This post originally appeared as a leadership column in Fast Company.
The biggest difficulty I thought we would face starting Next Big Sound was convincing investors that they should trust us with such a large amount of money. At the time we were starting, in 2008, I believe Mark Zuckerberg was the youngest person to have ever raised venture capital. He did so when he was 19 years old. My co-founders and I were 21 and 22. I also anticipated difficulty in selling our software to seasoned music industry executives at global major enterprises. In fundraising and enterprise sales most of the people I was pitching were 20-40 years older than I was.
It certainly was not an easy process but I learned something early on. Nobody, experts or otherwise, knows anything…until you tell them a story that makes sense.
I'll tell you the process I like to use to figure out the story that makes sense: find the story, test the story, and then test the story again.
It all starts with the story. Our story started with the music industry in 2009, in a state of dynamic change. I had experience stapling weekly CD sales reports together as an intern at the biggest label in the world. This taught me that the industry was not paying attention to where people were increasingly spending their time and attention and there was an opportunity to build a data company tracking all of this information. Venture capitalists categorically hate the music industry but most love data analytics businesses. In our story we positioned music as just the next industry to be transformed by data with Next Big Sound leading the charge. If I hadn’t workshopped a music-centric version of this investor pitch with investors over many months we would have ended up with a very different (and likely unsuccessful) story. We used compelling examples to drive the story home. Michael Jackson had just died that summer. To show the volume of online music data we showed that his sales spiked 1000% following his passing but his online activity jumped more than 10,000%!
Before you get discouraged that you don’t have a compelling story, remember that everyone has a unique advantage over everyone else. These advantages are usually the best place to find your story.
What unique advantage could three first-time founders have in a highly competitive marketplace where venture capitalists like Foundry Group are seeing thousands of pitches a year? How about the fact that as recent college graduates we were used to living with lots of roommates and on very little money? We spent the first 3 years of the business living in a 6-bedroom house with the first three people we hired. That’s the reality that drove part of our story that we were “cheap to keep alive.” What about our unique hiring advantage we had where we could siphon off the most talented engineers from our alma maters? That made it in the story too.
What unique advantage could a small team from Boulder, Colorado have over global enterprise software companies selling into Sony Music? How about the fortunate fact that my freshman year of college happened to be the same year that Facebook launched? I’d grown up with the technology we were tracking. When I stood in the boardroom presenting to all the label executives, I looked a lot more like the generation they associated with all these new technologies than our competitors who sent in more seasoned sales executives. By the time I got in the room I had also presented to hundreds of label employees and knew which parts of the Next Big Sound demo drove the most excitement, and which features caused people to tune out and check their phones, and shaped the demo accordingly.
I've been incredibly fortunate to work with my two co-founders, David and Samir. We take our stories to each other for the first test. Once it's been revised the story is taken to the appropriate party for a second test. This is usually some portion of the NBS team but can include the board of directors, current or potential customers, vendors, partners, investors, or just friends of the company. This is where the wisdom of people who have years of relevant experience can send us back to the drawing board, and save big mistakes.
Finally, by the time the story goes to a broad audience at a conference, via an email blast, fundraising roadshow, formal sales presentation or company all-hands, it has been fully battle-tested.
The corollary to the title of this post is that as a 22-year-old, I knew as much as any of the people I was selling to. The phrase nobody knows anything isn't meant in a malicious way. It's just the recognition that no one can predict the future with 100% accuracy and thus, nobody knows anything…until you tell them a story that makes sense.
As the Head of Next Big Sound at Pandora, Alex White oversees a NYC-based team of two dozen data engineers, designers, product managers, and data scientists focused on prediction research and cross-platform performance measurement. White co-founded Next Big Sound with David Hoffman and Samir Rayani in 2008, while in his last semester at Northwestern University. Next Big Sound raised $7.4 million dollars across two venture financing rounds from Foundry Group, IA Ventures, SoftTech VC and other notable angel investors. On July 1, 2015 Pandora Media (NYSE: P) acquired Next Big Sound, Inc. White lives in New York City and posts regularly at alexanderswhite.com.