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The art of entrepreneurship has been described as creating ‘something from nothing’. But, the reality is that you need a little ‘something’ to get the ball rolling. Three creative entrepreneurs whose careers cross the music, experience and tech industries explain how they found their sustainable revenue sources, remained unique and saleable, and adopted risk beyond the cliché of learning from your mistakes.
Parlour Gigs puts live music in people’s homes. Neat idea, but how do you get it funded? Founder Matt Walters said that the company came from his own experience of playing in a band and struggling to survive within the live music industry.
‘How do we play live regularly without exhausting our audience? You have to constantly beg your friends and audiences to come along. I had been signed to a major label; had years touring in a destructive cycle of working in pubs and then going and maxing out credit cards and then working at the pub again to pay off,’ said Walters.
‘While we didn’t want to be wealthy, we just didn’t want to get into debt every time we’d go out on the road. And, how do you get rid of all the boring admin? As musicians we just wanted to be creative.’
Parlour Gigs connects an artist with a super fan, who then becomes a promoter and sell tickets for a gig that they host at their house with their friends.
The company has grown to the point that it is looking to launch in America in late 2018, having presented over a thousand parlour gigs to date.
Similarly, the founder of Envato, Cyan Ta’eed, was a digital creator who thought she could do it better. Envanto’s Natalia Manidis holds the position of Author Success & Content Operations at the company – an eBay or Etsy for digital products that has been described as ‘the most profitable start up you have ever heard of’.
‘We have over 50,000 creators selling on our platforms – we call them authors – and they [sell things] such as stock photos, stock footage, audio tracks, website themes, presentation templates. There are 2.5 million items in total – things that people have made – and we have two million customers a year,’ explained Manidis.
The company recently changed its mantra from “you do creative we do the rest,” where the thought was you didn’t need business skills, to one that now empowers its authors with business knowledge.
Another company that is the model for vision and persistence is Underground Cinema and Secret Squirrel Productions. Its founder, Tamasein Holyman – who uses the title Mistress of Make Believe – trained in theatre and comes from a background in events.
‘I think the desire or need – or gut instinct – when I started, was that it was different and I really wanted to do it. I didn’t ever think I would be an entrepreneur. It was just an amalgamation of my experiences,’ she said.
Underground Cinema is a secret screening event where the world of the film is recreated with actors and costumes. ‘You don’t know where you are going until the last minute and you don’t know what the movie will be. In June [last year] we created Gattaca.’
But it took years before Holyman had built the enterprise Secret Squirrels Productions is today. ‘I was realistic about the sacrifices I needed to make for my dream to come true; I was willing to eat soup for two years,’ she said.
So how do you survive in those early days, and what is the cut through you need to make your project a viable enterprise?
Walters said that starting Parlour Gigs was really scary, but also liberating. His advice would be to seize any opportunity to self educate.
‘Initially it was financial accounting, and legals were really important. I also taught myself to code a little and built the first version of the website as well. It was enough until we could afford to get someone to build our platform,’ he said.
Holyman agreed. She says the best thing she did was to go to business management school.
‘I had a performance, film and theatre degrees – but we were not taught how to make our business work. It is great to be idealistic, but you need to know those rules, like “the Ikea chair test”. You have an idea and put it through the pasta grinder and test it from every angle to see that it will survive. That is what business school taught me – to distil my ideas and my execution to its strongest point.’
Walters also said that there is a pool of advice out there which costs very little. ‘All the tools were there. I didn’t need to go to university,’ he said. ‘Email and track down people you admire and take them out for a coffee.’
Let’s talk money
Entrepreneurship is often a rags-to-riches story. The stereotype is that you come up with a good idea and get a venture capitalist to fund it and then, whamo you’re a millionaire.
Reality check – like all businesses, a good track record builds investor confidence.
Dan Rosen, CEO ARIA and chair of this REMIX Sydney conversation, said that today ‘people want to see that you have had a crack at it yourself and that you are ready to take it to the next level’.
He continued: ‘The common [working] frame from people is, “show me how it works”. The best way to get funding is to show them a working platform and show that you have customers.’
Walters said of his experience: ‘When I first conceived the idea and business plan and went to one of my father’s friends, who was a VC, he told it was a terrible idea and it wouldn’t work and that he definitely wasn’t going to give us money. And, then a friend gave us the advice to invest in ourselves.
‘We had no money but we realised that it doesn’t cost much to get a website up and the first event was in my back yard. About six months in we were able to then raise $20,000, which we used to build a real platform. We didn’t get into debt and that was really important,’ said Walters.
Holyman also started with nothing, returning from working abroad in the middle of the Global Financial Crisis. ‘I was visiting companies trying to find production work as they were packing up boxes. I feel reluctant to go out there and ask for money,’ she said.
‘We are about seven years old now, and it was only about three years ago the phone started ringing,’ Holyman added.
She said the turn around for them provided a clear understanding of the experience industry. ‘Five years ago nobody could understand what I do. I had to constantly explain, “this is not events”. We are doing big client work where we create an experience. Now, big brands are recognising that because of [the growth in the] digital experience,’ she said.
Similarly for Parlour Gigs, the experience and intimate connection between a fan and a musician is the currency of what they do. It is about the unique experience.
For Envato, Manidis said that growth in revenue has come from a shift in their business model and helping their authors to understand the potential in shifting their thinking.
‘One of the things we are noticing is a growth in subscription versus items for sale. By that I mean our traditional market places were individual artists selling individual items to customers,’ she said.
‘A year ago we launched a subscription product. There are a lot out there now like Spotify and Netflix. But helping our creatives understand how they can benefit from subs, that it doesn’t have to be a negative thing – but can be a really great source of an incremental income on top of sales – has been one of great challenges we recently faced.’
She used the example of a photographer putting their entire collection of photos up on the site’s subscription offering where a customer can pay $29 per month and download the entire catalogue.
While many still view this as a creative risk, Manidis assured: ‘You can get a lot of income from those subscriptions if you can play it the right way.’
Advice from mistakes
Business advice usually comes in the form of ‘learn the skills, have a solid business plan, and don’t be afraid of risk’.
These three entrepreneurs offered a different take on the common question. Their advice was more about self-preservation and remembering to be ‘human’
Holyman said that she was ‘a nightmare’ in the first years of establishing her business. ‘In the first few years of owning a business I was completely compulsive obsessive; I had a notebook by my bed for when I woke up at 3am. And, I bulldozed my way through a lot of relationships to get where I wanted.
‘It would be a mistake not to recognise that whatever we do, we deal with humans – staff, contractors or suppliers – it is all about connecting, so the energy you create and your ethics and how you treat people is fundamentally important. Yes, you can be driven but try not to be blinded by that,’ she said.
Holyman said that one of the best pieces of advice is to be humble. ‘I have seen a lot of people start a business with the attitude, “I know everything,” and have a real defensive protection energy. I started off from the position of “I think I know nothing, I need to learn everything”.’
Walters agreed that switching off and protecting relationships is key to your personal success. ‘We have a team of eight people working for us so it is constant. After two years, my wife said we are going to have tech free evenings – no TV, no laptop, no phone – it goes in to a cupboard near the entrance to the house.
‘I was constantly checking my phone and my email. You are obsessed with it and you want to succeed but you have to learn to let go,’ said Walters. ‘These days I go to work much more refreshed and ready to work.’
Creative Entrepreneurship: Making Ideas Happen was a panel discussion presented at REMIX Sydney Summit, 6-7 December 2018.