When Billie Eilish uploaded her song ‘Ocean Eyes’ to SoundCloud at the ripe old age of 13, she had no idea it would ignite her career. Now, she sits atop the charts and is considered music royalty.
But as Jeff Ponchick, VP and Head of Repost at SoundCloud will tell you, the service is more than just another uploading platform. With a mission to help artists quit their day jobs and pursue music full-time, SoundCloud has become the largest community of artists, bands, podcasters and creators out there.
LA Startups talked to Jeff about this evolution in the music space, the challenges of starting something new, and how you too can be a rockstar.
LA Startups (LAS): Okay, tell us the origin story. How did you end up at SoundCloud?
Jeff Ponchick (JP): I was actually a video editor in the television industry. I used to edit for reality TV. Eventually, I ended up at a startup called Fullscreen, which was a multichannel YouTube network. I was very early there, and I initially started in a production editing role to make YouTube content.
Fullscreen grew and eventually was acquired, and the mandate then was: Make money for these creators off of YouTube. So I was working with some of the largest YouTube talents in the world, effectively making better content. That’s when I realized I had a knack for dealing with talent.
This led to a talent management role on the music partnership side, and that’s how I fell into the music industry and became an expert working with some of the largest influencers in the music space.
LAS: But what prompted the next step? How did you move from being a talent manager into launching a tech startup?
JP: Frankly, I was just blown away by how much money was slipping through the cracks for my clients. I like to joke that you practically have to be a lawyer to understand how to pick up every penny in the music industry because it is so complicated and the tech is so outdated. I saw a massive pain point for artists that I wanted to solve.
So at the time, in 2015, SoundCloud was rolling out monetization for the first time ever. So you could put an advertisement in front of your song and your channel could generate revenue. And there was a backend rights clearance process associated with all that. Super sexy stuff.
We built this portal where you musicians could log in, connect your SoundCloud channel, and it would bring in your tracks. You’d enter in the rights info, things like who wrote the song, who owns what percentage of what, and we’d register that for you. That was the technology piece that allowed people to generate revenue from their content on SoundCloud. That didn’t exist when we built it, so it just completely exploded, and Repost quickly became one of the largest rights holders on SoundCloud. It was us and the major labels and rights holders and we were two guys in a cubicle. A wild ride and great times.
Then we tacked on YouTube services. We tacked on Spotify services, which led us to pivot into a digital distributor. We became experts at finding artists on SoundCloud and distributing them off the Repost platform.
Then SoundCloud acquired the business almost exactly a year ago, in mid-June 2019.
LAS: You touched on it, but what did SoundCloud see in you?
JP: Together, we saw a huge content opportunity. There’s so much music on SoundCloud that isn’t on Spotify or Pandora. So we asked, how can we be the ones to shepherd the content there and build an at scale distribution product where anyone can pay a SaaS fee and get distributed everywhere. This would lead of course to more income for artists.
Another aspect we did was to create a label service and marketing division. So for the artists who were really blowing up and starting to see commercial success, and getting to that point where they can actually quit their day job and make music full time, we provided more services to provide value. We call this Creator Services internally, things like a $10 million accelerator fund for musicians to help put even more money into artist’s pockets. It’s more white-glove support, release planning, and making sure that artists take the correct next step in their career.
So we were building value, one step at a time.
LAS: Let’s not gloss over the ‘two guys in a cubicle’ part of the story. Can you go back and tell us more about that?
JP: Sure. The two guys in the cubicle were myself and Joey Mason, who’s my technical co-founder. I started the business, I really started it from my apartment before Joey even came on. I was doing all these registrations manually with spreadsheets and calling people and, you know, it was just 13 hours a day of cold emails and sales. Getting artists interested in the Repost service. None of it was automated, and it got to this point where there just weren’t enough hours in the day to help all of the musicians with the amount of inbound requests happening.
And so that’s where Joey came in. We went to Amplify LA and they were the first money in. They loved us because I was able to show them a demand curve already in place. A proof of concept.
I remember the person we pitched looking at me and saying ‘this is better than 90% of the pitches we get, which is usually just someone with an idea and a pitch deck.’ We actually had a demand for what we built.
So they invested. Then yet we spent a year in that cubicle in that office in Venice and rolled out a platform that could scale.
LAS: What were your roles at the time?
JP: I’m a very sales focused founder. So I was bringing in the artists, and I was also the expert on the rights and content ops side. And Joey is an incredibly talented engineer and leader, so we worked together closely at the beginning of what would be productized. It was a great fit.
LAS: How did you find Joey?
JP: Okay, so this is not how it usually happens but Joey and I actually met at a bar. I had this idea and he liked it. But that doesn’t mean we quit our day jobs, instead, we took it one day at a time. At first, we worked together in our free time to get to know one another and see how we worked together. It just worked. The takeaway from that is to take your time finding the right person to partner with. Don’t rush it.
LAS: So Amplify LA invested?
JP: We raised half a million dollars in total across our first year as a business, and Amplify was the first money in. We got to profitability in our first year, just focusing on making the best product and making the business model work. As a result, we owned a lot more of our company when it sold, and we didn’t have a board to answer to and we could choose what we wanted to do next.
When people think of VC money, I think a lot of people get stars in their eyes. VC money always has a price and I think a lot of people just don’t quite understand what that price is until it’s too late. Be intelligent about it.
LAS: It also sounds like Amplify LA was smart money?
JP: Our mission was to help musicians make a living through their audiences online. But we had to put our money where our mouth was. We had to prove we could build a profitable business ourselves, a real business in music, which sounded almost impossible at the time. But we worked hard, and by the time we approached Amplify LA, we had a story to tell. We had a good problem, which was things were going too well and we couldn’t keep up.
So they provided more than money. They provided infrastructure, people we could talk to about business, all the stuff we needed to take that next step and succeed. And the office blocks away from the beach was nice too.
LAS: How did Billie Eilish help raise awareness about SoundCloud?
JP: These artists like Billie Eilish, Post Malone, Lil Uzi, Chance the Rapper, some of the biggest acts today got their start on SoundCloud. So it’s just a great case study, right? It means we have the platform for new up and coming musicians to connect with audiences and test their music, empower creators to get heard and take that next step. It’s powerful, and their success has led to our success, and vice-versa.
TikTok also has an incredible power to amplify and get music heard for us. Basically anytime something goes viral you see a huge correlation into Apple and Spotify plays, and the result is a lot more revenue for the creator. So, you know, for us on the marketing side, we’re certainly starting to put more dollars towards seeding our content through TikTok and helping artists see more success there. We’re all battling for attention, and platforms like ours can really help.
LAS: What has your biggest challenge been recently?
JP: I think it’s certainly interesting and challenging leading a team given what’s going on right now. SoundCloud is headquartered in Berlin. And New York. So us being the LA SoundCloud team, more or less we’ve already had to work remotely to connect into the other business units. So I think we’re kind of ahead there.
But I was particularly surprised at how well the team was able to move to a fully remote workforce. That said, there are the stresses of working from home, and this has its challenges too. Not everyone has an optimal work from home space, or maybe they have kids. We want to make sure we’re there for people emotionally and just make sure we’re kind to each other. Helping each other through this is what’s important right now.
For our artists, we launched this $10 million advance fund as well as a ton of COVID related support initiatives. I actually personally led the partnership at Twitch that helps musicians get into the Twitch affiliate program so they can monetize their live streams. We’re taking a huge portion of our ad inventory and just giving that away to artists to get their content exposure and help boost their audience in these difficult times.
LAS: What are our goals moving forward for the year?
JP: I think we’re always trying to answer the question about how to optimize SoundCloud so that it truly becomes your command portal where artists can build an audience, manage their career, and make more money. That’s something I’m passionate about. Then there’s developing deeper relationships with complementary platforms like Spotify and YouTube. These are platforms that serve listeners and creators of every type and background, and we complement each other.
LAS: What advice do you have for the person out there bootstrapping a startup?
JP: Start with what you know. I see so many people who are working at an eCommerce company, for example, but want to start a film production company. Or vice-versa, right? Maybe you can be successful in that, but it’s going to be harder. Focus on what you know and what you’re good at.
Then it really boils down to your ability to compartmentalize and handle stress. That in itself is a learning curve. You have to get used to those first couples of years where it feels like anything that goes wrong could kill your business because you could be right. You just gotta be tough and get through it. it’s not for everyone.
One book I recommend is by Bill Campbell called ‘The Trillion Dollar Coach.’ He was the executive coach for people like Steve Jobs and Eric Schmidt, and this is his playbook on coaching executives and managers. He was really ahead of his time in investing in things like culture, giving your employees more accountability, things like that. It’s a great read for anyone who wants to learn about business.
When I started out, I didn’t feel like I had a true sense of ownership. But when I started Repost, things changed. I changed, especially as more and more people started telling me how I had personally started their music career and changed their lives. That they couldn’t have done it without me. That is the best feeling in the world, and I have very much found my purpose and now I’m just obsessed with doing more.
Ultimately, I’m in the music industry to help people. When I realized that, everything became really clear. Who cares about the way it was done before or the way the music industry used to be structured? If you just help people, you’ll be successful. That is what has worked for me.