How I Built This with Guy Raz - Live From The HIBT Summit: Troy Carter

Episode Date: December 12, 2019

Our second episode from the 2019 How I Built This Summit features founder and investor Troy Carter, who re-started his career in the music business after becoming Lady Gaga's manager. In a live conversation with Guy, he offers advice on staying hungry, being humble, and admitting when you don't know the answer. Every Thursday through the new year, we'll release new episodes from the HIBT Summit, so keep checking your podcast feed!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca slash host. All right, so today we've got another one of my conversations from the How I Built This Summit that happened in San Francisco a few months ago. This one is with Troy Carter. Troy made his name in the music business as a manager for several artists, including one of the most successful pop artists in the world. He founded his own management company, became an investor,

an advisor to Spotify, and all-around creative force. And if you remember his original episode of the podcast that ran back in 2017, Troy talked about starting out as a scrappy kid in West Philadelphia and getting a start in the music industry with help from Will Smith. Anyway, in this conversation from the 2019 HIV-T summit that you are about to hear, Troy offered up some really good advice about staying scrappy and about not being afraid or intimidated to ask for help, especially when you feel like you don't know something. Because in his early days as a music manager, Troy made a lot of mistakes. He ran into a ton of debt and he almost lost everything. But then he met a relatively unknown singer who went by the name of Lady Gaga. And when Troy joined me live on stage at the summit, he told me how meeting her and becoming her manager turned everything around. What struck you about her?

I mean, it's almost like being an investor where you can identify a founder or a company. What was it about her that you thought, yep, she's got something? You know, she was very unique in terms of her look, you know, and especially at that particular time. But also, she played me like three or four songs that were just like smashes. Paparazzi was actually one of the songs. And also, it was this level of hunger that she had. And I think her getting dropped from Def Jam. And, you know, and our dad had given her an ultimatum in terms of if you don't figure it out within a year, you know, you need to

go back to school. So I think her back was up against the wall and my back was up against the wall. So I think it was just that we're just going to have to go for this and can't take no for an answer. Did you see a star is born? Yes. I mean, obviously not the story, but there have to have been in some moments where you're watching that where you're thinking there's some parallels to what happened in real life with her. There were a lot of parallels that I saw, you know, especially with, you know, I remember people telling her she was going to have to get to. a nose job, you know, because, you know, her nose was too big to be a pop star. Or she was going to have to give her these songs to the pussycat dolls because she wasn't famous enough. Wow.

Or this record needed to go to Britney Spears, you know, so seeing her like in real life fight for, you know, there were a lot of parallels. I mean, it wasn't just, you know, sort of signing her and representing her. I mean, you guys went on the road in a van. She made her own clothing. I think you even helped sew on glass beads to a costume. She would take a mirror and crack the mirror and then glued a mirror onto a bra and panties. And that was like the outfit. This is before we could afford a stylist, though.

I mean, Troy, did you, at the time... But now somebody would charge us like $60,000 for that same thing. Sure, of course, right. It's amazing because both of you at that moment, you didn't know it, but you really didn't need each other. You were the right person for her. She was the right person for you. But did you, I guess you didn't really know that, right?

No, you know what? It's, you know, a lot of times, you know, you may have like a business relationship with somebody. But I think the difference was, you know, it was, we were very, very, very close in terms of just us spending that time together on the road and it's like you're on a tour bus and you're going place to place around the world you learn a lot about each other at that point and so I personally felt the sense of protection

and so where it went beyond just a business relationship it was actually this level of you got to protect your friend so you're negotiating with that lens on yeah but when you're putting the music out there you want the world to hear it you know so I'd play the music for everybody. I would keep CDs in my car back then, and I'd put them in my backpack, so when I went into meetings with people, I'd just be, I'd hand out CDs. I mean, was part of you worried, you were investing a lot of time and sweat equity in this thing? You were putting a lot of hours into it. I mean, that's a gamble, right?

I was unemployed, so I didn't have anything else to do. And it wasn't a matter of, If as much as it was when for me with Gaga, but you do worry about the win. Yeah. Because while you're going through the win. There's no income. No income. So people still calling you for unpaid bills.

You know, it's, I had debt out of the yin-yang. So for me, it was what's going to come first. That's where the fear came was the, I know we'll get there, but will the bottom drop out. on something before it happens. Yeah. I mean, there are so many parallels between that experience and a startup. We had an episode with Chris Zeru and Logic. These guys met in their early 20s, both of them unknowns, both of them, you know, no connections. And they very slowly and methodically built up logic by strategically giving away his music

and playing smaller venues and then bigger venues and bigger venues to when he released his first album, it went to the top of the charts. And it really was a business that they built. This was a startup. I mean, you guys were a startup, right? Definitely. And you hit it on the nose. There are a lot of parallels, you know,

and especially coming from hip-hop, you know, what Chris and Logic did was similar to what we did back in a day in terms of mixtapes. So that was our free model. You would make tapes and give them away. And you'd give them away. So basically, this is your entry point to this artist. So we're not going to put a paywall.

in front of it. But back then we would have never known that terminology or anything, but instinctively, you just want to get it out to as many people as possible. And then maybe they'll buy a ticket to the show, then maybe they'll start by a merchandise or request you on the radio. And to me, I think that this new generation of artists, because of the technological tools, are able to do it even better because you have SoundCloud and YouTube and places like that. It's interesting because in the music business today, right, artists are not really necessarily making their money off music, with the exception of some of them, right? They're making money from other things like touring.

I just went to see Logic in concert, and I was amazed the line for the merchandise was so long. People were waiting for an hour to buy merchandise, and I stopped and asked somebody. He said, why are you waiting? Why don't you just buy it online? They said, you can only get it at the shows, right? I mean, that is a big part of the business.

Well, unfortunately, it's always been, And through the history of the business, record income traditionally has been your smallest piece of the pie because record labels have screwed over artists for generations. So you're always forced to go on the road and sell merchandise and do all of these other things to subsidize the income essentially. But we're starting to see a generation of independent artists now that have broken that barrier that are starting to make money off of music as well because they're putting out this music. the record labels are discovering them because they've already blown up essentially. Yeah. And so they have to give them better terms on the deals. And we're streaming.

If you get a hit streaming, it becomes the gift that keeps on giving. So we're starting to see that barrier break and more artists make a living. You grew up in West Philly, and you didn't grow up with a lot of money, and you grew up with financial insecurity and then experiencing financial collapse in, you know, as a younger man, after having... had some money, right? Because you sold a company and you made money and you bought a house and then all of a sudden everything collapsed.

You said you developed PTSD based, you know, sort of financial PTSD and that it was really hard for you to forget that feeling as successful as you are now. And we're going to talk a little bit about some of the things you've been doing. Do you still have that financial PTSD in your mind all the time? Absolutely. Absolutely. You feel like you're still potentially just one, you know, bad luck day away from collapse?

No, you know, it's not even money as much as it is, you know, it's funny because like I'll talk to some of my friends who, you know, are successful entrepreneurs or business owners, but grew up, you know, middle class or whatever, right? Yeah. So it's a different set of worries when it comes to running a business or being an entrepreneur or even risk taken. So risk taking in my mind almost, you know, because it was existential for so long,

it's like that feeling still is like this undercurrent that still lives there. But also, I love how you call it. What did you call it? I grew up with financial insecurity. We were broke. I was like, that's a really nice way of putting it. No, we were. We were broke.

And we had to choose between having to pay a light bill or our gas getting cut off. So some days we wouldn't have hot water. So we would have to go to my grandmother's house or whatever. Or I would have to go. Like, I still hate the smell of kerosene because I used to have to go out and with a shopping cart and a kerosene can get kerosene from the gas station. And that's how we heated our house. Duke was kerosene and you boil your water on top of the kerosene heater and you put it in the sink and that's what you washed up with in the mornings. So this isn't like 1920s or anything like that or

whatever. So for me, I think it's that appreciation of wow, I can't believe this is my life. And I was laughing with Kevin Hart in Kevin's from Philly and we were having a conversation. years ago about do you ever think that you're in a coma sometimes and you might just wake up and all of this shit just might be gone? I was like, yes.

Like this would be the the shit dream of all time if I woke up and I'm going to get kerosene. So that's the sort of undercurrent. That's the undercurrent. Do you think there's a connection between your background

and your tolerance for risk or intolerance for risk? You know, I think the risk tolerance sort of changes depending on what stage I was at in life. But I'm a risk taker by nature. And I'm not quite sure where it came from. My mom was not a risk taker. It's like, you know, same job for 30 years. And like, you know, it was, you know, really about, you know, stability. Like, how can I just be stable? But for me, I think Working with Will, Will taught me very early on about sort of thoughts become things. And Will had this thing where his manager, J.L., is the most stable person I know. Like just very, very conservative.

So, and those two have been together for over 30-something years. So Will had this thing where Will would jump out the window. And J.L's figuring out how to build the parachute as Will's jumping out the window. And so I think it's this sort of balance of being around those guys for so long that I was able to kind of pull from. I want to ask you about since you worked with Lady Gaga, you created Atom Factory, management company. You've invested in Uber and Lyft and Warby Parker. Good on you. Well done. You've been a guest host on Shark Tank.

You're now in a position where you invest in companies. you help people build and make things. What do you look for in businesses? I mean, what do you look for in people who come to you and say, hey, Troy, this is what I do. Are you looking at what they do or who they are? I think both. Most of the entrepreneurs that we've invested in

haven't done anything in that space that they're getting ready to go into. But when you're, you have a founder who is hungry, willing to learn, self-aware, takes feedback, you've got a reason for doing it, like a real reason to do it. And a lot of times that reason isn't to get rich. It's like you really are on a mission to do whatever that thing is. And, you know, recently, you know, I'm so proud of this entrepreneur. We met him in Detroit probably five, years ago, we would do these pop-up labs in different cities, where we would just meet with

entrepreneurs. And this kid came out, and from Detroit, Street Kid, I think his dad got killed when he was, you know, like a toddler. But he followed us, you know, around for three days throughout Detroit. A couple years later, I saw him at a Clippers game in L.A. I'm like, what are you doing here? He's like, I moved here. You know, he's going to be an entrepreneur. and he actually connected with my partner, Susie. Susie introduces them to the science lab, which is a tech accelerator. And fast forward, I think his companies raised $96 million

and is an e-sports company for high school students. This is a guy without the pedigree, not Silicon Valley, but hungry, curious, no plan B. Those are the type of entrepreneurs. that they're unstoppable. Yeah. Because, you know, I hope this becomes the company that, you know, we all wanted to become.

But if it doesn't, his next one might be, or the one after that's going to be. But it's the way he's wired that he's destined for success. You made a very conscious decision probably about 10 years ago or even longer that you wanted to pivot to become an investor. You really wanted, that's what you wanted to pursue. And you did, you've done very well. I mean, how much of you. your journey, do you attribute to your willingness and desire and interest in just being a learner,

just sort of sitting down and saying, I don't know, telling people, I don't know, can you teach me, can you tell me? I do it all the time. What I've learned is if I'm humble enough to ask the questions, then 99.9% of the time, somebody is going to be humble enough to give me the answers. You know, I'm very keen on not wasting people's time and, you know, being prepared with, you know, the questions I want to ask. But the curiosity is what keeps me ticking. That's my fuel.

I love it. Troy Carter. Thank you so much for coming here. That's Troy Carter. He's an investor and former manager for Lady Gaga. Troy joined me live on stage at the How I Built the Summit, which happened in October at Yerba Buena Center for the Arts in San Francisco. We're going to be running more conversations from the summit on the summit. Thursdays through the new year.

And next week, we've got Kevin Sistram and Mike Krieger, co-founders of Instagram. Thanks to J.C. Howard, who produced this episode, and Rumpeteen Arablewey, who wrote the music. I'm Guy Raz, and you're listening to How I Built This.