How to conquer the world without money
Paavo Beckman (Finland) has been CEO and co-founder at five entertainment and tech companies and led teams in San Francisco, New York, London, and Finland. He is an expert in startups and corporations and an evangelist of lean startup methods.
My fellow student Jussi and I were always thinking that we were going to be actual rock stars, but finally it hit us that it wasn’t going to happen. So we decided to start a record label. We took student loans and together we were able to raise €1000. The office for the company consisted of Jussi’s bedroom, and his bed acted as a seat for us. I was involved a lot in the music events, and soon people started thinking that our label was a lot bigger than it was. Suddenly, I was also on the boards of various music organizations.
As the income of the company was basically just coins, we started thinking about how we could compete with big record labels such as Universal, Sony, and Warner. They have heaps of money and are able to buy media space and so on. What we had was an understanding of fan communities. We decided to sign a totally unknown band and not to tell anybody about it. We didn’t even try to get interviews or radio plays because the media wouldn’t have cared anyway. We also decided not to print out any ads, which was an easy decision since we wouldn’t have had the money for it regardless.
2005–2007
The band we signed had 19 teenage girl fans and their email addresses. Our goal was that the band will be number one on the Finnish music chart with a marketing budget of €80. We started by focusing on those 19 fans because they cared about the band. Big labels have a good understanding of distribution channels and the use of media, but we wanted to make this happen the other way around. I was the manager of the band, and with the lead singer we started to email the fans. At this time, Facebook or Twitter didn’t exist. We built a story for the fans about how the band was negotiating for a record deal and told them that it was highly confidential information and needed to be kept secret. This was actually true, but the negotiating parties were the manager of the band and the record label, which meant that I would basically have been negotiating with myself. We gave the fans exclusive information, which made them feel they were special. So they ended up starting to market the band themselves. For example, the girls took toilet paper rolls from school toilets and wrote things about the band on every sheet. Then they returned them to the toilets, and every time somebody would use a sheet of toilet paper, they would see something concerning the band. Obviously, this raised a lot of questions and interest in who and what the band were.
When the first CD was released, the whole thing had evolved to a point where kids around the big cities of Finland would skip school to go and queue in front of record stores so they could get the CD. The CD jumped up to number one on the Finnish chart and sold twice as much as the number two. It was only a matter of time until the media would start contacting me asking about the band. We made a list of media outlets that we considered to be good value. For these companies, we would tell them, “Maybe we can find the time for a two-page interview.” The companies that we didn’t hold in high esteem we told, “We can arrange an interview for a €4000 fee.” These companies had been used to getting paid by big record labels to get them to write something about their artists.
Obviously, now the media was even more interested in what was going on.
Everything that is exclusive in the world becomes valuable, even though it might not be useful in anyway, like an autograph on a record or a piece of gold.
The end game of this is pretty clear, and here are some of the titles the band won that year:
• Newcomer of the Year in what was at the time the biggest music magazine in Finland
• Best Song of the Year on the biggest radio station in Finland
• Best Music Video of the Year on a big music portal in Finland
• Young Power of the Year in the most appreciated music magazine in Finland
• Three number one singles on the hit chart
Around this time, the MySpace service had been launched, and some bands were using it, including us. Through MySpace, the band got some attention abroad too, and when some girl from Germany would write a comment on the band’s MySpace, we would make personal contact with her immediately. The same thing that we were able to make happen in Finland would start all over again in Germany.
We wanted to distribute 40,000 flyers in Germany and asked the fans if there were any volunteers, and there were plenty. As we didn’t have money for the flyers, we agreed with a merchandise company that they would pay and print out the flyers and their commercial would be on the backside of the flyer. After this, the fans in America contacted us and wanted to distribute some flyers too. They had already designed them and would print them out themselves. The response was “Go ahead.”
Without any promoters or distributors, the band’s single ended up as the whole of Europe’s 65th most sold single. At this point, we made a deal and licensed the band to Sony. The future would hold a big tour in Europe at festivals and clubs. You might be asking why you haven’t heard of this band called Bloodpit. During the first gig of the tour, the band started throwing fists and instruments at each other in the middle of the gig and then broke up. The band would never get together again and all the gigs had to be cancelled.
2007 onward
What if all this could be done through cell phones? For example, the lead singer could just grab the phone and send a message to the 10 most active fans in London saying, “We’re coming to London and it would be great to meet up.” Without any kind of understanding of the technology, we started to build the idea. We applied for the Mobile Rules competition in the United States. We were picked to be in the final 10 best applicants from around the world. Obviously, everybody else would have great videos and visuals, so we were trying to think about how to compete with these other companies. We took €50 and hired an artist to draw us a rock-themed comic. The final was held at Yahoo’s headquarters in Silicon Valley, and to everybody’s surprise and despite my horrible knowledge of the English language, we won the whole thing. I was told to haul ass to New York to a certain hotel and I would be picked up from there. I did as I was told, and there was a limousine waiting for me there the next day. A bit later, I had somehow gathered a couple of million in investments.
There, I was now CEO of a company called Mobile Backstage. Jussi was a product guy and he was forced to buy his first cell phone (he was quite likely the last person in Finland not to own one). We started a collaboration with one tech company, and after a year we bought their mobile communication platform and a couple of software developers from the company.
Quite soon we had as customers platinum- and gold-selling artists from the United States and United Kingdom and had offices in San Francisco, New York, London, and Helsinki. In 2012, I left the United States to move back to Finland because of my family. I hired IBM’s former big data director as the new CEO. I heard that the company faced closing in 2015 because the management team and investors weren’t able to agree on relocating the headquarters of the company from Europe to the United States, and finally there was only an empty company with no employees.
After moving to back to Europe, I was doing mentoring for accelerators, big corporations, and tens of startups in nine countries. That’s when I realized how slow the progress is for startups in Europe, no matter how good they are. I decided to start solving those problems, and so Startup Catapult was born. Nowadays, Catapult helps international multi-billion-dollar corporations in different business sectors to find the best startups based on their needs. We scan through more than 100,000 European startups annually with the help of artificial intelligence and pick up the best ones for our corporate clients.
Top three tips for conquering the world without money
1. Focus on the people who want to be part of your thing and personalize the marketing, so those people can experience the whole journey. Give people a reason to tell stories, give them behind-the-scenes access.
2. Even in big corporations, the people in charge are just humans, so find the guy who gets excited about your thing and he will sell it to his co-workers. This isn’t a story that applies to just the music business but follows certain logic that will always work when doing business with humans.
3. If you want to reach 100,000 people, focus on 100, as when you focus on 100,000, nobody will experience that this is personally for them. When you get 100 people really on your side, they will be the most powerful marketing machines you can have.
Waiting for perfect is neveras smart as making progress.
Seth Godin