If Northwestern University ever needs a case study for success, their board should look no further than Boulder’s Next Big Sound. Co-founders Alex White, Samir Rayani, and David Hoffman found themselves together in an entrepreneurship class in 2008. White was a senior and Rayani and Hoffman were juniors. Hoffman and White had met slightly earlier than that when White was running the concert booking group on campus. Rayani was in charge of signing off on White’s spending, an annual $330K to bring in big acts like Flight of the Conchords, Kanye West, and OK Go. Hoffman and White had met previously too, both majoring in organizational change.
When I asked them how they first heard about TechStars, Hoffman says he first met Micah Baldwin, a mentor, at an information session at Threadless in Chicago. Baldwin championed the acceleration process and they applied to the 2008 program but were not accepted. What compelled them to apply again? “We love rejection,” White jokes. “We were the same team with the same idea but the second time we applied, our product had been built and was launched. We had press, thousands of users, knew how to work together,” Hoffman trails off, then smiles. “We applied again because we knew we were creating something real. We were heavily encouraged to apply again by many people in Chicago. So we did.” The second time was a charm and Next Big Sound became part of the TechStars program in 2009.
All three founders describe their incubation time at TechStars as worth its weight in gold. Prior to the program, what they had built wasn’t sustainable. “It was a failed attempt to build a fantasy sports network for music,” Hoffman tells me. “Everything about becoming part of TechStars was helpful because we were plummeting towards zero. Samir and I were still students and Alex had been sleeping on a couch in Chicago.” With no revenue, the product was going nowhere. That was about to change.
Out of the three month incubation period of TechStars came a slight pivot. Their initial plan was to create a service in which anyone could become a record executive and sign artists they believed would become popular via individual online record labels. The concept evolved due to a market demand and became the solid product it is today: actionable intelligence for the music industry. In their own words, they track more data for more bands online than anyone else in the world. But Rome wasn’t built in a day.
During TechStars, the founders often talked to mentor Jason Mendelson of the Foundry Group. A shared love of music had them talking about where the industry was headed and they saw eye to eye on potential macro changes. As Mendelson tells it, White pitched him by phone right before he had to board an important flight, creating a sense of urgency. As White tells it, he didn’t know Mendelson was traveling that day. Regardless, Foundry Group invested. “He really put his neck out for us and it was one of the strongest relationship we built that summer,” White reminisces. “We never expected him to be formally involved in the company.” Mendelson is a member of Next Big Sound’s Board of Directors. Prior to their investment in Next Big Sound, Foundry Group had never previously invested in a TechStars company (they have now invested in five).
“When the termsheet came for us right after Demo Day, it was a surreal moment for all of us,” says White. “August 6, 2009 was Demo Day and we closed with Foundry Group September 23rd, did another close with other investors and that was the last money we took until our announcement a couple of weeks ago.”
It’s been almost three years since the team drove 1,000 miles overnight in Hoffman’s Volkswagen Rabbit to arrive in Boulder and participate in TechStars. They haven’t left yet. On the day I visit their office off of Walnut, Rayani is taking a much needed break from interviewing potential hires. He’s letting out steam by playing a game of FIFA on their big screen. A kegerator hums nearby, a staple of startup life. A Bob Marley poster is hung to the left of that and a screensaver of the Matrix Code flickers gently in the background. It’s after 5:00 but most of the staff is still hard at work.
Earlier this month, Next Big Sound announced that it had raised $6.5 million in a Series A funding round led by IA Ventures and Foundry Group. White was recently listed with the likes of Lil Wayne and Taylor Swift in Forbes 30 Under 30 for music. He spends his days on enterprise sales and lots of traveling. On a flight last year, he ended up next to Kevin Cronin of REO Speedwagon. Um, randomly? Yes. White eavesdropped on their conversation about the microphone arragement for a stadium show while working up the nerve to introduce himself and pitch Next Big Sound to Cronin. Cronin is now a huge fan of the company and endorses them whenever he can.
Hoffman is passionate about delighting users and clients. “You can’t ever stop giving them stuff you know they will love, even if they haven’t requested it.” A perfect example is their 2011 State of the Industry report, a detailed list of statistics. “It has overarching trends and highlights from the whole year. Because we’re tracking so many artists, we’re able to do what many can’t. Our customers didn’t ask us for this but the information involves their artists and gives them context as to how their roster stands against competitors or versus the industry at large. Making data useful is our overarching priority.”
Hoffman is running product and design and Rayani runs all technology for the company. White handles PR, business development, investments, and media. The three founders marry their customer requests and feedback with their own vision for Next Big Sound. In their rare down time, they give back to the startup community. “So many people helped us when they didn’t have to. We help the TechStars companies out when the Boulder program is in session. David Cohen usually calls us when the company switches their idea: ‘Hi, we’re a month away from Demo Day and our story makes no sense and we need to pull it all together. Help us.’ We go to Demo Days and love helping out where we can.”
In the meantime, Next Big Sound progresses, ten people strong. Music plays over their loudspeakers every afternoon. On Friday mornings, everyone sits together to eat bagels and talk about the past week and the week ahead. These days their hands are full running the company that powers the Billboard social charts. Everyone in the music industry turns to Next Big Sound when they need to understand what’s happening with any artist online.
We constantly espouse at TechStars that we accept incredible people and teams, not necessarily their companies or ideas. It’s awe-inspiring to see what such a passionate and smart team can do in a matter of two years.
Check out their favorite albums (and the Next Big Sound data for each) from the past year or so:
Samir- Kendrick Lamar‘s Section.80
David – Deerhunter‘s Halcyon Digest
Alex – The Wombats or Glitch Mob
See an episode featuring their time at TechStars on the award-winning Founder Series here.