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- CD Baby : Broke & Struggling Musician → Multi-Millionaire
CD Baby : Broke & Struggling Musician → Multi-Millionaire
How Derek Sivers transformed from a broke, struggling musician to selling his company for $20M+
Read time: 4 minutes
Hello Rebels
Fun one-liner 🏖️
Why did the entrepreneur go to the bakery? Because he wanted to make some serious 'dough'!
Onto Today’s story….
Ever heard of a circus performer who accidentally built a multi-million dollar music empire?
Buckle up, because you're about to dive into one of the most unlikely success stories in entrepreneurial history.
This is the tale of Derek Sivers, a guy who turned a $500 investment and a crazy idea into a $22 million business.
It's a story that proves sometimes the best way to solve a problem is to do it yourself, even if you have no clue what you're doing.
So, whether you're a struggling entrepreneur, a budding entrepreneur, or just someone who loves a good underdog story, get ready for a wild ride.
From the center ring to the cutting edge of the music industry, Derek's journey is about to show you that in business, as in the circus, anything is possible if you're willing to take the leap. Let's dive in!
The Ringmaster's Dream 🎪
It's 1987, and a young guy named Derek Sivers is standing in the center ring of a circus tent.
No, he's not there to tame lions or walk tightropes.
Derek's the ringleader and MC musician, belting out tunes and keeping the crowd entertained.
Little does he know, this is just the first act in a much bigger show.
You see, Derek had a dream.
Not of circus stardom, but of making it big in the music world.
He'd been playing piano since he was seven, picked up the guitar at 13, and now, at 18, he was juggling his studies at Berkeley College of Music with his circus gig.
"I just wanted to be a successful musician," Derek would later recall. "The circus? That was just to pay the bills."
But life has a funny way of writing its own script, doesn't it?
The Struggling Artist 🎸
Fast forward to 1994.
Derek's graduated from Berkley, toured Japan as a guitarist, and now he's back in New York, playing gigs with his band.
Living the dream, right? Well, not quite.
You know that moment when you're so close to your goal, you can almost taste it? That's where Derek was.
He'd finally recorded his own album.
The music was ready.
The CDs were pressed.
But there was just one tiny problem...
No one would sell it.
Derek contacted Amazon and other big online music stores, asking if they would sell his album.
They all turned him down when they heard he was an independent artist with no record label.
"I called up CDNow," Derek remembers. "I said, 'Hey, I've sold 1,500 copies on my own at shows. Would you guys like to sell it?' And they said, 'Sure, who's your distributor?'"
Distributor? Derek didn't have one of those. He was just a guy with a dream and a garage full of CDs.
Undaunted, Derek hit the phones, contacting distributor after distributor.
Each one turned him down.
One particularly reputable distributor told him he needed $20,000 in the bank just to be considered.
Twenty grand? Derek barely had enough to cover next month's rent.
The $500 Gamble 💰
Now, this is usually the part of the story where our hero gives up, right?
Throws in the towel, gets a "real" job, and tells his grandkids about that time he almost made it in the music biz.
But not our Derek. Oh no.
Instead, he looked at the problem and thought, "If no one will sell my CD... I'll sell it myself."
With $500 in his pocket - barely enough for a month's rent in New York - Derek decided to build his own online store.
Never mind that he didn't know the first thing about building websites or running a business.
The World's Worst Online Store 💻
Let's be real for a second.
Derek's first attempt at an online store was... how do we put this nicely? It was a hot mess.
The design was questionable at best.
The order processing? All done by hand.
And sales? Well, nine months after launch, the site was bringing in a whopping $15 a week.
But here's where Derek's story takes an unexpected turn.
Instead of obsessing over making everything perfect, he just... kept going.
"I quit aiming for perfection," Derek says. "I just launched."
And then something magical happened.
The Accidental Business 🚀
One day, a friend asked Derek if he could sell his CD on the site too.
Derek agreed, and now he had two CDs for sale on his website.
Then another friend asked. And another.
Before he knew it, Derek had thousands of "friends" selling their CDs on his little website.
He was still doing it as a favor, shipping orders from his bedroom in his spare time.
The concept of Derek's idea was so great that he soon started getting calls from artists he didn't know, asking him to sell their album on his website.
He then realized that his personal problem was a problem that all independent artists shared. They all needed a place to sell their music online. Furthermore, musicians want to spend their time making music, not going to the post office and maintaining an online store.
"Imagine if you had a car," Derek explains, "and your friends keep asking for rides. Then eventually you charge a little money for rides, and later someone asks you how you got your taxi business off the ground."
That's basically how CD Baby was born. Not with a grand plan or a fancy business strategy, but with Derek just saying "yes" to people who needed help.
The Bedroom Empire 🏠
Now, this is where most business stories would talk about rapid growth, venture capital, and fancy offices.
But CD Baby? It grew from Derek's bedroom to his living room, then to his garage.
No office. No warehouse. Just Derek, a computer, and a whole lot of CDs.
He started charging $25 per month, and customers happily paid.
Why? Because Derek wasn't just selling CDs. He was solving a problem that every independent musician had.
But how did Derek know he was onto something big? It wasn't about the money, at least not at first.
"In a way, success was felt right away," Derek recalls, "because everyone really loved this idea. Friends told friends about it, and strangers kept coming to it, even though I was doing no work to promote it."
That's right. No fancy marketing campaigns. No viral videos. Just word-of-mouth from musicians who finally had a way to get their music out there.
The Utopian Vision 🌈
While most entrepreneurs dream of profits and market domination, Derek had a different blueprint in mind for CD Baby.
He wasn't just building a business; he was crafting a utopia for independent musicians.
Derek had four non-negotiable missions that formed the cornerstone of CD Baby's operations,
Weekly payouts; Musicians would be paid every week from the sales of their CDs,
Direct fan connections; Artists would receive the full name and address of everyone who bought their CD.
Permanence:;No one would ever be kicked out for not selling enough.
No paid advertising or promotion on the site.
The Growth Spurt 📈
CD Baby's growth was anything but overnight.
It was more like watching a seedling slowly but steadily grow into a mighty oak.
"The business slowly grew over ten years," Derek recalls. "A full year after I started it, it was only making $2000 a month. Then a year later, $5000 a month. A year later, $10,000 a month. A year later, $20,000 a month. It was only after year 9 that it got to $250,000 a month."
"A lot of it was my selfless focus entirely on the customer," Derek explains.
Since I didn't really consider it a business," Derek says, "I treated everyone like they were my good friend. This kind of casual warmth is what really drew a lot of people to CD Baby."
Learning from Books 📚
Now, you might be thinking, "Wait a minute. Derek was a musician, not a business guru. How did he figure all this out?"
The answer? Books. Lots and lots of books.
"I read a lot of business and marketing books," Derek reveals. "Although none of them are about music, there are so many lessons in there that you could apply to music that most people never would think of."
The Steve Jobs Connection 🍎
Four years into this accidental business venture, Derek found himself in a meeting that would change everything.
He thought he was going to chat with some marketing guy at Apple about getting CD Baby's catalog into iTunes.
Instead, he found himself face to face with Steve Jobs.
"Steve walks out saying, 'It's really important to us to get every piece of music ever recorded available in the iTunes Music Store,'" Derek recalls.
Just like that, CD Baby went from a quirky little website to a major player in the digital music revolution.
The Unconventional CEO 🎭
As CD Baby grew, Derek faced a dilemma that many entrepreneurs dream of: how to handle success.
Investors came knocking, offering millions to expand the business.
Marketing firms promised to skyrocket growth. But Derek? He turned them all down.
"I want my business to be smaller, not bigger," he'd tell them, much to their confusion.
The Plot Twist 🔄
Now, this is usually where the story ends, right? Our hero rides off into the sunset, millions in the bank, living happily ever after.
But Derek's story has one more twist.
At the height of CD Baby's success, when the business was running smoothly and profits were rolling in, Derek did something that shocked everyone.
He sold the company.
Why? Because he felt... done.
"I had this sense of completion," Derek explains. "Like, 'I'm done. I don't know what else to do with this thing.'"
So, in a move that left many scratching their heads, Derek sold CD Baby for $22 million - not to the highest bidder, but to the company he felt would take the best care of his clients.
After selling his company, Derek became a multi-millionaire.
The Lessons Learned 📝
So, what can we learn from Derek's wild ride from circus ringleader to accidental tech entrepreneur? Let's break it down:
Solve a real problem: Derek didn't set out to build a multi-million dollar business. He just wanted to sell his CD online. What everyday frustration could you turn into a business opportunity? When was the last time you thought, "There's gotta be a better way to do this"?
Start before you're ready: Derek launched his site when it was far from perfect. How might your business idea benefit from a "launch and learn" approach? Are you waiting for your idea to be perfect, or are you ready to embrace the beautiful mess of getting started?
Focus on making people happy: "The single most important thing is to make people happy," Derek says. How can your business prioritize customer happiness above all else? If your business were a theme park, what would be its main attraction?
The Final Curtain (Or Is It?) 🎬
As we wrap up Derek's story, you might be thinking, "Well, that's nice for him, but I'm not a musician or a tech whiz. How does this apply to me?"
Here's the thing: Derek wasn't a tech whiz either.
He was just a guy who saw a problem and decided to fix it.
He didn't wait for permission, or for all the stars to align. He just started.
And that's the real lesson here.
Whether you're a circus performer, a struggling artist, or someone with a wild idea that just might work, the most important step is the first one.
So, what's your CD Baby? What problem are you itching to solve? What idea keeps you up at night?
Remember, every empire starts with a single step.
Derek's began with a $500 investment and a less-than-perfect website.
Yours could start today, right now, with whatever resources you have at hand.
The stage is set. The spotlight is on.
It's your turn to step into the ring and become the ringleader of your own entrepreneurial empire.
After all, as Derek would say, "Business is not about money. It's about making dreams come true for others and for yourself."
So, my solopreneur friend, what dream will you make come true?
Keep Zoooming! 🍹
Yours “Anti-hustle” Vijay Peduru