"We were pumping up the muscles in the body that is our company and then, all of sudden, someone at the gym switched the heavy weights with lighter ones. It’s not that we got amazingly stronger. At some point, we’ll have to go back to heavy lifting; we can’t take that for granted. Actually, because of that, we need to work harder right now to bring value to customers," says Yuval Kaminka, CEO of JoyTunes, describing how the COVID-19 period has fueled his company’s growth; by April, the startup had already exceeded its annual target revenue.
JoyTunes, which has developed an app for independent study of piano and guitar, was founded in 2011 by Yuval Kaminka, a former Weizmann Institute algorithmic researcher and IDF technology unit graduate, his brother Yigal, (who holds a double MA degree in the study of oboe, recorders and baroque-oboe), and Roey Izkovsky, a fellow IDF unit team member. This past December, the company ranked second in the "Globes" list of promising startups, as voted on by venture capital investors.
"We’ve observed two phenomena from our ad campaigns on the Facebook-Google duopoly, as well as on other platforms: prices went down a great deal because some of the bigger segments reduced their ad spend while at the same time, more people decided to spend money. So, advertising was cheaper and conversion rates increased. This rate will decrease over the year, as people get out of the house more. But it did reveal to us something we already knew - people really want to learn, they’re really interested, and they want their kids to learn, too. Clearly, they’ll invest less time as things get back to normal, but like anyone who discovered during this time that they truly love cooking, they’ll continue, even afterwards. A lot of people didn’t know they could learn to play music this way," says Kaminka.
Learning to play and getting feedback
JoyTunes, which is headquartered in Tel Aviv’s Sarona compound, has raised $43 million over the years from Qumra Capital Management, Insight Partners, Aleph, Genesis Partners, and from Yelp founder and CEO Jeremy Stoppelman. The company has developed a number of applications for learning and practicing music: one for self-learning, another for use by music teachers in training students, while a third offers music learning for toddlers. The company recently launched a guitar-learning app, currently available on Apple devices only. The apps turn learning to play musical instruments into an intuitive, "gamified" experience. The system detects playing and provides instant feedback.
Kaminka: "We appeal mainly to people who don’t want to study music with a teacher, they just want to have nighttime guitar jam sessions. That’s the bulk of our audience. I’ve been told it's the ‘democratization of music’. I don’t know if I believe that, but it certainly does provide accessibility."
Regarding product development challenges, Kaminka says, "There are many complexities in several aspects: product, technology and pedagogy. The technology must detect playing and identify what must be done to improve it, even when there’s background noise - it’s very complicated. At first, everyone whom we consulted said it was impossible in terms of the physics involved. But we made some very nice hacks, we now have the best detection capability around, and there’s still more to do."
The company’s business model is based on recurring subscriptions (three-month, six-month, or annual), offered after a freebie basic course which allows users to decide if they’re satisfied with the product. Prices vary according to country; in the US, for example, a yearly subscription costs $120. "Today, our business model makes sense because subscriptions are trending, but at first it seemed weird. Initially, a lot of our advisors - people from gaming and other sectors - said, ‘Why go with subscriptions? You could make a lot more money.’ We believed in our model, clearly, but it was also a moral choice, because I have an obligation to provide our users with value over time."
Globes: On the other hand, there’s an economic crisis and people have less money to put into apps like these.
"It would be irresponsible to say that we don’t consider that. I’ve read many analyses - after all, every investment bank, fund and analyst has issued a report. Estimates vary widely regarding the future. There’s a sweeping consensus that there will be a recession, but it’s very unclear how bad it will be. When I spoke with our board of directors and the team, I compared it to a light rain, with us under an umbrella. If a storm develops, meaning a deep recession, then we’ll get wet like everyone else. To my mind, our app is not a luxury product, it’s emotional; people view it as educational but also as wish fulfillment and self-expression. It’s also relatively affordable."
Did you make adjustments during the crisis, for example, in personnel?
"The fact that we’re now approximately at the point where we were supposed to be in another year has real implications. We emphasize support; we want to help everyone and need to figure out how to do that. There are a lot of changes like that. In terms of staffing, we’re hiring, we haven’t downsized. We want to build something significant and are very conservative with cash flow. We have 75 employees in a variety of fields - about 20 developers, plus musicians, designers, product and business developers, data analysts, etc. Given where we’re at, that’s very lean. We’re 75 people not because we stopped growing, but because our style of work and staff recruitment means bringing in who’s best and best for us professionally. We also want people who pitch in and take responsibility - no disrespect intended to anyone. We also believe in being focused. In terms of cash, we're close to break-even, and we have a great deal of control over our ability to move to profitability. "
Learning music as a family
JoyTunes appeals mainly to beginners. "Some who have never taken a lesson, others who studied music when they were small and retain muscle memory in their fingertips. Even people who already know how to play - we can still do cool things for them," Kaminka says. Over the last two to three years, the company has begun reaching out to the whole family. "Every parent wants their child to learn to play a musical instrument. Lots of people go around wondering, ‘Why didn’t I ever learn music when I was a kid?’ Our target is the family subscription that provides value to every household member. Netflix positioned itself as the family couch-potato subscription, and we’re building the family time-investment subscription."
JoyTunes started out offering recorder lessons. Why is that?
"We believed the recorder was the starting point for music education. It’s not a sexy musical instrument. Hard to explain but in the US for example, learning the recorder is very common. In many countries around the world, children in grades 1 to 4 learn recorder.
"In retrospect, it wasn’t a great choice. We understood it wasn’t a winner. It took us a long time to reach $1 million in revenue, but reaching the $10 million mark took only a year and four months. That’s in league with the fastest of fast companies."
It took you a few years to get on track. You received negative feedback from some investors who said you wouldn’t succeed. Did you ever ask yourself if you were heading in the right direction?
"Yes, of course. I think we felt we had something here but weren’t able to get the message across. I always say, things were very hard but also very good. We never really hit a breaking point. We never felt things were going to fall apart. In the end, we found someone who believed in us personally. When we first started out, some people told us: ‘We’ll give you the money, but do something else, in cyber-security for example.’
"To get a measure of customer response, we decided to set up sales at a mall kiosk - not as a business - just to get responses and see if people were willing to pay. On the first day, we sold two subscriptions. By the second day, our booth was already turning a profit because we gained an understanding of our customers. A lot of our investors didn’t understand but Eden (Shochat, founding partner of Aleph VC) totally did. He saw we were a bunch of guys who didn’t give a damn about what people think - just wanted to learn how to make the right sales pitch. He was the only one, at the time, who gave us points for that."
JoyTunes
Founded: 2011
Founders:Yuval Kaminka, Yigal Kaminka, Roey Izkovsky
Employees: 75
Based: Tel Aviv
Capital raised: $43m
Investors: Qumra Capital Management, Insight Partners, Aleph, Genesis Partners, Yelp founder and CEO Jeremy Stoppelman
Published by Globes, Israel business news - en.globes.co.il - on June 22, 2020
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