#StartupsEverywhere Profile: Carter Pochynok, Founder, Mobius Audio
This profile is part of #StartupsEverywhere, an ongoing series highlighting startup leaders in ecosystems across the country. This interview has been edited for length, content, and clarity.
Utah Startup Using Multidimensional Audio to Boost Music Quality
Salt Lake City is the original home of Mobius Audio, a music-focused startup that is using the latest technology to create a multidimensional sound platform for recording artists while teaching them to function as their own businesses. Carter Pochynok, the founder of Mobius, is using his background in music to guide the emerging company through its seed funding stage as it looks to establish itself on an international scale. We recently caught up with Carter to discuss his policy concerns, Mobius’ work and future, and what lawmakers can do to better support U.S. entrepreneurs.
Can you tell us a little about yourself? What is your background?
I’m a professional musician by training, and I got my start back in high school. I attended a school called the Caleb Chapman school of music, and through that I was able to start gigging with Grammy-winning musicians by the time I was only 17. I would spend most of my time hanging out with whatever professional musicians happened to be in my vicinity rather than the other students, and I would use that as an opportunity to pick their brain.
I had a record deal offered to me about six months after high school. I was stoked at first, but once I read the fine print I was a lot less excited. I’m just very fortunate that I have the sort of education needed to read a document like that, and know that 20 percent recoupability on $200,000 over the course of six years is debt slavery. They wouldn’t budge on any of the terms, even though I’d brought some really big names on board to work on my record. I was working with producers who worked with Pink Floyd, Yes, Tool, etc. If I were a high school kid drawing up who I’d want to be on my first record in a dream world, I pretty much got it.
But none of that was enough to get those guys to budge on their terms, so I ended up backing away from the deal entirely. So time went along and I didn’t find anything better than that, but I did take a lot of the advice from managers, my former agents, and others. And so I built the model for a 21st century record deal into a streaming-based platform, essentially giving artists
the ability to function as their own licensing businesses rather than properties of a publishing house as they currently do.
Tell us more about Mobius Audio. What is the work you’re doing?
I registered the company in October 2016. It’s been a long three years. Starting a company when you’re not even old enough to drink yet, there was a lot of a learning process involved. Most it has been product construction and pitching, standing in front of investors, and finding the next source of potential seed funding. We’re still building the application, but all of the back-end tech that’s going to power what we do comes from partner company we have in Hungary. We’re very fortunate the be the first company ever to be commercializing their technology. It seems ambitious to run both sound tech licensing and a record label under the same banner, but it makes a lot of sense if you think about it in the context of a data-based record label. Essentially, the creation of new content in Spatial Audio is going to drive consumers to want to adopt it and Freemium-based marketing is going to give musicians a high incentive to mess around with it.
We’ve spent most of our time right now on product construction. The nature of our platform is big and complicated, and we want to make sure we get it right. That isn’t helped by the fact that we’re a remote team. My co-founder and CTO, Miles Litteral, is in New York, I’m out here in Salt Lake City, so sometimes getting our schedules to mesh is an art more than a science. The other thing is that, with a small team, we can only do so much. I actually just barely just picked up programming so that we could take some of the workload off of just one guy’s shoulders.
A lot of it has been concept development, putting together solid numbers. We just hired a new CFO onto our board who is a rockstar. I’m very excited to be working with Amber Hemingway. Miles and I are both young guys — we’re both 20-somethings working on our first tech companies, but she’s been around the block and done a lot of high-profile transactions and account management. So having someone that knows what’s up ahead of time is a huge benefit to us.
What makes Utah’s startup ecosystem so unique?
There were a couple of factors, but the first was proximity. It’s easy to start a company where you’re already at, especially if you’re funding it by working as many day jobs as you have to. Every bit of money that we’ve had poured into the company so far has been from our founders bootstrapping it from the ground up, and that’s how it looks like it’s going to be until we land a big investment. The other thing is that we have fairly loose taxes. I don’t necessarily agree with those loose taxes entirely, but I will take advantage of them while they exist.
What policies at the federal, state, or local level are you concerned about?
The Trump tax cuts have not helped at all. Last year, I put about half my overall income into my businesses. I’ve got three LLCs filed, all with separate bank accounts. Even with all of that traceability, even with every accounting standard I could think to live up to, not a cent of my business expenses were able to be written off. Under the new tax code, there’s a minimum profitability in order to be able to claim any write-offs, and that was pretty crushing for me to see as much as a $1500 tax return be condensed into a $400 tax return by nothing more than bad policy.
That’s one thing I really went over with Rep. Bishop. I said, if you’re going to talk about Utah’s tax incentives being a reason to start a business here, then you need to talk about how the federal tax system completely undermines that right now. The average entrepreneur or small business owner doesn’t start a business with a giant amount of money. That’s why we need a tax code that better reflects where money is actually being spent.
What issues affecting entrepreneurs should receive more attention from state and federal policymakers?
Rolling back net neutrality creates further barriers to entry. It basically creates a broker system to determine who lives and who dies on the Internet.
I’m also concerned about the JOBS Act. I think we should lower the standard for what it means to be an accredited investor. The current asset definition is $1 million in the bank and a certain amount of invested equities or products that contribute to your net worth. I think the barrier is just too high because people like that are becoming fewer and fewer in society with the current economic trends. I think it’s going to inevitably create a pyramid system where every startup is competing for the same resources and funding, and that cannot conducive to a healthy business environment. It would be nice if you could help middle-class Americans more easily invest in a seed stage, or become a principal investor in a company. That would be good for the companies, since they’d have more people to pitch to and viable options, and it would be great for the middle class.
Another thing we need to be looking at is expanding definitions in the Small Business Administration’s program. We’re in a day and age where a small business could have a team of five people running an international enterprise with no problem. I think we’re kind of kneecapping ourselves when we make it so that small businesses become regulated to the point of just being local businesses. That’s a big issue I’ve had out here in Utah. All of the SBA people I’ve spoken with love the concept of what I’ve put together, but what’s an issue is that I don’t technically fit SBA terms because I’ve got a partner company in Hungary and I plan to do business on an international scale.
I know you met with Rep. Rob Bishop in August as part of Congressional Startup Day. What were that meeting like, and why is it important to have startups and entrepreneurs engage with their members of Congress?
Despite our differences on a political level, I was able to have a great conversation with him. The fact that our meeting went well over an hour, and during that time, I was able to gain a lot of respect from him because I was able to work through the nitty gritty of specific policies that even he wasn’t aware of. Once he realized I wasn’t just someone complaining about the state of things, I was someone who understood the state of things and had real grievances, that shifted the conversation quite a bit. And now I have a line of correspondence with his office, despite the fact that we’re opposites politically.
During your CSD meeting with Rep. Bishop, you discussed your opposition to the CASE Act. Why is that issue important to you?
As far as the CASE Act goes, that’s an issue that’s really pertinent to me right now. The intellectual property marketplace is becoming fairly crowded now. I don’t think it behooves anyone to essentially create a competition over who has the most money in order to get their product to the shelves. That seems insane to me. In the music industry that’s especially frightening, because patent trolling and copyright trolling are already hugely problematic. If you go onto YouTube, you’ll see a bunch of angry comments about Universal Music Group censoring people. There are large companies that have entire wings of their legal department dedicated to nothing but cease and desist letters. I don’t want to see that trend grow. That’s bad for everyone in my business, and I feel like the CASE Act can easily become a segue to that.
What is your goal for Mobius Audio moving forward?
Right now it’s all about landing seed stage capital. We’re working very closely with our new CFO to get our numbers solidified. She has redone a good number of our figures since coming on board, and we’re going to be asking for much higher amounts of seed capital than previously sought. But looking at things from a fresh perspective, that’s actually a good problem to have. Once that capital lands, the first thing we have to do is go out to Hungary, complete some research and development at my partner’s lab in Budapest, and that’s going to be about a month worth of process. We’ll probably have another month in Budapest six months down the line from that, because that’s where all of our hardware is developed, and there’s a lot of it to commercialize. Then just before that I need to get my album on the tracks. If you’re going to be coming out with spatial sound content to show people what your tech is capable of. Having big name producers tied to the project will help bring in fans and users to the platform, so we see that as a worthy promotional expense.
So a lot of technical development and getting into the weeds over the next several years. We’re in talks with a couple of artists about doing some of their future records through Mobius, which would be a huge boon to us. Everything is about getting that beta launch, and then once we can get ourselves past the minimum viable product then that’s when we can start to become profitable.
All of the information in this profile was accurate at the date and time of publication.
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