How A Musician Built A $22 Million Dollar Business From His Home

Derek Sivers created CD Baby because he needed a way to sell his music online. Soon other musicians asked him to help them sell their music. A few years later, he found himself helping over 100,000 artists sell their music. He recently sold his company for $22 million.

He’s now running a new company, but he’s always willing to help startups. So I called him up and asked him to teach us. Here’s some of what I learned. (Download the interview to learn more.)

Derek Sivers

Derek Sivers

CD Baby

Derek Sivers was circus musician and ringleader in the late 1980’s; he later founded and sold CD Baby, the largest distributor for Indie music online. This year he is launching MuckWork, which offers a network of reliable assistants to do the “uncreative dirty work” for musicians.

A few lessons from this program

He wasn’t afraid to start crappy

Derek laughs when wannabe entrepreneurs tell him about all the features they plan to include when they launch their companies. When he launched CD Baby the site’s design was pretty dorky. And instead of building a fully automated site, he did much of the order processing by hand. Quit aiming for perfection, just launch.

(Guy Kawasaki told me the same thing in this interview.)

He knew what feedback to accept

Start crappy and build the business by listening and integrating user feedback. But be careful not to let user feedback take you too far off course. Derek says people kept telling him that he should launch a radio station. But he kept refusing because he didn’t think it was a good fit for his business.

He was patient

9 months after launching, his site was only bringing in $15 a week. Others might have have assumed that the site was a failure, but Derek was patient. He gave it room to grow.

He knew how to get financial security

I asked Derek if earning that first million gave him a sense of financial security. He said it didn’t. He said he got a greater sense of security by managing his own desires. Knowing that he wasn’t a wasteful spender gave him his sense of security.

He worked 2 hours a week

When Tim Ferriss published his book, The Four Hour Work Week, most people doubted it was possible to work that little. Not Derek. He told me he worked 2 hours a week. He said it was because of the way he taught his staff. When anyone in the company asked him a question, he told the answer to everyone in the company. Within 6 months, everyone knew what Derek knew. “I made myself unnecessary,” he told me.

(Learn from Tim Ferriss in this interview.)

What other business lessons should startups learn? Tell me by email or in the comments.

  • In this era of recession everyone is tightening the belt including the startups. Derek rightly reminded that one needs to keep needs in check all the time. He lived on $20k per year. That’s just amazing.

  • Ian

    How do you keep landing these interviews with big time players!

    Keep up the good work!

  • Ian : He asks. :-)

    – Derek

  • Everything seems so simple when you listen this interview. :) But I’m sure that you have to spend a lot of time until the project is big enough.

  • great site and great interview! There’s a lot of value in it. And the most important lesson any budding entrepreneur can take from it is that there’s no such thing as overnight success.

    And that doesn’t necessarily mean that you have to be a tortoise. but you have to stay on a steady course, stay focused, don’t go off on tangents. Put together a program of regular marketing, daily, weekly and monthly goals, and accomplish them.

    And don’t expect overnight success and don’t be dissappointed when it doesn’t immediately produce results.

    I do search engine optimization and online marketing for small business and I don’t know how many times I’ve signed a contract with a client on Monday and by Friday, they’re calling me up wanting to know why they are on the first page of Google.

    just like a Twelve Step group, patience and steadily working your program will give you the same results that derek got.

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  • This was excellent.

    Im now checking out Derek's book list.
    Andrew, are there are any other places, where i can get qualified book recommendations?

    Everytime its time for me to check out a new book, i just dont know which one to go for . I dont trust the Amazon reviews, and i would rather there be a central place where i know that the book im reading is a) relevant to me and b) changed someones life.

    Im going onto David Allen's “How to get things done” next, because it seems to be an extremely popular one.

  • What kind of books are you looking for?
    You should get to know Derek too. You'll love him.

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  • This is a great post for me. I read Guy Kawasaki's book “The art of the start” last year. I've definitely started crappy and by doing so I have learned a lot. No amount of planning, preperation and reading can compare to how quickly you learn by actually “doing”.

  • This is a great post for me. I read Guy Kawasaki's book “The art of the start” last year. I've definitely started crappy and by doing so I have learned a lot. No amount of planning, preperation and reading can compare to how quickly you learn by actually “doing”.

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