LISA: From Gimlet, this is StartUp. I’m Lisa Chow.
About a year ago, a music streaming site called Grooveshark shut down. At the time, Grooveshark was nearly a decade old. It had tens of millions of users and was one of the largest music streaming services in the world. There were a bunch of headlines, a couple of think pieces—standard fare for the death of a tech company. But what the headlines didn’t reveal was the novel that played out, just beneath surface, as the company fell apart.
We’re going to hear that story today, but not from the people we normally hear from: the people at the top. Instead we’re going to hear from a small group of early employees—people who bought into the founders’ vision, and helped grow the company from an idea, to a business. At its peak, Grooveshark employed more than 150 people, earned millions in revenue, and drew the ire of an entire industry. When you help build something like that, it changes you.
Grooveshark was born in an unlikely place, far from Silicon Valley, in a small city in central Florida.
Reporter Eric Mennel grew up in the same suburbs as the people who started Grooveshark. He has today’s story.
A quick warning, there is some swearing in this episode. Okay, here’s Eric.
ERIC: Gainesville, Florida is a college town, home to the University of Florida Gators. It’s right in the middle of the state, about halfway between Orlando and the Florida-Georgia border. The best restaurant in town is Satchel’s Pizza, and the best table at Satchel’s is actually inside a gutted 1970s VW van. One of the best things to do at dusk on a friday is to go out to the bat house, which, as you might have inferred from its name, is a barn full of bats. Hundreds of thousands of them. And as the sun goes down, they swarm out into the night to the delight of young couples and alumni in town for the next day’s football game.
This is where Jack DeYoung grew up. Jack’s tall with curly black hair and the kind of tan you’d expect on a boy from Florida. At 21 years old, he was working part time at a used book store in town.
JACK: Not very much direction, and that’s a really kinda polite way of putting it. Yeah, I was fairly listless and kind of looking for something—something big to attach myself to.
ERIC: One day, in 2007, Jack met up with a high school friend. The friend had gotten a job with a brand new startup in town—a company called Grooveshark. It was a music download site that wanted to end piracy, to get past the legacy of illegal file sharing sites like Napster.
That sounded great to Jack, so it wasn’t long before he landed an internship at Grooveshark. He spent his first two weeks sneaking into the office early so he’d look like the hardest worker on the team. Then, one night, at 4am, he got an email from Josh Greenberg, the company’s co-founder.
JACK: Saying that he wanted to bring me on I think as a customer service representative. I suspected he knew that I would be awake at that time because we kind of all were. I replied to the email immediately and said, “Would you mind talking with me about this in person?” And he said, “Sure, come on over.” And I drove over to his house which in Gainesville is the long commute of 5 minutes. And then we talked about it for about two hours.
ERIC: So from like 4am to 6am you discussed your, your employment conditions.
JACK: Pretty much. And I just blindly agreed to all of them.
ERIC: Jack was so excited he called his mom. “I’m rich,” he told her. The job paid 24 thousand dollars a year.
ERIC: Grooveshark was the brainchild of a Freshman at the University of Florida—a guy named Sam Tarantino. Legend has it, Sam was driving by a used record store one day and thought, all I have are mp3s. Wouldn’t it be great if I could sell my old ones online? He imagined splitting the revenue three ways: one part for the seller, one part for Sam’s company, and one part for the musician.
Sam was a business guy, a visionary, but he needed some help on the technology side. He found his better half in Josh Greenberg, another freshman. Josh was part of a tech entrepreneur club at the University, and he had cut his teeth making websites for people around town.
In Sam Tarantino and Josh Greenberg you had a marriage of opposites. Sam was short, high energy. He’d quote Winston Churchill when he got excited. Josh was tall, mild-mannered, analytical. Sam grew up well-off; Josh came from a more modest home.
And on March 31st, 2006, they and a third student named Andres Barreto started Escape Media. Their chief product was Grooveshark.
ERIC: They rented an office—a glorified closet, really. They bought three computers, and used the boxes those computers came in as desks.
It wasn’t much, but by the end of the year, they’d raised about a million dollars in seed money, moved into a bigger office, and then they started hiring people.
That’s when Jack DeYoung, the intern who would sneak in early, showed up.
JACK: The energy in that room and the way that everybody talked about what they were doing, it felt like something big was going to happen.
ERIC: Around the same time, Isaac Moredock joined the company. He was a stocky 19 year old, with shaggy brown hair and substantial glasses. He was going to the community college in town when he got an internship at Grooveshark. And within months, he’d landed a full-time job there, selling ads for the homepage. His qualifications, you ask?
ISAAC: I guess I didn’t have any qualifications other than I was extremely passionate and willing to work all hours of the day, all hours of the night.
ERIC: How did you do it?
ISAAC: We would follow the sun around the planet. At some point, like, we were calling people in Australia—and just phone call after phone call you’re just like, oh, this guy’s probably just gonna hang up on me again, or be like, how’d the hell did you get my number?
ERIC: So if you were to make 500 phone calls in a week back then, how many of them would result in ad sales?
ISAAC: Well, I mean early? Like, zero. [laugh] I mean it was rough. It was really rough.
JOHN: I was, I think, more inspired honestly, that these guys who were so young were like so confident in themselves and their ability to do more than open say, like, a taco shop.
ERIC: And this is John Ashenden. At 21, he was one of Grooveshark’s oldest employees. His blonde hair was both slick and earnest, and he was the kind of guy whose brow always seemed to be furrowed. He started at the company on the design team
JOHN: we’re gonna change the world. Be the next, like, Facebook, we’re gonna be the next YouTube. That was the energy, right? And I know, like, today that’s so cliché, and like, I’m sure everyone has that same aspiration, but at that time it felt so achievable and it didn’t in any way seem unrealistic to me.
ERIC: These three employees, Jack the eager intern, Isaac the sort of salesman, and John the designer, were among the first at a company that would grow to over 150. They were some of the earliest to buy into Sam and Josh’s vision. And they made a fateful decision to dedicate the better part of their youth to a hunch—that something big was about to happen in music, and Grooveshark would be at the center of it.
ERIC: But Grooveshark was still missing one thing: users. The company had a little bit of seed money left, they had dedicated employees, but people weren’t using their product. And as Jack DeYoung remembers it, they were under pressure from their investors: Get 50,000 users by a certain date, or risk losing support.
JACK: I can distinctly remember begging our mothers to sign up for the website at one point and, you know, posting on Facebook and just saying, like, please for the love of God, sign up for this.
ERIC: So they started marketing around town. And it got a little desperate.
JACK: There was a really, really ill-advised marketing thing to have fake parking tickets on cars in downtown Gainesville that actually advertised for Grooveshark. One, not only are we going to piss off everybody, but there was a misprint on the fake parking ticket. It was supposed to say 7.2 million songs, and it said 7.2 songs. So we’re offering 7.2 songs and this is what everybody in downtown Gainesville saw. It was a comedy of errors for a very long time.
ERIC: The team struggled like this for a year and a half. Trying to get users for a product that people didn’t seem to want, trying to get advertisers for a site no one seemed to visit. They were generating almost no revenue, and had mostly burned through that initial seed money.
And then, one afternoon, the two founders, Sam and Josh, called everybody into the conference room. The news wasn’t good. Designer John Ashenden was in the room when Sam started talking.
JOHN: You know, he let everybody know, like, hey, we’re, like, cash dry in two weeks. And I can’t pay anybody in here. If you guys want to leave, I completely understand. And he didn’t even really offer any compensation alternative. There was no, like, I’m going to give you more stock for those of you who stay. It was generally just him appealing from his heart to everybody, like, I’ve hit the end right now. I’m doing everything I can, and I’m hoping you’ll stick with me. Every single person did. Except for, like, one guy.
ERIC: It was a testament to two things. The first: rent in Gainesville, Florida is really cheap. While $1000 might get you a tiny bedroom in San Francisco, it’ll get you a Townhouse in Gainesville. The second and more important thing that moment signaled, was buy-in. The people in that room believed they were on a mission—to make the music industry better for fans and artists. The whole endeavor spoke to them.
JOHN: And I think, yeah, that for me was truly the moment was all in. I was like, this company is great. Everybody here is like bought into the same vision. We’re all fighting the same fight.
ERIC: But the fact remained: if the public didn’t want the service, Grooveshark wasn’t going to survive. They needed to try something new. And the idea for that new thing was, as often happens, right in front their faces. A small feature already built into the product.
On peer to peer sites like Grooveshark, all the content came from user’s libraries. So, you could type in the name of a song you wanted to download—say, Virtual Insanity, by Jamiroquai—and you could see every version of that song that had been uploaded by users. There might be 30 different versions. But within that, some files would be good quality, others really crummy, or even mislabeled. And you’d wind up downloading an entirely different song than you thought you were paying for.
To avoid having users buy stuff they’d later resent, Grooveshark had a preview feature. You could click a button next to the file you wanted to download and play through it first. Designer John Ashenden.
JOHN: And what we found was that users were just streaming it and they weren’t downloading it. That was the behavior. I mean, it sounds so simple when you say it like that.
ERIC: It does seem simple. Now. But back in 2007, almost nobody was doing this with music.
So, put yourself back at your computer desk 9 years ago. If you were listening to music, you were likely either toting around CD wallets, or, you were downloading mp3s. You would download a song to your computer, plug in your iPod, and sit there in Apple product purgatory watching your libraries sync up. One percent. Two percent. Three percent. It was a hassle, but it was our hassle. We simply didn’t know there could be something better.
ERIC: So the engineers got together and they started scheming. They wanted to design the simplest version of Grooveshark imaginable. Out with downloads, and 99 cent transactions. All they wanted was the cleanest version of that preview button.
And what one engineer cooked up was a design more simple and elegant than even most of what you see on the internet today. At the middle of the page was a search bar. And that was it. You’d type in your song, and it would start playing.
JOHN: And within, like, basically a couple weeks we had, like, a functioning prototype of what our product would look like if it was just streaming. And then, it kind of got up to Sam, and, you know, here’s Sam, who’s like kind of struggling to make payroll and he saw this thing and was like, this is it, this is, like, our thing. This is the thing that we’re going to dump everything into and launch it and pray for a miracle.
ERIC: They launched the new site in 2008. John Ashenden, their chief designer, sat back and waited for the response.
JOHN: And it was insane. Like, literally insane.
I think within a matter of a month we had gone from, like, 10 thousand users to like, 50 thousand users and then, like, another month her were at, like, 100 thousand users. It just was compounding. It was crazy.
ISAAC: Instantly starting to grow 20 plus percent month over month.
ERIC: Isaac Moredock, the sales associate.
ISAAC: It wasn’t like uncle Bob signing up or whatever. It was, we have no idea who these people are and they’re logging in and they’re using it everyday.
JACK: It was sort of unbelievable.
ERIC: And that’s Jack Deyoung, the intern turned customer service rep. There were writeups in Mashable. The Atlantic.
JACK: I remember, one of the developers had rigged up something that would have balloons pop every time we hit a milestone.
ERIC: Like actual balloons?
JACK: No, not on actual…on a projector. Yeah, we didn’t have the money for that kind of helium.
JOHN: You know, it was so exciting in the beginning, right? Like, every day we’d hit a new record. And then it was like, every…twice a day we hit a record. And then every hour. And then it literally got to the point where we were hitting, like, a new record, like, every 5 or 10 minutes.
JACK: The balloons just, sort of, wouldn’t stop popping
JOHN: And we had to turn it off. It was so annoying.
JACK: You know, what had become, let’s get to 50 thousand users or lose our jobs, became, oh my, oh my…the genie’s out of the bottle.
JOHN: It was like, no doubt in anyone’s mind in the company that, like, this is what people want to do. They do not want to deal with mp3 files. They do not want to deal with hunt and peck for, like, individual songs and hoping the quality is good. And, also, as controversial as it might be, they don’t want to pay for individual songs either. They want something that’s cheap, easy, even free. And they want it immediately.
LISA: Coming up, what’s wrong with cheap easy and free. And what it would look like if Martin Scorsese directed your next management offsite. After these words from our sponsors.
LISA: Welcome back to StartUp, I’m Lisa Chow. When we left, the employees of Grooveshark had just designed a new version of their website. They were becoming a streaming service—something virtually nobody else was doing at the time. And, it was working. Eric Mennel picks up the story.
ERIC: Part of the original mission of Grooveshark had been to make things better for artists. Since Grooveshark couldn’t make money on downloads anymore, the new plan was to make money chiefly through ads on the site, and subscriptions for ad free streaming. From that revenue, they could, theoretically, give the artists a cut.
Now, all this new user growth, since the switch to streaming, it meant Grooveshark could get real meetings, with big brands—brands like Pepsi, Bacardi, and Samsung. In the first full year after streaming, revenue had grown from roughly 10 thousand dollars to 100 thousand dollars. And before long, Grooveshark was earning over a million dollars a month.
They were becoming a player in the industry, sponsoring festivals. They turned a tour bus into a studio for exclusive, live performances from big name bands.
MICHAEL FITZPATRICK: Hey everybody, we’re Fitz and the Tantrums and you’re watching Grooveshark sessions.
ERIC: Jack Deyoung, the once eager intern, was now running the music department. One year at SXSW, he and John Ashenden, the designer, they got hooked up with tickets to a secret Kanye West show. They even managed to get backstage.
JOHN: I think Jack was playing a game of basketball, like, pickup with Mos Def. And, yeah, I mean, it was a bunch of people back there. I think Rick Ross was back there. Aziz Ansari.”
ERIC: They actually decided to sneak even further backstage at that show. Jack remembers watching John stumble through the curtains, getting dangerously close to the actual stage where Kanye was performing.
JACK: The music is so loud that I’m screaming, just, top of my lungs, like, “John, John, you have to stop. You have to stop!” And John just keeps going.
JOHN: I’m sure he’s like, you know, “Doooon’t” Like slow motion, you know, like [laughs].
JACK: And John literally trips—
JOHN: I like trip over this guy who’s, like, bent over, like, tying his shoe. I turn around to Jack and he’s just got his, like, hands, like—he’s got this expression on his face like Macaulay Culkin, you know, in like Home Alone, like—
JACK: Hands to the cheeks, just, mouth agape.
JOHN: Just like, cannot believe what’s happening right now. And I’m like, what is going on? It kind of took me, what felt like an eternity, but it was probably two seconds and I looked down and I realize it was Kanye West.
JACK: And Kanye looks at John and goes “Y’all need to get the fuck out of here!”
JOHN: “Yo, get the fuck out of my way! Get the fuck out of here!” And we can just see that there’s some like backstage security guard, like, beelining it towards us.
JACK: And John literally jumps over a crouching Kanye and we run as fast as we can out of the building.
ERIC: Oh my gosh. That’s how you know you’ve arrived. Kanye yells at you.
JACK: I know, and I called my now wife at 4 in the morning, Austin time too. I’m like, “Kanye just yelled at us! It’s the greatest thing that ever happened!” She’s like, “I’m going to bed. Shut up.”
ERIC: Amidst the glamour the team had, literally, stumbled into, one question perpetually hung over their heads. A 2007 headline in Venturebeat summed it up pretty succinctly: “Grooveshark offers P2P music downloads — but is it legal?”
JOHN: I mean, that was always kind of, like, a constant question, a constant debate. You know, where do we sit in the legal spectrum from purely illegal all the way over to every “i” is dotted every “t” is crossed. You know, money constantly flowing back to rights holders. Like, where are we in the spectrum?
ERIC: Grooveshark had been operating in a murky area. They said they wanted to pay artists, but largely, those deals weren’t in place yet. So they were streaming songs they didn’t own and didn’t have licenses to. They did have some cover, though—a law called the Digital Millennium Copyright Act, or, DMCA. It says websites can’t be held liable for songs that users upload. The website just has to take the song down if the artist asks them to.
But Grooveshark was not always very good at handling all those takedown requests. Some musicians said they had trouble getting their music off the site. And of course even if a song got taken down, some new user could just re-upload the song the next day.
Grooveshark claimed it was acting in good faith, but artists and labels had their doubts. So, one of the four major labels, EMI—then responsible for about a quarter of the popular music out in the world. Sued them. For 15 million dollars.
JOHN: I think honestly, though it was kind of scary, it was also a bit exciting, too, right? Because it’s like we are worth even caring enough to sue.
ISAAC: It wasn’t like, this is the end. This was like a, we’re just going to tighten up together as a team and we’re gonna make it work.
ERIC: Here’s Isaac Moredock again, the sales associate from before. By this time he’s actually figured out the sales thing and worked his way up to Chief Revenue Officer.
ISAAC: We’ve gone through harder times. Remember when we weren’t getting paid for four months? And were about to go out of business? Now we have money and, you know, we’re able to, like, stand and fight against it.
ERIC: But the EMI lawsuit was just the beginning. It was around this time that Jack Deyoung had another backstage experience. One very different from the Kanye affair just months before.
It was 2011 and he was behind the scenes at Lollapalooza, the big music festival in Chicago.
JACK: It’s probably about 4pm, you know, we’re sitting backstage and I’d run into an executive at an unnamed major record label and he kind of just took me aside and was like, “It’s coming. This certain person has declared legal jihad. And, you know, just be forewarned.”
ERIC: Seven months later, the hammer dropped. Universal Music Group, the largest record label in the world, sued. They were roughly 9 thousand times the size of Grooveshark, and wanted 17 billion dollars in damages.
And Universal wasn’t just going after the company. They targeted seven individual employees as well.
JOHN: You know, it was something to the tune of, like, $1.5 billion. Just for me. That’s if the court were to award, you know, the maximum per song damage. I mean, that didn’t even seem real. To this day it doesn’t even seem real. It was so much money. It was, like not even like a real number. Okay, you know, like, yeah, you can take the money, but, like, you’re gonna get my couch and maybe my car and that’s about it.
ERIC: It wasn’t just the size of the suit that was daunting, it was the evidence Universal had on its side. The suit alleged that Grooveshark didn’t just flout take-down requests, but that, from the very start, its employees were uploading songs to the site themselves.
Remember that law, the DMCA? It said Grooveshark was not liable if its users uploaded copyrighted songs, so long as the company wasn’t uploading them itself. But Grooveshark’s employees were also its users. And that really complicated things.
JOHN: You had instances where employees within the company, you know, not naming anyone in particular, they themselves had, you know, their own collection connected to the network as well. I mean, you had people not just doing this out of their apartment, like, some people had their computer just running at work, right? And, I mean, that starts to become really questionable. Myself today, I look back and I’m like, yeah, of course, like, no way that should ever have happened. Like, that’s completely unacceptable. You kind of sat in this really tricky spot where you were kind of putting a mark on our head.
ERIC: Perhaps the most damning evidence Universal threw at Grooveshark were the management’s own words. Universal had internal emails from Josh Greenberg and board chairman Sina Simantob—emails that suggested illegal behavior.
Sina wrote one email to an advisor about Grooveshark’s growth. He said:
“The only thing that I want to add is this: we are achieving all this growth without paying a dime to any of the labels. Let’s keep this quiet for as long as we can.”
The email actually reads let’s keep this “quite” Q – U – I – T – E, but everyone was pretty sure it was just a typo. And he meant to say keep it quiet.
This email was plastered across the internet. And when Sina’s employees read it, they had concerns.
JOHN: He kind of sounded, like, really shady.
ERIC: John Ashenden again.
JOHN: I don’t think he was trying to be, like, a bad guy or anything, but it’s just kind of how he would say things every now and then.
And, like, imagine if you’re Universal’s lawyers and you read that. That’s going to throw up, like, a red flag.
ERIC: I reached out to Sina for this story. He declined to be interviewed, citing legal restrictions that prevent him from talking about Grooveshark.
Business started going sour. Advertisers dropped out. A deal with a major car company evaporated. This is Jennifer Hutton, VP of Advertising:
JENNIFER: Someone would lose a campaign and say, you know, they told me it was because of legal stuff. The feedback they were getting was that these brands didn’t want to work with us because of our legal problems.
ERIC: And this is where things at Grooveshark took an ugly turn.
All these legal issues, they started to trickle down, first into the business, and then into the very relationships that made Grooveshark so strong to begin with. That unity that was so present at the beginning of the company, started to splinter.
What needed to happen to stop all the lawsuits was for Grooveshark to sign deals with the major labels.
But managers at Grooveshark disagreed about how to get this done. Essentially, there were two camps.
One camp thought they needed to play by the music industry’s rules. To hire insiders – old school producers and executives who’d worked at the major labels, who could help negotiate on Grooveshark’s behalf.
CHRIS: The advisors with clout is what we’d always needed.
ERIC: Chris Blackburn was Director of Brand Partnerships at Grooveshark.
He says the people at Grooveshark, while ambitious, didn’t have any status in music industry boardrooms. Its executives would walk into meetings in t-shirts, sandals, and jeans. One guy had a ponytail. They didn’t know the lingo; they didn’t have the connections. And that became a real problem.
CHRIS: In a game that you are a nobody in, and you’re viewed as less than nobody, you’re viewed as an enemy. So in terms of getting anything meaningful done, it was really about bringing in people who provide Grooveshark access to the bright future we all wanted to have.
ERIC: But the company’s top leadership, they seemed to reject this strategy.
In those emails that Universal cited, Grooveshark Chairman Sina Simantob outlined what appeared to be his strategy for growing the company. In one email he writes:
“We bet the company on the fact that it is easier to ask for forgiveness than it is to ask for permission.”
In another email he writes, “In our case, we use the labels songs until we get 100 million uniques” that’s unique users, “by which time we can tell the labels who is listening to their music where, and then turn around and charge them for the very data we got from them.”
Sina was one of Grooveshark’s earliest investors. He’d had success in real estate out West – and was a mentor to Sam Tarantino, the company’s founder. Sam put a lot of trust in him. But Sina doesn’t appear to have had much, if any experience in the music industry prior to working with Grooveshark.
And so the camp that wanted to make nice with the labels, they found themselves in a really frustrating position: They saw what they viewed as a problem, but they couldn’t do anything about it. The only people who could do anything, were their bosses: Sam, Sina, and Josh.
I reached out to Sam for this story, but he also declined, citing legal restrictions that prevent him from talking about the company.
Some at the company hoped they would find an ally in Josh Greenberg, Grooveshark’s other co-founder. But, for Josh’s part, he was a tech guy, the product guy. Largely, it seems, he left the business decisions up to Sam. Josh trusted Sam. Sam trusted Sina.
For Isaac Moredock, Chief Revenue Officer, the whole thing became so frustrating he lashed out at Josh Greenberg directly. He ran into Josh at a party one night and brought up the issue.
ISAAC: At one point at this party, I saw him and we kinda had, like, some small chit-chat and, uh, I slapped him. I was like, “Josh, what are you thinking—”
ISAAC: “—like, wake up man, like—”
ERIC: You hit him?
ISAAC: —just ‘cause like I thought nothing was getting through to his head and here’s somebody that I greatly respect, one of the most logical people that I knew and had worked with and was like a brother to me. If anybody can help impact where this company’s gonna go right now, it’s you, man, like, why aren’t you seeing this?
ISAAC: And then we hugged it out and cried.
JOHN: There had been more and more kind of internal feuding.
ERIC: John Ashenden, former designer, now Creative Director.
JOHN: In fact, many of us who were on that kind of like leadership leg of the company had started having side conversations where we were like, you know, talking about how we weren’t happy with the direction, how we weren’t happy with Sam, Sina, what do we need to do to fix this? There was even like discussions of like almost like an overthrow, a coup if you will, of leadership.
JOHN: Yeah, it had gotten pretty nasty. And I know Sam and I know Josh, you know, they were not blind to it at all and knew that this was going on and they decided to call a emergency meeting.
ERIC: The meeting was going to be an off-site, scheduled for two days, in Gainesville. February 13th and 14th of 2012. I’ve heard people call this meeting a number of things: D-day. The Exodus. The most common though, was the St. Valentine’s Day Massacre.
There were about 12 people in attendance. 8 or 9 top managers. And then, at the head of the table was Sina, the chairman, flanked to his left and right by Sam and Josh. Day one, was a long day.
JOHN: Hours—probably like, 10, 11 hours in this room. Everything being moderated by Sina.
JOHN: Where we just kind of, like, bitched. We complained. It was really shitty, honestly, this meeting. It was, like, us going around the room talking about how we felt and what we felt we were doing wrong and what we needed to do differently and where Sam had fallen short and where we needed new leadership or a change of direction. Everybody, you know, it’s, kind of, becoming very obvious where everybody stood and who was, like, aligned with our direction and who was very clearly not aligned with our direction.
ERIC: This went on for many, many hours. Just going around the table and complaining. Like trying to do group therapy without a licensed therapist in the room. And the whole time, Sam Tarantino, he wasn’t saying anything. He was sitting there. Listening. At the end, he finally spoke up.
ISAAC: The first thing that he said was that we were all ungrateful, like, you know? He’s like, instead of saying like, you know, you guys are passionate about this and appreciate, you know, the feedback and everybody’s, you know, hard work he, he just like, I can’t believe that you’re questioning our strategy and I just, you guys are just so all ungrateful.
JOHN: I think for most people in that room, they really took his response, myself included, in a really bad way and saw it as like, he’s missing the message here and seeing this as nothing more than a personal attack on him. And that, missing the message that these are all people who deeply, deeply care about the success of this company as much as he does and are angry.
ERIC: Everyone went home. Slept it off. The next day, they reconvened. Most people figured they had aired all their grievances and now, it was time to think about next steps. How do we fix these problems? They ordered pizza. Here’s Jack Deyoung.
JACK: We ordered Papa John’s and I remember because there were paper plates and I remember writing out little notes to Paul who was to my right and sliding them over to him. And I actually kept that paper plate for quite a while after that.
ERIC: What were some of the notes that you wrote down?
JACK: One was, someone needs to know the definition of the word “literally—”
ERIC: [laughs] Mmhmm.
JACK: —was one of them. Um, another was “I feel like Hester Prynne.”
JACK: And the very last one was, “I’m pretty sure I’m about to resign.”
ERIC: Sina starts the meeting off, again, acting as moderator.
JOHN: He starts by essentially saying, like, we’ve heard everybody and we know where you stand and we’re going to make some decision here in this room, but it’s important that when everybody leaves this meeting that everybody is in line with those decisions and we no longer have a moment like this where, you know, there is backdoor discussions and people planning coups and like kinda outlining the energy again, right?
ISAAC: And at one point he drew a triangle on the wall and was like, I just want everybody to know that I control every point of the company’s, uh, position so I’m the—I control, um, all of the preferred shareholders, they all vote with me. I’m chairman of the board. Uh, you know, Sam and Josh are the only other people on the board, they always vote with me. I’m one of the largest common shareholders. I just want everybody to know that, you know, ultimately I’m where the buck stops in the company. And we’re like, oh man, like, you know, he just went out and said it and he’s like, “Now Sam runs the company and, you know, he’s the, he’s the visionary and all, but, you know, I’m the one that writes the law.”
JOHN: It almost felt like…the way it was delivered, whether he intended it or not, came off as very authoritarian and almost just like a dictator. And it did not sit well with me at all. And it did not sit well with a lot of people either. Instead, he basically created like an ultimatum scenario where everyone was required basically to pick a side almost, like are you with us or are you out? And, um—
ERIC: It was a line in the sand.
JOHN: Yeah and I think…I was not prepared for that. I was not prepared for that.
ERIC: The people in that room, among them Jack, Isaac, and John, they had all started at this company basically as kids, when the idea of a management offsite was as foreign to them as a polar bear in a palm tree. Now, they were executives, with other people’s lives depending on their actions.
In a lot of ways, circumstances had really changed for them.
At the same time, there wasn’t that much distance between the fake parking tickets, and the billions of dollars in lawsuits hanging over their heads. They were still in their 20s, still living with their best friends. And they were figuring out on the fly how to respond to an ultimatum that could change the course of their lives.
So they go around the room, person by person. First is the VP of Community Development, a guy named Graham Murphy.
JACK: And Graham, upon hearing this, he stood up and fist bumped me and said to the room, “Sorry guys I gotta go see about a girl,” which is a line from Goodwill Hunting.
ERIC: [laughs] Oh, and that’s how he quit.
JACK: That’s how he quit and then he walked out and didn’t say a word, and texted me ten minutes later and said, “I realize that I’m your ride home. Give me a call.”
ERIC: Next, John Ashenden. He had started at the company as a designer and was now a Senior VP and Head of Product Design. He quit too.
JOHN: It felt like you were giving up. When you were 6 years in, like, kind of admitting that like this is just not going to work for either of us and we need to go.
ERIC: A couple people later, the guy who couldn’t make a sale years before—but was now Chief Revenue officer—Isaac Moredock.
ISAAC: Well, I think we were all even like, fighting back tears because we’d all given our lives to this project. It was something that, you know, wasn’t just a job, it was, it was family. It was a very deep commitment we had all made for years of our life.
ERIC: Isaac quit. Then, the very last person.
JACK: And that’s when I think I wrote to Paul, “I think I’m going to resign.”
ERIC: A once eager intern, now Senior VP of the Music Department, Jack Deyoung.
JACK: It almost felt like, okay, there’s an out. And, it just seemed, if ever there’s going to be a time, it’s going to be right now.
ERIC: Half the leadership in the room quit that day.
It was a far cry from five years before. When those same people had gathered in a conference room to hear Sam tell them they weren’t getting paid for a while. Then, they decided to stay. Now, they were leaving. The only constant: it was never about the money.
ERIC: The meeting ended. People were kind of floating around the parking lot. Nobody really knew what to do. Eventually, John Ashenden saw the door to the building open. It was Josh Greenberg, the Co-Founder.
JOHN: I’ll never forget Josh Greenberg came out 30 minutes or so later. And, um he gave me like a really big hug and told me it was really hard for him too. And that he was like super happy to have worked with me and proud of me. And…I don’t know, it was just so genuine, you know, like, despite the fact that I had essentially turned my back on him and his company, that he was happy for me.
JOHN: And excited for what I was going to do next.
ERIC: It feels like this little spark of, like, humanity in this moment and period that was just cluttered with politics and bullshit.
JOHN: Definitely. Yeah, and I mean that’s who Josh was. He just had this, like, charismatic, positive, spirit that made you feel like, that everything was going to be fine.
JENNIFER: That was a really difficult time.
ERIC: Jennifer Hutton, Head of Accounts. While a lot of people quit that day, plenty, like Jennifer, stayed. And tried to make sense of it.
JENNIFER: It felt like the end of the company. It felt like, okay, if all these people are leaving, how can we possibly survive? What does this mean? What really happened? It was definitely a place of fear. Within the span of a couple months after that, almost my entire team had left. People I was working with everyday, people I considered my friends, people who I shared my frustrations with, my joys with. If they didn’t leave on that day, they left within two months. And I was kind of left alone.
ERIC: At the same time, a Swedish music startup that had been making waves in Europe launched its US operations. With 200 million dollars in venture capital, and deals with all of the major record labels, Spotify was here.
JENNIFER: When Spotify launched in the U.S. we started to see our users drop. And revenue dropped too. And it kind of took away any sense of the little bubble that we had around us and this mentality of, okay we’re gonna succeed because we’re doing this really different thing and we’re the only ones doing it and we’re so popular. It kind of brought us back to reality a little bit.
ERIC: Spotify had taken the opposite approach of Grooveshark and, largely, it worked. They raised money early, used a lot of it to pay for licensing deals with the labels, and then launched, free of the legal maelstrom that overtook Gainesville. It’s not crazy to look at Spotify and think, huh, that could have been Grooveshark.
ERIC: It was three more years after the St. Valentine’s day Massacre before Grooveshark folded. And I don’t want it to seem like those three years were simply a black hole of difficulty and despair. Of course, their numbers were down and they were losing money. Sony and Warner joined the Universal suit, so, quite literally, the entire music industry was now gunning for them. A lot was going wrong.
But there were other things happening too. The people who stayed, they became even closer. There was a dungeons and dragons game night a bunch of engineers had organized. Then there were two games nights. Then three. Much of the company still lived in the same apartment complexes and went out drinking together at the same bars every weekend. The Christmas parties were unlike anything else in town. I talked to a lot of employees from the company, and the best way I can think of to describe those last couple of years is like when you go away to camp for a week, and on Thursday night there’s a dance. And people are doing the limbo, and they’re eating too many cookies. And you’re thinking to yourself, “maybe we could all just stay here, out in the woods – form a little colony. Maybe we’ll never have to go back to real life.”
And then, the lights dim, and it’s the final song.
NICK: When we first heard it, there was that moment where we just had to, like, blink a couple times like, did that just happen?
ERIC: Nick Antonelli was an engineer at Grooveshark. He was there on April 30th, 2015, when Sam called for an all-staff meeting. He said the company would be closing down that afternoon, and that Grooveshark’s homepage would show a letter, admitting guilt of copyright infringement.
NICK: It was unreal in a way.
JENNIFER: They had officially addressed it earlier that day and we knew the letter was supposed to come out at a certain time, and there were a few developers working on taking down the site and putting the letter up, and so they were working at their desks, and the rest of the office had kind of gradually stopped what they were doing, and moved to join them. So, it was five or six, maybe, developers sitting at a little island of desks and the entire company was standing next to them in a big circle. And we started playing music from Grooveshark.
NICK: We basically had a playlist going on Grooveshark, and we just started dancing to it—
JENNIFER: You know, everybody was laughing and then, half of us were crying and then we were laughing again. We were just kind of having a good time playing music together.
NICK: I think we ended with Sister Hazel, which, I’m not sure of you know, they’re a band that came out of Gainesville.
ERIC: They’re a Gainesville band, yeah, I knew that.
ERIC: Yeah. All For You. The song [sings].
NICK: Yeah, I think that was the one. I actually have a video of us, part of us flipping the switch on the server—
-clip of singing-
NICK: And then, we all gathered around one of my teammates’ desks and he pressed the button and we shut off everything.
-clip of applause-
JENNIFER: And then we all stopped and read the letter together.
ERIC: And what was that like?
JENNIFER: God, that letter was such crap. That letter was rough to read.
ERIC: “Dear music fans,” the letter read, “Today we are shutting down Grooveshark. We started out nearly ten years ago with the goal of helping fans share and discover music. But despite best of intentions, we made very serious mistakes. We failed to secure licenses from rights holders for the vast amount of music on the service. That was wrong. We apologize. Without reservation.”
The letter then says that Grooveshark is forfeiting all of it its intellectual property to the record companies. And urges people to sign up and pay for legal streaming services. The first one they mention is Spotify.
And that was it. Overnight, the company was gone. People packed up their boxes, they threw out old files, and they wiped the servers clean.
Then three months later, news broke.
NEWS ANCHOR 1: 28-year-old Josh Greenberg, the co-founder of Grooveshark, passed away last night.
NEWS ANCHOR 2: Gainesville police say Greenberg was found by his girlfriend around 9pm.
NEWS ANCHOR 3: Friends and colleagues tonight are mourning a person they say was an innovator, a mentor, and an even bigger advocate for our community.
ABBY: Josh dying so close to Grooveshark closing made so many people think that he had taken his own life or that, you know, Grooveshark closing and him dying were related.
ERIC: This is Abby Mayer, Josh’s girlfriend. She’d been out of town that weekend. She’d last talked to him late saturday night. And, when she got back to the house that she and Josh shared on Sunday, she found him lying in bed, next to his laptop. At first she was talking to him—she thought he might have been sleeping. But she’s a nurse and says when she looked closer, she could tell. He was gone. He’d been dead for almost 16 hours according to the medical examiner.
There were no signs of foul play or suicide. When the coroner’s report came back, it listed his cause of death as “undetermined” something that happens in about 2-5% of cases across the country. So, not unheard of, but very rare. Gainesville police put that information out right away. But it didn’t stop people from speculating. That Josh had cracked under the pressure of losing his company.
ABBY: The people that said that, like you, you just knew that they didn’t know him very well. Like, after it was over though, that constant stress and that constant roller coaster and the constant, like, up and down of Grooveshark and the lawsuits and everything, once that was over, you know, obviously losing Grooveshark was hugely upsetting, but also, that stress was gone and that was such a huge burden lifted off of him. It just felt like a lot of opportunity opened up and, you know, when Josh died, it was the opposite. My world collapsed. One thing that I’ve learned about this whole experience is that it’s certainly not linear. It doesn’t get easier every day and it doesn’t become more normal. It, you know, it ebbs and flows.
TODD: We’re here to celebrate Josh’s life. I’d like to welcome everybody here. We’re gonna have a set of speakers. We’re gonna have some videos. We’re gonna have pictures—
ERIC: Nearly 600 hundred people showed up to Josh’s funeral. The University of Florida let the reassembled Grooveshark employees use one of the auditoriums on campus. The mayor spoke. The Former president of the University. Business leaders and students Josh had mentored. Employees from all eras of Grooveshark were there, from the founding up until the final song. At the end of the service Sam got up to speak, and then sat down at piano, and he paid tribute to Josh the best way he knew how—through music.
In startup culture, a failed business can be a sort of merit badge. It’s something founders carry around with them to their next project, part of their origin story about how they had to fail before they could succeed. For Josh Greenberg, Grooveshark arbitrarily became his life’s work. I doubt that’s what he intended. But if his legacy is wrapped up in the company at all, it’s not in the bottom line, or the company’s role in the music industry. It’s in the people whose lives it changed.
JENNIFER: You know, I grew up with with Grooveshark. I started out barely an adult. And I grew into this really responsible person. I’m not trying to, like, you know, brag or anything.
ERIC: Yeah, yeah, yeah.
JENNIFER: It’s just, I grew up.
JACK: Everything I always that I thought I could potentially possess that nobody ever realized was realized by about 80 of my best friends at a huge startup company. We grew up together. It was a surrogate for college, but we were teachers and professors. The curriculum might not have been as good as it could have been, but it was still pretty awesome.
ERIC: A lot the staff have scattered now. Some have started their own companies, others are managers elsewhere. They’ve got real, adult jobs, all over the country. But they stay in touch with each other constantly—texting, emailing, they go to each other’s weddings. The Grooveshark family, it seems likely to endure, long after people forget the company that brought them together.
LISA: Eric Mennel is a producer, here at Gimlet.
Coming up, we’ll have scenes from the next episode of StartUp, after these words from our sponsors.
LISA: In next week’s episode of StartUp, we’ll meet someone in the fashion business: a woman whose inspiration for her company began in an unexpected place.
MARY: I was screaming, hanging on to the edge of the doorway begging her not to make me wear that to school. And I remember sitting in that classroom, knowing that people could see me, not worrying that they saw me crying, but worrying that they saw me in this stupid dress.
LISA: A fashion crisis that sparked a business. That’s coming up next week.
And this week, be sure to check out the new episode from our friends at Reply All. Producer Sruthi Pinnamaneni tells a fascinating, weird story about a prisoner, his blog and a controlling mother.
Today’s episode of StartUp was produced by Bruce Wallace. It was edited by Alex Blumberg, Peter Clowney, Kaitlin Roberts, Molly Messick, Luke Malone and me. Editing help from Lisa Pollak.
Production assistance from Simone Polanen and Bryan Orr.
Mark Phillips wrote and performed our theme song. Build Buildings wrote and performed our special ad music. Additional music from R.A.C., Jeffrey Brodsky, White Dove, Devin Dare and the band Hot Moms Dot Gov.
Matthew Boll mixed the episode.
To subscribe to the podcast, go to iTunes, or check out the gimlet media website: gimletmedia.com. You can follow us on twitter @podcaststartup. Thanks for listening.We’ll see you next week.
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