Bandcamp was already profitable and has been for years. The pandemic dramatically increased their sales. They were doing fine.
Why did they need an exit?
That is the real flaw of SV thinking: that simply being a profitable, going concern is somehow inadequate. The result is monopoly accretion as small companies are repeatedly swallowed up by bigger ones.
If you look at their staff growth, it's been very slow and very steady. At the time of acquisition they were sitting in the 100-150 headcount range, which is modest for a company that's almost 15 years old. Given their claim of 207M to artists last year and their touted 18% average rev share, we can guess they were generating around 50M per year gross, which is a very healthy cashflow for a company that size.
Their strategy was clearly not to take over the world, but to carve out a niche and not bother to directly compete with the streaming platforms (which helps to explain, for instance, the incredibly rudimentary mobile player app).
As for the senior management, Diamond had already previously started and sold a company. I'm sure he was doing fine. The same is true of Mark Hall, their VP of Product (who started 5-ish years ago, if I recall). The technical founders I'm less sure about, though apparently at least one of them had already moved on.
I'd absolutely describe it as a sustainable lifestyle business that had a good long-term trajectory. It was never going to be a unicorn, but who cares?
Bandcamp is 100% a bonafide operating business. I don't want to put words in your mouth, but perhaps you're seeing that they were just trying to run "Business as usual" and equating that to a lifestyle business as they weren't chasing growth.
That, and/or they were not interested in running a company that is finally getting too large to feel like a family / tight-knit community. The kind of person who likes running a 20 person outfit is very plausibly someone who gets no joy out of running a 200 person one or even actively hates the idea.
So they sold to someone they liked well enough, or in any case someone they distrust less than others to have the expertise and values to scale the business in a way that doesn't COMPLETELY destroy what made it special
Because the people who like to start new companies and take lots of risks generally tend to not like running stable businesses and dealing with FP&A managers, lawyers, compliance and tax experts
... in SV/the tech industry.
That's kinda my entire point.
Stealing someone else's analogy: If you went to a bank to get a small business loan to open up a coffee shop, and you told them "Yeah, I'm hoping to take a bunch of your money, open a coffee shop, never return a profit, and then sell it to Starbucks", you'd get laughed out of the room.
In SV that's a business model.
No, everyone is free to start a bandcamp alternative that does not sell out. But the probability of people wanting to "cash out" or trade equity for other things they want is pretty high. And so that is the world that we see, because it is a reflection of what people want.
I don’t know how to combat the shift to a single monopoly/duopoly in every market though, but it’s definitely going to make our lives worse. Especially with the erosion of private ownership for us plebeians.
I get it: venture capitalists are interested in the most efficient possible way to loot the economy, and funding non-viable startups until they're so overhyped that some other idiot buys the over-inflated toxic asset from them before it blows is a great way to do that.
Of course speaking out against VC and startup culture on Hacker News is going to get me downvoted to oblivion, so go ahead and mash that down arrow. Don't forget to dislike and unsubscribe!
