Tech startup Usic to connect artists, businesses
John McElligott and Mike McHenry never intended to be technology startup executives. They were happy playing music in rock bands, recording and for McElligott, running a photography business with his wife in York.
That was eight years ago, but today they have a little more in common with Facebook co-creator Mark Zuckerberg. In coming weeks, the partners plan to launch The Usic, an online business marketplace for musicians and artists, with potential to branch into other industries using cooperative capitalism.
"The beauty of our site is that you have the guy for this (service) and you have the guy for that," McHenry said. "Our site is the Rolodex, and we're the handshake."
McElligott's band, Safe Jacket, had some success last decade recording albums and playing small venues on a regular basis. But the musician's road isn't easy.
"We spent all our time on everything else (on the business side) that we stopped being a band," he said.
In 2005, McHenry was working at a guitar store and amassing recording equipment to help singers and songwriters. McElligott walked into the store one day to look at instruments, the two started talking and became friends, they said.
Soon they discussed spending most of their time and money on the business side of their arts. It was inefficient and a barrier to success that others were dealing with, too, they said.
"It wasn't until we started talking to these artists that we realized there was a bigger problem," McElligott said.
It was an epiphany, he said. They needed to bring those with marketing, photography and recording expertise to the artist. And they needed a marketplace where artists and small businesses could interact in a simple and cooperative environment.
Usic was born.
McElligott and McHenry started researching the idea in 2011, building a network and ironing out the concepts for how their technology would unite artists and small businesses.
In time, the idea and effort would pay off.
Usic has attracted a local following as McElligott and McHenry do private testing with midstate artists and small businesses offering services to them. That includes enlisting more than 300 of them to test the site and offer feedback, they said.
"We spent a good deal of time interviewing a ton of artist entrepreneurs of all types and levels … to make sure we were not building something for ourselves," McElligott said. "We heard a lot of weird stuff but also a bunch of the same problems — problems that our product could fix. That's when we really knew we were on to something."
For about seven months, McElligott and McHenry have been working entirely on Usic thanks to financial backing from a well-known railroad executive and advice from national and local technology executives.
Usic's lead investor is Michael Ward, president, CEO and chairman of Florida-based railroad CSX Corp. Inc., McElligott said. The railroad is ranked No. 383 on Forbes magazine's Global 2000 largest companies. It had 2011 net earnings of $1.8 billion. Ward was ranked the 60th highest paid U.S. executive in 2012 with a total compensation of more than $19.8 million, according to Forbes.
"I believe that (McElligott) has a viable, exciting business idea that I fully support," Ward said in an email to the Business Journal. "It is very exciting that he will be launching it soon with lots of initial support and enthusiasm in the music community."
McElligott declined to say how much Usic has received from investors.
Usic turns the music industry on its head and provides a marketplace for the 99 percent who are not preapproved by record labels, said Scott Sorochak, a computer programmer and entrepreneur in residence for San Francisco-based tech investors Foundation Capital. He's advising the Usic partners.
The best part about Usic is its built-in business model that gives McElligott and McHenry a percentage of final transactions, Sorochak said. Usic will be ready for additional funding phases after it launches and builds greater use and awareness, he said.
"They're not in LA or Silicon Valley, and they're kind of bootstrapping it," Sorochak said. "If they pull this off and do it right, it'll be big, a home run."
Usic is relatively simple for small businesses and artists to use. After creating a profile and connecting it with your Twitter and Facebook accounts, a businessperson such as a videographer can offer services to artists. Google+ connectivity is coming soon, McHenry said.
There are no membership fees or entry costs because the company wants the site to be open to everyone, McElligott said.
Businesses can offer several types of deals: one-to-one set-price services, increasingly discounted individual deals, open offers and group discounts. Likewise, artists can place their needs on the site to solicit bids from businesses. Users can shop for the best offers using ratings, prior experience, pricing and niche needs, then rank and promote good services via social media.
"As I help these bands, they're going to promote me to all sorts of people … All of a sudden, I'm being endorsed to this huge demographic because I went out of my way and helped a band when I didn't have to," McElligott said. "It's that village concept. We both understand that me helping you and you helping me is mutually beneficial, but neither one of us is getting ripped off."
In time, Usic's cooperative marketplace could be duplicated for other industries, McHenry said. They're not there yet, but success with the artist communities could prove it useful to the broader business community, he said.
McHenry and McElligott made a conscious decision to locate Usic. Central Pennsylvania is their home, and it has a growing music, arts and technology scene, they said. That offers Usic a lot of freedom to disrupt the conventional wisdom, they said.
"There isn't one way to build a technology company here," McElligott said.
Others are enthusiastic about Usic's potential, too.
Rock band Live, which emerged from York in the 1990s to become an alternative headlining act, has shown interest in Usic. Live came back to York to invest in the city's music scene, technology, entrepreneurs and real estate.
"(McElligott and McHenry are) one of the first (groups) to come to us and not want a handout," said Bill Hynes, president and CEO of Think Loud, Live's group of companies. "They said, 'We just want what's in your head.'"
The Usic is a phenomenal idea because it's like an incubator for artists, whether they have starry-eyed dreams of being the next superstar or just want to make a modest living playing midstate venues, Hynes said.
"By virtue of it being a co-op by and for artists, we want it to remain that way indefinitely," McHenry said.
The Usic won't exclude anyone, but it's focused as an alternative to the status quo, he said.
"Whether you're an artist or a small business looking for artistic services," McHenry said, "having options is only going to make your artistic pursuits or your business that much stronger."