Six Things I Learned During My Time Building Pulselocker

Pulselocker was a music subscription and storage service created for DJs and electronic music fans. In this op-ed, Pulselocker’s co-founder, Alvaro G. Velilla shares an open letter to entrepreneurs in the music and technology space.

That naive view of the world, my positivity, boldness and excitement to move the Industry forward is something I’ll carry with me forever.

Alvaro G. Velilla

In 2010, after a ten-year prolific Music Business career in Europe and the United States, I saw myself in a loft in San Francisco’s SOMA District, drinking a glass of wine and discussing with my wife, Jillian, the poor state of our Industry.

In just a few years, we had gone from a thriving ecosystem to a situation where sales had decreased to all-time lows and household distributors and labels were shutting down. It was also becoming apparent that streaming was the next logical consumption model, something our industry was slowly and reluctantly starting to accept.

But DJs, traditionally the most influential, engaged, and valuable consumers, always ahead of the curve and responsible for breaking new records and identifying and building trends, were painfully stuck in the past due to technical limitations. The technology to make streaming compatible with digital DJ tools did not exist (yet).

For years, that business and technology vacuum pushed a significant portion of DJs to piracy as the perceived value of digital music plummeted. Simultaneously, the more seasoned DJs, needing robust and reliable solutions, were exhibiting painful compensating behaviours, such as carrying around terabytes of music files on external hard drives.

How was it possible that nobody was working on a solution? And right at that moment, it hit me: would it be possible to build a one-of-a-kind locker technology that would allow subscribers to download music on their computers and play tracks with DJ apps offline? Would the music industry be receptive to the concept? Did the technology exist?

Creativity usually starts by having the right problem to solve and it was clear that there was an opportunity in the market. In the words of the late author and digital strategist Professor Clay Christensen, there was a real “job to be done.”

After a few months of meetings, brainstorming sessions, team building and planning, we incorporated Pulselocker Inc. in November 2011 in Mountainview. CA, a day I will never forget. What followed can only be described as an adventure. A seven-year pilgrimage full of sweat and blood, miserable, but gratifying moments, and personal and professional growth. A ton of it for better or for worse.

When making big decisions early on (such as critical infrastructure partners or other significant investments), always try to visualize the worst-case scenario to the best of your abilities and reverse engineer it to the present moment.

Alvaro G. Velilla

We travelled the world, employed more than 100 people, set up and dismantled three offices, met with over 275 companies, educated and signed deals with most of the industry, and designed and integrated our patented technology with the leading software manufacturers. We became a bastion of new ideas and innovation for a group of early adaptors, friends, industry folks and advanced DJs that stubbornly supported and encouraged us.

Several critical factors play a role in getting a new product to market fit and adoption. In the case of current business models and the technology that enables them, a crucial one is an ability for users to adopt new workflows. Spotify didn’t invent music streaming. A team inside Yahoo did it years before, but it was too early. Labels were not as receptive, the internet was still too young, and the bandwidth was limited.

Curiously, DJs (and creators at large) who are ahead of the curve in many aspects, have historically been very conservative technology-wise. From Technics 1200s turntables to Pioneer CDJs players, from vinyl to CDs to laptops to media players, from mp3s to streaming – it has always been an uphill battle for companies working to lower the barrier to entry and expand the market. As a result, most DJs have been dragged from innovation to innovation kicking and screaming. I wonder, why?

A bigger market means a larger community. More DJs and creators, more options, and a healthier and more vibrant industry. Is losing that sense of individuality the biggest fear of a DJ? Much of Pulselocker’s philosophy derived from the powerful concept of democratizing music for music-obsessed creative individuals. We became fixated with the idea of providing a new generation with an unprecedented way of becoming a creator, by becoming a DJ (first). Together, we wanted to eliminate the socio-economic and geolocation limitations of the past.

We successfully pivoted twice; we set a precedent with our technology and agreements. While others spent years thinking about it, we built it, and we built it first. After an extenuating 2017 of growing pains and tribulations, Pulselocker’s technology was acquired by Beatport, one of the most iconic platforms in the DJ space, currently powering its subscription service, used by millions of DJs worldwide.

It’s a generational shift, slowly moving from ownership to access with the obvious Darwinian consequences as new creators & DJs enter the space, and older or disengaged ones retire. But, with Beatport currently leading the narrative technologically and strategically, the future is bright.

Pulselocker’s spirit will live on and, hopefully, evolve to tackle new challenges and exciting opportunities: how can the blockchain improve data transparency in the DJ space? How will 5G and WIFI-enabled hardware change professional DJ setups forever? DJ tools, audiences, edtech and new monetization strategies in the VR/AR, gaming/metaverse space?

Is losing that sense of individuality the biggest fear of a DJ? Much of Pulselocker’s philosophy derived from the powerful concept of democratizing music for music-obsessed creative individuals.

Alvaro G. Velilla

As my professional career evolved, I gained enough perspective to understand the fundamental challenges we had to overcome and our mistakes. Still, that naive view of the world, my positivity, boldness and excitement to move the Industry forward is something I’ll carry with me forever.

Here are six of the many critical lessons I learned along the way that I think could be of value for audacious entrepreneurs entering the music/technology space.

Don’t do it for the money

After we closed our first investment round, my dream was real: somebody told me that if we worked hard and I was fortunate, I might own 10% of the business. As the founder, the idea seemed outrageous (so tiny!), but a few facts became clear as years passed. Money is king, and If you are lucky enough to get funded, you will be spending somebody else’s cash to build your product (unless you are a serial entrepreneur or a trust fund kid).

In the case of Pulselocker, we were a sophisticated distribution channel for intellectual property we didn’t own and we had to share the majority of our gross revenue with record labels, publishers, and PROs. As a rule, don’t expect to be making much money until your product reaches market fit. You will probably have to fundraise sooner than expected at a lower valuation. It is a game of volume.

That is why mass-market streaming services, after years of being in business and international expansion, are quickly embracing a more integrated business model and developing their own content, something that already happened in the video streaming space. It’s a bumpy road ahead and data shows that it typically requires four to six years of commitment.

Don’t think about the riches or the status. Don’t believe the hype. In 2022, what happens in Silicon Valley is not magic; it’s just the market. Stay grounded and humble. Do it for something bigger than yourself, this will help you to find strength during challenging times. Who knows, perhaps you could be the next Daniel Ek or Mike Weissman.

How do you organize and mould an organization that will forever live in a constant state of sustained innovation? Embracing, celebrating, and becoming one with the journey is probably the only way.

Alvaro G. Velilla

Surround yourself with great people

One of the main challenges with Pulselocker was always finding the right talent and unless you have deep pockets, you will deal with a similar situation. We hired and had to let go 80% of the engineering team twice during the project’s first two years. Does it mean we were terrible at hiring? In part. But we also learned a few hard valuable lessons in the process.

First, a great candidate is not necessarily a rockstar, but somebody with great human values who feels personally invested in the project goal or the space. Second, as a golden rule, stay away from narcissists. They will make you lose valuable time and you will end up swimming in unnecessary cryptic documents and presentations, as the narcissist tries to convince you that the problem is you, not their dysfunctional behaviour.

Look for straightforward people who communicate plainly, love what they do, can sustain positivity for extended periods of time and can handle (and provide) constructive criticism. Third, hire agile people who can adapt quickly and If you can afford it, look for seasoned individuals. It’s all about trust. Creativity is a team sport. That goes for everybody, including founders, c-team, and advisors. That is why vertical (overly pyramidal) teams tend to be bad at executing projects.

I’ve had the opportunity to work and partner with exceptional companies and managers. The best of them were honest, upbeat yet balanced folks. Look for these attributes, and your team will thrive (and ship).

Think about the future early on

If you are lucky enough to find economic support for your project, you will be over the moon. Hires, incorporation, office space, strategy… espresso machine. It’s a lot to take in all at once, and it requires absolute focus. It’s tough to think about the future in the middle of the initial storm. Optimism is a potent tool that will serve you well along the way, but there is also a dark side to it.

In our particular case, during the early stages of the company, we made a few critical strategic decisions concerning the team and our infrastructure that, years later, harmed the organization by slowing us down (when we should have been running). At the time, we were not aware of the potential future consequences. They were simply a symptom of the generalized “yes” attitude that we had so that we could accomplish a lot with a small team.

Consider this: when making big decisions early on (such as critical infrastructure partners or other significant investments), always try to visualize the worst-case scenario to the best of your abilities and reverse engineer it to the present moment. If you are still unsure, look for help, talk to your advisors, industry friends, do some research, shop the project to different vendors, compare feedback, always sleep on it for a minute and remember, all that small print on the agreement is not for when things go great, but for when things go south. Pay attention to it.

Talk to everybody, embrace hate, and don’t burn bridges

With Pulselocker, I had to constantly push my limits and get out of my comfort zone. If you are doing a good job, that will also happen to you. Be friendly and down-to-earth. Practice your pitch and find a simple way to describe your opportunity in less than 20 secs. Identify the two most important industry conferences relevant to your product, fly in economy, Airbnb, or couch surf, and spend time approaching and connecting with folks.

In the current environment, everybody in the industry is receptive to new technology and start-ups, and you should have no issues securing a few meetings. After, follow up fast and be conscious about over-communicating and bothering people. Don’t email them again if they politely push back. Email again when you have something new to show. Don’t burn the relationship. Something helpful to remember about subscribers & press: haters will hate. Eventually, you will grow a (functional) thick skin.

Learn to read between the lines and understand what the hater is trying to articulate. What is the actual piece of feedback that you can distil? How can you use it to improve your business model or identify a possible emergent strategy? Lastly, as a founder, your contacts and relationships will be a big part of your future. Karma is the most potent force in the Universe. What goes around comes around (in one form or another). That is a fact.

Take shortcuts (at the beginning)

Our industry evolved tremendously over the last few years. Back in 2010 when we started our journey, many of the off-the-shelf peripheral B2B solutions available today did not exist. Suddenly, we were faced with the daunting task of learning, administering and building things we had not anticipated. One of the most precious things you will enjoy during the first 18 months of your project is the ability to put everybody in a room and act fast.

Use every dollar in the bank to go from zero to market-fit in the shortest amount of time. Mindful planning is critical. From very early on (as part of your business plan), try to visualize your critical differentiator. Why will customers “hire your product” instead of somebody else’? Once you identify it, focus on it.

After launching Pulselocker V.1 in 2012, we realized we needed a brand refresh and a more superior UI/X. We decided to fly to Berlin, one of the world’s design capitals, and hire a studio to help us ideate and launch a product that was initially far from our reach. It paid off (and we made a few lifetime friends).

Spend the bulk of your resources relentlessly trying to bring to life a stable, functional beta of your vision and outsource the rest as you sleep five hours a day for months obsessing about every detail. You will have to take care of the technical debt that you have accumulated and build in-house in the future. Your engineers will probably hate you. But that is a different story.

Enjoy the experience to the fullest

I’ll be honest, there are many possibilities that your project will fail. Even seasoned entrepreneurs typically don’t make it. The statistics are brutal; nine out of ten startups will die during the first two years. People compare it with climbing a mountain. For us, it was like crossing the Sahara desert, building a niche product during a time when nobody wanted to invest in music.

We were constantly standing behind closed doors as some of our idols (whom we had the opportunity to connect with) dismissed Pulselocker as a fantasy, an impossible technology or a damaging product for the Industry. How in heaven can you know if the initial strategy you are following is correct? Building the product becomes almost meditative. How do you organize and mould an organization that will forever live in a constant state of sustained innovation? Embracing, celebrating, and becoming one with the journey is probably the only way. Driving simply for the pleasure of driving and enjoying every minute of it.

Infuse your ideas, concepts, and products with love and dreams, be naive and ask dumb questions. Often innovation comes from the most humble and unexpected places. When faced with uncertainty, feeling rejected, or when things don’t pan out as expected, remember this: very few people can drive a vision from ideation to launch with honesty and character. There is greatness in you. You can achieve far more than you thought you could ever do. As Miles Davis once said, “…sometimes, it takes a long time to sound like yourself…”.

On that note, my final words are to never give up.

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