Even from the first sentence, the parallels between the music and tech industries are obvious: "The music industry loves to self-mythologise." So begins a new story from the FT "The New Hitmaker" detailing the steady, and sometimes skeptical, adoption of data to help the "golden eared" A&Rs (artist and repertoire professionals - the VCs of the music industry) uncover "talent" for the labels to sign.
While the question of how far data can used in VC is interesting - I want to look more generally at the differences in the 'architectures' of the two industries.
Perhaps the most thought-provoking difference between industry architectures is the separation between the talent spotter (A&R) and the person writing the check. Obviously these tasks both fall to the comparatively omnipotent VC in tech (putting aside for the moment the roles of junior VCs.) Another major difference: the A&Rs are also on a short term contract (standard being 3 years.) A music industry executive says this "conflict" is "built in."
Would this "conflict" be valuable in VC? I believe Charles Hudson provides the best answer. In his post reflecting on a single partner VC fund, Hudson points out the importance stage-dependency in this discussion: "I was comfortable writing checks of $100–250K to pre-seed companies without another GP to check my judgment or push back on my thinking before saying yes. For me, the logic was that companies at the pre-seed stage don’t have much data to analyze; you’re really investing in the founding team and their insights." At Series A and later however, with more traction data, the "opportunity for deliberation and discussion among partners" is more valuable.
This distinction between discoverer and check writer reminds me of the natural separation of CEO and Chairman. Growing up in Australia, there was no CEO/Chairman. The very role of Chairman was to provide a check on the CEO and build in a natural and supportive "conflict." I'm inclined to think this is the best approach.
This is probably the best description of the "indescribable" quality of a founder I've come across (it's probably the very fact that it is not a description of a tech founder but a musician that makes descriptive.) The quote is from an Briony Turner, an A&R professional describing how she diligences an emerging musicians general charisma. Tech founders are in the business of creating the world around them. This means vision, recruiting (not just employees but customers). It means building the required networks. I don't want to go to deep in the quote but I think you could if you wanted to .
Other quotes from the article that are incredibly relevant to VC:
- "It celebrates the men and women - but usually the men - with 'golden ears' almost as much as the people making the music."
- "Major labels call themselves a business but are insanely unprofitable, utterly uncertain, totally rudderless and completely ignorant."
- "The modern-day talent-spotter must have both an artistic ear and analytical eyes."
- "What A&R people are looking for, though, is not totals, but evidence of momentum."
- "The golden data phrase is: "It's moving.'"
- "We use every last piece of data we can get our hands on."
- "It's so much harder to connect with an audience or grow an audience, because there's so much noise."
- "Today the A&R people I talk to agree the new data has its uses, but insist it still takes second place to the evidence of their eyes and ears."
- "I have to have that live experience to think, 'Oh yea, this is going to work'."
- "Instrumental [a music data company] can tell A&R people which are hot, but not which are good."