Jiang Shu, the founder and CEO of Tree Music, finished the A round financing of more than ten million Yuan at the beginning of 2015. At present, he is preparing for B round. However, few people know that he had acquired 18.5 million Yuan in angel financing from individual investors to operate his indie music business.
Jiang has long hair, wide face and melancholy eyes. His voice is slightly hoarse. Moreover, he has
wearing casquette for more than ten years. When we first met him, he looked like a businessman and taciturn. But after we talked with him, we found that he was very enthusiastic and eager to express his desires. Jiang is a good interviewee because he is frank, warm-hearted, specific and directly in the conversation.
“I’ve spent three years working on land agents, and I think negotiation is very important when talking
about cooperation with large real estate groups, since you have to bring down the rent prices. If land agents are making money by rents, it’s impossible to continue. But I can trade with my contents. In this way, many land agents would understand the condition.” Jiang said.
Jiang told CMBN that, as for the layouts of production line, Tree Music has artist management, albums, theater, venue and festival. Now, Tree Music has signed with nearly 40 artists, including representative Chinese indie musicians such as Zhou Yuanpeng, Hu defu, Wild Child, Xie Tianxiao, Luo Qi, Ziyue Qiuye, and Sound Fragment. In the future, Tree Music will sign more popular artists and start to cultivate some promising new singers. This year, Tree Music has launched a new festival brand —– MOMA Music Festival. Jiang illustrated that Tree Music would continue to work with real estate partners, as well as expand the list of artists and organize festivals.
Jiang also realized that in the fast expansion in 2015, due to inexperience in multiple tasks, the group
were tired but failed to cut the mustard. Jiang sighed that, there were serious shortage of talented people in Chinese music industry. Both new-artists-cultivating and professional group-growing required time.
Jiang said, “The group of Tree Music has been expanding and growing too fast this year. I braked in time, but suffered a painful decision-making. Tree Music is a slow-paced company. Doing content would be slow but you have to focus on it.”
As for the layouts of Tree Music, Jiang has larger ambitions and plans. Born in 1980, Jiang is quite
young. Tree Music’s aim is to become a listed company. Faced with investing invitation from some listed company, Jiang confidently say, “You are the listed company now, but we’ll be the listed company in the future.”
Referring to the role of capital, Jiang thought entrepreneurs in the music industry didn’t control
capital very well. All music companies who successfully received financing this year should “have strict self-regulation and be prepared for danger in times of safety”. Capitals also worried whether music companies are as impetuous as Internet start-ups. In the early stage of music industry, each entrepreneur who acquires money should be careful.
Jiang will focus on indie music. In his view, indie music does not equal to “not signing with labels and
doing it on their own”. Independence is a kind of spirit, representing for independent thinking. This spirit highly fits with fans and its influence can last for the whole life.
As for game music, anime music and archaic music, which are popular with young people, Jiang held the attitude for “observing for three years”. Though these types might continue to be popular in the market, he will not touch them. “I’m not greedy. What Tree Music can do is limited. Indie music will attract and influence a group of people who have critical thinking. They are Chinese elites.”
CMBN: What’s the plan of Tree Music next year?
Jiang: We’ll have more festival plans next year and we will introduce more overseas artists. Also,
we’ll make electronic festivals next year, mainly dominated by foreign electronic musicians. I think international-standard electronic festivals must have world-famous DJs, which might cost 2 or 3 million Yuan of performance fee for each DJ.
We will acquire some companies such as social software companies; as well as, involve in online,
ticketing system, derivative sales. We plan to make the best of fans economy, APP or subculture group’s social software, which I’m very interested in. If we organize festivals, concerts, especially concerts with rock atmosphere, the group will be influenced. These all belong to elite culture, which is quite different from mainstream culture. Once there is a social platform, people can have
better chance to interact. Meanwhile, it is an aggregation platform for better contents, which strengths the bond in the group.
If we have our own content, we can shoot video by ourselves. Videos also have copyrights. We had invited lots of foreign artists to perform in The Post Mountain. Many copyrights of live recordings belong to us. We’re different from YugongYishan, which is only a venue. What we want is copyright.
CMBN: What’s your advice for start-ups on financing?
Jiang: You should have to think thoroughly to acquire A round financing because companies who fail in A round might be as good as you. You just get the money first. If you don’t get much in A round, you should have good control on the speed of company developing. Are the sustainability and expansion of your products strong enough? If everything is ready, you can successfully acquire B round financing. If not, it’s very dangerous. You don’t need to worry about what you should do if the
money has run out. If your products are good enough, there will be someone to
A round financing is more about layout rather than individual expansion of projects. If your company only has one product line, especially content companies like us, it’s very dangerous. Because when you receive money, the single product will change significantly. There must be several products to influence each other. In this way, the company can expand further and investors will offer financial support in B round.
The team needn’t to be too fast on expansion but should control the operation cost. Even if there are
changes or transformation of company modes in A round, you can success in B round. If your capital operating capability is not strong enough, you’d better find a good financial advisor to handle future cash flows and estimate risks. Then, you can win in B round. If not, there must be problems in your products.
Even if you don’t receive money in B round, it’s not a big deal. There would be risks in entrepreneurial. If you don’t acquire B round, but feel very confident in your products. You should cast down and control the cost. Or you could even use the money from angel investors. But the premise is that your products have to be good enough and so does the comprehensive ability of your team.
CMBN: You received 18.5 million Yuan in angel financing from individual investors. How did you persuade them? Could you share your experience in financing?
Jiang: Angel investors almost are individual investors. If we have a good conversation, they will
invest. I won’t tell anyone how hard I’ve gone through. We talk about what we are interested in and the current situation of the industry. Though some problems exist now, it will be better in the future. If you explain clearly the reason, you’ll receive the money soon.
At that time, there was a well-known investor who wanted to invest 6 million Yuan in angel financing. I rejected him, because he required 20% reward each year. I don’t agree with valuation adjustment mechanism. I don’t think it’s a good way. In the early period of industry layout, valuation adjustment mechanism will contribute to irrelevant work in order to finish the goals. Start-ups need layout. If you only work for the goals, it’s not good.
A listed company also wanted to invest on us. We talked for three times. They wanted more shares, but I didn’t agree with them. I couldn’t give them too much shares. We must apportion. I hope more strategic resources could come in. I was very determined when talked with them. They hoped me to compromise. But I was very stubborn, and said that you were a listed company at present but we were the listed company in the future.
Capital seeks quick success and instant benefits. In the Internet era, it is understandable. But we are a content company and producing contents is very slow process. Contents are the core. We should be clear about the finance, and be determined and responsible. While stocks are very expensive and valuations are high, we shouldn’t impulse.
We must hold back.
Besides, we must think twice before receive money. In 2012, I was in short of money. A friend introduced a large advertising company to me, invested by Xue Manzi. They wanted to invest on me, when I really need money, but I rejected them. I felt heartbroken when I came out.
CMBN: What’s your deepest impression about Tree Music in 11 years?
Jiang: It’s been 11 years since the start of Tree Music. We’ve met lots of difficulties but few good times. But it is the tough times that give me the wisdom today. I’m a Taurus, who is very suborn. This personality turns into persistence in my business. I’m not easy to change, but stable and persistent. Not matter success or failure, you’ll be much stronger to face the pressure. This is the basic rule of business.
Another point is that you should be modest. I’ve been CEO of Tree Music for three years, before I was
Executive Manager. Our company did not have a general manager, because I thought I was too young. If people noticed that I was the executive manager, they wouldn’t laugh at me if I did too much work myself. But if the general manager works too much, people wouldn’t sign high of the company. This would reveal your weakness. In 2012, we had investors and I promoted myself. Some of my colleagues became directors.
CMBN: What do you think you of current music market? Compared with the film market, what’s the stage of music market?
Jiang: Market is neural. No matter what the environment or living conditions are, if there’s good solution, it can survive. I think Chinese perform markets, especially music market such as subculture, rock and folk market, are still in the initial period.
Ten years ago, few people went to the cinema. Most of them watched DVD at home, and many were piracy. Few years later, we bought hardware in Zhongguancun. It could store thousands of movies. Later, there were Internet and video share online. People can watch movie for free. When DVD and hardware are eliminated, what truly support Chinese film markets are cinemas, theater line, and offline experience. You’ll find that piracy can’t replace the main body, which is the basic supporting of
Movie industry has stimulated many practitioners. There are abundant infrastructures. Where there a large number ofpractitioners, there are talented people in the industry.
Market that fits music industry hasn’t yet been established. If we can hold on, three years later, music market will rise up. Take offline experience as an example, China has more than 100 festivals each year, but 90% of them are not professional. People don’t know the operation concept of festivals. They are more likely to find sponsors and artists. However, there are even no standards for seeking artists. What they have is only simple interests relationship. They can earn profits in
projects, while those who invest lose. This is a problem.
For example, in Evergrande Starlight Carnival Music, their slogan is “watching festival just as watching movies”, which is a serious mistake. You only pay 30 or 60 Yuan for a film, and cinemas can copy the movie. Movies also have long showing periods. But festivals cost a lot on artists, stages, transportation and so on. It’s impossible for you to sell the ticket for just 60 Yuan.
CMBN: What are the problems of domestic festival market?
Jiang: Many foreign festivals are in order for decades. I hope domestic festivals can change. It would better that in West Lake Festival and Zhangbei Festival, there are some professional people in charge. We have a huge market, and should not allow layouts to control it. This must be changed or it can’t continue.
We also hope that there is a company who can make excellent festivals, as well as ticketing companies with good offline experience. Now, there is ticketing systems for movies, but not for music. Large ticketing companies like Gewala, have transformed from movie to festivals. For lack of enough teams, it’s not good enough in some cities except Shanghai. Ticketing will influence the quality of projects and experience in festivals. It’s not only the event experience but more of convenience.
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