Video Of The Week: SoundCloud Co-Founder Eric Wahlforss At Disrupt London

Eric and his business partner Alex started SoundCloud in 2007 (I think). Seven years later, they run one of the largest audio streaming services in the world. In this interview, Eric talks about how SoundCloud is building a business around the largest audio sharing service in the world.


Comments (Archived):

  1. David Semeria

    Key phrase in your intro: “seven years later”.Many people still don’t realize that frequently overnight success takes years to achieve.

    1. Jim Peterson

      Cool that they have the runway to have 13m revenue and 29m losses in 2013 considered successful. And I’m sure they will strike financial success.

      1. LE

        (I just started to listen to this hopefully I’ll finish).I think one of the issues that will make it hard for soundcloud to become profitable as a company [1] is that you have two forces coming together. The web where everything is free and artists, creators who typically have no money to spend or very little. So there are two hands tied behind your back right there. Little wind to fluff ‘yer sails.I mean if you took a 100 million dollars (or even 10 million) and built out an information security company that sold to companies and corporations there is almost no question it would be profitable most likely a few years after founding. Most likely very profitable (those companies bill out employees at $5000 per day…)[1] Which doesn’t mean as an investment it will fail because there are always ways to find value in something that is already built. I mean even bankrupt or near bankrupt chains of retail stores can sell off their real estate rights and often make out in the end.

    2. Twain Twain

      Years and the beneficence of investor-mentors who will stick with the founding team through thick and thin rather than pressurizing them for the “too quick flip”.Particularly where there’s either technical innovation and/or change in consumer behavior involved, the founding team better hope they attract the smart investors.The iPad took from 1968 when Alan Kay conceived the Dynabook through various iterations inside Apple, including the Newton version, before its eventual success in 2009.

      1. awaldstein

        I agree with patience as both an investment and development poise.It feels crazy to conceptualize the iPad as a straight line from the Newton. They are connected how?

        1. Twain Twain

          As with most R&D it’s never a straight line. Companies learn the lessons from their execution failures and keep the core idea.From…”Real impact of the Newton was the thinking that took the computer out of the office. Today, the PDA is with us all the time. We don’t use a stylus, though, we use a keyboard (which, for most of us, is likely a much faster and more efficient way to input text.) It’s our smartphone, and the whole concept of the smartphone was that it would bundle the PDA, the camera, the MP3 player, and the cell phone. And then there’s Siri and Google Voice search. The idea of an intelligent assistant that can recognize natural language and act on its intent is powerful once again, but this was something Newton pioneered–one of its great strengths was its ability to take a sentence like “I have a lunch meeting with John tomorrow at noon” and translate that into an actual calendar item.”Only after Steve Jobs returned to Apple was the execution and integration of a portable computing device that’s touch-based, has exceptional GUI, ARM processing speed, hardware-software coherency, AppStore etc. properly realized.The multi-touch breakthrough for Apple happened via their 2005 acquisition of Fingerworks. Initially, Jobs wanted to release a tablet but then decided to focus on the iPhone so the iPhone was released first in 2007. Two years later, iPad shipped and it reached a million sales in half the time it took the iPhone.There’s more on the evolution of tablets in the industry here:*…A number of times, the startups that become huge successes have idea origins that go back decades or even centuries. Sometimes, the execution isn’t possible because the technical knowhow simply didn’t exist (e.g. ARM processors did not become small and powerful enough, Internet and wi-fi connectivity wasn’t where it should be, no multi-touch etc.).Sometimes, the company simply doesn’t have the visionary leader who can integrate all the ideas into a coherent product AND the talent to deliver the product to market successfully.Sometimes, it’s the right product shipped at the wrong time, e.g. Bitcoin protocols. If this had gone out alongside with TCP/IP before the online payment incumbents took their roots, there would be a very different conversation and user behavior towards BTC. It wouldn’t be the currency volatility conversation.

          1. awaldstein

            Beautifully articulated. Thank you.If any company has been driven by a vision of consumer empowerment, it’s Apple.I’ve bought every one of their products (I think), had friends at the exec level and competed with them for years.And of course I agree that each of us and the best companies are the sum total of our thoughts and experiences.My point, which seems moot somewhat, is that evolution of thoughts and technologies is not the same as patience in developing a model.I agree in the context of this discussion that models, like Sound Cloud takes time and patience on both the company and investor side. No question.Nice chatting.

    3. Guest

      Esto es un solo un test

  2. abhic

    Huge fan of SoundCloud and the founders.They have been able to create web scale plumbing for audio. Wicked smart engineering team.

  3. awaldstein

    Queued up to listen.Read somewhere about some numbers about the business and curious to see where they are going with it.And yup–takes time and capital to get there.

  4. jason wright

    we are still waiting for the traditional characteristics of money and rights to catch up with the liquidity of the web.

    1. awaldstein

      How do ownership and rights ever become liquid?You create value like a movie–you deserve to have the control to profit by it.

      1. jason wright

        liquid in the digital sense, expressed as electrons, in sync with each other. rights holders deserve to profit from the value they create.the issue is how do holders ensure that rights continue to be expressed as profit on a platform where users are atomising their units of rights and reforming them by techniques like sampling?blockchain plus bitcoin (or other currency) plus music (or other units of rights – e.g. movies) ensures profits for rights holders. more creativity (like sampling of music) is more profits for rights holders.

        1. awaldstein

          It’s not that complex is it?I fund a game and release a lite version with keys to full usage with different prices in different locations, maybe some blocked.Why do I need bitcoin or blockchain to do this?

          1. jason wright

            it’s just as complex for rights holders and platforms to police rights. by taking down content rights holders stop the distribution and consumption of creativity and deny themselves profits. tech needs to evolve to allow distribution and consumption for profits. disrupting creativity is not the answer. profiting from it is.

          2. awaldstein

            I don’t wait for tech to solve anything honestly.We have so much. As more comes we use it. Till then we have more tools at our disposal and larger aggregate audiences than ever before.Never felt so bolstered by opportunities and possibilities as right now.

          3. jason wright

            new tech creates problems, and smart people see opportunities to solve those problems with even newer tech.pleased to read that.

  5. Dave Pinsen

    Didn’t have a chance to go through all of yesterday’s comments – did Fred or anyone else there give an elevator pitch for why Kik beats texting or iMessage?

    1. falicon

      I think it’s mostly about where ‘your crowd’ is.However, Kik does have apps and some other ‘features’ integrated that help it go beyond what traditional texting and iMessage currently offer…not sure if that ultimately turns out to be a pro or a con though (again mostly depends on ‘your crowd’).

  6. William Mougayar

    Good questions by the interviewer. Lots of focus on monetization.Is it accurate to say that On SoundCloud is an iTunes equivalent/competitor?Maybe a tipping point is needed, like a big name artist releasing exclusively on SoundCloud with spectacular revenues, like Beyonce did.

    1. fredwilson

      On Soundcloud is like YouTube’s Content Partner Program

      1. falicon

        Two interesting things to consume related to this then:Documentary “Please Subscribe” on Netflix (… )Book “Blockbusters” on Audible (… )As a side note, the Blockbusters book is also worth listening to/reading in relation to the VC industry as a whole. Gives you a lot to think about as pretty much the polar opposite of ‘The Long Tail’…feels like the true answer is somewhere in the middle of both of these (great to own and have strong access to the long tail so that you can more quickly identify, push, and profit from the Blockbusters).

      2. Jim

        Let’s hope Soundcloud fixes the glitches. It never works smoothly.Right now, Soundcloud is viewed the creative world as a company who is not paying artists…essentially getting a free ride.

  7. BillMcNeely

    One of the most enjoyable Uber’s I gave was when this young guy synced his phone and played his SoundCloud selections. It was the best music I had never heard of. I think his user name was SeanK or ShawnK he was from Ireland

    1. LE

      So the question is then how can that person “beam” you the music he is listening to so you can play it yourself?What is the app that will allow me to take something that is on my phone and get it on your phone without you having to remember, write it down and so on?I’m not only referring to music. I was in Starbucks the other day and saw someone that I thought would really like an app (was a shopping app ) but it was to much effort (this was an older person) for me to say “ok so there is this app called spring, oh here it is on my phone, ok you have to go to the app store and search for “spring” and it’s called “shop spring” etc.). Even if they are tech savvy I still have to say “it’s called the spring app” and they have to find it. Plenty to miss or go wrong there.What I want to do is be able, with permission, push something on my phone to your phone. Or pull something from your phone and so on.Soundcloud: I would think that with respect to soundcloud if you have soundcloud already installed as well as the uber passenger it would be fairly easy for them to push you the selection (same way you sync bluetooth with a 4 digit pin).

      1. Dale Allyn

        Similar to the way Bump or similar contact exchange functionality was done/attempted.Your described use case does come up. At the very least, we should be able to communicate a service or app identifier from which the recipient can go directly to the download/purchase site.

        1. LE

          I don’t know anything about bump or why it failed.However in looking at the wiki page I see this:When two users bump their phones, software on the phones send a variety of sensor data to an algorithm running on Bump servers, which includes the location of the phone, accelerometer readings, IP address, and other sensor readings. The algorithm figures out which two phones felt the same physical bump and then transfers the information between those phonesWhat a clusterf**k. Right off the bat that worries me. It’s almost as if they were trying to make something technically cool that interested the engineers instead of solving a problem or providing a service.The less “elegant” (thought about this for 3 seconds) way would simply to have an app that was able to label and identify something on the source phone, send it to the cloud, and have the target phone retrieve (even just a link) to the right object. That sounds way simpler and gets the job done.

          1. Dale Allyn

            Yes, I agree that Bump was ill-conceived vis-a-vis the communication method (and maybe in other areas).I do feel there’s a revenue opportunity to be able to quickly communicate an identifier of apps or other digital assets. Even a quick bluetooth handoff would be okay (perhaps a “perishable” sync), but one then needs to fumble with toggling bluetooth.NFC may provide a solution in the future I suppose.

      2. BillMcNeely

        That would have been nice to do since I did not have a pen with me that night and did not think to use notes to get his proper username

      3. William Mougayar

        On SoundCloud, you can just follow someone & listen to their collection. I think that’s part of the network effect they have.

  8. Guest

    Im a SoundCloud fan but this interview and Eric’s responses were complete BS… A lot of bla bla bla, and no content