UK, The Music Industry & Tech: Challenges, Successes, Reality & Hype
There’s no question that technology — initially perceived to be a blood-sucking albatross hanging over the music industry and draining it of all life — has taken on the persona of savior, savant and the all-powerful Oz. With that in mind, TMV’s UK Editor Laura Thorne launches an occasional series looking at tech startups within the music industry or media sector, to discover what lies beneath in terms of challenges, successes, reality and hype. First up: Decibel, a London-based company “operating a platform that supplies rich, semantic music metadata APIs and digital assets to businesses in the broadcast, media and digital sectors. These data-driven assets power the creation of Connected TV, mobile, tablet and web applications; and increase revenues, collaboration and communication through enhanced discovery and business intelligence for consumer electronics manufacturers, digital retailers, record labels and broadcasters.”
We talked to Decibel’s CEO Gregory Kris, who, prior to his role at Decibel, launched several tech startups and has been an investor in the sector himself. We thank Greg — who describes his role as being responsible for “making sure the team have all the resources they need to build a great product” – for his forthrightness and no-BS take on the industry.
TMV: A recent article in the Guardian UK included the following statement by a venture capitalist: “The best startups not only always get funded, but there is real competition to fund them from a growing number of angels, accelerators [growth hothouses] and VCs.” What’s your opinion?
Kris: At Decibel, we have turned down investment on a number of occasions. Of course, even though we’re financed by our own profit, we could easily benefit from extra investment, but its the quality, market-knowledge and faith, of the investor that makes them an interesting partner. Not just their money. We field calls requests to invest in Decibel from the US VCs and Angels every two weeks, far more regularly than from the UK or Europe – in the UK it’s still a buyer’s market. I’ve not seen a UK startup that has had significant competition from UK investors beating a path to their door. Interestingly, compared to the rest of the world, you don’t get a huge amount of UK companies funded by Asian or Middle-Eastern money.
TMV: In a speech in 2010, UK Prime Minister David Cameron set his government the “ambition” of “making Britain the best place in the world for early stage and venture capital investment.” Do you see a change, perhaps one that you’ve experienced yourself, in the climate for entrepreneurs since that speech was delivered? What are the challenges that you have faced or are continuing to face? In this regard, how do you think the UK stacks up compared to other countries?
Kris: Compared to the rest of Europe, the environment in the UK is right for supporting small business, with excellent tax breaks, easy legislation and a good climate for finding investment. This has been the case for as long as I can remember, it’s not a new thing. In technology this is true to a certain extent. A lot of good tech companies start up here, and have the funding to develop, but it’s not a surprise that as soon as they hit a certain size, their next round of investment is normally in the USA, and they relocate there. The UK is a nation of inventors, not investors.
TMV: What are the key factors from your perspective that have enabled Decibel to succeed thus far, and do you think that success is due more to product, or people? Based upon your own experience, what would your advice be to other young startup businesses?
Kris: The golfer Gary Player said ‘the harder I work, the luckier I get’. We hire talented people, give them an environment where they can do their job, and let them get on working hard building a great product. It helps that we are in an established market, music metadata. where the incumbents and market leaders are poor and seemingly asleep at the wheel. It’s an open goal. Advice? Work hard, keep focused on your long term objectives, focus on developing products that delight your customers, and try not to starve when you start out.
TMV: What is your strategy for growth?
Kris: In September, we start our second funding roadshow – this time in the US and Far East; maybe one or two choice investors in the UK. But we start from a solid basis – we’re already a profitable company and our growth is funded by our revenues. It helps – as our current growth goals are less about revenue, and more about market penetration. The more retailers, broadcasters, labels, applications and digital service providers that use our data, the better our position and the bigger the inherent value the company has.
TMV: What is Decibel working on right now?
Kris: We’re working on gaining market penetration and making money so that we can continue to develop a market-leading product. There’s one particular company in our sector, (Music metadata. Everyone knows who I’m talking about!) that has a very significant market share and we’re working hard to win over their clients by offering a superior product with more flexible licensing terms. So far so good!
TMV: Is there anything else you’d like to add that we haven’t covered so far?
Kris: I’ve been on both sides of the table, as an investor and an entrepreneur, and frankly, it’s a self-fulfilling prophecy. Only the best startups get funded, because getting funding by definition makes them the best startups. A UK engineer could develop a one-shot cure for internet piracy, but unless it got funded, it would get no attention or recognition- or indeed, traction. Often it’s not about the steak, it’s about the sizzle. The VC community works the same way as the old film studios and record labels – they take promising raw material and make them into ‘stars’ (or the best startups) by providing them with the financing to promote and develop. It’s not a bad thing – but it’s not as scientific as VCs and angels would have you believe!
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