A New Sector
Entrepreneurship has a hold on me. I paid the first down payment on a music production studio last week. Words I thought I would never type. I don’t know anything about the music production industry at all, I’m just a voracious end consumer. Like eating a sausage, I’ve never thought much about the production process or indeed have I wanted to know.
I hasten to add that the business plan is a bit loose. There is one modest income stream to come in the first year, but it will only cover 10% of the outgoing. It’s a case of finding some bread and butter production work to pay some bills and then finding promising new artists and hoping one or more will come good somewhere down the road. Costs are already almost twice the original estimate and it’s coming out of my pocket.
Thankfully I have two business partners, one a young producer with a lot of potential and the other an experienced owner of a small independent music label. The producer has been thinking about setting up his own studio for a while. The music sector guy has mentored and supported the former along the way, believing he has great potential. One steeped in entrepreneurship, one heavily creative.
This isn’t a business with predictable revenues. One of my now partners had a big success some years ago and after a time the artist left for a much bigger label. This isn’t like a commercial business where you look to compound revenue growth of a product every year. The product, a voice and or instrument, has legs and as such it can walk away.
But here I am. All my years in business telling me this is probably a decent way to burn a lot of cash. I’m sure there’s a line that starts “How do you make a million in the music industry?” I’ll tell you why I’m here. I believe in the core people. Rationally, there is no reason to be here.
A producer in his late twenties who has been very self sufficient and has consistently developed his craft. Not really a whimsical type waiting for the big track and the big track only; he can turn out some great new music from new artists, but also know it’s good to make soundtracks for commercials or computer games to pay the bills. He knows how to survive and that’s crucial for any entrepreneur, it always gets tough and the plan always needs to flex. I like the mix of resourcefulness and talent.
A New Team
A music record label guy who has already built a business and has seen success and tough times along the way. Most notably for me, he has done a great mentoring job with the producer. The duo trust each other enough to not to have had a contract in the many years they have worked together. The producer wanted the record label guy to come along to the point that he gave up a slice of his equity to get him involved. That’s a relationship built on real foundations and one which will weather the inevitable storms.
Then me. I looked at these two and thought I could trust them. I’ve had all the lectures in the past about only doing business if you really understand the sector, which I’m now clearly ignoring. I like to make data driven decisions and I’m now punting on something which could boom, bust or trickle along in the middle. Rationally I shouldn’t be here, that’s the second time I have said that. But I like the people, I like how they have approached their careers to date, I like the way they work.
I like the way they have not only gone along with getting good accountants and lawyers, they have encouraged it. Sound foundations are key to me, I have no desire to involve myself in a poorly structured venture. I like the way we only had to meet twice to shake hands and that any meetings and communications are short, sharp and direct. Risky venture, but the players have the right attitudes and approach.
Entrepreneurship Is Risk
Entrepreneurship is about risk. You can’t inject risk-free resource into a venture and get a given return. In this case my risk is limited within my own parameters. There’s a greater than evens chance all the equity is lost. But there’s also a chance that it turns into a good, possibly great business. Entertainment is like that, find the right artist and then the public find the right artist and off you go. To those of you thinking this is foolish; do you think a biotech business is any less risky?
Of course there’s the excitement of it. Entrepreneurship is always exciting. Creating something from scratch, or taking something small and building it into a decent venture. As importantly, allowing entrepreneurs to see their own idea and passion come to life. I always say that I admire everyone who starts a business and I believe that. I’m in a fortunate position where my own efforts mean I can support a team in a small way and hopefully create something. That never gets old. Never.
Also published on Medium.