SC-100 · Expert
"Scott" Yusuke Sugino: Insights From Yamaha
Guest: Yusuke Sugino, President and CEO of Yamaha Music Innovations
Summary
Yusuke Sugino, known on the podcast as Scott, is president and CEO of Yamaha Music Innovations after 17 years at Yamaha. He started in the company's semiconductor division selling chips to smartphone, TV and automotive manufacturers, then moved into corporate planning and a sales role in Europe before being chosen to lead Yamaha into music tech investment.
Yamaha is investing 50 million US dollars in audio tech and music tech. Host Jakob Wredstrøm describes music tech startups as often underfinanced compared with other industries and cites research that only about 10% of VCs help startups beyond the money. Sugino says that matches his own hypothesis that most VCs invest but do not help, and admits people often call music too hard to invest in, a view he partly shares.
The fund launches in May and targets seed and Series A rounds with minor, non-lead investments, aiming for a board observer seat rather than control. Sugino expects full fund returns to take six, seven years at minimum, but says smaller, quicker wins can come sooner through direct collaborations, using Yamaha's business units to run proofs of concept with startups alongside or even without investment.
As of the episode's release on 18 March 2025.
Key takeaways
- 01Sugino admits people often call music too hard to invest in and partly agrees, but Yamaha still invests because the basic relationship between artists making music and fans enjoying it has never changed.
- 02Sugino agrees with the host's view that most VCs invest but do not help startups beyond financing, and says Yamaha has to support startups over the longer term.
- 03Yamaha's fund plans minor, non-lead investments at seed and Series A stage, aiming for a board observer seat rather than a controlling position.
- 04Sugino expects full fund returns to take six, seven years at minimum, but sees smaller strategic wins sooner through direct collaborations with Yamaha's own business units.
- 05He was chosen to lead the fund partly from his background in corporate planning and European sales, which gave him a deeper understanding of Yamaha itself.
- 06Yamaha has already run some collaborations and proofs of concept with startups this year without making a direct investment.
Guest
- Yusuke Sugino, President and CEO at Yamaha Music Innovations
Questions this episode answers
How much do VCs actually help music tech startups beyond financing?
Jakob Wredstrøm cites research suggesting that about 90% of VCs do not contribute to startup success beyond the money, with only around 10% helping with the actual business. Sugino says this matches his own hypothesis that most VCs invest but do not help, and sees it as one reason startups in music find it hard to grow.
Why does Yamaha invest in music tech if many say it is too hard to invest in?
Sugino acknowledges that people often call music too hard to invest in and says he partly agrees. Yamaha still believes it should invest in music, because the basic structure of artists making music and fans enjoying it has never changed, even as the medium moved from cassettes and CDs to streaming.
What stage and size of investments will Yamaha's new fund make?
Sugino says the fund is primarily thinking about minor investments rather than taking the lead of a startup's board, hoping instead to become a board observer. He says the fund is more likely to target early stages such as seed and Series A rounds than larger, later rounds.
How long does Yusuke Sugino expect it to take for Yamaha's fund to show returns?
Sugino says the fund had not started as of the interview and would begin in May, and that full financial returns on the fund take six, seven years at minimum since it takes time for startups to grow. He distinguishes those slower fund returns from quicker, smaller strategic wins.
How does Yamaha plan to support startups beyond writing a check?
Sugino says Yamaha can push its own business units to collaborate with or contribute to startups through proofs of concept and smaller collaborations, some of which have already started this year without any investment. He sees this as a way to build toward bigger joint projects over time.
sometimes people say music is too hard to invest. Okay, that's fair enough and I also agree to some extent. But still, we believe in we should invest in music
Episode notes
President & CEO of Yamaha Music Innovations, Yusuke Sugino details his 17-year journey from semiconductor sales to European market leadership, and why he was chosen to spearhead this bold initiative. We dive into the challenges of financing music tech startups, the long-term vision for Yamaha’s fund, and how the company plans to support founders beyond capital—leveraging their global brand, customer base, and deep industry expertise.
Visit their website: https://www.yamaha.com/en/
Sponsored by Allfeat: Decentralized Blockchain Solutions for the Music Industry - https://www.allfeat.com/
Produced by Amplitude Ventures Consulting: Partners in Early-Stage Music Tech - https://amplitude.ventures
Topics
- Music Tech Funding
- Corporate Venture Capital
- Startup Support
- VC Behavior
- Yamaha's New Fund
Transcript
Transcribed from the recording by the production team. Names and terms may be misspelled.
Read the full transcript
Jakob
Hey guys and welcome back to the Sound Connections Podcast. Today I've been really looking forward to this episode. It is with Scott from Yamaha. Welcome.
Scott YAMAHA
Hi, good to be here. Thanks, Neppo.
Jakob
I read an article, I guess it's two months ago, where Yamaha announced that they're going to be investing 50 million US dollars in audio tech and music tech, which I thought, that's really interesting. And I asked Scott to be on the podcast and he said, yes. So thank you for being here.
Scott YAMAHA
Hi, nice meeting you, Jekyll.
Jakob
Scott, for the people who don't know who you are, can you tell us who you and what you do?
Scott YAMAHA
Right, my name is Scott Sugino. I am now president and CEO of Yamaha Music Innovations. You might be surprised, I worked for Yamaha for 17 years. That's a long time. And now, the company started to start off fun. I'll be in charge of that to start.
Jakob
You
Jakob
Amazing. And now you're based in Silicon Valley and you know, I've read the press releases and I'm really excited to sort of go deep into the reasoning for doing this. Obviously music and audio is at a crossroad now, probably for the better. Maybe if not, like it's very unknown. I'm definitely more positive now than I was a So it's really interesting to sort of follow and figure out like what is your reason, Yamaha's reason to do this and strike this. Scott, just to get some context in your conversation and your perspectives, you said you've been working with Yamaha for 17 years. Can you just briefly go through the journey with Yamaha and why you are leading this effort?
Scott YAMAHA
Right, I started my career from very niche division where we called it semiconductor division. I have been promoting semiconductor chips to like a smartphone manufacturer, TV manufacturer and some automotive guys. After that, I was transferred to corporate planning division where now I really start understanding Yamaha's main business, which is of course music instrument and audio equipment. After spending three, four years, the company transferred me to Europe where I was managing as European sales subs as a part of both team and I have been faced one biggest issue in Europe which was honestly I have to say musical instrument market is more matured not growing aggressively as it should be that's one of the biggest reason we how Yamaha started this corporate venturing
Jakob
Hmm.
Scott YAMAHA
We need something to boost the market and also our business. That's the one reason behind.
Jakob
Hmm.
Jakob
Yeah. And that makes sense. you know, Yamaha has been, I don't know how long it's been, you know, but since I was very, very kid, you know, that's been in homes and music has definitely fundamentally changed the last 30 years. And I can imagine how Yamaha also produces and looks at music. So what in particular was, was the reason that you got chosen for this?
Scott YAMAHA
Right! Yes, that's an interesting question. Maybe I would say because I was in corporate planning and also I was in the market field in Europe, it was sales and loans, therefore I do understand both sides. At HQ, corporate planning, I could really understand what kind of assets we have internally and also some business needs and issues which every business unit has.
Jakob
Hmm.
Scott YAMAHA
That was I think some deeper understanding of ourself, I Yamaha itself is one of the biggest reasons I was chosen. Hopefully. And plus you might be again surprised we have got 138 years.
Jakob
Hmm.
Jakob
Yeah, okay, I didn't know there was that one. Okay. Yeah, so I definitely do remember it. That's for sure. Amazing. basically, I might be paraphrasing, but just to understand the basics before we go into the conversation is, Yama has seen, especially in Europe or the Western markets, that instruments and music has matured. It's a market that's not disproportionately growing. And...
Scott YAMAHA
Mm-hmm.
Jakob
Yamahashi's and believe that there's still an opportunity music you guys want to partake in those new opportunities that are involved and that's the reason why this
Scott YAMAHA
Yeah, totally. And plus I would add about timing. Why now? Okay, during 138 years a lot of things happened. But right now looks like one of the biggest changes in music tech and industry could happen. Of course, affected by AI. And not only that, people listen to music, how people enjoy the music, both physically and digitally, is...
Jakob
Hmm.
Scott YAMAHA
strongly changing right now. That's also one point why we starting about now.
Jakob
Mm.
Jakob
Yeah, that's really interesting. We talked briefly about before the episode that you were listening to Daniel Núñez, the music industry professor's conversation. And he's very optimist about the music industry, which is really interesting. You might have noticed that I came quite depressed into that conversation, but that's the beauty. And it's really this...
Scott YAMAHA
Mm-hmm.
Jakob
Is it going this way? Is it going that way? And, as far as I understand, like the people who really knows where they're talking about, which is not me, they're optimistic, which, which is great. and I'm in the journey myself through sort of our activities to also figure out where's the opportunity music tech, because, know, frankly speaking, music tech is an interesting industry. and, oftentimes you see very underfinanced startups. you see, that are not living up to the opportunities they usually have from other industries because it is a particular beast and oftentimes it's smaller. It doesn't mean that there can't be outsized returns on your tickets, on your investments. It just means that it's a different space. What's really interesting about Yamaha is that you guys come with a lot of years of experience within this space. And I guess that's also the biggest differentiating factor from a lot of the VCs that I have relationships with.
Scott YAMAHA
Mm-hmm.
Scott YAMAHA
Thanks.
Scott YAMAHA
Mm-hmm.
Jakob
that has music as a vertical, but it's a part of, it might be part of gaming or lifestyle or whatever. So it's sort of packaged in many different things where VCs might say, music is something to invest in, but in reality, there's four investments in a portfolio that's music, if that makes sense. And as far as I understand your objective, you guys are going heavily for audio and music tech. Yeah. So 50 million US dollars is obviously a good amount within this space. Where do you see this going? Like, where do you guys see the potential?
Scott YAMAHA
Mm-hmm.
Scott YAMAHA
Right, as you just said, knowing we have some complexity and difficulty in this industry, sometimes people say music is too hard to invest. Okay, that's fair enough and I also agree to some extent. But still, we believe in we should invest in music, primarily out of 50 million. The thing, especially also after listening to your conversation, between you and your professors. You said you were even some negative sort of? And he was like an opposite. Now, at the same time, I was thinking like, okay, lot of changes happening right now. But I also noticed something that doesn't change, that will not change even after 138 years. The very simple, simplistic way, they have got artists one side.
Jakob
Mm. Yep.
Scott YAMAHA
the other side with some fans and audience. They play some music, they create some music, they play, they listen and enjoy music. Throughout some, okay, over history, there was cassette, vinyl, CD, MD, CD, streaming and such, also some interesting medium. But this kind of structure will never ever change. Okay, in Europe, you guys invented the musical instrument, in record.
Jakob
Hmm.
Jakob
Hmm.
Jakob
Hmm.
Jakob
Mm.
Scott YAMAHA
mid-century or even before that some, okay, Bujo people supported, sponsored, they forced the artists, let them play, and they somehow the more rich people enjoyed it. Okay, who plays and who will enjoy the music and how?
Jakob
Hmm.
Scott YAMAHA
How could be changed, but this kind of static structure has never ever changed. That was my belief, therefore, I am going to in constructed way or structured way, investing this structure of the music tech. The content itself can be changed. That's my initial thought also after listening to your podcast as well.
Jakob
Yeah.
Jakob
Hmm.
Jakob
Yeah. Well, it's so interesting because obviously, obviously it's going to be very hard to argue with that. And, know, I definitely agree and believe that. And it's not even a question that's correct. I think what the traditional argument is beyond that, it's not so much can to be made money on music. Is compared to where I can make my money elsewhere. That's off the argument. Because in our sort of venture studio structure, have 22 investors and you know, let's be frank, like none of them are from music. So they've invested in team because I can't confidently say like from an industry perspective, this is better than others. But what I can say is I believe that we have an angle that is a unique opportunity that could fit into your portfolio.
Scott YAMAHA
Mm-hmm.
Scott YAMAHA
Mm-hmm.
Jakob
So, yeah, oftentimes I try to myself not precision music as something incredibly different. Oftentimes it's weaker in general, but with that there also comes an opportunity because then specialized experience oftentimes is what it takes to be successful. Is that also your philosophy to it? Like, where do you, again, know, Yamaha also does more things than just music. You have chosen music for a reason to set this up with.
Scott YAMAHA
Mm-hmm.
Scott YAMAHA
Mm-hmm.
Jakob
Where do you see the opportunity that others might not see it?
Scott YAMAHA
Right, and I don't think we have really new out of nowhere. I would rather see music as more fundamental of human beings desire. You know, Jacob, you have got small children, I've got small son. We just found out we don't need to teach kids about music.
Jakob
Hmm.
Jakob
No.
Scott YAMAHA
They can just start singing, start dancing with music without being taught. That's an... I think again, it's same for ancient human beings. They invented half-wires, they naturally start dancing, doing some festival. That's on top of static structure between artists and fans. And also fundamentally, the strong desire or design in our DNA about music.
Jakob
Mm.
Jakob
Thank
Scott YAMAHA
Is not going to go away. AI cannot take this from us. That's also one belief. And music is going to exist in 2800 years, for example. That's something I'm confident about, to be honest.
Jakob
Hmm.
Jakob
Is it, you've mentioned several times that Yamaha is old. And what I'm wondering when I hear you talk is because you see music as a fundamental and you might be more patient than other investors. So, you know, we got to invest and we got to sort of liquidate within 10 years, which obviously probably also is your philosophy. But I can imagine that you also look at music at a longer timeline.
Scott YAMAHA
Right, that's right.
Scott YAMAHA
Thank
Jakob
Than just here and now and sitting up in VC. That makes sense. Does that play into this whole decision?
Scott YAMAHA
Mm-hmm.
Scott YAMAHA
Yeah.
Scott YAMAHA
You're sure and I think we have to invest in support startups in a longer term. Otherwise, that's really not working. Same thing in the musical instrument. Students, we have to keep teaching boys and girls to master music piano. They might have purchased one digital piano, for example, 10 years old. Think they would, they might come back after five to 10 years again. So that's on how longer time.
Jakob
Yep.
Jakob
Yeah.
Jakob
Yeah.
Jakob
Mm.
Scott YAMAHA
Or longer connection is needed in this industry that's based on our experience.
Jakob
And how do you balance the view on like returns on the actual fund within a given timeframe and then the long-term effects and you know, synergy with what Yamaha has as a brand? Like how do you calculate those two up against each other?
Scott YAMAHA
Right, think, okay, to be fair, we have not started yet. We're starting in May, so that's a how, but my design of my Blueprints would be, let's say, returns. I think we have to wait six, seven years at minimum. It takes time to for startups to grow. But when it comes to strategic return, we've got quicker, smaller one than bigger one. When comes to like a smaller, quicker one, this is something we can utilize Yamaha's assets, which I have understood in corporate planning times. And we can push our HQ of business units to collaborate or even contribute to startups. Some POCs, some collaborations, that's something I can say as a quicker, smaller collaborations.
Jakob
Hmm.
Jakob
Hmm.
Scott YAMAHA
We have already started several collaborations even without investment already in this year. Okay, let's keep on expanding our collaboration and let's sometimes utilize investment cards sometimes. And then we can finally make a big project together with startups to really impact music culture or musicians' life and creativity itself. That's how I see it. This could take some longer time compared to...
Jakob
Mm.
Scott YAMAHA
But this is kind of a portfolio in terms of timeline of returns. Otherwise, my boss from Japan is going to call me, what are you doing? I have to be accountable for it as well.
Jakob
Hmm. Yeah.
Jakob
Yeah, no absolutely, 100%. So what is the expectation from Yamaha? Do you guys have any public KPIs that you would need to hit with this fund?
Scott YAMAHA
No, that's something okay to be honest I'm still discussing with them as well. Because I have to explain this sometimes takes time. But the direction which I am looking at those Yamaha the corporates looking is and almost aligned in regard of okay first. We already have a specific KPI button.
Jakob
Mm. Hmm.
Scott YAMAHA
How we expand, grow, contribute to musicians, that's strong direction which we both pass through. For example, number of musicians has been improved or grown up. The, okay, in the matter of fact, some students is dropped out after they purchase piano and guitar after three months is okay, this is too hard, too difficult. I'm busy with something else and I stupid. If we could somehow extend prolong,
Jakob
Hmm.
Jakob
Hmm.
Scott YAMAHA
How much they enjoy playing piano and guitar. That's definitely one of the biggest strategic returns for Yamaha already.
Jakob
Yeah, okay, that makes sense. Retention, like retention through technology.
Scott YAMAHA
Yeah, exactly. That's strong differentiation from us being a CBC and just against pure financial venture capital.
Jakob
Yeah, it's really interesting and I think it does answer a lot of my questions as of why. Obviously, I support and cheer you guys on, but there's also a big question like why? And basically what you're saying is you believe that a big contribution to your financial return short term will also be a part of you guys having... powers to potentially help or make things faster or better for the startups you invest in. So that's sort of like a quite unique value proposition you have, but then also at the long run, besides the financial returns, you are investing into your relevance over time. You're investing into retention of the products that people use that they're from you. And that's sort of two side of things I definitely see can argue for setting up this.
Scott YAMAHA
Mm-hmm.
Jakob
What is your take on the current investment landscape or the previous investment landscape that has been in music tech in general? Like how do you read the market? Like do you believe it to be under financed? Do believe it to be appropriately financed? Like what's your experience or reflections upon what has been when it comes to music tech financing?
Scott YAMAHA
Mmm. If you ask me about financial aspects of music tech, have to openly publicly admit I'm not that experienced investors. I'm more like a pure beginner in this industry to be honest. You have to educate me how to do it. But this is something that I'm just working on right now and then trying to how to say. Welcome very experienced...
Jakob
Ha!
Scott YAMAHA
Investors and also financial. manager in our team. So I think they can help in terms of financial way and I think we the point Yamaha to succeed is how we can integrate both financial aspects and strategic aspects. Especially because market is not that easy in terms of financial things. And I have mentioned utilizing our assets is one of key and also I think Yamaha is the only one who can do strongly help
Jakob
Mmm.
Jakob
Hmm.
Jakob
Yeah.
Scott YAMAHA
Startups or founders, which most VCs cannot do. That's how we saw it.
Jakob
Yep. Yeah, not because everything you read on LinkedIn is credible, but I read a quite interesting long post on LinkedIn that was sort of like professional survey about Basis. And the post was, again, I don't know how credible it was, but it was a very interesting read.
Scott YAMAHA
Mm-hmm.
Jakob
90 % of VCs do not contribute to startup success and they're believed to be, I might be butchering the numbers, but 30 to 40 % of VCs that are directly counterproductive to startup success. In other words, like only 10 % of VCs effort to help startups with the actual business beyond financing.
Scott YAMAHA
In.
Jakob
Which for me was just very surprising because I think the sentiment for VCs, and it might just be a personal excuse for working in a very capitalistic environment, is we also help startups. Which I oftentimes struggle to see how even, again, we have different investors in our portfolio and I'm very happy they're on board. But most of the times if one of my investors has an opinion, I listen to it, but as that, as an opinion. Rarely do you find people who are more qualified to address how I run my business than me and my chairman. That's what I listen to and everything else is like a qualified opinion and I'll give it my best. That's also how I most investors. It's rarely that they have enough feel and touch on what someone is doing to actually understand like how they need to approach it.
Scott YAMAHA
Yeah, that's absolutely also matching with my hypothesis, let's say. Because as you just said, 90 % of VCs kindly invest, but they don't help startups. That is also one of the biggest reasons it's a little bit for hard times and tough times for startups to grow in this industry. So that's something Yamaha, even though we just came here in last year,
Jakob
Hmm.
Jakob
Hmm.
Scott YAMAHA
Quite great to come here but you know but also having said we have got some strong assets in this industry and plus some fans to invest so I think this I say like a double whiz to run
Jakob
Hmm.
Jakob
Yeah. And obviously like the goal of a fund is selling stuff at the end of the day, right? And I think it's very realistic to say that Yamaha will probably be experts in M &A's, like probably experts in buying and selling stuff within this space. And at the end of the day, like that is what finances a fund. That is what sort of returns the investment. So it's very interesting.
Scott YAMAHA
It's good, yeah.
Scott YAMAHA
Yeah, yeah.
Jakob
I'm sort of stroking back to my question, and you did answer it perfectly, but I'm just trying to reiterate it just to see if I can get a clear answer of it. Where do you believe the financing level has been in music tech until now? Do you believe it's been under-financed? You believe it's been appropriately financed? I know you said you sort of knew, but what has been still a sense of it this last year?
Scott YAMAHA
So what do you mean in terms of investment, financial?
Jakob
Macro level, do you believe that the investment environment for music tech startups has been favorable? What environment are you guys placing yourself in?
Scott YAMAHA
Right, and okay, just this is my kind of guesstimation on the world. What I'm smelling right now is an, for founder startups, it's really looks like a tough situations in terms of financial things that all they're raising money. I think it's because of both of course, market itself is really, you know, in some AIs to offer every money goes there. Plus some stereotypes around the situation surrounding startups and music industries are little bit tight right now, even though lot of interesting startups are popping out right now. So that's how I see it. It's definitely a difficult situation in terms of fun, in terms of startups' perspective.
Jakob
Mm.
Jakob
And in connection with that, what's your thoughts about using your money as validation capital? Know, if let's say some startups are doing larger rounds and you would come in with of validation capital, is that a big part of your strategy or?
Scott YAMAHA
No, I think we more like can go for early stages like a seed and series A. We hope we would do like a 401 investment if they would grow as expected. But I think we more like can go for early stages.
Jakob
Yep.
Jakob
Hmm. Yeah. Okay. Think one of the things that I believe is quite unique with the music tech industry is valuations. And what I generally see...
Scott YAMAHA
Mm-hmm.
Jakob
I haven't really said that, but Amplitude Ventures has been going for some very random reason. We have really been lucky with hiring really great researchers, especially in Africa. And I met this group of amazing professors that sort of had an opportunity in their time schedule to start.
Scott YAMAHA
Go on.
Jakob
Studying music tech and I've actually hired two professors researching music the last three months and we've been doing some really interesting findings that I haven't been able to see before and right now we have around 400 deals that we've analyzed ourselves with the &A's investment amounts and stuff like that. What we do see the tendency of which is also what I hear from colleagues
Scott YAMAHA
Go.
Jakob
I don't know, investor colleagues, you I'm not an investor person, but you get what I mean. Is, sort of the valuation which you invest in, but then also the exit. Maybe not to put words in your mouth, but again, what we see is that training speaking valuations are significantly lower than other tech ventures when it comes to sort of what stage are they in? I'm not talking about you, but like, you know, company, company life cycle. But then also the exits.
Scott YAMAHA
Mm-hmm.
Scott YAMAHA
Right.
Jakob
Generally speaking, has lower valuations compared to other markets where it's much bigger times. It might be a leading question or not, but what's your perspective on that? Do you believe also that the valuations that you will come in with will be lower than other tech industries and the sales you will do will also be lower or do you have totally different expectations? You guys are based in Silicon Valley, so the realities might be different from what I'm seeing.
Scott YAMAHA
Right, no Jacob honestly I have to say I maybe For me, I'm not ready to answer that questions because I have not yet started investment No, okay in terms of investor perspective. Okay valuation is not too high or too expensive. That's my hope No, But look and of course Jacob I have to okay get some financial returns on my fund the 50 million which I'm going to invest but this is I
Jakob
Yeah.
Scott YAMAHA
Clearly and honestly and openly say this is not my top priority. Of course I have to somehow keep some money to keep this activity ongoing. Rather I just purely I clearly say strategic or return for my fan for my parent company is top priority. Those are still you know issues of course I cannot escape some you know financial obligation to them.
Jakob
No. Okay.
Jakob
Mm.
Jakob
Obviously.
Scott YAMAHA
But that is something I can say about it right now.
Jakob
I think, you know, this might be a funny comment, but like... since you started the conversation, I was before it recorded, there's sort of one thing that I found very interesting and that is speaking with you, you come from branding, you come from storytelling, you come from context and commercialization and the choice of placing you in the middle of this very like, I would call it an innovative project, even though it's not imitative in the grand scheme of investment, but like within this particular space, I think that's really innovative.
Scott YAMAHA
Mm-hmm.
Jakob
And the choice that I see now is like really stating where the value is. The value obviously for any venture fund needs to be in returns from a power perspective. But the storytelling that you're bringing and also the storytelling that Yamaha is coming with when they place you as this is a more...
Scott YAMAHA
Mmm.
Jakob
Softer values than just cash, if that makes sense. And I think that in itself is an incredibly interesting statement because I often hear of soft values from intergovernmental organizations that are financed by the European Union, which I love, so I have nothing against that. But it's also hard to fully believe the value when something is soft funded. But here we have this combination of like this hard cash funding, but with the soft value first, if I may say that, which for me is just a very interesting statement, which is probably like the unique thing about this for me. Does that make sense?
Scott YAMAHA
Right. Yeah, that's what I'm making. And even our everybody from Yamaha board, global CEOs, like a CFO, everybody 100 % agrees on, they didn't call it soft. They do, even CFO from our company agreed I don't put on financial return as a top priority. 100%. Okay. Honestly, our company has got enough amount of cash. Okay, in terms of like a business we are somehow struggling in some places, okay, doing good somewhere, not making great money every year, this more than typical behavior from Japanese company, they didn't have a good opportunity to invest in. And also they're not humbly saying they have got enough cash. Therefore, Scott, okay, you have to make money, but you don't need to make a lot of.
Jakob
Mm.
Jakob
Hmm.
Scott YAMAHA
Rather than that, you have to do it like soft strategic return. For example, expanding musical instrument market or musician market. And plus, I totally get it. And plus, and I think we all, they, I think even you would agree, I think we have to really change the world. I mean, in terms of how they enjoy the music or how they enjoy spare time.
Jakob
Mm.
Jakob
Mm-hmm.
Scott YAMAHA
Okay, I sometimes watching YouTube, Instagram, TikTok. I'm little bit getting too old to for TikTok, but I don't really like the people house-spanning spare times at night. And you know doing like this for two hours producing nothing I don't even remember what I have just watched like two hours ago they've got some good quality of content but at the same time we have to say some not so good content at the same time especially having a smaller kids like you and me I don't want them to spend precious time doing like this
Jakob
No, agree,
Jakob
Yeah.
Jakob
Mm-hmm.
Jakob
Hmm.
Scott YAMAHA
That's a strong wish from me, from Yamaha. A little bit contributes, a little bit to guide world in a better way.
Jakob
Mm.
Scott YAMAHA
In the end of the day, we will be very happy. Thanks to the direction of the world and how to enjoy Spipping, a lot of people enjoy the music. Some people want to play piano, guitar. That's kind of the future we have to make. That comes first.
Jakob
I've had very interesting conversations on this specific topic the last few weeks. We'll have another episode out also where we speak a lot about this. And a year ago, referring back to, I have been depressed about music for a while, but really from the angle that, you know, I have a master's in music production, which means my association with music has been the craft, even though I've never been a craftsman, that's still my association to creating music. And I know my kids will not have the same association to music, one-to-one, that I had, which also, what I see in that perspective is the dreams shatter because change of financial realities amongst my peers. So that's been my thing.
Scott YAMAHA
Right.
Jakob
What has slowly brought me towards a more optimistic side is exactly your point. Is that as things have come over saturated from last many years when it comes to dopamine hits and platforms and everything. But then with the even more powerful element of new technology like AI. I believe, and that's also what I hear consensus around all conversations I have, that there's gonna be a counter reaction to that. People seeking the real. That's why the live music industry is really interesting right now. So they're probably gonna be the ones to really see the biggest upswing of looking for real moments, looking for real connections. But that's also gonna happen through technology. It's not so much about taking distance from technologies, like getting closer to technology that somehow engages you in a different way, that somehow stimulates you in a better way that is opposite of this mass consumption of, as you said, maybe less contributing content to your health and your personality. And music. Is one of those things that universally through time that has provided that to people. And that I believe is the strongest argument that I have right now to why music will grow is that it is in most cases the most natural counter reaction to what the world has experienced for 10 years and now experiencing much faster with new technology.
Scott YAMAHA
Yeah, that's how I see it. The possibility of technology can be enhanced.
Jakob
Mm.
Jakob
Amazing. Well, it does make me hopeful. And for me, one of the things that I have really missed is capital in between this industry, but also capital that is more than just one-off investments. What I see with a lot of VC investments is that it's very like random VC firms or angels that investing in music tech. Warner Music comes out with some great reports and I have a lot of friends, especially from, from Europe that, that does these sort of investor lists of like who has invested in music tech. The big issue with those lists is that these are companies where it's either the first time they invest in music tech, maybe a second time, but it's like, it's just a, it's a very. It's not because there's any particular strategy to that investment. It's just they believe they're the founders. They believe they're the product, which obviously is a great way to invest, but it doesn't prove anything. It doesn't showcase anything. So my belief is in order to really showcase the value of this industry, you need to have many tickets with a singular mindset that can prove something because then you take this randomness a tiny bit out of the picture. Like that's the whole concept of the fund. You need to diversify your investments. But if you diversify investments in one direction, the trends and results and the outcomes can much more easily be argued for being good versus bad. Where one of the investments rarely provides that.
Scott YAMAHA
Yeah, absolutely. After our composition, feel like, okay, Yamaha now can really like, not like a capital fan, like a passion comes first, belief, possibility comes first, together with some capital. That's how you clearly described, kindly described our difference, or meaning of existence, for example. That was great finding, yeah.
Jakob
Mm.
Jakob
Hmm.
Jakob
And that's powerful because you guys are placed in an industry of investors that can seem very void out of... Especially in Silicon Valley, I'm just very generalizing. Chasing opportunities is the ROI that investors need and hitting those unicorns. But the problem with that is... the good that those investments do in the world tend to be very random, if that makes sense. And there's nothing wrong with that per se. It's just, I think there needs to be differentiation in anything, anyone does. And this seems to be your take. Do you see in your local environment, now you've been in Silicon Valley for a year, do you see any excitement amongst other investors to go into this space? Like what's the feel you get for this space?
Scott YAMAHA
Right, so far what we are hearing in Silicon, not only Silicon Valley, that it looks like everybody has been kind of excited about Yamaha is coming in this world. Maybe, you know, some rare guy is going to invest some money in music industry after a while. And personally, it looks like they are excited about our assets as well. Not only money, we've got, like I know.
Jakob
Hmm.
Scott YAMAHA
Great numbers of customer database, including musicians, students, and kids. This could be, I the strongest way for Yamaha can contribute to founders and startups. I think we can test those very good potential services with our existing customers. We can instantly check they like it or not, disparate they like it, we can give good feedbacks to them.
Jakob
Yeah.
Jakob
Hmm.
Jakob
Hmm.
Scott YAMAHA
Living feedback and so we can do together go up spiral to improve and improve after all. Definitely, you know, something VCs cannot bring to setups and also one way we can strongly contribute to our portfolio camp.
Jakob
Yeah.
Jakob
Yeah.
Jakob
Yeah, and if I want to make that even more basic, and again, now this is not gonna count for all companies, but what I also hear you saying is companies that you invest in not only potentially get money, but potentially also save money. Yeah, that makes sense. Because that journey you just described is you can spend millions and millions on...
Scott YAMAHA
Mm-hmm.
Scott YAMAHA
Right, right. That's true.
Jakob
Getting to a place where that's, you know, whether it's even remotely reasonable to get results. And of course, I understand that's not a, you know, promise you make to every single startup, but just having that opportunity, I think it's really interesting because that means that the capital we bring in is a piece of the package and not just that alone.
Scott YAMAHA
Mm-hmm.
Jakob
So we briefly touched upon it, but validation capital or co-financing, do you believe that you guys are gonna invest ticket sizes that are gonna be like the entire round? Like do you believe that most of the investment cases you will see that you need other investors that you help bring in or what's the scenario there?
Scott YAMAHA
Right, I think we primarily thinking to just do minor investments, not taking the lead of board of startups, just more like, hopefully we become a board observer. Yeah, that's our priority.
Jakob
Hmm.
Jakob
And do you believe that some scenarios will be where music tech founders would come to you and you would recommend them to go to others? Do you believe that's going to be part of it? How do you imagine this sort of dynamic happening?
Scott YAMAHA
Right, think, okay, it's not started, but I'm imagining like, Yamaha should take part or even help to construct like a music investors ecosystem. Like for example, me, you, I don't know, bigger one like Live Nation, Sony Music, Universal, whatever. So we form some music ecosystem and everybody has got different assets and perspective we can discuss and we can... strongly mutually, collaboratively help startups and ecosystem. I have not started anything yet, but I think that's something my hope. Then having such partnership and ecosystem together should really solve the problem of the founders in music ecosystem. Knowing that because this is not that easy industry to start a business or to get the investment.
Jakob
Mm.
Jakob
Absolutely 100%. And that's also my future vision. We're working on some current projects right now that's sort of touching upon what you're saying, because also what I see is...
Scott YAMAHA
Mm-hmm.
Jakob
Even when you have great founders, good financing is not guaranteed. And oftentimes great ideas with great teams just never get to a place where they even can get proper financing. I think where I see, let's say, Amplitude Ventures and the partners that I have around us currently see a lot of opportunity and also impact is... the earlier stages, because especially in music tech, what we see is there's a really, really big funding gap between friend, foos, and family, and even a pre-seed. Like, even in between there, and depending on what kind of tech product you need, like building a functional MVP within this space or in any space within tech can easily be 500,000, a million US dollars.
Scott YAMAHA
Mm.
Jakob
And oftentimes in some more traditional tech things, that's the first amount. That's a small pre-seed. But oftentimes, especially in Europe, that's actually considered in music tech a seed round. So I believe that intersection between the first money with people around you and maybe some small investors, angels that are just, you
Scott YAMAHA
Mm-hmm.
Scott YAMAHA
Right.
Jakob
Here's my money, try to make something of it, to there's some seriosity in investment, that funding gap is really difficult because there's not this scale of investors that are ready to risk. And what you are addressing is what I believe to be the next step. So again, where I see there's, there tends to be fairly big, strong investment opportunity in friends, foes, and family, because it's music. Everyone loves
Scott YAMAHA
Mm-hmm.
Jakob
Then there's a really big gap between that to like semi-procurement. And then there's also a gap from now they've gotten a, in European standards, the seed to now they need to go to something again in European context, something that's sort of almost series eight, which is obviously much smaller than American series days. So in, actually in my book, that's where you placed, you placed, you know, the, between the, we've got enough money to make something to like, now we need to grow.
Scott YAMAHA
I got it.
Scott YAMAHA
Mm-hmm.
Scott YAMAHA
All right.
Jakob
And there's also a funding gap. So again, I see you placing that funding gap, which I think is really interesting. Obviously, with the partnerships I have and the capital that we have available, that's not possible. But again, so we're trying to focusing on the early stages. So that's really interesting because I believe what you're addressing now is a gap. And I see you over.
Scott YAMAHA
Mm-hmm.
Scott YAMAHA
Mm-hmm.
Scott YAMAHA
Yeah, that's Yeah, that's an interesting point and I think we should somehow... Of course, we cannot do it by ourselves. Yamaha only maybe with Jacob's theme and a lot of things we have to somehow create a continuous tunnel or funnel to support them.
Jakob
Sorry guys, we agreed on it on the podcast. That's not how needs to be. No, yeah, but that's really interesting because that's, you know, as you just quickly joked about there, but that is what I'm seeing right now is I'm seeing there's an agreement with money people that there are certain parts of the funding journey that could just be stronger. And the hypothesis is if you just make those gaps stronger, like...
Scott YAMAHA
Yeah.
Scott YAMAHA
That's a point,
Jakob
that probably will be much more successful music tech cases on a macro level.
Scott YAMAHA
Right. So we have to expand or increase the number of founders who are trying to go through some rounds. And at end of the day, hopefully some one, two, three unicorns came out in the music industry. But I think for me, again, it's not top priority. We have to really support in the first stage, first second phases, as you just said. I totally agree with it, Jacob.
Jakob
Hmm. Yeah. Scott, this has been a great conversation and I am, I am very happy that Yamaha chooses to have this as a focus. I believe that there is potential music tech. might be different metrics than what usual investors would be looking at, but just even from a capitalistic side, like there is potential music tech. but
Scott YAMAHA
Mm-hmm.
Jakob
One of the biggest issues is readily available financing that has specialized knowledge, which also means that the due diligence can be made. having an environment where founders choose the industry. Because if the financing environment is poor, and therefore also as a result, the reward side of it is also, the best founders won't choose this.
Scott YAMAHA
and
Jakob
And the only realistic thing I see is like a very tangible way of addressing this is capital. That's of all my sort of exploration the last 18 months, that is the one conclusion I come to is you need to start with capital. Not everything else solves itself because of it, but it is the most crucial thing to get done before we're going to see results from what founders choose to go into it, how much they can exit for and how companies do well.
Scott YAMAHA
Mm-hmm.
Scott YAMAHA
Right. That's true. Of course, inevitable. Besides, Fandana, of course, hopefully we bring both capital and some contribution from our side to Fandana's ecosystem. That's my hope. Or manifesto, let's say, from Yamaha. all, contribution.
Jakob
Mm.
Jakob
Amazing.
Jakob
Thank you, Scott. It's been a pleasure having you.
Scott YAMAHA
Yeah, good. Thank you very much, Diego. So much fun to chat with you.
Jakob
Cool.
