After selling his second startup in 2013, Dave Scott decided to pursue a lifelong passion and become a stand-up comedian, but by his own admission, "I was a really bad comedian." So he started a new business, one that lets him stay close to something he loves: Laughly (or Laugh.ly), a streaming service that has become the world's largest library of stand-up comedy and boasts content from stars like Kevin Hart, Amy Schumer, Chris Rock, Louis C.K., Hannibal Buress, George Carlin...
Laughly has also out-performed Dave's stand-up career, recently winning the SXSW Accelerator Pitch Event in Entertainment and Content, and earlier this year closed a $2.25 million seed round.
I talked to Dave about the idea behind Laughly, and how the goal is to not just build a great service... but to also help comedians make a living doing what they love.
Since music streaming is such a huge industry, Laughly seems like one of those ideas that made you think, "Surely someone has already done this..."
On the music side, people stopped buying, started downloading, started streaming, and services like Pandora and Spotify picked up distribution for music... but they all forgot all about comedy.
Unlike music, it was really hard to get access to a back catalog of comedy. People forget that years ago, one out of six albums was a comedy album. There's all this great stuff. But that back catalog was basically inaccessible until we came along.
Even now, the Sirius comedy channels basically only have 300 tracks per channel; they just run on a loop. Compare that to us: We have over 1,000 comedians and 18,000 hours of comedy, and those numbers grow all the time.
If you're a comedy fan, we're putting the world at your fingertips.
That's great, but it also has to work as a business, for you and for comedians. A comedian who enjoys financial success like, say, a Kevin Hart is one in a million.
I was a really bad comedian. For me, getting paid was getting free beer at the bar.
Much better comedians still don't get paid a lot. It's a tough job, you're on the road four nights a week or more, you might only get $100 per night... you only start making money when you hit Kimmel, and even then only 1 percent of those guys get rich. Like Louis C.K. said, "I've been doing comedy for 38 years... and the last 4 years have been great."
I just want to help comedians make money. That's why our deal is 50/50. We split any money we make with the artist, and that's whether it's someone like me or someone like Chris Rock.
The whole idea behind Laughly is to properly compensate comedians.
Shouldn't Chris Rock expect a bigger cut than, oh, someone totally unfunny like me?
My philosophy is that the future of comedy is not Chris Rock. The future of comedy is the next Christ Rock.
I'm more excited about the people you've never heard of. Sometimes the bigger you get, the less funny you get. Like Mike Paramore; he's incredibly funny. If there was a way to perform a comedy blind taste test, you'd pick him over a ton of other comics.
That makes my job incredibly fulfilling. I love helping you discover people like that.
But isn't it hard to pull all the existing material together, especially where rights etc are concerned?
The music business is basically made up of Sony, Universal, and Warners. With comedy they only have around 25 percent of the market; 50 percent is still owned by the comedians themselves, and the rest is controlled by mom and pop comedy labels.
So the first meeting we had with Warners, we said, "We want to license all your great Eddie Murphy, Jeff Foxworthy, etc material. We can't pay you though."
They said, "No one has ever asked us for that material before." It had been sitting there not making money, so they said yes.
We have three year deals in place with a variety of partners. That gives us a long runway to make this work, but we want everyone to make more money. If they see we're making money, they'll want to keep rolling with us.
Plus we're extremely artist friendly. That's the difference between us and music. We have partnerships and relationships with comedians. They appreciate the relationship, so they will do drops for us, they'll tweet about us... they appreciate what we're doing.
Many musicians complain about the revenue they get from streaming services.
Think about it this way. For a starving comedian, the average album brings in $5,000. If they can make incrementally more money, that's less time they have to be on the road. It's very real.
And the business is different. With music, when you get signed to a music label, they develop you as an artist, but they also own you. With comedy, the comedian develops the material independently. Once they have a strong hour, they sell it to whichever label they want to work with.
Take the eight Louis C.K. albums: He's worked with 6 different labels.
But comedians don't need to have a label. We give emerging comedians a platform to self-publish their stand-up, gain exposure, and most importantly make money... which for an up-and-coming comic can be very tough to do.
Speaking of someone like Louis C.K. Was it hard to get the bigger comedy names involved?
It wasn't hard to get the big time comedians because they've never been able to monetize their material. It's been stuck in a vault.
We said, "Our mission is to get your material in the hands of people who might like it, which will create more fans for you." When they realize doing so can make them a little money, too, that's the "sign me up" moment.
Even if you're a hugely successful comedian, and you don't care about the money we'll make for you, we definitely provide exposure to help you sell tickets to your shows.
Speaking of ticketing: That seems like a natural extension.
Absolutely. One of the thing we'll do next is get into ticketing. If you're listening to Amy Schumer -- who, by the way, has done guest podcasting for us -- we'll help you find out when she's coming to your town so you can see her live.
We're also doing some other really cool stuff: Live streaming, partnering with comedy clubs and festivals to get live access, podcasts...
And we're building a box for discovery, which is something our competition definitely can't do. In simple terms, we ask for your favorite comedian and then say, "Here are 3 comedians that you will probably love." But that's simple. Our IP actually allows us to personalize your recommendations over time, based on 150 attributes of comedy.
Our goal is to increase your comedy palate. 80 percent of the people we survey can only name 1 or 2 comedians. Everyone has a map app, a music app... they also need a comedy app.
Everyone should have access to comedy because everyone should have access to laughter -- all the time.