Former Etsy CFO Kristina Salen Talks Running Steve Stoute's Empire, Scouting Talent For UnitedMasters and Investing in Spotify
After leading e-retailer Etsy through its 2015 IPO and announcing in Nov. 2016 that she would be leaving her CFO post the next spring, Kristina Salen says she got a call from venture capital firm Andreessen Horowitz’s Marc Andreesen saying: "I have the job for you."
The gig: to work for advertising executive and record-label veteran Steve Stoute as the CFO and COO of both his existing ad agency Translation and his new music startup, UnitedMasters, which has raised $70 million to help indie acts distribute their music and grow their businesses while retaining their copyrights. Though her experience in the music industry was limited -- she invested in Spotify in 2012 on behalf of Fidelity Investments, where she'd overseen its technology and media research practice -- Salen began meeting weekly with Stoute, and signed on right as she left Etsy.
"Everyone who was looking for a tech CFO knew that I was in the market, so I got to see almost everything that was out there," Salen said recently in her Midtown Manhattan office. "What I found in that process was that I picked companies to work for in the same way that I pick companies to invest in."
Born and raised on Chicago’s South Side (save for four years in Venezuela where her father -- an assembly-line worker at a Ford plant -- was sent to teach Venezuelan workers to unionize) the self-described "numbers and patterns person" talked to Billboard about why she made the move, what she makes of the music industry so far and how she and Stoute plan to "create an operating system that helps you make more money... but that also kind of runs your brand so that you can focus on the art."
What sold you on the vision?
[UnitedMasters] is a hard-core, engineering-led tech company -- and it starts there, particularly with consumer-facing technology, with the consumer being the artist. I have just seen over the years so many companies fail because they haven’t really empowered the engineering force to really build something great. That mentality is first and foremost what I look for.
The second thing is: is it solving a real problem that’s a big problem? When I think about the real problem we’re trying to solve here, it’s twofold: Have artists benefited from technology to date? No. Are there ways to use technology to improve how artist make money and how they distribute their craft? Yes. Is that big? Are there are a lot of artists in the world and is there a lot of money around that? Yes, it’s a big, real problem. On the other side, do brands have ways of really connecting with their consumers, and using cultural forces to do it in ways that feel authentic? Not like hiring a spokesperson, but really connecting through experiences, which is where all of advertising and marketing is going? Nope, they don’t. The amount of money that brands will spend to connect with those consumers - is that a big pool of money? Yeah.
Finally, it’s about the leader. When it comes down to it, companies fail when the leader fails to grow with the company as a person. When I sit down with someone that wants to hire me, at some point I say: there are a lot of CFOs out there. Why do you want me? And there tends to be a very similar answer: 'Well you’ve been a CFO, you understand the strategic side and the tactical side, you can do debt deals, and M&A and you can take us public, you’re a known entity,’ and those are all really great reasons to hire me. But what Steve said was: "I want to be a great CEO, and you’ve been with a lot of great CEOs, and you understand the patterns that can get me there. He wasn’t complimenting me; he wanted a partner that's gonna help him be that person. Companies that don’t have people that think like that are companies that fail.
What’s been the most surprising thing to you about the music world?
How reluctant they are to use data in a process. When we hire A&R and artist services people, they have to be curious about the data piece. How can I use data to optimize parts of my job that didn't need to be doing? To really focus on the artist? It’s the same thing we’re trying to do for the artists -- we’re gonna create an operating system that helps you make more money, great, but that also kind of runs your brand so that you can focus on the art, because that’s the most important thing. There are a lot of great, great people in the music industry - who are stymied by that same industry -- but they have fantastic potential to really change it. I mean inside the labels right now. We meet those people. Those people are there.
You’re looking for a president of UnitedMasters -- have you zeroed in on any candidates?
No. It’s just going to happen -- it’s like meeting the person you’re going to marry. [It will likely be] someone who’s at the point where it’s their last gig, or someone in the middle of their career that just wants to change something, who says: "I know that this is the future and I want to bet on the future."
Given your history investing in Spotify, what do you think about Spotify going public now?
Spotify's vp of investor relations [Paul Vogel] is someone I’ve worked with for 17 years, and Barry McCarthy is their CFO, the former CFO of Netflix. What I would say is if there are two people who can do something really innovative, and execute on it really well, it’s those two people. I have a lot of trust in their abilities. I’m excited to see what they do with it and I’m always rooting for IPO innovation and iteration. There are lots of thing to be done in that process to improve it and ultimately align shareholders more tightly with management teams. I printed the whole [Spotify prospectus] out to read... I’m so excited. I’ll probably build a model.