It was the end of Winter in 2007 and I had just launched a video sharing site for independent music only called, Jamphetamines. In layman’s terms, it was a Youtube for indie musicians and record labels. To make a long story short, It was a miserable failure. After about six months of the site going live, I had realized what I had done wrong. Around that same time, an acquaintance of mine overheard me talking about Jamphetamines and mentioned he had an idea for a music site. He said, “How come there’s no iTunes for indie bands”? I kind of shrugged it off at the time, until a couple of weeks later when I ran across Snocap. It was an interesting concept, but they were doing it all wrong. I knew I could use their concept as a blueprint for something much better and bigger. I researched everywhere to see if something, like what I had in mind, already existed and I couldn’t find anything else. Since Jamphetamines had already failed I thought my next logical step forward would be to pursue this.
In the next couple of days I was able to reach the acquaintance whom brought up ‘an itunes for indie bands’ and mentioned that I was going to do this and I would give him a piece of the action if were to be successful. He wanted to be a full partner. I was very apprehensive since he had zero experience, however I also knew that I could teach him what I knew as we went along and that if he really wanted it, he would learn quickly just from researching alone. He promised he would give it his all and was ready to put up his share of the money it would cost us to get things rolling. My own online (non-music) business was thriving, so even if I had to cover the majority of the expenses I could still easily finance it. I decided to give him a shot as long as we made everything legally equal. I’ve had bad experiences with business partners before this and I believed I was taking all the right legal precautions so I didn’t get screwed again. My new partner and I went to a corporate lawyer and had the corporation and our concerns all drawn up. We signed the necessary documents and began dreaming up phase one of our new online digital music store.
We studied other social and music websites to see what people responded to. At the time MySpace was huge, Facebook and Twitter were just coming into the mainstream, a lot of bands liked PureVolume, no one (or not many) knew of TuneCore, barely anyone had heard of ReverbNation and Bandcamp wasn’t even in existence. I know I’m missing some others in there, but my point is that we had a lot of room to build something special and to be the first web-based music community doing it.We were fairly confident that we couldn’t go anywhere but up, from there. We had a great business model and good plans to continue building to an online music behemoth.
For those of you unfamiliar with what became the website PLUGOLA, let me explain. It’s a social music community where artists have full control over their music, from ownership to pricing. I had been marketing on the Web since 2000 and I wanted to be sure it was built with the necessary tools and incentives for artists to properly market their music. We incorporated your typical social features of the time, sales and play stats, rankings, automatic SEO, download codes that could be printed directly to cards for artists to pass out at live events, financial incentives for music fans to share and re-sell music, a music locker and a fairly elaborate shopping cart with different payment options. From a music fans’ point of view we programmed the site to only display music from their favorite genre, a music locker and, as I just said, music fans could re-sell( or ‘Plug’) music and earn a commission for each sale. Not to mention, we were the first place outside of iTunes where music videos could be bought and sold! On paper, I couldn’t see this not working.
It ended up taking almost a year for it to be ready for launch. The work and frustration that went into the programming and design is enough for another full blog post, so I’ll spare you the details for now. We had also been rounding up and meeting with investors and several parties really wanted to invest. They hadn’t signed anything yet, but they pretty much had told us that there’s a check waiting for us. We had to tie-up a few loose ends in the legal department, then the money was in our hands.We had worked so hard up to this point I think it was such a sigh of relief that we took our sweet time with all the legal stuff. The market was getting bad and these investors began to have second thoughts.
By November of 2008 we were ready for a public beta launch. Suddenly, my business partner was nowhere to be found. He wasn’t showing up for appointments and he wasn’t returning my phone calls. During some routine accounting, I figured out why I hadn’t heard from him. He had spent thousands of dollars from the company account on personal items, paid some personal bills and took a vacation with his girlfriend. He was already in the hole with me personally for a few thousand dollars, since I covered some of his share of business expenses. Needless to say, I was extremely upset. When I was finally able to corner him, I found out that he had quit his job months earlier thinking we would “be rich by now”. He was completely out of money. I was mildly sympathetic, but the majority of the stolen money was spent on luxuries. I tried to keep my cool and be open minded, so I gave him a second chance as long as he paid the money back. He agreed. He walked out the door and I never saw him again until a few months later when I finally forced him to sign over his rights to the company (otherwise he was going to jail). It was an unfortunate turn of events, but I persevered because I really believed in PLUGOLA and thought I could pick up the pieces as I went along.
That same month news of the economic meltdown had become widely known. All of the investors backed out of the deal. The little money we still had was already spent on some website upgrades. My already-in-existence, once thriving business had also took a very hard hit from the economic collapse. I had lost approximately two-thirds of my own income, because of this, so I could longer fund it with my own money, either. All work on the site was halted. My only option was to work really hard in hopes of saving Plugola. For the next few years I did everything I could think of to keep the site afloat, including paying for two servers out of my own pocket. The problem was that I couldn’t get the majority of artists to actually use the site. Once they registered and uploaded their content they rarely returned and almost never used any of the promo tools. I practically begged for feedback, but got nowhere.
After roughly two years, and few other similar sites doing a much better job, I realized that if Plugola hadn’t picked up any traction by then it wasn’t going to. My attention began to turn elsewhere in the music industry. As disappointing as the end result is, I learned SO much! I wanted to share this story so any aspiring entrepreneurs can learn from these mistakes, as well. Here are some good lessons I took away from a miserable experience (in no specific order).
- We built the site way too big – It makes sense in our heads to build something bigger than the competition and anticipate the flood gates opening when the site is launched, but that school of thought doesn’t translate well in today’s start-up world. It wasn’t until I read the 37Signal’s book, “Getting Real“ where I began to realize this was a big part of where we went wrong. We needed to start with the bare minimum and build from there.
- We took too long with investors – We had investors waiting to cut us a check, but we got lazy when it came to the legal red tape. Had we taken care of all that right away, or better yet, before we even met with investors, we would have had a decent amount invested before the American economy collapsed. I don’t blame them for wanting to back out.
- We spent money before we had it – I knew this was a bad idea, but something inside me told me to roll the dice anyway. I should have listened to my gut, rather than all the reasons I made up on why I HAD to spend that money. Doing this just dug us a deeper hole before we were ever in one.
- Bad choice of a partner – Not everyone has the same work ethic or vision, and character matters a lot. Never again will I partner with someone with little to no experience in the start-up world. Most people are all talk and will promise you the world, but when it comes down to doing the actual work and making good business decisions they are nowhere to be found. He wasn’t the only partner I had this experience with.
- Partner quit his job with dreams of riches – I warned by partner a number of times to hold on to his job, at least, until we can cut ourselves a regular paycheck. He quit his job dreaming of limos and reality TV (I’m not joking about that), ultimately leading him into a very difficult situation. He did steal, but I don’t think he would have if he didn’t put himself into that position.
- Not all good ideas guarantee success – I’ve been learning over the years, not only from this experience, that great ideas are everywhere and rarely are just the ideas enough to be successful. It takes very hard work, the right execution, a dedicated team, good timing and a little luck in order for a good idea to be successful. Don’t be fooled by stories of overnight success. Most ‘overnight success’ stories are of people who have spent many years failing before they finally got it right.
- You can’t do it all on your own – I’ve tried many times on my own and it just doesn’t work. You’re spread way too thin and it’s tough to focus on what really matters. You need a team to handle most of the important things. It may be one other person or a team of ten. It can be very hard to trust others, especially strangers, with your baby; but you have to. Try to be open-minded about your employee/partner decisions, but not naive.
- Upgrades were competitive, not needed – When we spent the money we didn’t have for upgrades to the site, we did upgrades that were to only keep up with the rash of other similar digital music stores that launched around the same time (ie: Bandcamp). They weren’t necessarily needed for the site to operate. Technically, it was wasted money.
- I built the site for marketers – While designing the tools artists would need to market their music correctly I forgot one very important factor; I was building all this for experienced marketers and not a typical Internet user. The tools were easy enough to use, but only experience would know how to tie it all together and make it work for them. Keep it simple.
Unfortunately, I will be shutting down Plugola in the next few weeks. The amount of sales we made I could count on both hands and I just can no longer afford to keep it going. However, I would hate to see such a good application go to waste. If you think you can salvage it, I would be more than willing to let it go for a reasonable offer. It does some need some work, but mainly in the upgrading department and perhaps a few adjustments to your liking. There is nothing broken about it, only that we couldn’t afford to keep up with the rapidly changing music/tech world. If you think you might be interested in taking it off my hands, please shoot me an email: email@example.com and we can talk details, before February 15, 2012. If no one is interested, it will be gone forever after that date. We will be keeping the name of Plugola Inc. for our company, however.
I hope to hear from some interested parties soon, but if not, please avoid some of the pitfalls we ran into when building our first REAL tech start-up.
UPDATE: Just to clarify, only the website PLUGOLA will be closing. The company Plugola Inc. (and this blog) will be moving forward with our other music projects: Hifidelics and Flexi of the Month. The @plugola Twitter feed will continue, as well.