Ty Morse, Songwhale – the best entrepreneurs are former artists!

Creativity is a potent fuel to kickstart entrepreneurial thinking in a person. Ty Morse of Songwhale is one of those unique entrepreneurs that can trace their entrepreneurial beginnings to their artistic career. Ty is the type of entrepreneur who just doesn’t fit the typical profile. As an ex-artists (theatre) myself, I share the creativity drives entrepreneurship approach with Ty. So do others, including Nathan Martin of Deeplocal, John Dick of Civic Science, Marco Cardamone of Merging Media – all of whom I will feature in upcoming posts. But back to Ty…

Founded in 2007, Songwhale is an interactive media company that works with companies to increase their reach, brand, and touch points to customers. The name of the company echoes Ty’s background in the arts – he wrote and played music, which is the “song” and studied marine biology which is the “whale.” Plus whales sing.

Background.  Songwhale’s origins stem from Ty’s passion for music. As a senior in high school in Wisconsin, Ty started working with a family friend on a rock opera for a class project based on “Beowulf.” In college (Davidson College), one of Ty’s professors found out about the Beowulf rock opera and asked him to a do a class/school rock opera project on Mary Brice Shelley’s “Frankenstein.” Once again, Ty turned to his friend, John Greenlee, who was seven years older and living in Minneapolis, working as a software developer.

The college wanted to produce it in a big way and the show recruited investors and debuted during his senior year. Ty recalls, laughingly, “Every break, every spare second, we spent at the studio preparing, writing, rehearsing, playing. To this day, I am not a very good guitar player, but I realized then that I like making things, which is why I make companies now.”

The show toured and John Hendricks, who owns the Discovery Channel, saw the musical. Ty tells me, “And I got a call asking me if I would like to write music for Discovery!” Upon graduation in 2004, Ty moved to DC to do work at the television station.

Ty and his friend, John Greenlee, formed a company called Discover Tones and used that company as a vehicle to sell tunes to Discovery. Six months later, Ty got bored and started writing music for the Animal Planet shows. Soon getting tired of that, Ty hit the road for Minneapolis to join John and start a record label. Ty had a few thousand dollars from selling a study abroad company, but John had a read software job and had to provide the bulk of the funding.

It was tough going financially. Ty remembers, “We had no money. I was sleeping on John’s couch. Every two weeks we’d go to the grocery store and we’d buy the discount things that were out of date.” Ty adds with a sparkle in his eye, “But I was happy because I was building something. The only thing that Io know for sure is that I will die and before that happens I will build as much shit as possible!”

They grew their record label and Virgin Records found them: “Virgin asked if I would come to NYC and run their collegiate marketing and promotion division. I viewed that as an opportunity to figure out how to make money in records. I mean, it was Virgin after all; surely they knew how to make money!”

Ty quickly found out that “Virgin didn’t really know how to make any money either! They made money on CDs, but they had been losing money for seven years when I joined because of the shift to the Internet.”

Ty and John went back to the drawing board. The iPhone had just come out; Ty was “looking at the Internet and downloading music.” They were into smart phones and they recognized an opportunity to sell advertising on mobile phones and give away music to attract the users. That was the first glimmer of Songwhale.

They picked a launch event of a Prince concert. Ty remembers the date well because it was July 7, 2007, or 7-7-07, which he marks as the launch of the company. “John built the technology to give away music from the opening band as part of Prince’s show. And we sold advertising based on the number of people we thought would download the music.” The concert was sold out at 1500 people, and 50% of the audience participated in the promotion, even though, Ty recounts, “no one had ever heard of this type of thing before.”

At the time, Ty really thought that he was starting a company that makes money so that, “We could go back to music. But the music industry was losing money and had no direction.” So Ty and his partner realized that they had a golden egg in their hands and that egg was Songwhale.

During this time, Ty had married a woman that he met at Discovery and the couple decided to move to her hometown of Pittsburgh. Ty raves about Pittsburgh to anyone who will listen: “I LOVE this place,” he crows! “The cost of living is low; the people are friendly; I can hire great people, people who are smarter than me; and it’s now home.”

Songwhale today.  The Steelers were Ty’s first Pittsburgh client so he followed the sports vertical and eveloped mobile marketing apps. The company evolved and added more verticals. Ty secured contracts with universities, which became another market for them.

Songwhale expanded into real estate because Ty couldn’t believe the archaic process of buying a house; “So you go out and look but to get any information as a consumer you had to contact the agent.” Today, you can text message to get information from all Coldwell Banker for-sale signs. “So you can just text a certain number and you can retrieve all the info that you want about a particular house for sale.”

Then they went into retail. Ty landed a contract with Pizza Hut and it worked out so well that the company asked if Songwhale could be their mobile provider for large brands. That brought in other large companies like Dunkin Donuts, Lowes, Panera Bread, etc., which are still Songwhale customers today.

Growth.  Songwhale started to take off and grow rapidly. Almost too rapidly. Ty was not prepared: “I had no idea how to do this,” he laments. “I mean, I was a liberal arts major in college. I studied literature and marine biology! I had no idea what cash flow was! I remember one day where I had to hire 10 people and I had no idea how to do that!”

Ty raised a little bit of capital to fuel the growth from friends and family. But he never wanted a lot of outside investment. Then he made an exception for Innovation Works (IW), a regional economic development organization. Ty tells me, “Songwhale was not looking for money, but wanted IW and the region to be tied into what we were doing. An investment from IW was good for both of us.”

The real coup de grace, though happened in television. Songwhale formed a strategic partnership with a large direct response company. Ty doesn’t want the name of the company made public, but tells me, “They are not be a household name, but they are huge. They saw the growth in mobile and wanted to be a part of it.”

As part of the deal, Ty negotiated a strategic investment $1.2M from the television media company. Songwhale got exclusive rights to the television platform, and the television media company got a small equity stake. Songwhale provides the web, mobile, and tablet platforms for all of their products.

The numbers are mind boggling. When you think of the millions of products that are sold by this company through direct response, and then you start to do the math of Songwhale getting $1 per unit, then you start to realize that one product alone puts close to $10M in top line revenues. Now think about 10-20 products! As Ty puts it, “It’s like clipping coupons but hundreds of millions of coupons. We have the best platform to do these sales. We drive more sales than other companies so we have grown in this area very fast.” He adds, “And we’re having a blast!”

Songwhale’s technology solution is using text messaging to buy the product. In fact, text messaging has turned out to be a key area of focus for Songwhale. Since the early days where revenues were split by verticals, Ty has winnowed down the focus to three main areas: text messaging (across all domains); mobile payment processing (text messaging based); and direct response.

Ty has grown Songwhale mainly by organic growth through revenue generation (what a concept!). In addition to Pittsburgh and his employee base of about 25, the company has offices in Milwaukee (3 employees), Minneapolis (where John is still based and where the company employs 8), Bejing (15 employees), and Indonesia (Jakarta with 20 employees).

Songwhale has grown every year since founding by a multiple of 3 to 5. Ty expects that 2012 will be a multiple of 10. Recently he launched a new mobile payment processing system that shows great promise.

Goals.  For Ty, business is not about the kill; it’s about the hunt. He just loves what he does and doesn’t want to drive towards an exit because “This is really fun. This is life. It’s more about the ride than about money.”

And Ty loves the fact that he is part of the economic growth in the region. He tells me about one employee who made more money than he thought possible: “The guy bought a house and a new car.” Ty is proud that he could help cause this type of reward.

Ty is just a superb salesman. He looks the part in his way-cool Songwhale t-shirt, and his funky spiked hair and winning smile. He could sell a comb to a bald man I tell him and he howls with mirth even though it’s not a new joke. He knows himself.

Ty’s favorite part of his role is doing the deals: “I LOVE putting together deals.” And he keeps putting deals together. He and his friend, Phil Laboon, also profiled by New Venturist, have a joint venture between Songwhale and Eyeflow to sell product into SE Asia.

Challenges:  Ty is aware, however, that he is not strong in everything, “I am really bad at some things,” he says ruefully. “So I need my team to make up for what I lack.” He outlines his key challenges in a rush:

• People are a pain. Ty has learned the hard way that dealing with people has been difficult, much more so than he expected. As a natural born salesman, he admits that he is not a good manger. He laments, “To be a great leader, at least the ones that I see, you have to be patient and an educator [he does not mean, I regretfully admit, a professor]. I am not patient. I have struggled with the fact that no one taught me, so why should I teach my team? But that’s not a great attitude.”
• Relying on managers. Ty relies on others to manage his people. Ironically, Ty is a people person but not from a management standpoint. His partner John, who Ty describes as a young Jerry Garcia, is a much better manager. Ty recounts, “John is the opposite of me. I am impulsive. He is deliberate. He is also kind of no-BS cut through everything. He gets right to the bottom line. I am not nurturing. I move too fast for that.”
• Establishing a positive culture. Ty chastises himself for not being a good listener and communicator. He calls himself a lone wolf with the contradiction that he runs a company with a bunch of people. That duality has forced Ty to find others who can establish a positive and strong culture in the company.
• Learning the hard way. Ty cites his biggest struggle as having to learn on the fly how to run and grow a business. “I have learned by experience. And believe me, you get punched in the face and you get battered and bruised. I learned everything the hard way.”
• Incentivizing employees. Ty doesn’t give ownership to his employees but gives them a lot of financial rewards. Even so, he gets frustrated that they don’t work as hard as he does. He recalls how hard he worked when he was at Discovery and Virgin and wonders why other don’t have the same drive that he had.
• Upsizing and then downsizing. Ty built Songwhale from went from 2 to 100 employees in two years. One day last year he visited a friend’s company and he was a $2B company with 35 employees. That stood Ty on his head and he spent all of this year becoming leaner and more efficient. Now the team is down by 25% but revenues have increased by several multiples. The trimming was hard but necessary, Ty explains.

Advice:  Ty’s advice to aspiring entrepreneurs is to “knowing what you are not good at. Hire and partner to fill the gaps. That has gotten me a million times farther than almost anything. You have to objectively assess yourself. That is pretty powerful.”

Ty talks about the hard work of being an entrepreneur, “Lots of people have lots of ideas. But most people don’t want to work that hard. They go to happy hour; they watch TV. I have gotten ahead by skipping those things. Just by working harder than anyone else you have a huge advantage even if your idea is not great. If you really want it and you are ready to crank then a lot can be done.”

He urges people to focus, “My personality, I want to do everything. But I can’t. Songwhale at the beginning, we were all over the map. But I had to learn to say no. For the benefit of my partners, my company, my people. And for me too.” My friend and colleague, Dave Mawhinney calls it brutal prioritization. It is brutal. But you have to do it. Ty admits that “Since I’ve said no, it’s gotten so much better!”

Ty attributes much of his success to his creative background in music and to his liberal arts education. “I am comfortable in almost any setting,” he tells me. Yep, I can talk philosophy or science, art or physics. And that gives me an edge in talking to customers and taking Songwhale where I want it to go.”

Good luck, Ty. The whales are singing too!