SC-093 · Founder
Building Ethical AI For Musicians
Guest: Michael Jacob, CEO and Co-founder of Lemonaide Music
Summary
MJ, Michael Jacob, is CEO and co-founder of Lemonaide Music. He grew up rapping from age 11 after his father was sent to prison and his family became homeless for a couple of years; music and later his Christian faith became his main sources of stability. After working at Google, he built AI models trained on his producer friends' beats to help himself write instrumentals as a rapper who did not know music theory, then turned that tool into a front-end app once other producers asked for it.
Lemonaide now pays artists directly, under legal contracts and direct consent, for every piece of training data behind its melody and drum models, arguing that AI companies training on musicians' work without paying for it are undervaluing the one input that actually makes their models valuable. Its product Spawn, built with producer My Best Friend Jacob's sound engine, sold more than 5,000 units at around $200 within three weeks. Lemonaide is already profitable and bootstrapped with a six-person team, and plans to license its consented data and models to other AI and music tech companies.
MJ argues that full song and instrumental generation tools could remove income streams like sync licensing and beat sales that let independent producers make a living, which could eventually reduce how much culturally significant music gets made. His advice to founders is to build only as much company as current revenue can sustain, and to raise outside money only when a bigger vision needs more resources than the business already has, rather than to buy time or force growth.
As of the episode's release on 6 February 2025.
Key takeaways
- 01MJ built Lemonaide's first AI melody and drum models from his own producer friends' beats because he could write raps but did not know enough music theory to make his own instrumentals.
- 02Every piece of data behind Lemonaide's models comes from an artist under a signed legal contract and direct consent, and Lemonaide has already paid artists for that data.
- 03Lemonaide's product Spawn, built with producer My Best Friend Jacob's sound engine, sold more than 5,000 copies at around $200 within three weeks of release.
- 04MJ warns that if AI tools replace income streams like sync licensing and beat sales, a producer could lose a third of their income and be forced to stop making music full time.
- 05Lemonaide is already profitable on its producer tools alone, which MJ says gives it room to build a data layer that could let artists license their work to AI companies for ongoing pay.
- 06MJ's advice to founders is to raise outside money only when a bigger vision needs more resources than the business already has rather than simply to keep the business running.
Guest
- Michael Jacob, CEO and Co-founder at Lemonaide Music
Questions this episode answers
How does Lemonaide Music pay artists for AI training data?
Every piece of data behind Lemonaide's melody and drum models comes from a producer who signed a legal contract and gave direct consent, after MJ met them one by one, on video calls or in person, such as flying to Atlanta. Lemonaide has already paid artists for that data and wants other AI companies to license consented catalogs the same way rather than take data for free.
Why does Michael Jacob say some AI music companies are undervaluing musicians?
MJ argues that training data is the most important input behind any AI model, and companies that train on musicians' work without paying for it are building billion-dollar valuations on data they never compensated. He says a company like Suno would be far less impressive if it had to remove all copyrighted material from its training set.
What is Spawn, Lemonaide Music's product with producer My Best Friend Jacob?
Spawn combines the sound engine built by producer My Best Friend Jacob, who has worked with Travis Scott, with Lemonaide's AI melody model. Released in November, it became Lemonaide's most successful product, selling more than 5,000 units within three weeks at a price of almost $200 each.
How could AI music generation affect independent producers' income?
MJ says a producer's income often splits roughly evenly between sync licensing, beat sales and streaming royalties, so losing even one stream, like sync licensing, to AI jingles could wipe out a third of their earnings. If enough of those income sources disappear, some producers could be forced to give up music full time.
When does Michael Jacob think a startup should raise venture capital?
MJ says Lemonaide is already profitable on its producer tools alone without needing outside funding, and he believes a company should raise money only when its vision has grown beyond what its current resources can build rather than to keep the business afloat or force faster growth.
if AI companies are taking data from rights holders, so musicians or people who created the original asset. and they're not giving some type of compensation credit or whatever, they're literally stealing the data, right?
Episode notes
MJ, CEO of Lemonaide Music, shares his inspiring journey from aspiring rapper to tech entrepreneur. He dives into the challenges and successes of integrating AI into music production, emphasizing ethical AI practices and artist empowerment. Learn how Lemonaide Music is revolutionizing the industry by providing innovative AI-driven tools that support musicians in their creative process.
Highlights:
- MJ's transformation from artist to entrepreneur.
- The ethical implications of AI in music.
- How Lemonade Music supports and protects artists' income.
- Building a sustainable music technology company.
Sponsored by Allfeat: Decentralized Blockchain Solutions for the Music Industry - https://www.allfeat.com/
Produced by Amplitude Ventures Consulting: Partners in Early-Stage Music Tech - https://amplitude.ventures
Topics
- Ethical AI
- Music Production Tools
- Artist Compensation
- Bootstrapping
- AI Training Data
Transcript
Transcribed from the recording by the production team. Names and terms may be misspelled.
Read the full transcript
MJ
Whew. I appreciate you, man. I should have changed my hoodie if you were coming for blood, bro. I should have had my all black on.
Jakob
Michael Jacob, the reason why I say blood is not so much because we're in opposite ends, it's because we're on the same side, but I have been struggling with the future of artists, musicians a lot. The thought and reflection about what's gonna happen. But before we go there, MJ, who are you and what do?
MJ
Mm.
MJ
Yeah, for sure. So my name's MJ. Thank you for saying the full name, Michael Jacob, but I go by MJ. Yeah, I'm the CEO and co-founder of a company named Lemonade Music. So I get the privilege to work with artists every single day. I get the privilege to work with a very talented engineering team, prioritize whatever the artists are really looking for from a product point of view, build models, deploy that and just, yeah, just continue to have fun. Getting to build the dream is the best way to put it. And the reason why I call it the dream is because when I was a kid,
Jakob
you
MJ
I grew up a rapper. I began that at age 11 and I also fell in love with technology at like age 12 and my dream was just one day I would love to just be able to either be a rapper or do something within music and to be able to both be building a music company and technology at the same time. It's dope. It's that's why I say living the dream.
Jakob
So I consult a lot of companies on communication and my biggest strength is that I'm pretty good at looking through bullshit and yours is not. I just wanted to say that. I just wanted say that it wasn't bullshit but actually that's the common because when I want to look through your website and you have like two videos on the website that's basically you know product announcement or the vision.
MJ
Nice good start time to go straight for it man go straight from the jugular out here
Jakob
What was so interesting is like you sort of had made them almost as small films, but the most interesting things that your whole appetizing voiceover, appetizing is not the right word, but you guys get me, was in a rhythm. Like the whole, I think the longest video was like eight minutes and was very enticing because it was listening to music performed.
MJ
Mm.
MJ
Mmm.
MJ
Yeah.
MJ
Yeah.
Jakob
describing the product and I might have heard it before but I can't really recollect where I would have if I have. So for me that just stood out. Okay, this guy, he is serious enough about artists that everything he does is not only on behalf of artists or through whatever symbolic nature that needs to be but he's performing even the most commercial aspect of selling the company as an artist which I thought was extremely intriguing and
MJ
Yeah.
MJ
Mmm.
MJ
Yeah.
Jakob
And I think this is where I like to have this conversation today because at least from what I understand, you're quite genuine with that. Let's just start there. So would you call yourself a narcissist?
MJ
Mmm.
MJ
Yeah. Yeah, for sure. Well, first of all, even before that, thank you for even addressing and acknowledging that because the amount of time and energy that goes into making the content. is almost the equal love and care that goes into building the product and that is just straight up by nature of being an artist first. Know what I mean? So going back to your question, would I consider myself an artist? Yeah, for sure. Mean, first and foremost, you maybe heard about my personal journey in the videos, but the long story short of it is my dad was sent to prison when I was 11 years old and that's why I fell in love with music, right? So the reason why I fell in love was because things sucked.
Jakob
Hmm.
MJ
we became homeless for a couple years and like the outlook on my life being a minority in the US single mother did not look good at all. And the only outlet of hope that I had outside of my faith was music. And it was listening to music, but it was creating music after the fact of being inspired by like the likeness of like Eminem, Jay-Z, know, Nas, the list goes on. But the reason I bring that up is because at age 12 is when I made my first song and like uploading it to Myspace and having my older brother like put it on his like profile and I'm like, let's go, you know? And then fast forward a few years later, I did this like Mac Miller remix to the song called best day ever by Mac Miller and rest in peace to Mac one of the greatest artists of all time and that video got like 60,000 views and that's what like kind of shaped me to realize like shoot like I Think I'm good enough to do this thing for real one day. So yeah, the majority of my life I've been making music going through the journey of producing mixing mastering recording making my own lyrics to then going through the journey of uploading music on spot Spotify to then getting a few million streams to then headlining my own shows and going through the whole process. so yeah, I, regardless of the journey, I think you can consider yourself an artist out of like just identifying as one, but for the sake of like giving a little bit of a story and resume to it, that's kind of where I'm at.
Jakob
Yeah. Let's jump into it a bit because I promised you to play a bit of devil's advocate. So not every single question is going to reflect my own opinions per se. But when you are now working with sort of protecting the artists and we'll come into that. Do you believe that whole thing is a lot to do with just nostalgia? Like, you know, things being disrupting the financial realities of artists. Like, is a lot of that nostalgia or is there... is how would you place nostalgia in that whole?
MJ
Yeah, I guess do you mind elaborating what you mean by nostalgia?
Jakob
Yeah, like, you got a lot of things out of being music and you have these icons you look up to and there's a whole cultural history, like is respect and longing and nostalgia about that being sort of projected into the future that it should stay like that? Yeah.
MJ
Yeah. Yeah, yeah.
MJ
I see what you're saying. just to like resummarize from what I understand. for my own personal journey into the vision that I have for Lemonade, which is like all about ethical AI meeting and protecting the artist, is the question, do you think the vision is planted out of the nostalgia from making music as a kid and having a love for these like artists that inspire me? Okay, cool, cool. Look, I'm a human. So first and foremost, I'm sure there's some bias in growing up an artist, you know, and being inspired by these folks.
Jakob
Sure. Yeah.
Jakob
Hmm.
MJ
And I think that bias is a good thing, right? Especially as a founder, like we're all biased by things and ideally when you're running a certain company, what is your superpowers? I think naturally is what biased you before that moment, you know, so by being Like it's like bias overkill by like going on this path But by going through the journey of being inspired by musicians making my own music learning how hard it is to like create beautiful music there's a bias for sure in wanting to protect that. I'm not gonna like my knee jerk reaction was no, it's not nostalgia, but like to be realistic, yeah, I think nostalgia based on your definition that we just clarified here is part of it. And the other part of it though is just understanding what could go wrong if the protection of musicians isn't actually defined. And by that, mean, I just... like breaking down how AI works, the concept of machine learning. And I think your listeners are very familiar, but for the sake of like simplifying, at least from the MJ point of view, training data, the algorithm, and the generation step. It's those three things, right? The training data is the most important part to any algorithm. End of sentence. There is no algorithm without a great training data set. And there's so many studies that show the difference in the quality of outputs. So my point is,
Jakob
Hmm.
MJ
It's not just nostalgia, it's like a technical reason for if AI companies are taking data from rights holders, so musicians or people who created the original asset. and they're not giving some type of compensation credit or whatever, they're literally stealing the data, right? And if they're stealing the data, going back to the most important part in an AI company being the training data, the AI companies valued at billions or trillions of dollars and they didn't pay for the most important part that made their company valuable. And I'll go out to boldly state, if a company like Suno had to actually like, audit their training data and get rid of everything that's copyrighted, I guarantee they're not close to as impressive of a company as they are today. And it's because of, again, the training data, which lastly is tied directly to the artist. And that's why it's not just nostalgia. It's like a genuine understanding of what could happen if this thing continues to scale.
Jakob
Yeah, I think there's a lot of levels to it. And I'm going to stay because I have the freedom of my own podcast in the negative space to some degree. again, I've lived full time since I 19 for music, been running my own music studio, bachelor's, master's in music production and master's in music business. So I'm pretty much music. But I would say of the musicians,
MJ
Yeah, let's do it.
MJ
Hmm... Yeah.
Jakob
that I've met through my journey. I've probably been inspired by 2 % of those. And in my own...
MJ
Mmm, yeah.
Jakob
Perception, I think maybe only those 2 % had anything really to say. Like the rest were, in my opinion, instrumentalists. A lot of privileged, again, I live in Nordics, privileged people that wanted to express themselves, but really didn't have anything to bring beyond their own personal story, which is great on an individual level.
MJ
Hmm.
MJ
Yeah.
Jakob
But for me, music really transcends when you have something that can resonate with the masses. And it does need to be masses in terms of public culture, but then at least in whatever niche you're pursuing it. So my big question when thinking about Suno, for example, is just like, I understand the macroeconomic environment. I understand the problems there, but like an impact level on a national level, I don't really see...
MJ
Hmm.
Jakob
That I'm gonna miss the people that they're gonna hurt the most. And it's not meant in any other way than like, who's actually important in this equation, first and foremost? That's actually my question, so that was an intro. Who's important for culture that impacts? And are they gonna be as impacted by this, or is it gonna be another segment, in your opinion?
MJ
Mm-hmm. Yeah, no totally.
MJ
Yeah.
MJ
Yeah, totally. So I think who is impacted comes down to musicians and then breaking down musicians even further. What are the several ways musicians can make money? It's number one, know, uploading to Spotify, Apple Music and like publishing and things of that nature, right? So there's actual like making the full song. Then there's another way an artist can make money. If you're a producer, you could be selling your beat on a platform like BeatStars. And I personally know on two hands, like people making hundreds of thousands, if not millions on just selling instrumentals on BeatStars alone. So they're making a livelihood. Friends bought a home from his beat sales. So that's another way just selling beats, working with artists and getting not only the actual leasing of the beat, but getting actual points on that song as well if the artist ends up uploading their sync licensing. So there's so many ways to make money and there's so many ways to build a livelihood as a musician. So in terms of like... why it matters from a listener point of view. Let's not even go there yet. Let's focus on the actual artist. So the problem here is if AI tools get good enough that is able to generate, you know, sync licensing music, so amazing jingles for commercials. Well, an artist who might have had 33 percent of their income be sync licensing, 33 percent beat sales, 33 percent Spotify streams, they just lost 33 percent of their income. And maybe that's the reason they can't be a full-time artist anymore. And if they can't be a full-time artist anymore, maybe they have to give up music in totality. Maybe they decrease by 90 % of their time. And if that person has to decrease the amount of time they spend making music, what banger are we missing out on if that person was able to give 100 % of their time dedicated to music, right? So I think sync licensing naturally is a really easy one to think about. But then thinking about instrumentals, like as a rapper, I love little baby type beats. You I used to love that growing up.
MJ
Hypothetically speaking, what's the whole concept of AI? What you put in is what you get out. So if enough people are making little baby type beats, AI will have enough data to be able to build little baby type beats and all of a sudden, my friends were able to buy homes because of their beat selling. Is now they're able to be replaced by AI. And then we get to the Billboard charting artists. It's just a matter of sequentially, it'll get one step at a time to the Billboard charting artists eventually, but it's not all gonna happen at once, right? Like I think it unravels over the next five, 10 years or whatnot, but that's like doomsday worst case scenario. But let's be clear here. I talked about the artists the whole time. So now let's jump back into the listener. That 2 % of music that you enjoy, who knows, maybe that's now 1 % because we lost all the artists that might have made that hit. And the last thing I'll mention on that and why that's so like, and back it up with like a real example. One of the biggest songs out right now is called Tweakin'. Have you heard that?
Jakob
No, I don't think so,
MJ
Okay, I'm blanking on the artist's name. It's in the Ball family, the NBA, know, LeVar Ball, and there's another brother. But this is an individual who essentially got a beat off of BeatStars from these two producers who have less than a thousand followers each. And they made this crazy West Coast style beat. And it's the number one song in the world, or at least in America right now. And... these guys lives are changed and it's just like such an amazing thing to see but the power of like just being an artist and caring about your craft still matters and now those guys are able to you know continue to make music and things of that nature but I think that miracle story of those two producers that just made this track that's the stuff that's at risk and if that's at risk I think, like I said, that 2 % of music you enjoy could easily get lower and lower because the incentive and the ability for full-time creators to be full-time has just gone down.
Jakob
No, I think that was actually one of the best answers I've heard because you made it super practical and gave it a few pictures. And obviously I agree with that. But I also struggle with seeing... I'll start with seeing the full picture because yeah, like one of the arguments for, I don't wanna say for these companies, but one of the potential outcomes that could be interesting is how much people are forced to have something incredibly unique to say when they say something. So let me say it this way.
MJ
Yeah, let's keep seeing the picture then.
Jakob
I used to also be a songwriter, traveled around Europe writing songs. I was never successful, but I would say I was pretty good. But one of the things that I struggled a lot with was lyrics. Not so much... The way that my brain works is I don't hear lyrics unless I fully intend to do so. And again, my family has a few things.
MJ
Yeah.
MJ
Mmm, yeah.
Jakob
That's interesting and that's always been for me like almost a dysfunction like even my favorite songs I don't know the lyrics for them like I form a lot I like toward a bit and I stop
MJ
Mmm. Like, you know, the melody or whatnot, but not the words. Gotcha.
Jakob
Yeah, yeah. I've been in plenty of stages where most of my energy was by what's the next sentence, even though I've said it a hundred times before. So that's always been my thing. So lyrics for me was always the weak thing because I never had that reference. But then I've been an entrepreneur for five, six years, and basically that journey is about conciseness, or it's about intent. If you want to live in this reef, yeah.
MJ
Hmm. Yeah.
MJ
Mm.
Jakob
Really weird space of being an entrepreneur in such a not nice industry to be an entrepreneur. Everything you need to do needs to be very, very intended. Which means when I like a few months ago with Suno for example as a tool, started writing songs with my kids or like to express something for myself, I came back and realized how much my songwriting on the lyrics that had improved. And...
MJ
Yeah.
MJ
Sure.
MJ
That's awesome.
Jakob
I'm making a long statement. Basically, the only thing that had changed in those five, six years where I hadn't written music is that I knew what I wanted to say. And that's why I love writing lyrics now. I haven't become better, I haven't become more aware of lyrics or anything. I just had something to say suddenly in a new way because that's the only thing I've been training for five to six years. My point is, because of the macroeconomic environment that will affect individuals,
MJ
Mm. Yeah.
MJ
Hmm.
MJ
Yeah.
Jakob
I think the barrier of that's good enough is going to be significantly heightened. Like there's not going to be enough, so much room for, know, hey, you do well, because the financial reality will never reflect that. Unless your goal is to have something incredibly unique to say that would bring value to whoever listens to it, you're not going to cut it.
MJ
Mm-hmm.
MJ
Yeah.
Jakob
If that makes sense. So for me, being forced into that corner, disregarding all the other things, I think could be really interesting to see how that's going to affect music.
MJ
Huh. Yeah, yeah. Okay.
MJ
Yeah, okay. So again, to make sure I understood that and thank you for just sharing that whole journey and I feel like the idea of you making music with your kids with Suno, that's a beautiful image. Like regardless of ethics or anything, that's a great thing. Like I think we could at least all be on the same page for that. But to make sure I understood what you're saying. So you struggle with making lyrics for a long time. You honed in on the last five years to work on making lyrics better. Okay.
Jakob
No, I honed in on being an entrepreneur, so nothing to do with her.
MJ
Entrepreneur. Okay, nothing to with music. And then you got back into Suno and then you wrote lyrics.
Jakob
Because I had something to say suddenly. Yeah. So that's my point is the difference between now and then is only that I know what to say. Know I... Yeah.
MJ
Because of the last five years of being an entrepreneur. Okay.
MJ
My gosh, that makes so much sense though. That's, this isn't an AI conversation. That's an inspiration conversation, right? Like, like to be completely crystal clear, I recommend like let's take technology and throw it out for this convo for the, for the sake of the next like two minutes. If you ever have writer's block.
Jakob
Yeah. Okay.
MJ
It's not tooling that's necessarily the only thing that matters. It's go outside and go accomplish things. Like one of the best songs I've ever made in my life is called Diamonds. And I'm just flexing so hard. Like there's a line where I go, now my family got no problems because the checks are clearing. And I say like, woo, it's like so hype. And then one, like this amazing artist named Ruslan heard it. And he said, dude, what changed? Like your music? I feel what you're saying. And I was like, in the last year, I got a promotion at work. I bought my mom a condo and me and my wife hit some milestone, right? And I looked back and I was like,
Jakob
Hmm.
MJ
The reason that song was so different and good is because I had stuff to write about. Like I had a real like energy and fire because life allowed that to be inspired through the, you know, metaphorical notepad to then be recorded, then to music to be made. So all I'm trying to say is what you did with Suno is great. And I think that's not necessarily even a element of like AI or not. It's a matter of like, if you're struggling with making music or anything creative, go outside. There's a reason God made the world to be like observed, enjoyed and experienced and then get back into whatever your lab is and like get back to creativity. So what you just shared from the five year journey of being an entrepreneur makes sense. Like I can't wait to make my next album from like the gruesome journey of building lemonade. Cause that's gotta be the best one yet.
Jakob
Yeah, before we get deeper into that conversation, let's actually talk about Lemonade. I promise you we will get there. And I guess, you know, we talked about it very quickly, but let's just go there. First, tell me about Lemonade. I'll make sure we have an introduction at the start so I make up for the long intro. What do you guys do? Why are you special?
MJ
Yeah.
MJ
No, dude, you're good.
MJ
Yeah, for sure. I think the best way to put it is just sharing the journey of Lemonade and then it'll just kind of explain who we are. So as a rapper, right before Lemonade even existed, the thing that I struggled with the most is making instrumentals. And for anyone who has used a digital audio workstation before and for those who haven't, those are tools like Logic or Ableton, FL Studio, tools that are traditionally used to make music. And even to this day, your favorite songs were used using a digital audio workstation. So for me as a rapper, recording music was always like a pretty straightforward process. But making beats was an overwhelming thing because when you make an instrumental, just to like, if you want to imagine the concept of having a virtual keyboard in front of you, If you don't know music theory or you don't know how to play piano, it's a pretty difficult process to actually piece together a melody. So for me, I would do that for a while, but the beats would only go so far in terms of like how good they could actually be or whatnot. And I actually, before Lemonade, I was working at Google and I learned a lot about the fundamental of AI through Google of like the idea of what you put in is what you get out. So I thought, well, I've been an artist for the last 10 years. What if I hit up my producer friends that have made me all these beats and said, Hey, can I train an AI algorithm that is able to generate melody and drum beat ideas? And that was kind of like the big goal, right? Just can an AI algorithm do it good enough? And lo and behold, it was terrible. The first time it was trained, it was like so bad. It was overcooked for the, for the best way to put it. And like in the AI world, that means it's generating the same melody over and over again. because like the training data set's too small and just a lot of things, right? Like it just wasn't good. And then six months later, it got okay. And when it got okay, I decided I wanted to actually create a hip hop EP that was fully co-produced using my AI models. So it was a melody model and a drum model. And what was sick is the beats are actually kind of dope. Like there's an article that I actually wrote on this. So if you just Google like Michael M.J. Jacob Magenta, you'll see the article that I wrote. But the point is,
MJ
is the beats were dope and I'd look back on it like, holy crap, like. these little AI models I built on my laptop unlocked the ability for me to be my first full stack producer of a song, right? Like for melodies, drums, recording, mixing and mastering, like he was all me and like, shout out to Russ, one of my favorite rappers, but like AI unlocked my ability to be that kind of artist. So then after doing that, a bunch of producers just hit me up and they're like, yo, how can I have an instant melody generator on my laptop? And I was like, I literally was like, how do you Google, how do you send Tentra models like to like other people so they can install and I was like there's no way this is going to be a good idea so I was like you know what let me just build like a front-end application that like holds these AI models and then see if it actually helps to provide inspiration posted a couple of videos on TikTok after I built that product And lo and behold, know, 100,000 views later and a lot of other music tech companies that I chatted with later because of those TikTok videos, I realized this is a cool problem to like jump into for like helping solve the idea of inspiration just through new channels, right? Because to be clear, there's so many inspirational tools out there and AI is just adding a different channel of inspiration. And the uniqueness aspect is so cool to me of like... when you can generate a melody idea and feel like that melody is actually yours and have the controls to tweak it even further that's like different than like a straight up wave sample. Like if you have the MIDI, you can go like super deep and like fine tune it. It was like a really cool tool that yeah, was essentially built for myself and now well over 10,000 people are using it. And you know, we've got an amazing partnership with BeatStars as well. And outside of
MJ
we actually, you know what, let me stop. think I've just rambled a lot around like, where is Lemonade? Like we're really an inspirational tool for musicians. Right now we're focused on helping the music producer, but by no means are we stopping at the music producer.
Jakob
that's great.
Jakob
No, I totally see that. It's definitely something that I recognize from my production days that can be a huge, huge thing. So, where do you guys want to go with this? Again, because...
MJ
Yeah.
Jakob
being mission-driven is great and you have 10,000 users, so there's actually more to it than just having a unique vision. But what do see this going as a company and an impact? Why are you guys doing this?
MJ
Yeah.
MJ
Yeah, totally. I think the why in the beginning was a terrible reason to build a business and it was passion. it. Like that was literally it. And then passion led us to 20 months later with a full-time team of like, you know, six folks. Like, all right, well, passion should actually drive into purpose that is much bigger than what we've been doing and ideally more impactful in every sense of that word. Impactful. So. Where I wanna go now is I don't mind tools like Suno or Udio or full song generation tools, to be clear. That's one thing I just wanna plant a flag at least for myself and state on this podcast because the way you create music should not be judged, right? Like. The idea of a digital audio workstation back in the day was very judged, right? Of like, you can make music with physical instruments and now you can do it on the laptop. That's not real music. I think that's real music. So then you get into like, is if you create a song with Sunu, is it real music? I'm not the judge of that. And if you're judging it, I highly recommend you go to therapy and you mentally work through what really matters. Because if you're questioning people's like... happiness and like what is actually an artist or not. That's not the fight that I'm up against. The fight that I'm up against is how do tools and the inevitable reality of AI continue to grow? How do they continue to evolve while the artists can evolve with them and continue to grow with them? And by that I mean, how do you protect their forms of income and their ability to continue to make money in this AI revolution? And that's what I care a lot about of like, yeah, like I would love for the have the ability and we're already working on this right now of like, you know, collecting a large catalog of music from artists and musicians that are willing to work with us, but also able to be licensed out to AI companies that ethically want to give their data. But there's also passive income they can out make. And I'll give you an example. Lemonade paid pays tens of thousands of dollars to artists right now.
MJ
for our models that we built in-house. So every single line of data in our algorithms has a legal contract with the artist. I've jumped on a Google Meet with them. And to be clear, we have enough data that we're an AI company, right? Like these are not overfit models. Like I recommend anyone play with our tools. We have enough data, but we went through the gauntlet in the last 20 months of meeting with artists. I'm flying down to Atlanta, you know, like actually like talking to these people, helping them understand what algorithms do. getting legal consent and compensation models built in. So if we did this for the last 18 months, now I'm thinking, how do I do this for the next 18 months and continue growing this like artist almost army of people that are like, I rock with Lemonade and for Lemonade to now be the voice of the artist and be like, look, these are the AI companies that we think if we give them data and access to your data, then they may be good shepherds of it. and we'll have like ideally compliance and like, you know, security controls, but then allow for tools that are full song generation or whatever to continue to evolve. But as they evolve that training data set, that thing that we mentioned way earlier, there's some type of value to it now, because right now the training data sets zero, that's the value on it. And that's the most important part. So Lemonade wants to put a value on the training data set.
Jakob
Mm. Amazing. I had a conversation yesterday and that's going to be the episode released one week before this and that was with Olo Sas. He's a Swedish entrepreneur. Sort of he followed that whole journey. He basically he founded what turned to be Apple Music and he also founded Spotify for Business that's now soundtrack and one of the most established music entrepreneurs in the world and he said something very interesting.
MJ
Wow.
MJ
man.
Jakob
And I knew it to be true on many different angles theoretically, but he said it just very precisely. He said, if you want to succeed as a music technology company, you need to be in synergy and help all activists around you. There's not a model in disrupting a part of the pie. There's not a model if taking something out of it.
MJ
Mmm.
MJ
Exactly.
Jakob
And he said it just with such clarity and he's been an entrepreneur this space for 20 years. Yeah, yeah. Yeah, you should go listen to But it was so interesting to hear him say that because I, more than my own trust in business theory and lawsuits and following all that, the trust in an entrepreneur that I look up to saying with such clarity is like, no.
MJ
I love that.
MJ
I'm stealing that by the way, that is fantastic.
MJ
Hmm.
Jakob
You know, that aligns with all the research I've done. I'll hold to that belief, which is pretty interesting because as much as, uh, Suno, Udio and all the companies following afterwards, so, know, now going into 11 labs and Google, like, uh, joining that whole, that whole race, um, what's going to stand, uh, long-term when it comes to sustaining, uh, the business. And I do think ethically trained material.
MJ
Yeah.
MJ
You Yeah.
Jakob
will be the long-term winners, but the problem is, they'll make sure the medium term loses. So how do you build companies that can sail through the storm without dying, and then when you get to the other side, have some sort of reward?
MJ
Mmm, yeah. Mm-hmm.
MJ
Hmm.
MJ
Yeah, I mean, it's a combo answer of it's extremely difficult and extremely easy at the same time. Let's talk about the extremely difficult part first. You mentioned this at the top of the before we even jumped into the podcast. But if you don't love music, I don't recommend building a music technology business because I mean, let's jump into VC talk like the most cringy like, you know, like quote VC land. The total addressable market for music tooling is $4 billion, like three to $4 billion. That is like, I think 1 % of the financial industry, know, or like less than that of the healthcare industry or whatever. So if you want to start a business or be an entrepreneur, I don't recommend music unless you genuinely love it and care about it. And that's where the difficult part comes in because like you can build... good product, but there still isn't enough revenue to go around to say like, my gosh, this is so sustainable that we can build a 30 person team and keep going on just your revenues alone, right? So that's why it's hard. But why it's easy is because if you follow the compass of what this previous podcast that you just had mentioned of like, you can't disrupt an industry without bringing all the players with you. If you do actually consider what it looks like to bring the players with you, at least starting for our journey. We built a tool that was able to inspire music producers out of trying to solve a need for music producers. And now we do have enough revenue that we're profitable as a company. Right? So hypothetically speaking, without raising another dollar, we could sustain for the next, as long as our product stays alive, you know, and shout out Google cloud for being our servers, but assuming things are well, you know, and like we continue to monitor like churn and things of that nature, like
Jakob
you
MJ
Like for a six person team, and it's a quite impressive team. Like I'm ex-Google, my co-founder is ex-Amazon. We've got someone who, you know, went to Berkeley as a research scientist. Got full stack engineering team, marketing, things of that nature. But I guess my point is we've built our way to sustainability by focusing on genuine tools that'll help the music producer. And now we've bought ourselves the ability to dream a little bit bigger, you know? So we have this like, let's say the apps line of business that's able to float us. And now we're like, okay.
Jakob
Mm.
MJ
without taking an additional dollar unless we wanted to, how could we start to protect the musician? And then all of a sudden you almost work backwards and you're like, wait, all of our algorithms were built on data that we got consent from artists. Why don't we just start with them? Like, yo, Lemonade's been able to train algorithms on your stuff. Would you be open to other companies training as well? So I guess my point is you're absolutely right. In the medium term, So many AI music companies are about to die out. Like so many. And I'm not gonna say that like I'm, you know, immune to that or we're immune to that in any way, shape or form. Like the way that I like to look at it is every day I come into work, I'm going into the fire. Like literally I meditate and I pray every morning of like, all right, God, what do you want me to be today? Who do you want me to meet with? What are we gonna do today? And it's tough. But if you just like follow the simple principles again, what that person said of like, you gotta...
Jakob
Mmm.
MJ
bring all the people with you. What would our world look like if we built tools for artists? What would the world look like if we built tools for creators who have never made music before and are able to stitch together an ethical data layer so both can coexist in a way? Artists aren't losing money, but creators who were able to make music because of tools are now able to make music, you know? yeah. And last thing I'll mention is it comes from sustainability. Sustainability comes from profitability. profitability comes from building genuine valuable tools that artists actually want to use. Because if you're building gimmicks, people are canceling that subscription the next month, you know?
Jakob
There's a lot of sound principles in what you say and well said. Great, well that's pretty amazing and I haven't had the opportunity to play with the tools yet. I've seen videos of it so I have a good sense of it. But what is the future for you guys? Again, you say sort of training models for other companies perhaps. do you have a next layer? it, you know...
MJ
Yeah, cool.
MJ
Yeah.
Jakob
Coding in on more products, the product, the release date.
MJ
Yeah, totally. So we have a pretty big pipeline now of music technology companies that want to work with us and embed our lemonade built models into their applications deck. And like a really cool example of this is so like visualizing the AI landscape, not just music, but AI in general. And I know this is review for you, but like, probably for the majority of listeners, but there's the data layer, there's the model layer, and then there's the application layer. And you can build a successful business in any of those three, right? You can just be a data provider and be highly successful, just models or just application. And Lemonade had been doing all three for the longest time, like serendipitously to be clear. It wasn't an intentional strategy again. It was built out of passion, then ethics, then, wait, we actually built everything from the ground up, great. But what we realized is the models that are built on the ethical data, so layers two and three, One of my really good friends, he's a producer named My Best Friend Jacob. He's not literally my best friend, he's a great friend, but he goes by My Best Friend Jacob and he's one of Travis Scott's producers, know, made such amazing music. He built a sound company, so like a VST company, right? And he was like, dude, what if we took Lemonade's MIDI algorithm and plugged it into our sound engine? What could we build? So we released this product called Spawn this past November. Which is the marriage of his instruments and our AI technology. And it just has built our most, by far most used successful product to the point where I think it's got a purchase price of almost like $200 and well over 5,000 customers had purchased it in like three weeks. So, I mean, people could do math, but like for an AI company our size with this little people to be able to pull that off came out of genuine product market understanding of what does a producer really want. So yeah, this relationship with software is amazing. We've got a, like I said, a client pipeline of a few other folks that I just don't want to mention just yet. Yeah, just people that have expressed interest in, you guys are ethical and high quality models. We're really good at applications. Can we work together in some way, or form?
Jakob
Thank
MJ
So that's definitely one big part of what's next of like continuing to scale who do we want to work with? Cause it's definitely select partnerships. But then the other part is that idea of protecting the musician. Want to, we want to throw a hat in the ring of like, how can we build that copyright data layer that can allow for creativity to evolve with other AI music companies while not screwing over the artists that are making a living selling sync licensing beats list goes on.
Jakob
Thank Yeah. Interesting. From a more entrepreneurial perspective, nothing to do with music. I think you guys are doing something really interesting there. I'm working on a working theory that everything I work with right now needs to have the goal of profitability and sustainability because I believe that there's going to happen a lot of things that are beyond tool disruption in the next few years to come. And that is...
MJ
Haha.
Jakob
Things will have a backlash in so many different ways. And I also believe the funding environment is going to have a backlash. And so for example, we're building an AI documentation company that which I think is incredibly interesting. So we work with banks and incubators and accelerators for any growth companies and it's just, yeah, venture political AI.
MJ
Wow. Yeah, that's a good space to be in.
MJ
What's the name of the company by the way, or if you can't share? Okay, cool.
Jakob
We actually launched privately. We have a lot of private customers. So first launching six months publicly, you can find a website and stuff. So we have paying clients and the really interesting thing is like, we're looking here now, like we're raising some capital, but like we've been able to bootstrap it because we have paying clients, but in our deck, say, this is the first and last round we were doing. And then we make you.
MJ
Cool. Yeah, yeah.
MJ
Mmm. Yeah, I love it. I completely agree with that concept.
Jakob
Then we're making a prediction that we don't believe that this is going to be an environment to raise money in 18 to 24 months. So the only reason why we're raising this money, it's not to scale. It's in order to be able to very fast get really good people and then be profitable. Yeah.
MJ
Yeah.
MJ
Gets to sustainability. That's beautiful. I almost think every business should be built like that. Like the idea of building a business and funding it to get to the next round has always like irked me. Like only take the next round if you need to do it to scale for some other brand new idea or whatnot. But to set the precedent of your business to then raise again, I just, I don't believe in building business that way. So like, I think.
Jakob
Yeah.
MJ
That's a spot on point of view of like the first and last time that we'll raise.
Jakob
Yeah, and I think that's how companies should prepare themselves, especially when AI is coming. And again, if you use AI tools correctly, unless you're going for the really big boys league, which happens in America once in a while, why would you need to raise more? Most of the time, it should be an ineffective organization to use all the tools. So it's just very interesting.
MJ
Yeah.
MJ
Yeah.
Jakob
You gave two good answers today. Was hoping for more blood. Obviously I was trying to swing my sword a few times, but you...
MJ
Man, I can show you my 13 year old rap videos and that'll be a lot of blood from the cringe if that happens.
Jakob
Actually, everyone go try to find that.
MJ
Yeah, no, it's on listed on YouTube, but anyways, maybe I'll make it public for an hour and that'll be the Easter egg.
Jakob
So if we were to just quickly sort of run through your life as an entrepreneur, but like from a personal story angle. You said that people could, from those videos, probably know your video a bit and I heard a bit. Could you give me two minutes to just run through your story? You're unrelated to entrepreneurship, just your story, because the question I want to ask afterwards is sort of where are you going?
MJ
Yeah.
MJ
Yeah, totally, totally. So I guess I'll close my eyes for this one to get into destroy chilling mode. I think we kind of covered it earlier, but to pretend like we didn't. So yeah, I'm of Indian descent. My family actually all immigrated to America from Kerala, India. And yeah, growing up, they actually chose Alabama of all places, which is like wild for those who live in the US and know and you probably are familiar. It's like, would a family from, you know, this village in India choose to move to Birmingham, Alabama of all places? But anyways, life was solid. Nothing to really talk about or complain. Move forward to, you know, when I was 11 years old and I was living in Virginia. My dad moved us up there because of his job. Yeah, I remember these cops came over to our house and my sister was missing and that's why they came over. Were trying to understand where's my sister like she's missing what's going on. So the cops were asking my dad a couple questions and then out of nowhere he was putting the handcuffs right in front of me and I was so confused because I was like wait a second. I thought the cops came over because we're trying to find my sister and then all of a sudden the dots start to connect. My sister came out of the cop car that was at our house at that time. And then I was like, okay, maybe my dad went to prison for child abuse because we got abused a lot as a kid. I don't know what's going on here. Fast forward to like going through a ton of court cases and, you know, house hopping. And like I said, falling in love with music. Yeah, just essentially entered this survival state for I would say ages 11 through 20 of like nothing but wanting to get to the next day. There was no desire of like career. There was no desire of like making it big. It was just like continuing to get to the next day and finding whatever love and joy that we can in each day. And that's why music brought a lot of that. But there was never any vision for my life because there couldn't be a vision when you're in your survival state. So yeah, so, you know, fast forward to going through that journey and like, you know, for me, I really discovered my faith. I'm Christian and my faith is super important to me. So when I was like,
MJ
Think 16, 17 years old is when I really started to believe that God had a bigger purpose for my life. And that's when I was 18 and I Googled what makes six figures as quickly as possible because when you're that broke, I'm talking like three kids and a mom with $200 in her bank account and just trying to figure out if we can make it to the next month. All you're trying to do is get financial stability. So. Went to school for computer information systems, two years in computer science, two years in business. Ended up working for a great consulting company called Booz Allen Hamilton. And yeah, I was making well over six figures pretty quickly. And I was like, holy crap. 10 years ago, I was sleeping on an air mattress with my older brother. And now I make six figures. And I was like, I got to keep going because it's not just fun to make money. Getting stability is great. And there's no way I'm going waste my story. I didn't come from where I came from to stop now. Lo and behold built this prototype while I was at that company Booz Allen that got selected at this really big conference called Amazon reinvent to be presented Ended up landing a job at Google as a result spent five years at Google and that's when like the rocket ship kind of took off Financially and professionally and look to be straight I'm saying financially like I'm super set by no means like I'm talking I think I'm middle class So like I'm talking as if I'm wealthy but like when you come from $200 to middle class It makes a big difference and to be clear I'm 31 so middle class for 31 is not doing that well, but after I undid the financial trauma of like Okay, life's not all about money is when I was able to dream all over again And I was like wait a second. I do think I'm really good at music and I do think I'm good at technology I think it'd be worthwhile to try to build a technology to see if there's a sorry a company to see if there's some type of way to have a positive impact in the music industry because in many ways music saved my life, you know, when I was a kid. Yeah, that was the mission and the vision for the longest time. And, you know, now we've been doing Lemonade for the last like two years. So I know you mentioned don't talk much about business, but that's a big part of my life. I'm married, you know, and yeah, like I said earlier, we live in New York City. And the last thing I'll say is like what I really try to balance is I call it the six F's for right now. And it's faith, family, friends, fitness.
MJ
Finances and fortitude and fortitude is all about mental health. And all I'm trying to do is live those six as well as possible every day. And if I can do that, I'll be the best CEO that I can be. You know what I mean? Like I think sometimes we over engineer how to be the good employee or CEO or whatever. Just prioritize the important things in life and you'll end up being able to be fully yourself and you know, everything else will work itself out.
Jakob
Amazing, I think that story ties very well into why stories are important and why they should be told.
MJ
Hmm. Yeah.
Jakob
We'll quickly touch upon sort of where you're going now, but I think that's beautiful. Yeah, but it's also beautiful in connection with the conversation. Like, why does it matter that artists should be able to thrive? Well, for that reason you just told.
MJ
Thank you man, thank you for allowing me to share that.
MJ
Yeah.
MJ
Yeah. Yeah, exactly. Thank you for tying that gap together. Because that's exactly right. Like, I think if you robbed me the ability to make music because something happened and you don't make music the same way that I did as a kid, think half of my almost therapy through music would have been removed. And if my therapy is removed, as you know, when you're going through a survival situation, who knows what would have changed or what would have happened. So in many ways, I would almost like look back and say, The only reason I'm like able to like smile and like say that like I quote unquote made it out the mud is because of God and music. Those are the only two things and thankfully AI is not replacing God. So I think the music part has a chance and that's why it's like it's important to try to put ourselves in the middle here.
Jakob
Amazing. So where are you going? What's the next step in your journey?
MJ
Yeah, I mean, like, I know it sounds crazy, but I mean it in terms of the six F's is all I'm really trying to focus on in a day to day point of view. And then continuing the mission of how do we protect musicians in the middle of the AI revolution. So if I just continue focusing on those two things, I'm not in a rush to get anywhere. You know what I mean? Like, I think that the gift that God's given me is the ability to persist, I would say. I like, I can be in the same situation for the next 10 years and it's all right. You know what I mean? Like don't need a crazy life-changing milestone to happen that's gonna be like, finally we made it. Because I think this journey that we're on is... It's tough. But like I said earlier, it feels like going through the fire every day. And that's when I know I'm in the right place. You know? Because when you're not in the fire, think you're not... Unfortunately, you're not allowing yourself to really use your purpose and like what you're meant and what you're built for to be fully... Realized and there's a price to pay for that one day. You know what I mean? I want to get 70 and be like dang I'm a freaking refined MJ because I spent 70 years in the fire, know So where are we going just kind of exactly where we are today. I hate to be cheesy with that closure But it's the reality man
Jakob
No, I think that's important. Yeah. MJ, it's been a pleasure. I am happy to hear that an AI ethical company have a sensible approach. And that is sustainability. Is growth by being the best out there. It is riding out the storm. Like again, back to my analogy, I believe that there's a storm. That's already here, it's going to be even more powerful. And following the hype of raising capital, building big, even as an ethical company, I don't believe it's going to be the solution. It's really about build the boat as big as you can with what you have, and then just build it really, really well, and then ride those waves. And then if it's going to be 18 months or 36 months from now, I don't know where...
MJ
Yeah, absolutely. Yeah.
MJ
Totally.
MJ
Yeah, exactly.
Jakob
The biggest waves are over and where the light can see the day of what new financial reality we might wake up to. Then you just gotta stay in the boat.
MJ
Yeah, no, I love it. And the only thing I'll add to that boat analogy is the one thing that I do believe in is let's go to that boat analogy. Like use all of your resources to build the boat. But if your vision evolves to be more than what that boat is capable of, that's a good time to consider raising, at least from my point of view, because. Don't raise because you need your boat to keep going raise because you need a bigger boat, you know for the sake of this analogy and that's the one thing that I would just add to what you just said of like for the boat that we've got we're good we're sustainable but I do think at the end of the day there is a with a bigger calling comes a bigger need for resources and like
Jakob
In.
Jakob
That's great. Yeah.
MJ
We're not against the idea of like considering does our boat need to get bigger? But I am very against building a boat that can't be sustainable 18 months from now.
Jakob
Mm.
Jakob
Yeah, perfect. With those words, thank you.
MJ
Yeah. Thank you. This was awesome,
Jakob
Love it! Well...
