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Sweet marketing music

Tanner Montague came to town from Seattle having never owned his own music venue before. He’s a musician himself, so he has a pretty good sense of good music, but he also wandered into a crowded music scene filled with concert venues large and small.But the owner of Green Room thinks he found a void in the market. It’s lacking, he says, in places serving between 200 and 500 people, a sweet spot he thinks could be a draw for both some national acts not quite big enough yet for arena gigs and local acts looking for a launching pad.“I felt that size would do well in the city to offer more options,” he says. “My goal was to A, bring another option for national acts but then, B, have a great spot for local bands to start.”Right or wrong, something seems to be working, he says. He’s got a full calendar of concerts booked out several months. How did he, as a newcomer to the market in an industry filled with competition, get the attention of the local concertgoer?

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by Beth Ewen
August 2005

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David Carnes of ArcStone, on keeping many firms, owners and a band on track

David Carnes runs three companies so far, ArcStone Technologies of Minneapolis, a technology consulting firm, and two new companies, AMO and Wonderfile, that he’s parceled out to multiple minority shareholders. With his wife, Lisa, he also runs the band Mayaflyer. Carnes believes, in music and in business, it’s all about keeping time.

“I started ArcStone after selling another business. Since finishing school I’ve been involved with many startups. I guess I like the buzz.

We assembled a database of property taxes for the state of Minnesota. Also, as a side project with the person who started the Minnesota Real Estate Journal, we put together essentially a commercial multiple listing service. Eventually it made the board of Realtors nervous enough so they bought it.

With ArcStone, I just started a rent-a-nerd kind of thing. I kept getting busier and busier. My wife came on board, and it’s been slow and steady growth since then. We’re up to 10 employees. Between the companies we have about $1.1 million in annual revenue.

We realized as consultants we’re limited by our time. We wanted to create some intellectual property, like the real estate database. Being from Minnesota and having a socialistic kind of breeding, we wanted it to be something that all would share.

A lot of our customers wanted the same thing, a way for their members to interact. We thought there’d be a product in that, so we assembled a system and that became AMO, which is an acronym for Association Management Online; the Web site is associationsonline.com

The guys who were with me and Lisa, all got an ownership piece. We came up with a formula, if you contributed time, you’d get a portion of it. Those guys are still with us. It keeps people engaged and willing to go the extra mile. There are five owners including Lisa and me. We have the majority, three have the other portions. With an LLC it’s easy to split up the managing percentages and the financial percentages.

AMO is a little too close to a consulting business. Wonderfile is something else. We’re really excited about that. One of our biggest customers for ArcStone is BP, and our contact there, he’s responsible for coordinating where the drilling platforms will be sent next. He needed to keep all the unstructured information organized and accessible..

We’ve developed a unique system to do this. A lot of organizations have this problem. We can’t wait to finish this so we can use it at ArcStone.

It’s a central point for storing information. It doesn’t use folders, it uses what we call labels. So you can say, ‘I worked on it with Beth, and it was for Upsize,’ and you can  find it that way. It can integrate with Outlook, so as you’re sending an attachment you can CC it to our system.

Is this our billion-dollar idea? It could be. We have a patent pending. We worked with a patent agent, for 5 grand. I didn’t want to spend 12 grand with a law firm. We only have so much cash.

We’re doing an alpha test in a couple months, then we’ll really launch it first quarter of ’06. We formed an LLC with seven owners, the same model as with AMO, some outside the company. They’re keeping their day jobs, and the people at ArcStone will stay at ArcStone and we’ll see how it grows.

Partnerships can be hard. It’s worked for us so far. Having open communication is important, including on financials. Everyone will know what’s going on. It’s not like a typical startup because we have two other businesses providing revenue.

My role is to provide leadership, to get people the tools they need, providing the structure to play with. Maybe it’s being like a band leader, and keeping time.

My wife and I met in music school at the U of Minnesota. She was involved in ArcStone, now she’s pursuing music and taking care of our kids, who are 5 and 3.  I try to make it a rule, having the different pieces going on is important. I try to keep my time at ArcStone between 8 and 5:30 or 6, and then I hang out with my kids. When they go to bed we go into our studio and play music. It’s such a different thing. It’s a creative outlet.

I have the same role in the band as at the company. I play in the background. I write the music and the lyrics. Then I let the people who are great at singing or playing do that. I’m more concerned with the rhythm and structure, and the tensions of the chords.

I could work 14 hours a day no problem, but I don’t think I’d be as effective. I’ve had a growing realization that a part of leadership is providing that seed and letting people build around that. It’s like that grain of sand that finally turns into a beautiful pearl. For me that’s a pattern that happens in music and in the business.

I want to provide several enterprises for people. If they own 5 to 10 percent, five to 10 years from now maybe we’ll have four to five entities. People will be able to be secure in their lifestyle and come to an environment that’s very creative.

Maybe it is the Minnesotan in me coming out. I don’t think I’d want to participate in a venture that I wouldn’t want to be part of. I want to treat others how I would like to be treated.

The end game for me is to create the environment that I mentioned, so the financial aspect is there. I don’t know yet what all the middle enterprises are, but the last enterprise I want to start is a music school for kids. It’s getting cut from the schools now and it’s going to harm them. I’d like to buy a block on Lake Street and create a place for kids to come play music.

That’s where I want to be when I’m 50. I’m 36 now.”

— As told to Beth Ewen

 

[contact]
David Carnes is president of ArcStone Innovations:
612.381.9951; dcarnes@arcstone.com; www.arcstone.com

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Beth Ewen

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