The Startup Apple Music Had to Acquire

Jakob Wredstrøm

Starting and I can also just see if you have internet that can carry the upload. Most people do, so it shouldn't be an issue.

Jakob Wredstrøm

So what does it say at the top of your screen right now? On percentage.

Simon M. Eder

It says right now hold on it's switching it was already at 81 now it's 71 55 50 like 60.

Jakob Wredstrøm

Yeah, I think that should be decent. You might need to stick around like two or three minutes afterwards if it doesn't catch up, but that's fine. Cool, great. Well, I will start in five seconds. How do you pronounce your name? Eater?

Simon M. Eder

Eater. Yeah, like me, eater. Would, I would introduce myself as Simon Eater. Yes.

Jakob Wredstrøm

Eater.

Jakob Wredstrøm

Hey guys, welcome back to the Sound Connections podcast. Today we have a really interesting episode with Simon Eater. Welcome.

Simon M. Eder

Thank you very much, you're welcome.

Jakob Wredstrøm

I had the pleasure of meeting you in Poland, where we were both speaking at Music Tech Poland event. And you have an incredibly interesting background as an entrepreneur with a brand everyone knows, Apple Music, and very particularly Apple Music Classical, where you build a company that got acquired by them. And today we're to sort of discover your entrepreneurial journey and the journey of the company and try to understand how that went about. So thank you, Simon, for doing that. For the people who don't know you, Simon, who are you and what do you do?

Simon M. Eder

So basically, my background is not necessarily music tech. I started basically back in culture and kind of made my way to music. Basically, it was more of a coincidence. I started in the music industry at a record label. So my background is arts, theater, music, culture, branding, communications. And I had the opportunity to was asked to join the new, the new. team, the new management team of a record label in the Netherlands. So the label basically was founded in early 2000s and they were going through a transformation, like trying to get the label ready for the digital era. So the label was very tech, like very CD heavy, not very prepared for the digital side. And that's a little bit where, let's say my music tech era kind of started and where also like Primphonic was born.

Jakob Wredstrøm

Yeah, so sort of starting with the end, you guys ended up being acquired and turned into sort of Apple Music Classical. So that's sort of the, not the end, obviously, there's been a story since, but that's sort of what you built to. When you joined this company, what qualifications did you have to help them digitalize?

Simon M. Eder

I'm wondering, you know, I was thinking back, I'm wondering myself. I would not have picked me to be completely honest because my background was, let's say somewhat classical. I've worked in classical concert halls. I was familiar with, let's say, the music set of things. The record industry was completely new to me and also to my co-founder back then, so the other colleague who... joined as the second director. So he then was the managing director, I was the marketing director. And I mean, we were assigned with the task to kind of transform the label into the digital era. And we had zero clue about the recording industry. which was tough at many times, but I think it kind of had the advantage that we've really just tried to understand everything from scratch and don't take anything for granted, if it makes sense, or like just really, like we had to learn and we had to learn fast. Yeah, so I think like that kind of helped. But in all honesty, terms of like what qualified me, I have to say now thinking back, that much.

Jakob Wredstrøm

Yeah. We'll cover that. And I'm sure that's going to show itself in the story and how this got built at the end of the day. But let's try to the scene for the label first. So again, you joined later in the journey when it comes to the label side and wanted to transform. What was the state of the label? What was the past of that company?

Simon M. Eder

So the label was basically founded from three former record label executives. And they had founded the label basically at the end of the 90s, early 2000s, with the focus on SACD, so Super Audio CD, which for a while could have turned into the successor of the CD. So basically it was instead of stereo, multi-channel, higher quality. And I mean for very long, like a new music format replaced the previous one because it had better sound quality and that was also, let's say, their assumption back then. And they wanted to be the first ones building a catalog, building a vast catalog in high quality recordings on super audio.

Jakob Wredstrøm

Hmm.

Simon M. Eder

Obviously the super audio never replaced the CD and the music industry took a different path because of digitalization and suddenly it became more important to make the music format portable with MP3s and the sound quality wasn't that relevant anymore. And that was basically, yeah.

Jakob Wredstrøm

In order to do a pursuit for some time before you joined, ultimately, you know, not pursuing the right thing, if you talk from sort of those terms, it must have had some sort of financing mechanism that could help them do that. Did they raise capital or like, how did they operate that?

Simon M. Eder

Mm.

Simon M. Eder

The very beginning it was really just the three of them and they were raising capital over time with getting various investors on board. And by the time when I joined, basically they were reaching their retirement age. They were also able to grow the catalogue and grow revenue over, it was a little bit more than the first.

Jakob Wredstrøm

Hmm.

Simon M. Eder

How long was it? 12, 13 years basically. But then with digitalization, obviously like CD sales went down drastically. The old kind of rules didn't apply anymore. And there was back then just a question of what to do. Like should the catalog be sold? Should the entire label be sold to someone else? Or... or is another path just trying to get the label ready for the kind of digital era. And that's where I was part of the new management team.

Jakob Wredstrøm

Mm.

Jakob Wredstrøm

Amazing. So to some degree from entrepreneurial path, you sort of start from scratch. Obviously you have some strengths to stand on. Have a catalog, have, you know, some, some original founders with understanding of what it means to have investors and, and build tech to some degree or invest in a tech approach. So you had some shoulders to stand on, but still like very much from scratch. Like how did you go about thinking about digitalized? What was your first, first sort of approach?

Simon M. Eder

So basically back then, mean, sounds like centuries away, but it's not that long. Streaming wasn't that big of a thing yet, especially for classicals. Like in the early, like it was 2010, 11, 12, back then digital was basically downloading or downloads, basically iTunes, Amazon. And we kind of felt that first of all,

Jakob Wredstrøm

You

Simon M. Eder

We are not practically enough pushing on... that element, we're not really steering, let's say, the distribution network on that side. We don't understand as a label well enough how that side of things is working. And we also started to, because the high quality was a big asset for the label and it had a very audiophile followership. So we also integrated a download store for the most high risk files on our own website that you couldn't download anywhere else. And we kind of knew, well, it's a very niche product to download basically the DSD files, which is, let's say, the studio file that you would really produce at a recording. So we made them available. And there weren't back then that many online stores that were doing that. So that was the first approach. And then in parallel, also, let's say, proactively building out the distribution, the international distribution network, and pushing it and trying to understand it better.

Jakob Wredstrøm

Hmm. So to some degree, because like the first value proposition of the label was this prosumer almost like this consumer that really cares about the quality. And then the first step was basically a digital version of that. Like whoever wants to download digital music will provide the highest possible quality they can get at this digitally. So that was, it feels like it's very much in the spirit of what the first sort of iteration of the company was.

Simon M. Eder

Optimism, we also didn't sorry, yeah.

Simon M. Eder

Yes, exactly. Basically also what came in parallel was also thinking what is the function of a label with, let's say, also with the changing aspects of how relevant is it for an artist or what's the relationship between artist and the label. That was also something we tried to kind of intensify and work out a little bit more.

Jakob Wredstrøm

Okay, you talked about sort of how to push distribution internationally. Again, you know, I'm sometimes way too young. What do you mean by that? Like, what was the effort of pushing internationally? What do mean by that?

Simon M. Eder

So basically, when we joined, we had the former distribution partner that we had. So you would have the distribution partner for physical taking care of really of, let's say, managing the CD stock. And then also taking care of, let's say, the entire ecosystem of bringing the recordings onto iTunes, bringing them onto Amazon. We wanted to understand that better to also see. who's downloading our stuff, where and why, and how can we improve that proactively. And there was also the physical side of things. basically, stock management reprints that aspect, which was... bit of a nightmare because I think like two months after we started, the distribution partner went bankrupt, which meant our stock was in a warehouse, but we kind of knew that the warehouse, once really with bankruptcy, we probably very soon will not have access to the warehouse and to our stock. So I remember that back.

Jakob Wredstrøm

Okay, that makes sense. Okay, so you basically, you still have so much in cutting edge of digitalization that a lot of the sort of logistic pieces in distribution of music still wasn't properly in place.

Simon M. Eder

Yes, yes. Was like at the very beginning, it still very focused on the logistical operations of CDs. Like that was really the, let's say 95 % of the label's daily operations was focused on that.

Jakob Wredstrøm

One quick thing is just breaking the podcast. It seems like your computer is working overtime with the cooler. Do you know if you have any apps open you could call us just to save the CPU?

Simon M. Eder

Let me check.

Simon M. Eder

Exactly. And I mean, for very long, also remained extremely relevant. If you like with classical, which was which was labels core repertoire in the CD era, classical had a share of four percent roughly from all music. And that went down in the digital era to almost like one percent. So you can tell that there was some kind of gap.

Jakob Wredstrøm

Sometimes it takes a lot of time. Yeah, sometimes it has a lot of CPU. Cool. Let me just take it from there. OK, so basically, there was a mixture between, OK, how do we pursue a new model, which is digital distribution, high quality files? But then there was also, we still have an existing business of CDs. How do we effectivize that part of the business? Was that the dual pursuit there?

Simon M. Eder

And still, you can tell that the gap is still there for multiple reasons. And that was the element that we tried to kind of feel like, can we get our share from 1 % to the 4 % in the digital world?

Simon M. Eder

Not only the consumer but also I would say label executives and artists very like it was a highly sensitive topic like going or branching out into digital formats.

Jakob Wredstrøm

Mm. Is that to some degree because there's a consumer that listens to classical music tend to be more concerned about the physical medium or the quality of the physical medium? What was the reasoning for that?

Jakob Wredstrøm

Okay.

Jakob Wredstrøm

Hmm. You know, I have a slight background in classical music. I'm a Royal Tone Meister by degree, which I sort of regret I did because I did a popular music producer and audio engineering background and then went into classical music just to try something. And, you know, I almost failed because I had something to do, learn a lot of classical things, but I was good at the engineering part.

Simon M. Eder

Totally, yes, definitely.

Jakob Wredstrøm

One of the things of my experience is like, it's almost like an athlete-like experience being a classical musician or an artist. Like it is repetition and perfection, everything from overtone harmonics of one particular instrument to what room you play in to like, there's so much related to perfection or maybe perfection is the wrong word, but like, know.

Simon M. Eder

The fall was slower and the switch to digital happened or happens still with a big delay. Indeed. And I mean, you could tell that several, especially classical labels, they did not make it through the transition if they didn't focus early enough on digital. There was a lot of hesitation.

Jakob Wredstrøm

The pursuit of the optimal scenario for that performance to happen. So guess that also sort of shined through which medium they preferred consumers to listen to their music on. So I guess that somehow when everything crashed for music because of the digital age, that revenue was somewhat sustained in the classical world a bit more. Like was the sort of the fall slower?

Simon M. Eder

Hmm.

Jakob Wredstrøm

Okay.

Simon M. Eder

Also true, mean, one, for sure one problem or practical element, which I think also kind of caused the delay, was basically metadata or the way how metadata worked back then on most platforms because it was really not suitable for classical. So I think there's also this pragmatic reason why it took a while before a lot of digital platforms became that attractive because of problems you wouldn't have with non-classical

Jakob Wredstrøm

Hmm.

Jakob Wredstrøm

Yeah, so if you want to put it on the edge, might be wrong about this. Like to some degree, you could argue that you some element of foresight. Obviously you were in the middle of it, but then you could also see the market reacting faster to certain parts of the music industry than your own. And you had a tiny bit more time to adapt, I guess.

Simon M. Eder

Repertoire. If it makes sense, just to explain, let's say if you have a Beethoven recording, like Beethoven's Fifth Symphony, there is no original version. Like they're all cover versions. Beethoven didn't record anything himself. So whatever you record, it's a cover version. And you will have...

Jakob Wredstrøm

Mm.

Simon M. Eder

20, 200, in some cases you really have hundreds of recordings of the same piece. And trying to reflect it in a digital structure, it's a bit different compared to, let's say, world of pop music, where you really always have the authentic recording in most cases.

Jakob Wredstrøm

Hmm that makes sense. Yeah

Jakob Wredstrøm

Hmm.

Jakob Wredstrøm

Hmm. That makes sense. Okay. So the whole industry didn't adapt to digital that fast and therefore also consumers, you know, didn't really have the possibility to listen to classical music in the optimal environment or the optimal repertoire that quickly either. So that makes a whole lot of sense. And that also really makes sense of how you somewhat could survive the digital transformation from

Simon M. Eder

Well, so one of the first things that we did with the label in parallel to what you just mentioned was, let's say building, we did a rebranding process. Also in respect to how can our label be more relevant brand-wise on digital platforms and also, let's say, redoing our own website, which kind of had this download store. And that was basically back then the kind of initial, like the first step for Primephonic.

Jakob Wredstrøm

Being in the old industry, but still somewhat sort of progressive in technology and then going on to succeeding in the digital area as well. So after you've tried to work on this distribution in the digital realm and then also sort of the logistics, what happened? Did you find a way to make this more effective?

Simon M. Eder

Because we said okay well now having a download store in Hi-Res only for one label is a bit of a waste of effort. Like why don't we join Synergies with a lot of other Hi-Res labels to target in a first step let's say the audiophile, the audiophile classical listener and we kind of like started with a new brand. We didn't want to... We didn't want to ask other labels to join under our label name. And that's when we kind of made the first step for Primphonic. So the beginning was really... At the very beginning it was a completely separate standalone product and brand, basically just a sub-product of our... of our own company, of our own label. And when we presented back then the kind of idea that we have and that we're also partnering up with other labels and we shared that with our shareholders and that we would see their potential for some additional revenue, they really liked the idea that much that they said, okay, well, what if you take it one step further?

Jakob Wredstrøm

Okay.

Jakob Wredstrøm

Yeah, did you flip that out into a separate company or was it still the same company but with a different brand?

Simon M. Eder

What are the challenges ahead that you would identify, bring us the business plan, bring us the forecast. And that was basically really when we then like... developed the business plan for Bramphonic and said, we'll download, we'll come to an end at a certain stage. We can still make some money perhaps over the next 10 years, but we also see a big opportunity for streaming, for streaming service focusing on Classical. Back then it was only Spotify and Spotify was in rather early days and Classical didn't work that well back then. And that's how it kind of started.

Jakob Wredstrøm

Mm.

Simon M. Eder

Right before we got acquired by Apple, was a standalone app offering the entire catalog of classical music. So basically, think of any kind of streaming app that you have in mind with the core difference that I'd say the way how we dealt with metadata and the way how we dealt with the creation was really tailored for the classical listener. And the metadata,

Jakob Wredstrøm

Mm. So try to explain what was the end product before it got acquired. Like how did PrimFomic look before it got acquired by Apple?

Simon M. Eder

Was the big USP or was also let's say why Apple now kind of decided to have a standalone app called Apple Music Classical in addition to Apple Music because it simply works in terms of metadata, in terms of search, different than the rest of the music.

Simon M. Eder

Definitely not the catalog or not in the first step because basically the catalog Apple already had access to like Apple had access to the entire classical catalog The relevant part really was let's say the tech and the metadata the way how we dealt with tech With metadata within our tech the tech approach that we had with metadata

Jakob Wredstrøm

That makes sense. obviously we don't need to go into specifics because you are under NDA with the giant. But what do you believe is the reason why they acquired the company? Was that for the tech stack? Was it for the brand? Was it for the of the catalog? What was the reasoning from their side as far as you understood?

Simon M. Eder

Mm.

Simon M. Eder

Metadata and in a way if you break it down the metadata which kind of shows in two ways so I mean I shared now let's say the challenge of let's say the cover version

Jakob Wredstrøm

And, do you, so, so when you talked about the issues with classical and the digital age with all these, well, everything is a cover version. There's many versions. is that basically the magic thing you correct? Like the logic of like, we need to create something that addresses the way the metadata is sort of structured here or used. Is that the key to all of this to some degree?

Simon M. Eder

But then another very annoying thing in the early days of streaming platforms for classical was you weren't able to find the entire work. So you have Beethoven's Fifth Symphony and it's broken down into several movements and they come with an order. in the digital, within the streaming platforms, they were broken down just like into tracks. So you had a completely random mixture. It was almost impossible. possible to kind of listen to the music the way it was intended, the way it was composed, because of the trick element in a second level. And...

Simon M. Eder

Exactly. That's great comparison. You're on Netflix, you want to watch season two, episode three, four, five, and you're not able to identify. I in season one? Am I in season two? Episode three, four? So even that structure was basically impossible to find in the early days for classical music in a streaming platform.

Jakob Wredstrøm

Hmm.

Jakob Wredstrøm

Yeah, so some degree it's like, you know, each movement is like a scene in the movie, but if you don't have the connection between watching the whole movie and its sort of continuity, the music makes less sense.

Jakob Wredstrøm

Yeah, because most listeners of classical music also understands that. It's not the same way of listening to traditional music playlists. There's a storytelling, there's a context, there's a history, there's to some degree a big intellectual part of classical music that's beyond just the simple consumption. There's a lot of context, and that's what we're So has any of the other streaming services falling?

Simon M. Eder

It improved, it massively improved over the last decade. So let's say when we started with Primephonic and when we started working on it, that was back in 2014-15, before Apple came, before Apple came, know, before even Apple launched Apple Music. And I remember definitely, let's say, it was addressed and improved from most of the players within...

Jakob Wredstrøm

You guys address that approach with metadata? Like have you seen an adaptation?

Simon M. Eder

Within the last 10 years, it got significantly better. Yeah.

Simon M. Eder

A battle, a joyful battle, let's put it like this, it was a joyful battle in the sense that, I mean, there were multiple barriers. We had several critical moments, I would say. So one, for example, when you, okay, well, we now have, let's say, some kind of funding in place and we now have a business plan where we want to offer a streaming platform for Classical.

Jakob Wredstrøm

The way that we talk about it is sort of very almost like an academic dissection of what happened and because I really like to have that angle, but I'm sure that it was not a straight path and just joy and win-unwin. What was the actual situation? This a battle to make happen?

Simon M. Eder

And we knew in order to be successful we need the entire catalogue of classical music. No cost, no mobile pay. Let's say an additional 9.99. Theories if then the classical listener isn't finding the entire catalog. That also meant we had to get all the major labels on board and the idea of a niche streaming service like only licensing a part of the entire like only licensing a part of the repertoire was completely new first of all. We also introduced a different payout model. In the sense that with most streaming platforms you would have paid, you're paid per stream track. And that also is a bit of a challenge for classical music because you have extremely long tracks sometimes in classical music. It's very common to have a track that can be up to 15 minutes, which at the same time means you will get paid for 15 minutes the same amount as for a three minute piece. So take one album, 60 minutes of music for classical can be three tracks, for non-classical can be nine tracks. So you even cannot make the same, you have a completely different financial business model behind it that is very... Very disadvantages for Classicals. We changed it to stream second, basically, payout, which was already a challenge to explain why we want to do that and why we think that makes sense and why this should be introduced for Classical. And getting as well all of the majors on board. Yeah, so that was one of the battles where we know, okay, well, we have to do that because if not, we can shut down again.

Jakob Wredstrøm

I have the privilege of speaking with lot of founders, a lot of startups and scale-ups, and I'm also fairly technical myself. So I have like a rough idea what it takes to build a streaming service, everything from data science to the actual sort of app and everything in between. Like it's immensely complex. And you said you and your sort of co-founder that took this on.

Simon M. Eder

In all honesty, I think with growing with the right people and with the right ambition and having, I would say, this kind of weird mixture of really not being naive, but at the same time, be naive and it says, well, we'll make it work. Because now thinking back, it was a complete nightmare. Even just ingesting the entire catalog.

Jakob Wredstrøm

The managing director and you as a marketing director, you didn't really have any qualifications. Like how did you become good enough as a team to actually pull this off?

Simon M. Eder

Now, so many things could be so much easier and faster with AI, but back then, like, also to make that a problem, we wouldn't have it to that extent anymore at all. Ten years ago, very, very different story. Yeah, I think it's a mixture of, like, really growing with the right people and not giving up, in a way.

Simon M. Eder

At the end, by the end and by the time of the acquisition, had our entire tech team in-house. That was not the case at the beginning. That was, for example, one of the things where back then we were kind of wondering to what extent are we insourcing? Should we develop it from scratch in-house or are we working with an external tech partner? And our approach was that, let's say, we start with an external...

Jakob Wredstrøm

So how does the team structure look like? Did you have a whole team of engineers and salespeople? What was the situation at the end or the acquisition?

Simon M. Eder

Tech partner and gradually once we've built, once we've made the first steps and we get the understanding, once we were learning, we start to in-source and by the time of the acquisition we were running our tech team. In-house, like the team was roughly 50 people. So I would say the big part was the tech team. Also data ingestion was a very key part. Marketing operations, yeah.

Simon M. Eder

We were making, by the time of the acquisition, were making relevant or substantial, I would say, revenue, but haven't reached the level of being profitable that was still down the road. I would say we were very lucky was that, let's say, our investors set up. So the investors were also the owners of the label, a broader set up, who kind of made the journey possible.

Jakob Wredstrøm

So if you just follow the trajectory of any other streaming platform out there, I'd be very surprised if you were profitable by the end. It takes a lot of time to build up users. I can imagine there was a lot of investors that took this chance and bet on it. What was the situation? Was it primarily financed by external capital the majority of the time, or did you actually make any revenue that could sustain the team?

Simon M. Eder

And we had, it was pretty much at the time when we were also starting the very first conversations with Apple, when we were also considering to start onboarding work with VCs. There were then another complete level of complexity because we, back then even... Weren't ready for us mentally to kind of sell already. Didn't have that, we did not, we thought, okay, well that will come later at a later stage. So it kind of was a surprise back then.

Simon M. Eder

There were multiple. Was one of them, one of the possible outcomes for sure. But also other scenarios could have been possible. But that was one of them. Yeah.

Jakob Wredstrøm

Okay, so ultimately there was a pursuit of selling this at one point. Like that was the capitalistic goal, I guess, that you were trying to realize on behalf of your investors.

Jakob Wredstrøm

Hmm. So, you know, I think a lot of these journeys also, there's so many moving pieces in succeeding in entrepreneurship. I haven't myself succeeded, so I can't firsthand speak of it, but other than academic approach. But one of the components is having capital that...

Simon M. Eder

A very big factor for sure, but not the only one. I think one of the other elements is that with a startup and funding becomes available, you can burn money so easily and it's burning so fast. Think that's, of course you have to find the balance of, well, where do you really want to grow and where do you want to invest? At the same time, from my perspective, there's a big risk with

Jakob Wredstrøm

Is supporting whatever journey the company is taking. So how big a part do you believe that was that you had strong hunters that were seemingly willing to be patient and also quite comfortable in living on the unknown of where this was going?

Simon M. Eder

Burning too much too quickly. I think that's also a potential risk for failing.

Simon M. Eder

It was, so basically was at the pretty much at beginning of the pandemic, which was hard because we didn't know how exactly it would influence daily operations. Turned out not at the end, turned out operations went operations sales, they went ahead pretty much like planned. But that was when first conversations kind of started out of nowhere. And I mean, I just remember

Jakob Wredstrøm

So operational, well, good operations, I guess, good management of cash and make sure you're not burning money is a big part of the journey. You said that the offer for acquisition came as a surprise. Try to sort of paint that scenario for me. What was happening at the company at that time?

Simon M. Eder

That was 2020 and three years before in 2017, we had a small team in New York. They were taking care of the US market and operations on site. And I was sitting with a former colleague there and we said, where do we want to be in three years from now? Over drinks, let's dream big, blah, blah. And we said, OK, well, yes, Apple. And we put it the calendar for like in three years. I think it was somewhat like, I don't know, January 2020 or February 2020, something like that. Or March. And I remember sitting in front of the computer this pop-up comes like gosh wow that's we're thinking three years now we're still I mean we're still around we're growing everything's going as according to plan but at the same time you have so many new berries always coming and there's the pandemic And I think eight weeks later, the first contact was made from Apple back then. So put it in your diary. That's what I'm saying. Put something in your diary for the future.

Simon M. Eder

For sure. I think in all honesty, there's always a level of tiredness that comes. I think back then it was for sure also because of, let's say, the pandemic changing a lot of operations. Anyway, they change in a startup all the time. It's like 80 % failing. You learn, you get up.

Jakob Wredstrøm

Thank

Simon M. Eder

I think that's one of the positive things that you just become very fast. It's not about finger pointing. It's just like finding out what works and what doesn't work how you can improve it. And it's not so much. If you start to finger point, you're kind of lost already.

Jakob Wredstrøm

Were you tired at this point?

Simon M. Eder

But for sure there were a lot of tiring moments. And I think back then it was just the beginning of, let's say, a very long process, very long conversation. I think that was also that part, the entire conversations that we then had ahead, they were also very long and very, very...

Jakob Wredstrøm

Mm-hmm.

Simon M. Eder

Like with a lot of open ends, mean, obviously you go out by the time the deal is done and it looks like one shiny announcement, but all the uncertainty and all the of question marks that were coming before, you don't see at that moment. And exhaustion, and also exhaustion to a certain extent,

Simon M. Eder

Mm.

Simon M. Eder

When it was completed, how it was affected, it all has to do with relief of closing a chapter in a way that you kind of want to close a chapter. Although basically when it started, we didn't think of closing the chapter yet. Like, OK, well, we're still writing the book. Somewhere in the midst, they're like, OK, well, is this perhaps now how we kind of are?

Jakob Wredstrøm

Hmm, yeah.

Jakob Wredstrøm

Yeah, so one thing is sort of learning company. Another thing is also, you know, having this deal on the table to some degree might feel like the light at the end of the tunnel enough because the journey is that terrible, but like still like it's sort of a reward for hard work and that in itself can also be quite exhausting, I guess. How was your life affected when this was completed?

Simon M. Eder

Writing the end of that chapter. So I think it was a mixture of relief, of course also being proud, but also letting go a level of exhaustion.

Simon M. Eder

Yes, I mean, so in that regard, would say having in mind how much, such a like a startup that is, as in this case, B2C, which is financially extremely challenging, I think the B2B, the B2C part, extremely challenging, what you also have to invest.

Jakob Wredstrøm

Yeah. And financially for investors, owners, do you think that was a good experience? Also, a lot of the owners, including yourself, had been on a quite long journey to get there.

Simon M. Eder

I mean, I made some money, I'm still working, it allowed me to do things that otherwise probably would not have done, but it puts me at ease, let's say, with some things, but it's not the kind of success story that some people might imagine. Well, if the company where you were a part of it... You co-founded, you're flying around with the helicopter and that's the new life. No, that's not what the reality is. Also basically, there was a lot of investment needed to get that far where we went.

Jakob Wredstrøm

Very.

Jakob Wredstrøm

Yeah. And that's also the typical thing I hear with music tech is like, we talked before we did the interview, like the perceived, notion of music tech and how that works. And one of the things is it was success is success a hundred percent. But, but I think there's also, it's healthy to understand that financial success in music tech might be a tiny bit different than.

Simon M. Eder

Mm.

Jakob Wredstrøm

Than other industries and the reality is healthy to balance. Also behalf of whoever's taking a risk on both the founder side and capital side that yes, there's a win to be had, but even when you succeed, the math might not be comparable, I'm not saying necessarily in your case, but might not be comparable to alternatives of similar, know, pursuit and effort. Do you believe you...

Simon M. Eder

Yes, mean not that for me it's not so much let's say about the specific industry but I have to say there is despite all despite all the let's say challenges that I mentioned but there's something that I liked that it is a fit for me personally in terms of let's say company culture that you probably need in such a sense and like from their perspective yes

Jakob Wredstrøm

You would have put that entrepreneurial energy somewhere else than music tech if you had sort of had an opportunity to do it again and be younger as well.

Simon M. Eder

Also in the sense that, let's say, with that experience, it's kind of, how should I say, both. Like you get more relaxed with certain things. Learn your lesson and you can look back on something and ask yourself, did I have to go that far mentally for myself or like, where is it healthy? Where does it become unhealthy, for example? I mean, I have to say now the level of, for so many years, like the pandemic was I think really the first time, when a pandemic hit, it was the first time that I was sleeping in the same bed at home. For more than two weeks, more than 10 days. After nine years, think the longest probably was a week at the same place. And that was something like when that suddenly ended and like I was at home and they did not like, where am I right now? This is like, that's where I realized that's pretty fucked up. Like doing that for nine years almost, constantly in a row, that wouldn't work. What, like now thinking back, what would happen if, I don't know, an health issue comes in or like, you know, if you have family and a family member comes sick or you have children, that would not be, that would not be, that would not be that easy. I would not, I would not be sure if that would be combinable. If it would have been combinable, to be honest.

Jakob Wredstrøm

Hmm. Yeah. I think that's a, know, really important thing about entrepreneurship is also understanding how much it costs. Like I personally, you know, I've been an entrepreneur for 14 years in, you know, many different aspects, small business, and then more startups, more startups.

Simon M. Eder

You

Jakob Wredstrøm

And, you know, in any financial terms, I haven't succeeded yet. Like I've definitely built things that, you know, has its merit. And also amplitude as we run it now, we run 50 people. Like it also has its merit. Very far from, from sort of the, the end game, but I've made a conscious choice now. Like I work, you know, between 25 and 30 hours a week, just because like, I just realized like, you know, I have three small kids. I cannot wait. I cannot take the chance of waiting until I'm there to slow down. I just can't because I'm still young, I'm only 32, but again, there's only so much you can take. So I've proactively chosen, okay, great, it might suffer the potential of the company to some degree, but also realizing like, okay, I need to slow down, I need to run a lot more, I need to spend time with the kids, I need to be present. So I'm trying to take that sort of...

Simon M. Eder

It makes complete sense. You said something that kind of triggered me now. You said you cannot wait until you're there. And that's so true. That's something I would have never asked myself during the period. Now for me, it's clear. It's not about getting there. It's about the journey. And do I want that? And I don't know where there is, in all honesty. Think that's also the danger. You put it there. When are you there? And what if you don't get there?

Jakob Wredstrøm

Joy before I'm actually earned it to some degree, just without, the realization that I speak with so many founders, like I speak with hundreds of founders and just through this podcast, know, many, many as well. And I sort of painted a picture of what it takes and say, okay, I can pay that price, not, not that fast. It will take longer for me because I need to take a story. Does that make sense?

Simon M. Eder

You might lose sight of a lot of things if you're only trying to get to that there. And that's not something that makes so much sense and that's something that I now also I would say I've realized it's not only about getting there, yes, but that's a goal but that's not the only that's not the only that's not the only goal.

Jakob Wredstrøm

Hmm

Jakob Wredstrøm

Hmm.

Jakob Wredstrøm

No, It's funny. I was having a conversation with my wife, I guess, yesterday. You know, we always have these conversations. Is it worth it? Because there's a lot of personal cost, there's a lot of stress, there's a lot of responsibility. And my answer in the past used to be, well, like, I've worked so hard for this goal for so long, I can't let go. And now the conversation has changed. No, I can't change this because all this freedom and flexibility I have now, I can't find anywhere else. Which is a quite interesting thing. And obviously, I can sort of do that because I've paid my dues, maybe not in success, but in hard work. I've laid the foundation that I know the ship can run without me being there at all times. But still, it's interesting how that has switched. And I think that's also what founders need to realize. You're sacrificing so much to pursue that goal. And you need to find that worth probably in between because again, not talking about your specific example, but that illusion of this big payday and, and the helicopters that you said, like that might well very well not be the case. And also you probably not necessarily going to find your happiness there. Um, but where were like, what did your life look like after you got acquired? Like

Simon M. Eder

So basically after we got acquired, was still, so basically I was director of both companies, Primphonic and the record label Pentatone. And by the time of the acquisition, had also operationally already a strong focus on the label still. Yet at the same time for me personally, there was this kind of, okay, well, if it's only the label, it becomes boring or it becomes not enough.

Jakob Wredstrøm

What do you spend time on? What was your next chapter?

Simon M. Eder

Basically that for sure, let's say having both of these companies and having them operating in parallel was challenging and definitely in many cases too much, but at the same time. It would not have been enough to only have for me, like to only have, let's say the, the label side. And I, back then already had an offer or briefly after I got an offer for an agency, for, for an artist management agency. So that was when the pandemic was kind of coming to an end, to join, to join an artist management agency, where the intention was how can you kind of now take the pandemic as an opportunity to kind of rethink artist management and how could the agency not just like go back to the old way. And I did that for not that long, for probably one and a half years, because let's say our, way how we were thinking forward didn't really match or like the ideas of how we could innovate or not innovate wasn't a hundred percent match. It was basically until after that when I kind of did what I had in mind right after. So basically I the very cliché traveling alone through the world and Asia for a while, which was this kind of delayed, hey, I'm doing this because now I can. So that came basically with a delay, not right after the acquisition, but one and a half years later.

Simon M. Eder

Where's my life right now? I joined a startup again last year, which I, in all honesty, if you would have asked me two, three years ago, am I going to do this? No, nope, been there, done that. I've written that chapter already. It ends with Apple. I'm not ruining that chapter with now a potential second attempt, but I joined

Jakob Wredstrøm

About and where are you now? Like where is your life right now?

Simon M. Eder

Another startup last year as basically a late co-founder and started to work on a project which I always wanted to do, also a bit cliche, and I probably would not have been doing it now without having the kind of financial security or safety that I have because of the acquisition, which is opening a bar in Vienna I'm currently working on. Running between construction site and startup life. So right before I'm just like, I'm coming still with a little bit of dirt in my hair. There's a little bit of like brick, rest of bricks are still in my hair. Yeah.

Jakob Wredstrøm

Amazing.

Jakob Wredstrøm

Ha.

Jakob Wredstrøm

Amazing. Well, it's been it's been incredibly interesting to hear about the story. And I think, you know, my most important takeaway is cynically almost that we need to have more education about what the actual outcomes are of these acquisitions. Again, I don't want to point this as a negative story. This is a very positive story. So everyone listening is damn right is it can be transformational. But I think, you know, because a lot of these deals are under NDAs as any acquisitions are, but I think especially in music industry that tends to be, you know, lack of transparency of like what happens when you sell a company. There is this misunderstanding of the metrics. Of first, like, what does it take to build a great startup in a streaming space? You know, how much does it cost to acquire customers? And like, is it worth it from a metric standpoint? And in what situations doesn't make sense? Like, all these things are not very clear. It's not very gathered and structured, which I think is sort of a shame. And really, that's sort of how we met in Poland, that my talk was about how not to do a music tech startup based on sort of our initial findings in the space. And

Simon M. Eder

You mean like found like that they are in for the same intention or were basically this?

Jakob Wredstrøm

I think our talk today really also helps exemplify that both the path to success and sort of what randomness of timing and industry and consumption patterns happen, but also what diligence went into it and how much hard effort it was to achieve an exit and what that actually meant. But it's hard to find those stories. It's hard to understand those, Have you experienced

Simon M. Eder

Yes, there are definitely several of them where you feel like, okay, well, it's like very comparable story. I know the struggle. Then there are also very often moments where you think, okay, this will, someone's underestimating how they're trying to solve a problem. Like, okay, well, this is...

Jakob Wredstrøm

Founders in your network that's been in similar paths. Like, can you find people around you where you can resonate with their journey and your journey?

Jakob Wredstrøm

No, it's sort of the club of X of the founders of music tech where you have a common understanding of what you've been through and where you are now. Like, you found any community around that?

Simon M. Eder

They think it too easy sometimes and like don't get me wrong like I think we were we were doing the same at the beginning especially music tech it's both I think on the one hand various like there are rules but you just have to know them you have to understand you have to understand You have to understand all the music law elements, have to understand master rights, you have to understand publishing, and you can find these rules, they're out there, but understand them, you really have to understand them, and otherwise, basically no chance. I think you will run into an issue later. If you don't. Understand them in music tech. And there are not that many music companies where I would think, okay, well, you will not at a certain stage have to think about publishing rights, master rights, in some way or another, even if they might be not relevant for you directly, but they will be very relevant for your clients. So not understanding them, I think, will kind of... already a certain level of success potentially.

Simon M. Eder

Would be great. It was also my pleasure. Hopefully soon. Thank you.

Jakob Wredstrøm

Well, Simon, I also appreciate like really, I was very honored to also have you at, you know, Music Take a Poll, not that I was a part of the arranging part, but like I was surprised to see there and very surprised to see that you also spent your time trying to give this information to other founders and share your story. So I really appreciate that. Simon, it's been a pleasure. Thank you so much for joining the podcast and I hope to see you again soon. I don't really know when we'll meet next time, but I'm sure we'll meet somewhere. Yeah. Thank you, Simon.