Recovering Lost Revenue: Vindicia CEO Gene Hoffman (Part 2)

Sramana: You were already doing your first major startup while you were still in school?

Gene Hoffman: I was in school, and I also worked for the North Carolina basketball team. During my junior summer, Coach Smith had a basketball camp where he brought in a lot of kids from all over the country for three weeks. I was sitting on the Smith Center floor while the kids were watching the NBA playoffs. Coach Smith walked past me and said “Gene, you’re on my television every 30 minutes. Tell me more!”

CNN Headline News had picked up a story about my company and was running it every 30 minutes. Later that week I sat down with Coach Guthridge that even though my business was booming I was coming up on my senior year for the basketball team, and it was clear that I would be the senior manager. He looked at me and said “I will tell you exactly what I told Stackhouse, Wallace, and Jordan. Go take the dollars and get out of here.” I took his advice. PGP bought my company that fall, and that is when I moved to Silicon Valley.

Sramana: How much did you make on that transaction?

Gene Hoffman: The valuation was around $20 million. PGP went through some machinations so I did not get that much out of it, but it was clearly an amazing move. I really enjoyed getting involved in Silicon Valley in 1996, which really positioned us well for eMusic.

Sramana: What were the circumstances around the founding of eMusic?

Gene Hoffman: It was clear that PGP was going to be sold to MacAfee. I was sitting there trying to figure out what to do next. One thought was to do something with anonymous digital cash, which today has been taken on by Bitcoin. I thought about it from the perspective of e-commerce freedom as well as cryptographic technology.

The other thing I was watching at that time was the early MP3 piracy movement. It was clear to me that the liquidity of underground music files meant there was a market there. I have always loved music, and my co-founder was not only the General Council at PGP, but his dad had run Warner Chappell Publishing, which was the largest publisher. He and his dad had written a 1,400-page book on music licensing and what was necessary to be able to do an e-music business.

The problem with anonymous digital currency was that governments don’t like it because it makes it hard to do things like taxes. We had a sense that the Internet was going to be a game changer for the music industry. It was obvious to us that the movement was going to be away from CDs toward things like the Rio PMP300 or the iPod.

Sramana: When did you start eMusic?

Gene Hoffman: On January 8, 1998. It was a wild ride.

This segment is part 2 in the series : Recovering Lost Revenue: Vindicia CEO Gene Hoffman
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