 What's up everybody it's Brain Man Sean and I'm back with another episode of Culture Shock where we talk music, business and pop culture from a different perspective and today I want to start with a story because in 2007 a company by the name of Get Satisfaction was started by Lane Becker. Now eight years later, Lane Becker's company was acquired and the last evaluation was $50 million. You would think Lane Becker would be excited about this but he literally vomited. When this occurred, why is that? He made no money and when I say he made no money I'm talking about zero. Him and his early investors. How did this happen? We will get into that but that's the premise of this video. The fact that artists and founders are so much alike. A lot of times we actually over demonize the music industry not realizing that this is just how business goes if you don't handle your business and I want to contrast the differences between the two, actually more of the similarities between the two. Hopefully you'll be able to transfer the knowledge, see how it applies and at the end of the day become a better business person in your own particular area. So starting with the artist and the founder, those are the same person in this example and similar to the artist, their first round of funding where they get their first money is either themselves when they're starting their company. Maybe they might be hitting up friends and family. There's literally a friends and family round that people use colloquially a lot because they're hitting up calling everybody in the family asking for money trying to save money for the business or angel investors which is kind of somewhat of a next level. These are people who will invest they have money but they're not truly those venture capitalists which is the next level. It's the same thing for an artist, you're either funding it yourself or you're scraping around asking people you know. The next level is when things really starts to get tricky though. The venture capitalists and the record labels. So the venture capitalists obviously the founder side we're thinking about tech and a lot of the other industries and then the record label side because both of these people can be helpful alright but at the same time these people are no one to play with. So leverage is important for both companies on both sides. We hear so much about artists needing to build leverage if they really want to get a deal where they're not screwed with a label but the same thing goes when it comes to business in general. If you've watched any episodes of Shark Tank what do you see? What are yourselves? That's one of the main things they're going to ask. They might entertain all the other stuff but before they start investing they're like yo what are the sales and it might have been this great pitch to where it was so bought in but once they hear they're zero sales they're like whoa same thing for an artist right? Why does that make sense because if anybody's investing in you they're investing to get a return and their return has to answer to what actually happens with the investment right? Do you have fans? Can you make the money back? Is your product sellable to people who actually want your product? Can you make the money back? That's the end question and that doesn't mean that nobody appreciates art. That doesn't mean that nobody appreciates somebody needing a chance and all that stuff. It just means if you're an investor you expect your money back so you have to analyze not based on the heart and what I believe is awesome music and all that stuff you have to analyze on will this vehicle bring back my money? You put yourself in a better position to have some sort of leverage point blank period and if we look at Shark Tank again as another example you'll see right that people get some pretty bad deals at times or offers right some pretty aggressive offers from the investors to take a lot of control from the people if they don't believe that the person is right. So you'll see a situation where literally Mark Cuban or somebody will say hey I'm going to just give you this much money but I want the whole business because I don't think you're the right person to run it. The less sales you have the less likely people will want it at all or the more they'll want to control your situation point blank. So leverage now on the founder side you might have customers or users and on the artist side of course you have fans and in the same way as an artist you're looking for your first fans right and you're getting your early product out there the early version of yourself out there businesses are doing the same right they have a amenable viable product right the product that can find and connect with the fans who needed the most or the users who needed the most and they're trying to connect with those people so they can get some feedback and some money that gives them a tomorrow so they can build and continue to get another tomorrow and another tomorrow until they get to a point where they're a full-blown business that can truly self-sustained that's the same thing that you're trying to do as an artist right you're trying to build fans and build fans until they can start to fund tomorrow and then fund another tomorrow until you have a lot of tomorrow's and your tomorrow's become weeks months and years and you have a full-on career it's the same path business in so many ways especially principally is business so that core product and your core fan base those are the things that start to relate right the core product with the core customers and then the core music like that initial that niche type music not just your commercial stuff and then the core fan base around that in both of these this is when it gets more interesting and something that has to be watched out for and that is the fact that there is core product on both ends you have the type of music viewers that your core fan base loves and a company has its core product right that thing that solves the initial need but both have a tendency to get caught up in features so for a product in a company features are something that are additional to the main thing that matters and sometimes the features are so shiny that we're like yo I'm gonna chase this and this is gonna change the world and this is what they're gonna want they're gonna love me but the thing fails in the same way the iPad is kind of a feature of a product right when we're thinking about a bigger company it's an extended brand line that doesn't necessarily have the need of the phone and it doesn't have the need of the Mac in itself it's that middle ground but you can do the same thing with a specific product let's say my Mac all of a sudden had a heat pad that was warm because it would be cold on outside right if the mouse like I touched it and all of a sudden the computer got warm I could put my hand on it yeah that's nice but I can't put my entire direction of my company on that because it's not the core product even though it's cool companies get lost on that that sounds like an obvious example but companies get lost on that all the time and artists do something similar when they try to get caught up in this whole diversity thing and I want to do all this stuff but forget what my core fan base loves me for and it's nice you are a person you should be able to express yourself and get all these other things out but you also when we're talking about it from a business and have to be able to answer to who your core fan base is and what's going to keep you in there and then last but not least this is where we get back to get satisfaction that acquisition and how the founder had zero dollars losing control all right and there's two ways to look at it first you have the lose control that happens with a lot of founders and the business starts to go down we can even look at Steve Jobs even though you know arguably he wasn't completely ready to even take it to the space that it eventually became but the the whole idea of losing the DNA of your company losing the DNA of your company those founders losing control because you decide I'm going to put a CEO in this place a seasoned CEO in this place because the founder doesn't have that experience and I as an investor want to make sure that my investment is protected I don't want to trust this newbie with it that happens to a lot of founders they literally get booted just for season CEO now same thing happens with artists as well though when you get in label situations and you get all these you know minds in the pot in that situation the artist is losing creative control so you'll hear a lot of artists say man I listen to too many people or I allowed other people to really take on my project when it wasn't coming for me and now because I lost that creative control my product became something that it shouldn't have and the companies get affected the same way they go down because the consumers they feel it but then the last level of losing control that I'm referring to is obviously the fact that this founder lost control of their business and how did they lose control of their business they lost control of their business through investments right because these people start to own more and more of your business in the same way your masters might be owned if you're an artist right or whatever your IP right your your image can literally be owned as an artist this same thing essentially happened to this man in Lane Becker's story you can actually see a combination of all the things that went wrong because in 2010 three years after him founding the company he got pushed out three years after the company sold five years later but it didn't just sell because it was doing well it's sold because it was either going out of business or it was going to be acquired there was something called a fire sale which means look we somebody buyers or out of here we don't really have a choice and why was it in that position maybe some of that could be contributed to not having that initial creative energy that person that was supposed to be there in the same way the artist should be involved in their project in that creative process they lost that DNA when they lost the founder that could play a large part into that situation and then last but not least though Becker actually admitted to not being honest with himself and that being a large portion of why he lost control and what I mean by that is think about as an artist when an artist wants to happen to a deal knowing they're not in the position to be in control of their career knowing that they don't have a true fan base that reality is not there however they allow themselves to think and feel that they're bigger than they are or they allow other people to pump themselves up to feel that way because the label or whoever you're trying to sign to is going to pump you up and make you feel that way they allow that to happen and then you put yourself in a aggressive financial situation that you can't account for right you take a bigger investment that you're not going to be able to pay back it's an artist taking a huge events when they know that their fan base isn't in place or just taking more money that you need in general where you can one operate by yourself or maybe you just need a little bit to get you by but instead you want to go for the big pie when you're not ready to even take that bite it's something to consider because again all these problems exist in all types of business the principles are always there is just if you notice them or not and again no matter what type of business you're not going to win doing bad business that just is how the game is going to be set up you can't expect anybody that's going to be putting money into you to look at you purely for who you are and and the amazingness of the product at the end of the day they have to make their money back that's their goal and then you have your particular goals but once you take their money you also have to answer to their goals as well because you have a fiduciary responsibility that's just something to consider please please of course start to look at other forms of business to really inform how you can look at music and and move throughout your music career and people outside of you know music look at music because music is helpful that their situations and analogies are all there I would like to know what you guys think do you guys see similarity between tech founders and artists do you guys see any other business celebrities or have any other stories anything that's interesting to tell and other than that this is yet another episode of culture shock where we talk music business and pop culture from a different perspective you know what to do hit that subscribe button