A founder who sold his first startup for $85 million explains why tons of VCs rejected his second startup idea despite his success

Sarah JacobsSteve Martocci at Splice headquarters in 2015.
  • Steve Martocci, cofounder of the music-editing company Splice, had previously sold GroupMe to Microsoft for $US85 million at just 27 years old.
  • Still, Martocci worried he would not receive funding for Splice due to an over-saturation in the music startup space, he told Business Insider in an interview.
  • Many VCs – even those who had made money off GroupMe – rejected him.
  • Visit Business Insider’s homepage for more stories.

Steve Martocci’s résumé is sure to cause entrepreneurship envy.

Martocci cofounded GroupMe, which Skype bought for $US85 million less than a year after launch. Martocci designed the app at a 24-hour hackathon when he was in his 20s.

Prior to GroupMe, Martocci founded Sympact Technologies, an email marketing company, and worked as a lead engineer for the online shopping company Gilt.


Read more:
The cofounder of GroupMe was 27 when the text-messaging platform sold for $US85 million just a year after launch. Now, he’s raised $US107 million for a music startup that could make him even more successful. Here are his lessons for pitching, leading, and building a company.

Despite his stacked portfolio, the entrepreneur still feared he wouldn’t get funding for his next venture: Splice, a music creation platform that raised $US57.5 million in a Series C funding round earlier this year.

Many investors said no to Martocci initially, even those who made money off GroupMe, he told Business Insider’s Shana Lebowitz in a recent interview.

But Martocci “didn’t blame” investors who turned away from Splice in its early days. Creating a music platform was risky, Martocci said, because of the oversaturation of artists and ideas in the industry. “There are so many dead bodies buried in the space,” Martocci said.

Still, he believed there was a market for Splice: “We’re just in a very serious renaissance for music right now and the rise of the creative class. I think people underestimate how much content kids are forced to make these days.”

Martocci was wary of entering the music space at first, but eventually decided to go for it after a serendipitous meeting at a conference in Bogotá, Colombia. The entrepreneur ran into Matt Aimonetti, an audio engineer and his eventual Splice cofounder. The two bounced ideas off each other and started building code for the project at the conference.

Then Martocci ran into Adam D’Augelli, a partner at True Ventures, in New York City. He showed D’Augelli what he and Aimonetti had built at home. D’Augelli agreed to invest, as did Andy Weissman at Union Square Ventures.

The early days of Splice were rocky. Martocci and Aimonetti launched Studio, which lets users store their work and collaborate with others – but the market wasn’t ready for it, Martocci said. They had greater success with the launch of Sounds, which lets users download samples from producers, artists, and sound designers.

Today, Splice says it has 2.7 million users and counts among its subscribers Drake’s producer Boi-1da, according to The Wall Street Journal.

Martocci said the Colombia trip taught him that entrepreneurs shouldn’t be afraid to bounce ideas off other people, and use networking to help make ideas stronger.

“I am very transparent, and ideas from me are pretty cheap,” he told Business Insider. “Putting yourself out there, getting feedback, meeting people, building your network, all this stuff can really pay off.”

Read Steve Martocci’s full interview with Business Insider about his lessons for pitching, leading, and building a company.

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