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The Soul of an Entrepreneur, the DNA of a Business

— It’s not about you —

Derek Sivers had a problem.

As the leader of a successful touring band, he needed a way to make his CDs available to fans everywhere, all the time—not just at concerts.

derek_sivers_125.jpgBut Derek and his group were unattached to a major label, and big sellers like CDNow and Amazon required bands to have in-place agreements with large distributors. What was a hard-working, independent musician to do?

Derek decided to set up his own modest online sales channel, and soon friends from other bands were asking for help selling their music. Within a couple of years, the store, renamed CD Baby, was distributing the work of more than 90,000 artists. To date it’s paid independent musicians more than $70 million.

At Derek’s invitation, a couple of years back I visited CD Baby’s cavernous headquarters near Portland International Airport, and was knocked out by the depth and conviction of his entrepreneurial vision. Over the past month we caught up by e-mail. Following are excerpts from the conversation.

– Making a living playing music must have been deeply satisfying. Describe the moment you understood that CD Baby would become a full-time job and your focus would shift from playing to business. What went through your mind as the scale tipped?

The big thought was, “Oops! Well … as long as I’ve accidentally started something, and I don’t need the money, I might as well be really utopian about it.”

That’s when I decided to give CD Baby a real DNA that was not about making money, but all about being a distribution deal dream-come-true from a musician’s point of view. I considered it a utopian experiment more than a business. I was really surprised when it made money anyway.

Really I think the timing was just right. The world needed it, and nobody else was doing it. I was reluctant and actively fighting the growth of it, so when it grew anyway I knew it was meant to be and just accepted my new role in the world.lighthouse.gif

– I love what you just said: “a DNA that’s not about making money.” I’ve never met a single successful entrepreneur who began with the primary goal of making money. Every one had a higher purpose. What’s your take?

People or companies that are only in it for the money seem to have a metaphorical odor. You might end up patronizing their business anyway, but feel kind of icky about it.

People or companies that are really doing it for the love of the subject seem to glow. You like doing business with them. You smile more often. You feel better about it. And that’s why you end up telling your friends how wonderful they are, and that’s why those companies do better.

People who truly love what they do are more likely to put that extra effort into excellence than those who are only in it for the money. The difference between “really good” and “passionately excellent” can be massive, and take a lot of maniacal work to achieve.

– CD Baby took off shortly before the explosion in digital music sales. How have you adapted?

We didn’t simply stick to CDs. As soon as iTunes launched, CD Baby became their biggest supplier of music, via our Digital Distribution program. Today iTunes is our single biggest source of income.

But we still sell CDs because people still want them. My original vision was to help the artists, regardless of how the music medium evolves.

– That vision clearly offers irresistible value to your customers, because CD Baby now serves more than 200,000 artists. What’s next for CD Baby? And what’s next for you personally?

On CD Baby’s tenth birthday, March 2008, I announced that I don’t work there anymore.

I’m more of an entrepreneur than a manager. I enjoy experimenting and inventing, and know that others can manage much better than me. So, in order to free up my time (and mind) to create new services for musicians, I completely stepped out of CD Baby. Good scary challenge.

After reading The Art of Learning I was thinking of mastery: committing yourself to years of achieving mastery of one single thing.

My first thought was computer programming, but that didn’t feel fulfilling enough. I enjoy it, but only as a means. Then I realized the thing I could really commit myself to a lifetime pursuit of mastery is entrepreneurship. It satisfies me on every level—much more for personal and altruistic reasons than financial.

– Wow. That’s one big hunk o’ learning.

But—what the hell is mastery of entrepreneurship? Starting one successful company? Ten? Or is it something else entirely? There’s no championship, no finish line, especially since happiness is a crucial barometer.

And if entrepreneurship is about creating a new company, then focusing on that means starting a company, achieving proof of success, but not getting involved with ongoing management after that, since management is a different skill. The focused entrepreneur should then start a new company.

As for what’s next—I have so many plans for new companies and services, but nothing worth talking about yet since they don’t exist, and we all know how plans change between paper and reality. In fact CD Baby was only meant to be like PayPal—processing credit cards for my friends—but it turned into an online retail and digital distributor. So, I’ll just quietly launch my new ideas and watch them morph into whatever my customers really need them to be.extreme-version.gif

– You’ve produced a terrific new illustrated book (6M PDF), that, while targeting musicians, offers tight, offbeat advice any entrepreneur can use. I love your bullets: “Proudly exclude some people,” “Be an extreme version of yourself,” “Well-rounded doesn’t cut it,” and “Call the destination and ask for directions.” Tell us how the book and illustrations came about, and your goals for the work.

Thanks! For the illustrations, I just found a friend-of-a-friend named Heather Q in Portland. She and I sat together at a bar coming up with ideas that might illustrate each point (“This one’s about things getting easier once you do the initial work. How can we illustrate that? Hmm … How about a guy pushing a heavy boulder up a hill, and he’s almost at the top?”). Then she would go sketch out the ideas and come back for the next revision. She’s great.

Honestly I had no goal for the book. I didn’t want to sell it. Just spread it out there freely in hopes it’d help some fellow musicians.

Between every line of the interview, Derek confirms surprising truths about entrepreneurship. I’ll share more in future posts, but here are today’s big takeaways:

It’s Not About Youhillbilly-flamenco.gif

Entrepreneurship is not about you struggling to break through, you making the grade, you overcoming the odds, you getting rich. It’s about helping others achieve their goals: enabling others’ satisfaction, helping others earn a decent living, helping others succeed.

But it Starts with You …

… because the best place to discover the seed of a new business is at your own workplace. What problems do you face? What’s annoying? Solve that and you may have a business. My friend Jay calls it “scratching the self-serving itch.” And if you serve yourself effectively, you may serve many others well, too.

You may also enjoy:

Pursuing Fortune and Fulfillment with Blogger Extraordinaire J.D. Roth

Three Things I Wish I’d Known Before Starting My Own Business

How to Go Solo Without a ‘Big Idea’

4 Comments to The Soul of an Entrepreneur, the DNA of a Business

On Jul 10, 2008, Sara at On Simplicity commented:

I’ll be honest, this left me inspired yet jealous. To have created something so successful in spite of your best efforts not to is an amazing thing. This piece left me feeling like Derek’s success was easy, but I’m sure it was far from that.

This was a terrific way to truly hammer home the point that success often isn’t about you. Like you noted, you have to help others to help yourself.

I think there’s a desktop sticky message for me in that: keep focusing on providing genuine help, and success may come. Waiting to be successful before being helpful isn’t going to cut it.

On Jul 11, 2008, Mark commented:

He does makes it sound easy, but there is a tremendous need for the CD Baby service. As a veteran of several bands (years ago) I can tell you its almost impossible to get into mainstream distribution channels. We would have jumped at this service if it had been available back in “the day”!

On Jul 14, 2008, Steve commented:

Thanks for this great interview, Tim – and Derek! Tim, you have a knack (and/or carefully honed skill) for finding compelling characters and doing wonderful interviews. The interviews were often my favorite parts of the Japan Internet Report and it’s a treat to have the chance to enjoy more here.

A very inspiring read!

On Jul 15, 2008, Tim commented:

Thanks, Steve, interviewing people like Derek is pure pleasure. Just talking with him makes you happier and smarter. Check out his book, it’s a knockout!

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