380
things we we're squinting at and
and and what we invest in.

754
00:46:33,340 --> 00:46:35,100
So we're very bullish about the
space.

755
00:46:35,100 --> 00:46:39,460
It has performed, I believe,
ahead of most, if not all other

756
00:46:39,580 --> 00:46:41,980
spaces in 2020 well.
There you go.

757
00:46:42,700 --> 00:46:47,340
Most media companies in the
early stages really find their

758
00:46:47,340 --> 00:46:51,940
money with angels and struggle
to find institutional money.

759
00:46:51,940 --> 00:46:56,420
Not until maybe Series B&C, when
something's already big and

760
00:46:56,420 --> 00:46:59,060
moving, yeah.
When you have $1,000,000 in

761
00:46:59,060 --> 00:47:02,340
revenue, a lot of folks, a lot
of VC's like yourself have told

762
00:47:02,340 --> 00:47:05,180
me that they the $1,000,000
revenue is sort of their

763
00:47:05,180 --> 00:47:08,010
starting spot to.
Look at a deal, but I think you

764
00:47:08,050 --> 00:47:12,330
you work a little bit earlier if
you find really compelling and

765
00:47:12,690 --> 00:47:15,610
and I guess are you Co investing
with angels now as well.

766
00:47:16,610 --> 00:47:19,010
We Co invest with angels.
We're not opposed to be in the

767
00:47:19,010 --> 00:47:22,730
first check but normally we
won't necessarily be the Angel

768
00:47:22,730 --> 00:47:26,770
invest investment in a company.
We look for the product already

769
00:47:26,770 --> 00:47:33,090
be there to see a most viable
viable product example and we're

770
00:47:33,090 --> 00:47:36,910
looking for some sort of
traction if it's KPIs or on

771
00:47:36,910 --> 00:47:43,310
users or early revenue trends.
We want to join the team when we

772
00:47:43,310 --> 00:47:48,710
can add value to growth, not to
the creation of the product, but

773
00:47:48,710 --> 00:47:51,750
to the growth of the product.
And that step when the

774
00:47:51,830 --> 00:47:55,190
entrepreneurs need to cross the
chasm and really reach scale,

775
00:47:56,430 --> 00:47:59,830
that's where we can add value
both with expertise as well as

776
00:47:59,830 --> 00:48:02,790
our network.
So we kind of roll up our

777
00:48:02,790 --> 00:48:06,580
sleeves and not only, you know,
make a financial contribution to

778
00:48:06,580 --> 00:48:10,260
the effort, but really roll up
the sleeves and work with an

779
00:48:10,260 --> 00:48:13,220
entrepreneur or whatever needs
they might have on the C-Suite

780
00:48:13,220 --> 00:48:16,340
level to help them prepare for
their growth and really

781
00:48:16,420 --> 00:48:18,460
accelerate their business.
Right.

782
00:48:18,580 --> 00:48:21,100
And you mentioned it and I
apologize, I should have said it

783
00:48:21,100 --> 00:48:24,980
earlier, but the website for
those that are listening.

784
00:48:25,490 --> 00:48:29,930
Is sound media dot VC.
So it's just like it sounds

785
00:48:29,930 --> 00:48:35,010
SOUNDNEDIA dot VC.
So you're an entrepreneur in

786
00:48:35,010 --> 00:48:38,010
that space.
If you're an investor that's

787
00:48:38,010 --> 00:48:42,130
trying to you're looking at a
deal and you want to because of

788
00:48:42,130 --> 00:48:46,610
the network that Shahar has, you
know it.

789
00:48:46,650 --> 00:48:49,610
I think he take a coffee or
anymore.

790
00:48:49,610 --> 00:48:52,770
It's just a zoom call and say
hey, let's bounce these ideas

791
00:48:52,770 --> 00:48:54,130
off each other and things like
that.

792
00:48:55,080 --> 00:48:58,040
Because I remember you talking
about one deal that you, I

793
00:48:58,040 --> 00:49:00,240
believe you guys have already
invested in that was really

794
00:49:00,240 --> 00:49:06,040
fascinating on delivery of art
through streaming on, you know

795
00:49:06,040 --> 00:49:08,040
streaming on TV or something
like that.

796
00:49:08,040 --> 00:49:10,640
It was.
It was, it was completely novel

797
00:49:11,040 --> 00:49:14,560
when you described it to me
before and I I I was fascinated

798
00:49:14,560 --> 00:49:17,640
that somebody not only had an
idea, but they identified their

799
00:49:17,640 --> 00:49:22,880
marketplace for that and it has
developed it and it it is, it is

800
00:49:22,880 --> 00:49:25,060
a game changer.
Yeah.

801
00:49:25,460 --> 00:49:28,580
And I know we only have two
minutes left.

802
00:49:28,620 --> 00:49:35,140
It's the company is called Loop
Art Lou, P/E, art.com and they

803
00:49:35,140 --> 00:49:40,420
are a a market maker, if you
will, in streaming art.

804
00:49:40,460 --> 00:49:45,820
So the vision is that what
Spotify is to music and Netflix

805
00:49:45,820 --> 00:49:50,660
is to movies and TV loop art is
to high end art.

806
00:49:51,580 --> 00:49:54,060
So it's curated contemporary
art.

807
00:49:54,550 --> 00:49:58,510
It streams on your flat screens
and you can now already find it

808
00:49:58,510 --> 00:50:01,910
through Pluto.
We launched a linear channel on

809
00:50:01,910 --> 00:50:06,630
Pluto TV.
We also launched on Comcast

810
00:50:06,790 --> 00:50:13,110
where you're preloaded on the X1
modem and others modems and and

811
00:50:13,110 --> 00:50:15,790
there's more now we're working
on several other distribution

812
00:50:15,790 --> 00:50:20,550
partnerships this year.
In 2021, the company has grown

813
00:50:20,550 --> 00:50:23,780
tremendously just in the fourth
quarter since deploying with

814
00:50:23,780 --> 00:50:25,660
those first initial partners I
mentioned.

815
00:50:27,620 --> 00:50:32,420
And so we went from very small
amount of users to over a

816
00:50:32,420 --> 00:50:35,100
million Unix per month.
Wow.

817
00:50:35,260 --> 00:50:36,980
We did like 2 1/2 months.
Yeah.

818
00:50:37,420 --> 00:50:41,580
So fantastic growth, very
exciting product.

819
00:50:42,380 --> 00:50:45,660
Okay, great.
So now as we wrap up, I'd like

820
00:50:45,660 --> 00:50:50,380
you to sort of explain because I
thought it was interesting why

821
00:50:50,380 --> 00:50:55,510
you chose to start a VC fund.
And do what you're doing versus

822
00:50:55,590 --> 00:50:58,990
just being just a straight, you
know, Angel that puts it writes

823
00:50:58,990 --> 00:51:03,510
a personal check every quarter
or participates in somebody

824
00:51:03,510 --> 00:51:07,990
else's fund.
You know, it was, I think it was

825
00:51:07,990 --> 00:51:13,430
a brave, but of course you've
always been sort of a, you know,

826
00:51:13,470 --> 00:51:15,660
a.
I guess a brave I'm trying to

827
00:51:15,660 --> 00:51:18,180
think of the word I'm trying to
think of it but you know leading

828
00:51:18,180 --> 00:51:22,740
the way into you know doing
things you know and it's and you

829
00:51:22,740 --> 00:51:26,220
and you chose to start sound
media these sound media

830
00:51:26,460 --> 00:51:28,980
ventures.
So you know, just, you know

831
00:51:28,980 --> 00:51:32,820
quickly tell our audience on
what was, what's your passion

832
00:51:32,820 --> 00:51:36,820
behind it, why did you choose to
do that instead of just you know

833
00:51:36,820 --> 00:51:39,220
being an Angel, not just an
Angel investor but you know

834
00:51:39,220 --> 00:51:41,740
taking your wealth and doing
that or going off to the lake

835
00:51:41,740 --> 00:51:43,380
and.
You know, building another

836
00:51:43,380 --> 00:51:46,740
house, you know you, you've
committed your own.

837
00:51:46,740 --> 00:51:50,060
Now it's a new business, which
is, you know, helping these

838
00:51:50,060 --> 00:51:54,060
other entrepreneurs go about
creating and and you know and

839
00:51:54,060 --> 00:51:56,420
sharing in their wealth, but in
a different way.

840
00:51:56,420 --> 00:51:59,580
So talk a little bit about your,
your passion and your reason for

841
00:51:59,820 --> 00:52:02,420
for being.
You're taking that space within

842
00:52:02,420 --> 00:52:06,700
the capital framework.
Sound me to venture checked

843
00:52:06,700 --> 00:52:10,390
toolboxes for me.
First of all, I enjoy paying it

844
00:52:10,390 --> 00:52:12,070
forward.
I enjoy working with

845
00:52:12,070 --> 00:52:17,430
entrepreneurs and hear about
exciting new ideas that founders

846
00:52:17,430 --> 00:52:20,550
are developing and being able to
help.

847
00:52:20,670 --> 00:52:24,590
You know, at this stage in my
career after being an operator

848
00:52:24,590 --> 00:52:28,110
for two decades plus and you
know what?

849
00:52:28,110 --> 00:52:31,710
I can, you know, bring to the
table is a lot of wisdom and

850
00:52:31,710 --> 00:52:38,620
experience, for better or worse,
and what young, you know, all

851
00:52:38,620 --> 00:52:40,580
founders are bringing to the
table.

852
00:52:40,700 --> 00:52:44,060
Often times young creative
founders is a lot of creativity

853
00:52:44,060 --> 00:52:47,180
and deep understanding of
current and future technologies

854
00:52:47,500 --> 00:52:49,940
coming out of universities doing
a lot of R&D.

855
00:52:49,940 --> 00:52:53,700
That's super interesting.
So when you marry that passion

856
00:52:54,020 --> 00:52:58,100
and that knowledge of bubbling
new technologies with mentorship

857
00:52:58,100 --> 00:53:01,220
and experience, which is what I
I had when I was young and I

858
00:53:01,220 --> 00:53:04,580
know the benefit it gave me at
the time, I think it makes a big

859
00:53:04,580 --> 00:53:06,140
difference.
I enjoy the work.

860
00:53:06,820 --> 00:53:09,540
I enjoy paying it forward.
I wanted to have a bit more

861
00:53:09,540 --> 00:53:13,380
structure behind how I engage
founders and how I work with

862
00:53:13,380 --> 00:53:17,580
them and why I'm doing it. #1,
#2, I was looking at things as

863
00:53:17,620 --> 00:53:20,700
an investor.
I'm a member of a TA Atlanta

864
00:53:20,700 --> 00:53:26,500
Technology Angels, just joined
Venture South and other Angel

865
00:53:26,500 --> 00:53:29,740
networking the Southeast.
So I enjoy looking at different

866
00:53:29,740 --> 00:53:33,580
opportunities as an Angel, but
when I was running the numbers

867
00:53:35,660 --> 00:53:39,060
investing in this particular
area of media and technology,

868
00:53:39,060 --> 00:53:42,500
it's kind of like making a salad
with the vegetables I have.

869
00:53:42,820 --> 00:53:44,740
It's an area of expertise for
me.

870
00:53:44,740 --> 00:53:48,940
I understand the space both from
the content and IP perspective,

871
00:53:48,940 --> 00:53:52,740
which is really the product and
how it it correlates with

872
00:53:52,740 --> 00:53:55,660
technology and how to apply
technology to distribution and

873
00:53:55,660 --> 00:53:59,540
monetization.
So, so that's where I can bring

874
00:53:59,540 --> 00:54:01,620
in a lot of value from an
investment perspective.

875
00:54:01,620 --> 00:54:05,770
I understand the market and I
felt after looking at all the

876
00:54:05,770 --> 00:54:09,570
numbers, talking to a lot of
colleagues, I felt that with a a

877
00:54:10,610 --> 00:54:16,490
fund that's bigger than my own
firepower, we can make a bigger

878
00:54:16,490 --> 00:54:19,210
impact, write bigger checks to
investors.

879
00:54:19,490 --> 00:54:23,330
So I just decided to put a lot
more discipline around the whole

880
00:54:23,330 --> 00:54:27,210
process of investing and how
much money is being invested and

881
00:54:27,210 --> 00:54:31,250
how we advise and work and
consult the founders we engage

882
00:54:31,250 --> 00:54:33,430
with.
And investing some media

883
00:54:33,430 --> 00:54:37,270
ventures gives the whole process
a lot more structure with the

884
00:54:37,270 --> 00:54:41,110
goal of creating a lot more
value for for everybody

885
00:54:41,110 --> 00:54:44,710
involved, which at this point is
the investors, the Lps that are

886
00:54:44,710 --> 00:54:48,630
involved in sub media ventures
and of course the the founders

887
00:54:48,630 --> 00:54:51,670
we curate and invest in and work
with.

888
00:54:52,630 --> 00:54:56,100
Yes.
Well, thank you so very much for

889
00:54:56,100 --> 00:55:00,780
joining me on the show.
Shahar, it's been great talking

890
00:55:00,780 --> 00:55:03,860
to you.
I think hopefully listeners out

891
00:55:03,860 --> 00:55:09,300
there please comment, give us a
you know five stars on this and

892
00:55:09,300 --> 00:55:12,420
you know share it with other
people that you know that are

893
00:55:12,420 --> 00:55:15,660
interested in media tech or
interested in getting started in

894
00:55:15,660 --> 00:55:18,220
Angel investing in media tech or
whatever.

895
00:55:18,220 --> 00:55:20,460
You know, interested in
understanding the Atlanta

896
00:55:20,460 --> 00:55:24,880
landscape for capital?
You know, this is, I think one

897
00:55:24,880 --> 00:55:27,160
of the things that you mentioned
at the very beginning is that

898
00:55:27,520 --> 00:55:30,680
Atlanta has become a very
dynamic community for

899
00:55:30,680 --> 00:55:35,280
entrepreneurs and investors.
And this is just another flavor

900
00:55:35,320 --> 00:55:38,960
color that of the spectrum of
what is out there.

901
00:55:38,960 --> 00:55:41,400
And it's really exciting the
things that are happening here

902
00:55:41,400 --> 00:55:43,560
and I'm excited to be a part of
it with you.

903
00:55:45,000 --> 00:55:47,280
Well, thank you very much for
having me today, Karen.

904
00:55:48,120 --> 00:55:51,240
Appreciate the time and thank
you all for watching.

905
00:55:51,480 --> 00:55:55,280
Yes.
Sound media dot VC everybody.

906
00:55:55,280 --> 00:55:59,040
And of course my website is
Karen rands.co for those that

907
00:55:59,040 --> 00:56:01,800
are listening.
You can go there and get access

908
00:56:01,800 --> 00:56:05,240
to all the other podcasts and
blogs and on the blog page and

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00:56:05,560 --> 00:56:08,120
and information about the book
Inside Secrets to Angel

910
00:56:08,120 --> 00:56:11,360
Investing.
And so as I always close out the

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00:56:11,360 --> 00:56:16,480
show onwards and upwards.
Thank you very much.

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00:56:16,840 --> 00:56:21,080
Appreciate it.
Well, that's a wrap for.

913
00:56:21,540 --> 00:56:23,340
Another episode of The
Compassionate Capitalist Show.

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00:56:23,340 --> 00:56:26,940
Thank you so much for tuning in.
Please go to dothedeal.org and

915
00:56:26,940 --> 00:56:31,900
also Karen Rands dot Co If you
are already established as an

916
00:56:31,900 --> 00:56:35,940
investor and need help with due
diligence or your company trying

917
00:56:35,940 --> 00:56:38,900
to figure out what your capital
strategy could be, we offer

918
00:56:38,900 --> 00:56:42,740
services for all those things.
And please share this podcast

919
00:56:43,220 --> 00:56:47,740
with folks that you believe that
will be interested in the topic

920
00:56:48,020 --> 00:56:51,850
and benefit from it.
And give us a thumbs up, a star

921
00:56:51,850 --> 00:56:57,410
and a like or whatever is on
your platform so that we can

922
00:56:57,410 --> 00:57:00,690
spread the word and you can be
part of the compassionate

923
00:57:00,690 --> 00:57:02,410
capitalist movement.
Onwards and.