Inside Hangout.fm: Changing How We Listen to Music Together

Jakob

Streams the conversation, it downloads at the same time and uploads at the same time, which means that I get full resolution at the end, which might also affect if there's some graininess or some lag once in a while. You don't need to think about that because I won't see it at the end. Also, if you have any background noise, you don't need to worry about that. We have some pretty good noise suppression tools we're using. So yeah, that's it. And then we normally...

Joseph Perla

That means other software besides Riverside.

Jakob

Yeah, we use a bunch, like for audio we use Adobe's podcast. That's like super good off the shelf. Does like most of the work. It does some really good stuff.

Joseph Perla

Have you used DreamYard?

Jakob

I have not, no. Okay. I'll check it out.

Joseph Perla

I mean, similar to Riverside, and I'm trying to see what the difference is.

Jakob

Great, well, that's basically it. You have any last questions?

Joseph Perla

No, it's all good.

Jakob

Amazing. Great. Then I will start in five seconds.

Joseph Perla

Okay.

Jakob

Hey guys, and welcome back to the Sound Conditions Podcast. Today we're talking with Joseph Perleff from Hangout. Welcome.

Joseph Perla

Hi, good to be here, Jacob.

Jakob

I discovered your company on some random LinkedIn posts and I read about Hangout and I was like, what a fascinating guy and what a fascinating journey and company. So I reached out to LinkedIn and said, Hey Joseph, this might be random, but can you join my podcast? I really want to hear about your company. So welcome. Joseph, before we get going and sort of talk about your journey and your company, for the people who don't know you, who are you and what do you do?

Joseph Perla

Hi, I'm Joseph Perla. I made a very viral website in 2011 called TurnTable.fm that people loved but got shut down because the music labels didn't have the rights given to it yet. And so that started me on my journey to truly build something that's truly legal and set up to do what it needs to do. In a quick summary... So when you're at home and you're just hanging out with your friends, you always play music. And at a cafe there's music, and at a bar there's music, and music connects us, right? It gets everyone on the same page, gets everyone in sync. But there's one place that everyone spends more and more time around the world that never has music, and that's online. So online, there's never music playing. You can't, have the option to do that even. Um, and it's only because of music rights actually. So it's the same reason they got shut down in 2011. I realized that we need to actually focus on getting the music rights and then creating online spaces, web chat rooms, uh, mobile apps, integrations into social media that let you actually hang out and listen to music at the same time. So we built all that, built all the tooling and built the website, launched it a few months ago. And now, you know, Gen Z's jumping on it.

Jakob

Hmm.

Joseph Perla

And loves it and sharing it all around. And so that's what we've done.

Jakob

Amazing. And we're going to dissect the journey a bit today and sort of understanding how you got there more in detail. But Joseph, why are you even motivated to building such a company? Like, I know you tried in 2011, but like, why did you start it back then?

Joseph Perla

In 2010, I was living in New York and going to Webster Hall and going to music festivals like Lightning in a Bottle and Coachella and Burning Man. And I realized that, wow. It's really, really great to have community bound together with music. I'd probably say food and music are probably the biggest things binding community together. And I also had a long distance partner at the time and I realized that I was sending her music videos all the time and she was sending me music videos on YouTube all the time. And again, it was a really great way to get to know somebody and get to know them in a deeper level, sharing stories about those music videos. So I thought, okay, is there some way to make a product out of it? And that's where the vision came. And people really loved it. People really connected with it. I still get messages every week, people telling me that they met their husbands on turntable back in the day. And it's really, really fun to hear all these great stories of people connecting through community, through music. And it's something that we actually just need more and more of now. I mean, I started hanging out during the pandemic because... more so than ever, people were losing the connection to each other. Right? With the pandemic, all concerts, all festivals were canceled. There were a lot of festivals people were about to go to it and suddenly they were canceled the last week, last minute. And so I think even as the pandemic was ending, still people weren't joining, know, signing up to go to concerts very much. Was just, everything was getting disconnected more and more. We're spending more and more time on our phones and our laptops than ever before. And, you know, people are feeling lonely. It's a lot, there's a loneliness epidemic and the current Silicon Valley ethos is to do even more, making us more lonely, get us more addicted, get us to spend more time with AIs and not other people. And so we're really, we are really the antidote to all of this. We're really the antidote to all these, these people saying, let's, let's do more AI. Let's do more.

Jakob

Hmm.

Joseph Perla

Telling us what to, they call it a feed. It's like feeding us this garbage that they have. What if we just do away with all of that and create a whole new kind of social platform where it's about humanity and connecting and curation and thoughtfulness. And so that's why it just seems like this is the perfect thing for the now, for the moment.

Jakob

Mm.

Jakob

If we go back again to 2010 and you have this sort of idea, obviously just have an idea and things come to life, could you walk me through the journey? Are you a tactical co-founder? How did you go about actually making something that went rival? Could you just go step by step?

Joseph Perla

I'm an engineer, so I actually build things. So I come up with ideas and I prototype them and actually build out everything.

Jakob

And it was that like just that it you just spent a few months putting it out in the work door.

Joseph Perla

Yeah, building it out, putting it together, getting everyone on board, that took some time. Yeah, getting that together and shipping it is what you need. We actually did a demo with some students from Princeton who were visiting New York and demoing with them. I mean, a lot of it's feedback, right? You try it with people, see what the feedback is. And it was kind of a trip, right? So was just like an hour. They just tried to use it. They didn't have their own laptops. And they didn't get it entirely. They were like, this seems kind of okay, but I don't see how much, I don't quite get it. Obviously, you know, it's just a month later, so it's going viral. So sometimes you just have to understand what the future is and just build for it. Like, know what you want to build and just keep going for it.

Jakob

But did you have a business model? Was this intended to be a business or was this just like a technology building on the side of a job?

Joseph Perla

At the time, people didn't think about business models so much. That wasn't what people would say, if you build it, they will come, or if you build it and get tons of users, you'll figure out a business model eventually. That worked out for Google. They just had a certain and figured out the ad thing later. People just figured you could do that. We had ideas about it, but it wasn't a million years too early.

Jakob

Yeah.

Joseph Perla

So at the time Spotify didn't exist in the US. At the time... there wasn't a Fortnite. Fortnite makes billions of dollars selling virtual goods now and it just did not exist in 2010. So I think when I started Hangout, there were already way more proof points that this is the way to go. Like Roblox has gotten really big, Minecraft is really big, Fortnite's really big, they're all selling virtual goods and that's gonna be a key component of our business model. And obviously Spotify makes billions of dollars, $10 billion a year from users all around the world. So that's something that's lot easier now because the models have kind of caught up to what the vision is.

Jakob

But you said labels did not like your first business. How did that play about? You just get a legal notice you need to close the site or how did that play out?

Joseph Perla

It got cut off from, it was a lot of leverage, but they cut off international usage immediately and that cut off the traffic by 75%, which killed all the momentum. All the great DJs were in Europe playing all their latest electronic music, so it just kind of completely slowed down and died. I don't know if sounds like you maybe didn't use it at all.

Jakob

No, didn't use it way back. No, I didn't, no.

Joseph Perla

Europeans hadn't heard of it because it just completely got shut down and then yeah, it just kept sinking lower and lower until people just gave up on it.

Jakob

But so, so was that like a big disappointment for you? Like we were hoping this could be sort of your big break as an entrepreneur or?

Joseph Perla

I was excited for it, definitely. Yeah. But it broke me into, got me on the map of Facebook. So Facebook reached out to me and said, Hey, we're, you know, we need someone to run things here. I ended up running the newsfeed for iOS. And so I was tech lead and product lead for that. That was really fun, really good learning experience for, you know, billions of users. So really fun to practice that skill.

Jakob

Yeah, you definitely must have hit something, a pretty big nerve in order to get hit on that way. But what were you sort of intrigued back into your entrepreneurship? Like you were at Facebook and then what happened?

Joseph Perla

Also, had started in college, I'd started a social network for people applying from high school to college. And that was really when I started to learn Python and shipping things and startups and started competitions and things like that. Let's see, I left Facebook because I didn't, it felt very... numbers, metrics focused, and it wasn't focused on people actually enjoying themselves on Facebook or people actually developing themselves or growing or actually feeling fulfilled from it. I ended up starting a PhD in AI, so I was pretty deep in machine learning from college. So I started doing some of that, but what really pulled me is, my advisor went to Amazon to work on tech AI in industry, and I realized... Everyone's doing that. Mean, everyone at AI at the time was moving into industry. It was the right time for that. And so it felt like maybe I should do it too. So I ended up co-founding with a few brilliant people, terminal.com. And so I left the AI program and started doing terminal.com. And that was like a faster AWS. And it was really cool. Mean, some of my co-founders are doing amazing things at Google and Facebook. And one of them wrote GPT-2 and GPT-3. He's on the papers for that. So really, really brilliant people. We built some cool stuff. That eventually got acquired by Udacity. So I've always been in and out to different startups. But then after that, I went to...

Jakob

Amazing.

Joseph Perla

To Lyft, which was a startup, but it was already growing quite a bit by the time I joined.

Jakob

The way that you tell the story and it might just be sort of the way you tell it, it just seems very casual. Has entrepreneurship been casual for you? Is that just an extension of the next step of your career or was it like deep dive, grind, throw yourself into it, everything you had? What was the situation for you starting these companies?

Joseph Perla

I think I just have a very strong urge to build things for myself and have a real impact. When you're at a very large company, I guess more if you're a junior, you don't necessarily have so much impact. You're kind of building a little widget for a small thing that maybe some people are using. Even if you're managing something bigger, you're still just a part of a bigger machine and you can easily be replaced. You probably are replaceable. And when you're a small startup, are wearing every hat. No matter where you're coming in, you can easily be wearing every hat. Marketing, designing, engineering, product development, product feedback, everything. And that's really, really fun. It's engaging. It can really help you grow quite a lot. And I really, really enjoy the chaos of that. It just fits with how I... think and how I can actually have deep impact. When you're at a startup, like the thing that you do really affects the company and whether it's going to succeed or fail. And so I've really, really enjoyed really diving deep and all the skills I'd learned to start up, ended up using it a bigger company. Although the reverse can be true as well. Everything I've learned at a big company, like managing people, I've used at smaller companies as well. So it's been good to go back and forth.

Jakob

Mm.

Jakob

Mm.

Joseph Perla

And I think it's probably best to work on something also that needs to be built, not necessarily just building a startup just to get into Y Combinator. It's good to actually do something that other people, I feel like it's good to do something that other people aren't doing and that wouldn't exist without what you're contributing. If not, maybe you should just join another person's startup or another person's big company.

Jakob

But let's say now, you as an entrepreneur on your current journey, is that just all fun? Or the ad?

Joseph Perla

Is it fun? It's pretty fun. It's very difficult. Mean, depends on the market cycle. Sometimes it can be a lot harder to fundraise and sometimes a lot easier. Sometimes you have to lay people off and that's always very difficult. So yeah, there's definitely a lot of difficult parts to it. It's a lot of like sleepless nights getting... things improved and fixed and shipped and serving customers and downtime when you get pager duty calls, always very difficult. Yeah. But the difficult parts are, again, I like really difficult things. Like I've done an Ironman and doing the really difficult things is a type two fun, right? It's like you look back and it's really fun to like be in the trenches with your colleagues, really getting stuff done and really pushing through and making something amazing. I'm being proud of that.

Jakob

Hmm.

Jakob

Walk me through the journey of studying Hangout. So you were, as far as I understand, at Lyft and you said, okay, I got to start something music later. The end is that the situation.

Joseph Perla

Now I was working on self-driving cars at the time, Lyft, and I built the first version of their self-driving cars and those were working pretty well, but I realized that the direction, the strategy that we were taking was similar to Waymo's and I realized that wouldn't really work long-term. And so I decided to leave and I was just kind of there. I was having more fun. I was just kind of learning about things and exploring the world and learning to ski and lots of other things that I really enjoyed doing is skydiving a lot. I've done over 200 skydives and then COVID happened. I actually, I was. I was exploring, also was starting a small venture fund to invest in AI companies. So I've been in AI for a long time. I know it very well. And I realized that AI was probably the great thing to invest in. And made a lot of good investments just before ChatGPT launched actually. So our investments are doing like pretty well, but like, yeah, it's kind of funny that I made all those investments before ChatGPT and the whole game has changed, I guess, since then, obviously. Anyway, was in, COVID started. I was in Berlin and I was with a lot of...

Jakob

Mm.

Joseph Perla

DJs who were very sad that they weren't able to play music for their friends, for crowd, because all the clubs, everything was closed. And I realized that there was a still market need even a decade later for something like turntable. There was no way to really just play online that was popular, that had people, that had virtual world, nothing, it just wasn't possible. Then when I dug in more and more, I realized it was because of music deals, none of them. were willing to or tried to or had to write to even done to make music deals. were some went off things, but we, I realized that this is the way to go. So I immediately started to negotiate with the labels and they got pretty excited, more and more excited every, every year. And yeah, really dove in. But it still took four years. I mean, that's another hard thing, right? Like really grinding and trying to get these deals and then spending four years getting them and then just kind of having them. But.

Jakob

And new.

Joseph Perla

Taking a while to get there.

Jakob

No, I can imagine like licensing is definitely one of the quite difficult things about being a music startup. If that's the direction you go, we have a lot of episodes on the pack. was talking about that, but, but did you just say, okay, you just started.

Joseph Perla

I mean, any kind of partnership often takes months or years, but yeah, music in particular can take years if you can get it done at all. Like TikTok spent years and tens of millions of dollars trying to get music deals for a new global music service and they couldn't do it.

Jakob

Mm.

Jakob

No, it's, for me, it beats me why it's that difficult. Again, there's many market dynamics to it. But did you just start building it the same way you did Turntable? And then at one point there was a product or did you go the more traditional startup way that you try to raise capital and hire people? What was the journey there?

Joseph Perla

Yeah, it wasn't planned so much. Sometimes with startup, you have to make some guesses about the direction to go and just kind of move in that direction. And because you're a small company, you don't have all the answers. And you just have to hope and trust that you will figure that out as you get closer. And so I was moving in the direction with a lot of focus and problems propped up. And I just knew that people wanted this. So I just kept going and the answers were solved. In 2021, we raised a venture round from Founders Fund. That was really successful. And they're very excited. They're a great partner because they were original investors in Facebook and Spotify.

Jakob

Mm.

Joseph Perla

So yeah, we're very excited to be doing that with them. And yeah, we've found a lot of great partners also all along the way.

Jakob

But you say it so casually, raising from the founder's fund is probably one of the most famous investment vehicles in the world. Can you just walk us through that process? Did you know anyone in the company who just had a deck? Where were you in the company? How did you convince that case?

Joseph Perla

So I, let's see, one of my advisors, we have a lot of angels who invested early believing the idea. They connected me to some investors. Those investors thought it was too early, but then they connected me to Founders Fund. So yeah, the advice is often to not take an investor's intro to another investor unless that investor invested. But in this case, it was fine. Worked out very well. So sometimes the rule of thumb advice is not always correct.

Jakob

Where were you in the company? Like where were you in the tech stack? Do you have anything?

Joseph Perla

We had a simple demo, pretty basic, not impressive. And we were a good way into the negotiations, but it was less than a year. So it was actually much farther away than I realized. I it would take them one or two years to get the deals. Everyone will tell you it'll take one or two years to get the deals, but it does take three, four, five years if you can get it at all.

Jakob

Hmm.

Joseph Perla

Yeah, that was intro was to Keith Raboi and we had a great conversation. I guess one thing to know is that sometimes it's easier to raise money and sometimes it's harder. And in 2021, it was probably the peak time for fundraising for any entrepreneur ever, if you look at any of the charts. So that was a bit easier. I had a few offers from different VCs and I ended up choosing Founders Fund. I think they're the best and... Yeah, it's just a different kind of game, I guess, in 2021 versus like last year where it was pretty rough. Let's see. Different investor, like if you're not an AI company right now, it might be pretty tough, right? And it's just, there are different seasons for different things. Interest rates being low are often a big factor in affecting that investment rate.

Jakob

Mm.

Jakob

Yeah, there's a lot of timing to it. Like as we sort of briefly talked about before this talk, Amplitude Ventures, which is the company that I lead, we've had a significant growth last few months and are profitable. You know, just during the last year when it was almost impossible to raise funds, like we were so close to go bankrupt. I don't know how many times. Just because like

Joseph Perla

Yes.

Jakob

We luckily had one investor that had significant funds and whenever things like, fuck, he was able to step in. But besides that, I don't know how we survived if we didn't have that investor. And we're pretty good in our own small world to talk with investors and onboard investors. But at that point, it was just incredible. And that's lot of the timing to it. But where are you guys now? Is that the money you raised in 2021, you used to spend on technology development and licensing? How do you spend that money and did you raise more as well?

Joseph Perla

Yeah, we hired engineers who've been building it out, testing it. Uniquely, we built out on every platform, full feature set before we launched because we had time to do that. Native on iOS, native on Android, on web as well. And really natural partnerships with companies like Discord who... integrated our product deeply into their stack and are promoting us quite heavily. So we're on every platform, we're available to billions of users on day one because we had that time. And then of course a bunch of lawyers and things like that to get all the deals signed and everything in place.

Jakob

Yeah.

Joseph Perla

So yeah, have a unique launch strategy from launching four months ago where we had our whole moat, a big moat. We're on every platform. We're available to everyone. And so that really set us up to have good success and get millions of users on board very quickly.

Jakob

Yeah, it's incredible because you well, you've been in a game for a while and you've done a few impressive things, but the usual journey of like music tech is like struggle, struggle for like X amount of years and then sometimes you just have a small breakthrough. But you guys took a like a very patient, patient journey. Is that because of the capital you raised or is that because the background you've had from before with previous ventures? Like what made you guys choose that strategy?

Joseph Perla

Again, mean, this is unfortunately, it just took a lot longer to close the deals than I had realized. There's not really much I could have done. Why choose the strategy of choosing the music deals first? Partly from experiences from the 2011 and also researching all other music companies. Basically, if you are doing music and aren't getting licensed, like you will be.

Jakob

Okay.

Jakob

Mm.

Joseph Perla

Illegal and banned and shut down. That's not really a way to succeed. Whereas if you're, you know, there are companies that did get deals 10 years ago, like YouTube Music and Apple Music, and then they launched and they're obviously making billions of dollars. So when you, when you make the right moves strategically and in line with the industry, then you end up being supported very well.

Jakob

Hmm.

Jakob

You said at the beginning of interview that you had this love for music and festivals and community and that's why you sort of started Turntable. Would you say that you've picked music tech because that's an evident problem you had and that's a thing you understood more so than you having a particular interest of the industry?

Joseph Perla

Yeah, I've been learning about the industry deeper and deeper over the last few years. One thing that's been really fun is getting to know all the people involved in building the music tech industry. There's a small group of people who really pick, you understand all of it on the legal side and the business side. And it's been fun last year is getting to know them and being a part of that, and really contributing because if you know, we're successful, really adding a lot to the whole music tech industry and music industry as a whole. So it's been great to get to know different artists as well. Like we've had different artists come and show up on Hangout and perform. Empire of the Sun, Greta Van Fleet, Sophie Tucker have all done performances and promoted their albums on our platform. And so we've got a long backlog of artists that want to do that as well. So.

Jakob

Mm.

Joseph Perla

I think it's really fun to have artists to be a part of that. The music business is fun business. It could be more optimal sometimes, but it's definitely fun. There's an annual gala in LA called Musicares. It's a great nonprofit that really supports people in music. And this year they had the Grateful Dead do a show live. It was awesome. And then last year it was John Bon Jovi.

Jakob

Hmm.

Joseph Perla

And Bruce Springsteen. Really fun, really amazing kind of great group to be in.

Jakob

Hmm. Do you, this is gonna be a bit direct. Do you regret picking music? You like you said, it's been four years. Like that's incredibly long journey just to get the permission to launch something. Like we were like, okay, you're now launched and you've done it, but I can imagine there must've been a lot of, if not regret now, then maybe during the process. We were surprised about the complexity.

Joseph Perla

Yeah, mean, launching, like getting the deals take way longer than I expected. I just wish I had known how long it would take, I guess. I wish I had known, wow, this is going to take that long to really align everything. I would have planned things out a little bit differently. It's hard, hard to know the future about business partnerships, I guess. So I should definitely keep that in mind in the future. I think, I think it's, I think it's hard to do things in other fields. Mean,

Jakob

Hmm.

Joseph Perla

Then what else would you be working on? AI? AI is great. I've been doing it for a long time. It's unclear what the best is besides open AI that are going to do well in AI. Open AI is monopolizing everything. Let's see. I remember when I was at Lyft.

Jakob

Mm.

Joseph Perla

I was thinking that I really didn't like that it was so competitive and when you're in a very competitive industry the margins can get to zero and it's... not as nice as when you're in Google, which has like a monopoly basically, and has very big margins and they have like free food everywhere and it's just a different kind of experience. And I thought, oh, it's kind of interesting to do something in a field where there's a bit more margin and it's not as competitive. I don't know where music sits on that. Mean, it has some IP protections which help with that. So yeah, it's a... I think it's a really fun business that fits with my community-minded way of working. I'm a bit sad that a lot of the AI stuff is not very community-focused.

Jakob

Hmm. But why are you concerned about the community aspect of building a business?

Joseph Perla

Yeah, I just, think it's important. I've built a lot of communities in San Francisco and been part of communities elsewhere. And I just think it's a really important part of being human. Think in the planet we've started, especially in the West, we've moved away from communities a lot and it's showing up again in people's sense of loneliness. People are feeling more disconnected than ever. And I think... part of tech, tech has been partly responsible for helping destroy some of that. I think music, tech, food, all that's really important for having us just be happy, healthy humans.

Jakob

But how do you, again, you said you've run an Ironman, you focus in community, you've mentioned food multiple times, so I'm gonna assume there's a health aspect to that as well. How do you combine that with entrepreneurship? In many cases, they're almost opposites when it comes to the strain you have on yourself, your health in general.

Joseph Perla

Hmm. Yeah, I'm not doing business to make a billion dollars or anything like that. I'm just doing it to help people. It's like if something, I think I mentioned doing something that no one else is going to do, doing something that I can uniquely contribute my skills and thoughtfulness that will help make the world a better place. That's why I'm doing some of this stuff. And sometimes I actually have tried to get out of tech. Uh, tried to be an actor at one point, tried to be an EMT at one point and paramedic. And I kept getting pulled back in because of my skills or something. Um, but I definitely am trying to choose things that just make the world a better place. Like I, I probably had picked Lyft because I could see that it offered a much better value system than Uber, the people at Uber. And I could see I help provide, you know, even Lyft started as a more communal based system, right? It wasn't just a black car. Was actually like your friends, your like nurses, like people like kind of fist bumping you to come into the car and have fun and just build that community. And I loved that. And that was an ethos that was throughout the company, everyone there. And it meant that while I was at Lyft, was able to build features like, round up and donate, which is still a part of Lyft, which means that whenever you take a ride, it rounds up and donates to a charity. And everyone was really supportive of that. And it led more people to come join the company because we have that feature. And yeah, I've always done things as relates to charity and giving back and all of that. Maybe that's not the most business oriented way of thinking about it.

Jakob

Yeah.

Joseph Perla

But I think it can be quite profitable. Lyft ended up IPOing for billions and doing quite well for a while I was still there. If this company hang out, we'll reach billions of people and make billions of dollars too and make a very good return for investors as well, while also doing good for the world. It's not just feeding off people's algorithmic addictions.

Jakob

Hmm.

Jakob

You say it with such confidence, which I love. I'm curious because, know, I'm just going to ask a question about Founders Fund. And again, I might just be, you know, stereotyping what I believe to be American VC. But you coming with your approach of like, you know, I just want to build something good for people and, I'm not just trying to do it for a billion dollars. Was that the approach you had when you pitched them? What did they buy into about you and your company that was so attractive?

Joseph Perla

I can't really speak for them, I've given this whole pitch that I've given, is really bringing back this sense of community that lets people socialize with music. Music has been a part of humanity for millions of years. Fire as well. We've, know, our ancestors hang out around a campfire and danced and played music and played drums and sang and they've been doing that for millions of years around campfires and it's just one of our, you know, most joyous times. Barbecues and Burning Man, all this stuff. And we've kind of lost that. We lost that in the last 20 years. We lost that certainly since the pandemic. And I'm not even really doing something new, I'm just a part of the set of people bringing back this thing that we've always had. And it will happen, I guess, eventually. But for whatever reason, we seem to be moving away from that again. And so when I tell people anyone this story, PCs or not, they get it. They understand that this is something that's missing. And they don't totally understand why. Keith Roy Boy is a major music fan, so I think he got it a lot more. He loves music, listens to music all day.

Jakob

Amazing. Again, I'm just trying to sort of understand the like where all this was placed at. Would you imagine that if you were trying to raise funds now in 2025 and not 2021 that you would have succeeded to raising capital for such a company?

Joseph Perla

I actually wrote a blog post called the B2B Trap, which is about how the kind of environment has shifted from consumer investment to B2B investment, usually like B2B SaaS AI. And yeah, I think it's harder for a consumer company now than, in the past. And I think it's always pendulums, it's always just one or the other. And so as an entrepreneur, you're always having to be responsive to how the winds are shifting, basically.

Joseph Perla

Like deep tech, for example, is very hot right now. And it definitely wasn't in 2019. People were like, why would you invest in hardware? Like it's a money losing thing to invest in hardware. And now it's quite the opposite that people are saying.

Jakob

Do believe that you could have... Huh? No.

Jakob

So again, I didn't quite sort of get the answers was looking for. Maybe it was a bit also on the nose, but like, do you think like this pitch would have raised the capital today that he did in 2021? Or like, did you hit the time, you know, right when the appetite was there? That's regardless of what the potential for the company is, just like the market as of right now.

Joseph Perla

I mean the market is, the problem still isn't solved. The problem is still a big problem.

Jakob

But again, you have an amazing company. You reach millions of users. So there must be a value proposition that you can play off as a founder and sort of continue building. But what is the next steps for your company? Because obviously, you've launched and you've been out for four months and have millions of users. It's really impressive. And I also understand why, and I want to speak to you. Again, my interpretation of you during this conversation is like, what a genius. I know that reality is also just life. So what is the next step for you guys?

Joseph Perla

Yeah, so we have partnerships with social media companies like Discord. So we want to extend that further, integrate into Telegram and Snap and to basically all social media. The product side, we actually haven't launched yet our virtual goods store yet. So that'll come next month. We'll launch a way for you to buy tokens, credits, virtual gold coins, and then use that to buy like fireworks, and avatars and things that show up in the screen and pop out in and out. And that'll be really fun. And that was the second physics model that I mentioned to you.

Jakob

Mm.

Jakob

Hmm. Yeah, I was, you know, I never grew up with gaming. And even though like I'm 32, so I should have, like I sort of left that world quite early because I'm a very obsessive person. So like I couldn't, I also did sports and I couldn't combine those two. Like I go fully into a world and I stay there. I did track and field in my own nation. I was pretty good. I think in an international setting, nothing remarkable, but it was also, yeah.

Joseph Perla

Wood sports.

Joseph Perla

Was it all solo or all solo?

Jakob

That sort of like was my, I think that's sort of where also the founder gene came from. Like I'm less so you, I'm less community based. I'm much more like exploration. Like I do it for the exploration of itself, the innovation of itself. And then I think only recently have I figured out the community aspect of it. But for me, it's always been like the actual work that's been the goal. What was he getting to? Boy. So I've never had the relationship with gaming. And so I've actually never really understood the concept that you're talking about now, like with tokens and doing stuff. But I was sitting on, I think, around, I guess around six months ago. And they, I think that's when they just introduced the live feature where you can sort of see roses and stuff like that. And I just sat for hours and hours and hours. I spent like, not a good deal of money, but like, you know, enough.

Joseph Perla

Hmm.

Joseph Perla

Yep.

Joseph Perla

News spam wow

Jakob

I spent, yeah, and I've never done so in my life. And I spent a good deal of money just because it was so rewarding being on live and seeing that reaction and actually interacting with the community for the first time online. I've never done that before. And for me, I just realized, wow, there's actually something here that I just have completely missed. And for me, that was intriguing. And I wouldn't say that's something that I do on a daily basis or I'm fully converted in that concept. I understand the value proposition. I understand what it gives of what I didn't have before. And like you're arguing, that is going to be more important of gathering that community. So what are you actually seeing in the market? Do people have similar stories like mine? Or is there a lot of people who already fully grasp what that means?

Joseph Perla

It's a multi-billion dollar industry, these virtual goods, and it's growing. Games have actually outpaced music as a huge industry, makes 40 billion a year. That's slowed down a bit recently. But the idea of buying virtual goods and using it to create this beautiful visual experience and having a fun time, showing off what you're buying, right? People buy, Chanel bags and Hermes bags, right, to show off that they're buying something that's fun and quality and good. And also to help, be in a community, right? It's like if you go with Hermes Bagg and you see someone else, like you know you're in this little club. If you're in a Ferrari or Lamborghini, you're in this little club with the people who own it, right? And they, you don't just buy a car, but you buy Ferrari meetup groups where they regularly do Ferrari drives around, right? And you're connecting with people, that is always, again, this is also an ancient thing that probably is millions of years old. People, getting physical items or virtual items to be part of groups. And so this is something that people do already get. It's just they don't necessarily connect it to virtual world, this more we spend, more everyone spends time in virtual worlds and more that we're doing that. I also don't want people to spend all their time in virtual worlds. We are building these virtual worlds, but also making them local. You know, making a dubstep in LA group, and then you can find the other hundred people and really into dubstep in Santa Monica, and then actually meet up with them there every week. Right? And you can say, you know, hey, we're meeting up Friday, but you know, the rest of week, you can hang out here while you're at the office.

Jakob

Hmm.

Jakob

Hmm.

Jakob

Hmm.

Joseph Perla

And that's what Hangouts is about. It's about not just being online, but also bringing people in person. We don't have ads, ads are not our business model, so we don't care. We don't want people to spend all day staring at our screen. We want people out and about and really building community.

Jakob

It's really interesting, before this interview I was doing some stuff and I was on Hangout and I was just sort of roaming around some channels and I was first in this room where we could deal people pretty packed and then I was like, hey, let's try something else. I just picked something random and I came into this weird room with like two people in the audience like playing this obscure music and I just stayed for like 10 minutes like this. I would never have listened to this music in my life if I wasn't there. I think that was actually a really interesting experience. Like, it's kind of weird because I run a, what I would say, a fairly large music industry podcast, if not the biggest, then one of the biggest in the world right now. And I don't listen to that much music, to be honest. Like for me, the music industry in itself is what intrigues me, not so much.

Joseph Perla

Hmm.

Jakob

product of music. And I'm just particular that way. And so I actually rarely position myself in moments where I get caught up, where I experienced this novelty of music and just spending like 20 minutes and hang out before this meeting just like gave me so many new experiences and also new perspectives because like I have not been confronted with co-listenership for a while. Again, like the way that I work as an entrepreneur, my company's fully remote, fully remote. My business partner lives 10 kilometers that way. We meet every two weeks. So for me, my world is just fully immersed in digital. But I don't co-listen, I don't co-experience other than watching a series with my wife when the kids are sleeping. So having that experience alone was just like novel for me, which is kind of weird again, and I might be more old and boring than I think, but again, it's just these small revelations of what I'm missing out on and what you guys are serving is just quite interesting because I'm not that old and- dislocated for what's happening, but I feel like there's so much to be discovered in that way of listening to music that people just haven't realized yet.

Joseph Perla

Yeah.

Joseph Perla

Yeah, and they haven't realized it because no one has done the hard work of getting all the rights to make something like this happen across Universal, Sony, and Warner. No one's done that. The last companies to get deals with the music industry to launch any kind of music service, even a solo music service, was YouTube Music and Apple Music 10 years ago.

Jakob

Mm.

Jakob

Mm.

Joseph Perla

And so we're really innovating by doing this and that's why you haven't done it. It's not because of you, it's because it just wasn't legal until a few months ago. And now that we've solved it and made it legal, a lot of people are realizing, wow, this is something unique. And as they tried a bit more, they realized, oh, this is something that's actually great. It's actually something I can integrate and they have to figure out how to integrate it into their daily life. But they will, for example, a lot of people use it with their significant others. So use that with your wife. Also, a lot of people use it in their office. Often it's actually best in a physical office if you're in the same room, but it's also definitely great if you're in the same time zone, but have a virtual office. If you're in different time zones, obviously this doesn't work because it's, you know, in the same time zone. But if you are in the same one, it's great because people use it to get to know each other. It's team building. It's free. team building throughout the day. You get to know each other, you start to get in sync a lot more. People are finding, oh, I'm using that at the office and it just feels like I am just more in tune with everyone else. And a lot of people are posting on our Discord server that they are using at their office every week.

Jakob

Wow. So what is the potential of this? Like where are you taking this as a founder? said it's been a while since a company has succeeded at this. Where do you see it going?

Joseph Perla

Yeah, so we see it as the next big social platform. So we see this, we call this a third generation social network. So the second generation of social network was like Facebook and Instagram. Those are very fully featured and cool, but they are missing out on the music side. They didn't start as a music focused. social platform, even though music is around us every time we socialize at any cafe, at any bar, whenever you're at home, always have music. And so the third generation of social platform is what's kind of innovating and getting Gen Z and taking over. And so that's TikTok and it's Hangout. So TikTok obviously is totally different from Hangout, but they also have music at the core, right? From the very beginning, musically from launching. The first generation of social platform also had music at the core. Actually, that was MySpace. MySpace, every band had a MySpace page. You go around clicking around, there's always music playing on MySpace. So why? Because music is absolutely core to that. And the only reason that went away in the second generation is because it was the low point of the music industry. There was like no way to partner. It just didn't work. And so that's the only reason they're missing out on it. So I'd say the era that we've been in the last 20 years has just been kind of causing us loneliness because it didn't have music. So it was just kind of a mistake, historical accident that we've lost this for 20 years. So that's why you, even though you're 32, you just kind of like grew up in this 20 year morass.

Jakob

Yeah.

Joseph Perla

But we're just bringing it back. Everyone's going to be doing this. And when I say everyone, mean everyone online, right? And anyone in physical world wants to socialize with music, everyone online wants to socialize with music. And so that's billions of people, right? So that's where this is going to go. It's gonna keep growing until everybody on the planet uses it sometimes, right? It has music sometimes. It's gonna be a big industry and people will pay for that. People pay for music to socialize with, not just for solo streaming. Solo streaming is not going away. Spotify and Apple Music are great. Probably people wanna solo stream more than they wanna socially stream actually. Group streaming is gonna be the future as well, but solo streaming will also be the future.

Jakob

Hmm.

Joseph Perla

So group streaming will have billions of users, but you might do it like 10 or 20 hours a week. And then solo streaming, might do 30, 40 hours a week, 20 or 40 hours a week. A month, And that's probably where the future is. People like to listen to their own songs, Justin Bieber on repeat over and over again.

Jakob

Hmm.

Jakob

Mm.

Jakob

you

Joseph Perla

alone, not share that experience.

Jakob

Amazing Joseph I think in this like 45 minutes we've spoken you've actually converted me like I and I say this seriously like I get to speak with a lot of amazing people and that's sort the beauty of my job and I'm always trying to figure out like where do I believe that new revenue models and opportunities are happening music Mostly from an angle that, you know, as a venture studio CEO that I, we work with a of business models and the last, I would say the last six months, like 85, 90 % of our income and clients we've served or companies we're investing in has not been music, even though that's sort of core domain expertise knowledge, at least for me, that's what I've been doing the last 13 years. So I'm really curious to see like, where do I participate? Because I believe that on behalf of my owners, my investors, I want to make healthy investments and healthy builds. I oftentimes fail to see the opportunity. So for me, that's why I'm saying I converted like, okay, I didn't actually consider this in depth. before this conversation and actually before I just, you know, we're in hangout for 20 minutes before this talk. So I think it's going to be incredibly interesting for you and following you in this new but old way of consuming music and how that's going to integrate. So I'm very happy that you joined the podcast and I'm happy that I'm going to be an early mover in that.

Joseph Perla

Thank you for inviting me. Really great.

Jakob

Joseph, thank you for sharing your knowledge. Maybe we will jump on in a couple of years and you're gonna be the biggest star in the world within this space, but I'm honored for you to be here today.

Joseph Perla

Yeah, me too. Thanks, Jacob.