Scaling CD Baby – Observations

Derek Sivers founded CD Baby in 1998 grew it to $48m by 2008 selling out to Disc Makers for $22m in that year. By 2005 CD Baby’s main business was doing digital delivery of music to all the digital music retailers: iTunes, Amazon, Napster, Rhapsody, MSN, Yahoo! and fifty more.

Scaling Observations – selective quotes from his book “Anything You Want”.

1. Success comes from persistently improving and inventing, not from persistently doing what’s not working.
2. No plan survives first contact with customers (Steve Blank).
3. Never forget that absolutely everything you do is for your customers. Make every decision  – even decisions about whether to expand the business, raise money, or promote someone – according to what’s best for your customers.
4. It’s counterintuitive, but the way to grow your business is to focus entirely on your existing customers. Just thrill them, and they’ll tell everyone.
5. For an idea to get big big big, it has to be useful. And being useful doesn’t need funding.
6. To me ideas are worth nothing unless they are executed. They are just a multiplier. Execution is worth millions.
   
7. Have the confidence to know that when your target 1% hears you excluding the other 99%, the people in that 1% will come to you because you’ve shown how much you value them.
8. Derek wrote an email one night to his first and only other employee at the time: I think there’s a chance that this thing might be huge one day, so we better start preparing for that now. I mean some day, we might have ONE THOUSAND artists on CD Baby. We might need a third employee! That would mean we’d need three computers here in the office, which would mean we’d need to figure out how to network them together. We might even need to start moving CDs into the garage, since eventually they might fill up the living room. Yes I know it sounds grandiose, but I think things are heading that way.
9. When asked – what if musicians just set up their own store on their own web site, how do you plan to stop it? Answer, I don’t care, I only care about musicians. If some day, musicians don’t need CD Baby anymore that’s great!
10. When writing an email to 2 million customers if you are not crystal clear with each word you get 20,000 confused replies! That’s expensive to deal with. Unfortunately people writing web sites don’t get this feedback. Instead , if they’re not clear , they just get silence. Lots of hits but no action.
11. When you’re thinking of how to make your business bigger, it’s tempting to try to think all the big thoughts and come up with world-changing massive-action plans. But please know that it’s often the tiny details that really thrill people enough to make them tell all their friends about you.
12. Never be the typical tragic small business that gets frazzled and freaked out when business is doing well. It sends a repulsive “I can’t handle this!” message to everyone. Instead, if your internal processes are always designed to handle twice your existing load, it sends an attractive “come on in, we’ve got plenty of room” message to everyone.
13. Delegate or die: I had to make myself unnecessary to the running of the company.
14. Because my team was running the business, I was free to actually improve the business!
15. When I was away, my company grew from $1m to $20m in four years and from eight to 85 employees.
16. Never forget [as the owner] that you can make your role anything you want it to be. Anything you hate to do, someone else loves. So find that person and let him do it.
17. Delegation lesson: Trust, but validate.
18. Business is as creative as the fine arts. A business is a reflector of the creator. Just pay close attention to what excites you and what drains you. Pay close attention to when you’re being the real you and when you’re trying to impress the invisible jury.