"The one thing I've learned over the years is to not be afraid of coming into things with a beginner's mindset. If you feel like you know everything, you end up missing everything."
Troy Carter is a talent manager and investor based in Los Angeles. He is the founder and CEO of Q&A, a technology and media company which supports the music business through distribution, services, and data analytics. Carter’s career took off when he founded Atom Factory in 2010, where he served as CEO and managed superstars including Lady Gaga and John Legend. Before Q&A, he also served as Global Head of Creator Services at Spotify and was named Entertainment Advisor to the Prince Estate in 2017.
As an investor, Carter is interested in the intersection of technology and culture. He formed the investment firm AF Square, where his early investments include Uber, Lyft, Dropbox, Spotify, Warby Parker, theSkimm, Blavity, Gimlet Media, Thrive Market, PlayVs, and FazeClan. Carter also currently serves as a trustee for The Aspen Institute, Los Angeles County Museum of Art, and CalArts.
In this interview, Troy Carter shares early advice he received from Will Smith, how his entrepreneurial spirit has guided him throughout his career, and insight on COVID-19’s impact on the music industry. He also opens up about the importance of meditation for his mental health and his complex relationship to the art world.
TGL: How was your childhood?
TC: I found myself getting into trouble because of my curiosity, I have always been inquisitive and on this journey to learn. I grew up in Philly, the early 80s were my formative years. That's when hip hop was really being born, graffiti culture, DJ culture, and a new style of fashion had come in as well. I found myself so intrigued with this emerging culture, and that's what made me fall in love with music.
TGL: When did you know what you wanted to do?
TC: In ninth grade, I was part of a rap group called 2 Too Many. We had this crazy idea if we met Jazzy Jeff and Fresh Prince, they would give us a record deal and sign us. We would go and wait outside of Jazzy Jeff's studio every day until they finally let us in months later. We met Will Smith, his manager James Lassiter and their crew. They took me under their wing and taught me a lot. Will and Jeff were the first guys to really make it famous out of our neighborhood. At that time, coming from a poor neighborhood in Philly, and seeing these guys become international stars was mesmerizing. Will always had the attitude that thoughts become things. If you can conjure it up in your imagination, you can execute on it. It works both ways: negative thoughts turn into negative things, positive thoughts turn into positive things. Coming from a place where you didn't see success or wealth or a lot of positivity, to all of a sudden have this person feed my spirit with this new information, giving me books to read and words to learn…that was my turning point. There was no looking back from there.
TGL: When did you move to Los Angeles and how did this happen?
TC: The first time I moved to Los Angeles was to work as James Lassiter's assistant. I was the worst assistant ever, and he fired me. I ended up leaving LA and going back to Philly. When I moved back to Philly, I was promoting shows, doing this and that. I started managing Eve just after she got her record deal. She was my first real client, and I helped her navigate what it meant to be a brand-new artist. I finally had this opportunity to help her grow her career, and at the same time, help me grow my career. Me and my partner Jay Erving built the talent management company Erving Wonder and sold it to Sanctuary in 2004, and then moved back to LA. Eve started a TV series, and we helped open up Sanctuary's West Coast division.
TGL: Your deal with Sanctuary did not work out, can you describe why?
TC: About a year into the deal, I realized it wasn't the right cultural fit. As an entrepreneur, you learn a lot about culture and what you want as an entrepreneur, but more importantly, what you want as a person. What feeds your soul. Working directly with artists, breaking artists, and building a company with my best friend, that was the culture we loved. The culture at Sanctuary turned into an entirely corporate environment versus the fun startup culture we had built. I decided to buy the company back, and start a new company, and Eve was going to be the first client, but she fired me after I started the new company. That was probably the most challenging professional time of my career. I had spent all of my money on starting this new business. I bought a house, my family had moved to LA. Then, the 2007/2008 financial crisis hit.
TGL: What was your mindset through this challenging period?
TC: From a mindset perspective, I went through six months of being in a basement mentally. I was not a person who ever suffered from depression, but all of a sudden, I was depressed. I didn't even know what depression was. A friend of mine introduced me to meditation, which I thought was a crock of shit at the time, but it ended up transforming me. To this day - that was 13 years ago - I still work with the same meditation coach. Meditation centers me so I can make better decisions. When you're going through turbulent times, you make decisions while you're stuck in the mud. Meditation has helped me look at decisions from 30,000 feet and decide consciously in those bad moments. I spent time feeding myself with positive information and affirmations, I’m a big believer in energy, and the right energy came along after that.
TGL: How you managed Lady Gaga and used social media to make her famous was a huge transformation for the music management industry. Can you explain your intuition?
TC: The one thing I've learned over the years is to not be afraid of coming into things with a beginner's mindset. If you feel like you know everything, you end up missing everything. Any success that I had prior to managing her didn't matter. If you get hired for your past success, but you don't deliver, then you don't deliver. I asked myself: how do we break an artist when we don't have radio, can't get videos on TV, and records weren't selling particularly well at that time? We had to do things differently. The tools that were available at that time weren't available years before that. YouTube and Twitter were brand new. Those platforms helped democratize what it meant to be both an artist and a manager, because now you could build direct relationships with fans. I built direct relationships with Twitter, Facebook, YouTube…a lot of different technology companies. We were always experimenting. That's something I still do to this day. We're always looking at what's next and trying to live around the corner and be ahead of what's coming.
TGL: What are the current challenges for the music industry right now?
TC: We're going through a pretty massive shift right now, Covid-19 has accelerated the inevitable. We would've had years to shift to virtual reality or augmented reality, enhanced live experiences. We're seeing 1.0 right now with Instagram Live and some other platforms. Technology is being developed right now that's going to enhance those experiences and allow artists to not have to tour so much. To create these experiences without beating your body up traveling the world, is going to create another type of experience for the artist and the fan. I’m definitely excited about that. Also, with what's happening to Live Nation right now and AG and other companies in the live space, we have to rethink the entire ecosystem of the industry and which areas are most fragile. If artists rely on live touring for 70% of their income, and we see the fragility in live touring, we have to create new models and new revenue streams. We can’t necessarily depend solely on the record labels to give out more records and more money. This is the time to be innovative and find new solutions.
TGL: Outside of touring, what are the different streams of revenue in music?
TC: Monetizing live stream. There's some platforms out there right now that give you the ability to monetize live streams. Facebook recently announced that they're moving in that direction, as well as Instagram. And merchandise - if you have a fan base, figure out how to stay fresh and replenish your merch. Also, look at what influencers have been able to do in terms of monetization on platforms, whether it's YouTube or TikTok or Instagram, any of these platforms. Musicians who have the luxury of going on the road that may not be able to now may have to look at those brand partnerships the same way influencers do.
There's always somebody that's inventing some new revenue stream. TikTok didn't exist a couple years ago. Be creative, and don’t sit around and wait. Come up with your own ideas. If you build genuine connections with your audience, they'll support you. Whether it's releasing new music that they end up streaming or buying deluxe versions of, they'll find ways to support you. Instead of focusing on monetization, how do you focus on building value for your audience? The score will keep itself. Just play the game, set yourself up to win. Don't focus on the money. Focus on the work.
TGL: How will music videos evolve because of Covid-19?
TC: We've been talking about this around my office over the last few weeks since everybody's been at home. My gut tells me that the consumer is moving to a different level of expectation now. Staying at home has forced these intimate performances and execution on simple ideas. I'm watching artists do FaceTime photo shoots and simpler music videos with probably more post-production. I think the consumer is going to be looking for more realness. It is the same thing we saw when we saw that shift from television to YouTube. It went from these big TV show productions to simple down to earth moments. I think it's going to become a little more intimate.
TGL: Which hip hop artist are you excited by right now?
TC: I love Rosalía, she is one of my favorite new artists. She's so bold, and cut throat. I'm excited to see what happens with her career.
TGL: You also worked at Spotify and have become an important figure in the tech world, where you have invested in over 120 companies. Why did you decide to explore the tech world, and what was the starting point of creating this angel fund?
TC: It has always been about the entrepreneurs, and how do we invest in smart people who are going to solve big problems or bring value to consumers? When you invest in smart people, they're going to always figure it out. It may not be the first version of their idea or the second version, but they're going to figure it out on their third or fourth time. We really invest in teams.
The other thing is, investing in technology has given me exposure to what's ahead. That's one of the things that has allowed me to go and add value to a company like Spotify. I understood technology culture just as much as I understood music culture. That skillset of being able to translate between those two worlds came from investing in these companies over the last 11 years.
TGL: What is the biggest problem you're trying to solve as CEO of Q&A?
TC: We're looking at the business side of music, and everything broken in between. What I mean by that is, there has never been software built specifically for the music business, especially by people who understand the problems intimately. Some of the problems that I saw when I was at Spotify surrounding working with labels, managers, and promoters, I felt like there was opportunity to make their business more efficient. Those are the problems that we're solving.
TGL: How do you identify a startup you want to work with?
TC: I look at a few different things. What problem is the company trying to tackle? Who are the competitors in the market? Is there a big incumbent in the market that's asleep at the wheel right now? Is this team uniquely qualified to solve this problem? Do they have other investors that can be complementary to us to help them solve problems as well?
And then, what is the size of the market opportunity? If you're going after a niche market, and the total size of the market is $100,000, there's no value. If you're going after a multi-billion dollar market, then there is a lot of value if we feel like you are uniquely qualified to tackle a market. We like to take wild swings. What hasn't existed before? When we invested in Uber, it was a unique idea. When we invested in Zimride, now Lyft, that was a unique idea. Same with Dropbox, cloud storage wasn't a thing back then. Slack is another good example. What areas can be created that provide value to the consumer which they may not know they need?
TGL: Did you have fun on Shark Tank? Do you think you will do more TV shows?
TC: That was a lot of fun. The other sharks are great and competitive. I don't know if I’ll do more, maybe if the right thing came along. It takes a lot of time. Doing the show and building a company is tough. It depends on the show and where I'm at in my life at that particular time.
TGL: How did you become interested in the art world and why?
TC: I just love artists. Whether it's a songwriter, a painter, or a sculptor. I like creatives. I think coming into the art world, it was intriguing to see how the ecosystem worked. Seeing the artists, galleries, museums, auction houses, collectors, and how the world operates. There's so much politics that lives underneath the art world. Some of it reminds me of the music industry where you have these gatekeepers in between and these decision makers at the end.
A museum would be the equivalent of a radio station in our world. If a painter gets accepted in a big museum, their value goes up. Same thing with a musician on the radio. It's subjective, as well. Who is making these decisions and why? We see a lot of groups left behind in the art world. Specifically, artists of color and women, because of the people who make the decisions. I felt like I needed to be more than just a collector, I needed to support artists and institutions where I could be part of that decision making process to make sure that there's a voice at the table for people of color.
TGL: You criticize the economy of the art world. What needs to change?
TC: The art world to me is purposely opaque, there’s no transparency in terms of prices. A lot of artists don't even know who the gallery is selling their work to. If I make a painting, I sometimes have no idea who's buying that painting. If that person buys the painting from me as an artist for $20,000 and then goes and sells it on an auction in a few years for $1 million, that artist gets zero benefit from it. In some cases, artists do free public works for cities and municipalities, and then the city and municipalities send the work to auction and make millions of dollars.
I'd like to see changes. Are there different ways for artists to have more control of where their work goes? Is there an easy way to find out where work travels to? If an artist years down the line wants to do a museum show, it would be great to know where the work is, so people can lend the work to the museum.
Auction houses only exist because of the artists' work. If there is a premium that goes back to the original artist when the work is sold, that would do so much for these artists and the system. Right now, I think they charge a 25% buyer's premium. Include the artist within the premium. It could be 5% of the 25% or make it 30%. Give the artist 5% and the auction house keeps 25%, but the buyer of that piece pays the premium.
TGL: How did you build your art collection?
TC: I collect both emerging and established artists. I don't work with advisors. For me, it is about understanding the art myself, having direct relationships with most of the artists, and understanding the intent behind the work. Even with my house, I couldn't hire a decorator, because I have to live in this house. There has to be stuff that I actually love and want to look at. Not somebody else's taste. It's the same exact thing with art. I have to really love the work, and love the artist. I always change around work between my house and my office. We have a place on the East Coast too, so works rotate. I try to hang everything that I buy, so it doesn't feel like I'm hoarding the work. Investing, I definitely brought that skill to art, and understanding value and how to build out a portfolio. How do you build a collection that's not highly concentrated on one artist, and is spread across artists that you love?
It keeps me excited. It's hard for me just to do one thing. The way that I set up my office and my team allows everybody to participate and work on different things, so it keeps everybody excited. It gives you a unique point of view. I can bring my art point of view into some of my music conversations. We put together collaborations between music artists and fine artists. I've introduced people all over the place there.
TGL: How has Covid-19 impacted your business and outlook on investing?
TC: On the business side, the most important thing is protecting my team. There are 30 of us in my company, and a lot are young people. Many of them are thousands of miles away from their families. I’m making sure, from a physical health standpoint, they're okay. But, also from a mental health standpoint, that they're fine as well. Sitting in a one bedroom apartment by yourself for months at a time isn't good for anybody's mental health. We've been thinking about how we get people back safely? How do we roll out opening the office? We're fine working remotely, we haven't missed a beat. To be fully honest, one of the things we have realized is that we don't even need an office. But, some people need to get out of the house. We're also thinking about our partners, and artists. When they can't tour to make money, how do we help increase revenue through brand partnerships, live streaming, and other types of deals? I think there's a lot of opportunity. The world has been shaken up.
I've been so bullish on ghost kitchens for the last few years. When we go on Postmates or most food apps, a lot of those restaurants aren't even restaurants. They're set up in warehouses, and made strictly for the mobile app. The food is being prepared within these warehouses. There's 10 to 20 restaurants set up within the warehouse built for delivery systems. When you think about where things are moving in terms of physical spaces, there’s a lot of opportunity for anybody that can create cloud based solutions for physical spaces, and make that world more efficient.
TGL: Who would you like to have dinner with that you don’t already know?
TC: Queen Elizabeth. When you think about everything that she has seen globally by sitting in that position for all of those decades. From wars to technological shifts to countries turning into democracies, I would love to hear her personal stories around that.
TGL: What advice would you like to give to The Genius List’s readers?
TC: The easiest thing for me is optimism. Being able to look at the world, your work, your relationships through an optimistic lens, and being able to spread that is so important. With the negative news cycles - this gray cloud that's floating over the world globally right now - most of the people I talk to say the world has fallen apart. Why can't we use this moment as a gift? We have zero control over it, the only thing we can do is focus on the opportunities. Is this an opportunity for me to spend more time with my family? Is this an opportunity for me to learn a new hobby? Is this an opportunity for me to be forced into learning a new skill, because I have to get a new job right now? Be a delusional optimist.