Former School of Rock CEO Matt Ross details his journey scaling creative education franchises like School of Rock, overcoming intense personal and professional hardships, and the life lessons on mental health and purpose detailed in his book, Grow or Fold.
I really, I always said to myself, I'm gonna treat myself like a business. I have to balance this three-legged stool of my personal challenges, professional, and I have to find purpose along the way.And the book tells that story around what I did.
How do y'all I'm Elizabeth Gore. Welcome to the Big Idea from Yahoo Finance. We're so glad to have you.As the co-founder of the small business funding platform, Hello Wallace, it has always been my mission to help ensure entrepreneurs have the tools they need to succeed. So let's cowboy up.Today's big idea question is, how can education in the arts lead to a fulfilling career in creative development?Our industry focus will be music and arts education. Did y'all know about 67% of schools cut arts budgets during the recession, yet 91% of parents support arts education. So, my daughter loves the guitar. She plays electric, acoustic, um, the bass, and I have no artistic ability. But these kids, y'all need this type.of education. They need opportunity too, whether it's art, whether it's music, whether it's fashion. What gets me really excited about entrepreneurship is sometimes they step in where funding leaves the government or nonprofits. And I love when we actually monetize good things for good people. OK, y'all, joining me today to talk about this is one of the CEOs of the School of Rock and the founder of One River.School. So Matt Ross, many of you have seen the movie School of Rock. We love us some Jack Black. But did you know there's an entire business story behind it that was scaled into an actual business that exited and was incredibly profitable, yet educated millions, millions of children on how to use creative arts for their soul. So let's get to it with Matt.Well, Matt, welcome to the Big Idea. It's so good to have you. Thank you. So I was, I was telling you earlier, I'm a huge fan. My daughter loves rock bands. She's guitar, bass, electric, acoustic, and, uh, we need more people like you bringing the entrepreneurial spirit to creativity in the world. It's awesome.
I love that. I have a question about your daughter.
OK. Did,
did she first demonstrate an interest in music? That, that's a curious question,
4 or5.
OK, cool.
Yeah, but you know what, we live, we live in a remote area and it was really hard to find places for music. So that's why what you have done and are doing are so important.
Yeah, it's been a calling for me and I stumbled onto it and it's, you know, it's just been joyful.
Well, tell me about, yeah,
and challenging like all entrepreneurship should be, right? The idea lifts you up and motivates you, but then you've got to grind and fight your way through.
It is all about the grind, man. We're, half of us are crazy to even be trying this, you know, it's, and you've done it multiple times, so you're double, triple crazy, right?
Maybe even more so, like, uh, I could tell you stories, but I've also been before I was in, I'll tell you a little bit about my background, but before I did the School of Rock, we, um, I was like turning around businesses, which was sort of just downwind from building and starting a business, you know, when they're broken.You sort of grind them down and build them up and so I, I realized I had that muscle.
That's what, uh, my dad said, you know, when he's in the Air Force, that's how they build strength is they grind you down and they build you right back up. It's, it's kind of like pruning a rose bush, right?
Well, growing up on the streets of Queens, New York, that was a daily experience for me.Be down and getting back up.
There it is. Well, well, tell me about your entry point into School of Rock. I, I mean, you took it from a great idea to an incredibly successful franchise business. Tell us about that journey.
It's really, um, important pivot point for me. I had been in the media business. I was running radio stations.Before there were podcasts and actually, uh, really grew and had my dream job. I was the, um, I was the, uh, general manager and vice president of the classic rock station in New York and, uh, had 3 or 4 trips around the country to different markets, building stations.Became senior vice president with Clear Channel and then we had that dot com bubble burst 9/11 and oh my God, radio advertising fell 30%. We had to lay off thousands of people.They wanted me to move. I'm like, nope, I'm not moving. I'm already, I've already done that. So I took a new gig and a few years later I was ready to try something different. Um, broadband, uh, people forget this, but Pandora and Spotify were just starting to get started. Google and stuff. So we're talking about 2005, um.I just didn't wanna do that anymore. I didn't want to go into the digital media business because it just felt like I needed to grow and learn and challenge myself, so I was managing a musician.And this was a little part-time gig that I was thinking, maybe I'll start a management firm. I'm really good on my feet. I'm conceptual and creative. I could sell programs and do BizDev and um.You know what, uh, the record business fell 50% that year.50 CD sales. And I was just like, huh. And then I got a call, a text from him and said, how would you like to be the CEO of School of Rock? And I was, I thought my, my life was going down the drain that my struggling musician was sending me job leads.
That's OK. That is not a great sign when you're, you're.technical employer is sending you job ads,
teaching someone's living room, you know, and then the, and then like, you know, we did a call, he said, no man, they've got 5 schools, this crazy founder, they're Philadelphia-based. They opened a school in New York. They need someone like you. I want to introduce you. And that was the entry point. I met with a guy named Paul Green and then Joe Roberts, who was the chairman, who was really their first seed capital, who brought in some Philadelphia area business folks.Um, he and I got along great, and I decided to throw my whole body and that was 2005.
It is interesting though that you, you've had this kind of thread of music in your career.
Yeah, it spoke to me in my heart, you know, when I was a little kid and I wrote a book, and we'll talk about that hopefully in a little bit, but, um, I tell my backstory and I was that weirdly creative kid that got no input from the, from the parents, you know, I starred in every play. I was singing, writing comedy, doing music, and, you know.They wouldn't even show up at the play. And I'm like, I guess this creative thing isn't important. I'll just go play sports because I also had that interest and I never felt like woe is me. I was just like, I guess this is not important. But music was a foundational thing for me, um, every minute, every day of my life, even to this moment, it just is.
So tell us then, so you, you step in during one of the toughest times, both internet, music, all of it. I mean, I still miss jogging past the old Virgin Music Store, right, over near Union Square. And umWhat made you think, OK, there's enough interest still in music that I can, I can scale this company?
First of all, it was 2005. I had 20 years of business experience and 4 turnarounds under my belt, created a couple billion dollars in enterprise value. So something was saying time to bet on myself, number one.Number 2, I reflected that, you know, when I was a kid, if I had something like the School of Rock, I would have been all in. I would have done this and I would have been good at it.The, their concept, uh, was just different. They gave you private lessons, and they put you in these little bands every 3 months. Those kids got out on stage and performed a, a, you know, a, a body of music. It could be anything from the Red Hot Chili Peppers to Motown, to Frank Zappa or Cream or the Who, and it, it blew my mind. I went to see a show at CBGB's and it was a tribute to Led Zeppelin. And I thought it was gonna be like,A goofy recital and who didn't believe what I saw happen.Bro, these kids were. It just blew me away. Even the first-timers had this love and joy, and you could see the parents look on their face, and I, and I was just like, there's something sticky about this, emotionally sticky. And that was it, you know, I didn't, I didn't know if we'd hit a home run. I just knew I would do it. I would do better than they would do. And let me tell you where they were. So at this moment in time, they were burning $80,000 a month. They had $125,000 in the bay. Woo.It's 1.5 months of burn rate.And actually, sorry, sorry, they had, yes, that's right. I put $175,000 in. That was my initial investment, got some options, and so now we had 4 months of cash, go to work andYou know, I figured like, I would figure out life. If this didn't work out, I would figure it out. I was 45. I'd built a good toolkit. I'm that strange left brain, right brain. I had an MBA in finance, but was in media, marketing, sales, general management. So,I just had to do this. It was just a calm.
Well, the two things that interests me is, one, you would have been your own best customer, it sounds like as a kid, which is super cool. And then, you know, cash flow makes me so anxious, and I have multiple companies that still makes me anxious. But the fact you had the balls to come through and be like, you know what, not only am I believing this, I'm putting my own capital in it. So then how did you make that leap from, you know, a cash poor.Company that's going downhill then to, I mean, you went all the way through a full exit.
Yeah, so there's a number of steps along the way. The first step was we formed a franchise company, so they only had, they had 5 company-owned units, and what was happening is, is they were