Overview

Product Description

The Crowdmix app promised to ‘enable users to develop and enjoy rich, social media experiences by joining crowds, or communities, of like-minded people, using music as the link’. However despite having 160 staff in its London office and others in its LA office - a staff 10 times the size Spotify had a decade ago - it still never managed to get a full product out the door.

Quick Stats

2013

Started in

Jul, 2016

Closed in

201-500

Employee (s)

$18,150,000

Total Raised

Why did Crowdmix fail?

Follow This Question - 0

Evan Lee

Updated on 15 Aug, 2017

Burn Rate

Overgrowth

Crowdmix's <a href="http://www.businessinsider.com/crowdmix-collapsed-administration-raising-14-million-2016-7 target=" _blank"=""></a><a href="http://www.businessinsider.com/crowdmix-collapsed-administration-raising-14-million-2016-7 target=" _blank"=""></a><a href="http://www.businessinsider.com/crowdmix-collapsed-administration-raising-14-million-2016-7 target=" _blank"=""><a href="http://www.businessinsider.com/crowdmix-collapsed-administration-raising-14-million-2016-7">failure</a></a> exemplifies a company guilty of "putting the cart (way, way, way) before the horse". Crowdmix simply (and brazenly) tried to grow without a launched product.The company's first iteration was simple– it was a platform that produced local fan music charts. &nbsp;However, CEO Ian Roberts and his cofounder Gareth Ingham had ambitious goals for the company. The pair pushed Crowdmix to be "the destination for fans of all the world's biggest musicians to come and talk about the music they love" by adding social media and embedded music streaming aspects. &nbsp;Crowdmix's main value proposition became extremely unclear, and Robert's leadership&nbsp;and his impossible-to-attain growth expectations caused the company to falter. Early on, Robert declared that Crowdmix should build a platform for 15 million users instead of an initial few thousand. Building a platform of that scale so early meant that "even the smallest change was a huge amount of work."Robert also allegedly predicted that Crowdmix would be worth $1 billion and have millions of users, even though they no revenue and only a couple thousand users at the time.To build his "grand" plan, Robert began hiring people– a lot of them. In 2015, while still pre-revenue and pre-launch, the company swelled to 160 people&nbsp;and went through a "<a href="http://musically.com/2016/08/05/anatomy-of-a-catastrophe-the-fall-of-crowdmix/ target=" _blank"=""><a href="http://musically.com/2016/08/05/anatomy-of-a-catastrophe-the-fall-of-crowdmix/">revolving door</a></a>" of hires with poor HR tactics. Robert and Ingham also couldn't agree on a singular vision for the company, which caused a lot of extra features to be added and spread developers thin. It was "difficult to do any work other than firefighting," says one source.&nbsp;While employees contributed to high burn rate, the company also lacked fiscal discipline.&nbsp; Before it had a product, Crowdmix threw massive parties in Amsterdam and Austin costing $250,000. Employees were sent around the world to events like South by Southwest and the Cannes Film Festival on the company's dime. The company also opened a swanky office in Los Angeles and frequently flew employees between LA and London (again, without a product).&nbsp;As one employee said, "I find it morally wrong to be so lax with the spending on interior decorations and events when the company is not making any money. You are basically spending product development funds on chandeliers." Yes, the LA office had an actual chandelier in it. And by the way, the burn rate was <a href="http://www.businessinsider.com/leaked-administrators-report-crowdmix-2-million-burn-rate-2016-9 target=" _blank"=""><a href="http://www.businessinsider.com/leaked-administrators-report-crowdmix-2-million-burn-rate-2016-9">leaked</a></a> to be $2.65 million a month.Furthermore, while Crowdmix was supposed to have implemented advertising at launch, Robert wanted "interactive, custom branding". Robert's demands&nbsp;delayed advertisements (and revenue) indefinitely. As it turns out, the delay lasted until Crowdmix's death. In other words, the company never made any revenue.In May 2016, Robert abruptly left Crowdmix, rumored to have been pushed out by investors. Ingham took the reins, but it was too late. The company never paid June wages and investors dried up funding. Facing bankruptcy, Crowdmix looked for a buyer. Ultimately, Nick Candy, one of Crowdmix's investors, <a href="http://www.billboard.com/articles/business/7461606/social-music-startup-crowdmix-sold-nick-candy target=" _blank"=""><a href="http://www.billboard.com/articles/business/7461606/social-music-startup-crowdmix-sold-nick-candy">bought</a></a> the company in August 2016.

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Investors - 2

Funding Rounds - 1