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"our concept does work...but...we simply needed a lot more capital" This sounds like the old dot-com boom excuses of the early 00's. Popular service or not, if

"our concept does work...but...we simply needed a lot more capital" This sounds like the old dot-com boom excuses of the early 00's. Popular service or not, if after almost 5 years you're still relying heavily on recurring investor capital for day-to-day operations and not bringing in sufficient revenue to at least cover basic expenses, unless it's high-tech biomed or pharma, it typically isn't a viable business model for a startup. Maybe this would have worked out for them 10 or so years ago, but not so much any more.

robryan 12y ago
I would actually put music in a similar class to biomed/ pharma. I think music is probably worse though, even with another 5 to 10 years to capital it is entirely possible that it could still be to early and fail. Music services right now don't make good returns and at the same time short change artists. The issue is that in general people just won't pay the same amount for music as they used to. While we have that and entrenched labels it is going to be very hard. Over time hopefully the labels influence is broken down an we end up with something more sustainable.
- USNetizen 12y ago
  I agree. That was my point that music is too entrenched of an industry for a startup to change it overnight. They took on more than they could handle which is a flawed business model, yet they still call it validated and proven in their parting blog post. This is not exactly accurate seeing as they are shutting down - it's like calling a rocket that blew up a few seconds after launch a "proven, viable" design. At least biomed and pharma startups have arguably the potential for a beneficial impact on society at large to justify the long-term capital infusions, whereas a service like this is more of a convenience or recreational product at best.
earbitscom 12y ago
You're right, which is why Pandora has been relying on investor capital for over a decade, and Spotify is right behind them. They haven't had a profitable year yet and they don't have a viable model. Our business model, on the other hand, would be highly profitable at anything over about $1M in annual revenue, up to $100M, without playing any commercials. The problem was not our business model, as it is for most companies in our space. It was our inability to scale the audience to the point of sustaining $1M in annual airtime sales because the product wasn't yet sticky enough. That was a factor of being underfunded and trying to do too many things at once. The capital thing wasn't an excuse. We tried to start a far more difficult business than (also failing) companies in the space, with a fraction of their capital. If we had an engineering team of 10 people and a ton of money to acquire content, there is no question we could have built a stickier service, and the unit economics were already great.

robryan 12y ago

I would actually put music in a similar class to biomed/ pharma. I think music is probably worse though, even with another 5 to 10 years to capital it is entirely possible that it could still be to early and fail. Music services right now don't make good returns and at the same time short change artists. The issue is that in general people just won't pay the same amount for music as they used to. While we have that and entrenched labels it is going to be very hard. Over time hopefully the labels influence is broken down an we end up with something more sustainable.

USNetizen 12y ago
I agree. That was my point that music is too entrenched of an industry for a startup to change it overnight. They took on more than they could handle which is a flawed business model, yet they still call it validated and proven in their parting blog post. This is not exactly accurate seeing as they are shutting down - it's like calling a rocket that blew up a few seconds after launch a "proven, viable" design. At least biomed and pharma startups have arguably the potential for a beneficial impact on society at large to justify the long-term capital infusions, whereas a service like this is more of a convenience or recreational product at best.

earbitscom 12y ago

You're right, which is why Pandora has been relying on investor capital for over a decade, and Spotify is right behind them. They haven't had a profitable year yet and they don't have a viable model. Our business model, on the other hand, would be highly profitable at anything over about $1M in annual revenue, up to $100M, without playing any commercials. The problem was not our business model, as it is for most companies in our space. It was our inability to scale the audience to the point of sustaining $1M in annual airtime sales because the product wasn't yet sticky enough. That was a factor of being underfunded and trying to do too many things at once. The capital thing wasn't an excuse. We tried to start a far more difficult business than (also failing) companies in the space, with a fraction of their capital. If we had an engineering team of 10 people and a ton of money to acquire content, there is no question we could have built a stickier service, and the unit economics were already great.