You're thoughtful and highly self-aware. From minimalism to putting the proceeds of CD Baby into a trust, how did you become the person that you are?
I spent age 14-29 being laser-focused on one thing: being a great musician.
I didn't party. I didn't date. I didn't expand my horizons. I JUST FOCUSED. I was a WORKAHOLIC MUSICIAN.
I spent age 29-38 completely focused on building CD Baby.
Again: no hanging out, no going to restaurants, almost no love life. Just focused work, 7am-midnight, 7 days a week, for 10 years.
So at 39, when I sold the company, it was like I retired, which is kind of like a professor getting tenure.
I stopped focusing and started exploring.
since i wasn't head-down in my work, i wanted to lift my head up and look around for alternate ways of looking at the world.
Most people, including my past self, don't have time to ponder alternate perspectives, or reflect on random ideas for hours a day.
But now I do, and it's my favorite thing.
I picture all the kids playing on the playground but a young Derek reflecting on the meaning of life? Do the swings truly make me happy? No, they do not. I’d rather learn music!
Kind of, but focused, not reflecting.
Even as a kid, I've always felt that WORK IS MORE FUN THAN FUN.
I read your blog post “My loss.” What a brutal year. What’s your take? Are mistakes and hardships an essential part of learning? Or rather, are there things you do now to make sure you never have another year like that one?
Pain and regret is one of the most effective ways to learn anything.
That's why I don't have an answer to that common question - “what would you tell your 20-year-old self?” - because the idea is to avoid mistakes.
Don't avoid mistakes. Make more mistakes.
You have a very simple definition of wealth! Let’s discuss that.
To me, wealth is having more than you need.
So the easiest way to become wealthy, and the best way to stay wealthy, is to not need much.
When in your life did you realize that you had enough?
When I was 22, I had saved $12,000.
I was living in a cheap apartment in an unfashionable part of Queens with three roommates, so my rent was $333 per month, and I never ate out so my total cost of living was about $500 a month.
I was making about $300 per show, so that meant I only had to work two days per month.
That was one version of “ENOUGH”.
When I was 32, CD Baby was earning me about $30,000 per month.
I was living at my grandma's house for free.
Once I had about $300,000 in the bank I realized that even if I never earned money again, that was enough that I could invest it in safe boring mutual funds returning 5-8% per year, and I could live off the interest indefinitely.
That was my final version of “ENOUGH”.
Everything after that was MORE THAN ENOUGH, by definition.
So many people are not happy in their jobs and/or are struggling with money. What mindset shifts might result in dramatic changes?
Read the website “Mr. Money Mustache”. He says it better than I can.
What do you value? How have your values changed over time?
Values change when the situation changes.
We all have a need for certainty and a need for uncertainty.
When your life is boring, you crave more un-certainty, more adventure.
When your foundations are shaking, you crave more certainty.
A few months ago, I was planning on moving to a tiny studio apartment in the heart of the city, and making a point of never being home. Doing all my writing and reading out in public places.
Now, in Corona times, I'm so glad to be in a house in the Oxford countryside.
My values instantly changed from INTERdependence to INdependence.
In my 20s, I was driven by money. I wanted to make money making music. I would get so excited if I negotiated an extra $100 from a booking agent.
Now? I'm completely ambivalent about money.
You could put a MILLION dollars in my bank and I wouldn't notice.
If you gave me a BILLION dollars, I'd just give it straight to charity.
I just don't want any more money.
What is it like to not work for money?
Money is like sex.
When you have NONE, you can hardly think of anything else.
When you have PLENTY, you think of other things.
Is building a successful business like writing a hit song?
I admire the metaphor of a hit song to a successful business, but I think the metaphor doesn't apply.
Whether something is a HIT or not is OUT OF YOUR CONTROL.
But making a PROFITABLE business isn't so hard.
If once a month I bake cookies for $5, and sell them for $10 to my neighbor, I have a profitable business.
My whole first year or two of CD Baby, I was making between $300-$2000 per month of profit. My cost of living was cheap, so that was enough for me.
Only after four years was it earning $30,000 a month.
FORGET THE UNICORNS. Don't look to Facebook or Tesla as role models.
Look to AMY HOY at STACKING THE BRICKS.
Read SETH GODIN's thoughts on the MINIMUM VIABLE AUDIENCE.
Read “$100 Startup” by Chris Guillebeau
AIM LOW, because it keeps you focused on SERVING INDIVIDUALS, and staying profitable without investors.
Your goals and corporate values for CD Baby appear to be completely different from most entrepreneurs today (dreaming of VC funding and a lucrative exit.) How is that a better way?
We're affected by our SURROUNDING CULTURE.
A big reason VIENNA of 1780-1820 spawned MOZART and BEETHOVEN is because there was a CULTURE of MUSIC APPRECIATION in Vienna then. The audience PUSHED them to greatness. Great compositions were CELEBRATED.
SILICON VALLEY for the last 25 years has a CULTURE that CELEBRATES what you describe - the VC funding and a BIG EXIT. This is GLORIFIED in those circles. It's hard NOT to be affected by it, if you live there.
But I was a MUSICIAN in hippie-artsy WOODSTOCK NEW YORK, with NO desire to be an entrepreneur, NO desire to run a BUSINESS. Yuk! I was trying to be a great musician.
So the DNA was different, from birth.
I didn't see CD Baby as a BUSINESS.
It was a FAVOR I was doing for my fellow musicians.
I only charged money to keep it sustainable so I could keep doing it.
Did you really not want the money from the sale of the company?
I knew I would never spend it.
And even HAVING it can make people do dumb things.
I had a rich friend who decided to buy a huge house in central London because it was “ONLY $10 MILLION”.
I decided I never wanted to be someone who would ever say, “It was only $10 million.”
So I wanted to make sure that $22 million never came to me. It was never mine.
It distorts your perspective.
How did you have the foresight to create the charitable trust?
My lawyer at the time told me about the Charitable Remainder Unitrust, and explained how it worked.
Let’s talk about how it works and fits your philosophy and lifestyle.
I didn't want the $22 million. I wanted it to go to charity.
But I didn't want to have to get a job at Burger King while I'm alive.
So I just wanted an annual salary of like 1% of it to pay my living expenses while I'm alive.
When I die, it all goes to charity.
Let’s talk about the “deeper happiness” of knowing your life will benefit a ton of people.
I can't think of anything non-obvious to say about it.
What do you want your legacy to be?
I don't care.
I don't want anyone to think of me after I'm gone.
But I think of sive.rs as my legacy.
I try to share everything important there, if anyone cares.