Are you interested in the fascinating entrepreneurial journey of CD Baby's founder? Do you want to know how he balanced business growth with personal happiness? How did he manage to sell a business he initially had no grand vision for? And what can be learned from his unique approach to business, delegation, customer service, and the art of saying no? Dive in to find out more!

Anything You Want

From 1998 to 2008, Derek Sivers transformed a simple hobby into a $22 million business and sold it. While his approach is unique and might not work for everyone, enough people have found value in his stories and philosophies.

Most people blindly follow paths laid out by others, often leading to unfulfilled lives. To avoid this, one needs to understand what truly makes them happy and what’s worth pursuing. Sivers' ten years in business taught him that:

1. Business isn’t about money; it’s about making dreams come true.
2. Start with no money; it’s an advantage.
3. Success comes from persistent improvement, not relentless promotion.
4. Don’t try to please everyone; focus on your core audience.
5. Make yourself unnecessary in your business operations.
6. Only do what makes you happy.

In 1997, as a 27-year-old musician, Sivers was living his dream but faced a challenge: selling his CDs online. No existing platforms supported independent artists, so he created his own online store. Despite the hurdles of setting up a credit card merchant account and building a shopping cart from scratch, he succeeded. Soon, friends and strangers asked him to sell their CDs too, and CD Baby was born.

Sivers wanted to keep the business small and utopian. His ideal distributor would:
1. Pay him weekly.
2. Share customer information with him.
3. Never kick him out for low sales.
4. Avoid paid placement for fairness.

These principles guided CD Baby, which grew by word of mouth. Musicians loved their transparent, artist-friendly approach.

Sivers borrowed a local record store’s consignment model: artists set their prices, and they took a $4 cut per CD sold. A $35 setup fee covered the time to add each album to the site. This straightforward model sustained CD Baby, bringing in millions over the years.

Flexibility was key. Initially, CD Baby was just a credit card processing service, but when customers mistook it for a store, Sivers adapted. Later, they became a digital distributor for iTunes. Each pivot was driven by customer needs, proving that no business plan survives first contact with customers.

Lack of funding turned out to be a blessing. While others squandered investor money, Sivers focused solely on customer satisfaction. Learning to program himself and keeping costs low ensured every decision was customer-centric. Weekly calls from investors were turned down; he wanted a smaller, more efficient business.

If you’re overwhelmed, remember: say “no” to most things to make room for the projects that make you say “Hell yeah!” Focus on thrilling your existing customers, and they’ll become your biggest promoters. Sivers journey wasn’t about revolution; it was about serving people better.

Can You Turn Your Hobby Into a $22 Million Business Just Like This Musician Did?

Start now. One doesn't need funding to begin. Sivers notes that too often, people claim they can't start their big, world-changing ideas without money. This usually means they're more in love with the grandeur than the actual work. He reminds us that for an idea to grow, it must be useful, and usefulness doesn’t need funding.

Take, for example, Richard Branson. He didn't wait for a large investment to start Virgin Atlantic. Instead, when a flight was canceled, he offered to lease a small plane to get passengers to their destination. That's how his airline began—solving a real problem for real people.

When Sivers started CD Baby, he didn’t have a grand infrastructure. The first version was simply a list of a few CDs with a 'BUY NOW' button. It cost him $500 to start, but in the first month, he made back $300, and by the second month, $700. It’s been profitable ever since. He believes execution, not just ideas, is paramount. A brilliant idea with no execution is worth $20. But even a so-so idea with great execution can be worth millions.

Sivers believes formalities often play on fear. A year after starting CD Baby, a friend asked him about terms and conditions for his website. He replied, “I don’t have any of that. If something happens, I’ll deal with it then.” He points out that big companies often push unnecessary formalities to scare you into compliance. But look at small businesses like Jim’s Fish Bait Shop—they thrive without all the corporate red tape.

Sivers advises against relying on one big client; instead, focus on many small customers. This way, losing one customer won’t sink your business. For example, CD Baby only served independent musicians, excluding major labels. This focus made them a haven for independents, which kept them true to their mission.

He believes in proudly excluding people to win the hearts of those you truly want to serve. The Hotel Café in LA is a no-talking venue, making it a haven for music lovers. Similarly, CD Baby refused to feature major-label acts, sticking to their roots and valuing independent artists.

Sivers was once approached to run ads on CD Baby. He refused, saying, “I’m not doing this to make money. I’m here to help musicians.” He suggests that in a perfect world, your website would not be covered in ads. Focus on what your customers want, not on squeezing out extra revenue.

His voice teacher, Warren Senders, taught him about creative flexibility. For each song, he made Sivers sing it in various styles and scenarios. This showed him there isn’t just one way to do things. Similarly, in business, don't stick to one rigid plan. Explore multiple options and be ready to pivot.

So, whether you're dreaming of an airline, a school, or a simple service, start now. Begin with what you have, solve real problems, and constantly adapt. Execution over ideas, real solutions over grand visions—this is the path to success.

From Humble Startups to Thriving Businesses: The CD Baby Founder's Guide to Success

You don’t need a grand vision to succeed. When Sivers started CD Baby, it was just him and his first employee, John, working from his house. During an introspective night, Sivers emailed John, predicting they might need a whole third employee and three networked computers! 

Years later, with a hundred thousand artists and eighty-five employees, John and Sivers laughed at his old email. Journalists would ask, "What’s your long-term goal for CD Baby?" Sivers would respond, “I don’t have one. I’m just helping musicians with what they need today.” 

Once, in Las Vegas, a taxi driver lamented the corporate takeover of the city, comparing it to the simpler, more enjoyable mob days. His story resonated with Sivers. MBA types questioned CD Baby's growth rates and projections. Sivers would respond, “I started this as a hobby to help my friends.” They'd say he could maximize profitability with better analysis. Sivers would then tell them about the Vegas taxi driver: Never forget why you’re really doing what you’re doing.

How do you measure success? Trump puts his name on everything, grading himself by visible markers. Others measure by money, influence, or how much they give. Sivers measures by how many useful things he creates. Know your metrics and stay true to what’s important to you.

Care about your customers more than yourself. At a conference, someone asked what Sivers would do if musicians set up their own stores. He responded, “I don’t care about CD Baby. I care about musicians. If they don’t need CD Baby, I’ll shut it down and make music again.” Businesses often fall into survival mode, keeping problems around to solve them for a fee. Be willing to let your company die for your customers.

Act like you don’t need the money. Banks love to lend to those who don’t need it. People are drawn to those who give generously, not out of desperation. Set up your business like you don’t need the money, and it will likely come your way.

Don’t punish everyone for one person’s mistake. A local diner near Sivers has warning signs everywhere due to past issues. His strict school banned juices after spills. One guy tried to light his shoes on a plane, and now millions take their shoes off at airports. Resist making reactionary policies. Remember the thousands who didn’t wrong you when one person does.

Remember, behind every computer is a real person. Sivers' friend Sara’s client sent a scathing email but later dismissed it as a bad mood. Valerie, using an online dating service, deleted genuine messages without replying. Don’t dehumanize people online.

Clarity is crucial. At CD Baby, unclear emails to two million customers meant twenty thousand confused replies, costing $5,000 and staff morale. Writing clear, concise emails was essential for Sivers. Websites should learn from this. Unclear text leads to silence and inaction.

In business, focus on helping people today, measure success by your own metrics, care about your customers more than yourself, and strive for clarity in communication.

Can You Succeed in Business Without a Grand Vision: Insights from the Founder of CD Baby?

For Sivers, building CD Baby felt like creating a world where he made the rules. Initially, every order triggered a standard “Your order has shipped” email. But this felt bland, so Sivers spent twenty minutes crafting a whimsical message about the CD being handled with sterilized gloves, placed on a satin pillow, and sent off with a celebration. This playful email was a hit. If you Google “private CD Baby jet,” you’ll find thousands of results—people loved it so much they shared it everywhere. This tiny detail turned customers into loyal fans.

Sivers and his team made tiny tweaks that delighted customers. They added a countdown to their next FedEx shipment, which customers found super helpful. They answered calls within two rings, making them a rare company where you could always talk to a real person. Every outgoing email had a personalized “From:” field like “CD Baby loves Susan,” which made people smile. If musicians needed special favors, they'd say, “We’ll do anything for a pizza,” leading to fun interactions and loyal fans.

Customers sometimes left special requests, like asking for cinnamon gum or a rubber squid. Sivers and his team obliged whenever possible, even sending a real squid once! These little touches made them memorable.

Their hiring was informal. Sivers would ask current employees if they had friends who needed work. This casual approach worked surprisingly well, creating a trustworthy team. Even for high-tech roles, Sivers would hire based on recommendations, and it paid off with amazing hires like Ryan and Jason.

When Sivers quit his first job, he found and trained his replacement before he left, thinking it was the considerate thing to do. Years later, he was shocked to learn this wasn’t the norm. This naivety sometimes led to better decisions, like designing processes that prepared CD Baby for rapid growth.

Sivers spent years becoming a good singer, despite people telling him to give up. He learned recording and programming himself, finding joy in the process. This hands-on approach slowed business growth but made Sivers happy. Ultimately, it’s about being, not just having. Running a marathon isn’t about crossing the finish line in a taxi; it’s about the journey.

Building a Business with a Personal Touch: The CD Baby Story

In May 2003, Sivers found himself at Apple’s headquarters, eager to discuss getting CD Baby’s catalog into the newly launched iTunes Music Store. Like many in the music business, Sivers was skeptical of iTunes’ model, but the meeting’s surprise guest, Steve Jobs, was in full swing, passionately convincing them to share their entire music catalog with Apple. Jobs emphasized wanting every piece of music ever recorded, a groundbreaking shift for independent musicians.

Despite the excitement, Apple’s strict software requirements posed a massive logistical challenge, but they were ready to comply. After sharing the news online, Sivers was swiftly reprimanded by Apple for breaching confidentiality, though no agreement was ever mentioned.

Still, they forged ahead, signing the iTunes contract and preparing to upload music. Charging musicians a $40 fee for the service, they quickly raised $200,000, and soon competitors like Rhapsody and Yahoo! Music came knocking. It was a monumental summer for independent music, but iTunes went silent. Months passed, and frustration grew.

Then, during a keynote, Jobs indirectly criticized their $40 service, effectively shutting them out. Left with no choice, Sivers refunded all $200,000, only for Apple to send the signed contract the next day. They resumed uploads quietly, but the experience taught Sivers to never promise what he couldn’t control.

Years earlier, a casual decision had cost Sivers dearly. He’d inadvertently sold 90% of CD Baby to his dad’s company for a $20,000 loan, a fact he only realized when his accountant pointed it out, resulting in a painful $3.3 million buyback.

Delegation became Sivers' savior. Swamped with work, he shifted from answering every question to empowering his employees by creating a detailed manual. This freed him to focus on innovation, resulting in explosive growth from $1 million to $20 million in four years. However, he learned to trust but verify, especially after a crucial employee failed to deliver music, damaging their reputation.

Over-delegation also taught Sivers a harsh lesson. Giving employees too much power led to a profit-sharing debacle and significant unrest. Ultimately, he retreated, focusing on programming new features in solitude.

The journey from skepticism at Apple’s headquarters to learning the delicate balance of delegation was filled with hard-earned lessons. Sivers learned it’s crucial to delegate without abdicating responsibility, always ensuring trust is coupled with verification.

Did Steve Jobs' iTunes Revolution Teach CD Baby the Art of Delegation?

In 2004, during a feature on National Public Radio, Sivers confidently declared he would never sell CD Baby. By 2007, Sivers had rewritten the website from scratch, producing the most beautiful code of his life. The relaunch was successful, but his plans for 2008 felt uninspiring. Sivers had taken CD Baby far beyond his original goals and realized he had no grand vision for its future.

One week, three companies expressed interest in buying CD Baby. Despite his usual instinct to say no, Sivers decided to explore the idea seriously. That weekend, he reflected on the possibility in his diary. Surprisingly, he found himself excited about the freedom of not having eighty-five employees and the potential for new projects. Seeking advice, Sivers reached out to Seth Godin, who simply said, "If you care, sell." His business coach Jared Rose helped him see that his desire for freedom meant he was ready to move on.

By the end of that introspective day, Sivers had emotionally disconnected from CD Baby. The paperwork took seven months, but he chose a buyer who understood his clients, not the highest bidder. On January 18, 2008, Sivers slept deeply and woke up brimming with ideas for his next venture.

Kurt Vonnegut once shared an anecdote about Joseph Heller at a billionaire's party. Heller remarked, "I have something he'll never have: enough." When Sivers decided to sell CD Baby, he already felt he had enough. He lives minimally and values the freedom to live anywhere. 

He created the Independent Musicians Charitable Remainder Unitrust, ensuring that the proceeds from the sale would benefit music education. Sivers transferred CD Baby's assets to the trust before the sale, turning it into $22 million for the cause. This decision wasn't about altruism but about what made him happiest: knowing his success would benefit many and that he had enough.

Starting CD Baby, Sivers focused on creating a perfect world for musicians. Along the way, he realized the importance of making his business a dream for himself too. Business is as creative as fine art, and it reflects its creator. Some dream of being billionaires with large teams, while others prefer working alone. 

Pay attention to what excites or drains you. Be true to yourself, even if it slows your business growth. His company grew, but his happiness didn't. Sivers learned he's happiest with fewer employees or working solo. Whatever you create, make it your personal dream come true.

Selling CD Baby: An Entrepreneur's Journey from Success to Philanthropy and Self-Discovery

The journey of Derek Sivers, the founder of CD Baby, offers invaluable takeaways for aspiring entrepreneurs. The success of a business lies not in making money, but in realizing dreams and creating value. 

Starting a business without money can be an advantage, leading to a focus on customer satisfaction rather than investor returns. Success comes from continuous improvement, not aggressive marketing, and it's okay to not please everyone. It’s crucial to focus on a core audience and make oneself redundant in business operations to ensure the business can run smoothly without constant involvement. 

In business, it's essential to remain adaptable and responsive to customer needs, which often leads to new opportunities and growth. Also, businesses should aim to serve many small customers rather than relying on a few big clients to reduce risk. It's important to remain true to the mission and focus on serving the target audience effectively. 

Sivers emphasizes that businesses should prioritize solving real problems over chasing grand visions. He insists that execution matters more than the idea itself. He also advises against getting entangled in unnecessary formalities, suggesting that businesses should focus on serving their customers effectively instead. 

Success should be measured by personal metrics, and businesses should prioritize customers over their own survival. It's also important to maintain clarity in communication to avoid confusion and misunderstandings. 

Sivers' journey also highlights the importance of creative flexibility and small tweaks that can greatly enhance customer satisfaction. Furthermore, hiring based on recommendations can lead to a trustworthy team. However, delegation should be balanced with verification to ensure tasks are being executed correctly. 

Businesses should be ready to let go when the time is right, and it's essential to choose a buyer who understands the customer base. Finally, entrepreneurs should always stay true to themselves and create businesses that align with their personal dreams and values.

Home

Trending Books

News & Mags

Relax

Curated

Collections

Key Ideas & Notes

Insights

Highlights & Bookmarks

Listening History

Anything You Want

Derek Sivers

Are you interested in the fascinating entrepreneurial journey of CD Baby's founder?

Do you want to know how he balanced business growth with personal happiness?

How did he manage to sell a business he initially had no grand vision for?

And what can be learned from his unique approach to business, delegation, customer service, and the art of saying no?

Dive in to find out more!

Key Ideas

#1