How Neil Young Won Kickstarter
Neil Young is on a mission to rescue the art of recorded sound, and thanks to his recent Kickstarter effort, he might pull it off. His widely publicized campaign for the Pono music player, a portable device that aims to deliver sound as rich as your grandfather's vinyl, generated $6.2 million in pledges on the crowdfunding site--no small feat for a startup helmed by a guy known far better for his songwriting ability than his business prowess.
But there it is, plain as the Guardian headline that announced the news Wednesday: Neil Young's Pono is the third most-successful Kickstarter campaign ever in terms of money raised, trumped only by the Pebble smartwatch ($10.3 million) and the Ouya game console ($8.6 million).
How did the startup, which PonoMusic CEO John Hamm once dubbed one of the "worst-kept secrets in the world," thanks to a reveal on David Letterman's Late Show, take Kickstarter by storm? With star power, obviously. But more than that, it took an entrepreneurial mindset.
The Startup That Wasn't
The story goes that Young heard his songs on a CD for the first time in 1982, around the time the discs were first coming to market. He was disappointed at how bad they sounded; he didn't hear the plainspoken folk songs he'd played, but something much flatter and more condensed. The sound lacked the soul of his music.
As he told Mashable, he grew even more disheartened as the industry shifted to MP3 downloads and streaming music and the fidelity worsened. Meanwhile, Apple's iPhone was quickly becoming the go-to music-listening device and no one seemed to notice the problem.
"People started buying their music through their devices, and the fact that you could get so many songs on the device had a blinding effect on consumers. They realized, 'Whoa, I can get all these songs; it's so great.'" Young told Inc. in an interview earlier this month. "After a while, it dawned on them that the music was slightly compromised. Some of the depth was lost."
By the early 2000s, Young believed there was a business opportunity to restoring quality sound. He began to tinker with the project that would eventually become the three-sided PonoPlayer (pono means "righteous" in Hawaiian) and gathered a board of advisers to help. Young even met with Steve Jobs, but says he found the late Apple founder more interested in his iPod than with recreating authentic sound.
A couple of CEOs came and went on the project without fanfare. Then in October 2012, Young's fledgling Santa Monica startup, then called Ivanhoe, raised $500,000 from an undisclosed investing group, solidifying PonoPlayer's potential as a hardware disrupter. Young also put his extensive Rolodex to use, tapping friends such as John Tyson of Tyson Foods for angel investments. Soon Ayre Acoustics was on board to help manufacture the device, and Pono began to truly take shape.
The company "got a lot done on that money; we built a prototype player and got our music label contracts done," Hamm told Inc. in a recent interview. But in many respects, the company was at the point "where Neil needed to make something of it." Hamm joined the company after becoming acquainted with Young through a board member. But it would take time--and many failed prototypes--before either Hamm or Young felt satisfied.
At one point, Hamm says, "we had to stop and start the player design," as well as adjust plans for Pono's online marketplace, which will function much like iTunes but with a broader array of studio master-quality recordings. (It's set to launch sometime this year.) "We wasted a little bit of engineering time, rewrote the firmware," Hamm continues. But overall, "we kept evolving, figuring out ways to make it better."
Today, Pono is a full-fledged business with a product, a vision, and as Young puts it, soul. The device has 128 gigabytes of memory (good for storing from 1,000 to 2,000 digital albums), comes in black or mustard color, and retails for $399. And of course, as listeners attest, it sounds really good.
A Star-Studded Kickstarter
"That's the best sound I've ever heard in a car ever in my life; as a matter of fact, it might be some of the best sound I've ever heard," David Crosby says in the Kickstarter video as he exits Young's boat-size Cadillac Eldorado. "It's starting to sound like an amazing, warm, dynamic analog recording," says a beaming Chris Robinson, the Black Crowes's frontman, at a concert. "It's vinyl quality," says a young music fan. Chimes in another: "Yeah, it's a lot different than, like, a regular iPod. It sounds like I'm actually there."
On March 15, Young began taking discounted preorders for the music player on Kickstarter. Within a day, it reached its $800,000 funding goal, powered by the celebrity-filled video. The wow factor the artists project when describing the PonoPlayer's sound also proved effective--so many of them seem so astonished by what they've just heard that you can't help yearning for that feeling.
Perhaps the best testimonial of all comes from Dave Grohl of the Foo Fighters, who hops in Young's car for a listening session. On rotation: Aretha Franklin's "Respect." The car windows rattle and the bass is insistent, turning the vehicle into a concert on wheels. "You could definitely hear that it's not as compressed so that music can open up a little bit wider," Grohl says later while lounging in his tour trailer. He stretches his arms to convey what what he means: This sound is really huge.
"There are a lot of people who miss music," Young said of the Kickstarter success. "They miss hearing it and feeling it. There's a magic in music that's missing when you take away 95 percent of the data. That's what an MP3 is."
Vickie Nauman, the North American president of 7digital, a digital music distributor, offered a different take. "First and foremost, Neil Young is very authentic, and people respond well to authenticity," Nauman says. "It's rare these days. Second, the Pono story of 'hearing music as the artists intended it to be heard' brings the artist back into the dialogue, and fans care about the artist. And finally, the message about higher-quality audio is also timely--music fans are demanding better-sounding audio."
The third point may be what sets Pono apart from other music startups, even those like Beats that use sound quality as a selling point. "Beats is basically an earphone with a bass boost in it," Young says. "It gives you that fat sound, and it's a good sound. But you can plug into Pono through a Beats set of headphones. You can play Pono through anything. Pono is music that you buy. Beats is a pair of headphones and a streaming service."
Not that Young is averse to a little competition: "We will [make] whatever set of headphones you want to see," he says. "The better the headphone, the better the Pono is going to sound."
Whether delivering superior sound will attract a critical mass of customers remains an open question. "Convenience trumps quality," James McQuivey, VP and principal analyst with Forrester Research, tells Mashable. "It's why MP3 works. It's why streaming works." At nearly $400 for the hardware (song and album prices have yet to be determined), Pono may remain a niche business that caters mainly to die-hard music fans. But it could still be a very lucrative one.
JILL KRASNY | Staff Writer
Jill Krasny is a staff writer for Inc. magazine, where she covers the intersection of entertainment and startups. Prior to Inc., she was a writer for MTV and Esquire and an editor at TheStreet. She is a graduate of the University of Southern California with a degree in communication. She lives in New York City.