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?
A company with 100 employee isn't a lifestyle business. The term we used to use for that before VC swallowed the world and decided that anything less than a billion is chump change was simply "business". A 100-person company with millions in revenue is a successful medium-sized business.
The only reason it doesn't feel successful and stable today is because we live in a unprotected corporate environment where any of the giant behemoths may anti-competitively crush a smaller business if they so choose to and there won't be any repercussions.
I wouldn't be surprised if the main motivation for Bandcamp selling was simply the fear of being either bought out by someone worse, or crushed by them. (Likely Spotify, which is two orders of magnitude larger than them.)
Notably, Bandcamp absolutely encourages purchasing individual tracks, so for folks who, unlike me, tend to build mixed playlists, it's even more annoying that this feature doesn't exist.
In fact, they only very recently (as in last month!) added basic queuing support:
https://blog.bandcamp.com/2022/02/10/the-bandcamp-app-now-su...
Which is pretty incredible as I view that as a core feature of any music player.
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.
There aren't many "startup industrial companies"
There’s a few smaller operations doing it as well.
The big one, Merivale, seems to have practically unlimited money to throw at interesting or struggling venues. While I really don’t like the changes they eventually make to most places they buy, I have a grudging respect for the business acumen of Justin Hemmes the owner.
He seems to have an uncanny knack for having bought a good sized venue a year or two before, in every area that becomes cool and popular. Often they’ll barely change for a few years, while the demographics around them shift, then one day they’ve suddenly been renovated and there’s a queue of b-grade celebrities all dressed up and lined up around the block waiting to get in every weekend for a month or two.
I totally get that my demographic spends less over the bar than the crowd he’s so good at attracting, but he’s ruined two of my local ex-favourite pubs in the last few years, and over decades he’s turned some of my favourite music venues in things like trashy Mexican restaurant/bars.
But yeah, even as successful as he is in his field, I doubt it’ll get him into the three comma club.
Almost, but it's these guys:
