Interviews → Productive! Magazine

Michael:

Could you quickly introduce yourself in case somebody doesn’t know what you do?

Derek:

How should I start… I was really a professional musician for many years, all the way from the age of 15 until 30, really. My full-time living was making music. I was producing people’s records, going on tour. I actually bought a house with the money I made touring. But then around that time, I was trying to sell my CD online and there was no good website to do it. Nobody would sell your CD for you back in 1998, the old days before Amazon, before all this stuff…

Michael:

Right…

Derek:

So I created a little website that, at first was just to sell my music, and then some of my friends’. But then friends told friends, and it became the largest seller of independent music on the web, with something like a quarter-million musicians. And in 2008 I sold that company, and since then I’ve been writing books, speaking at TED, and working on some new stuff.

Michael:

Exactly, that’s the kind of story I love. You created a company to scratch your own itch. I followed the same path with Nozbe. Because I needed something that wasn’t there. And I wanted to solve my own problem. And after eight years, I’m still solving my own problem… along with thousands of people using my solution. So I really like this idea that you do something first for yourself, and then, you know, suddenly it becomes a business.

Derek:

I get lots of people that contact me saying: “Hey, I’ve got this idea for a business. I think it could make a lot of money.” It’s always tough, because then it feels like the only reason you’re doing this is to make money. Whereas if you’re doing something to scratch your own itch, and ideally something that is very concretely helping some people you know…

Michael:

It’s coming from such a better place than when you simply look for a way to earn.

Derek:

It’s standing on more solid ground than something you’re just doing because you think it might make some money. Money is best as a side-effect of something you’re doing. I often think of it as like the odometer in a car. The whole point of driving is not to make that number go up. That’s just a side-effect that happens when you are out in the world seeing lots of cool things.

Michael:

Exactly. And enjoying the views and the road trip, right?

Derek, I’ve read your book “Anything You Want” twice and I can really relate to the story. You had all these bumps in the road with your business but in general it was doing great. What drove you finally to sell CD Baby?

Derek:

I actually cut a couple of chapters from that book, because they sounded too nasty. It just got really bad at the end for me on a personal level. Some things went really wrong inside the company that changed the culture of it. The relationship between me and the employees just turned really bad. Actually, I got an email from one of my former employees with whom I haven’t spoken in years. He said: “Hey, Derek, I don’t know if you remember me, but I was one of your employees at CD Baby. I’m a guitar teacher now and I’m actually managing a music store with a few other guitar teachers. Now that I’m managing other people, I realize what you must have had to go through with us.” And he added: “I’m so sorry that we treated you like that. I don’t know what happened that we suddenly decided to blame you for all of our problems. We were really mean to you, and I’m really sorry.”

Michael:

Wow…

Derek:

Yeah, they were really mean to me. It just got really bad and I hated it. And since I was always doing this for love, not money, I didn’t love it any more. I just had to ask myself, why am I even doing this? This sucks. I don’t need the money, and I’m not having fun anymore… So what am I doing? So that was most of the reason I sold it.

But the other reason is I think there were a lot of similarities between this business and art. When you’re doing it like you and I are doing — where you created something just because you want it to exist — you’re not doing it just for the money, you don’t have investors and shareholders, and you’re not doing an IPO or trying to please the stock market… So, in the art comparison, there is a point when your art feels done, right?

Michael:

Complete.

Derek:

It felt like I had finished that painting that I set out to paint years ago. I got CD Baby to the point where I had just rewritten all the software. I had just improved it. I had just made all of the changes I wanted to make. It was running really well, and I just felt like: that’s it. I’m done.

Michael:

Alright…

Derek:

There was nothing more to say. It felt like a finished painting for me. But yet, I knew that for somebody else it was the beginning of something, you know. And so, it felt like I was actually doing my clients a disservice by remaining the boss of something that I felt was done…

Michael:

I get it. In my case, Nozbe is still an unfinished painting. I still feel like I’m just getting started and there is much work left.

I wanted to highlight something that you mention in the book: when you create a business like this — scratching your own itch — it is like your unicorn land, like you’re in paradise. This is a reality that you create. You don’t do stuff to please the investors; you please your customers, your team, and yourself. The rules you set out are simply the rules that you want to have. It reminds me of the thing we did two days ago in my company. Somebody didn’t agree with the policy that we introduced because it prevented him from improving something. So I said: let’s change the policy, then. It’s our company. We can change the policy if we feel we need it.

Derek:

Awesome! That’s such a good example. We always think of policies as something like, “Well, sorry, there’s nothing we can do. That’s the policy.” That’s great if you can say, “Alright, if that’s not working for you, let’s update the policy.” That’s so cool, man.

Michael:

Exactly. I’m trying to encourage my team to do the same by telling them: “Guys, we all shape this company. Not just me. I’m an owner of the company, but it’s our company. So if you don’t like something, let’s change it, let’s make it differently.”

Derek:

Yeah. Cool, I love that.

Michael:

You sold the CD Baby and you gave away the money to charity, right?

Derek:

I wasn’t going to tell anybody. It was going to be a secret but then about a year after I sold the company, someone was interviewing me for some obscure podcast, we were like 45 minutes into the interview. And he said something like: “So what did you do with the money?” or “You must be rolling in the money now.” And I said, “Actually, no. I gave it away.” And he said, “Wait, what do you mean you gave it away?” I said, “Don’t worry about it. It’s nothing. It’s just… It’s a technicality.” And he said, “No, hold on. I want to ask you about this.” And I was like, “Uhhh…”

Michael:

And you revealed the secret.

Derek:

There was eight months in between the time when I decided to sell the company and when it was all done. During that time, I talked with my lawyer a lot. He has a finance background and he was a good guy. I’ve known him for years and we were friends. So, I asked him: “This is kind of weird for me, because I don’t even want the money. What I am going to do with $22 million?” I was not in debt. CD Baby had been profitable for years. So it’s not like one of those Silicon Valley companies that has no profits but then sells for a lot of money.

Michael:

So it was really profitable.

Derek:

Yes, I was making about $4 million a year for a few years before I sold the company. I had everything I wanted: a house, a car, I had already given my parents money. There was nothing I wanted to buy. And so I thought: “$22 million… What am I going to do with that?”

Michael:

So you decided to give it away…

Derek:

I said, “I’m just going to give it all to charity.” And so my lawyer is the one that said, “Are you serious about that?” I said, “Yeah. Well, I’m not going to spend $22 million in my life. Therefore, I’m just going to give all away to charity.” And he said, “Well, if you’re really serious about this, then the smarter way to structure it is that instead of you getting $22 million and then paying all of your income tax on the $22 million, you’ll be left with $15 million, and then you give away $15 million to charity. Instead, we can transfer the ownership of the company into a charity now, so that when this company buys CD Baby, they’re not buying it from you, they’re buying it from the charity.” He said that way the entire $22 million goes into charity, tax free. And I was like, “Yeah. That’s what I want.” He said, “Are you sure about this? Like, you want to give away your company to a charity entirely, 100 percent, right now?” I said, “Yup.” So that’s what we did.

Michael:

Wow, that’s really something. As you said, you didn’t do it for the money anyway. I think more companies should support the charities in any way. In Nozbe, that is profitable too, every month I have to do income tax. So I’m paying income tax, but then I have a spreadsheet where I divide the income tax. And then there’s six percent that goes to charity as well. So every time, you know, if I earn more money, I pay more tax and I pay more to this separate charity account. So I have a certain amount of money there. Right now, I have to figure out how to use it for charity.

I’m trying to encourage people to do the same when they pay their income tax. If we are supposed to teach our children to be charitable, we should do it ourselves before we start preaching it.

Derek:

That’s a nice way to do it. I like that.

Michael:

It’s a smaller contribution than your 22 million bucks, but anyway it’s a contribution. :-) So, now… Apart from a best-selling book and TED talks, what else are you doing? Could you tell us a little bit about your Wood Egg project?

Derek:

I think it’s just my book publishing company now. When I started it three years ago, I was living in Singapore, and I used it to produce a series of books about the different countries in Asia and learning about the cultures. It was really a way, again, of scratching my own itch. I wanted to learn about all of these countries because this was my new home. So I did this as a way of learning. The books didn’t sell very well. So I wasn’t doing it to make money. Now, Wood Egg is just my generic publishing company for whatever I’m publishing in the future.

Michael:

What other projects do you have in the pipeline?

Derek:

It’s not worth talking about yet, since they’re not done yet. I may change a lot before they’re finished, but I’m spending most of my time doing all the computer programming for that. And just doing lots of writing for future books.

Michael:

So you are still doing programming, right?

Derek:

Yeah, I love it. It’s very peaceful to me. I think even when I was a kid, I liked doing math problems, because the rest of the world is crazy, but I like that math has a right answer. For that same reason I noticed that whenever the world feels crazy, with people fighting, programming just feels like such wonderful solace; it makes me so happy. It’s more like my favorite hobby. I don’t want to pay someone else to do it, because I just enjoy it too much.

Michael:

Well, I do it differently. I don’t program anymore because I’m trying to run the business, and I have great programmers. But every now and then I do scripting. For me, it’s like LEGO, you know, but on the screen. :) You can build something for fun. Start something new. Of course, I don’t commit to our main applications, because then I would simply spoil the thing. When I explore a subject, and it looks it could be something, I just give it away to my CTO who laughs at me a little, and then, starts the real programming. I don’t have much time for coding. But, as you said, sometimes it just brings me back a bit of peace and a bit of fun.

Derek:

I love it. Cool!

Michael:

I remember that when I was starting Nozbe, you were trying to rewrite your whole thing to Ruby, and then you decided to cancel, and destroy the code. Tell me the story.

Derek:

Actually, I loved Ruby. The thing that never worked very well for me was Rails. So, I loved the Ruby programming language. The Rails framework was just never quite right for me for what I wanted to do. And so, CD Baby started in PHP, because it started in 1998, and that was just the thing at the time. And then in 2004, when Rails started, at first I thought: “This is perfect for us!” And I got very involved for two years of converting everything from PHP to Rails. And then after two years, it felt like: “Ummm, no, this isn’t worth all the effort. All of our code was still in PHP and it was just so many moving parts. Instead, I used what I learned from Rails, because Rails is beautifully written, and it has wonderful conventions… So, instead, I took what I had learned from Rails, and I rewrote CD Baby from scratch in PHP. And I still think it’s one of the most beautiful things I ever programmed. And what’s funny about – just about exactly one year after I sold the company, the purchasing company threw it all away and they rewrote it all in Windows ASP.

Michael:

:-) At the time, I was trying to write Nozbe. I thought I didn’t have time to learn Ruby so I just watched all these presentations about it and this also made my PHP programming better. I rewrote the first version of Nozbe in a more Ruby-on-Rails-kind of way.

You have all these different endeavors… How do you prioritize? How do you manage your personal productivity? Do you have any daily routines or habits that you have that you might want to share with our readers?

Derek:

I don’t know if my advice would be very useful because I’m feeling a little bit retired… Maybe it’s the wrong word, but I’m doing things just for fun now. If I was very focused on getting something done and launched, and hurry up and let’s get this thing launched, I would be doing things in a very different way. But instead I’m feeling very leisurely, and I’m exploring things. So, in 2008 I came up with this idea for my next business called MuckWork. And I’ve rewritten Muckwork like five different times, but I’ve enjoyed it every time. I’m like the guy who has an old Corvette in his garage and he keeps taking it apart and putting back together. I’m really enjoying it but if you’re looking for tips for productivity, you should not ask me. :-)

Michael:

And what about your past experience?

Derek:

Maybe if there’s one lesson to learn from it, it’s that some people have different habitual styles. My friend Tynan, for example, is really into habits. He has daily habits every day, and he wrote a book about it called “Superhuman by Habit”. It’s a great book that I highly recommend.

Michael:

What is the main point Tynan speaks about?

Derek:

He’s into doing certain things for some time every single day: he will do this thing for 30 minutes, and this thing for one hour, and this thing for one hour, and that thing for 20 minutes. And he’s very comfortable with that. That works for him.

For me, I’ve tried that a few times, but I tend to get really, really into one thing at a time. It’s so often that I will do this one thing from 6:00 a.m. to midnight, seven days a week for many, many months. And then I finish it, and then I want to do something else. So for productivity, I wouldn’t recommend my way of doing things, unless if you find that way really works for you. I think that some of us feel that we should be living with habits, but actually we really like doing one thing at a time.

It says on my site that I’m studying French, but I was trying to do it an hour a day… but I think that I’m just going to finish my writing and programming first, and then I’ll focus on my French.

Michael:

Or just move to France? :-)

Derek:

Yeah. I would just move to France… Do it all at once, do it entirely. :-)

Michael:

And why have you chosen New Zealand to live in?

Derek:

It is a good place to raise a kid. It’s a very peaceful and beautiful country. I really love it here. I was living in Singapore for a few years, and New Zealand is the opposite of Singapore. So, it’s what I needed now. After a few more years, we’ll do something else.

Michael:

In one of your TED talks you spoke about leadership and its mechanisms. What it means to be a leader.

Derek:

I actually don’t know much about leadership. I really only read two or three books about it.

Michael:

Well, you’ve been into making money for years, so you should know something. :-)

Derek:

I guess I was, but maybe I was a bad leader. You know, I saw this video of a dancing guy, and I thought it was an interesting metaphor for leadership. So, the funny thing about TED is I gave that talk to room of only 150 people. And I didn’t think that anybody outside those 150 would ever hear it. But then it got on the ted.com website, and now it has, whatever, 10 million views or something.

But I actually don’t know much about leadership. I gave that talk and I think immediately at that conference three or four book publishers came and said, like, “We want to turn this into a book.” You know, “Could we talk about this?” And I said, “No, I don’t have anything more to say about it. I’m sorry. I’m not ready to stop what I’m doing and suddenly become some kind of consultant on the subject of leadership. :-)”

Michael:

That’s really funny :) I love your enthusiasm. I love what you do. Thanks for writing the “Anything You Want” book. I like what you said about the way we create our reality, we create what we want, and we do things for love. We’re all artists.

Derek:

Oh yeah, yeah… It’s all art. You know, whether it’s making music, or making computer code, or making books, it’s all just art.

And, hey, any of your readers that made it all the way to the end of this interview, I actually enjoy putting aside a little time each day to answer questions of people by email, so feel free to send me a little email and ask me anything. I’m happy to help.