Alex Ljung and SoundCloud's search for the right tune
What's the story
It is always a challenging thing to ask the founder and CEO to let go of his start-up. It's almost criminal in ethical terms. However, at the end of the day, the start-up is no longer only about him/her.
SoundCloud's journey, with an imminent closure looming overhead and then the last-minute save, shows better hands are potentially needed to steer the ship.
Here's more.
DJ
SoundCloud is important for the indie scene
When SoundCloud was first created, several influential DJs and producers were handed out free accounts so that they could upload tracks and mixes which would help the platform grow.
It did, and, perhaps, EDM wouldn't have become such a big thing if SoundCloud wasn't there. It not only gathered users but wove communities in a proper manner so that they didn't lose their flavor.
Entrepreneur
How was it created?
Ljung didn't set out to be an entrepreneur. He was interested in technology and music. So, he became a sound engineer. When he realized that he was searching for something more, he decided to become a researcher working on human-computer interaction.
He bumped onto another student, Eric Wahlforss and "A start-up…became the vehicle we chose to actually do the thing we wanted to do."
Music
Transition was hard
Although SoundCloud was popular, it was not without problems.
In 2015, Sony decided to pull out music by several key artists from SoundCloud, as they were not getting the proper revenue that they had expected. Things were sorted out and later on, they came back onboard.
However, fresh allegations about the platform not paying musicians royalties again surfaced later, the same year.
Equity
The monetization policy backfired
For the longest period, it had been completely free and had no revenue stream. Later, with ads and subscription services, it tried to remedy this.
However, its financials continued to dwindle. It had lost valuable equity, trying to woo music labels, so that it could compete with platforms like Spotify. Its reserves were also running out. It was firing staff.
A shutdown was imminent.
Ljung
Better hands to make it profitable
With fresh funding, SoundCloud's closure has been stalled, for now. However, Ljung will have to give up his seat. He'll remain the chairman but no longer the CEO.
Perhaps, this was necessary, considering Ljung has lost more than he could afford and still SoundCloud is not commercially-viable. Someone more capable should take it from here.
Ljung's idea was great but execution, not so much.