Posted by: hmchang | October 9, 2009

Entrepreneurship: Pandora Founder’s Talk at UCSB

This afternoon, I attended a talk given from one of Pandora‘s founder, Tim Westergren. It is absolutely fantastic to listen to one of the major websites that renovates the music industry in the recent five years. In addition, Tim, as a true Entrepreneur in himself, sets a great example for young Entrepreneurs.

Tim graduated from Stanford in 1988 (if I remembered it correctly), and went into must-related jobs for ten years. The Music Genome idea started to be formulated in these years, and during the first prime time for the Internet — approximately 1999 –, he and other fellow friends got an Angel founding and started  a company to work on this project.

The situation become bad when by the end of 2002, they ran out of money. They paid no salaries to the employers until in 2004, they got a 9 million USD from a group of VCs. During that difficult period, they owed about 2 million of salary. It is amazing to me about how Pandora can keep the employers even under this tough situation, but they survived.

After getting the major funding, they hired a new CEO, and then re-positioned themselves to become an online radio. In fact, their original business model was to license their software to the big brand names to help recommend songs that someone might be interested. Latter, they figured out that online radio is, in fact, the way to go, and thus started the website we currently see today in 2005.

The Pandora radio is soon a great hit and more people registered after than launched an iPhone version. They do not need to license the music, according to Tim, since there is US laws that allow them to freely put music on a radio format. This is also why, when you key-in the title of a certain song, it cannot play it. Any music on the “radio” need to be played in an un-predictable fashion.

There are two barriers of entries: one is the music selection algorithm behind the music engine and the other is that the music genome, in reality, require human to listen and label them. Each album may take up to more than 2 human hours. Of course, this will results in some scalability problem and may also prohibit them from fast expansion, but they do not intend to cover all music but, perhaps, 10% of the all music in the world.

Pandora is now a very popular internet radio and their success is basically worth-of-mouth, with very few advertisement. The story is definitely inspiring from young entrepreneurs.

The video will soon available on the TMP website.


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