How does Soundcloud work?

[Chris Ree]

SoundCloud founders Alex Ljung and Eric Wahlforss studied together at the Swedish Royal Institute of Technology.

The future entrepreneurs were united by their love for music. Eric grew up in a family where music was a part of everyday life, and he was engaged in music, while Alex worked as a sound engineer and also had experience recording his own tracks. The colleagues had a common idea - to create a platform that musicians could use to share and discuss their compositions. According to Valfors himself, at that time it was possible to turn to either “cheap file sharing services” or to the MySpace social network, in which “a complete mess reigned”.

The partners started implementing their idea in 2007. To do this, they bought the domain name soundcloud.com for $400 and moved to Berlin. They had to work on their product in a cafe and a common apartment - there were not enough funds to develop the project. However, already at this stage, Alex and Eric found support in the face of local underground musicians.

The platform launched in the fall of 2008 and quickly gathered 20,000 musicians and people close to the "music crowd" who became the first users.

Shortly after its launch, SoundCloud was dubbed "Flickr for Music".

This slogan emphasized the convenience of the platform and its social mechanics. After the beta tests, free account holders were able to upload and share an unlimited number of tracks (but no more than five per month).

It was also possible to maintain a contact list of 20 "friends".

Only the last 10 uploaded records were visible to other users. Even then, basic statistics were available. The paid version, costing $11 per month, allowed you to download more tracks. According to Eric, the first versions of the profiles on SoundCloud were optimized for the needs of musicians and independent labels.

First money

In 2008, the SoundCloud office had a small team of less than 10 people. Money was required to develop and pay for the work of employees.

At the beginning, the service existed at the expense of Valfors' acquaintances from previous work in the start-up industry, but the company continued to need investments.

Already in 2009, SoundCloud holds its first round of funding. Investment company Doughty Hanson Technology Ventures invests 2.5 million euros in SoundCloud. At that time, Doughty Hanson was actively interested in startups in the music industry and was looking for new growth points in this area, which at that moment was already warmed up by the Spotify streaming service.

Stefan Tierty of Doughty Hanson Technology Ventures commented on the investment round: “What we have found is a team solving a real problem that professional musicians face. SoundCloud is to music what Flickr is to pictures.”

At that time, SoundCloud had already crossed the mark of 100 thousand users and began to receive money from paid subscriptions.

Years of carefree growth

The money and the first stars like Foo Fighters to bring their music to SoundCloud became a growth point for the platform, reaching a million users in 2010. Apps for Android and iOS have been launched.

The year 2011 began for the company with two announcements at once: SoundCloud's audience doubled, and the platform raised $10 million from Union Square Ventures and Index Ventures. In less than 100 days, the company added another million users to its audience.

Along with this, SoundCloud's first overseas office opened in San Francisco, the number of employees increased to 50, and the company focused on improving the service. There is an iPad app, an updated widget, an experimental music production lab and a number of other features for music content producers.

[Damion]

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