♪ emily: he got his start in west philadelphia, working for the fresh prince himself, and later biggie, and p. diddy. his breakthrough came in 2007, when he met a woman the world would come to know as lady gaga. troy carter helped take gaga unknown to multiplatinum, then brought in his job title from talent manager to tech investor, betting on spotify and uber. but his own path to hollywood was unexpected, coming from a tough neighborhood, with a father who did time for murder. proof, he says, you write your own future.

joining me today on "studio 1.0," founder and ceo of atom factory, troy carter. troy, thank you so much for being here. it is great to have you. troy: thank you for having me. emily: so, you grew up in west philadelphia, just like the fresh prince of bel air. troy: west philadelphia, born and raised. [laughter] emily: we are going to talk a little bit about where you are from, and your career in music a little later on. but i want to start with technology. how did you get into tech investing? troy: you know what, it kind of fell into my lap. about five years ago, i did not even know what the terminology venture capitalist was. working with lady gaga in the very beginning, it was difficult to get music played on the radio. so we used a lot of social media tools for marketing. facebook was coming out of .edu, twitter was on the rise, youtube was just taking off. so we were using these social

media platforms to reach fans directly. a lot of the technology companies basically started approaching us. 75 investments later, now i am a venture capitalist. emily: you and lady gaga started using twitter, and facebook, and youtube before anyone else in the music industry really did. in fact, they thought those services were their enemies. troy: we kind of used it out of desperation more than anything else. we were at a stage where these distribution systems and gatekeepers all of a sudden were a little less powerful, because of this technology where you could speak directly to fans. the first time we heard gaga's music, before she got before she got signed, was on myspace. she was the first mainstream artist to really break out on these platforms. emily: you are an investor in companies like uber, dropbox, lyft, slack, spotify.

these are deals that traditional silicon valley venture capitalists would kill to get into. how did you get in? troy: i think it helps that i am an entrepreneur. i can relate to founders on a ground level. emily: give me an example of what your secret weapon is as a tech investor. troy: the willingness to drive a mack truck through a cul-de-sac, when i believe in something. and also, empathy. i know what keeps founders up at night. the anxiety of competition, and what's next. i can relate to it. emily: how did you get into uber? tell me the story. troy: i met an entrepreneur, and he said, i'm thinking about going into venture capital. the first deal he called me about was uber. at that time, they were only in san francisco. the first conversation i has with travis, was about -- you know, i'm thinking, the capital expenses around this business of

buying, you know, hundred of thousands of black cars. this could never be successful. and then, automatically, travis said, this is an logistics platform. we are not buying cars. he explained it. my worry was about, how do you scale this company? emily: so travis was convincing you, you were not convincing him to let you in? troy: right, he sold me on the vision. at that stage, you are interviewing each other. we had a pretty significant network. we helped pull jay-z and the roc nation team into uber. it was about us being able to activate our network as well. emily: you are also an investor in lyft. uber and lyft are sworn enemies. how does that work? troy: we actually invested in another company, where they provide carpooling from dormitories at school to campuses.

six months later, we invested in uber, just the black car service. they were completely noncompetitive. and then uber launched uber-x, and they wanted to kill each other. emily: so what is that like, having bets on two opponents? troy: you know, i think some people have the opinion that it will be winner takes all. as we look at this complicated transportation ecosystem, i feel like there will be enough room for both. it will be winner take most, but i don't think it will be winner take all. emily: what is your philosophy at atom factory? what kind of companies and technologies are you most interested in? troy: we are kind of focused on huge shifts in consumer behavior, and large demographic shifts. when you look at spotify and songs we invested in, and are looking at, the shift from downloads to streams. emily: what do you see as the main differences between silicon

valley and l.a.? troy: the difference is, up north, you have a very mature system here. you are on fourth and fifth generation tech companies. l.a., the lineage is more around media, and more around storytelling and narrative, so the tech ecosystem is very young. but when you look at companies like beats by dre, maker, snapchat, you are starting to see multibillion-dollar companies pop up. emily: snapchat for example, $19 billion. are they worth that? troy: i think so. i think they will be worth more, actually. when you see the amount of videos viewed per day, and the type of engagement around the product. emily: what do you think about the fears that we are in a bubble, that valuations are too high? troy: i'm seeing valuations that

are way too high, because the company is not worth what that valuation is, at that particular time. when you have a rounds that look like b rounds, and the late stage rounds look bigger than what the ipo would be, i think you have to really be smart in your approach to how you deploy capital. as a founder, i just would be very careful with burn rates right now. and making sure i have a clear path to revenue. just in case the winter comes quickly, you are prepared as a company to survive, and not just surviving off of fundraising. emily: do you think winter is coming? troy: winter always comes. [laughter] it is just a matter of when. i definitely feel like there is a correction coming. we see a series of many corrections, by the way. i don't think the bottom will fall out, but i think we will see a series of corrections.

hopefully, nothing catastrophic happens. emily: where are egos bigger, l.a. or silicon valley? troy: both. [laughter] emily: people here think they can change the world, is that awesome or arrogant? troy: i think it's awesome. in order to change the world, you have to have big, audacious goals. we need elon musk. we need mark zuckerberg. we need larry page. we need mark andreessen. we need the george lucases, and steven spielbergs, and the jj abrams of the world. i think that we need both. ♪ emily: your father spent time in jail for murder. how did you overcome that? ♪

later, i was interning at bad boy entertainment. emily: 1999, something big happened. you met eve jeffers. who happens to be eve. troy: originally, i met eve when she was about 16 years old. she was my first management client. emily: you worked with her for over eight years. troy: we had an incredible run. we went from -- the good thing is, working with will, i had seen his blueprint of you can take an artist who is a rapper, and they can do television, they can do film. so my job was just to execute on the blueprint. emily: and then your relationship ended kind of abruptly, another stumbling block for you. what happened? troy: she wanted to go to another level. at that time, there was not a lot of faith that i could get her there. it was a bit of a heartbreaker. you spend eight years with somebody, you become really close. and it caught me off guard, top of the financial crisis. you know, 2007. emily: and you couldn't pay your bills. troy: no. literally, i got wiped clean. it was a tough 18 months.

emily: but then, something even bigger happened. you met stefani germanotta, better known as lady gaga. troy: yes. emily: she was an unknown at the time. troy: she had just gotten dropped from defjam records at the time. you know, this girl with these huge dark sunglasses, fishnet stockings, and no pants. she and i were kindred spirits right away. we really hit it off. emily: no one knew who she was. you could not even get "just dance" on the radio. you are playing clubs, multiple gigs a night, just pounding the pavement. how did you finally break through? troy: she's probably the hardest working artist that i have ever met. you just couldn't find an artist who put in more hours, studied the game, studied the craft. from songwriting skills to piano. she wasn't a dancer when we met. she was behind the piano. but she worked so hard at the

choreography, all of a sudden, she was a dancer. she wanted to compete on the highest level. emily: you guys started her own social network, little monsters. i wonder how much that helped take her from here to international popstar. troy: you don't meet too many artists that really understand digital and social in that manner. so it wasn't us educating her, it was just as much as her educating us. i remember getting a phone call one day of saying -- she was watching "the social network" movie. she said, "i want to start my own social network." and of course, i made a couple of phone calls. it was a collaboration. emily: so this is another relationship that ended abruptly for you. what happened? troy: the relationships change. and you begin to know what you are really good at. and i kind of started looking at us as, i'm really great at being

an accelerator. the sort of, you know, we sign you as a kid, we go through 30 years. i don't even know if that is my personal ambition anymore. i think after working with gaga, and kind of going through that heartbreak of just, we worked incredibly hard to build this sort of empire, and then all of a sudden, you kind of get snatched out of it -- it was a little disheartening. emily: you now manage john legend. you manage meghan trainor. how do you go from your, you know, music manager hat to your tech investor hat, and manage yourself? troy: it's all one thing. we are an accelerator that supports both artists and entrepreneurs. i'm equally as passionate about both. emily: how does spotify get over

its taylor swift problem? ♪

emily: you were critical in getting the music industry to embrace spotify. how did you do that? troy: the difficult part is the music industry has been through a lot. we hear the horror stories about these guys are litigious, and they are dinosaurs. a lot of the guys who run music labels really get a bad rap. what the technology industry and some of the press is insensitive to is what napster did to not just to the industry, but to families. i'm watching people lose their jobs. their kids having to be taken out of the schools that they go to. we are not like the finance industry or even the tech industry, where you go to college, you get a degree, and you really got something to fall back on.

you don't go to school to be a record promoter or a concert promoter. so a lot of people, like myself, we don't have formal educations. i barely got my ged. so when spotify came along, daniel ek did a really good job at, ok, you know what, let me show you guys that i am a friend, and that i'm going to add value, and my job is going to show people that it is easier to pay for and stream music, than it is to steal it. and from there, i became a really big supporter. because one, he is a guitar player, he is a musician. and he wasn't a guy that's just trying to steal from artists or anything like that. emily: give me an example where you said to an artist, look, this is something that can benefit you. troy: there have been times where i had to get on the phone with really big managers who

have really big clients, and tell them what the downside was for them leaving their product off of spotify. all of the music is still available on youtube for free. it is still available on the piracy services for free. so you are missing out on a big audience, and you are missing out on a revenue stream. and by the way, you are ignoring the future. hurricane katrina is coming, you what i'm saying, and you are staying in the house right now. emily: have you talked to taylor swift? troy: i have not, i didn't talk to taylor swift. emily: how does spotify get over the taylor swift problem? troy: i don't know if spotify needs to get over the taylor swift problem as much as it is, people have to see the future. free already exists. it is a flawed argument when you say, "i don't want my music on any service that offers free," when free already exists. emily: is taylor swift wrong? is she on the wrong side of history?

troy: i won't say it is wrong, but i will say in general, it is a flawed argument. it is more free than it is paid right now. she is an incredible businesswoman, one of the best marketers that i have ever seen, and on top of that, incredibly talented. so i think she does a lot of things right. but when it comes to this specific argument about -- it is proven that freemium works. that if you give people a free option, there's a huge case study that they become paid users. but you got to offer them an entry point. we will see the world become a streaming world. downloads will not last. you just look at the data right now. it just won't last. emily: what do you think of apple music? troy: apple radio, every saturday i am listening to the app. beats one, hands down, is one of the best music experiences.

when you have djs like dr. dre, like q-tip, like pharrell, and you are listening to the records that inspired them. musically, it is one of the best music experiences. an algorithm can't do that. emily: how do you see the hierarchy between apple music and spotify and tidal, how does that play out? troy: you have terrestrial radio that is stronger than ever right now. this is another one that will not be a winner-take-all market. it is very, very complicated. the streaming market is going to be very, very competitive. emily: what about tidal? troy: i think the verdict is still out. i think the intent was fantastic. just, i want artists to own something. by the way, i would rather see something that is artist-owned, than something that is venture-backed. i think the statement was powerful.

and you cannot underestimate jay-z. emily: artists are now making the bulk of their money from live events and tours. right? do you foresee that changing? troy: there will be multiple revenue streams. i think we're going to see revenue streams that don't exist , right? emily: like? troy: ai and vr. when artists can scale themselves by doing -- instead of having to go out and beat your body up by doing 120 shows over a four or five month time span or whatever when you can do 120 shows in one night, because of ai and vr, and you can create this sort of real experience, where you don't have to be there in the flesh -- that is a brand-new revenue stream that never existed before. emily: what is next for troy carter? troy: you know what, we are having fun right now. and also, just a future of support and entrepreneurs and artists. emily: troy carter, entrepreneur

accelerator. i really like that. troy, thank you so much for doing this. troy: thank you for having me. ♪

♪ sam: every year around november or december, many journalists will get an assignment that makes them feel -- >> gulp. >> oh boy. sam: a little nervous. >> shoot, man, you are putting me on the spot. sam: they will be asked to write a story about what will happen in the coming year. >> the worst thing journalists can do is try and predict the future. >> i don't think anyone has made an accurate prediction once. >> there is an excellent chance i will be wrong. sam: predicting the future is a tough job, but you know what they say about tough jobs. some schmuck's got to go out and do it. t