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If you are not a musician, you may not have heard of Durham-based ReverbNation yet by name, but chances are good you’ve been in contact with one of their tools or applications through the online presence of an artist you love.

ReverbNation is a local start-up that’s grown into a significant player within its niche; their online music marketing platform is used by over 950,000 artists, managers, record labels, and venues, and provides solutions to individual artists and the music industry professionals that support them in the areas including web promotion, fan-relationship management, digital distribution, social-media marketing, and e-commerce.

ReverbNation’s market niche lies in developing technologies that integrate the wide array of distribution, marketing, promotion, and social media functions used by the music industry into one comprehensive application — helping musicians grow their revenues, and providing insight into how each marketing input contributes to overall outcomes.

In 2005, Jed Carlson, a successful entrepreneur in another industry and recent graduate of Duke’s MBA program, was looking for people to partner with for a music-related idea conceived while at business school. He was introduced to Mike Doernberg, a local entrepreneur who had already led two successful venture-backed start-ups (SmartPath, a marketing software company, and Marathon Partners, an Internet services organization), who would become a co-founder and CEO of ReverbNation.com – a role he fills to this day.

Carlson and Doernberg considered a couple of start-up ideas before deciding to pursue the music space. They quickly added two senior engineers to the founding team and got to work fleshing out the core concepts for ReverbNation.

Carlson stresses the importance of putting together the right founding team, “I can’t imagine how we would have gotten this company off the ground without the contributions of each of the founders.”

Doernberg’s previous start-up successes had drawn the interest of some local venture capitalists including Southern Capitol Ventures in Raleigh, and the ReverbNation founders were called in to pitch their idea.

The pitch went over well and Southern Capitol introduced the team to another Venture Capitalist in the region, Novak Biddle of Bethesda, Maryland.

Within a few weeks, the company had commitments for funding from both investors, and began in earnest. Both Carlson and Doernberg had some familiarity with the music industry but not enough to build a company around, so one of their first moves was to acquire a company in New York City that would provide the music DNA to the founding team and the fifth and sixth founders.

Since inception, the company has been growing steadily each year. But recently the growth has been accelerating, and the company now employs 22 people, with plans to grow to around 30 over the next 6 months.

In discussing ReverbNation’s history, Carlson emphasizes the importance of timing in the company’s success. For one, they were able to secure funding at a time when it was easier to come by. And one of the key elements of ReverbNation’s success was offering a customizable music player that musicians could freely embed in their own sites.

This drew lots of traffic and lots of new users to ReverbNation because it was at a time when custom music players were prohibitively expensive. And for ReverbNation, even the recession may have helped their cause.

“Looking back, the recession kept our rear-view mirror clear – nobody else was getting funding behind us to come chase us. So we were able to focus on executing our plan. In addition, start-ups, on Net, are consumers of products and services. The recession made quality employees easier to find and acquire, services got cheaper, and almost everything our business required became more abundant and available.”

Carlson also credits the company’s success to the fact they have deliberately aligned their incentives with that of the musicians. The musicians, of course, want to build a large and passionate following, and ReverbNation’s interests are the same because many of their free services require payment once an artist achieves certain levels of success.

ReverbNation and Durham

ReverbNation’s headquarters are located across from the old Durham Athletic Park in a space near other young companies like Shoeboxed and Urban Planet Mobile.

The founders originally chose to locate their company in Durham because of, well, convenience. The founders and their families were not interested in leaving the area. But a decision made out of convenience turned out to be a useful one.

For one, Doernberg’s local reputation and connections undoubtedly influenced the remarkable speed at which ReverbNation was able to secure venture capital. For another, Durham (as we all know) is simply a special place. Where else in the world will you find the combination of five-star restaurants, the low cost of living, and the density of smart people?

“It has a soft spoken, but consistent, electricity,” Carlson says. “Durham seems like it has been in a perpetual state of evolution for many years. It has always had plans to be this bigger thing. But it’s never quite had the fuel to do it all at once—to transform itself in one fell swoop.”

“And that’s actually turned out to be really cool because it’s been transforming slowly but consistently every year I’ve lived here. But the secret of Durham is really getting out now, as evidenced by the recent relocation of the start-up incubator LaunchBox to Durham from Washington DC. It’s starting to take off and get noticed on a National level, and that’s really exciting.”

Carlson said there are certainly a growing number of start-ups in Durham, but there are also more “credible” start-ups than you might see in other areas.

He cautioned that this impression was not based on any hard data, but the environment here “...seems to favor a more conservative and lower-risk approach to start-ups, concentrating on more mature business problems and teams with established track records.”

One of the biggest opportunities for our area, Carlson suggests, is in bringing the universities and entrepreneurial community even closer together.

“The universities are like giant wells full of talent, energy, and intellectual property. Entrepreneurs and financiers are the means to ‘tap’ them and convert the potential into actual. We need a system that brings both elements together efficiently and effectively,” Carlson says.

“Sometimes the entrepreneurs are actually attending the university, so an internal matchmaking system that pairs entrepreneurs with the right skill players would probably go a long way. The great news is that lots of really talented and dedicated people are working right now on this issue.”

Advice for would-be entrepreneurs

For potential entrepreneurs, Carlson offers this advice: Don’t own your idea alone. Young entrepreneurs have a tendency to operate in secrecy, but you can’t build a team in secrecy, and there is nothing more important than the team to a company’s success.

“I think most would-be entrepreneurs struggle because they couldn’t get the right team together. A lot of people get tripped up on those early sticking points,” Carlson says. “They need to understand that a team is most likely a requirement. If you can’t get the right team together, you probably don’t have a company.”

He also cautions against investing too much effort in trying to prepare to be an entrepreneur. “I don’t care how many books you read on having kids, you have no clue until you actually experience it. Same thing can be said about being an entrepreneur. Yes, prepare yourself, do the best you can, but you are still going to be underprepared, so expect it.”

“The key is to know what you don’t know, and to get really good at finding the information or people you need to fill in the gaps,” he added. “Don’t be afraid to ask questions once you get the company going.”


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