This Billboard cover story (Vol. 125, Issue No. 15, newstand: April 13) entitled "Power Trio" examines three of the music industry’s most successful music and tech entrepreneurs: Guy Oseary, Scooter Braun and Troy Carter, who in addition to managing three of the biggest musicians ever in Madonna, Bieber and Lady Gaga (respectively), are actively investing in tech companies like Spotify, Uber and SoundCloud. This piece features exclusive insights into all three men’s businesses and marks Oseary’s first major interview since 1997. Billboard.biz is pleased to reprint this article from Billboard magazine in full -- note that subscribers got the full article nearly two weeks ago.
GUY OSEARY IS SITTING IN THE SPRAWLING YARD OF his Beverly Hills estate, listing all the things he’s said “no” to in the past 16 years. It is not a short list.
Though he’s built an enviable career as co-founder of Maverick Records, business partner-turned-manager of Madonna and a powerful partner in A-Grade, an investment fund with Ashton Kutcher and supermarket billionaire Ron Burkle valued at more than $20 million, Oseary has done little press since 1997. That was the year he agreed to talk with the Los Angeles Times’ Calendar section regarding Maverick’s meteoric ascent as the little boutique that could—breaking Candlebox, Alanis Morissette and, later that year, the Prodigy—and the last time he can remember participating in any type of profile that focused more on him than Madonna.
He has just turned down an interview request from another business magazine before Billboard arrived at his house, and it will be 24 hours before he agrees that this conversation can be on the record. When he does, the floodgates open, and nearly everyone who moves money around Los Angeles wants to talk about Oseary and his investment activities.
It’s an exceptionally sunny L.A. afternoon, and Oseary is friendly, focused and remarkably forthcoming for someone who doesn’t like doing interviews. He’s also exhausted—it’s early January, and he’s been home for barely two weeks after being on the road with Madonna’s MDNA world tour, Billboard’s highest-grosser in 2012, no less. “It’s nice to just be in one place for a while, you know?”
So why is he talking now? Since 2009, Oseary has become an increasingly important presence in the tech and entertainment startup scene, partnering with Kutcher and Burkle for A-Grade’s investments in more than two dozen companies (Fab.com, Airbnb, Vyclone, Path and Tinychat among them). In addition, Oseary’s personal investments that have helped take companies at varying stages of maturity to the next level (including INDmusic, the video music service now known for helping monetize the YouTube videos driving Baauer’s “Harlem Shake” meme).
In turn, he’s inspired two of his most notable peers—Troy Carter and Scooter Braun—to build their own tech portfolios and rewrite the definition of what it means to be a successful music executive in the social media age. Oseary, Carter and Braun are already the managers of three of music’s biggest stars—Madonna, Lady Gaga and Justin Bieber, respectively. How big? Billboard Boxscore calculates their 2012 touring revenue at $582 million combined, and the trio’s combined album sales stand at 83.5 million units and digital singles at 89.1 million, according to Nielsen SoundScan.
Not bad, but not enough. The music business that Oseary came of age in from the late ’80s to the early 2000s could rely on album sales and touring as principal revenue streams. No more. Being a manager in the age of disruption means staying abreast of every ripple and current in not just pop music, but social media, technology and even consumer products. Promotional opportunities and brand partners are constantly surfacing. Some demand attention and evaluation; others need to be sought out and understood before they cannibalize your business.
In part, that puts managers like Oseary, Carter and Braun at the forefront of emerging technologies, able to spot investment opportunities as early if not earlier than seasoned venture capitalists. This trio invested early in Turntable.fm, SoundCloud and Spotify. Together, they’re helping redefine not just the profile of a music manager in 2013, but also how Hollywood’s gradual merger with Silicon Valley (or “Silicon Beach,” as some have dubbed it) unfolds.
“I have a lot of friends tell me, ‘The house you’re at was paid for by the music business,’” Oseary says from his patio, nodding at the expansive property that includes several wings, fresh orange trees and a private tennis court. “Absolutely. Maverick Records was sold and bought me this house. My life is music, no matter what part of my soul I’m using.” But that said, he’d rather be funding SoundCloud, Spotify or INDmusic than working with a traditional record label. “I don’t control these labels. I don’t control the managers and lawyers. It’s very complicated. I’d rather support pipes.”
The transition that Oseary, Braun and Carter are looking to spearhead for the music industry comes with a healthy dose of skepticism from veteran tech investors. “I think they are actually distractions,” says Fred Davis, a founding partner at investment group Code Advisors, of managers who enter the investment world. “Are they misusing their platform as a representative to an artist to sweet talk their way into investment deals they should not be a part of, or are they good investors? Good investors provide value, and if they’re not good investors, they can be distracting.”
Shervin Pishevar, co-founder of investment fund Sherpa Foundry and a powerful investor in his own right as former managing director of Menlo Ventures, sees Oseary, Braun and Carter as assets, if not major money players. “They’re value creators—they’re not value extractors in this context,” he says, having worked with all three on mobile car service Uber. “They’re definitely not the most cash in a deal, but they bring way more value than just their money.”
In many instances, celebrity managers can create the most value through access to their respective Rolodexes. Airbnb co-founder/CEO Brian Chesky credits Oseary with introducing him to the company’s now-heads of international and for playing a hands-on role in Airbnb’s global growth. (The online travel housing company was valued at more than $2.5 billion in a Wall Street Journal report last October.) “Guy’s really focused on big, not small steps,” he says. “Expanding internationally was a major thing for us, and the outcome was we eventually became the overwhelming leader in our category. We are far ahead of the clones and all the other international companies—we’re no longer an American company.”
Social commerce site Fab.com co-founder Jason Goldberg also cites Oseary’s introductions to fashion designers who’ve sold on the Fab platform and other key partners as having a direct correlation to his company’s current valuation—Fab was expected to complete $500 million in revenue by 2013, according to Goldberg’s comments at TechCrunch’s Dispute confab in 2012. “I can say without a doubt that Guy’s involvement with Fab has added tens of millions of dollars to Fab’s value as an enterprise.”
Oseary knows how important valuations and exit strategies are in defining an investor’s ultimate success, and teases that A-Grade is prepping an announcement in the coming month that’ll make some of his own projects a little more clear. “We have investments in a lot of companies that haven’t exited. Their growth is all you can measure,” he says. Kutcher adds, “What we do as a team is more valuable than some celebrity marketing your product. We’re trying to figure out the direction of the product and the direction of the company. We put our money where our mouth is, not create some promotional vehicle for myself or Guy.”
Coming to the table with battle-tested instincts is a critical strength in investments, but so is another skill well-cultivated in Hollywood: a proven eye for talent capable of capturing the public’s imagination (and dollars). To hear Oseary tell it, signing an artist isn’t so different from evaluating a startup tech founder: “At Maverick, we were a small label, so I had to have a quick gut check. Most artists I signed were within the first songs they played me. Alanis walked in and played me I think the first 30 seconds of the song ‘Perfect’ and I said, ‘I’ll sign you.’ Or Muse—I stopped them after the first song and said, ‘You can keep playing, but I’m good.’ If you don’t do that when you’re a small company, you’re just waiting for someone to come in and overpay—and you can’t compete and they take it from you. Today, I’m not doing music, but you got to meet the founder. The founders are kind of like our artists now. It’s a different kind of experience, but we still make quick decisions because we know what we like. I know I have a partner who also has a strong gut, so together if we both love something, then we know it’s right on.”