The idea of Linkin Park, a group from the era of Limp Bizkit and Papa Roach, trying to present themselves as venture capitalists might sound like a story that The Onion briefly toyed with after the first dot com bust only to discard because of its implausibility.
But we live in a different time now — a time when the musician mogul is a powerful role model. Jay-Z acquires music streaming services and Nas invests in dozens of startups and Ashton Kutcher backs founders of major startups while pretending to be Steve Jobs on screen.
Mike Shinoda, one of Linkin Park's two vocalists, doesn't want to be the type of celebrity who just has his agent find some interesting startup, get press for backing it and then forgets about the whole thing.
He says he wants to build up something lucrative and long-lasting, not unlike what Kutcher has done with A-Grade Investments.
"We did a lot of homework so far," Shinoda told Mashable in an interview. He talked to professional investors, made introductions to startup founders and hired a small staff with backgrounds in banking and management. The initial portfolio of Machine Shop investments is impressive: Lyft, Robinhood, Shyp and most recently Blue Bottle Coffee. "We are trying to make sure that we do our due diligence and we understand the landscape to the best of our ability."
Skepticism, to put it mildly, abounds. After CNN Money published an article last month spotlighting Linkin Park's new venture, reporters, investors and fans reacted with snark.
However, interviews with band insiders and their contacts in the startup industry reveal an earnest effort to get more involved with the businesses they are fans of and perhaps create a new money-maker that will continue to support members of Linkin Park after the music stops.
"It kind of makes sense at this point in their careers to diversify," says Ryan DeMarti, who has helped manage marketing and other areas for Linkin Park over the years. "When they get a little older and they all have kids now and the touring is probably going to get a little less, having other forms of business and income [is good] and also just things to stimulate their creative outlets."
"We just want to deepen our connection with the tech community," Shinoda says. "I feel like I have a closer kinship at a tech conference to the people I’m speaking with and hanging with than a music conference. I have much more in common."
Shinoda's second life as a tech investor actually started in 2001. Hybrid Theory, the band's first album, sold more than four million copies that year. At first, he and his bandmates "re-invested" their earnings in equipment and marketing for the band.
But after Apple released the iPod that October, Shinoda decided to buy "a little bit" of Apple stock.
"What a phenomenal ride that was," he says.
"We approach our own band as a startup"
In the years that followed, Shinoda tiptoed further into tech investing by backing music startups like Spotify and Sonos. But he and the band wanted something more involved and more fulfilling. "Those were just investments. They were just financial," he says. "We had minimal activity or interaction with the actual company. We didn’t really get so deeply in the weeds."
He gradually realized he wanted something more involved — more "fulfilling." He began to learn the ropes by meeting with people like Digg founder Kevin Rose and billionaire angel investor Chris Sacca, the latter of whom got Shinoda involved with his successful firm Lowercase Capital.
"We’re not crazy: our band knows that we are not about to re-create the magic of something like that," Shinoda says, referring to Sacca's investments. "But we do know that we have a skill set in marketing and branding. We have access to bands. We do approach our own band as a startup, whether we are talking about the creation of the group from nothing or the launching of each record as a new and unique platform."
Linkin Park, Inc.
On January 1, Shinoda and the band opened Machine Shop Ventures, part of the same Machine Shop brand that houses the rest of the Linkin Park empire. Then the real work started.
A couple of the band's members made a pilgrimage in late February to visit Y Combinator, the influential startup incubator, where they met with Michael Seibel, cofounder of Justin.tv and a partner at YC. Shinoda describes Seibel as one of his mentors, a list that also includes Sacca, Mark Suster and Ron Conway.
Seibel spent much of his time giving Shinoda and co. a crash course in startup investing 101: equity vs. convertible notes, the average size of an angel investment, what he calls the "norms."
"To me, it was impressive in and of itself that they came up here and spent the time to dig in, as opposed to the first move being to cut a check," Seibel says. He also told the band what he tells anyone interested in investing: "Go slow. The Valley feels like it's extremely urgent. Everything feels like it's going to be the next Facebook, but new opportunities are being created all the time. This isn’t a short-term engagement."
The band, Seibel says, seemed to internalize that message. Rather than invest their considerable resources in a mishmash of businesses, they focused on startups that reflected their personal interests — areas like stock picking, which Shinoda has done since buying Apple. Hence the investment in Robinhood, a stock trading app that waives all fees to compete with E-Trade.
Vlad Tenev, cofounder of Robinhood and a longtime fan who says Hybrid Theory was one of the only "four or five" CDs he owned in 8th grade, was put in touch with Shinoda nine months ago through a mutual contact at Google Ventures. They chatted by phone on and off about opportunities and shortcomings with personal investment applications. Then a couple months ago, Shinoda asked to invest in the startup with Machine Shop.
"One of the things that was super attractive for us from a business stand point was our goal to expand internationally. Linkin Park as a group has a huge international following," Tenev says.
One product category you won't see in Linkin Park's VC portfolio: music.
"I don’t want to say we won’t invest in anything music related, but I'd say a music-related investment has to clear a pretty high bar for me personally," Shinoda says. "I’m not as interested in music ideas, mostly because they are too niche for what I imagine the fund being about."