It’s Israeli entrepreneurs who make the startup nation The Startup Nation. |v| is interviewing 12 outstanding founders on their current successes and past mistakes.

Interview #2/12

Shachar GiladON BUILDING A MARKETPLACE FOR MUSICIANS AND squeezing fifteen years of experience into two

A couple of years ago musician and marketer, Shachar Gilad was asked to build a website for a music production professional. What he thought would be a ‘quick WordPress project’ suddenly turned into weeks of work. It was then that he told himself, “Wow, it shouldn’t be this hard for the thousands of music production pros out there. They should be able to create a profile at the click of a button and get discovered if they are good”. A few months later Shachar founded SoundBetter, a marketplace for musicians and music production pros, that has since become the leader in the space.

Today,  every laptop has the possibility to serve as a recording studio giving tens of millions of artists around the world the opportunity to record their own music. But this does not come without its own challenges: how does one make these home records sound professionally finished? Musicians often lack the required skills and experience that  professional music production/sound engineers possess. SoundBetter enables musicians to hire these professionals to help with recording and post production and has recruited and aggregated the industry’s top talent in one place.

Lisa Avsiyan and Katya Rozenoer spoke with Shachar on his entrepreneurship experience.

Shachar Gilad/ Photo: Lisa Avsiyan

– Shachar, I take it you were providing the service similar to SoundBetter long before it started?

– Well, I would get dozens of emails a month from people asking me if I knew someone who mixes, say, hip-hop and charges up to X, or if I knew a mastering agent who specializes in pop-rock etcetera.  I recognized there was a need. The way the problem was being addressed was broken. Musicians would ask their friends and then be limited to whoever their friends knew. Or maybe they would go to google and find a random mishmash of websites by individual service providers, but there was no easy way to compare, no transparency, no third party vetting, nothing.

I remember when I became a mixing engineer in New York, over 10 years ago, I was hustling to get gigs. I would post on Craigslist, and I built my own little website.

At the same time I was looking at 99Designs and SortFolio, places that were helping connect designers with clients. I said to myself, “Why don’t we have this kind of place for music pros?”

– So one day you woke up and already had SoundBetter in mind?

– All those things together hit me: the emails I was getting, the website that I had built,  myself needing music professionals when I finished my album before I knew how to mix. I realized this needs to happen and I knew it had potential to help both sides. Within a week of realizing this makes sense I was on a plane to Poland.

– It’s not where Silicon Valley is. Why Poland?

 I knew it was going to be a web app and I really wanted it to be on Ruby on Rails, which was the hot language at the time for the web apps. And I knew it would be hard to find Rails devs in Israel. I wanted to move fast, and it was also more affordable.

So I got on a plane to Poland, where I knew from past experience, there were a lot of Ruby developers. On the plane I created a couple of rough drafts of what it was that I wanted; and as soon as landed I started talking to web development shops. Once I found a company that I liked, we started to work on SoundBetter on location. I did marketing consulting for them, which helped reduce the costs even further.

In his marketplace Shachar himself could be both: a musician and a service provider / Pic: Shachar’s photo archive

– Did you have to leave your job for that?

I left my job about a year and a half before and was looking to do a startup.

– Did you have enough money?

– I had some savings, I figured I had enough to get the MVP off the ground.

So, I stayed in Krakow for around three months, worked with the developers and got the MVP going. I wanted to launch really fast.

Today, SoundBetter is already helping thousands of mucis professionals/Pic: SoundBetter

– I know ‘marketplaces’ are one of the hardest things to start. How did you do it?

 At the time the MVP was a directory for music production professionals but with no music production professionals on it. Think of a Yelp with no restaurants. I needed to fill it in somehow but I didn’t have a mailing lists, I didn’t have anything. One thing I did have was a friend who was a pretty well-known music producer. I called him and asked him if he would be willing to take questions via video Skype for about ten minutes from aspiring audio engineers. He said “Sure”.

I then called a music studio in Berlin and told them “I’m putting on an event”, (I was not putting on anything yet, it all depended on their response)“…with a celebrity producer and a group of audio engineers, are you willing to host it? All you have got to do is give me your space for two hours, whenever it’s convenient for you, I’ll even bring the beer”. They said “Sure”.

– Sure…

– I then called a big audio engineering school in Berlin and said, “Hey, I’m doing this event, with a celebrity engineer, in a recording studio that you know, with some press”, (there was no press yet) ,“…are you willing to blast your email list and partner with us on it? I’ll put your name right next to ours, as hosts”. I was hoping they would be interested, since places like that are looking to do cool things for their students, work with recording studios, industry celebrities, and let their alumni know about it. Their alumni were exactly the kind of people I was trying to reach at the time. I told them that it would be free to attend but people would have to register. They also said “Sure” and blasted their email list. As it was my Eventbrite event, I was able to start collecting emails. Their students and alumni connected with what SoundBetter was offering and people began registering and signing up for SoundBetter.

I then called a big pro audio dealer in Berlin and said “Hey, I’m putting on this event with this recording studio, this celebrity producer, and an audio engineering school, would you want to partner with us? I’ll put your name as one of the hosts”. To my luck, they said “Sure” as well.

At that point it was already much easier, because there was social proof. Each one helped bring the other.

– This really should be in a marketing textbook.

– That’s not the end of this story… Once I realized that this event was actually going to happen I contacted  industry media, and told them about the event, the celebrity producer, the studio, the school and asked,“do you want to send somebody down?”. They also said “Sure” and sent a reporter to write about it. In the end we had about 100 attendees, but with the halo effect of the press, the mailing list etc, we had many hundreds of signups to the site and the word was starting to spread, plus I started building a targeted mailing list on the supply side.

– But that is still not enough to get a marketplace going…

– Right. But like any good marketer, once I saw that it worked, I decided to double down and did the same thing in London, New York, and Mexico City. And then – like any good marketer – once I saw that the ROI wasn’t there in doing  another one, I stopped. So that’s how I seeded the initial supply side of the marketplace in the very first days.

– How many people did you end up having after all of the events?

– After a few months, I had a few thousand.

– Not a bad start.

– You know marketplaces are a chicken and an egg, neither side wants to join until the other side is there. Usually the supply side is a little bit easier to start with. Once you have several thousand on the supply side, you have value to offer to the buyer’s side.

Needless to say, there were still many things I would have to learn, but that’s kind of how it got started.

Fast forward about a year and a half I was already getting a lot of production pros (supply side), more and more on the buyer side and starting to create liquidity. Quite a bit of organic traffic was happening, as an SEO strategy was there from day one. I felt I shouldn’t be bootstrapping alone anymore, and decided to find a co-founder.

– Were you making money at that point?

– I was making a little bit of money. It wasn’t a marketplace yet and some providers were paying us to be featured. It wasn’t a lot of money, but given the traction and amount of leads the site was helping generate for the pros on the platform I knew I was onto something.

I started to put the word out that I was searching for a co-founder and was lucky enough to meet Itamar through a mutual friend pretty quickly. We hit it off right away. He left the startup he was working at to join SoundBetter. He is a fantastic engineer and we get along amazingly well. We were super lucky.

Shachar presenting SoundBetter at the beginning of his 500 startups batch in the winter of 2014/Photo: 500 Startups

– What happened next?

Shortly after Itamar joined we got invited to 500 startups, a well-known startup accelerator in Silicon Valley founded by Dave McClure. I was in touch with them previously, so I had an indication that we were on their radar. I think that was one of the things that helped convince Itamar that there was an opportunity.

We flew to San Francisco, and spent a very intensive, incredible 4 months there. We decided to make the directory into a real marketplace.  Itamar had coded a ton of new features. From a directory, we made it into more of a freelancer marketplace, with a workroom, the ability to actually hire and pay someone through the platform, with all the advantages of that to the user. While being at ‘500 startups’ I realized that I needed to dive deeper into the world of marketplaces. I read everything out there about marketplaces, met founders of other marketplaces such as Thumbtack, the CEO of UpWork and others and combined it everything we’ve learned.

– How were you getting the meetings?

– ‘500 startups’ helped open the doors to those meetings. In Silicon Valley you have a lot of access: there’s a true “pay it forward” culture, which is amazing.

Shachar Gilad and Itamar Yunger started to work on SoundBetter the day they met/ Photo: Lisa Avsiyan

– So you were just emailing whoever you wanted to and they were agreeing to meet you?

– Sometimes I was getting intros through mutual friends but even without intros, yes.

– And how frequently people were responding?

– About 3 out of 5 times I’d get a response and then we would meet to share thoughts, learn some lessons. I then started organizing marketplace meetups. I would invite CEO’s from successful marketplaces, talk to them and ask them questions in front of other people who were also interested in learning about marketplaces. What’s nice about “pay it forward” is that once someone helps you out, you remember and make sure  you do same with others. I now mentor entrepreneurs through programs and accelerators and often take calls from entrepreneurs seeking advice.

– Is there any specific advice from that period of time that really got stuck with you?

– Many things.  I remember I had a conversation with Micha Kaufman from ‘Fiverr’ about optimizing our commission and payment fees, and he said to me “at your stage, all you need to worry about is getting liquidity” which in our case was growing our demand side since we already had the supply. “Just that one thing,” – he told me, “- keep your mind focused on that”. It was good advice.

– Have you ever thought about walking away?

– I think every entrepreneur goes through that on some days.

– Clearly. So I’m wondering when did it happen to you?

– Not recently, but there were a couple of times that it crossed my mind. The first time was before I met Itamar, when I was spending my own money on outsourced developers. I didn’t have a co-founder, there was only my brother who was great help and advising me regularly. Being alone is very difficult and I was constantly thinking “am I crazy? Is this going anywhere? Am I supposed to be making money at this stage?”. I didn’t have the network in the startup world to discuss with, to benchmark.

On the bad days you have no one to lift you up, and on the good days, you have no one to share your excitement with. That was hard. So in the first two years, maybe a handful of times, I thought to myself, “Maybe it won’t happen, maybe there’s a really big opportunity cost for someone my age to be doing something like this.”

– Why didn’t you quit?

– The reason I didn’t quit is because the one thing I was sure of was that if this was done right, it would provide great value to both professionals and musicians. It just made sense. I think my brother being there as a sounding board at the time was very helpful too. He’s a very smart guy.

– … And after some time came your eureka moment – when did it happen?

Well I’m not sure there’s one eureka moment, but at the end of 2014 the growth started to plateau and we were running out of money. Realizing that we had nothing to lose, we started making big changes and then the magic happened.  I believe things happen when you take big risks, gross motor movements.

– What was that?

–  After a series of experiments, we changed our business model and also started to curate a lot more heavily. The combination of those two things worked really well.

Suddenly we were seeing pretty significant growth, month after month. The first few months you don’t want to get too hopeful but you start thinking about how you can bake good experiments into the product, scale them.

Then after five-six months of growth, we realized  that this is working, and that’s when I went to Silicon Valley to raise a seed round.

–  You also had some pre-seed money, right?

Yes, it was a part of the ‘500 startups’ program. We raised a small pre-seed, then our seed round came almost a year later.

– Is it right that the “Lean Startup” author, Eric Ries, is one of your investors?

– One of our amazing investors is Foundry group. They have what is called AngelList Syndicate, an online list of people who invest together with them. It starts with one investment by them which is followed by syndicate members putting small amounts of money and Eric Ries is part of their syndicate and chose to invest alongside them in SoundBetter.

The syndicate is great as it allows you to raise funds from people you normally wouldn’t raise from with smaller amounts because it’s not worth legal fees etc. Here you have one hundred of them investing small amounts together.

– Do the investors help you? Are you getting any value from them besides the money?

– Yes, they are helpful with whatever we need, introductions, advice, partnership deals etc.

I was very picky with the investors: we walked away from several investment offers that were not the right fit. I wanted a certain type of investors — micro VC’s with a culture that really matches ours.

It wasn’t a walk in the park to raise, even after several months of growth, it’s never easy.

– So you went to the Valley for the summer, and during the summer you found investors?

– Exactly.

Shachar working with the famous music producer Yoad Nevo on a video for SoundBetter/ Pic: SB photo archive

– That’s pretty impressive. Actually the whole story sounds almost too impressive. Did you make any mistakes on the way?

– So many mistakes! Today I could probably get to the same place I am now in one year instead of three.

The great thing about establishing a startup is whether you succeed or fail, you get to squeeze fifteen years of experience into two. There is nothing else in the world like that, no job where you learn every side of a company in two years, so if your startup fails, you walk away with something tremendous. I really feel like I’m fifteen to twenty years more advanced as an entrepreneur and marketer than I was two years ago.

– What is your biggest lesson that you’ve learnt so far?

– I think learning how to prioritize is something very important that every founder needs to do: learning what not to do, how to decide on what needs to be done. When to stop building and start focusing on marketing; or when to stop marketing and improve the product or UX; when not to optimize things that don’t have to be optimized yet and when it’s finally time to optimize; when it’s partnerships that’ll bring you to the next milestone, and when it’s conversion rate optimization; when you’re ready for paid advertising and when you are not; which features not to build because as much as you want them, you know then won’t really move the needle etc.

– What is the one thing you are focusing on now?

– Growing our reach to more musicians.

– What personal sacrifices did you have to make on the way?

– Music. I’m a musician at heart, I was touring until about a year and a half ago in Europe. I had been doing it consistently as a serious hobby for about fifteen years and recently I pretty much stopped it to focus on the business. That was a huge sacrifice.

My social life suffered as well: seeing friends and other things that you usually do to fill your time. I wake up thinking about the business and go to sleep thinking about it. For good and for bad.  

– And I imagine you don’t sleep like a baby. Do you have any fears regarding your startup?

– That’s right – I do not sleep like a baby. Everybody has fears. Some days mine is that we’re not growing fast enough. One of my biggest fears in life has always been wasting time, I wrote a whole album about exactly that.

You have to be very conscious of the value of your time, every hour you spend on something, stop for a second and think “Is this going to move the needle for us?”, and if not, don’t do it. Say no, learn how to say no, learn how to disappear for a few months.

As a founder you have to really think and focus on the one thing that will make your startup get to the next milestone.

– What does success look like at this moment in life for you?

– Success for SoundBetter is it becoming the place that millions of musicians trust with their babies, which are their songs; where they save their best songs for SoundBetter, to make them sound better and we deliver on that promise. At the same time, providing livelihoods to creative professionals who otherwise might struggle to make a good living, bring work to them they probably would never have had access to otherwise. If we manage to do both of those things, that’s a win.

Shachar Gilad

Education: BA in Philosophy, MA in Political Science and Business Administration

Favorite book: Orwell, 1984 

What would you do if you weren’t in hi-tech: Music, photography

Startup: https://soundbetter.com

Startup Count: First real one

Current status: Growing

Founded: 2013

Funded: Yes

Twitter: https://twitter.com/shachargilad

Linkedin: https://www.linkedin.com/in/shachargilad

|V|.