Illegal Streaming with Andrew Batey

george grombacher 0:02
Welcome leopard, this is George G. And the time is right welcome today’s guest strong apparel for Andrew Beatty. Andrew, are you ready to do this?

Andrew Batey 0:09
I’m ready. Let’s go.

george grombacher 0:10
Let’s go. Andrew is co founder and CO CEO of BT app. It’s a venture backed streaming content auditor and fraud detection company for the music industry. Andrew excited to have you on tell someone about your personal lives more about your work, why you do what you do.

Andrew Batey 0:30
Yeah, it’s a, it’s kind of a windy road actually started as a literary agent for film and TV. So selling properties and a lot of family animation stuff. I started investing into tech companies, the beginning of 2007, when it was the first one was into a Facebook company that was building Facebook games when it was still largely edu based. And you have to have an edu address that to be on the platform. And you can only talk to your own silo of students. And so we were building technologies that circumvented those rules and allowed you to kind of talk to other campuses, through games, basically. And so so that was quite interesting. And I remember back then everyone telling me, you know, Facebook’s for kid, this is never going to work like No, no even going to companies and saying, Hey, you should jump on this Facebook thing. We’re building these really cool games, you should participate. And they will look at us, like we were stupid and say like, Facebook’s not gonna make it like this is not a thing. So really interesting times back, then, we ended up growing that into an agency in selling it.

And then, you know, after that, I wasn’t really sure what I wanted to do, it’s just kind of important to beat that. But said to go back to grad school, and do my MBA, though she doesn’t 11. And that’s where I actually met my co founder now for beat that we became super good friends, we were on a special select team that was like a traveling case team for the master’s program. And we go compete in different case studies against other schools and whatnot. And we just became like, really, really fast friends. And we always knew we wanted to do something together. But we weren’t really sure what, at that time, he was a lobbyist actually helping extend copyright protection in Canada for most of the major labels. So he helped change the legislation from 50 to 70 years for copyright protection. And then I was on the promotional end. So remember, I was talking about Facebook stuff? Well, I was the guy that was like hacking, Facebook, Twitter, YouTube, like if you wanted to get on the front page of YouTube, I was probably one of your first calls. You know, I was I was talking to that guy. And I learned how to change those kind of tactics into frameworks for growth. And from that point, I think I was a bit unstoppable is what I felt like I jumped into software and started using all of these tactics as learned for growth hacking, which was at the time who was calling it online marketing sales, I guess, technically more growth hacking into growth frameworks and how to leverage that for products. So from that point forward, actually grew and sold three additional companies. And then in 2018, Morgan and I were at a football game, and a large label that we all go to football games with, because we’re all still friends that hey, we have no idea how many times the song is played on the streaming service, we get a report that says like, let’s say, for example, Snoop Dogg did 100 million plays. But we don’t actually know Snoop Dogg did 100 million plays like we don’t actually have the real data, we have to go and send auditors who are like, visualized in this old man with pens and paper that like go in there and pull the server logs and one by one, map it to the reports they were given for the times as the song was delivered. And like in today’s digital world, that’s just impossible takes forever. And so now you have hundreds of streaming services, or use cases for your music, like even think about like fitness streaming applications that might use any of these use cases for music that need to be audited. But you have an offline auditing format. So they asked us to build an auditing tool. And so that’s really how we started geeked out and that’s why it’s called beat up is like, beat like music and distributed application because we built it on top of a blockchain technology. The other kind of weird thing with that was I was everyone’s we’ve crypto friend, I started mining in 2011. And was sort of like the person you call we’re like, is this real? Or how do we do this? Or, you know, what do you think of it, that’s kind of the consigliere it for crypto for a lot of people. And so I think there was a belief that because I do crypto, I knew blockchain, which is if anyone can say is witness to different very, like different things. But but I’m thinking I think like you’re probably built that, you know, it started to look a little crypto club at work. We’re building all kinds of crazy stuff. I already knew most of the engineers I would pull into something like this. But no one had ever done it before me is at the time was the fastest they had 40,000 transactions a second we needed to do over a million thoughts a huge multiple or step forward in technology to make it possible that you know we could do it. That’s what made it so interesting to me. We We started solving this audit problem. And we built a real time tracking solution. So imagine if you’re listening to streaming service. And as the song is being delivered to your phone, it’s also going into our network. And the streaming service is saying, Hey, I recognize Andrew, he’s played the song 30 seconds, he’s now right revenue generating tear, he’s in the right location, all these rules, and then they say this one counts for royalties, and they sign the label also would see that same transaction, say we see Andrew and all those rules, beat up, sees it and says, we agree with both you and we see Andrew and we sign it. So you have was real time tracking, and reconciliation. So you no longer needed an offline auditor come in because everyone agreed to the counts as they were happening in real time. So we we, we beat the million, we’re actually we can do 10 million transactions per second, we have 40. If patents, you know, around blockchain tracking technology to Christian media. Both the funny thing that happened was, is a is as we’re tracking, we’re seeing all these weird anomalies like somebody played a song 30,000 times in the week, and we all agreed every individual font counted. But that’s actually impossible. Like a person can only play a song, like maximum 3000 times per week, if they had it playing 31 seconds, and they were skipping. So clearly, this is a bot of some kind, like this one shouldn’t count. So we started discovering all these weird anomalies in like, what looked like stream manipulation. So we went back to our partners and said, Hey, we can’t really do audit, because there’s this huge discrepancy of problems that are occurring, where things that look like plays shouldn’t be plays, because that’s not how people and so then we then, you know, realize everybody at the streaming levels, kind of dealing with some forms of this, but they didn’t have like a definition of what streaming prod was, didn’t have clear, not everyone had clear rules about what counted didn’t count. Like, do you count streams that are 3000? Do you count them if they came from multiple countries, but they weren’t, you know, 46 countries in a week, like, which seems like clear abroad. So we were we were sort of going through all of that stuff at that time. That was probably two, three years ago. And then as we started developing those rules, we started building way more sophisticated machine learning algorithms, unsupervised supervised models that were looking for this fraud, and we just started catching away more of it, and we became the industry leader. So as of today, we are the leading industry fraud detection service. And we do almost no audit. So our blockchain is no longer I mean, we, the I think the hope is eventually we could turn audit on for people because it makes sense for everyone we’re like, it’s a, it’s a really great product that’s fully built and flushed out and mature. It’s like the Ferrari of blockchains. However, we really have to solve fraud before we can ever solve the audit. And so that’s kind of the phase we’re now in. And from that, we’re like, We are the industry leader in fraud detection at this point.

george grombacher 7:57
Next work. Do that. That’s awesome. Super excited. So you were a literary agent, you got into Facebook games? Do you just understand how to do development? Or how did you learn all that?

Andrew Batey 8:17
No, it was actually quite the opposite. So Facebook games was probably the one thing that worked that elected 20 investment, one of two things that worked out of the 20 investments. I was just taking money, and I didn’t trust the stock market. So I was just thinking, I don’t really trust the stocks. Like because I don’t know well enough, it’s not my area. But what I feel like I know is entrepreneurship. I you know, ever since I was a kid, like my dad, you know, he gave me a lawn mower. When I was 12, and had to build like, I’m sure there’s a story of a lot of people, we had to build like a little lawn mowing services business. But he made me pay him back for a lot more. So I had this concept of like a loan to pay back the loan. And as part of the interest on the loan, he made me actually mow the lawns of all the old ladies in our neighborhood. So there were three older women who were too old to mow their own lawn, and my dad made me do it for free in exchange for giving me a lot more. I learned about bad deals at that point because I had to mow their lawn for years for free, which is definitely not worth the interest on whatever a four or $500 lawn mower is. But you know, it is what it is. I guess getting back in community and a bunch of other stuff at that point. So I didn’t really believe that, you know, I think at the time I hated him probably cursed him every time I was mowing this old woman’s lawn. But at the end of the day, I think it was such a valuable lesson to learn. And so again, I just kind of felt like I knew entrepreneurs really well. I always sort of had side businesses and hustles and and then when I had the the literary agency job, I thought it was my dream job and you know, it was the job everyone wanted to have, you know, especially in LA but it really wasn’t my favorite job like I hate Reading, I’m not a huge animation fan, the two things were basically 90% of my, my job. And I just thought, you know, it looked at my boss and he had the most miserable life, from what I could tell, like just just constant work. I remember his honeymoon photos, had his scripts on his labs, as he’s like reading, trying to catch up. And I’m like, this is just not for me. So I started thinking about how do I invest outside of the space. And honestly, I just like every bad angel investor just started investing in people I knew right around me, probably not the best deal flow. And that included the kids that were building games, if you because remember, keep in mind, I was one of the longest agents in direct field history. So I was like, 19, when I started selling these major book properties 1920. And so I remember, I remember investing in the game. So that was 2021. With all the kids I hung out with, like kids, they went to USC that met UCLA that I’ve met, I invested in a bad T Shirt Company that went sideways, you know, all kinds of weird stuff, a bar restaurant, because, you know, I thought that was cool, and then did a few more of those. And but yeah, so the Facebook thing is just the thing that took off. And I think as it started taking off, my brain just started connecting dots, I could see it working. And I could see how could we weren’t used for music specifically. And I went to a bunch of musicians I knew and I said, What if instead of just the game, focus on the game, but what if we took those audiences and told them to buy something like your music. And at the time that was so novel, like no one had owned audiences other than email, and they thought I was crazy. And so I spent a year and a half building up this kid, we founded a bonfire and then took it and launched him and he went number one on iTunes, number seven, billboard 2010 just broke everything with no label. And really, that’s that was kind of the sort of like, you know, the big the big breaking point for us, because then every major label came every huge artists, we were working with everybody at that point. And that was really my entry into music on the promotional side. And just learning how all of these tools can be used to sort of help artists out.

george grombacher 12:08
I think it’s really cool and fascinating. So you’re obviously good. You’ve talked about learning tactics, and then developing frameworks for those, and you’ve done it in all these different complex systems. But you look at the stock market, and you’re like, I don’t get it, or it just doesn’t make sense to me. How do you think how do you reconcile that?

Andrew Batey 12:32
Yeah, I guess I just never get it. Like, it just feels. Like I just don’t like, I don’t understand how a company can have such amazing fundamentals and then just move value because people perceive it differently. Like, to me, that’s never felt real. If you make 400 million in cash, you’re worth 400 million in cash. It’s a multiple, like, that just seems obvious. I don’t know. I just I guess the headline risk and the way that things move, that doesn’t seem like it’s, it’s truly should, it doesn’t feel market. I know this is every finance person out there is like you’re an idiot, but like in in my brain is doesn’t click, click for me. Like it just doesn’t. And then I’m like, so what’s the benefit? Like, you know, I remember putting, you know, not a huge but a significant six figure song into Docs, probably back in 2012, or something. And I remember financial, I wouldn’t talk to financial managers, like you’re my safety net, here’s some money because I don’t understand what you do. Like, please just outperform me. And they didn’t I outperform them every quarter. And I just was like in. And I all I did was pick specific socks that I thought I had a gut instinct on, or that like, seemed to make sense to me. But it didn’t feel like repeatable. You know, like, I would pick one or two. You know, like, I picked hydrogen one, because I heard that they were like, basically hydrogen ones, like a utility company in Canada. And I’ve heard that they were privatizing. And I’m like, In what world doesn’t monopoly privatize and then not manipulate the price that they charge people? Like, if there’s no competition, they’re going to charge people as much as they can. And the stocks gonna go up. And that’s exactly what happened. It just seemed logical to me. But I mean, how do you do that? 20 times over simply trading. So I just assumed that people knew more than me, so I gave them money. And it didn’t matter anyway, because honestly, around the same time, I started acquiring just an absolute boatload of crypto and like obviously have outperformed them in crypto no matter how the market is today. So I don’t get it. I don’t I still don’t get it. I don’t I own zero violences zero, I probably own like, less than 50 grand of stocks, like I don’t really pay attention to it at

george grombacher 14:56
all. Fair enough. I appreciate you answering my question. So it was impossible to do 1 million transactions a second, and now you’re doing 10 million transactions a second. Is that hard to do? Is that easy to do?

Andrew Batey 15:15
Yeah, the thing was back then there wasn’t a even today, to some extent, there wasn’t like a forum with all this code, you could just copy paste, if you truly had to figure out how do all these nodes interoperate? How do you network them together? When they start getting confused? Something happens called orphan blocks, because they can’t process like, what do you do with all these passwords on transactions, and music royalty, you can’t just like, forget, they exist, because it’s someone’s money. So there was a lot of problems to work through. And I think once we worked them through for a million, we realized a horizontally scalable path to like, basically, it’s called paralyse processing, where you just do the same thing in multiple lanes. And so we’re, that’s the best way to visualize. So instead of one lane of traffic, you’re creating like 14 lanes of traffic, but they’re all still going the same direction. And once you’ve figured that out, we just going from 1 million to 10 million super easy, going from that 40,000 to 1,000,001 of the hardest things you’ve ever done. And then once we had it done, it truly was infinitely scalable. If we could have gone to 30 million transactions, you just increase the number of lanes you add. So there’s some extra building, there’s like you build roads, but generally speaking, like that’s the the easiest part. The hardest part wasn’t you know, blasting that road through the mountain was like that, the hardest part to begin with.

george grombacher 16:38
So talking about broad, talking about manipulation, now that you’ve done it, can other people, for lack of a better term, rip off what you’ve done.

Andrew Batey 16:54
I think the technology, I think the technology can it can mean machine learning. And it’s, it’s always evolving, we use a lot. It’s hot now. But we use a lot of AI for prediction stuff and trying to see if we are right or wrong. And if we’re really wrong, then that might be a signal that, you know, we need to go back and reevaluate. Because we think it might be fraud or whatever. So I wouldn’t say we’re like, we have a really brilliant team that’s well funded and is pretty far along the path. So. So one, I would say technology can always be ripped off. But I think the thing that can’t be ripped off is relationships, because we’re the industry leader. And because we’ve been selected as the company. I just don’t see a short term scenario of someone coming in and replacing us, it’s just so hard to switch these products out. And there’s so many dependencies from like product teams at this streaming services that use us or management teams that use us. So it’d be really hard for someone to replace you only because they would replace you with the same thing. And I think the services are just risk averse. So it really was a land ground in the beginning, which is why we were so quiet about what we were doing. We never did press, we always just, you know, I don’t know there’s concept called the boiling frog. If you put a frog in water before it’s hot, and they turn the pot off, they don’t jump out because they don’t realize it’s getting hot till it’s too late. It’s kind of the same thing with the industry. Like we came in, we were quiet, we worked with all the biggest partners, we got all of our technology adopted across. And then by the time the rest of the industry figured out, we were ready to industry leader and we were kind of cemented our position. So that’s kind of how we approached it. So I would say it’s always possible every incumbent in history has been displaced. It’s just a matter of time, right? I just hope that time is 100 years from now, or at least after we sell the company at some point in the future. But for right now I feel like we’re pretty stable. Yeah, things things are, you know, great. And, and also, there’s lots of other types of broadly probably don’t work on. So these companies that are doing stuff can can look at other sort of like sectors of fraud or other ways that fraud is occurring in the music industry, other than stream manipulation. The reason we’re hyper focused on this one problem is, you know, last year we shifted market share back to rights owners by 18%. So you’re talking about like billions of dollars a year being thrown. It’s not like a small problem. It’s two to 3 billion annually being taken, taken from artists and labels. And so we’re just hyper focused on that one problem. We think there’s a huge business there, it’s growing. That number is going to reach 7 billion by 2030. In terms of theft annually, so you’re talking about a huge, huge problem and a market that we’re well positioned to solve and instead of trying to own everything for everyone, we’re really hyper focused on just doing that one thing extremely well.

george grombacher 19:50
Well, Andrew, thank you so much for coming on. Where can people learn more about you and how can they engage with BT DEP?

Andrew Batey 19:57
Yeah, they can go to BT app.com You know, this isn’t for us like we do these podcasts and stuff like this more because we’re excited to tell our story. Finally, as I said, we were quiet for so long. So we’re happy to, you know, engage with people, they can find me on LinkedIn, Andrew Beatty, they can approach Morgan Morgan, who was also on LinkedIn. And my other co founder PORIA, outside of tour, he’s, he’s our CTO, but if anyone ever wants to reach out like we’re multiple time founders, we’ve been through it a lot. If anyone has any questions like we’re always open, we kind of keep an open door policy for people.

george grombacher 20:31
Awesome. Well, if you enjoy this as much as I did show Andrew your appreciation and share today’s show with a friend who also appreciates good ideas, go to beat dapt.com It’s BBEATD a pp.com. And check out everything we’ve been talking about today and learn a little bit more about how they are working to solve a big problem that will only get bigger. So thanks again, Andrew.

Andrew Batey 20:58
Thanks for having me.

george grombacher 21:00
And until next time, remember, do your part by doing your best

Transcribed by https://otter.ai