Troy Carter is a master developer of talent. Whether he’s guiding a mega popstar to the next No. 1 hit or investing in a young entrepreneur with the next billion-dollar idea, Carter understands the level of support that creative thinkers of any stripe need to achieve their highest potential.
“There’s a patience with the process that I’ve been able to carry over to startups,” he acknowledged in early June sitting in the library at Atom Factory, the Culver City music management company he founded in 2010. Carter, however, didn’t build the careers of Lady Gaga, Meghan Trainor, and Eve, among others, by being patient. He’s a consummate strategist and part-time psychologist, highly skilled at dealing with strong personalities. “Inspiration can come from anywhere at any time,” he said. “You have to be incredibly empathetic and have a respect for art and process. But you also have to be able to deal with crisis.”
Less than a week after our interview, news broke that the 43-year-old CEO of Atom Factory would become the global head of creative services for streaming-music giant Spotify. Carter posted on social media days after the announcement that his commitment to Cross Culture Ventures and the Smashd Labs accelerator (both under the Atom Factory umbrella) would not be affected by his new role at Spotify, a company he first invested in five years ago. Carter has invested in more than 75 companies since 2011 as an angel investor (including Dropbox, Lyft, Warby Parker, The Skimm). In 2015, Smashd Labs (accelerator) and Cross Culture VC (venture fund) were launched to continue to build upon Atom Factor’s technology portfolio.
A Notorious Introduction
There’s a picture of Carter—a slight 21-year-old with a penetrating gaze—with Christopher “The Notorious B.I.G.” Wallace and Sean “Puffy” Combs that hangs behind Carter’s desk in his Atom Factory office. A friend had discovered a forgotten roll of negatives a few years ago and had the photo enlarged and framed for Carter’s birthday. “I wasn’t one to take a lot of photos along the way,” says Carter, “but that one is my favorite.” The pic was snapped backstage at Wallace’s first Philadelphia show; Carter had just started working for Combs’ Bad Boy Records, Wallace’s label.
“Inspiration can come from anywhere at any time.”
But it was the trio’s first meeting a few months earlier that makes the photo hanging on the wall all the more impressive.
The year was 1994. Carter was promoting parties, bringing in acts like Wu Tang Clan, Foxy Brown, and Jay Z from New York City. Most hip-hop shows had difficulty securing liability insurance back then, and Carter was circumventing the requirement by booking pop-up parties at different locations. “Biggie was one of the acts I brought down to Philly, and the first time, he was a no-show,” Carter recalls. “I got into a huge argument with his manager on the phone […] and with the head of his label, who ended up being P. Diddy. They ended up coming to town late, the show was over, [but] we went to this after-party and just kind of hit it off from there.”
Carter subsequently started working as an intern at Bad Boy, and he used the experience to soak up knowledge about every aspect of the industry, eventually rising to the position of assistant to the president. “I was a sponge. I read every contract. I knew all of the deals that were going through,” says Carter. “It was a real education.”
He also observed the way Combs conducted his business. “I studied this guy, every single thing that he did.” Still, Carter deems P. Diddy a passive mentor. “I was an intern and he was a CEO,” he reasons. “So it wasn’t a close relationship.”
Building Dreams on Harsh Realities
Growing up presented an assortment of challenges for Carter. The family was poor. His parents divorced when he was a toddler. And his father, who remarried, was convicted of murdering his second wife’s brother after an argument. Carter was eight years old. His mother raised her three boys as a single mom, worked full time, and did her best to provide guidance and direction.
It was around this time that Carter wrote himself a letter. In it, he described what he would be accomplishing at certain ages during his life – five, ten years down the line. He’s written many of these letters over the years, and it’s a practice he continues to this day.
West Philadelphia was a harrowing place to grow up, but it also planted seeds of grit and resilience in Carter, qualities that have served him well over the years that he relishes in those with an entrepreneurial spirit. “I grew up falling asleep to the sound of gunshots, you know what I’m sayin’? To make it through half the stuff that even my peer group came from, there’s something in you that’s different.” Carter was lucky in one respect; he lived in the same neighborhood as Jeffrey Townes and Will Smith, better known as DJ Jazzy Jeff and the Fresh Prince.
By ninth grade, Carter had decided that he wanted to pursue a career in music. A fan of early ’80s hip hop, he took note when New York rap act Salt-N-Pepa signed a deal with a West Philly label. A music movement seemed to be building momentum right in his own backyard.
Carter eventually dropped out of high school to pursue music full time. His family was dismayed by his decision but remained supportive. “My mom put me in a program called Job Corps, which was like college meets jail,” he recalls. “She said, ‘the only way you’re going to pursue music is if you get a GED.’ ” He appeased his mom by honoring her ultimatum.
“I’ve always been able to take a really complex situation and break it down in an incredibly simple way. And the natural protectiveness I have over my clients is an instinctive thing.”
Carter met Will Smith when he was 17. Four years his senior, Smith and business partner James Lassiter took the aspiring rapper under their collective wing. Carter performed in a rap duo, Too 2 Many, but soon realized that while he did thrive in the environment, performance wasn’t his strong suit.
Smith and Lassiter were active mentors to Carter. He got his first taste of Los Angeles, migrating west for the first season of The Fresh Prince of Bel Air. He hated the city and returned home. He gave LA a second chance, but this time it was Lassiter who sent Carter packing back to Philly to readjust his attitude.
He struggled a bit but found his way, and things started to come together. “I fell into being a manager quite naturally. It was the first time I realized that I was really good at something,” he says. “It’s the ability to listen, understand, and problem solve. I’ve always been able to take a really complex situation and break it down in an incredibly simple way. And the natural protectiveness I have over my clients is an instinctive thing.” Carter’s previous experience working his way up in the industry provided additional framework for his approach to managing, promoting, and branding his clients.
In 1999, Carter began to manage Eve, Nelly, and Floetry among others. He formed the music management company Erving Wonder with Jay Erving, son of NBA star Julius “Dr. J” Erving. In 2004, the pair sold Erving Wonder to Sanctuary Records in the U.K. The deal ultimately fell apart and Carter, who was now back in Los Angeles, got a double punch to the gut when Eve fired him months later. He was deep in debt. His car was repossessed and his house went into foreclosure.
The Edge of Glory?
Just as the downward spiral of his life seemed to be intensifying, Carter got a call from Vincent Herbert about an amazing performer from New York he had just heard. He was flying her out to LA tomorrow. Did Carter have time to meet with them? Herbert was a child prodigy who produced records for the likes of Celine Dion as a teenager. While the two had known each other for years, they had never done business together.
The artist Herbert introduced Carter to that day was Stefani Germanotta, soon to take the world by storm as Lady Gaga. Carter did a masterful job of packaging the singer, whose style had previously been considered too dance club for mainstream pop radio. Gaga has gone on to sell more than 150 million records globally, win six Grammys, and consistently push the artistic envelope.
In 2010 Carter formed Atom Factory, continuing to grow the music management business and adding John Legend to his roster of clients. Fresh from the breakout success of Gaga, Carter also made his first venture into startup funding, with mobile app Tinychat in a deal that closed around Christmas.
The following year, he went to “Summit at Sea,” part of a conference series that was started by a group of entrepreneurs. “I just so happened to be sitting next to a guy, [and] he made the statement, ‘In your life there’s only people who extract value and people who add value and there’s no neutral.’” Carter leaned over and the two got into a deep conversation on the subject. The “guy” sitting next to Carter was none other than Shervin Pishevar, an entrepreneur who had just sold Social Gaming Network and was considering venture capital investing as his next career step. The two became friends.
“I get satisfaction from sharing deal flow and learning from other investors. Google Ventures builds their practice around co-investment.”
Shortly after Pishevar joined Menlo Ventures as managing director, he introduced Carter to Uber founder and CEO Travis Kalanick, telling Carter on the spot, “I’m going to lead the Series B on this deal, and I’d love for you to be a part of it.” That marked the beginning of a fruitful relationship, as Pishevar connected Carter with other promising startups, including Warby Parker.
“To marry my diligence process that I was developing with a more sophisticated [one] like Menlo really helped me figure out what my own view of deals would be,” Carter says. “For me, I get satisfaction from sharing deal flow and learning from other investors. Google Ventures builds their practice around co-investment. There’s data that shows when you have smart money around a table, the company becomes more successful.”
Suffice to say that 2011 was a very good year for Carter and his portfolio of investments.
As Carter became a more active presence in the VC world, he had a conversation with another investor that left him astonished. The man, who managed a fund to funds, candidly told Carter that people were reluctant to invest in his new fund because they thought Carter was only interested in African-American entrepreneurs, not in finding the next Uber or Lyft. “It was an eye-opening experience, and it hurt my feelings…. Sometimes as an entrepreneur, you get discouraged and you think your idea just isn’t there or that something is flawed.” He’s sharing the exchange with others so they have a more accurate picture of the scope of the challenges facing them on either side of the negotiating table.
Swimming With Sharks
In 2013, Carter’s world was rocked again when Lady Gaga fired him as her manager. While it was a substantial hit to his cash flow, Carter had other irons in the fire. He got up, dusted himself off, and got back to work.
He appeared as a guest shark on ABC’s Shark Tank this past season. Though it is a TV show with certain elements staged for the benefit of the viewer, Carter recalls the experience as being fairly accurate in terms of the negotiating that takes place. “You’re playing with your own money,” he says. “So once the lights go up, your investor instincts kick in.” He hopes to return to the show next season.
While he can capably sift through P&Ls and ROI statements, Carter has vivid memories of the scarcity that defined his youth. “I call it ‘financial PTSD.’ When you grow up poor, and you come from hard circumstances, it’s a fear that lives in you and you never want to go back.”
One day, Carter arrived in the office and his heart skipped a beat. His wife, Rebecca, the company’s CFO, was in the conference room. Sitting across the table from her was The Bank. “Where I come from, your relationship with the bank is like with the police,” Carter says. “You stay away from it. You go to the ATM and hope the ‘insufficient funds’ message doesn’t pop up.” Rebecca, who came from a finance background, explained to her husband that it’s common practice for businesses and banking institutions to foster a cordial relationship with each other.
Having his wife’s support and feedback is something Carter clearly treasures. “My mom was always a big believer in me, and having that [quality] carry over to my wife has been extremely helpful.”
Carter comes from a big, tight-knit family and while there were the naysayers along the way, he came to rely on certain family members whose validation kept him going through difficult periods. “Just being able to hear, ‘You can do this. I got your back. I don’t care what the outcome is.’ It means a lot.”
A strong believer in the importance of modeling, Carter believes that a change in thinking needs to occur. “African-American men in this country have a certain image that’s ingrained in people’s psyche,” he says. “I think it was Mark Cuban who said when he sees a black guy in a hoodie, he crosses the street. It’s an image problem.”
“My mom was always a big believer in me, and having that [quality] carry over to my wife has been extremely helpful.”
While music or professional sports offer the dream of a lucrative career path for young African-Americans, Carter wants to open up the conversation so that completing your education, going into business, or being an entrepreneur are considered just as desirable and attainable. He points to Robert Smith, recently on the cover of Forbes and one of the most successful hedge fund investors today, as a great role model for today’s youth.
Thriving magnificently at the intersection of entertainment and technology, Carter himself is a strong role model. Intelligent and articulate, his determination and resilience are inspiring. His feelings about Los Angeles have changed markedly since the early ’90s. “It was an actor’s town,” he recalls. Today, he points out, LA boasts the fusion of the culinary scene, multiple thriving arts districts, and wears the crown of music capital of the world. “Technology is booming, we have a young mayor…. There’s a sense of optimism that I’m feeling.”
Music Moves Forward
During our interview, Carter discusses the core issue behind music piracy (“Bad product that was mispriced”), the emergence of streaming music platforms (“People don’t mind paying for value”), and his thoughts on where the industry is heading (“Drake has adjusted to the new consumer better than anybody else”). Elaborating on the latter, Carter observes that by rejecting the conventional model of distribution in favor of more fluid interactions with the audience, Drake keeps his fanbase constantly engaged by adjusting to consumer behavior.
Carter recently used Spotify to test market a group of songs by Mishcatt, a pop singer from Costa Rica he’s been working with. They uploaded a few songs in March, seeing what worked and what didn’t, identifying similar artists for proper categorization, gauging listener feedback and so on. “We’re learning a lot as we go,” Carter says. It was a masterful move that created intrigue (because not much else was known about her) while giving its platform exclusive content that people wanted to hear. In just over three months, Mishcatt’s top-ranked song, “Another Dimension,” garnered more than 8.5 million plays.
While Carter’s new role at Spotify will curtail his day-to-day involvement in Atom Factory, he has expressed a commitment to keeping the company – including Smashd Labs and Cross Culture Ventures – fully operational.
With all that he has accomplished, Carter’s response is refreshingly simple and close to home when asked his definition of success. “Being happy most of the time.” What makes him happy? “I don’t know if there’s anything better than my kids being happy.”
When Carter turned 30, his mother and wife presented him with a “This Is Your Life” scrapbook highlighting his accomplishments to date. Also included were all of the letters he had written to himself over the years, outlining his goals and vision for the future. Carter never saved the letters, but unbeknownst to him, his mother had. “When I opened it, it was like waterworks went off,” he recalls.
When Carter’s mom passed away two years ago, he pulled out the scrapbook again, which he had never properly examined, and noticed that his mother had included a Bible scripture and a note expressing how proud she was. “Look what God has blessed you with,” she wrote. “These are the things you dreamed of and you accomplished your dreams.” More waterworks.
“As a kid, you want to make your mom proud. With that said, I don’t rest on my laurels. I always keep trying to keep pushing forward,” Carter says.
As Carter grows into his new role at Spotify and continues to groom musical and entrepreneurial talent, one thing is clear: the next letter he writes to himself is sure to be epic.