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Have you tried the Jay Z / Tidal model of bringing in influencers from day 1 to drive fast adoption?

Getting early users for a new service is the hardest challenge for most new ventures. I like the model Tidal are trying, whereby they have given up equity to a collection of stars that can promote the new service and drive fast adoption. Some info here:http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-jayz-tidal-music-streaming-20150401-story.html#page=1

I am considering this model for some projects and looking for people who have tried this approach. Did it work? What went wrong? How did you structure the equity to ensure they delivered on what you needed?

Thanks

9 Replies

Cam Burley
3
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Cam Burley Entrepreneur
Co-Founder & CEO at Primo
I've never seen it work. And, while I'm not the world's wiki on most successful product launches, there are clear and rational reasons why it doesn't.

The first is that, internet users don't care who builds a tool. People use products online because they solve a use case, are useful in some specific scenario the user finds herself in, or as a recommended solution to a known problem. I won't spend much time on Tidal, but it seems pretty clear, they're a product in search of a problem.

Secondly, users resent (and are mistrustful of) the idea that they need to be commercially sold on web products -- including and especially if it's a consumer-facing product. Great products need no gimmicks. Pandora or Spotify don't need to put Madonna on the front of ads to convince you it's a quality product, because great products speak for themselves. The users are the biggest advocates. Crowsourced validation speaks much louder than a stage full of celebs. This is different from commerce offline. With web and mobile, I've got to live with you in my pocket everyday. If you take up space on my device, the experience better be awesome & the product valuable or it's not worth it -- doesn't matter who sells me on the idea that it's a good product.

The last thing i'll mention is that, to use a lot of paid celebrity endorsements is to completely misunderstand the business behind the internet. Web & mobile products are about constantly iterating and re-building your solution over and over again until it satisfies a very significant portion of your audience's use cases in a seamless way. That sounds like it's jargon & it may be but it's also true.
What a lot of ppl don't understand is that you've got to truly understand what you're selling, or you're DOA. Despite what seems to be obvious, Tidal is not selling music. But, it's my sense they're under the illusion that they are selling music. Music is ubiquitous and has been commoditized on the web with the rest of the animated gifs and 6-sec Vines. What Tidal is actually selling is the best and most seamless access to a media experience in your pocket. Maybe that takes the shape of being able to vote up & down the best new songs with your favorite artists' everyday...maybe it's your favorite artists Facetime DJ'ing a playlist every week...maybe it's your favorite artists curating the best song hooks of the past 30 days and building rapid-fire playlists from these....I don't know. I'm not in that business. But, no amount of celebrity endorsements can help a company execute that seamlessly.
Of course there are edge cases like gaming, etc. But, compensating non-tech people to influence the adoption of a web or mobile product is about as good an idea as Justin Timberlake buying & relaunching MySpace in 2011.
Any day now, it's slated to catch-up to Facebook.
Dax Hamman
0
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Dax Hamman Entrepreneur • Advisor
Interested in hearing about exciting opportunities
Interesting Cam, thanks. What cases have you seen where you have seen this not working? Would be interested to compare the model. I would counter and point out Beats as a use case where this has been successful.
Karl Schulmeisters
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Karl Schulmeisters Entrepreneur
CTO ClearRoadmap

Well the flip side of this is Dr Dre and Beats.

I think the statement

Secondly, users resent (and are mistrustful of) the idea that they need to be commercially sold on web products -- including and especially if it's a consumer-facing product

applies to a segment of consumers but not to all of it. The iterating on the customer needs is nothing new about the internet. P&G have been doing this since the days before Tide...

The point though about understanding what you are selling is the important one. BEATS is selling an image and "cred". And Dre is using his own image and "cred" to sprinkle that "glitter dust" on all the users of BEATS.

The question then is what Tidal is selling with JayZ , Madonna et al. And they are selling a couple of things

  • being "in" with "the best quality music" (since they claim to stream higher quality) - IE they are to some extent doing the Pono route having seen Pono get some traction
  • Selling the cred associated with "its the best music" - Pono did it using Neil Young's name. Tidal is trying to do it using the same approach but with a wider stable of artists
  • To musicians they are selling
    • larger share of the revenue
    • more control of how your music gets played
    • sticking it to "the man" of the top streaming music sources and music industry publishers
  • To consumers they are selling
    • Sticking it to the man...
    • being on the down low with the artists they love


Celebrity endorsements work. Look at the Apple Watch - endorsed by Jony and Tim Cook - the apple fanboys (and girls) are buying something that

  1. really is a big beta
  2. is very expensive for what it does
  3. is underdelivering on original promises

its mainly being sold on image. I contend that part of why NEST sold out to Google was to get the cachet and imprimatur of "this is the future"

Celebrity sells - but only to certain demographics and only in categories aligned with that celebrity.

JayZ isn't going to help you sell a new satirical look at news - having been on Jon Stewart's show does.
Madonna isn't going to help you sell BBQs - having Mike Rowe endorse it might


Taiwo Adeleke O (TAO)
2
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Taiwo Adeleke O (TAO) Entrepreneur
CEO @ BDGC LIMITED
Waoh..this is an interesting debate..@DAX I think the best solution to this is to go out there and follow your gut on which ever one you believe would work for you,but I personally believe having a celebrity as a face of a brand brings quick credibility to a brand which could eventually boosts the company's traction.
Cam Burley
1
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Cam Burley Entrepreneur
Co-Founder & CEO at Primo
@Taiwo -- great debate. Very interested to see how it plays out over the next couple of years.


Fair points about Beats, but as I mentioned, I think there's a relevant distinction btwn web/mobile products and offline products.

Consumers interact with web/mobile products differently. Most consumer-facing web products are free. So, the conventions and expectations from users have grown to be different, over time. Not only do people not want to pay for your product up-front (with all the apps and web products available in the marketplace) you've got to first prove the product worthy of a free download. So, the expectation around its utility is different.
Distribution is diff. Product support is different. Shelf-Life is diff. User Experience is diff. Integrations with other 3rd-party tech is diff. Etc. It's a different world.

Plenty of examples of offline products where celebs endorsements do well. Look no further than Peyton/Eli Manning and NFL DirecTV packages or [insert celebrity here] and Vizio TVs...

When we say celebrity, I mean entertainment celeb...not a famous VC, or a product designer. Jony Ive is cool but he's not a celeb. And, I get your point @Karl but it's hard to use the Apple example when they've got the world's biggest cult following.

I think Karl makes interesting points about celebrity brand equity being passed along when the celeb's brand is closely associated to an endemic product -- but there's little to no evidence of consistent quick and consistent product adoption.

Sqor

  • Sports Webapp/ mobile App for iPhones/Androids
  • Brett Favre endorsed it (SB MVP, Future HOF)
  • 2 Yrs old
  • Raised $6MM
Doesn't crack the top 100k sites in the world
Traffic to web app from searches for Brett Favre less 1/2 of 1%

alexa.com/siteinfo/sqor.com

Gentology

  • App let's celebs pass along style to guys in hopes dudes will ante up on latest fashions.
  • 2yrs old
  • Paul Pierce,
  • Oscar Winning group Three Six Mafia (lol), andothers endorsed.

They don't even own Gentology.com today.


Kim Kardashian and Shoe Dazzle -- $66MM in investment, investors don't break even.
Floyd Mayweather & Justin Beiber's Selfie App, Shots -- barely 1M downloads. But, together they have over 100 Million social followers.

We don't know all the details. A lot of reasons tech companies fail. & endorsements don't preclude you from building a top-notch product. But, I have yet to see any consistent evidence that suggests celebs drive brand lift or even early adoption, in web or mobile products.

A.J. Lawrence
0
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A.J. Lawrence Entrepreneur
Data focused revenue growth executive from startups to Global1000s
This does get interesting because of the very nature of influencer marketing. Check out CharityBuzz.com, while they don't have celebrity investors, in the early days, all the pr around celebrity auctions for various charities, raised their profile and drove a huge amount of traffic and registrations.

I think the folk using influencer to grow only do well when they have a logical second tier of acquisition/awareness/growth that is focused on normal folk.
Heidi C. Hutchison
0
1
Heidi C. Hutchison Entrepreneur
Managing Director, Tau Consulting Group ❖ Outsourced Marketing Expertise ⇨ Driving Business Growth
I will be attending a conference in Atlanta from Wednesday, April 22 to Saturday, April 23. I will have limited access to emails. If this is urgent, please call me on my mobile or text me at (858) 245-7003. I will be back in the office on Monday, April 27. Cheers, Heidi
William Del Pilar
0
0
William Del Pilar Entrepreneur
Fantasy Sports Entrepreneur, Pioneer, Executive ♦ Business Development ♦ Consultant ♦ Writer ► Open to New Opportunities
Here's an interesting note:http://www.redorbit.com/news/technology[removed to protect privacy]/jay-zs-tidal-streaming-service-is-floundering-042315/

and

http://bgr.com/2015/04/21/tidal-vs-pandora-vs-spotify/

I must say every situation is unique but music seems to be like content - regardless of the quality, free rules the day in this case and their monthly costs is not what the average listener seems to want to pay. It does depend on the industry / product / service you're thinking of doing. Until then it's all theoretical. Karl and Cam have pretty much solid responses to your question.
Justin Ballou
0
0
Justin Ballou Entrepreneur
Manager of Human Capital Investment (I teach...) at Campbell High School
I believe it depends on your type of influncers. With the Tidal play, they are focused on pop culture as well as creators of the product that is being consumed....>Tidal itself is merely the access to the product.

In other plays where the digital/web/app is the marketplace, having influencers on board to create product to be consumed on or through the platform could be very lucrative....and the equity stake may just be a large enough barrier to switching to another platform.

I do agree for an app that just has a basic use case, equity will just be a flash in the pan, as people will begin to feel that the equity has no value. But, compound the equity stake of being a maven with the earning potential of the tools for immediate gratification.....you may have a process of onboarding and seeding a marketplace that has potential.
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