LE TECH SHOW 13 - Denis LADEGAILLERIE Fondateur & PDG de BELIEVE - PARTIE 1/3

Thank you, delighted to be with you.

Well, he's at Believe, that's it. We've had the chance to work with Jul for over seven years now, both on records and we produced his first big concert in Marseille a few months ago.

Exactly.

Believe's job is to develop artists at all stages of their career. We allow developing artists to get a first springboard through a service called Tunecore, which lets them make their music available everywhere in the digital world, up to supporting top artists like Jul, PNL, or Vianney through some of the labels we work with. Our goal is to have solutions to accompany artists in the digital world regardless of their development level. So concretely, if I'm an artist and I connect to Believe, how does it work? If tomorrow you decide to change careers and start playing piano or singing, we have a service called Tunecore on which you can deposit your music. It's an annual subscription; you can deposit as many tracks as you want for 50 euros per year, and we make that music available on all distribution services so your friends, family, first fans can find it on Apple Music, Spotify, and Co. And we return 100% of the revenues generated by that music. That's the first step. As you develop, we will mobilize increasingly significant teams to support you according to your needs. Okay, can you share some numbers on Believe today? Today we have 1,700 employees worldwide, present in 50 countries, we support over a million artists at different stages of their development, and we generate a little over 750 million euros in revenue. The company is growing rapidly, over 35% organic growth since the start of the year, profitable, cash flow generative. The dream: a profitable unicorn with strong growth. We are a story of profitable growth. We continue to invest heavily because the opportunity is still very significant. With 35% annual growth, we have opportunities in all countries, so we are always strongly investing. Our scale allows us to combine both continued heavy investment and a gradual increase in profitability.

We have raised very little money. We have almost always entirely self-financed the company's development. We did a funding round at the very beginning in 2008 (after three years) to finance a first acquisition. We did a second in 2014 to finance the acquisition of Chewing Corp, and more recently with the IPO to finance future acquisitions. But our model has always been to operate the company profitably so that organic growth is self-financed, and to raise money to finance acquisitions.

First, the thing that helps is the nature and size of your market. We are lucky to be in the music market, which is global and digitalizing. We have really played the transformation of the digital music market. The key success factor is being able to combine three key expertises: technological expertise (how we use technology to build proprietary solutions - all our tech is proprietary, from interfaces to track plays across platforms, providing daily data on listeners' age, gender, etc.), digital expertise (how to act on data to increase audiences and revenues, marketing, promotion), and musical expertise (the ability to develop trusting relationships with artists like Jul or PNL over time). This combination has allowed us to scale up and be present in 50 countries, supporting so many artists.

One fantastic thing is that technology has democratized market access. Producing CDs was very expensive, so most developing artists never had their CD available in stores. In the digital world, a developing artist's music is present everywhere, on all services worldwide. That creates extremely strong opportunities. In every country we look at streaming numbers daily, see which artists are growing fastest, and when we see that additional support could take them further, we contact them. So you are very data-driven. When you see an artist has good stats at Believe, you offer to support them to move to stage two. You develop progressively. Take an artist like Jul. Few people realize he is the biggest hip-hop seller in France of all time, over the last decade the second biggest seller after Johnny Hallyday, and the biggest digital seller. He is extremely popular. We have renegotiated contracts with him five times, each time to support him more deeply, from touring to merchandising (t-shirts, sneakers). Relationships develop gradually; it's rare for an artist to go from unknown to top star in six months. It's a whole development process mobilizing increasingly important expertises.

The beginning, actually. To give an idea, we started working in late December 2004, early January 2005. You think about your model, how the record industry is structured, how digital transformation will happen, and you say, I think there's a place here. We thought digital would democratize access, so we could offer a solution to more artists. You start thinking about what contract to set up, how to sign artists, how to support them. There's an image I liked from a management book: the hamster in its wheel. The effort to get the wheel moving is huge before it generates inertia and starts turning. Starting a company is the same. Our first office was in my apartment on Rue Lafayette. So you started in the kitchen, some start in a garage; yours was in the kitchen/living room. When you're three people, you do very little, and your ability to move is slow. We generated our first revenue in June 2005: 30 euros. Six months to make 30 euros. After the first year we had a little over 100,000 euros. So it takes a lot of time. The first two or three years you think, wow, I'm investing all this time and the market is developing but slowly. Do I have a model? There's strong uncertainty. That was a tough point. Another difficult element was the IPO, for different reasons related to uncertainty. The IPO could have been one of the best moments, but it was actually one of the most difficult because it corresponds to a development plan. We wanted to raise 300 million to do acquisitions and develop. We had already identified targets. If I can't do my IPO because markets aren't open, I can't do exactly what I want, and that creates very strong uncertainty.

My ambitions are driven by two things: a market that will continue to grow very strongly for at least the next 10 years according to projections, and the fact that history (including recent history) has shown that our ability and model allow us to gain more market share than any of our competitors. We grow two to three times faster than non-digital competitors (the traditional houses). Our ambition is to become the market leader in a number of markets within the top 10 global markets. If you give us 20 years, we will go for global leadership.

I wouldn't say on Spotify, but we had over 700 million views, 180 million streams just on Spotify. It's just incredible, truly exceptional.