Friday, February 5, 2016 – Today, a group of MBA students from the University of Michigan stopped by the Reverb offices to spend an hour with founder, David Kalt. The visit was part of the UM Ross School of Business MBA program’s effort to provide exposure to startup culture in Chicago. With a track record of founding three successful companies and a BA from the University of Michigan, Kalt was an obvious choice for these educational talks.
During the hour, the Reverb CEO told his story of entrepreneurship – one that includes many highlights, a few setbacks, moments of personal discovery, and the undeniable fact that while success may fall fortuitously into the laps of a few – those who work hard toward a clear vision have the power to determine their own success. Other key points included the importance of surrounding yourself with good people and the virtues of product obsession.
Kalt’s very first company, ClientBase, was a CRM system for travel agencies which sold in 1998 for about $1.5mm. The second hit was OptionsXpress, an online brokerage platform that went public in 2005 and sold to Charles Schwab in 2011 for $1 billion.
David Kalt explained that there are three things he’s really passionate about: technology, finance, and music. It was fitting that his next venture would be a combination of music and tech. After purchasing Chicago Music Exchange in 2010 and feeling the pain of selling music gear on eBay, he realized there was a huge opportunity to build a marketplace specifically for musicians. Reverb.com launched in January 2013.
Throughout the discussion, Kalt pointed to challenges that called for big solutions. When OptionsXpress faced the obstacle of syncing to antiquated back-office software, he decided to build a modern system from scratch to house the data internally (they would simply reconcile once a day to pull updates). This was a huge undertaking that paid off big in the end.
When Chicago Music Exchange had $6mm in inventory and just $3mm in annual revenue with a reputation for carrying only high-end vintage gear, Kalt decided to supplement the used and vintage pieces with new, more affordable inventory – a change that helped CME become a source for all musicians (not just rock stars and collectors). In 2015, Chicago Music Exchange did $30mm in revenue and continues to thrive as a favorite Chicago destination as well as one of the fastest growing ecommerce websites in the world.
The University of Michigan MBA students asked questions during the talk, such as “How do you decide what new features are needed or how to make product improvements?” David Kalt responded with ease, “I use the product as an actual customer every day.”
In the end, there was a clear message. David Kalt taught himself how to code and took on the tech world. He never got an MBA or a degree in finance; he simply read the Wall Street Journal every day and conquered the options market. “I’m a roll-up-your-sleeves entrepreneur,” he declared. And that right there is the real trick to building a successful business.
Reverb is the world’s fastest growing community of musicians. As the premier destination for musicians to buy and sell gear online, the Reverb.com marketplace connects millions of amateur and professional musicians, collectors and musical instrument dealers of all sizes. Further enhancing the Reverb community, Reverb Lessons connects aspiring artists to experienced instructors across the globe.