Venture Voice – interviews with entrepreneurs

Entertaining Entrepreneurship

Derek Sivers of CD Baby

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CD Baby founder Derek Sivers made two appearances on Venture Voice in the early days of this podcast. In our first conversation, he described the process of growing the company into one of the largest sellers and distributors of independent music online, with $25 million in revenue and 50 employees at the time. This week we’re revisiting our second conversation, which happened three years later. What a difference three years makes. 

In August 2008, Derek, who owned 100% of the equity, sold the company for $22 million. When we spoke in October of that year, Derek described what drove his decision to sell the company, how he sold it (including a Willy Wonka style plan that never came to fruition) and what he learned along the way. As you’ll hear, Derek wasn’t driven by the money. If anything, it was a deterrent to selling. So his lifestyle didn’t change when he sold CD Baby — and he made sure of that by putting all of the money into a charitable trust that will go toward music education when he dies. If you’ve ever felt disconnected from your own venture or wrestled with the idea of whether you should sell your “baby,” this episode offers some good insight and excellent advice.


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Highlights from this episode:

“It takes a certain amount of energy to go from zero to 60, and then it’s almost like it takes that same amount of energy just to go from 60 to 70.”

“Three companies in one week had called me, asked me if I wanted to sell CD Baby. And I told them all no.”

“I thought, well, what if, okay, I’ve got an imagination. Let me pull up a blank text document and start typing. What if I did sell it. Then what. And for the first time ever, it was an inspiring idea.”

“I was already pretty alienated from my own company at that time.”

“You realize if you don’t learn to delegate, you are trapped. I meet so many people with businesses that just felt, like, you know starting their own company was going to be liberating, but all of a sudden you find out that owning your own company can be this trap where you get no peace.”

“The company had kind of gone off in this direction, I didn’t even realize it because I was trying so hard to be good at delegating that I kind of over delegated.”

“Being irrelevant to the business can be a great thing. Being unneeded for the operations is a crucial thing.”

“You need to really be diligent to make sure that, if this is something that’s important to you, that you follow through to make sure it’s happening. It’s all in the details. You can’t just stay top level and bark out something once and expect it to happen.”

“One of the hardest lessons learned is the difference between being self-employed and being a business owner.”

“If you’re not going to be there, the company really needs a leader.”

“At a certain point, it wasn’t about the money to me.”

“I felt icky about having that much money. That’s just a stupid amount of money.”

“Everything I own fits into two suitcases. For a lot of the last year and a half, I’ve lived out of a backpack and I like it that way. I got my laptop, and I’ve got a few books, and that’s about it. That’s about all I own and I like it that way, so I’ve already made that lifestyle choice. I didn’t want all that stuff.”

“I’ve been fascinated with what I did wrong, so I’ve been studying a lot about that.”

“I’ve learned through trial and error and some good examples to just kind of be a ‘good enough’ kind of guy.”

“You don’t have to do anything…maybe pay your rent or buy food, you have to eat and breathe and stuff like that, but all that other stuff that you tell yourself you have to do, no, you don’t really. You actually do have a choice.”

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