I have spent much of the last four months working on this and was up most of the night last night finishing it, so I don’t have a lot of gas in the tank today.

But I do plan to write about all of this at some point, maybe soon, maybe not so soon.

It has been one of the most interesting and challenging projects I’ve worked on in my entire career.

And it could not have been for a better cause.


Comments (Archived):

  1. Boogie

    >>And it could not have been for a better cause.I can think of world peace, ending hunger, global health.. even Twitter (arguably they have some issues too)

  2. andyswan

    Why did Twitter invest so much money at such a high valuation and then do (seems like) nothing with it?

    1. Salt Shaker

      That’s an interesting question. TWTR has 328M MAU’s and SC only has 2.3M followers on TWTR. They’re made for each other, and there should be much stronger integration, even irrespective of an equity stake.Hope at some point Fred can share the backstory on all this. SC has a cult following and a unique place in today’s music ecosystem. You can’t accomplish what they’ve achieved via marketing or promotion, their success is quite organic.

      1. andyswan

        Which makes it all the more confusing how in the hell they are spending that much money!

        1. JamesHRH

          Twitter couldn’t get laid on shore leave if you spotted it $10,000 in $100 billls,It would be more surprising if they had a plan and executed it.I am about to campaign to become CEO.

          1. Matt A. Myers

            If you need a UX/UI product guy and can integrate with my projects, then I’m in..

      2. LE

        SC has a cult following and a unique place in today’s music ecosystem.To grow to be large and profitable, at least in terms of what venture capital expects, you have to move beyond cult following and unique place in the music ecosystem.You can’t accomplish what they’ve achieved via marketing or promotion, their success is quite organic.Think about this then. That is the problem. Whatever they are doing can’t be grown via marketing and promotion.@andyswan:disqus says: Why did Twitter invest so much money at such a high valuation and then do (seems like) nothing with it?Internet businesses (of this type) tend to do well if they can stick their hand out and catch business. No so well if they have to go old school and generate business. Execute and suck in the low hanging fruit out there which money helps a great deal with. They tap and serve existing demand in other words.

        1. Salt Shaker

          When I say the brand has “cult like” appeal, I mean there’s a purity or non-corporate aspect to SC’s brand image, in addition to being very artist friendly. Their rev and other key metrics are uptrending ($100M rev run rate). From what I’ve read, their probs are far more operational than product based.

        2. Michael Elling

          Right on! The power of Facebook, Google, Amazon, Netflix, et al is that they scaled micro-communities and pointed that resulting macro scale at existing profitable and easily arbitraged revenue sources (typically where they were weak). Neither Twitter nor Soundcloud have done that. Their strategies have been focused on trying to maintain unstable mass and take those profit sources head on.Furthermore, Facebook and Google have made sure not to disaffect those micro-communities too much, whereas Twitter and Soundcloud seemingly have.

    2. Matt A. Myers

      Imagine what Twitter would be if Instagram founders didn’t (supposedly) fuck over them and sell to Facebook instead.I don’t know why Twitter didn’t immediately make an Instagram competitor, at least they could have attempted to capture some of the IG market.

  3. ErikSchwartz

    Congratulations. Good luck!

  4. Dan Epstein

    “Internet treasure” is accurate. Thanks for your work on this.

  5. sigmaalgebra

    Yes, when I saw the news on Soundcloud, sad news, remembered that maybe it was an AVC portfolio company, and noticed some relatively late new threads at, I guessed that maybe you were busy with the negotiations.From the little I read, the F round was for more than the pre-money evaluation; the positions of the existing investors were hurt; the company got a new CEO; some of the C-suite was changed; a significant fraction of the employees were let go; and there were claims of friction with some of the musicians. Sad story.More sad was the news that actually there is significant revenue, likely enough for good, stable earnings and organic growth, but still the company was losing money and maybe on the way to basically broke by this fall.Sounded like the burn rate has been a bit too high, like they have had a good business but were ambitious and were “swinging for the fences”, seeking a very strong position in a very big market that maybe so far doesn’t exist, and taking losses to get rapid growth.Did they do well with virality, having Soundcloud usage let the users do better getting social connections, being addictive? Did they need a better search, discovery, recommendation, etc. engine for the music and/or a better user interface (UI) and user experience (UX)?Yes, I’ve had in mind my work resulting in a lot of new Soundcloud usage so hope that basically they stay in business! I might be getting more revenue from Soundcloud usage than Soundcloud! Same for Netflix, YouTube, art museums, some of the products at Amazon, etc.Today is grunt work — reviewing my old notes on Microsoft’s, actually amazing, NTBACKUP. It’s worked well for me before, once I fathomed the obscure aspects and poor documentation, and I hope it will work well again! For me, NTBACKUP is important!

  6. VincentWright

    Well, I heartily confess that I have a bit of a daily addiction to @SoundCloud so BIG-THANKS, Fred!

  7. Anne Libby

    Congratulations and thank you. I’m so glad.

  8. jason wright

    does SoundCloud use a PR firm to compose/ proofread its public statements?p.s. i thought you were at the beach.

    1. fredwilson

      I am. But with a cell phone you can work from anywhere

  9. rich caccappolo

    Very glad to hear it. Would have been a real loss. Great job. Glad the outcome wasn’t left to Chance…

  10. Dan Ramsden

    This post really takes me back to another time, and I say it with great admiration, and a little bit of envy… Congratulations.

  11. OurielOhayon

    Congrats. I just tweeted sound cloud should laser focus on podcasts a fast growing spot own by apple but under served.i feel they have chance to crush it with a better product and service approach

  12. Seth Godin

    Anyone who says that all VCs are the same hasn’t met Fred.Money is fungible, but people and their dedication are the magic that lasts.

    1. LIAD

      Amen to that.

    2. LE

      I have spent much of the last four monthsInvestors have many companies that they need to spray their magic over. So this could also be seen as a parent that spends all of their time on one child’s problems and ignores their other children.But in that case it’s a child and not an investment.No doubt this has taken an incredible toll on Fred if I take what he has said literally. I feel sad for that.

      1. Marissa_NYx

        Fred is a pro. It’s his job. Caring & stepping up is part of how he defines what he does. And he does it with amazing resilience, just like many resilient founders out there who focus on their job & craft, grinding at it day after day, year after year. Admire & respect what Fred has done , for SoundCloud, yes. But feeling sad because it has exhausted him makes no sense. It wouldn’t have been the first time he has pulled in all nighters to get a deal done and hopefully he’s the sort of guy that would do it again for the things he cares about.

        1. LE

          It wouldn’t have been the first time he has pulled in all nighters to get a deal doneYou think I feel sad (for him) because he pulled an all nighter??That’s not what I said. I was quoting (clearly) ‘much of the last four months’ as the context.Also noting GothamGals blog post today. In particular this:I really do believe if you can get it in your head that quitting is just part of the road map of life, then it changes the conversation around exiting from something.It appears at least from my reading (and this is speculation) that she doesn’t see it the situation the same way. That was also formed some of what I was thinking. Meaning perhaps this caused some conflicts. Not trying to start trouble just trying to be honest in how I interpret this.

      2. cavepainting

        Some kids need more attention than others at some points in time. Especially when you feel they are not living up to their potential.Does not mean you care for others any less.

    3. fredwilson

      Thanks Seth. Very kind words. I think caring is what separates the good VCs from the rest

  13. Michael O'Rourke

    As a Soundcloud power user I’m very happy about this. Thank you Fred.I now wonder what direction Soundcloud will go.. Keep going down the label path or focus on the artists growing up through the platform?

  14. Vitor Conceicao

    Soundcoud lives on! Hooray!

  15. Tom Labus

    Beer, sleep, good coffee. and Congrats. Lots of stories out there on this one. Jeeze

  16. Twain Twain

    Congrats, hooray for independent platforms!

  17. Ryan Tanaka

    Does this mean the artists will finally get paid?

  18. creative group

    FRED:You had accused us of providing false information on what the streets have been reporting on SoundCloud. We don’t expect an apology but expected standards of what you set for others to be applicable to yourself. Like the reality of the SoundCloud fundamentals haven’t returned what it’s investors expected.Just amazing how one week the information posted by us on SoundCloud was false information and today’s post on restructuring is called the best job by a VC ever. Just amazing.News:SoundCloud faces do-or-die vote by investorsPosted yesterday by Josh Constine (@joshconstine)…Cash-strapped SoundCloud gets new funds and top management…Captain Obvious!DISCLOSURE: No investments in any music sharing, storing or competitors of SoundCloud.

    1. fredwilson

      Please don’t use the term fake news here at AVC. I have banned it and all who use it

      1. creative group

        fredwilson:You responded to our previous post and falsely stated we were posting false statements (sic) about SoundCloud that accurately outlined the financial condition of SoundCloud that was cited in tech news. Now you desire to nitpick on wording used to sarcastically outline what doesn’t agree with your narrative.Would expect it from another source but really understand the motivation behind it.We will continue to accurately address perceived power no matter the location.To whom much is given much is expected.Fear is always in the Supreme Being and never mortal man who will definitely be faced with their mortality.”Shot across the bow” duly noted. (Admiral William Smyth)

        1. cavepainting

          Hi, Give Fred a break. As an investor and a public figure, he is not going to (and should not) say anything that might reflect negatively on the company, especially when they are working through a complicated down round.

          1. creative group

            cavepainting:Review our postings. We will support and been on the side of what is right. Meaning we have supported and defended Fred against malicious posts and stood by them because that was the correct position not because we are a contributor that sucks up to Fred. We are truly Independents and have been critical of any position that is inaccurate, evangelized, etc. We expect the hits that accompany our position on confronting voices who shape opinions.When biases are motivated by Political and financial interests it pains us if it is a Contributor we support and are aligned socially more than not.The current threats really assure us we are on the correct path.We are more concerned with the deeds of a person verses when communication veers. No one is perfect and we don’t do hit posts or gotcha posts. Just factual posts.We acknowledge the fiduciary responsibly Fred has and disclosure clauses. But financial public information can’t be disputed as a falsehood and lie one week and then used as saving a company to be Evangelized as the best VC less than a week later. That is just wrong. The Contributors who suck up will give it a pass. We get it. But we will continue to hold those in perceived power accountable no matter how much we support them if they do some Philanthropic deed.

    2. Michael Elling

      I came across an interesting chart over the past few days comparing TCP/IP with OSI. No, not the standard 4 vs 7 layer, but one which put sociological and semantic definition to the differences.OSI:-request-indication-response-confirmTCP/IP:-listen-connect-send-receive-closeIt’s quite easy to see that there is little in the way of civility in the latter, while the former is all about agreeing to a communications session in the first place. It’s as though thousands of years of social conventions and culture have been forgotten or cast aside. Something we might expect of developers caught up in their software realities. Another way of looking at it is that much of the risk in the communications session is shifted from the sender to the receiver.In a world where there is no risk to the sender, the outcome can only be fake news (there, I used the word!), subjectivity, baseness and reverse network effects such that social outcomes and benefits are minimized, not maximized. That’s the state of the internet and world today. And it’s not good for the business models of companies that USV invests in. We need more balance in the protocol stack. (And ICO’s/crypto ain’t that.)

      1. creative group

        Michael Elling:Fred’s warning:”Please don’t use the term fake news here at AVC. I have banned it and all who use it”He at least said please.Great post.

        1. Michael Elling

          Ahhh yes. Twitter. Font of fake news. Can’t say ya couldn’t see the monster it created coming!

      2. creative group

        Michael Elling:” (And ICO’s/crypto ain’t that.)”Smart money is attempting to control it. One main reason with the assistance of the Asian Smart Money BCC was created.A Book we recommended here on AVC before Smart Money promoted it:Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent MoneyBook by Nathaniel Popper

  19. lynnerae

    Bravo, Fred. When I woke up this morning and turned on my Soundcloud music, I wondered if today would be the last of it. Mid-morning I was thrilled to read that the funding had gone through. I thought to myself that you must have played a significant hand in it, having followed your postings (and playlists) on Soundcloud over the years. The Soundcloud community thanks you — and I also thank you for being at the top of my “VC role model” list. (a fellow VC who cares).

  20. Adam Parish

    A SoundCloud + Vimeo merger would make a ton of sense.

    1. Pointsandfigures


      1. Adam Parish

        Two B players with A quality content makers.

  21. Stuart Willson

    I hope they can use this capital to return to their roots product and positioning-wise. Getting caught up in a low margin, wholesale transfer pricing rat race – and as the #4 or #5 player – is… hard.

  22. Thomas Luk

    Looking forward to the real story behind all of this!

  23. Michael Elling

    Closed, siloed, winner takes all models that do not transcend to some type of exchange model drawing latent energy from other areas almost always fail. Google, Facebook, Amazon, and even Apple are good examples of those that have transcended (advertising, e-commerce, music, access). They didn’t just get to critical mass with sound strategies, they executed well and found existing profit sources rather than try to create new ones that didn’t exist. With 88m listeners, why hasn’t Soundcloud been able to do this?

  24. george

    Congratulations! Sometimes the biggest risk is when there is no risk left. Hope the new management team can polish this platform into something brightly brilliant and profitable.

  25. Pointsandfigures

    Nice job. It’s a difficult task to keep a company going. I read where previous investors also took a big hit on their equity. That brings up a good topic for a blogpost. When you are already invested, when do you do down rounds and how do you go about organizing them?

  26. Donna Brewington White

    Good news, indeed. Although, as you’ve conveyed, not without hard work. I think I detected “grueling.”Makes the congratulations all the more meaningful.

  27. Ronnie Rendel

    What a mench. Sucha different type of VC. SoundCloud were lucky to have you,

  28. CJ

    Now THAT’S Founder-Friendly. Well done Fred.