Stephen Kennedy, president and founder of iSong.com, is a little sheepish when discussing his company's origins. Nervous laughs replace the periods at the end of his sentences. At first, it's difficult to discern what he's so skittish about. Maybe he's embarrassed by the fact that iSong.com, a Dallas-based Web site, is built on an idea he came up with when he was in high school and that he's still working on it as his 40th birthday approaches. More likely, it's because iSong.com designs and sells software intended to make it easier for people to learn how to play a musical instrument, something he never quite figured out. Maybe he's afraid someone's going to realize just how absurd the idea is after all, basically taking music lessons from someone who is just as clueless about it all as most of his clients.
Twenty years ago, the Midland native would have been one of them. Like many high school kids, he grew up with dreams of being a musician. Of course, that's all they were, because as Kennedy soon realized, he had absolutely no talent. Even though he was determined to teach himself how to play guitar, spending his free time in his bedroom murdering Led Zeppelin and Jimi Hendrix, his skills didn't improve much -- or at all, really. But that didn't stop him from becoming a "fat gym coach," as Kennedy says today, coming up with opinions and theories about how to play guitar, none of which he could actually apply himself.
Kennedy would continue to explore his theories at the Berklee College of Music in Boston, before later graduating from the University of Texas at Austin with a degree in history. By the time he graduated from UT, he had abandoned his dreams of becoming a musician, and most of his theories as well. He moved to Dallas and on to new schemes, everything from real estate to computer games. Still, the thoughts about music instruction remained in the back of his mind, and almost two decades later, he finally put one of them to use, designing the software iSong.com is based around.
"It's just one of those incubator ideas that you go to work every day and think about, keep your productivity down while you're daydreaming," Kennedy says, laughing, as he prepares to leave for the National Association of Music Merchants (NAMM) Conference in Nashville, one of a series of showcases planned for the company's products over the next few months. "Eventually, I just decided that I was going to pursue it. And even after deciding to move forward, I didn't make much progress for a long time because I didn't know what the hell I was doing. I didn't know anything about software. I didn't have any resources to pull together. I certainly didn't know anything about the music business...Now, it's actually really starting to get some momentum and move forward."
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The idea is simple: make playing music easier for people who don't know how to read music. Early on, Kennedy decided that the easiest way to learn a song would be to learn a simplified version of it, figuring out the patterns of the notes before tackling the real thing -- which is basically the same thing that music instructors have been teaching for years.
The difference is that the iSong.com software does more than just show the sheet music, and it uses transcriptions based on the artist's original recordings. The CD-ROMs that iSong.com sells from its Web site use animated guitar tabs and performance videos that demonstrate exact fingerings, as well as the original recordings. Passages can be speeded up or slowed down to suit a particular skill level, and looped over and over again until they are perfected. On September 13, the company will launch a new site that will also feature real instructors, allowing musicians to take virtual lessons.
"Here's the bottom line: Seventy percent of musicians can't read music," says Guy Hoffman, the company's CEO. "What ends up happening is that, unless you can learn by ear, there is no way for you to play the music that inspired you. You want to play Clapton, you want to play Hendrix, you want to play B.B. King. This did two things. One, by linking to the artist's original recordings, you get to learn to play the music that initially inspired you to go and buy that guitar. Second of all, it completely overcomes the biggest barrier to playing music, which is reading music. Even if you can read music, sheet music sounds nothing like the recording. It's a cover. The response that we're getting from our customers is totally awesome."
To make iSong.com move forward, Kennedy needed money, as well as someone who knew what to do with it. He'd had experience with financial dealings before, just not enough of it. He came to Dallas in 1984 at the height of the real estate boom, and, he says, "rode the crest of that wave all the way down." After two years in real estate, he began trading stocks and bonds, but he was never really happy in the financial world. He spent a few years as a trader, until he decided to give it up in 1993 to found Red Ant Inc., which eventually became iSong.com.
"I just thought, 'This is ridiculous. I hate this. I'd really rather do what I always wanted to do,'" Kennedy recalls. "Which was solve this music problem and actually try to create a product that made some sense, to me at least. It was one of those strange things, where you're driving a car, and all of a sudden you realize, 'I don't like the music business, and I don't particularly like the computer business, but I might like the combination.'"
Before Kennedy had a chance to see whether he would enjoy the combination, he learned firsthand that he didn't like the computer business by itself. As he began looking for someone to help him write the computer code for the software he needed, he came across Todd Porter, a programmer who was setting up a game-development company with artist Jerry O'Flaherty. The company, Distant Thunder, proved to be almost a complete failure, as far as Kennedy was concerned. He invested $30,000 in Distant Thunder, which never produced a single game before it was bought out in 1995 by 7th Level. Porter later became the CEO of the embattled ION Storm, another game developer that has yet to pull its weight.
One good thing did come out of Kennedy's involvement with Distant Thunder: He made enough money off of the sale of the company to get iSong.com off the ground. The company had been incorporated since 1993, but it didn't go anywhere until Kennedy invested $400,000 of his own money, which helped him raise another $1.75 million from Wagner & Brown, a venture capitalist firm based out of Kennedy's former hometown, Midland. The influx of cash allowed him to finish the product and bring in another round of investors who saw the potential of Kennedy's ideas.
In May, two more venture capital firms, Hunt Ventures (part of Dallas billionaire Ray Hunt's holdings) and the Dallas-based Hat Creek Partners, pitched in $4.3 million and brought new CEO Guy Hoffman on board. Hoffman refers to himself as a "mercenary CEO," the guy venture capitalists hire to "take great ideas and turn them into great businesses." Hoffman's most notable stop was Deja.com (formerly Deja News), another Web-based outfit that attempted to make sense of the vast Usenet discussion groups, building archives and searchable databases. Although Hoffman says he was happy at the highly trafficked site, he was less happy when the company decided to move its headquarters from Austin to New York. He left the company in 1991, and says now that the best thing about Manhattan is "seeing it in your rearview mirror."
Before joining the new management team at iSong.com, Hoffman was the entrepreneur-in-residence at Austin Ventures, looking at scores of deals involving Web-based companies that promised to be the next Yahoo or Amazon. Hoffman was looking for a new opportunity, one that didn't make the same promises that every other new Internet startup seemed to be making. He was also looking to move to Dallas, a city both his wife and children were fond of. In the midst of his search, he was introduced to Hat Creek Partners, which brought him into the deal they were completing with Hunt Ventures. Hoffman and iSong.com couldn't have been a better fit.
"I think most of the success seen on the Web to date is about a mile wide and an inch deep, and I think there's going to be a next wave that is an inch wide and a mile deep," Hoffman says. "I saw the opportunity [at iSong.com] to develop a unique kind of hybrid, where you use the brick and mortar -- in this case, music instrument stores -- to drive people to your Web site. And you use your Web site to drive people to the brick-and-mortar channels. You can create a very nice new media and electronic commerce opportunity. And so, the ability to put music back into the hands of people and build a great business was just very exciting at the end of the day."
The building continues: In addition to launching the new site in September, the company will move from its current cramped confines on McKinney Avenue to a new building on Commerce Street, which is, incidentally, directly across the street from the Dallas Observer offices. The company has already signed with Hal Leonard, one of the country's largest music publishers, to distribute its products, and plans to announce four new relationships in the next few months. iSong.com has already come a long way from its humble beginnings in Kennedy's bedroom, and he seems a bit overwhelmed by the rapid growth. But he's getting used to it.
"I've been through the entrepreneurial side, where you start it all yourself, and I learned a lot of tough lessons there," he says. "But now, we have some professional management in. Guy has a tremendous amount of experience. He's come in and helped us really get organized, focused on a direction. Now, I'm sort of on my second learning curve, learning how you actually do it." Which could also apply to his skills with a six-string. "Oh, I still play," he says, laughing. "Not well, though. I still hack. And I have even more opinions now."
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