Tidal Stays Surfing the Wave

News broke this afternoon that less than two years after acquiring the Aspiro streaming service for a reported $56MM, putting his artists friends on the team and renaming it Tidal, Jay has already made himself a pretty penny. The American telecom provider Sprint swooped in this week to purchase 33% of the company for a reported $200MM which puts Jay in close proximity to a $150MM profit with 66% retained ownership. Somewhere in Marcy, Memph Bleek is cackling with five fingers wrapped around the neck of a bottle of D’usse as he listens to “Diamonds.”  
If you’ve ever spent time in the tech world, you’ll be familiar with the barrage of acronyms, proverbs and jargon that populate every spare breath of the day. Between the verbal BRBs and the email requests to pivot your lunch strategy on 20 minutes notice, it can be enough to make your head spin around and tear that $450 Thom Browne Oxford.

Thankfully, with people like Jay-Z dabbling in the tech world, one cliché still holds true: “difficult takes a day, impossible takes a week.”

The gains were not without struggle, as Mr. Carter has quietly listened to the media chastising his investment, his team and his business acumen for a steady 24 months period since the original purchase. Bulls**t puns like, “Prince’s Estate Hates Tidal Just As Much As You Do” and “Tidal is Sinking and Nobody Will Miss It” plus other click-bait headlines have been plastered across your favourite magazines, websites and Twitter feeds from the same websites that suggest Apple are the lords of the future for their removal of AUX ports and USBs. Let’s slow down for just a second and analyze some of the mudslinging up until now with a critical eye.

When Aspiro was purchased in 2015 to be transitioned into Tidal, the doors to their Stockholm office were shuttered and the employees, including the CEO were terminated. An interim CEO took over until December of that year when they left and Jeff Toig was appointed. The practice of choosing a new leadership team after a takeover is common practice in any business. Want to catch-up on how it goes? Heinz was acquired by Brazilian supergroup 3G in 2013 and before you could say “Beyonce,” 11 of the top 12 executives were let go in favor of 3G executives. When you invest millions and billions into a project, you want proven leadership from people that you can trust. Instead of reporting this as a positive shift in towards aligning on a singular vision for Tidal, we were bombarded with headlines from college bloggers on the world’s most viral websites with no business acumen that stated that Tidal was doomed just months after Jay touched it. December 2015 doesn’t seem so far away now, does it? It’s only about $150MM removed from now, to be precise.

The media can’t even challenge the Tidal subscriber base without a sub-headline airing out their death wish for the brand. Connect a few dots and it becomes obvious that there is an omnipresent skew in reporting on the streaming underdog that rears its head at every printed moment. I’ll refrain from putting my tinfoil hat on and linking to articles from the same writers and publications that praise these tactics and strategies coming from Spotify, SoundCloud, Apple and others. In their place, I just ask that we use a bit of common sense when analyzing the S. Carter Enterprises. Remember, he isn’t a businessman, he’s a business — mannnnn.

There’s an old proverb in the tech game that success is close when 1+1=3. Jay-Z has been able to take a Nordic streaming company (1), add his friends as ‘owners’ (1) to catapult on the publicity (good and bad) and dodge the Trumpian wrath of tech media for just long enough to sell 1/3 of the company for a $150MM come-up. While he retains 66% of the company, he has already earned an almost 200% payout from his initial investment, added Sprint’s 45MM customers to his existing active users, whatever that number may be, and slingshot the Tidal brand into contention as one to watch.

The bigger lesson here isn’t related to tech, entertainment or venture capitalism. Jay has taught multiple generations how to throw their XXL Mitchell and Ness jerseys away on their 30th birthday in favor of three-piece suits, he has made owning your own businesses cool and served as a positive male role model for countless youth have witnessed him serve as a dedicated husband and father.

If we take the time to connect the dots, he just taught us that we can take people and products from our own environment and pair them together to create value far beyond the sum of their parts. Some people don’t have access to J. Cole or Deadmau5 for their start-up tech platform, but they definitely know a friend who knows the neighborhood superstar. With the right agreement and the incentives in place, the platform you built that just needed a publicity could become a staple in your city before applying the same formula to the entire coast.

Nothing comes easy and there are never any guarantees in business, however the formula works across all kinds of business for a reason. Three lessons that we can take from today’s announcement:

  1. Have a plan and stick to it

Whatever your vision is, map out the steps you need to carry it out over the next few years and make it happen. As the market shifts and bends, your plan should be flexible enough to adjust but the ultimate goal should stay the same. Tidal succeeded in delivering premium, rich media experiences because they knew exactly what they wanted and built it brick by brick.

2. Recognize value where others see spare parts

If you know that your 1+1=3, keep building. It might not be Sprint that sees the value in your fanbase, it might not be Verizon, but maybe EE or Vodafone will come knocking because value=value in every country in the world. Warren Buffett used to say that he invested in companies that were undervalued, trading at less than the worth of their parts. If the company was bankrupt, each of the parts — down to the furniture — could be sold and it would earn more than the initial investment. Understand your worth and the value-add from the parts you bring to the table and start hustling.

3. Listen to your customers, not your critics

Aspiro built a customer base by offering something their fans wanted. Jay piggybacked on the platform to bring it into more territories, offer exclusives from the musicians that his data told him his fans wanted and create a compelling proposition. The media tried to burn the brand to the ground but if you ask Tidal subscribers, they love the service and recommend it to their friends. Critics love to get their keyboard wet with passionate keystrokes about anything that trends so focus on listening to real consumers and their insights.

Finally, this isn’t a ‘victory’ for S. Carter Enterprises, Panther Partners Ltd or Tidal. This is one step in a long marathon towards success. A new business model is emerging with infrastructure owners (in this case telecom), snatching up media properties to attract customers. This expensive approach to customer acquisition is increasingly prevalent (Verizon and Hearst purchasing Complex Media, etc) because they can lock customers into the content by offering it free of data charges then push advertising down the same pipes into their phones as they consume it.

The business isn’t entirely integrated up to this point but you can bet they are working towards a goal much larger than having a streaming service that can ride out the waves of negative publicity. Watch out for Shawn Carter and his next move because the Tidal block is just a single piece of a much larger kingdom being built under our noses. Next time Hov’s high fidelity vocals stream into your earbuds,“I’m far from being god, but I work god damn hard,”don’t forget to connect the dots.

This entry was posted on Monday, January 23rd, 2017 at 7:38 am and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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