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How a Startup Accelerator Is Trying to Find the Next Spotify

Techstars Music just announced its third class of music-tech startups, which range from fast merch printers to interactive video players

Techstars Music just announced its third class of music-tech startups, which range from fast merch printers to interactive video players. Bob Moczydlowsky is the company's managing director.

Kiana Nicio

An app allowing users to create videos with the face of any person in the world, an immersive entertainment platform that lets fans interact with things they watch and an augmented-reality live music company are among the nine new startups that Techstars Music believes can shape the future of music.

Techstars Music — which was born out of its parent technology startup accelerator Techstars three years ago and already has a combined valuation of $300 million amongst its previous two rounds of startups — announced its latest class of music-tech startups this week. The nine fledgling businesses, which represent less than 1 percent of the application pool, will now enter an accelerator period in Los Angeles, ending with a demo day in May when they’ll present their products to more than 300 music executives, venture investors and entertainment technology executives.

Techstars Music’s funding and mentorship pool includes the likes of Sony Japan, Sony USA and (new to this round) fitness giant Peloton; alumni of the program include the world’s first Ethereum blockchain-based ticket seller and a facial-recognition startup working with Live Nation and Ticketmaster to use music fans’ faces for concert entry.

Bob Moczydlowsky, the managing director of Techstars Music who formerly served as Twitter’s head of music, spoke with Rolling Stone about how this year’s slate of startups is more promising than ever.

What’s in the mix? What can we expect?
This year’s class has some stuff in it that might take a couple of years to develop — but it is going to have crazy impacts on entertainment and media. We’ve got a company from Japan that lets you take any video off the internet, from anywhere, and use your face to remix and control the facial expressions of the people in it. You can use your voice and face to make Donald Trump or 21 Savage talk. It’s going to change the way we interact with content in a crazy way. We have a company from Australia allowing you to make synthetic voices: A kid can make an animated cartoon with the voice of a major actor, or you can chat with your friends through a video game as a character, you can play Fortnite as Travis Scott. There’s a company doing on-demand, localized printing for merchandise, so instead of a huge on-demand print shop, people can make orders and drop-ship them in the local area. Imagine getting a piece of merch from an artist you care about totally customized, printed down the block, looking great, and delivered to you the next day.

It’s all stuff that’s thinking about how music is going to evolve over the next five to seven years — really radical stuff, not small. It’s a total upheaval of how things in the music business have worked to date. We’re super excited about it.

What’s changed the most for Techstars Music since it started three years ago?
When we started, a lot of it was like a grand experiment. The concept was: Music is transitioning from transactional to streaming, but there isn’t continued revenue growth. We wanted to take venture capital and music — which have been historically opposed groups — and have them collaborate, and attract high-quality entrepreneurs. Then the funding came together and it wasn’t just rhetoric anymore. Our companies are working with Live Nation and building world-class AI to make music with software. We have crazy things happening that we could’ve never predicted.

We’ve got some more years to go until we see the multiple on investment capital returned, but we feel pretty good. This is an ecosystem where more capital is coming, more innovation is coming, and more people are paying attention.

Speaking of people paying attention: Peloton, the indoor bike company, is a curious new addition to the membership group. What’s their interest and investment in music startups?
They reached out to us because they liked the way we were thinking about investments. They’re the fastest-growing fitness company in the world, and all their content includes music — so they’re in a really interesting position. They have the ability to break artists. They have the ability to turn songs into hits. They can do things like measure how your biometrics influence the content you like. Literally in our first meeting with them, we were like, “these are our people.” And from a business perspective, they’re part of this interesting horizontal expansion going on in the music business. Once you have millions of people subscribing to something, it’s easier to create new products than it is to create new businesses independently. If Netflix added a music service tomorrow, a bunch of people would subscribe to it. Similarly, there’s a lot of people who’d be interested in arts and culture in the Peloton ecosystem, so it makes sense for artists to go there.

How many startups applied to be a part of Techstars Music this year?
We don’t publicly detail that number, but it’s a lot. This year’s class has an under-1-percent acceptance rate. But it varies year to year, so we don’t want to talk about how many candidates there were, and we want to focus on the ones who made it through the gauntlet.

And how’d you go about choosing from that huge pool? Were there a lot of ideas that were really similar or overrepresented?
We think about ourselves this way: We want to invest in companies solving problems for music — not music companies. The dirty secret of Techstars Music is we don’t invest in music companies. We want royalty investment funds, AI generative content creators, facial recognition companies. We’re investing in them because if these particular entrepreneurs are successful, music gets a lot better. Fans, artists, people in the industry benefit.

We get a lot of applications from people who are passionate about music and want to share their taste: A lot of ideas are “I want to see what my friends are listening to” or “I want to listen to the same music as these influencers.” But by our estimation, those companies aren’t doing things to make music better. They’re interesting experiences, but they don’t grow the pie. We want to focus on companies that can be big, giant businesses for the future of music.

So what advice would you give to the next round of applicants? What’s something you would say to hopeful music entrepreneurs?
Well, here’s a company I’ve been trying to invest in for a long time: We’d like to see an interactive, global version of something that’s not a game show, but a game you play, where the outcome is real music and real audience development. The traditional music business invests in things that have an emerging following. They take something that’s a flame, pour gasoline on it, and try to make it into a bonfire. They’re not trying to start something from scratch. You have to go out into the market on your own and prove, on your own, that you’ve got a flame.

Now imagine if you had a set of organized rules for that — a marketplace for that — where you could “play music business” in a role, maybe being a fan or a critic or an investor, and help artists emerge in that space. All those rules are definable. We’ve been searching and trying to make this investment for years. It’s the kind of thing we want to see: a combination of lifestyle, music, and technology that shapes the way ahead for culture.

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