On Being An Entrepreneur – Ariel Hyatt Interviews Derek Sivers
TL;DR Quick Summary In this interview, CD Baby founder Derek Sivers shares core entrepreneurial lessons for musicians and music industry professionals. He discusses transitioning from CD Baby to his virtual assistant venture, MuckWork, highlighting the importance of adaptability, mastering delegation through outsourcing, continuous product improvement, and focusing strictly on tasks that spark excitement. TL;DR Quick Summary"Anything You Want - 40 Lessons for a New Kind of Entrepreneur"Problem #1:Problem #2:Problem #3: Being Derek Sivers’ best friend is a blessing. He’s my friend who: Helped me create Cyber PR® In fact the design of the Cyber PR® campaigns and software were his idea. Always cheers me up and talks me through whenever I think that I can’t do something Is the first call on my birthday This list can go on for pages but I will stop here and say Congratulations Derek on your new book! "Anything You Want - 40 Lessons for a New Kind of Entrepreneur" And speaking of Entrepreneur, I interviewed him in depth on just this subject… It’s long but it is a wonderful deep dive into all things Derek… Enjoy! See the book announcement here: http://sivers.org/ayw And the book page here: http://sivers.org/a Ariel Hyatt & Derek Sivers... On Being An Entrepreneur Derek Sivers. Derek founded CD Baby in 1997, and he invented what today is the distribution paradigm model for all independent musicians. Before CD Baby there was no way for independent musicians to get distribution without a record deal. Derek left CD Baby in 2008 to start a new business to help musicians called MuckWork. He had reached a point where he felt like CD Baby could function without him and he had this new idea that he could not hold at bay. Derek often speaks to musicians about the state of the music business, and how to sell and market themselves. This is a rare interview because it shows Derek’s business-owner side and it addresses thoughts for people who want to get into the business and not musicians. Entrepreneurs are by definition problem solvers and Derek had a double-sided good fortune. As a musician he was frustrated by the fact that he could not get distribution for his own CDs. Because of personal experience, he identified a few major problems and he solved them with CD Baby. Problem #1: Musicians could not get distributed anywhere unless they were signed. He solved this issue it by providing artists with an online distribution channel that allowed artists to accept credit cards Problem #2: Distributors were only paying their artists 2-4 times a year and holding up valuable capital that was necessary for artists to use to self-fund their own development. Derek created a system that paid artists once a week no matter how many or how fee CDs they had sold which was revolutionary for artists who were not used to getting paid so regularly and fast. Problem #3: Musicians are inherently lazy. Ariel: Can you give us the Cliff Note version of CD Baby? Derek: Actually, I’ve never told anybody this story. There was one artist I knew from Finland who was living in New York City and it wasn’t going well because a few weeks after I charged the cards, his customers started contacting me, saying they didn’t receive his CD. So, I contacted the artist from Finland and he said, “Oh, yeah, sorry, we forgot.” Oh man. Now I was on the hook because he was too busy to be responsible. So, I said, okay, how about this? I’m glad to continue processing your payments for you, but please mail me your CDs and I’ll take care of the shipping, too. That way, the minute the card is charged, the CD will be sent out. That’s really what turned into CD Baby. So, I went into this thing thinking it was basically going to be like what Paypal became. Then it turned into a store. So Derek was running a full fledged online record store, and then Steve Jobs asked if we could be a digital distributor to iTunes and I said okay, so then we turned into a distributor. Even if you look at just CD Baby, it changed course a few times in its history. Ariel: We have already touched on the CD Baby. So, I wanted to have you not tell that story. What I would love for you to talk about is your new company, MuckWork that you are just now starting. One classic problem entrepreneurs have is they tend to bore easily so they jump around from one idea to the next sometimes prematurely. A successful entrepreneur needs to understand the concept of reinvention. The basic premise of great entrepreneurs is they must know how to adapt. This is a major trait of every person who was interviewed for this book. Only one person I interviewed is doing exactly what he was doing when he started. Derek: OK. I want to start with a quote. I like this quote because it alludes to adaptability, which is what we are talking about. “The illiterates of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.” - Alvin Toffler The MuckWork story so far is: Every musician feels overwhelmed with all the things they should be doing and all of the solutions that are supposedly making their lives easier. Everywhere online they’re told what to do. Dozens of new companies that are all making them useful tools, crop up every single day and but nobody out there is saying, “we’ll do it all for you”. The mindset of Web 2.0 companies is to find programming solutions for everybody’s problems. So I felt like doing the contrarian’s thing, which is to find people who can operate the implementation of creating solutions to these problems. It satisfies me business-wise because it’s the opposite of what everybody else is doing, but more importantly it’s satisfying the musicians’ need to have somebody take care of this overwhelming stuff for them. Ariel: So, MuckWork is taking outsourcing to a new level for musicians. I think a lot of times musicians don’t even think about outsourcing. What led you to this? Derek: Outsourcing is a hard mindset to get into. I first tried it after reading “The Four-Hour Work Week” in summer, 2007, where Tim Ferris describes his experience and his advice for using remote assistants, which in his philosophy frees up your precious time so that you can focus n the activities that make you money. I thought: “This is great; I have to try this.” So I started working with a few companies in India, handing them random tasks to get the experience of what the process of outsourcing is like. Next, I started noticing that whenever I found myself doing something really uncreative, I’d think, “hmm, couldn’t somebody else do this for me”, so that I could get back to doing more valuable and creative stuff that only I can do. Any time I found myself researching online, for anything, I would stop myself and say, “oh, let me instead spend five minutes describing this task and have somebody else do it for three hours and I can get back to programming, and building my new business.” After doing this for a few months, I was thrilled with it and I wanted to go tell every musician I knew about this. “This is great. You can have other people do all of your boring stuff like trade marking your band’s name, copywriting your songs, or updating your website.” I realized that the only reason I was able to do this is that I had years of management experience with CD Baby employees. I think most musicians I knew would call up India and say, “hey, I’ve got a gig booked in Chicago on October 10th and St. Louis on October 20th; can you fill in some dates for me in between?” The virtual assistant in Bangalore, India, would say, “I’m sorry, what do you need us to do?” To be successful at outsourcing you have to micro manage and delegate. An outsourcing company is staffed with competent college graduates, and they can do great work for you, but you have to tell them exactly what to do. You can’t just name a vague goal and expect them to fill in the 120 steps in between. You have to give them all 120 steps. That was the last ingredient to realizing that MuckWork would be really valuable, was to create a remote virtual assistant firm that already had the knowledge to turn musicians’ ambiguous requests into very specific tasks that could be done affordably by people half way around the globe. Running a small business is all about reinventing and nothing turns out like you thought. When I started CD Baby, it was really just supposed to function like Paypal, because I started CD Baby before Paypal existed. It was 1997 and I’d spent a lot of money to get a credit card processing machine and a merchant account. It was over $1,000 in setup fees and it was months of red tape and at the end of all that hard work, I had a credit card merchant account so I could accept Visa, MasterCard, AmEx, and Discover. It was so hard that I told some of my friends, if they wanted to use my account they were welcome to. It was never meant to be a store. It was just meant to be a credit card processing backend so that my friends could use my credit card merchant account to accept credit cards. That was the whole point. To me, the entrepreneur mindset is jumping in to do whatever you think you would have value. Whenever you see somebody needs something or there’s somebody willing to pay for something, you just say yes. This advice applies to everybody graduating with a degree in music business or anybody that wants to get into music business. Being entrepreneurial means you just keep your ears open for opportunities anywhere that you think you can help people and you jump in and help. You can’t just do something casually and expect big results. You don’t get big results without big actions. Ariel: The definition of an entrepreneur is someone who solves problems for a profit. I this is something to keep in mind when you’re striking out on your own and figuring out what you’re going to do in the music business. An A&R man doesn’t solve problems these days. That’s a job that’s now in the history books. But I can tell you, from someone who sits behind a desk and takes musicians calls all day long, a booking agent is someone who solves tremendous problems. A manager of online communities is a person who solves problems. There are always new problems cropping up in the music business. What Derek has done with MuckWork is he has realized a new problem: Musicians are overwhelmed with too much stuff. Derek: Somebody reading this might like to work at a large company within the music business. Even in those situations, It’s important to still think of yourself as an entrepreneur constantly, that you are your own one-person company out to solve problems. If the problem at Warner Music is they need somebody handing their royalty licensing, then you can be a one-person in the company that will handle that for them, but you always have to think of yourself as a problem solver. What you might be learning at your current job is some knowledge that you’re gaining in order help you go solve other problems in the future. The skills I learned doing the computer programming in the early days of CD Baby have helped me solve other problems for people as my career progressed. As your skills increase, you’re able to solve more problems for more people. Ariel: What is the most important skill that you’ve learned or you’ve needed to learn in order to have success in your music business career? Derek: People communication skills are the single most important thing I’ve ever learned. Read “How to Win Friends and Influence People”. It’s one of the best books ever written on how to be considerate. It really puts you into the mindset of thinking of things from the other person’s point of view, which makes all the difference in the world in how you communicate. You will find that how you communicate means everything and it can either open all the doors or shut all the doors, depending on how well you do it. When I moved to New York City when I was 20 and got my job at Warner Brothers and until then I’d thought of the music business as this big, giant, intimidating thing, as if record labels were like the Death Star or something. Then once you’re in it, though, you realize that it’s all just people. The people running the promotions department at Sony Records, they were just cool kids like me. They were like 24 years old, running promotions, sending out things. The people doing A&R were actually just like 30-year-old music fans that were actually cool people that you realized you had a lot in common with. As a musician, I found out I had more in common with all these people that make up record labels than I did with my friends from high school that were now managers at the telecom company. It was so enlightening, that day that I realized, oh my god, it’s all just a bunch of young people like me running this entire music industry that used to be so intimidating. Now that I’m in it, it is not intimidating at all. Talk about the How to Win Friends and Influence People thing, once you started of thinking of things from the other person’s point of view, you realize that the woman who works reception at Rolling Stone Magazine is just a woman who lives in Brooklyn, who has a job, who just has to show up and get the phone calls answered and not get fired. Once you realize what it is to be her, then it’s not as hard to call Rolling Stone Magazine. Once you start to realize what it is to be a writer for Rolling Stone and what it is to be them and all of a sudden that’s not intimidating. You realize what it is to be somebody who’s booking a club on Bleeker Street. Ariel: Do you have a favorite book or movie that you think all people trying to break into the music business should read? Derek: If you really fancy yourself an entrepreneur, I recommend reading “Think and Grow Rich” by Napoleon Hill. Even though it was written in the 1930s, it’s the foundation for a thousand other self-help books that have come since. It really gets you into that mindset that money is not some finite thing like gold coins, that if you have some that means you took them from somebody else. Money can just be invented out of nothing, because it’s value that you can just invent from doing things. You don’t have to think about how you can get somebody else’s money. It’s about how you can create things that didn’t used to exist the day before and create value out of your imagination. The key word in the title “Think and Grow Rich” is the first word. It’s all about telling you that getting rich isn’t just about being a laborer and moving things around. It’s about thinking, inventing, and creating things in your head. “How to Win Friends and Influence People” by Dale Carnegie to me just means everything. This entire industry, all of a sudden, is the most un-intimidating, friendly… Maybe not friendly, but at least un-intimidating place once you realize it’s all just people like you that are just doing their jobs. You look at it from their point of view and all of a sudden the entire way that you navigate things is just, with every person you encounter, you think about why are they doing what they’re doing and how can you make their life easier while still getting what you want. Voila, that’s how you navigate your way through the industry. Read More READ MORE
