A plastic cow sits on a desk in an Old Street office.

“I press this,” said the co-founder of the biggest UK music/tech disaster in living memory, hitting the synthetic bovine’s head so it emitted a loud moo, “when I think you’re talking bullshit. Don’t talk bullshit!”

This is the story of Crowdmix, the social music discovery company that had a staff of over 160 in London and LA and managed to burn through £14m without fully launching.

It is a tale of hubris, incompetence, ego, mismanagement, directionless strategy, panic, paranoia and profligacy, sitting as a textbook example of how not to launch a startup.

It’s also the story of a plastic cow whose bullshit-detecting moo could be heard by everyone – except, seemingly, the people running the company – and turned music into a toxic investment category among the VC community.

Business Insider has already run a highly entertaining chronology of what happened at the company and, without wanting to tread on toes, there are still a huge number of stories to be told about what happened at Crowdmix as well as what it means for the music industry in general and music startups in particular.

Music Ally understands that co-founder Gareth Ingham and Rob Wells (global CCO and CEO, Americas) are currently seeking a recovery plan for the company, trying to salvage what they can and to get the best deal possible for the company’s list of creditors. (The other co-founder, Ian Roberts, exited the company in June.)

That said, the remaining workforce was laid off on Friday 22nd July as part of this salvage operation. Last week David Rubin & Partners was appointed as administrators for its three companies: Crowdmix Ltd, Crowdmix Holdings and Crowdmix Management. Crowdmix Holdings had already acquired startups BuddyBounce and Music Technology Limited to bolster the development of its app and these could possibly now be sold off.

It is extremely unlikely that Crowdmix, in its current incarnation, has a future; but its assets and IP could be sold off or reconfigured within a new operation. That is still all to play out, but as a brand, Crowdmix is irreparably damaged.

Here we go through the dozen main reasons it all fell apart.

Reason for failure #1: No one knew what the product was and couldn’t explain it properly to potential partners.

By far the most common criticism amongst everyone Music Ally spoke to for this piece was the fact that no one really knew what Crowdmix was or what it did. There was vague talk of “social and music and brands” as a form of shorthand, but it was never fully articulated to the staff and that caused huge problems when the sales and partnership teams were going out to meet brands and music companies to get them on board.

“I took them to see Don Jenkins of Raw Power Management,” said Andy Saunders, whose Velocity Communications was hired to PR the company from the early days and is the only person Music Ally spoke to who was prepared to go on the record. “Afterwards he rang me up and said, ‘Thanks for bringing them in – but what do they do?’ I had a lot of these conversations and they were embarrassing. There was no (presentation) deck.”

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When the person brought in to communicate to the media what the company was doing and what it was trying to achieve was unable to boil it down to its fundamentals, warning signs should have gone up. Saunders says that he repeatedly asked for a succinct summary of what the company did but this was never forthcoming.

“There were always lots of people in meeting rooms, talking very earnestly and scribbling things on whiteboards,” he said of Crowdmix strategy meetings. “There was Gareth leaping around like a toddler on too much Coca-Cola, telling everybody who would listen that this was the future of music. But when you tried to pin him down he’d say, ‘Oh, we have an amazing elevator pitch coming. We have a brilliant deck. It’s going to be amazing.’ Ian [Roberts, the other co-founder] was always saying he was working on it.”

This situation was exacerbated, rather than clarified, as the company grew.

You could see straight away that there were too many cooks and not a clear idea of what it was,” says one source who watched the company grow at close quarters from its early days. “They were even arguing at the time over what it was going to be. There seemed to be more and more people coming into the company with less understanding of what it was.”

Even so, the early hype around the company was helping to open doors, even though there was still enormous vagueness around what the product was.

“You had people going out to artist management companies and we all thought there was no way they’d get through the door,” says a source. “But they were getting through the door and they were talking to people. I asked them, ‘What are you even telling these people?’ They were doing what we told them not to do – going in there and selling the dream.”

“You could see straight away that there were too many cooks”

Almost like an anemic version of Steve Jobs’ legendary “reality distortion field”, there were many in the company who were hyped up about the scale of the vision being sold to staff yet who were oblivious to the fact that it was possibly built on sand. Some in the company talked about all-hands meetings that almost descended into hype rallies or TV evangelist shows, with some people referring to a “cult” thinking being embedded in Crowdmix where the belief that it would happen was enough to make it happen.

“Ian had this idea of ‘Let’s go and shape the world together’ – and that was the actual phrase he used,” a source reveals. “But the minute you started asking what the business plan was, his back went up and he got very defensive about the whole thing. He’d say, ‘We’ve sold you the vision. Why are you not sold on the vision?’”

As it turned out, that vision was somewhat akin to the aphoristic dismissal of metaphysical philosophy: it was like being in a dark room and looking for a black cat that wasn’t there.

Reason for failure #2: The company had a scrambled HR policy and there was no stability in the hiring.

Crowdmix had, at its peak, 160 staff in its London office and others in its LA office, headed up by Rob Wells. Much has been made of the fact that it had a staff 10 times the size Spotify had a decade ago and still never managed to get a full product out the door.

The official numbers do not, however, tell the complete story as there were considerably more people who passed through its doors in the past two years – both staff members who were hired and then dismissed as well as a seemingly endless succession of consultants.

“The money went on recruitment agency fees,” claims one source on how the company managed to spend £14m before launch. “One of the biggest department in that place, other than tech and development, was HR. They were recruiting, replacing, recruiting, replacing. They hired scattergun and they fired scattergun.

This was tied, of course, to the fact that Crowdmix was unable to clearly and succinctly sell itself and its purpose not only to its own staff but also to its potential partners in the music and brands sectors.

“There were teams of millennials just sticking up different coloured Post-it notes and joining them with string”

“What seemed to have happened,” said one source, “was that they had gone on an indiscriminate hiring spree. They filled an area [in their offices] with social media grime kids and filled another area with artist relations people who were signing up hot grime acts. It wasn’t as if any of the people doing any of the social media had any direction. They were all just off doing their own thing.”

Repeated criticisms of the company were that it had hired too many people too soon, with whole departments filled with staff who only had a concept (vague as it was) rather than a tangible product to work with.

“There were teams of millennials just sticking up different coloured Post-it notes and joining them with string on a big board,” was one source’s sniffy dismissal of what was happening there, saying the company had hired marketing and branding teams about nine months too early.

They had about 20 people in the data science team,” says another source. “I had a look at the app and there were no recommendations.

Yet another source described the internal culture of the company as tumultuous, where teams were built, reassembled and decommissioned on a regular basis, which only accelerated the lurching nature of the company.

“There was no direction,” they said, bluntly. “They changed the roadmap every week and half the people in the office didn’t even know what their job was. They’d have a product meeting every Friday in a secret room – almost like a war room. People stood there going, ‘What the fuck are you talking about?’”

Exasperated by what they saw unfold during their time there, they just sighed. “You couldn’t make this shit up.”

Reason for failure #3: The company became a parody of itself

Ever since his initial appearance on Charlie Brooker’s satirical TV listings website TVGoHome between 1999 and 2001 (and subsequently turned into a Channel 4 show in 2005), the name “Nathan Barley” is used as a scathing shorthand for startup incompetence and the ludicrous excesses of the Shoreditch lifestyle.

His name was invoked repeatedly by several of those Music Ally spoke to about the inner workings of Crowdmix. But other pop culture references were drawn on to illustrate just how absurd they felt it became.

“It was like trashbat.co.ck,” says Saunders, referencing Nathan Barley’s ludicrous online culture website.

Business Insider ran photos of the office in Bonhill Street in East London, complete with reception desk that looked like a giant ghetto blaster and murals on the walls. Most startups want to create an impression of ‘cool’ and of tearing up the rule book, but the feeling within Crowdmix was that it was, visually, trying to be the uber-startup – the startup to end all startups. Which it eventually became, just not in the way it intended.

Former Universal Music digital head Rob Wells joined the company in October 2015 and set up his office in LA’s Venice Beach. Just like the London office, it was intended to be semiotically resonant, making immediate and bold claims for what the company was seeking to achieve.

“A senior Crowdmix executive had a “Shoreditch makeover” to fit in with younger staff”

Some company meetings were done standing up, a common startup trope designed to stop them overrunning and for everyone to pay attention. “No one was allowed to sit down,” says a source. “This isn’t a joke.” This thinking mapped across into the strategy side of what Crowdmix was trying to do. “They’d give you completely artificial timelines [for product development, deals and company strategy] as it would fit with their other [seemingly arbitrary] colour-coded timelines. It was like an Alan Partridge of business.

Another source said it was “exactly like Silicon Valley” (the HBO sitcom about San Francisco startups), but this was contained when they were subletting space in the Truman Brewery on Brick Lane and trying to bootstrap the company. All bets, however, were off when they moved into an enormous space in Bonhill Street.

The huge investment the company had secured at that time seemed to whip up the extravagance and started to change the upper echelons of the company – literally.

One source tells the story of a senior Crowdmix executive having a “Shoreditch makeover” to fit in with younger staff that fell spectacularly flat.

Andy Saunders claims that meetings would begin with strong intentions but soon fold in on themselves in parody when one senior figure continually interrupted a presentation to name-drop that they knew huge music celebrities and could broker introductions if necessary.

“It was tragic beyond belief,” he says. “Everybody was just staring into their coffee. It was just embarrassing. Then they did a big speech. ‘I am expecting people to work 27 hours a day and if we are all going to get mega-rich there can be no stopping us.’ Everybody was ‘Yay! Let’s eat sweets and have a Friday afternoon pizza!’ It was just a massive startup cliché.

Reason for failure #4: The company grew too quickly and was hyped too early to be taken seriously.

This is something all startups grapple with – how quickly they scale and how they manage that transition from an idea in the founders’ heads into an actual functioning company.

Ingham and Roberts came from a telco background and had, according to one source, funded its early days with investment from friends and family as well as Roberts selling off part of his former businesses to help it get off the ground.

From that it raised £14m in 2015 according to reports and was planning on raising the same figure this year. This is where the problems really started, according to those who witnessed the company make the light speed jump into serious investment.

Crowdmix almost fell apart at Christmas 2014 when staff salaries were late for the first time (this would become a recurring motif in its final months).

“The money just stopped – or, rather, it started dribbling,” said one source who estimates the company had a headcount of around 30 by that stage. “In early December, the money started drying up and no one was getting paid. Someone told me they were not getting paid but the company was going to turn that into sweat equity. I was like, ‘Have you got this on paper?’ They were preying on a lot of people who really didn’t know what they were doing in respect of being an employee or being involved in an early-stage company.”

Andy Saunders backs this claim up. “They kind of ran out of money [late 2014],” he says. “Ian said to me, ‘Do you want to sweat some equity in the company?’ I said, ‘No – I’d like to be paid.’ He was quite offended. I said, ‘I have worked in quite a few startups and most of them don’t work. I work on a fee basis and if I miss out on Facebook then that’s my look out.’ We didn’t fall out, but he was a bit sniffy. But they paid me first time round.”

Having managed to survive through 2014, the following year saw the founders amp up the bullishness as the huge funding they were after was finally within their grasp.

“Gareth came into the meeting,” recalls a source about a company meeting in January last year. “’It’s a new year! I’ve got these ideas. We are going to do this!’

While some were whipped up by the fizzing potential that comes with major investment, others in the company were not so effusive, believing investment was just going to make the company’s inevitable crash all the more spectacular. “They didn’t know what they were doing,” says a source. “Regardless of whether they raised the money or not, they were just never going to execute.

The company announced the appointment of Rob Wells in October 2015, and it was sold to the media as a serious coup as it was Wells’s first major role since departing his position as head of digital at Universal Music Group earlier that year.

That same month, the pre-launch hype swung into gear, throwing a party at Amsterdam Dance Event to get its name out in the music industry. This was when it was courting the dance music sector and trying to sign up major acts as launch partners. “They were going to spunk a massive amount of money at ADE and then they decided they weren’t going to go for the dance area,” is how one source put it.

There followed serious flip-flopping around the genres the company wanted to launch with. It soon went after the indie label community, sponsoring AIM’s Indie-Con 2016 conference in London at the end of January this year and using it to preach about its vision to the key independent labels it wanted to work with.

“We think we’ve created a great new tool that will generate music streaming: will push people into the streaming platforms and drive them to stream more and share more music,” said Gareth Ingham at the AIM event. “We’ve taken time and effort to create tools that support your existing revenue streams. We don’t think we’re trying to interrupt anything. We’re trying to build a platform that supports the new ways that people are consuming music, and generates engagement around that.”

“They over-hyped it without having any product”

The sales message was strong, but the reality of the product was limping far behind.

“They made the mistake very early – and everyone internally and externally said this – they over-hyped it without having any product,” suggests a source. “They were trying to buy their way into things.” Yet its third major sponsorship initiative had to be pulled at the last minute, just as the wheels started to come off the company.

Another source claims that the Candy brothers – the luxury property developers, with Nick Candy putting £6.5m into the company in 2015 according to Business Insider – were going to lend Crowdmix their yacht to host a major party in Cannes during Cannes Lions, all with the goal of getting the advertising industry to jump on board. This coincided with Business Insider running a story about staff not getting paid – but the company had, through either serendipity or prescience, pulled out.

“At Cannes Lions, they – a company running out of money and not being able to pay staff wages – were looking to buy the Ultimate sponsorship package,” reveals a source. “That’s usually for Google or companies like that. A startup buying that?”

Reason for failure #5: Its launch was delayed too many times and it lost momentum.

A common challenge that all new companies face. When is the best time to bring a product to market?

A major mistake Crowdmix made was to loudly trumpet its major hiring announcements (notably Rob Wells) and sponsor major events without a definite timeline for launch. The company would allude to a launch date and then change it. With so much pre-hype, the music industry began – as the music industry so often does – to gossip about the company, suggesting it was never going to make it out of the gates. Music Ally started to hear snarky comments about the false potential of Crowdmix last summer and they only got louder and more sneering in the following months.

“They went about it all wrong,” says a source of its repeatedly delayed launch. “There was no product. It was headless chickens in the office.”

(It should be stressed that an invite-only beta of the app did come out in May so the company did have a product that did launch, albeit one that was only accessible by a small userbase.)

This all served to send out mixed messages to the music industry and ad industry. Here was a company that had secured an enormous amount of investment and yet was struggling to put its product, even at a closed beta level, into the market. The company started to be treated as a punchline to a terrible joke and the feeling was it was never going to claw back the credibility it had lost as it lurched between missed launched dates and frantic product refinement.

Reason for failure #6: It left it too late to get people with music industry experience in to help shape the vision of what the company could be.

The two founders of Crowdmix did not come from a music industry background. Normally that should not be a problem as companies can hire in experts on staff or as consultants. Crowdmix did do that, but the feeling among many Music Ally spoke to was that it was left far too late and the company had lumbered forward without real direction for too long for it to be something that could be resolved swiftly or easily.

“They [Ian and Gareth] were doing live wireless stuff for stadiums,” says one source on where the initial idea came from. “They had met at some event and thought it would be really interesting if you could connect crowds within a stadium. Ian had this idea that he could provide wireless internet within a stadium with a captive audience and Gareth had an idea about how social could be applied to that. It was basically beacons. Then they thought there could be a mass use for this beyond stadiums. That’s how they started to formulate the idea of Crowdmix.”

Andy Saunders was one of the first people with music business experience to be brought in. “Ian hadn’t come from a music business background so they were building an idea – well, building some tech – and raising some money when I met them,” he says. His role was to work on “some key messaging” for the company and also help open doors to the music business.

Another source suggests, even after the appointment of Rob Wells last year, there was “hardly anyone” in the London office with record company experience until the start of 2016. The feeling was they had wasted so much time recruiting the wrong people when they should have been filling departments with people who had years of experience in the music business.

“They seemed to have a lot of hot, young, connected grime people and hot, young connected hip-hop people,” says one source on the types of people being employed. “Everyone seemed to know Stormzy and Skepta, which is great. But there was no one there who you thought knew the British music business and had connections to make it happen. That is clearly why they hired Rob Wells. They saw him as a mover and a shaker who could get people on the phone. It was very much a trophy hire.”

One source said Wells was appointed to bring some much-needed credibility to Crowdmix within the music business. “It was a brand deal with Rob,” they said. “They hired a brand.”

Even with big stories, all deeply linked to the music business it was so desperate to woo, the ever-changing PR strategy started to see opportunities crumble before their eyes.

One audio-conference meeting with a US PR agency saw “about 30” Crowdmix staff gathered around a table in the London office, only to see Roberts shut the meeting down and walk out after the agency appeared inadequately prepared.

Reason for failure #7: It had no one senior from a startup culture at the beginning and so overspent and wasted time as a result.

Sources who watched the company develop at its earliest stages says it made some fundamental mistakes that meant it was doomed from the off.

“Building a technology product is very different to building any other type of company,” they said. “Actually building the product and managing that is a whole theory in itself. They didn’t know what they were doing.”

They claimed that the company had learned nothing from the fundamental shifts in startup culture in the wake of the first dot com bubble bursting. The old model used to be around building a sales team and then getting the product into the hands of users – but most startups today do not follow that logic.

“That has flipped around and most startups understand that you have to get a product out there first that is a bit broken and buggy, just to see if people actually want it,” they said. “Once they have found a product/market fit, they can move on and build up the business. They were doing something in 2014 that people were doing in 1999. It seemed like such an odd dynamic.

Another source adds, “In keeping with everything else in that office, they didn’t start at the beginning and work up. They went out and made promises without having any structure behind it.”

A third source adds that the company was spending money like it was already a success and that this profligacy should have been stamped out early on as all it did was engender a culture whereby money was thrown at problems with the expectation that this would fix everything.

Throwing money at problems may be a solution if you have a revenue model that is up and running. At this stage Crowdmix hadn’t even launched and monetisation was a chimera.

Reason for failure #8: The deals being offered to artists were on a 50/50 revenue split but this was decided on a whim and had no economic modelling behind it.

Those who saw the Crowdmix business model let out a huge sigh of despair when describing it to Music Ally. The main problem, of course, was there was no business and no model underpinning it.

One source suggests that securing so much funding early on was the kiss of death for Crowdmix. “I still don’t know how they managed to get that amount of money up front with their plans,” they said. “Whoever negotiated that in the first place deserves a medal for extracting money of that magnitude without any firm business plan.

The business plan, as much as it can be called a business plan, was to go out to the artist and management community and offer them a 50/50 split of resulting revenues around their music and content. That may sound egalitarian but it was decided on without any actual economic modeling behind it.

“There were massive red flags going up for us,” says once source when the precise deal terms were revealed to them. “I had fundamental questions about the platform. You are trying to take mass eyeballs away from the platforms that monetise those mass eyeballs and bring them to you – but you are using their APIs to deliver that. Aren’t they going to shut you down in five seconds when they realise what you are doing? [Ian] just laughed it off. He said they were going to do deals with Spotify, YouTube and Facebook so it wasn’t going to be a problem.”

In essence, the business model was to sell ad space and make income around secondary streams. “Imagine the insanity of them not talking to the labels about this,” says a source. “They were going to take streams [from other services] and play it in within their app. That’s a secondary stream happening off Spotify and then re-monetising around that content – but paying that money to the artists when the label in fact owns the content. So the model within that was flawed.”

Not only was the model seen as being flawed, the software and UX was equally unsound.

Have you seen the app?” asked Andy Saunders. “It’s fucking useless. You and I could have made that app. I’m serious. All you get is a feed. You follow people and that is your ‘crowd’. Ideally you are following famous people and they promote products at you. Various other people join the crowd and it becomes a big influencer thing. Essentially what it is is clips taken off YouTube and Spotify. 30-second clips. Who the fuck wants that? Nobody is interested in that. Is this what you spent fourteen million quid on?

Reason for failure #9: There were thousands of ideas but implementing them was a problem.

“You could tell straight away he was the kind of guy who had 1,000 ideas and some of them were really good – but implementing them was always a problem,” said a source on meeting Gareth in the early days of the company.

This was, arguably, a core issue that was never resolved and that ultimately served to sink the company. It was a product that lurched from iteration to iteration, seemingly without logic, and this is no way to set a business up for anything other than an enormous fall.

“[Watching the whole company was like] watching Gareth’s mind,” they said. “He’s an incredibly creative person. But he always needed someone to [ground him]. When I looked at them at the beginning, I thought that was what Ian was going to be [the grounding force]. Ian is obviously very good at building teams and raising the money, but he has no idea how to execute a product.”

Reason for failure #10: It was never focused on long-term sustainability and was just focused on making a big impact out of the gates and then being sold to a huge company.

Every startup has to have an exit strategy. Crowdmix’s exit strategy was apparently to launch in a blaze of hype, hit scale immediately and draw in keen-eyed buyers. Of course it didn’t play out like that, but possible suitors that were being chased (or, more specifically, hypothetically chased) included Google, Amazon, Apple and blue chip brands like Coca-Cola.

There is no indication that acquisition talks even happened, but Music Ally’s sources mentioned these companies in particular as examples of the types of companies Crowdmix would have liked to have been sold to.

Maybe one of these companies will pick up parts of Crowdmix in a fire sale but, as it stands, we can chalk this one up as idle daydreaming.

Reason for failure #11: Towards the end, a team was being formed that could have made a proper go of it but it ran out of road.

Here’s the killer. After so many false starts, lurches in focus, minor panic pivots, confused direction, over-spending and more, the company was finally starting to take shape in its closing months.

Never has the “too little, too late” platitude been so apposite.

The core idea wasn’t crazy,” says a source. “What was crazy was the massive spending at the front end. If they had done it cheap and lean… Signing up grime kids was not the expensive part of it. There was a huge development end. Then there were all these kids doing indiscriminate social media things…”

Another source supports this. “The ethos of what they wanted to do was sound but the way the executed it was wrong,” they said. “Even the things they were preaching internally and to the music industry, they had no product that could deliver on those promises in any way, shape or form. The product idea – being social around music – is not a ridiculous idea. But as others have pointed out, there are plenty of apps out there that were developed in a bedroom and which came out with the same, if not better, product than they had with 160 people.”

The arrival of Rob Wells did bring about significant changes for the better within the company, but some feel he had to undo everything that was executed incorrectly before his arrival and that meant the service was always going to be sunk by its past.

When he [Rob] came in there was a total shift in the way they were doing things,” they said. “They had enough people in going ‘What the fuck are you doing?’ but it was too little, too late. If they hadn’t gone down so many different routes they might have lasted longer or maybe they would have got some of the things they wanted to do in place had they lasted a bit longer and not spunked their money on signing whatever.”

They added, “Towards the end, the irony is that they were gathering together a team that might have been able to steer them had they got them in at the start. It might actually have worked.

Crowdmix is now the great “What if?” of digital music startups. It’s also going to be held up, alongside SpiralFrog and Beyond Oblivion, as a textbook example of how not to launch a startup.

Reason for failure #12: It has made music a toxic investment category among VCs for the next 12-18 months.

This is the point that raised the hackles of many people Music Ally spoke to for this piece. Crowdmix’s collapse was so big and so public that VCs, few of whom were effusive about music startups anyway, will not touch any new company with the word “music” in its title or investment deck for a long, long time.

Will its legacy have anything positive associated with it? “The one thing they achieved out of the application they released was that they quickly demonstrated why music shouldn’t be at the centre of a social network,” says a source, tartly. “That is the one thing they managed to achieve. I just think music doesn’t matter that much to the mass consumer.”

Another source is keen to shift the emphasis away from music lest everyone else be poisoned by the dust clouds erupting in the wake of its collapse. “This should not be seen as a music industry product,” they asserted. “This was built by a bunch of people from telecommunications and a lot of the fuck ups and overspend was because they thought they were still in telecoms.

Some are bitter that it is other, possibly well-structured and cleverly bootstrapped startups, that will have to reap the sour harvest that will now follow.

“I think it’s frustrating running a business in the music and entertainment space, particularly a startup, and just seeing more money squandered by people who can’t execute,” they said. “It’s unreal, isn’t it? When you are doing your own startup and need a bit more investment and you look at Crowdmix – that hurts. It’s ridiculous. It hurt so many other people who are doing good things. I am just glad I got out of it.”

Andy Saunders is owed £12,000 from the company and his lawyer was about to file an insolvency notice at the High Court for unpaid invoices to prevent the company from trading but was beaten to it as Crowdmix went into administration a matter of hours before his final payment deadline.

He pulls no punches in his summation of what went wrong and what it means for the music industry. “I am cross,” he says. “I am not cross about the money [I am owed] – I can live with that. I am cross about the deception and the delusion that companies like this can pretend to be valid companies where no one turns around and questions them. A lot more questions should be asked. I am sick of people coming into the music industry going, ‘You guys have all fucked it up. We’ll show you how to do it.’ Actually, we’re pretty good. We are pretty good at doing stuff in the music industry. We are pretty good at change.”

A former employee boils the whole sorry affair down to its absolute basics.

The mantra at Crowdmix was, ‘Go big or go home,’” they said. “I went home.


We approached Ian Roberts (who exited the company in June before it went into administration) for a comment and he replied as follows, “Whilst I have no part in them, I understand there are ongoing efforts to secure a deal with administrators which would be best served without public comment from myself.”

Music Ally delayed publication of this piece for several days to give Gareth Ingham and Rob Wells time to answer the criticisms outlined here – including emailing them a point-by-point breakdown of the claims.

Both declined to be interviewed, citing the risk that public discussions of what happened at Crowdmix might jeopardise the recovery plans they have for the company.

DISCLAIMER: In the interests of transparency, the author of this piece, Eamonn Forde, did two days of consultancy at Crowdmix in July 2014, researching and overviewing the digital music services market. He had no input in the company’s strategy or business model. 

CORRECTION: In the Music Ally Report version of this piece (published on 3rd August), we said that the Candy brothers put £6.5m into Crowdmix. It was only Nick Candy who invested in Crowdmix. We are happy to correct this error in this online version. 

Major music startup failures and how much investment they raised

Rdio – $117.5m
Beyond Oblivion – $87m
Veoh – $70.8m
Joost – $45m
Thumbplay – 41m
Songbird – $11m

Source: Crunchbase

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  1. Nick Candy, a billionaire, throws what for him is pocket money at a social music app that is going to revolutionize the music industry with a new platform, back end data, new ways for indie artists to monetize content. All these start ups seem to want to do is convince themselves they are going to be as big as FB and get traction and bought by Apple. Why? because there is no real business here. No way for them to make money or create value. Lots of people in search of a way to solve the music industry problem seem to miss the basic point: Normal music listeners don’t care. They don’t want your app. They don’t want to build another online social arena. Three years later, money spent, and the simple fact remains: Music around social is never going to take off. It’s a niche market that will never create a profitable market on scale. How many more investors are going to get burnt by this same idea repackaged in some new way?

  2. Great piece. Another company, BKSTG, raised $20 million for the exact same concept. It is also going down despite having indie and major artists on board. The CEO and CFO were recently fired. It’s been so easy over the past few years to raise seed funding and VC money that it has led to so many people who have no clue about business becoming founders and CEO’s trying to crack the music industry market. Boomio app another trying to help artists monetize their music and connect with fans raised 4 million and shut down Dec’15. Sad to say no matter how much they raise, they are all doomed to fail. Just hope people/staff stopped getting burnt by the reality.

  3. I swear if one more clown pitches a new music platform app! I don’t know who is more stupid here, the founders for believing they have “different” features or the investors believing they would ever make money from it. If Spotify wanted or users needed your “different” features that will “set you apart” from other platforms they would have built them by now. Taking eyeballs from Spotify by using Spotify as your music source and hoping they allow you to continue to operate is such a desperate business plan.

  4. Most VC’s won’t touch social music. The money in social music apps is being funded by dumb money. Mostly wealthy people putting their own money buying into the founders sales pitch that a one stop app for music and social is going to take off and you’d be surprised how a good pitch, an investment deck can convince wealthy investors there app idea will get bought by Google or Apple so don’t worry about the fact it has no revenue or music licenses. Crowdmix was backed by wealthy individuals, bankers, brokers and half of the fund managers from Goldman Sachs and Blackrock put their personal money in with no business model just because they have the money to do so. Dumb money convinced themselves this thing would work because smart money knows the concept is flawed.

  5. anyone spending millions on building an app with no users wants there head examined. Build and they will come mentality. This start up culture of raising money from rich people and hoping to make it scale and having no revenue really has to change.

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