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Chapter summaries
Leaving a Startup Job and Facing the Silence
Sung Cho describes the tough decision to leave stock options behind to start his own company before turning 30. He recalls the loneliness of sitting in a San Francisco cafe with no one looking for him, in contrast to his inbox at Oracle.
- •He had shares and vesting stock options he could have waited for, but felt it was now or never
- •He wanted to start a company in Silicon Valley before turning 30
- •Working at Oracle meant about 50 emails every morning
- •After quitting, only a couple of spam emails arrived, and he felt thankful for them
Background: Gamevil, UCLA MBA and Chartmetric Intro
Cho introduces himself and Chartmetric, a music-industry data analytics tool with major-label customers and $7 million in ARR. He recounts being the first engineer at mobile game company Gamevil and growing the engineering team there.
- •Chartmetric serves music industry professionals and has hit $7 million in annual recurring revenue
- •He was the first employee at Gamevil and built its mobile game division
- •The engineering team grew from two or three people to 50 or more
- •He then did an MBA at UCLA and joined Oracle as a product manager
Why He Left Oracle
Cho explains what stifled him at Oracle: a mature company that felt like a tax collection agency, where innovation happened outside through acquisitions. He wanted the lasting pride of building something himself.
- •Oracle felt like a huge family of 100,000 people but a mature one
- •Monthly fees from clients made it feel like a tax collection agency
- •The company generated roughly $1 billion in cash profit per month, which was comfortable
- •Innovation happened outside the company, which Oracle acquired
- •He wanted the pride that comes from succeeding on his own
Finding the Right Idea and the One-Step-a-Day Advice
Cho lays out three things that must match when starting a company: passion, skills, and the right people. Dropping every idea left him lost and depressed, until a friend advised him to move forward just one step per day.
- •Founders need passion for the problem, the skills to solve it, and the right people
- •Ideas satisfying all three conditions are hard to find
- •After dropping all his ideas, he felt lost and depressed
- •A friend who had been through it advised moving forward one step per day
- •He has followed that approach for seven or eight years
Chartmetric's Growth and Running Out of Money
Cho lists Chartmetric's major customers after seven years. He then describes how, a year and a half after seed funding, running out of money pushed him to start charging and to fund the company himself for a few months.
- •Customers include Universal, Sony, Warner, Netflix, Facebook, Amazon, Apple Music and Pandora
- •Running out of money forced him to prove people would pay
- •He chose to prove demand rather than go back to investors
- •He moved personal money into the company account for a couple of months
- •Pricing was set at $95 per month for premium and $65 for standard
The First Paying Customer
After emailing about a hundred beta testers, Cho received a $950 annual payment from Rene McLean of RPM Group the same day. Afraid it was a mistake, he called him and learned that he had been using the product, saw how fast it was improving, and prepaid to help a young company.
- •The first payment was $950, a full year of subscription, arriving the same day as launch
- •Cho was ready to refund it if it was a mistake
- •The customer had used the beta, saw rapid iteration and got real value
- •As a fellow business owner, he knew cash is precious early on
- •That day Cho first felt the company would work
Exceeding Early Customers' Expectations: The Bread Analogy
Cho explains that early SaaS customers extend a lot of trust, so he focused on delivering ahead of schedule. He uses a bakery analogy: customers feel they helped the baker improve while the price stays the same, creating reciprocity.
- •Getting first SaaS customers requires earning enough trust for upfront payment
- •Early customers know the product is still unfinished
- •Cho aimed to deliver ahead of schedule
- •Like bread that gets better at the same price, customers feel they contributed to the product's success
Competitive Advantage: Be Similar, Then Become Different
Cho says he never had a good answer to investors asking about competitive advantage. Drawing on his Gamevil experience, he argues that sticking with a similar vision over a long time makes a product different, and he describes starting at half of competitors' prices.
- •Investors often asked about competitive advantage, and he struggled to answer
- •At Gamevil, trying different flavors didn't work, as with Cherry Coke versus Coke
- •Pursuing a similar vision for years eventually makes a product different
- •Initially Chartmetric priced at half of competitors, though it is now more expensive
- •Today it has more data and partnerships than competitors
The Next Big Sound Shutdown
Cho tells how competitor Next Big Sound was acquired by Pandora for roughly $50 million and then shut down last year. Its site ended by pointing users to Chartmetric for social data tracking.
- •Next Big Sound was a good product he learned a lot from
- •Pandora acquired it for roughly $50 million
- •Pandora later decided to sunset it
- •Its shutdown page recommends Chartmetric for social data tracking
Pricing Formula: One-Tenth of the Cost Saved
Cho shares his pricing yardstick: a tool should cost one-tenth of what customers would spend without it. He walks through the cost of hiring people or engineers to replicate Chartmetric's insights and notes a $20 monthly price for independent artists.
- •A tool's price should be one-tenth of the cost incurred without it
- •At $140 per person, users should save about $1,400 per month
- •Manual data collection would cost $2,000–$3,000 or more, and an engineer around $10,000 per month
- •Big companies could spend a million dollars a month building it themselves
- •Independent artists are charged $20 a month
From Vitamin to Indispensable: The Bloomberg Vision and the 10-Year Rule
Cho says building a SaaS business requires willingness to commit many years. Chartmetric started as a vitamin product and is becoming more important, with Bloomberg for the music industry as the goal. He believes nothing important can be built in under 10 years.
- •Founders must be ready to put many years of effort into a SaaS business
- •Chartmetric began as a vitamin product that is nice to have, and is not yet indispensable
- •Bloomberg terminal in finance is the model for what he wants to build
- •He believes any such business takes at least 10 years
- •With seven years done, he expects at least three more
