♪ 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 from unknown to multiplatinum, then broadened 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 on "studio 1.0," founder and ceo of atom factory, troy carter.

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 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, 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 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, 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 had with travis, was about -- you know, i'm thinking, the capital expenses around this business of

buying, you know, hundreds of thousands of black cars. this could never be successful. and then, automatically, travis said, this is a logistics platform. we are not buying cars. he explained it. my worry was about, how do you scale this company? emily: 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 school dormitories to campuses.

six months later, we invested in uber, just the black car service. they were completely noncompetitive. 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 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 -- and be rounds that look like the -- c or d rounds, and the late stage looks 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 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 the 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? ♪

♪ emily: you had a complicated and difficult childhood. how did you overcome some of the

things you had to go through, which no kid should have to go through? troy: we grew up in a really tough neighborhood. we went to sleep to gunshots every single night. it was something regular. my mom worked 30 years at a children's hospital in philadelphia. she got up to go to work every day, 5:30 a.m. we would pour out the penny jar, and count out the pennies to be able to put into the bus, so that we could go to school in the morning. we had to boil hot water, because we did not have hot water sometimes. that gave me a drive to really make my family proud, to work really hard. emily: your father spent time in jail for murder. how did you overcome that? troy: that was definitely tough growing up. not having a dad there, and looking for that figure, that void was always there.

it took a long time for me to kind of really reconcile that. one bad night can change everything. he was arrested, did his time, and came back out, and pulled his family back together. for kids who grow up now, so many black men in prison right now, so many kids left fatherless, me being able to show those kids -- this script is not written. you are able to write the script. i come from where you come from. on my father's side, him being able to show, you know what, this does not need to be your life. what you did in the past doesn't necessarily define who you are in the future. emily: i want to talk about how you discovered music. i know when you were 17, you tried to be a rapper. troy: i was the biggest hip-hop fan.

i was the kid that would read all of the liner notes, down to which recording studio. i used to sneak down -- where the records were recorded in, i used to sneak down stairs in my grandmother's house, she had this old hi-fi stereo, and i would listen to records when everybody was asleep. in ninth grade, i decided we were going to form a rap group. me and my best friends. we used to hop on the train down to jazzy jeff's studio. literally, for months we would do it. jazzy jeff would peek outside, never let us in. [laughter] one day we ended up being able to get in the studio. will smith was in the studio. we just walked up to him and said, can we play you some music? the studio was so small, we had to go outside and do dance moves in the snow. will drove us home that night. emily: will smith drove you home?

troy: he drove us home that night, and he basically told our parents, i have got these kids. they're going to be ok. we weren't a great rap group, so our careers were cut short, but will and his manager were kind enough to take me under their wing. i was jazzy jeff's assistant, james' and will's assistant for a long time, doing everything from car wash, running errands, doing all of these things. that was my entry into the music business. i started promoting concerts. notorious b.i.g. was one of the concerts i promoted. i met p. diddy through working with big. i asked him, "tell me what you do. i want to come work for you." and he said, "your first job is to get me that girl from behind the bar." [laughter] i got him the girl, and three weeks later i was interning at bad boy entertainment. emily: 1999, something big

happened. you met eve jeffers. who happens to be even. eve. troy: originally, i met eve when she was 16 years old. she was my first management client. emily: you worked with her for eight years. troy: we had an incredible run. we went from -- the good thing, working with will, i had seen his blueprint of taking an artist who is a rapper, and they can do television, they can do film. 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 i could get her there. it was a bit of a heartbreaker. you spend eight years with somebody, and you become really close. it caught me off guard, at the top of the financial crisis. emily: you couldn't pay your bills. troy: no, 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. she was an unknown at the time. troy: she had just gotten dropped from defjam reords at the time. this girl with huge, dark sunglasses, fishnet stockings, no pants. she and i were kindred spirits. we really hit it off. emily: no one knew who she was. you could not even get "just dance" on the radio. you were playing clubs, multiple gigs a night, pounding the pavement. how did you finally break through? troy: she's probably the hardest working artist that i have ever met. you 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 on the

choreography, all of a sudden, then she was a dancer. she wanted to compete on the highest level. emily: you started your 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 who really understand digital and social in that manner. it wasn't us educating her, it was just as much her educating us. i remember getting a phone call one day. her 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: 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. i kind of started looking at us

as, i'm really great at being an accelerator. 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 lady gaga, and going through that heartbreak of just, we worked incredibly hard to build this sort of empire, and then all of a sudden, you get snatched out of it -- it was a little disheartening. emily: you now manage john legend, meghan trainor. how do you go from the music manager hat, to the 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

the 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 that these guys are litigious. they are dinosaurs. a lot of the guys, who run music labels, really get a bad rap. with the technology industry, and what some of the press is insensitive to, is what napster did 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 they go to. we are not like the finance industry or even the tech industry, where you go to college, get a degree, and you

have something to fall back on. you don't go to school to be a record promoter, or a concert promoter. a lot of people like myself, we don't have formal educations. i barely got my ged. but when spotify came along, daniel did a really good job at, you know what, let me show you guys that i am a friend, and 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. for one, he is a guitar player and musician, and he wasn't a guy trying to steal from artists. emily: give me an example where you said to an artist, 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 piracy services for free. you are missing out on a big audience, and you are missing out on a revenue stream. by the way, you are ignoring the future. hurricane katrina is coming, and you are staying in the house right now. emily: have you talked to taylor swift? troy: no, i have not talked to taylor swift. emily: how does spotify get over its taylor swift problem? troy: i don't know if spotify needs to get over the taylor swift problem as much as it is, people need 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 it 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. i think she does a lot of things right. but when it comes to this specific argument about -- it is proven that freemium works. if you give people a free option, there's a huge case study that they become paid users. but you have to offer them an entry point. we will see the world become a streaming world. downloads would not last. 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 it. beats one, hands down, one of the best music experiences.

when you have djs like dr. dre, like q-tip, like pharrell, and you are listening to 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 it work 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: the verdict is still out. i think the intent was fantastic. i want artists to own something. i would rather see something artist owned, than something that is venture backed. i think this 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. we will see revenue streams that don't exist. emily: like? troy: ai and vr. when artists can scale inwhen artists can scale themselves by doing -- instead of having to go out and beat your body up by doing 120 shows over four or five month time 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.

just a future of support and entrepreneurs and artists. emily: troy carter, entrepreneur accelerator. i really like that. thank you so much for doing this. troy: thank you. ♪ . .

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