Music streaming for b2b

Joining me today is an entrepreneur who was crucial in creating the Beats Music brand that was eventually sold to Apple. He then partnered up with Spotify to create a way to bring music streaming to businesses.

He has recently moved away from Spotify and I’m fascinated by how he’s did it. I want to find out how he got a deal going with Spotify to spin out this very complicated product.

Ola Sars is coming to us directly from Stockholm. He is the founder of Soundtrack Your Brand, a music streaming solution for businesses.

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Ola Sars is the founder of Soundtrack Your Brand, which allows businesses to find the perfect music in the world’s largest commercial catalog.

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Full Interview Transcript

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. You may not know my dad was an entrepreneur, his whole life. I remember, um, One time he got into opening up stores to sell clothes. And I read an article, I think it was in the wall street journal that said that there was this team of people who are going into stores and saying, if you’re playing music, you have to pay for the license.

And apparently store owners were. Once they found out about it, they were happy to pay. Well, at least they were accepting. I remember going to my dad and saying, look, we play music in the store all the time. That’s how you create the vibe. That’s how you get this. He was playing a lot of hip hop. Um, that’s how people maybe forget for a moment that you’re actually a Persian guy who doesn’t ever listen to hip hop and would never wear the clothes in the store, but you give them the atmosphere that makes them feel comfortable.

He said, Hey, if they ever come in, we’ll talk about it. We’ll negotiate. We’ll deal with it. But I think he was basically blowing me off. I think he had a small store. He may not have ever had to pay for music, but I realized at that point, there is a payment for music who knew that store owners can’t just put on some CDs or put on some streaming music and pump up sales and increase the vibe and do it all for free.

They have to pay the musicians. Well, The system for doing that has gotten a lot better. Joining me today is an entrepreneur who was instrumental in creating the beats music brand that was eventually sold to Apple, who then partnered up with Spotify to create a way to bring music into stores and do it in a way where the musicians were, the creators get paid.

Okay. He has recently moved away from Spotify. Not completely, they’re still an investor in a business, but I’m fascinated by how he’s doing this. I’m fascinated about how he got a deal going with Spotify, how he basically spun out. On his own. I’m fascinated by what’s going on around COVID with all these stores being closed.

How is he handling? And how’s his business going? And, uh, basically I’m curious about a lot of things. We’re going to find out how he built up his business. His name is Ola SARS coming to us directly from Stockholm. He is the founder of soundtrack, your brand. It’s a music streaming solution for businesses, right?

We can find out about how he did this. Thanks to two phenomenal sponsors. The first, if you’re paying people, whether they’re full-time employees, W2, you know, that thing, or 10 99 contractors, they will help you pay them and do it right. It’s called Gusto. You can sign up and get it for free at gusto.com/mixergy.

And the second, when you’re hiring developers, you got to go check out top towel.com/mix.  good to have you here.

Ola: thanks for having me.

Andrew: Are there a lot of businesses? My dads who were just saying, eh, we’ll only pay if they force us.

Ola: Well, it’s actually not ill intent, mostly it’s it’s, um, the information around actually paying for music and a business. Isn’t great. And hasn’t been, I mean, music has been in venues since, you know, back in the days, right. Uh, always, it came out of elevator music. When, when during the twenties, they used to put music into elevators in order to get people more common, not hearing the mechanical sounds.

And, you know, people started thinking about music as actually kind of an augmentation of an experience or helping people feel a certain way. And that has a very natural connection to a physical experience, right? So he was moved into the public domain, into the commercial domain. That’s nothing new, um, mainly driven probably by the big brands and you know, the big change global change, but then successfully moving down to the mom and pop stores, probably your dad as well, and where people use music to do exactly how you referred to it, create a vibe or.

Make people feel a certain way or behave a certain way, but it hasn’t been professionalized. And specifically it hasn’t been, um, moved into the 2000 and twenties and into the streaming revolution and into kind of. Retail tech. And when you’re talking about real time experiences, so forth, and that’s probably where I come in, trying to facilitate the technology enablement in the physical world and retail together with music, which is a great tool to kind of augment the brand exposure.

Andrew: But, uh, how you saying that? I thought the issue was that. Today people are just getting a Spotify subscription, maybe a few months, or a few years ago, it would have been a Pandora hitting play, just like they would at home and maybe paying $10 for a personal license. So they don’t have to deal with commercials in their store.

And boom, they’re done. I thought that what you were doing at soundtrack was just. Making, uh, that’s not really the right way for a store to pay. They should be paying a little bit more because they’re making money off of this, right. Not a ton more, but they should be paying a little bit more. I thought that’s all you’re doing.

Are you going beyond that? Are you actually helping them create a vibe? There’s tons of research that shows that if you, if a retailer plays the right music, the right beats, the right. Be that people increase, uh, their, their spending or their time or they move faster. Are you going, are you just focused on getting artists paid the right amount or are you also starting to go into that second part, which is how do we get customers of these stores to spend more.

Ola: Both. Uh, but obviously you need to sequence it right. Building a music streaming service for business is not trivial. Um, it’s taken me a long while to actually do 10,000 licensing deals. That incorporated to actually architect the business model for music, background music, B2B music, what you like in the streaming space, meaning, dive to do what does the business model look like?

Tell 10,000 labels and publishers that that’s a great model for us. We should move streaming in there. And then once I’ve done that, obviously then the interesting intellectual challenge of. Actually using music to drive business comes into play. When I’ve been able to connect that, build the actual distribution and technology enablement and licensing enablement.

The fun part starts with helping brands actually do really cool stuff with music in order to drive business. Like one example, that’s a bit sophisticated is, uh, there’s a neuroscientific research on certain types of music that could actually help a consumer deal with perception of time. Meaning if you have a long queue, you would play certain types of music, uh, that would actually keep that consumer in line longer and not get stressed and leave the line.

And that’s. Money walking out the store, right? So that’s a very practical well business application of music.

Andrew: Yeah.

Ola: Another one would be just, you know, if you’re in a restaurant, uh, you’re obviously playing one type of music during lunch on a Monday. And you’re obviously playing a different type of music on a Thursday afternoon, moving into after work or Friday afternoon moving into after work.

Right. So. What I do is I facilitate the opportunity to play the right music at the right place at the right time for businesses around the world. And I monetize that in a way that’s better for the music industry. And at the end of the day, the artist

Andrew: You know what, Allah, I I’ve seen that. So because my dad was always in clothing, he was manufacturing women’s clothing, selling them to stores for a short period. He was, he had his own stores, but I would go and work at these stores that he sold to in the summer after school. Cool. And one of the things that I noticed was there’s some places where even if the store was empty, they would play that hip hop, boom, boom, boom, beat, you know, because that’s what, that’s the vibe they thought fit with their customers.

But if you’re. One of four people in a store and you hear that, boom, boom, boom, that club atmosphere. You feel a little bit lame being in a club with nobody in there. So there were some stores where this, the girls who were selling, who like teenage girls, who just happen to have taste in music would go and take control and they would slow down the music a little bit.

And it would make it feel a little bit better to stand in a store with four other people. You almost felt like, ah, this is a relaxing experience that I’m having. That was just happenstance that some stores would have these people who could do it. You want to find a way to systemize that by seeing how many people are in the queue, how many people are in the store, shopping, that type of thing.

What time of day it is?

Ola: Correct. So if you bring the power of streaming and I’ll try to simplify, because there’s a very long response to your question, but I’ll take the very short Swedish one and I’ll try. So if you enable 50 million tracks, And you’re able to add intelligence on top of that catalog of music, meaning that you’re actually filtering you’re analyzing, and you’re filtering that music based on how a brand thinks.

Just an example, let’s have a progressive medium energy. Jazz. So hip hop experience without explicit lyrics, then you can tell our machines to actually provide that type of vibe based on how the brand or the business owner thinks. And then we will, from the beautiful art of the 50 million tracks that are made available from the music industry every year.

Um, we will help brands deliver that experience that they’re looking for. And that’s a damn hard experience to do. If you’re going to sit down and start playlisting at yourself and you’ll get tired after five hours and you need help, you need the technology to scale that experience, not just in one store.

But in thousand stores around the world, depending on what time it is, who’s walking into the store. What type of experience you want to deliver during lunch at Jonah juice in New York versus Joe and the juice and Stockholm, that might be a different experience that you want. So scaling that whole distribution in an intelligent way, on brand contextually, relevant, driving the business goals of that specific business.

That’s what we’re trying to solve for

Andrew: Okay. I understand how you got here and then I’ll ask them my questions along the way that will help me understand how you made these big decisions. You are the guy who helped create beats, the subscription music service. My understanding was that Apple wanted to buy beats more for that than for the hardware.

Am I right?

Ola: That would be a correct assumption. Yes.

Andrew: You created it from scratch. How hard was it? You told her producer was difficult. I guess I imagined can’t be that tough. How hard was it to put it together? You’re smiling as I say that, because obviously I’m being naive. What was the difficulty in putting it together? I mean, they already had all these deals with Spotify.

I assumed you could just go over and say, you got to deal with Spotify. Do with us to diversify your revenue. End of

story.

Ola: fair. I mean, um, you’re right in the, in the, um, comparison that Spotify, his job was way harder because they actually had to invent a model. Uh, they had to convince the very. You know, not so forward-leaning music industry to change their whole business model when they were under heavy fire, um, into an access model and they needed to harmonize a business model where you would have find a fair share of who takes what in a subscription model moving forward.

So they did all the hard work to be fair. That’s true. But, uh, moving in as the second mover, which beats was, I would say we have the. Privilege of actually following their lead in terms of the business model being set. Yes. But we needed to find a way to be better than Spotify in order to hit the market.

Right. We needed to find the relevant differentiation and the evolution, and basically compete Spotify, uh, out of the business. Uh, and that’s obviously a pretty challenging task because. Um, they had a pretty good headstart. They were re doing a really good job, but we had a different angle, but at the same time, we needed to build all the infrastructure.

Do all the 10,000 deals, uh, developed a software, develop a differentiated approach to the market execute and everything that comes with building a global startup. Right.

Andrew: How hard was the 10,000 deals or with who.

Ola: So I’ll take, go back to soundtrack. My reality today, I actually, that was harder than beats because that soundtrack I needed to do what Spotify did in the consumer space, but for the business side. So just take the Netflix example. Nobody’s opening up a cinema on their Netflix account, right? Because it’s not licensed for the public domain for opening up cinemas.

So when you actually, when I went out to do soundtrack, I needed to go to every. Label. Um, the labels are the companies that represent the artists and the music value chain. And you also need to go to the publishers who represent the songwriters composers. You need those two levels of licensing in order to build a streaming service and Spotify and Apple music have around 10,000 deals with labels and publishers worldwide.

I had to do the same deals. Um, but for B2B, an a model that I have architected in order to set the set, the B2B model for streaming, right. And it’s different because I’m charging 35 bucks for a subscription or 50 bucks for a subscription, depending on what type of tier you’re buying from me. And everyone knows that Spotify and Apple are nine 99.

They’re actually $5 on the global ARPU. But, um, you know, uh, the window, the window pricing is nine 99.

Andrew: What are they? $5 on where.

Ola: They’re five, their average revenue per subscription is $5 with all the family plans into telco bundles and so forth, kind of. So, but let’s just call it nine 99.

Andrew: So how hard is it to make these 10,000 deals? Is it as difficult as just sending out a form? Hoping they sign it? Is it, is it how much of a flow can you create to create 10,000 deals?

Ola: Well, it’s extremely difficult because first of all, you have all of these labels that all believe that they’re the best and that they should be. Um, in control of the art that they are distributing, which they’re completely right. They should, but in order to create an harmonized approach, like in the consumer space, you need everyone to agree to a business logic, right?

So what should it cost to open a cinema on your Netflix account? That was kind of the thesis I needed to go to the market with and you need to. Choose the ones that are most progressive first and get them on board. And then you need to get the ones that are a bit slower and a movement, and you need to sign one deal at a time and, and you need to put.

Bring it to critical mass. So everyone joins and everyone has to agree on the fact that, okay, it should cost 35 bucks globally or 50 bucks, and we should keep X or Y in that equation and getting 10,000 music companies to agree on a business model was not tripled.

Andrew: Wait. So what is the process for doing it? If you could, if you could simplify it for me a little bit, it seems like what you’re saying is start with the record labels because they have a lot of control and there are a few of them go with the most progressive of them, agree with the number, take it to the others and harmonize, and then go back to the other rights holders and say, this is what we agreed.

Would you like to be in or out and then persuade them? That’s it

Ola: I try to simplify this, um, because it, it was a long poker game, like it was for, for Spotify. I don’t remember if you, I don’t know if you remember back in the days when Spotify wasn’t fully licensed that they were in world war three with universal and stuff. The difference. And I would, I was in that. So I learned from my experiences in the B2C space.

And the one thing that happened in B2C was that. The service providers, the DSPs, Spotify, Apple, uh, in this case, um, created, uh, an expectation in the market that they should have all the music. Right. So when we were learning to use streaming, we were like, okay, I’m searching for, uh, artists and it’s not there.

And the experience was just broken. The consumer got spoiled very fast. So what they ended up is they were negotiating basically with monopolies, right? So they, they, they ended up. Paying up 70, 75% to the rights holders in that equation. We all know that the share in between the DSPs and the consumers base are 70 30, or they’re actually like 75, 25.

So they’re only keeping a smaller portion. So I took that learning with me is that when I build the B2B solution for this, I’m not going to build a service initially that requires all the content in the world, which would put me in a corner and then negotiation. Right. So I built an initial service. That we could launch with limited catalog.

And I did that, um, through three, four years of negotiations launching the product with, or without rights holders until they would join. And so then when we were able to get the critical mass of the 50 million tracks, which we got to just this year, we launched our fully on demand tier, which is kind of the same as Spotify, which kind of exposes us to that search query.

Um, where we need to deliver on all the content. So it was a product strategy that provided me with the leverage to negotiate. So I wouldn’t have to give away too much of the share in the business

Andrew: You were saying, when you were at beats, you saw how difficult it was. Even as the second player who is going in and saying, this is proven, let us in it. It was so difficult. You said, how do I do it better in the B2B market? And it makes sense. Businesses don’t need every song. They’re not sitting in the store saying, there’s this one song I have to play it right now.

They’re just saying, I need good music that fills this vibe. If I can’t get a Taylor Swift, can I get somebody like her? Who’s creating the same atmosphere. And now you don’t, uh, you’re not over a barrel. Okay. So you leave beats. You decide, you know what I want to get into, into something new? Where does the idea come from for soundtracks?

Okay.

Ola: well, it’s, it’s a very simple idea, right? It’s okay. What happens in the consumers based most likely will happen in the business space. That’s usually what happens in technology evolution or, or, uh, transition into new model. Um, but, um, I did get the idea. When I was on the consumer side, I would meet with brands because my us partners, Jimmy, and those guys, they like to meet people and they network and you’ll meet people from McDonald’s or Starbucks or best buy and so forth.

And, and. Everyone would constantly ask me, um, how can we get streaming in kind of our brand experience? How do I relate to what’s going on in the streaming market? How can I get streaming in my cars, general motors, how can I get streaming in my car dealerships? How can I get, you know, and this. After hearing it, you know, 10, 15, 30 times, it kind of stuck on me.

Right. And all right, so there’s actually a business market for music and I had never done B2B before I come from the consumer space. So I started thinking about it and it became a very interesting thought that. Of course, but that’s, I used to DJ back in the days and, and it’s basically what we’re doing.

We’re replicating the DJ through machines. So every brand’s got a personal DJ that plays the right kind of DJ set in a store around the world, uh, on brand 24 hours. So it kind of came to me and then I took the knowledge that I had gained in the consumer space of the music value chain. And I sat okay.

Let’s move that into the B2B space and let’s build the world’s first strings for, for businesses.

Andrew: Okay, they’re coming to you. They’re saying they need this. You realize, of course it makes sense. I, I think I could do this myself. At what point do you say and why do you say I’m going to go over to Spotify and partner up with them?

Ola: well, I, I was flying back and forth, um, Stockholm and West coast us, right. For a long while. And, and it was, uh, becoming really tough and I decided to kind of move on and, and, and move back home Sweden properly for family reasons. Um, And when I did, so I had the idea to do soundtrack and what I just referred to as bringing music streaming into the B2B space.

What I had learned was that. It’s really expensive and complicated to build the backend service of a music streaming service, the whole kind of infrastructure part of doing all the connections with the 10,000 labels, managing 50 million tracks in real time, doing all the licensing and stuff that kind of the engine that runs it.

So, but I wanted to focus on the customer interfacing part of the software experience first to prove out the concept would streaming work for brands. How does the branded kind of the business space work? So we basically walked over the street to Daniel and Stockholm is a small city and we’re only 9 million sweets.

So everyone knows each other. And, and basically we, um, came up with a conclusion that we should do it together. With my logic, then I don’t have to build the backend stuff that just I did at beats, which costs 30 million bucks and at least 24 to 36 month build. I could start with building the consumer or the user interfacing experience first.

And we did it as a joint venture. And I think it was challenging, but smart because I could move to market very quick, quickly.

Andrew: Let me see if I understand this though, the agreements that Spotify had worn transferable to this new product, right? Because you need brand new agreements for businesses. So you didn’t get that. The software is kind of similar, but you weren’t starting with their code base. Right. You were starting from scratch.

So then you’re, you’re just to be clear for people who are listening, you’re agreeing with what I’ve said. So what were you able to take from them to start the new business?

Ola: um, basically the commodity supply of 50 million tracks from the world’s best music backend. So I would connect on top of their whole catalog management system.

Andrew: Ah, do you mean just even getting the music is hard? That’s a key component.

Ola: I mean managing 15 million content components that include the metadata that needs to be up to date every hour that you play that track. And that metadata constantly changes on markets because tracks change ownerships to whole time and you need to be able to report. And renumerated on what you’re playing in real time.

Worldwide. That’s a very complicated machine. So I took that. I took that part and I put the. B2B software experience on top of it. First of all, to try out the concept. When I had proven out that concept, I decided to move away from one, built my own infrastructure.

Andrew: All right. Let me take a moment to talk about my first sponsor. And then I’m going to come back in, um, and ask you a couple more questions about this early days, and then why didn’t Spotify decided to go do it on their own? My first sponsor is Gusto. Gusto is a company that’s built to make payroll. Easier for business owners, like the people who are listening to us and also for the people who are getting paid by them today, we’re seeing that.

And especially as we go into 2021, we’re going to start to see that people more and more are working outside of the office, outside of the city that the company is in. And if we’re going to pay them properly, we need a system that can pay them regardless of where they are. And frankly, even regardless of whether they’re right.

Considered W2 employees or a 10 99 or w nine contractors. That’s where Gusto comes in. It’s incredibly beautiful. It’s incredibly easy to use three a where let me get the data. Right. Three out of four customers say that they run payroll in 10 minutes or less, which means you’re gonna have more time to run your business.

But I think beyond the stats, there’s something that you just can’t communicate in a number. And that is okay. The beauty, simplicity and clarity of an experience that you get from Gusto. It just works. It works well. And this is the time to shift into that. And of course, they’ve got HR professionals to help you.

They’ve got all the tools that you need. There’s a reason why this is one of the most talked about startups in, uh, in Silicon Valley. These days Gusto has done, um, payroll, right? If you’re listening to me, I’m going to give you three months of Gusto for free. If you use my URL. All you have to do is go to gusto.com/mixergy that’s G U S T O.

I love that name. gusto.com/m I X E R G Y. gusto.com/mixergy. Go do it, get going right? Why didn’t Spotify say? Alright, great idea, Allah. See ya. And just hire somebody to run it.

Ola: Well, I got that question a lot of times. Um, we, we co founded the company together. Um, there’s one thing you can say about the founders and specifically the CEO, um, Daniel yuck. He is an amazing entrepreneur, an amazing entrepreneurs know that laser-focus is the only way to win. And he was building a global challenger in a very attractive market space.

Yeah, music right for consumers, the billion, 2 billion, maybe 3 billion user market. And he just was laser focused on beating Apple, Google, and he still is within audio per consumer. So it’s kind of like asking, you know, Tesla, the first, first part of Tesla, if they were going to go do trucks right away, they might do it later down or they might acquire to do it.

Uh, but first of all, they got to win the consumer space. And I, I think. Spotify will remain laser focused on the consumer space. And I’ve now spent five years building out the team technology and the position within the B2B space. And they’re a great owner. Um, I have one out of many owners and let’s see what happens in the future.

Andrew: That you had with them was I think you own, what was it? 60%. They own 40%. Am I right about the percentages? Invest money. Or were you going out and getting they did, they also invested money? The only funding that came in in the beginning was from them.

Ola: No, I took, I took the money I made and, uh, as well and put it

Andrew: own money,

Ola: Sorry.

Andrew: your own money?

Ola: I took the money I made from beats and, um, Spotify put in some money and then we kicked off.

Andrew: How much are we talking about? Millions. Hundreds of thousands of dollars.

Ola: Okay. W what’d you need to get going? Just not in the millions, but.

Andrew: How was it for you and your family to invest your own money into a new business?

Ola: I’ve been doing that since I’ve been doing that since way back. And, uh, I, I kind of, I do it on a reasonable level. So, uh, I protect what’s most important, obviously my family, but like, look, I can go flip some burgers if it doesn’t work out. And it’s, it’s, uh, it’s all in the game and,

Andrew: you could do better than flip burgers. My wife and I though were talking last night about how I feel a sense of confident when I confidence, when I have some money in the bank, just clearly in the bank, not even in the South market. Do you feel that? And she said to me, why do you feel confident?

How not, how much, but why do you need it? And I said, you know, I would like to be able to burn out. And not care about the world for a few years, half a decade, at least if not a full decade and still know that I’m, I’m not stressed out when I’m talking to my kids, I’m not stressed out when I’m going to sleep.

That’s where it comes from. What’s your, what’s your, what’s your version of that?

Ola: Well, first of all, I live in Sweden, so I don’t like I don’t live under that us stress that you guys do. I’ve lived in your country many times, and I know it’s different. We have a little bit of a different society here. It does kind of enable you to take a bit more risks because the fall isn’t as steep as having said that, obviously I would never put my.

Family in harm’s way. I’ll, I’ll always kind of have a plan to how we, how we will survive. If something really goes wrong, I will never like risk that. Um, so, but within the other, outside of that kind of limitation, I’ll usually go all in. Right. And I put my, my eggs in one

Andrew: So, what does that mean? As long as you have a house to live in, you know, the government’s going to protect the you’re not going to

Ola: I have a house live and I have some money put away so I can, you know, keep, keep the household and my family, you know, safe. Um, we have a very comfortable, basic life and Stockholm, uh, life that I want, uh, nothing more. Um, we don’t need more than that. And I know what that requires for, you know, within a 10, 15 year range and I’ll kind of protect that position and the rest will go into building whatever I’m building.

Andrew: It’s so nice not to want things. I was thinking, what do I, my wife wants to get me a present. What do I want? I don’t need anything.

Ola: I don’t want anything. We’re having that discussion right now at home for Christmas. I don’t, I don’t, I really don’t want anything. I want to watch two soccer games without getting interrupted. That’s all I

Andrew: Yeah, that’s it. The, the big luxury we have, and I don’t think that it’s the same way for you as a school. It goes around schooling. So we did like two different schools around COVID for my kids, so that we’d have a backup solution in case it was an issue with one that’s a luxury beyond that. I don’t, I don’t care.

That is very relaxing. Your, your mom was, um, a hard worker, an entrepreneur. She ran a business called contact. What was contact?

Ola: there’s basically a secretary service, right? So where outsourcing of secretaries. So she was doing that, um, while my dad was off traveling and, uh, trying to, you know, take care of the family.

Andrew: cause he was working for the UN

Ola: Yeah. He was at UNICEF.

Andrew: what did you get from watching your mom build a business that you think is now a part of who you are and your mentality about going all in and driving towards something. So new.

Ola: I think a lot because in Sweden, uh, historically we believe it or not. Um, we don’t, we didn’t, we didn’t have kind of the entrepreneurial. Um, history that you would think looking at us now? Uh, it was, it was a lot of big corporation, Volvo SKF Erickson, um, and those Ikea and those type of companies. And we were very stable and people would work in the big companies or in the government and be happy about it.

So it was different because being an entrepreneur back then in her generation as a woman and taking care of family was. Quite unique. So she was a warrior and, um, It did inspire me to just think about it. Like you could actually run your own business. So I was running my own businesses, which wasn’t very Swedish back then.

Now all of a sudden, everyone wants to run their own business, which is good, which is great. I mean, it’s been like in one or two generations, it’s completely shifted us. You guys have always had the kind of entrepreneurial history and the drive and the small business families and, and all of that. We didn’t have that as much as Sweden.

So it was, it was kind of a unique upbringing.

Andrew: I remember going to college and seeing a video in one of my classes about, uh, of this woman who was running a company and she was in tears holding it back. But you could see that she was tearing up. As she said that her friend said, don’t you love your kids. Why are you running a company? And. It was that weird for her to have done it.

And by her talking about how she did it, it became less weird for us, even though I went to a school that was training us to get a job. I wonder if your mom having a company made it less weird to be an entrepreneur and more just all right. It’s an option on the menu of life. Sure.

Ola: Well, you’d have to ask her. Right. Um,

Andrew: for you, did you feel more acceptable to do this because of that? Do you feel like, well, yeah, sure. Of course. This is one of the things that people can do.

Ola: Yeah, I think so. I think, uh, she taught us that, you know, get up in the morning, go to work and work hard. Um, but always put your priorities right, family first, but then like running a business, you got to go for it and, and don’t be afraid to work hard. And I think that very much inspired me. And then I also.

The kind of luxury, to be honest, it’s, it’s a privilege being able to go and take that risk because I’m here in Sweden. And obviously I grew up in an okay environment. So I never, I was enabled to take risks, um, because I would fall and someone would pick me up. So I’m grateful for that. And, um, and being able to then training and then also the acceptance of that is a way forward.

You don’t have to go and. Worked for McKinsey and something like it’s cooler to run your own little shop. That’s kind of how I was trained. Um, and, um, so I started doing that in different parts in different industries, and I ended up being able to do it in my passion music. And that’s obviously that, that was my dream to work with music or sports.

And that’s how simple I am as a guy. Right. So, so

Andrew: life. It seems like has been in.

Ola: I took that opportunity and I ran with it.

Andrew: Your whole life does seem to have been in music. You get a, you start to talk to Spotify. 2015 Spotify. You told our producer was just consumed by the consumer challenge. Apple was joining the streaming service. Google was trying to buy Spotify at the time.

Ola: Yeah, I think everyone knows about that. So,

Andrew: All right. And you, what you call a world war three, uh, which was Spotify, his battle with universal music to get their music on you come into this space. You work through Spotify. It was called the brand was Spotify for business. Am I right?

Ola: It was actually always a separate entity soundtrack from the beginning when we co-founded, but our initial product was Spotify business and Spotify enterprise. Two product lines testing, the small business market and the enterprise market. So, so the product name was Spotify business, but the company behind it was always soundtrack because my idea was always to go independent.

Um, but it was a good start.

Andrew: At some point you went fully independent. Can you tell me why and what that meant for the business?

Ola: the why is very simple. I mean, we, we did this in a very, um, an Orthodox way, right? We did a joint venture. We created a mutual product, Spotify business that we developed, but they sourced kind of the music to, and the initial licensing that gave me the opportunity to. Try it out in the market. And very quickly we became the leader in Sweden, Finland, and Norway, where we tested it.

So I call that the commercial proof of concept. And once that was done, I felt confident enough to say like, look, this is actually going to fly. So now let’s take the step of going totally independent, meaning that I needed to build out all the stuff that Spotify was helping me with myself and from that.

Um, so I funded that raised around in order to build up. The infrastructure of the product and do the licensing myself. And that is obviously that took me three and a half years. So we started off in like 2015, 16, and we rolled out soundtrack independently, 2018.

Andrew: Is it $11 million from Telia, Spotify and others?

Ola: Well today we’ve raised $50 million in different rounds. But at that point, yes, when we, when we took the, the, you know, we need to move away from home, that was, that was the $11 million. So it was going to pay for the rent and the initial Ikea furniture. Yes.

Andrew: Um, I imagine that the first customers were Nordic companies with multiple locations, like McDonald’s, am I right? Or not nor to companies, but companies that were located there. Right.

Ola: yeah, we were limited to, during this commercial proof of concept, we were limited to, you know, these small markets up here in the North, um, which is a pretty good thing because it’s kind of a nice test environment. And, but it was local chains, uh, brands that you wouldn’t know of, but also global brand brands with their Nordic presence.

Right. So it would be McDonald’s Norway, Finland, Sweden. Uh, that would be one customer. It would be chain X of the Swedish brand. It would be the local restaurant, entrepreneur and Stockholm with 25 restaurants. It will be the, your dad and Stockholm with maybe one shop or two shops. So just testing out the whole, the waters and, um, We just realized that everyone is buying music or kind of sourcing music in any way or the other.

And everyone wants obviously to source it through streaming. And we concluded that, okay, this has got to work both for big, medium and small businesses internationally as well.

Andrew: What was your process for getting them to sign up?

Ola: So that’s obviously a whole story of mistakes as well. Uh, talking about, go to market and kind of how we were to take this to the market. Cause we did a way too unfocused approach. We, we, we wanted to test everything. So we, um, Recruited a direct sales force. So, um, field sales as you guys call it. And then we also built an inside sales team.

We built a partner sales structure with resellers and we did online. So we did all of the above because we didn’t really know what was required and fast forward after learning. And you know, all of these mistakes. Very very tough mistakes. We’re now at a point where we found the go to market model where it’s online first, we’re actually selling online.

Primarily music is a self-service enabled, uh, product that’s proven in the consumer space. You can buy it as a business self-service and that’s obviously beautiful because it scales.

Andrew: but wait, uh, uh, business though, are they really looking online to see how they could buy music?

Ola: Well, it depends on what business, right? So, but what we realized was there’s a big market. There’s 128 million potential locations in my total addressable market. That’s a. 40 to $50 billion total market opportunity. It’s never going to be fully penetrated, but that’s kind of, it’s big and it’s, and it’s a very interesting marketplace.

Um, and then there’s the big Starbucks and then there’s your dad and everything and all of the above. Right. And so looking to, how do, where do I start was probably the better, um, question to ask myself, instead of saying, I could go for everything right now, uh, which we did. And we, we, we understood that you can sell through steaks and wine bottles in Las Vegas.

You can do that the old school way. But the cost of doing sales, uh, is way too high. If I would have a hundred dollars today, I would put all of it on the online channel because the online channel works a little bit like square or kind of, uh, the companies in the U S that go for kind of the SMB saws approach where you’re actually.

Looking to find the buyer online first that the buyer comes into the funnel through an online behavior, mostly through search and they start educating yourself and you pick them up into self-service onboarding, or you pick them up on an assistant onboarding through our, our customer success team, but then they go to self-service.

So. That that’s kind of the customer that’s mature enough to buy self service that I’m going for who that is. That could be either, you know, we have big companies with thousands of, of locations to actually accept that that are used to buying software as a service today in the U S they’re very mature buying stuff.

Um, you know,

Andrew: forgive me. I, I, the part that I’m not understanding is are they actually actively looking to buy music online? They are. And even though they have, at this point, I imagine the more established businesses have some kind of music solution. They still do research to see if they could find something else.

It’s not a set it and forget it type of deal.

Ola: Yeah. So that’s a good question. Um, let’s just take the existing market, right? Um, let’s say roughly the a hundred million locations out there playing music, and that’s pretty much in line with what it is according to Pilsen. Um, yeah, they’re doing either. They’re doing CDs either or to doing some type of satellite.

No, it’s they

Andrew: Wow. Yeah. CDs

Ola: doing some type of satellite.

Andrew: XM. They promote their, their business thing for a long

Ola: have a business offering in the U S that they’re limited to us the due to regulation, um, or they’re doing radio with commercials, um, or they’re doing some type of online radio thing, or, you know, there’s no streaming solution out there and that’s, what’s kind of driving the transition from a legacy platform to streaming.

So they’re searching for music streaming for my Italian restaurant.

Andrew: that just got, or they got rebranded. They’re now called mood media. They don’t do streaming where you can pick your own playlist and play it. No.

Ola: Look, that’s, you know, I’m here and not trying to bore people with kind of the complexity of building a music streaming service, but people tend to underestimate the complexity. It’s a $50 million investment and you need to get the, you need to set the, the content and the software and the technology, and that takes time and experience.

And it had not been done previously.

Andrew: Ah, I, you know what, you’re right. I had no idea. I didn’t, I guess, because I see services offered. I feel like that’s a solvable problem. It’s not that hard. You just throw some money at it, but I didn’t realize it was tens of millions of dollars to do. Wow. Okay. I got it. So then a business that just has music playing.

Just on the radio, someone else’s playlist essentially might be frustrated and go online to see, can I do this? Is there a Spotify version for business? Got it. And then they end up on your site. I would have thought that of all the things that you did, I would have thought that the partners would have worked out best.

Anyone who is selling point of sale to a store. You know, like the squares of the world. If someone’s smart enough to say, I don’t need a cash register, I need a square cash register. They’re opening up a new store or they’re changing up their store and they’re open to new ideas. That’s not what worked best.

It was online. Let them come.

Ola: channel is still very, um, new for us. So I, I, it, you know, ask me in a year, but I think that’s a very interesting route to market for us. For example, collaborations with Sonos, for example, collaborations with square, uh, or just installation companies that actually do the speakers cause they need speakers and we’re doing those.

Um, integrations as well right now, but look, it’s, we’re a small company. We’re 72 employees out of Stockholm and, uh, we’re doing, uh, you know, just above a million bucks a month right now. So we’re in the beginning of, of our trip and, and we have a pretty nice margin and what we’re doing. So. We we look at, okay, what’s the most logical channel right now to over invest in and the market is big enough.

The maturity is there to scale the online model. So I think in that I’m spending my, my kind of hours on figuring out how I can, you know, 10 X that intake before doing too broad of an effort.

Andrew: All right. That makes sense. I’m going to talk about my second sponsor and then I want to come back and ask you about the time that you told our producer. You actually got a stomach ache in this business because it was so difficult. My second sponsor is one Ola. I want you to just file away in the back of your head because you’re going to need it at some point.

You’re going to thank me for introducing you to them. It’s top talent for hiring developers. Every company like yours. If you’re hiring developers, you’re going to be stuck with one of two options. Either you go quick and you get a freelancer who does it, and doesn’t do a great job, but you need a fast, or you go to the other direction where you put intense research a lot of time and you put in and you really invest a large part of your company into finding the right match.

And that process is slow and it’s expensive and it distracts people. Well, top towels said there could be a better way. What if Ola needs to hire a developer and they go to top tower, top tile has a network of developers who are already the best pre-screen pre pre-vetted pre-tested and you say, here’s what we’re looking for.

And you challenge them to find the perfect ideal person to do it quickly. So that maybe in a couple of days, you get on a call with them, call meaning like a zoom like you and I are on. And then if you want to hire them, you can often get started with the person or even a team of developers while work together.

Who’ve done projects similar to what you’re hiring for. You can hire them and often get started within days. And that’s the top towel solution. This is why this company is not, they get very uptight. When I say how much they’re valued at they’re just a phenomenally successful company. This is why companies like yours companies like mine will and have hired from them.

I urge everyone who’s listening to me to go and at least start a conversation with them. Challenge top towel with your biggest problem that your team doesn’t have time to focus on. Challenge them to find someone who solved it, who could solve it, who could out-think everyone else on your team. And the way to do that is to go to top talent.com/mixergy it’s top isn’t top of the mountain, talent and talent.

T O P T a l.com/m I N E R G Y. Top towel.com/mixergy over half a decade old. Are they. They’ve been advertising here. I’m so proud that I’ve been working with them for that long. Do you remember what you told our producer? The stomach was from what part of the business?

Ola: Oh, uh, I’ve had a lot of stomach aches. Uh, so I don’t remember the exact stomach ache. I’m trying to remember. She was laughing. I can remember, but it was, it helped me out,

Andrew: It

Ola: which one?

Andrew: Um, you said I’m actually getting a stomach ache, just talking about the work and challenges that we were involved in restarting and relaunching. Uh, you were saying that you had to pivot nearly three years in. I had to get all the global licensing. I had to invent the business model for B2B streaming, just as it had to be invented for the business to consumer streaming and had to go.

I had to go all to all the labels and publishers and get them to harmonize on a business model, which was different than Spotify. I’m actually getting a stomach ache from thinking about it. You said. That challenge. I thought it was, I, I didn’t, it was easier because the methodology you’re talking to me about make sense, just get a few of them on board businesses.

Don’t care that they have all it. Wasn’t that easy.

Ola: Well, so little bit of context. We started off with, with Spotify business as we spoke about earlier. Right. Emery and, and I, we, we were successful and basically I, I drew it out the pay structure either Spotify buys us now. Um, or we go bust or we move away from home and fund the development of a completely independent music service again, meaning building all the infrastructure and doing all the licensing, which I had just done at beats and worked my ass off until fainting on planes.

That’s why I got a stomach ache because it was, you know, it was the revisiting of the impossible again, uh, standing up in front of the challenge of, okay, we got to go talk to all of these people again and get them to agree on a compromise model that would benefit everyone and that we could launch into the market and you need to get all of them someday down to smokey mountain range.

But at that first instance, understanding that here we go again. That’s when my. Stomach just turn on me.

Andrew: This model just makes so much fricking sense. I wish I could invest in the business. Here’s the problem that I, that I think we have, I feel like it takes so long for companies to go public. Then we get excited about their models. We can’t participate in it. I feel like now the business is so set for success.

Well, it probably, you told me before the interview started 2020 set for success. All the hard work we talked about finally hit. And then COVID hit. And a lot of clothes, a lot of stores were closed down. Right.

Ola: Yeah. Yeah. It’s um, I mean, 20, 20, 20, we were set. And just also for some context, during 2020, 19, we all saw. Complete governance meltdown in the company. And we just had at an F you know, and, and someone trying to take over the company. So I just fought through that one as well. It’s completely accepted and I’ve been able to fire my board, take over the, the chairman seat and CEO, which is not normal in Sweden.

Usually you have an independent chairman and kind of take control of the company. Again, I am. At parallel to that, we were able to develop the company, launched 74 markets, uh, during 24 months. And we were there. It’s like, I looked up from my desk and I was like, finally, you know, finally we’re here. And after the pivot from Spotify and everything, and I look at the news and there it is, COVID-19, we’re shutting down all of my markets.

Andrew: I’m assuming because you’re on a subscription basis that people didn’t cancel. Right. But they paused.

Ola: So, what we did was we scrambled for like two, three weeks and we rebuilt all our cancellation flows toward COVID discounts or COVID COVID pauses. And we were able to kind of drop that into the product quickly. And then obviously, because every, it was just like, All hands on deck, everything was like, save any type of, I thought, you know, basically it was over and, um, we were able to save, we lost over 30% of our top-line in like three weeks.

And we, the engine stopped, we took a direct hit and, but we scrambled and we were able to save around 80% of the, the outflow or the cancellations onto COVID related programs. Some people, you know, they, they went out of business. People were crying on the phone. Right. So it wasn’t me, you know, I had all the sympathy, everyone was in it together.

And, but, but we, we fought our way back in June that we hit rock bottom. And then we started crawling our way back in October. We were back on the same MRR as we were, when we got, when we started, then the second wave came. Right. So now we’re dealing with that.

Andrew: I feel like we’re going to get through this soon. It’s it’s going to be about a year of pain. Um, how are, how are you personally dealing with all this? What are you doing during this difficult time? How are you spending your time?

Ola: Well, look, once again, we. We live in a small, little comfortable, um, city in Stockholm, um, in Sweden, um, we’ve kept our schools open. My kids have been in school through the whole process, right or wrong. We can discuss over a bottle of wine, but that’s how we’ve dealt with it here. I’ve lived very close to the office.

We shut down the office. I put the whole team on furlough. Um, without support from Swiss government, which was very strong actually. So we were able to kind of fight through the financials, uh, was able to close around to take me, uh, into 2022. So I could kind of fly through the storm, um, with the confidence on my existing investors, which was great.

We were able to release the strategic. Product efforts that we wanted to do this year. So we’ve had a very interesting experience. I personally, you know, I’ve. I’ve had the opportunity to focus more than ever before, because you were forced, we were working on 40%, so we could only do the essentials. We had the office closed, like everyone else.

That was obviously an experiment that everyone’s gone through. And that’s an interesting experiment then, as everyone else is talking about the productivity we got out of it, and it’s just incredible. Uh, and, uh, And I think I I’ve took a half a step back and kind of, I’ve been through a lot and I’ve tried to do the best of it.

And as long as I can pay people’s payrolls and keep the team intact. Uh, and we’re, we’re kind of. Still progressing on our strategic vision. I’m super happy. Like I, I can deal with all the other stuff. Um, and now, as, as you said, I think actually I think we’re, we’re, we’re daring to see that, you know, take us through Q1, maybe into Q2 and through the summer and let’s go.

Andrew: Yeah, let’s go. By the way. I’m looking over your shoulder. You’ve got some papers up on the wall. There’s only one word that I could read. You just flipped your head around so fast to see. Is there anything secret? There’s only one word that I can read. It’s the word? Simplify. Underlined. I can’t even see if it’s one or two times.

That’s what we’re talking about, right?

Ola: Right. Um, that was not planned that’s uh, it was, no, it was, it was, I mean, honestly, I, I just wrote a little article about it and I’m not going to kind of take the whole story, but like laser focus was the religion I lived by before this. And moving into this, it, I had to take it even further and it’s a very interesting exercise.

Um, kind of like we only do the essential, like we said, we had three things that we said we’re going to do three things, nothing else. If you

Andrew: are the three

Ola: your car, if you’re opening a computer and it does not relate to these three things, you’re doing the wrong thing. Stop.

Andrew: What are the three things

Ola: The three things were one saving customers, uh, from, you know, falling out COVID.

So we had a very clear program for that. The second one was launching our tier three product soundtrack unlimited. The third thing was, uh, launching universal music at closing the deal with universal music, which was our last deal to be complete. Those three things, nothing else you might.

Andrew: what soundtrack unlimited,

Ola: It’s our on demand product.

It was up kind of, you know, our, our, uh, premium tier product. It’s the equivalent of Spotify enables you to do anything with your music, but on a, on a business license.

Andrew: where I can just go and click pick my own playlist. I also love that you can even take a playlist from Spotify and put it into soundtrack. That’s such a cool, like step, right? How many people who work for a company have a playlist that they really like now they get to incorporate it into

Ola: And it’s like, you’re legalizing it.

Andrew: it’s beautiful.

The government, the governance meltdown. What happened, who was trying to take over?

Ola: Well, um, it was, it was an interesting one as well. I thought I’ve seen it all right. But every year you kind of see something new. Uh, we came out of, um, 2018, rolling out full, full engines on kind of building out, you know, this global dominance we’re going to raise $40 million. Um, we had just kind of proven that we could launch the soundtrack.

Independent company and the pivot was done and everyone was on fire, but we have really bad dynamics, uh, and in the board and then in between certain owners and so forth. And when we came out of 2018, we, we crashed, um, because we had gone too broad, too many markets. And what I referred to as, when we were doing everything wrong in terms of go to market.

Um, so it was on us, right. And on me at the end of the day, as, as a CEO running the company, uh, So I had to, um, basically we, we failed raising money. Like we were on the table at a couple of big, high, high flying investors. And on the investment decisions, they were just like one vote away. It was one of those classical what we lost one, you know, we lost together and like, Now we lost a third we’re in real trouble.

So we crashed and, um, we had to, um, fund it by internal, you know, an internal, uh, round in order to kind of take us through. And I do. Basically take the company down from 120 people to below 70 myself very quickly and rearchitect everything. So just when I gotten through that in 2019, we were obviously underperforming because I had to change the whole company at the same time.

And, but there were people that were very close to the company that saw the huge opportunity and the intrinsic value and what we had built and the opportunity to take me out. And that’s what they tried to do. It was a couple of internal people.

Andrew: Is it, is it the co-founder Andrea’s

Ola: uh, no, no, he was not a part of that. It was, it was some other people,

Andrew: Investors

Ola: um, some of my advisors, some investors and a little bit of that,

Andrew: I just saw that Andrea has left the company at the, this year started as a different company last year. I thought maybe that was part of what was going

Ola: no, he, he, he, he and I were partners and he left when we crashed in 2018. So that was before this, this effort.

Andrew: Dude, it’s gotta be so painful that you’re onto something so much so sensible. And you’ve got this big vision and it just kept getting hit from side to side to side to side. What, what keeps you fired up about all this? It’s

Ola: I, you know, there’s a lot of passion course working with music and it’s all romantic and stuff, but like, look at how you’re reacting to it. It’s so damn obvious.

Andrew: so damn obvious.

Ola: And, and so it’s my brain that keeps me sane and my rational thinking and this business model is super interesting. And I mean, recurring revenue bottles are interesting, right?

B2B, recurring revenues are interesting. If you can add. Really high barriers to entry on that and a complete Greenfield market and three to four years of tech lead. And you are actually serving a market that is prepared to buy self service on a scalable model. You can build a diamond. Like I could. My vision is to build the most profitable music company in history, mankind, and scale

Andrew: Oh, you know what, and you do have the possibility to do it because we’ve seen in the consumer side, the deal that they did with music is just it’s. Honorous the only thing that could save them is by going away from music, into other audio content, where they don’t have these crazy deals, you don’t have the crazy deals.

And if one label drops out, you survive versus any one of these others, they lose a

Ola: My op ex is like way below a million dollars and we’re running 74 markets with basically a time limited monopoly.

Andrew: What’s under a million dollars

Ola: Uh, my, my op ex my, the cost base that I’m operating on is below a million dollars. Yeah. So it’s like a small, neat little seal team going in after you know, this big chunk and we can scale it.

That’s why also we’re, we’re kind of looking away from some of the opportunities and direct sales and stuff like that. We’re just going in on, on scalability. First. We might build that out later, but now I’m laser focused on executing this.

Andrew: Price is tiny 50 bucks a month, a hundred bucks a month is even small for, for music. If they don’t have to pick it all themselves, if they get some control over it and some help guiding them into getting it right, it makes a world of difference. I think about there’s this fricking grocery store in San Francisco, my wife and I, we were cycling down Valencia street.

When we first moved here, she said, I got to go see the grocery store. I go to the grocery store. It has a few specialty items, which are really nice, but it also has vibe. And part of the vibe is the woman who works there just has interesting eclectic taste in music. You go in there, it feels different. I don’t think anyone walks in and goes, I like this place because of the music.

But you like it better because the music is there. And I know it because she left about a year ago. It doesn’t feel the same. The music is not the same. It’s a grocery store. It’s a nicer grocery store. You might go a little bit out of your way to go there, but it lost a lot of something.

Ola: Imagine the wrong music now instead like walking in there and this there’s terrible music playing, then it’s all destroyed. Right? You’re

Andrew: it’s not, it’s not easy to find the right music, frankly. I get people to come over from our dinner party in my house or forget dinner party, my wife and I will sit on the couch. I want to get some music going. It’s hard to find something that she’s going to vibe with, that I’m going to vibe with. But it does make a big difference, uh, for the experience I fricking love this company, soundtrack, soundtrack your brand.

I don’t even know what the hell you’re doing here, but I’m grateful to you for being in here. I can’t imagine there are a lot of people are going to go. I’m going to sign up. I think they’re going to be a lot of people like me going, dammit. I wish I’d come up with this idea. And even if I would have there’s no nothing I could do about it because it’s such a pain in the ass to do it.

You’ve got the experience. You’ve got the team now you’ve got the agreements. This is a killer fricking business. All right. It soundtrack your brand.com, right?

Ola: correct. Or soundtrack thought FM, Hey, it’s 10 o’clock here. The kids are asleep. Like, what should I, what should I be doing? I’m talking to you on mixer dates.

Andrew: Nothing better. I appreciate it.

Ola: There’s nothing better to do. I got nothing better to pitch dark outside.

Andrew: Thanks so much. Thanks for doing this. I want to thank the two sponsors who made this interview happen. If you’re, if you’re hiring a team of people, go to gusto.com/mixergy. Let you try for three months for free. And I urge anyone who’s hiring a developer to go to top towel.com, uh, slash Mixergy. Alright, and it soundtrack.fm.

I didn’t realize that’s what it was too. I’m going to go check that out.

Ola: soundtrack. Your brand.com is the correct URL, but we got us FM IO, Oliver.

Andrew: Good name for a company. Thanks.

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