This Week in Startups - Next Unicorns: Splice CEO Steve Martocci, building the Github for music | E1265

Episode Date: August 13, 2021

Steve Martocci, the CEO of Splice (also co-founder of Blade & previously sold GroupMe to Skype) joins for our Next Unicorns series to discuss how music rights work (10:07), growing a high-quality marketplace (21:59), AI music creation (36:10), & more

Hey, everybody, it's Jason. I'm still in Italy. I took a two-week vacation, but the show must go on. And we had two amazing guests we had booked before I even planned my trip to Italy. And I had no choice but to do these two interviews because they're awesome companies doing awesome things. Glenn Kelman was on. I recorded that episode from Florence. What a wonderful city. I went to see the statue of David. I ate gelato, pasta, walked around. I saw incredible. art. It was absolutely wonderful. And the interview with Glenn was amazing. You guys had so many great comments on. I saw a lot of people sharing it on Twitter. He was super honest. And immediately after having Glenn from Redfin on, I said to him in the post show, where we do we do a little

chit chat? Hey, he said this was such a great experience. I loved it. I said, yeah, you know, let's do it again in exactly a year. And his PR person said, sure, we'll book it for a year from now. And then you guys and gals all loved it so much, we said, you know what? We'll have them on in six months. Our next guest is working on a company called Splice. And I've been waiting to have them on the program because I've heard about this company over and over and over again for my friends in the music business, my wife who likes to sample music and makes music sometimes and a number of my friends.

So I decided, hey, I'm here in Tuscany. I'm literally out of the pool. If you're looking at this on YouTube, I'm wearing a hat. This is actually technically a swim shirt. I jumped out of the pool. I ran to my desk to do this interview. And after this, I am going to go for a hike. And then I'm having a pizza party and with a bunch of my friends here in the countryside in Tuscany.

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And music has advanced massively. Many of you know that sampling in hip-hop became a very, very big trend. You know, even from the late 70s, rappers delight, Sugar Hill Gang, I think, being one of the first to use a sample. And since that time, people with their laptops have been creating their own music. But it is fraught with intellectual property issues. And you are only as good as the collaborators as you could get in one room. Studio musicians and having the money to get a band together. Kind of determined if you were going to make a breakout success, but because of the internet and because of sampling.

and now because of Splice, you can make incredible songs with a team of collaborators and you don't even have to be in the same room. And great music is being made. Some people might argue, are these musicians, are they just sampling stuff and remixing? Who cares? It's got a great beat. People like to dance to it. People like to work out to it.

I'm not going to be hoity tooty about it. Then again, my favorite musician is Mark Knopf for my money, one of the top five guitarists of all time and top five songwriters of all time. But, you know, I'm not going to be here and be an OK boomer. Today on the program, Steve, I'm going to hope I get this right when I'm in Italy, Mar Tochi or Martosi? If you're in Italy, you should probably be saying Martochi, but my family here in the U.S. says Martosi.

Martosi, yeah. That makes sense. Now, you're the CEO and co-founder of Splice, which you started back in 2013. You also started two other companies. I remember group me. Mm-hmm. Or was it group me or message? No, it was Group Me.

No, yeah, group me. Group Me, which broke out at I think South by Southwest, or at least that's where I became aware of it. You sold that to Skype. Arguably, you sold early. We'll talk about that. But no regrets. You got a nice win out of it.

Then I think you did Blade, the helicopter company. Am I right about that? Co-founded Blade as well, yes. Co-founded Blade, the Uber of Helicopters, which I think is still operating and doing quite well. Doing great. And you start at Splice, which is. If you haven't seen it, you're not in the music business, you just go to Splice.com. It costs $10 a month, I think, and you get, and there's, I believe, I'm going to say there's

hundreds of thousands of people paying for this already. It might have been broken a million, but people don't know this. And Steve, you'll correct me if I'm wrong. In terms of people making music today, we are aware of, you know, thousands of artists on Spotify. Right. But correct me if I'm wrong, that there are millions, if not tens of millions. of people on a global basis making music as a hobby and a passion and some number of them are using Splice, correct?

Welcome to the problem. Yeah, 100. Thank you. Thanks for having me. This is super fun in taking a time after the pool until you go back to the fun. So yeah, look, I think that music creation, I mean, if you think about it, you know, we like to say a third of the world tries to make music at some point. Like think about playing a recorder in elementary school and public school and the people who

have banged on a drum. And it's just been this hard, you know, there's a hard. learning curve and a lot of people drop off and I'm like, oh, I'm not musical. But software can change that, right? You might not have as much rhythm or the dexterity or have to, you know, play guitar the first time and get the fingering right on the chords. But like software has a chance to keep you engaged longer. And yeah, and there are tens of millions of people creating now. And I think, you know, with things like garage band everywhere and all the mobile apps, you could see that being a nine-figured number. And you have hundreds of thousands of-

Hundreds of thousands of paying consumers, millions of registered users. Wow. And, yeah, and people like are lifelong musicians. Like, it's, uh, the retention's really great. We want it to be a pretty sad day when, uh, when you cancel your splice account. It's like selling the drum set or the guitar and, uh, you know, in your garage. So pretty simple pricing. You pay 10 bucks a month.

You get a hundred monthly sound credits. If you're a creator or a creator plus, you pay 20 or 30, you get 200 or 500 sound credits. And for people to think about that. this. It's essentially like the stock photography business. So when I was in the magazine business, you would subscribe to a stock photography. You'd pay 50 bucks a photo or you might pay $5,000 a year for 300 photos. You could use them in your magazine. Everybody knows stock photography. This is a stock library of music. And also, I think you kind of have sound effects and sound there. So if I wanted a game show theme or somebody knocking on a door, I could get that too,

right? Yeah, for sure. I mean, I think, you know, the core thing we're known for is the samples and loops. There's over 2 million samples in the library. Growing every day, there's new content released spanning from, you know, the drum beats and hits, one shots, loops, vocal lines, and then, yeah, like sword fights and things like that. So that's great for podcasting and video and all that. Everything's available royalty-free. So no attribution, no royalty paid out. You just have your subscription, you do your download, and you can use it in your music completely royalty-free. And then, you know, with those two, two other plans, the kind of creator and creator plus plan you were mentioning, that's where we've

gotten into a lot more than just the sounds, music education, because again, so many people, you know, fail or get stuck in different spots. And then our own first party creator tools. So just trying to make the creative process better all the time. And, you know, so that more people don't give up on themselves. We say our biggest competition is people give it up on themselves. So we've rounded out the platform and continue to round it out with everything, you know, you kind of need to stay inspired and create. How much time and money do you spend integrating a bunch of different software products together at your company?

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does royalty free mean? Explain the legal framework here. For sure. Why that's so important? Music rights, it's a very complicated world and there's two sides of things. There's the master recording, which is the actual recording of something. And then there's the composition underneath it. Like did someone write a melody or a vocal line? And when you sample directly from another track, you're really violating both of those in most cases, the actual recording and if it's long enough the composition of what's happened. And so, you know, it became such a part of culture because, you know, people were doing it. It inspired so much creativity. But you'd get releases where all a sudden the original rights holder is like, wait a second, that's my song. And you watch,

you know, these claims get made and royalties being taken. And you can clear things. You can go to the rights holders and say, I want to use this of my track and they can sign off on it. And you will give them a split of the song or a buyout fee, something along those lines. But it's complex, that takes forever. Tracking down the rights holders,

finding that process just stifles creativity. And so what we wanted to do is create a very clean abstraction where you don't have to worry about any of that. You go in, you find the sound, you get inspired, and you start writing. And you don't have to worry about the clearance. It's there.

we protect you and you know we really do want to make it so that when you're in that creative flow you know you don't have to have those thoughts going through your head about whether or not this is going to be legal so if I were to sing the word

gelato right now and go gelato and then somebody makes that into a song which I think I just invited to make a gelato I mean a lot of gelato that I own that piece of

intellectual property. If somebody were to put that in a song, I could then sue them and make them either take it out of the song and get damages for it. And so if I wanted to take other people's stuff, what you're saying is, how do I sit there and jam and make a creative song if I have to go every time I want to add some beat, ask somebody for clearance, how, and if I take royalty free, I have to pay nothing forever for the life of it. You have bought that sample from somebody or made it yourselves. We'll find out about that in a second. But you buy that from somebody, they sign an agreement that says, I no longer own this, Slice owns it, and I'm sorry, Splice owns it, and anybody who Splice sells it to down the road gets it for free forever.

When I sign up for my $10 a month, I know that everything on the platform I never pay for again. And if I were to take, if I sold that gelato, beautiful melody I just sang to Splice, and somebody made a song that became Baby Shark or whatever. made a billion dollars off of it or a hundred million dollars off it, I would see zero point zero dollars. Am I correct? You wouldn't see zero point zero.

Close, right? There's nuance to like what you're allowed to do with things. You can't redistribute the sample on its own as like another piece of a sample library. I can't resell it. Yeah. Right. And technically like, you know, they own it, but it's a, they are licensing it to us in this way.

They get paid for, you know, a lot of our deals, the majority of our deals in Splice, get a pro rata share of the downloads. So you get some. thing every time someone downloads it. You just don't get something in the track. So on the recording side. And look, I mean, I think that that's, our artists know that going in. That's not a surprise.

That's not a secret. But they're able to get, you know, relatively large payouts from the hundreds of thousands of people downloading their sounds. And that's a great income stream for them. They don't have to worry about like maybe someone will have a hit. You know, they just get paid on the download. And, you know, it's been really great to take. and build careers, you know, off this, like, interesting abstraction in the space in this royalty-free music.

So, just to make up a story here, I'm a young Mark Knopfler. I play guitar particularly well. I haven't written Sultons of Swing yet. And I'm just doing little guitar riffs or even playing chords. I put my collection, a finger-picked, either Stratocaster, amazing harmonic music, and I put those, that Mark Knopfler-esque sample up there. People start downloading it. It becomes popular in one song. Other people start saying, hey, where did you get that from?

I found it on Splice. Now, everybody starts downloading it. You've got hundreds of thousands of members paying tens of dollars a month, which is hundreds of dollars a year. You're making tens of millions of dollars. You take the million samples or 100 million samples that get downloaded this month, and everybody gets a penny per download, 10 cents per download, whatever it happens to be. Yeah, I mean, it's a lot more than streaming royalties, I'll tell you that.

And, you know, it doesn't have the same scale. But what's cool is it proportionally grows with how much, you know, we kind of bring in. And what's good, too, is a lot of this stuff is evergreen. So it sticks around and people come in. It doesn't necessarily need to be a hit. So, like, new people join the platform. They come back and they find that amazing, you know, guitar sample. And you can release more content all the time because these are, you know,

they're smaller snippets, right? Some of these artists can create this, like, just in a day in their flow. So, you know, it's a unique. I think it's like people are finding a really nice balance of, of sound design and sample creation as a new incremental form of their artistry and career. Got it. You know, so, like, you can be working on full-length tracks and then do these smaller tracks as well.

So if, and what are the top 10% of people who are putting up samples there, are they putting up dozens of samples, hundreds of samples, thousands of samples? Your top 20% of creators, how many samples do they have up there? Packs are somewhere between 100 and 500 sounds, and those can range. The difference between 100 and 500 is like how long they are because some of them are just, you know, one shot like drum hits and stuff, right? So you want a lot of those. And then with the loops that have, you know, more melodic or longer form content, you can do

less of those and they get very popular. So what would somebody in the top 25% of creators be able to make per month slash year off of their modest collection of sounds? You know, it's really, the dollar. amount is very interesting because this is a unique revenue stream for them. One, it's usually all incremental. Two, it's not really stepped on the way musicians are used to with like, oh, there's a label in between, and then there's a this in between processing, and then, or I'm touring and I have, you know, all the crew and all the travel expenses. So, you know, some people make a couple thousand dollars a month

off their tracks. Some people have made hundreds of thousands of dollars off their works. And what I love is just how happy they are for this revenue. Because it is incremental. So they based. They can be a studio, yeah, they can be a studio musician and make their rent or mortgage every month. For sure. And when you're a studio musician and you play on a track, you just do a work for hire, maybe you get some residuals, but probably you don't. It depends, yeah. Session musicians, deals in session musician land are all over the place. And like, you know, to have, I do, some of my favorite text messages is when a musician friend just is like, man, I just got my spice check and I'm just like so thankful for it.

It's amazing. What is the split between creators and splice? It really depends, right? So all the deals are pretty custom. Sometimes there's a buyout. Sometimes we really encourage everybody to continue to have a royalty just because we want them to see growth if they do very well on the platform. And like, I think it's a constant. You said that you take a certain percentage of revenue and split it between everybody.

Is it 50, 50, 70, 30? Yeah, it depends. Every deal is different. There's no like standard. Oh, you do it on a deal by deal basis. Yeah. Yeah, because it's like how much content is coming in. What's unique about the artist?

Sometimes they draw more people to the platform. We have a big in-house team as well. So I think we're constantly, I think one of the things, if you ever look at us in the news, I very rarely like to talk about any kind of spliced metrics or numbers other than artists paid. No, I just like to talk about artists paid, right? You know, like we announced 40 million paid out to artists and like, oh, and we raised $55 million of. Oh, you raised. You've paid out to date $40 million, you're saying.

Correct. Yeah. Yeah, over that now. But that was the last announcement we made, yeah. Got it. So that means this last year has been great. So if in the last year you're doing 10 million a year or something to artists, more than that, yeah.

More than that. It's amazing. Yeah. Yeah, it's really cool. So, you know, that that is the stat I'm proud of. And I think that as we continue to scale, I mean, I listened to your NFT episode. And I heard you talking about, you know, how cool it would be if music rights, it wasn't just a consumption thing, but it was more of a, you know, how to use this and it looked like

the music industry. I think what's really cool where we are is. we have kind of, you know, created this royalty-free opportunity, which is, you know, it's used in half a top 40 music at any given time. Wow. Yeah. And then now, kind of continuing to understand the artists and their needs, where does scarcity, where does uniqueness, where does maybe royalty bearing, all these different opportunities to kind of build off of where we are and keep paying out artists. So, you know, I think it's a nice long road ahead of us on how we can continue to evolve the content side of the business. And if can anybody start putting samples on there? You have to be

approved. I wish. You know, like the goal, you know, we talk about wanting to build an open ecosystem, but originality is so important on the platform. And like, look, I can't have people running into copyright issues because they pulled something and quality issues. I mean, one of the things I think that's where most known for is these samples can be pretty much dropped right into your track. And that's a rare site. So, I think as technology evolves and as our community and we want to lower the bar so more people can participate. But right now we really think that quality and, you know, originality are higher concerns than the openness right now. Let me just say up front, go to LinkedIn.com slash unicorn and post your job for free.

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So post your job for free at LinkedIn.com slash unicorn. LinkedIn.com slash unicorn to post your first job for free. Terms and conditions apply because they're giving you a free job listening, okay? What I was going to ask next is, does this not become a race to the bottom where, you know, I am a great drummer. I played in Billy Joel's band. I put up some stuff. You recognize me as that famous drummer. his name from Billy Joel's band.

And he puts up a bunch of interesting sounds. And then somebody who's a super competent musician, you know, from, I don't know, Manila, New Jersey, San Paulo, listens to it, mimics it. It's not, you can't copyright a beat. You can't copyright somebody just hitting the drums. So they make something similar in a pack.

And there's no recourse there. So couldn't somebody just. you know, make their own Mark Knopfler. We have a content team. We do review content on the way in. Liberty DeVito, that's the guy's name. Remember him? Liberty DeVito? That's the guy's name.

You know, I should give him more credit because Billy Joel is awesome. No, no, I mean, in terms of Billy Joel, like, people forget this, the drums and the Billy Joel songs, remember Allentown? Mm-hmm. Doon-d-Dun-Dun-Dun. Whatever. And you guys get it. He was just spectacular at drums.

and he wasn't a member of Billy Joel's band. So I think there was like this movie, the documentary, I haven't seen it yet, about how Billy Joel's band was really resentful because Billy Joel just swept all the money, swept all the credit, and the band didn't get anything out of it. It was really normal. And by the way, it really is unfair to the music business, right? Right.

That's one thing I think we're really, we really want to be doing here. We're empowering artists earlier in their career before they've necessarily signed a publishing deal or broken. to be able to create small form content on Splice. Hopefully, like you said, pay that mortgage, pay that rent with, you know, these little snippets of sound. And then when they go in to get a deal, they don't have to sign like the first thing that comes over to them because they need to eat.

You know, like I really kind of want to smooth those power dynamics out a bit. And I think that's a long-term play for us is continuing to, you know, we think about two sides of the artist's journey. First, we think about making music. Like, make it. How do you make music? And then how do you make it in music, right? Because, and that gets, at some point, it transitions from, am I inspired to try to create?

Can I make something I like? Can I make something others like? Get feedback on it. Can I make a dollar? Can I make a career? Can I be a superstar? We have to help people along that curve once it gets to that dollar or they're going to have to go get a job. Right.

So our goal is to raise that curve, make you a lifelong musician. And those power dynamics for those kinds of, you know, session musicians that are incredibly talented, we think we can raise the curve there for the. them by giving them these opportunities. In a way, it's what's happened with podcasting and YouTubers as well. And so I had been offered to be a CNBC contributor or other networks as well. And they wanted to pay me, etc. Other people wanted me to reality TV shows. You know, I did these negotiations. And I was like, they're like, yeah, well, you know, for a network TV show, I was going to do with NBC that I did a pilot for. They were like $30,000 an episode. And I was like,

my podcast makes $15,000 in episodes. So I'm going to be on network TV and you're going to be 30. The show is going to make a lot. make 5 million an episode and cost 2 million to produce. And my podcast, I make $30,000 a week on. Are you kidding me? Like, this doesn't make any sense. And then you look at the YouTubers, you know, like they get cast in some TV show and they get offered 5,000 or 10,000 an episode. And they're like, my YouTube channel, you know, makes $100,000 a month. I'm making a million year. Why would I do that? Like, you can't get those people. And I think it's really interesting. You're talking about the dynamic. It does create that floor. It does create that, you know,

stability for them, but I interrupted you on the race to the bottom. You said you have a content team that I think is, I'm assuming, listening to that drummer from New Jersey who listens to Liberty DeVito, copies it, and then tries to draft off his pack, which we see in graphic design and stock photography as well. Some great photographer, you know, or some great designer makes a beautiful logo and then all these people steal it and adapt, I would just say charitably adapted, but we all know what's going on. They're basically mimicking it, uh, is a, charitable way of saying it and stealing it would be the uncharitable way of staying it. Your group is looking for that, right?

Yeah, we're trying, right? Like, I wouldn't call it like a full, I think we do a really, really great job. I think people are proud of our library. I think we continue to get stricter and stricter about, you know, it's kind of like an app store process in a will in a way. And it's not perfect, but it's like we want things to be, we don't want people wasting their time on splice. Like, I really care that every minute you're spending with us is the fastest you can

get to getting that sound in your head or that creative thought out into the world, right? I want to keep, we say, we're looking, the vision statement for the company is a world of more transcendent musical highs. And there's two sides of that. There's the fans getting their music that they're deeply connected to, you know, so spiritually, like, wow, in their best moments and worst moments. But it's really on the creator side about keeping them in their bliss while they're creating. And, you know, when you're in your flow state, you know flow state.

Like, when you're in there, it's the best feeling in the world, right? And technology and not having an idea for a sound and not being able to get to it. These things can break you at the music. It's complicated, to be perfectly honest. It is a hard audio is way harder space than anyone realizes. And so if we can keep them in their bliss, you know, that's the moment. So I don't want them wasting a single moment on a bad sound or something they just heard. So when you have somebody's knocking my stuff off, what do you do?

You're kind of insinuated like the app store has to. to deal with this. Somebody makes angry birds. Somebody makes like perturbed, you know, pigs. And it's like, okay, we get it. You know, you're trying to steal the idea. But, you know, Mark Pinkis got in a lot of trouble this with Zinga. He was making, like, a mafia game or some other tower defense game. And I came to his defense on this a little bit, which is like, there are some genres, you know, somebody makes good fellows. Somebody should still be able to make, you know, Scorsese should make good fellows after the godfather and sopranos can come after that. But it is a real judgment call, so you've had to make these judgment calls. How do you make them?

Yeah, look, I mean, I am floored by our content. There are humans on this planet with ears that just blow my mind. They can listen to any song and be like, I know where that came from, that came from, that came from. And, you know, what we generally try to do is not shut the artist down if something comes up and just say, hey, we don't think this is original enough. Can you, can you do something else? Right? And they're like, cool, I can do something else. So it's more of a collaboration, I would say, of caring about, you know, what's good for our user. and what we think we'll do better on the platform, you know, by working with. And we can't, I don't, we don't do that with everyone, but with the, especially our in-house

stuff with, you know, a lot of the higher profile artist work that we do, we really want to make it so that they're, they're showcasing their best talents for our library. How many in-house artists do you have just making samples? That would be like the equivalent of a stock photography company. I think some of them do this. Yeah. Hiring photographers to work for them full-time, giving them benefits, which is crazy. in the photography industry,

doesn't really exist anymore. And then just saying, like, go take pictures of San Francisco. We get requests for the Golden Gate Bridge all the time. We need more Golden Gate Bridge. So you have a lot of people doing that? At least 35, at least 35 people making content.

And then more supporting the other content creators. You know, like really now, we get to do some fun stuff. I mean, people's jobs are like, you know, go capture the sounds of the world. You know, like crazy. Get like a subway train? Yeah, we have glaciers.

like the sounds of like what it's like walking a glacier and uh and whale sounds and like things like that and then and then also we're going into you know all these different uh countries we went over to senegal and did a whole set of series of packs with local producers there and we use the proceeds to build a school like it's a real great way to figure out how to bring the sounds of the world to the world appropriately yeah and uh and leave the place better uh you know than we found it uh by by building a healthy relationship around the world certainly some of these musicians would say, I would think some high-end musicians would say,

I don't want to give my music away royalty-free, I'm established, et cetera. Yeah. How do you convince people who are on the bubble of that? Like now, if you're a Liberty of DeVito, you might be like, eh, I don't know. But, you know, I guess there's an argument, if you were high profile,

that this could be even perceived as marketing. It is. I'm taking a guess at that. Is that true? Do people look at and go, you know what I'm slash, I want to be on Splice, And I want to have a bunch of slash sounds because it's marketing for me.

If people put slash sounds and they're strong, even if I don't get paid, it builds my profile. Exactly. So, like, you know, I won't forget the beginning of the journey when I would show people splice and they would be like, there's no way I'm giving you my secret sauce. Like, this is how I make it, right? But then they would see the other artists on the platform. And they would see like, oh, wow, you know, I remember what someone saw, Just Blaze was on

the platform. And that was like, oh, if he's on there, maybe I should. should be on there. And it flipped from like people holding back their secret sauce to that, to being a badge of honor, to being on the platform and to inspiring. And you'd be, it'd be amazing because you could be a leader of a genre. And now all of a sudden, like, your genre has blown up because you've provided sounds to help other people create it. And, uh, you know, I think it really, that flip was really interesting to watch, which was that transition from the, no way am I giving my secret sauce to, you know,

that becoming part of the career development process. So raising money for this kind of thing is pretty hard. As an entrepreneur, how are, I can say, I mean, people come to me with a music startup. I'm like, oh, great, got anything in health care? It's like, you're going to fail. This is a disaster. Like, health care with the incumbents, the music industry, the incumbents. I'm curious how two groups of people looked at you because you have been successful

at raising money eventually. But I'm guessing it was harder in the beginning before you figured this out. But that's just a guess. And then I'm curious what the music industry thinks of you because they are persnickety and weird. And they can be at their, you know, at their worst, cutthroat and, you know, unethical. Yeah. Look, this is the ultimate question, right? Splice was at the top of my do not do this list.

Do not fly. Do not do. Like, you're passionate about this, but don't do this. It's going to be a terrible idea. And I had an artist friend who got into programming after. GroupMe was successful. And he said to me, because we started with collaboration software, and he said to me, where's GitHub for music?

And it took my, do not do this list. And it just took it over the line. And I was like, all right, I guess I'm going to go down this crazy-ass path. And, you know, luckily coming off GroupMe's success, Andy Weissman from Union Square Ventures, who was my first investor of GroupMe at BetaWorks. And then Adam Dugeli from True Ventures, who had to, you know, run a music label for a while, small kind of indie label. They were in, but I will tell you,

almost everyone else who were my initial investors, at least the more institutional ones, were like anything but music. Like, please, Steve, you can do anything, but don't do a music company. And look, the fact that I'm on this show,

on a path, you know, to try to get to 100 million ARR here is like, is, it feels like you're building a, it's the effort probably required to get to a deck of corn. Yeah, exactly. So what about the music industry?

In a way, I'm thinking the music industry likes you because you get rid of their biggest headache, which is somebody makes an album and then their legal department has to clean up the mess. I think that's right. You know, I think in a moment, like, that's my thing in this space is not to be coming in and be like, I'm Mr. Disruptor. Technology is going to change everything. I'm not going to need your old. I actually, like, have worked really hard to build bridges with both the, you

you know, music industry, the music instrument side of the businesses. I haven't been like, you know, you know, fuck you guys. We're tech is coming in and cloud and AI is going to change everything. It's really been a attempt to build a harmonious relationship by just doing things better and understanding everybody's needs and desires. Like, we don't take away from any of the revenue that the labels and publishers, like we're only incremental if we work with their artists. We help them write music faster. So like, you know, in general, I think that, That's what's been cool about building a brand like this. It's a pretty loved brand.

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or somebody did it with the besties on all in and it you can have a conversation between Sax and Chamoth and me and Friedberg, and it tries to mimic our voices based on that. I'm wondering if you think an AI or ML for music where you and I could just say, gelato, put in a beat like this, make it sound like Biggie Smalls, make it sound like Biggie Smalls collaborating with Tupac. And, you know, boom, you all of a sudden have the beats emerge and then it samples

stuff and says, does this sound good? and you basically have an AI making music. Are you doing any AI or ML? Can I hum in to Splice at this point? Or I don't know if you have an app like Shazam did. Can I hum into it and have it say, try these samples? Or can I describe what I want and have it? You know, I say, hey, listen, I want to have like a drum that sounds like Neil Pert from Rush, rest in peace.

And, you know, but I want to have it with a little bit of, you know, whatever, you know, like Pink Floyd. I got answers for you. So, you know, all the progress on the AI front is this incredible. I think it's going to be a revolutionary space. And the key here is figuring out how to engage with the human side of it to pushing the art forward, not just replacing musicians. And I think that's so much of music, the narrative of the artist behind it and the story and community they build.

And like, that's an important part, right? So what we've been focusing on is more of the AI-assisted creation. So really helping in the music process. So the first thing we release is a feature called similar sounds, which is basically you find a sound you like on Splice, but it's not quite right. And there's a way to like kind of turn the fine tune knob, and it gets you all the,

either, you know, the timber is similar or the harmonics are similar. And like what you were saying, like I have this sound. It's not quite right, but I know I'm close. That same ethos I was saying around not wasting your time, you can press down several hundred times and find it, or you can press this button and you'll find it into two presses of down. Ah, so it's like the Amazon, if you like this, people want this, bought that, you know, kind of thing. But on the music, but on very much on the, you know, ML trained on the audio signal itself, which is very cool.

The next one that, yeah, go ahead. But if you do that, that means I might download your sample of this drumbeat, and then I might also download somebody else's two or three, so it increases consumption, right? Yeah, consumption goes up. Listening to it doesn't cost me money. but downloading it does. Correct, correct. Does that mean people could just rip it by listening to it? I mean, it's like a user experience thing, right?

It's like similar to the Spotify world and stuff like that. The ones you listen to on the site are a lower quality. You want the higher quality ones that you download and you pay credit for. And like, honestly, the workflow is just like, yes, you could rip it and put it through the thing. But like dragging it right into your DAW or having it be right into your music software, it's just a better experience. And so you try not to play. the cat and mouse game of piracy that much in the space.

What's really interesting about fair pricing is, I don't know if you remember this, but the radio stations used to have, they couldn't play a whole album, but they would play the side of an album. So when in the 80s, we used to know that like K Rock would play half of Pink Floyd's Dark Side of the Moon or, you know, whatever on this time or whatever. And we would get our cassette tapes out. Yeah, I remember that. We'd have $1 blank tapes and we'd record half of it.

Then we could record over it. We were like, people are stupid buying things. We could get it for free. And it was like, we were listening to Dark Side of the Moon on like a TDK tape that was like taped over 20 times. Yeah, it did not sound very good. Yeah. But you were going to say there's another piece to either piracy or M.S.

Yeah, some of the AI. So I think some of the stuff you'll see from us next is really assisting in the songwriting process in a way that I saw some tech recently. I'm just floored. And the way that we can use AIML to accelerate the songwriting process is so exciting to me. Give me an example. You know, like just the way that we can find compatible sounds from our library to kind of build out a track for someone is wild. And I think we're going to be sitting on a revolution of the songwriting process us in the next few months here that that is that is exciting so well it's kind of like you know Howard Stern is a great interviewer especially of musicians I think his his I don't have

you ever heard Howard interview musicians before yeah and he always talks about the songwriting process just had Elton John on it was particularly great did you hear the two part Elton John one that was like three hours oh my lord stop after this podcast just type in old John I mean he literally gets into it and he also had Paul McCartney on twice and he talked to the them about the songwriting process like we're talking about here. And it's always the same. Do you start with the lyrics? Do you start with the guitar riff? And everybody has a different process. Yeah, totally. And I think for Elton John, it was always they would have the music. And then he would just, the lyrics would come out of him. And then for McCartney, he would have some lyric and then he

would go to John and George and Ringo and he'd say, you know, well, she's got a ticket to Raja. And then they would like all of a sudden add the music to it. And you go back and forth like that. And the best I heard is my guy Mark Knopfler, you know, just talking about how he plays around with riffs on the guitars. Yeah. And he, you know, over the famous I Want My MTV and that little monologue like, look at those yo-yo's.

That's the way to do it, play a guitar on the MTV. He overheard that conversation in New York at an appliance store. These appliance guys were moving washers and dryers. And they were looking at the TVs at MTV. and laughing at these like idiots dressed in, you know, guys dressed in spandex. Like, look at those guys. That's the way you do it. You play the guitar on your MTV. And he literally was like, oh my God, he took out his pen and he wrote the lyrics down.

I love that. And it was like, so now you think about AI doing that. And it's like, okay, well, I have a guitar riff I like, what now? And it could actually be like, well, this would sound good with this drumbeat. And then it's like, how do you know it sounds good? It's like, well, if people told you would sound good, then the AI, figures it out, however, you know? Well, I think the key, too, is just, like, having the AI try, and then the person being

like, does that sound good or not, right? Like, and then quickly switching to the next one until you're like, oh, until you really feel it, right? And, like, I think that what's interesting, you know, the way you're even talking about it is the songwriting process, some people are good at one part of it. Some people are good at writing a melody. Some people are good at writing a beat. And, like, if software can help them move quicker to round out the whole thing, then, like,

they can get further and not be blocked. Or, you know, Beatles are just such incredible songwriters that you had access to the when you get stuck. You're like, you know, hey, John, what do you think of this? And not everybody's got that. And if the machine can at least help you unlock that in yourself and give you, you know, it's almost like a little jazz like. You lay something down and then it's giving you what it thinks is right to kind of play off

you. You know, how do you build a relationship with that that just lets you take music further? All right. So I know that like these splice samples have been used in Justin Timberlake, Justin Bieber, BTS, the weekend, all these like famous people have used it. Have you been able to go to a Justin Timberlake or a Justin Bieber and say, hey, we want you to make a library and then make that premium to be licensed into songs? And instead of it being royalty free, build a royalty level on top of it or premium packs.

You know, you play a video game like Fortnite. You get a certain number of weapons or whatever or skins for free. there's just like premium and that could be not royalty flee. So you could have splice and then you could have splice with royalties and you could maybe draw in the people who are even, you know, maybe don't want to be royalty free. They might let you use it for creative commons. And then if you do commercial, then you pay me. Yeah.

So this space has been, you know, on the radar for years. You know, the one side of me that is truly the tech side of me is like really going and securing music rights is like the most like unmee thing there is because that's like lots of permissions, lots of red tape. I like to build products kind of for the world. And so we've, that are in our control, right? So we started with what we've done. I think we've taken it very far. I think we're very open to exploring that kind of work. We've created some content for it. We've done some a little bit of licensing and experimenting in it. We see there's a great opportunity in it. We just have to get it. We have to get it. We have to get it.

right to go in there. And like, you know, even Apple, they just did, you know, I think Lady Gaga and Dual Lipa samples for garage band. But those are only for personal use. They're not for commercial at all. They're just, they're in there to kind of play and get a feel of the creator tools. That's how hard it is. Like it's not, Apple's not even getting that from them. So we do want to get it right. We want it to be, we think we love the original content. We think there's so much fresh content to create that, you know, getting blocked on licensing existing content is. is a long road, it's a hard road. But we are very open to it.

We're very open to exploring it if we can bring the right user experience to make that truly seamless and really make sense to our users and interact with the rest of the industry the right way. Curious what you think of freesound.org? I know when I was doing my research, it came up. They've got 500,000 samples now, so whatever, you have three or four million. And they've been, I think you have three or four million. They've been sort of collecting free sounds as Creative Commons. What do you think of those kind of projects?

And are they getting Steam? Are they competitors? Yeah. No, I think that there's, you know, Free Sound is a great thing to exist in the world. More sounds, if that's where people want to grab them from. I just, like, don't know how they handle originality and, you know, the way that we, and the quality level that I know we have on the platform.

Like, it's just a question of where you want to spend your time. You can go browse around the Free Sound Library or you can pay $10 a month and have access to what I know is incredibly high quality and, incredibly. But like, look, I'm in the land in this music innovation stuff where I welcome every, like, I say my biggest competition is people giving up on themselves. Because there's so many people who want to create. It's like this inert human desire to be creative and all these kids want to be, you know, standout content creators now. So like, I'm not worried about anyone else in my space. I'm worried about can I keep people engaged? Can I keep you a lifelong musician?

Can I deliver you great value in product? And the more, I think what's not, nice about us is we've actually helped some of these other companies been able to raise money and just like even to get a shot at a seed stage because the music is too small of a market thing. You know, we've kind of like started to show that maybe it's bigger. And the creator economy and all the COVID. I mean, we had a billion samples listened to during those first two months of lockdown last year. You know, it's a 400 million samples being listened to a month on the platform. And so, like, there are people, people want to create. And, and so I'm, you know, I just think there's such a big market opportunity here. People are finally waking up to it. And, you know,

I'm, I'm welcoming all of the angles trying to make creativity flow in the world. So Apple has started to dip their toe in here. They just announced last week that they have sound packs from Duelupa and Lady Gaga and some great producers in Garage Band. They're building a lot of, in seemingly competitive, but I couldn't figure out when I read that release if it was just like educational, inspirational, but I don't know if it's royalty-free or not. So is Apple just straight up copying your business model? Are they going to be your biggest competitor? Look, I have welcomed Apple as a competitor and, you know, the group me world. I have like, you know, if Apple's not going to be your competitor. But is this, do you look at that thing they announced

is like it's educational? No, it's educational. It's like if you, that's what I said, free though? No, but what I was saying before is they don't give you a commercial license to do anything with it. Oh, okay. So it's completely different. It's really for play and learning the software, which is good for me because the more people who learn how to use the stuff and then want to go on to make, you know, actual

tracks, they're going to come in my direction. It's a sandbox, basically. It's a sandbox, yeah. Yeah, but it's great. I mean, like, they've got that device on everyone's phone. Like, if they can get people and spy. How many times have they offered to buy you? My God, Apple must want your product.

I mean, if you were part of garage ban, that would just be killer for them. Yeah, put in the, put in the, put it. in the good word, no. Exactly. No, I, like, look, I, the one thing that's, like, serious about this journey that's been, you know, whenever an acquisition offer or anything like that has come up over the years, it's like to be able to do something so independent that we are doing so well for musicians, this is a unique spot.

The fact that it's not, like, directly Facebook competing with me or all this, that I'm in this kind of unique lane that no one understands. I like, this is a unique spot to be in right now. So I'm pretty happy to be building an independent company. Well, you know, the other thing that's good about is you're a third-time entrepreneur. You made a little bit of chatter on message me. So you can go long. It's not like you have to worry about paying your rent or your apartment or something.

Correct. And this is the kind of business where it seems really easy to do, but it's not easy to scale. I mean, you have to build this thing for 20 years to get it where it needs to be. Group me rather. Sorry. I can say message me for some reason. But you would have to build this for 20 years to kind of get it to your vision, I think. And you're what, seven years in?

So you've got a long way to go. And like, you know, I say I want to build the most iconic company in music history. So, you know, that's going to take some time. And, you know, that's, it's, there's so much zero. I'm a really good zero to one guy, like, you know, creating something from nothing. And there's so many parts of the stack here to be innovating in that there's kind of an endless appetite for continuing to improve this space. Yeah, this could be the one way you scale it, right?

You do both, both acts. I mean, Steve Jobs was just not good at scaling. He was a zero to one guy. and then he added being a one to a billion guy. You know, it just took him a little while to do that. And so I'm curious just talking about being entrepreneur and entrepreneur to entrepreneur. You know, you're part of the Web 2.0 kind of stuff

like I was when things were worth $30 million or I think you sold, message me for $80 million or something, maybe $5 million. Group me, sorry, I keep saying message me. Group me, you sold for $85 million, I think, to Skype? That's the number in the press. That's the number in the press. Could be a little, yeah,

some people don't know. It could be air announced. It could be a little more. could be a little less, whatever. So that was obviously selling too early, except people don't realize when at that era, that was an incredible price. But in today's era,

it could have wound up being slack or WhatsApp. So you learn that lesson. And then today, you can do secondary sales, which you weren't allowed to do back in the day, and you can smack stuff. So just as an entrepreneur, what do you think about this new landscape? What's amazing about it and what's bad about it here

20 years later in your entrepreneurial? journey or so. Oh, man. I mean, look, group me was so fast, right? We sold that 13 months in. You know, I heard recently it's got 100 million users and like, you know, double digit, a million active dailies. Like, it's kind of amazing. And, you know, you said the Slack thing. I remember after we sold it, I was doing a hack week project. My project was just to look at the domain names of the users who had signed up. And then we had 7,000 Verizon employees, 7,000 Best Buy employees. We were Slack in yeah,

yeah, it's like inside of yeah, because there was no, people were using Yahoo Messenger at that time. Remember that? Like companies would be like,

they just get on Yahoo Messenger messenger, you're like, what? Like, yeah, that's what we use. So the thing that's interesting

about it to me was that like, you know, like at that point in time when you have that amount of money being, you know, offered to you,

it's like it really is life changing. And, and, you know, it was also us against the big scary, you know, Skype's and Facebooks and all that's, the Facebook Messenger,

had just come out, I message had just come out, like, it was like, it was a journey. I remember an IMess PM who like interviewed at Splice said like my job for two years was to copy everything you made it. That's a moment of candidness. It was nice. My favorite feature was the, you know, like emojis when you send them and they go big if you send them on their own? Yeah.

We did that and group me first before anybody and that was a fun one. That's wild. I'm glad is out of the world. They literally just stole it. Wow. I mean, look, Apple's not as bad as like. Facebook, which is just brutal how they just relentlessly steal from founders. I can't take them.

Yeah, and so like, you know, the SPAC thing is really interesting. Blade went public through a SPAC this year. It did. I didn't realize that. How's it doing? Yeah, it's doing, it's doing well. It's out there in the market. It's like, you know, there's a, it's one of those ones that has a real business right now

and the potential to become something, you know, really big with the electronic, you know, take off from vertical, Vitol. Yep. And so Rob's done a great job kind of leading that into a public company, which is cool. And then with GroupMe, I mean, with Splice, it's just a constant looking at what our best path is to fulfilling that most iconic company in music history. I think we really do have options. It's crazy to be that I'm doing this for seven plus years. Like I've, it's been wild, but it's been exciting.

And to know that there are more capital options than ever to, to kind of, yeah, I love. You're actually, you're over 50 million in revenue, I'm sure, or close around that range. So you could SPAC right now. How do you think about that? Would you want to SPAC and be public? Or would you rather have the, be able to build in stealth and not disclose numbers? Because right now,

like everybody knows you. So retail investors on Robin Hood, they kind of probably some overlap with, you know, it's kind of like Robin Hood going public. It's like, well, there's the inception moment.

Like you going public, there's a lot of young people or Fortnite going public. You know, people buy what they know. So you can get a big investor base. I think we just got to keep weighing what's right. the overhead of being a public company, the, you know, predictability of that.

Do we, you know, we have options. And we have a ton of cash in the bank right now. So we're in a good spot. And, you know, that's just what we're plotting all the time is figure out how to build this into a big independent company. Amazing. What have you learned about managing people and growing businesses through three startups? It's hard, man.

You know, my zero to one days are really, I think the transition from a founder to CEO is a journey. And, you know, I think it's, I'm always learning on it, really trying to lead and empower people. You know, really glad that we've articulated good company values, mission vision, all that stuff. It's amazing, how powerful. Like that transition from when you can tell everybody the thing to like, wait, no, I need documents and really learning at scale. And it's a constant, it's a constant journey for me. I edit that one too, you know, like the idea of like documenting something was something that was kind of forced on us. by the pandemic, right?

And fortunately you go remote. So now I'm like, you know what? I'm no longer going to manage by talking to people. I'm going to manage by people writing reports. And it sounds like TPS reports, but people actually writing their plan down. Yeah. It's kind of fucking cool because you really like, it's like, oh, people are going to read my plan?

I better think my plan through. And then I better read it twice and I better learn how to write. And so I'm literally teaching people who work for me. I'm like, okay, here's Grammally and here's the Hemingway app. I don't know if you've used either of those. I've heard about them, but I haven't. Oh my God. They're both, they're life-changing.

I don't know who copied who, but they're very similar. I use both. And like you go to Hemingway app or you go to Gramerly. It's like, you're in the passive voice, right in the active voice. Oh, so great. This is a long sentence. This shit is too confusing. Or, and then like, even Grammally is so dope now.

They're like, are you writing professionally? what's your goal here? Do you want to be intense? Do you want to be clear? So it actually lets you set what your goal is. And then writing stuff simply, I just went through a whole clinic with deal memos, because we syndicate deals on the syndicate.com. And I'm trying to teach my team how to do, and founders how to write a deal memo. And I'm like, okay, you know what? I could teach you how to write. It's going to take me f***ing days. Just get grammarly or Hemingway, put it in there and look for the, and just read up on passive voice. And just if you just change passive voice and don't make, Anytime you get to 10 words in a sentence, ask yourself, you know, just be prepared to start the second sentence.

Wow. When you get to word, this is my best advice to people want to be writers. Active voice. And when you get to the 10th word in a sentence, just please for the love of God, consider a period. Like, don't do what I do. I'm a professional writer. I can write a compound sentence. I can write a compound.

I can write a, like, paragraph that is multiple, you know, commas and m-dashes. that shit is complex. That's kung fu writing. Don't do it. You know, that's Mark Knopfler. Stay out of that. Just write like Hemingway. One sentence, 10 to 15 words are done. Oh, I like that. Yeah. I mean, I'm checking these out because, you know, that's the counselor. You know, it's like when I get into the flow, it goes, but it's always so daunting to me. It really is. And I spend so much time correcting stuff that I'm like, oh, I wish I could just talk to someone, you know. But yeah, I think I can be... When you get to your second sentence,

yeah, it's time for a new paragraph. When you get to 10 words, it's time to think about the period. And you are not qualified to use more than one comma in a sentence. Unless you want to be a professional writer and you have a writing coach and an editor, one comma max, 10 to 15 words, you got to get that period dropped. Two sentences, it's time for a new paragraph. Love it. And, you know, like a lot of times for writers and in business writing,

one sentence, one point. Not one sentence, four points. Four sentences, four points. Four, you know, two points, one paragraph, you know, max. Five, six, seven points. You know, that's got to be two or three paragraphs. I'm really trying to cut down the number of times I use and in sentences at this point too.

And it's like, and then that, you know, and it's, you know, I think I'm trending in the right direction based on your criteria. Well, I mean, think about this. Like if you're talking about splice and you're like, it's for people who want to add drums, guitars, sounds, whatever. And it's like, no, it's for people who want to make music. Yeah. And that's, you know, and even as we float, period.

Period. And as we flowed in the conversation, like, I could have said, we also sell software. We also do this. But like, we focused on. You have the plug in store, right? You have the plug in store. We have collaboration software. It's another thought.

Right. That's another paragraph. Or here we go, folks. in the right that we have a writing clinic here or it's time for a subhead where you hit heading two we're heading three and you know word or google docs you say i'm going to put plugins and then you start the plug in discussion so like samples plugins you know and whatever else you're doing are just separate pages in the document i'm i'm you are professional writing huh well i mean i started as a journalist and i know yeah i know it's i was a self-taught so what i happened to me was when

in New York. I had all these Columbia and Barnard grads, was Barnard, maybe, mostly women from Barnard. And Kieran, Stacey, shout out to all the folks at Silicon Reporter, but in 96. And they were like, you're writing a magazine, you don't know how to write. And they were like editors and they were proofers and they were 20 years old and I was 23 or 24 and they were just like, we'll just edit it for you. Here's how to write. They taught me a lot of that stuff over time, you know. I think the one that I'm trying to figure out now is how to like, you know, on product and design sense. Like, I don't really know my process.

Like, I just do it. And I'm trying to, like, extract that as we do it, you know, like, oh, how do you look at that? Like, what is the principle you're using? I'm like, I don't know. But now I'm trying to really, for my team's sake, trying to really extract out what I'm doing in this process because it's like, I don't even know, you know. Yeah, you need to come up with the heuristics.

Right. You know, like, in chess, I was playing chess with David Sachs and we played a game and it's like, control the center of the board. I'm like, that's a great. great way to say. Yeah, sum it up real clean. And he's like,

unnecessary pawn movements, you know, too many pawn movements, not enough development of your other pieces. And I was like, okay. Like now I added those two things to my game. And then I was playing poker with Annie Duke.

And she, uh, she invited me to a coaching session she did before a tournament. And I went. And she was just like, I'm going to give you two pieces of advice. Number one, don't play under the gun seats one,

two, and three unless you have a big pair, uh, or Ace King. because you've got so many people who are going to raise you and you're a new player. You don't know how to deal with all those people who are going to raise you after that. So just take those three hands and that's when you can study other players. And that was her second tip. When you're not in the hand, watch the other players.

Don't look at your Blackberry dating the conversation. Just stare at the other players and try to predict what they're going to do. And I was like, wow, thank you, Andy Duke. And then I got coached by another guy, Phil Helmuth. And then my other friends guy dated. That's a good coach. Well, Phil is out of my best friends. I'm actually here in Italy with Phil.

We're playing some cards. Phil is, you know, he's an incredible player and he knows how to lay down big hands. People forget why Phil Helmue is the world's greatest Texas Holden player. It really is three things. And I was talking to him about this at two in the morning last night. One, he can lay down big hands. So he can lay down a king high flush. He can lay down the smaller boat on the board to the two bigger boats.

He can lay down the sucker straight, which is the lower end of the straight. You know, you've got 9-10 and I've got the 4. five, six part of the straight. So being able to lay down big hands for big pots. And then he is also able to read people very well. And the third thing is people want to play into him because it's the poker brat. So that whole strategy of being obnoxious at the table or starting fights with people, it means people want to get revenge on him so they'll play into him.

If they play into him 10% more, that means they're going to be playing 10% worse hands. Right. And then if he plays 10% better hands because he's more disciplined, now he's just EV positive. Oh, I love that. They're just like knowing where you sit in people's minds at the table. Correct, correct. Yeah, yeah.

And I think like every single pursuit in life has some basic heuristics. So in product design, like I was on your site, it's elegantly simple. Like there's not a lot of cruft. And I think taking stuff out is one of the best heuristics I've ever seen. And that is what Apple does. Apple looks at every product and says, what can we remove? Yeah. And then like, you know, Microsoft for a long time was like, yeah, what can we?

we add to these drop downs? What can we add to the, yeah. Bill Gates is like, okay, Microsoft Word, we've only got eight drop downs. Can we get one more? Can we get a ninth drop down? You know, and then Apple's like, you know what? All the shit is bull-put, put it in the control center. You're like, what's control center? It's like, let's make control center so people can get to stuff in two clicks. Right. Because right now they're having to hunt and pack. Like, I mean, I think that's also a big function of having to deal with enterprise customers, right, who won't buy your thing unless it has this feature. So you're like, okay, I'll get this feature in. Unlike Apple, who can just be like, this is how it should be and come along if you want to.

All right, folks, we got another winner on the program. Hey, guys, producers, I'm going to say six months. Let's have them on again six months. Oh, I love that. Congratulations on your great success. Jason, thank you so much. I'll have you on. I want to start doing the news roundtable again, and you seem like you're pretty brave

and fearless and that you would talk about other topics in tech. Some people won't because they're afraid of stepping on people's toes. But you seem like you would do a news roundtable pretty well. I think I would. put you in rotation on the news roundtable, I think. All right. Listen, continued success.

I assume you're hiring since you raised a big war chest and you're growing so fast. So jobs. Jobs.com or Splice.com slash jobs? Try either one. They're probably both work. All right. First name at Splice. And what do you need?

You need MLAI engineers. I always take M-I. Always engineers. Come on board. Build the coolest software in the world for musicians. Pre-IPO, folks. Get in there. All right.

We'll see you all next time. Bye. Bye.