You'd think the founder of the popular website Pandora would be rich beyond his wildest dreams. I mean, come on.... Tim Westergren invented the Music Genome Project. Punch in a song you like and it will spit out a slew of others you'll enjoy because of the musical qualities they all share. Turns out despite 40 million users Pandora is still a passion and not a winning lottery ticket. Mr. Westergen's inspiring story to promote music!
VJ: Joining us on the J-O-B is Tim Westergren. Very excited to have the Chief Strategy Office and the founder of Pandora. Yes, you know Pandora it started in 2000. It’s the product of the Music Genome Project—to put it simply, you play a song you like and it suggests more songs that you might like that are like it. Pandora’s just passed the 40,000,000 registered users mark and it’s growing over 2,000,000 new users a month just in the United States. Tim, thanks so much for coming on the show.
Tim: My pleasure.
VJ: Alight. So let’s just talk a little bit about how the sausage gets made first, The Music Genome Project. Do you have a bunch of music people hidden away in some dungeon and all they do is rate and categorize music. Is that right?
Tim: Yeah, well there are windows in the office.
Tim: So there is natural light.
VJ: And you feed them?
Tim: [Laughs] Yes, when they need to be fed.
Tim: Yeah we have about twenty-five musicians now—that team has been as large as sixty—their job is to listen to songs and analyze them one song at a time on along to close to 400 musical attributes per song. They’re kind of capturing the equivalent of musical DNA.
VJ: How did you come up with this idea? I should get a bunch of people, rate the music and then it will help the people like music more?
Tim: Yeah, well I’m a musician and before Pandora I was a working musician I played in bands for a long time and then I was a film composer. It’s really in my capacity as a film composer that I really started thinking about the kind of musicological underpinning of songs and sort of deconstructing them. I got pretty good at figuring out what a director wanted based upon the songs that they liked and ultimately that led to this idea of a genome.
VJ: So you get this idea and then did you tell someone and they said “You should do this?” How does it morph from your idea to an actual website?
Tim: Well I shared the idea with a friend of mine—a college classmate named John Craft—he was the one who said “Wow this could be a really interesting business”. So literally we went from sharing the idea to writing a business plan and before we knew it we had raised some money and were off to the races.
VJ: Tim Westergren joining us on the J-O-B, founder of Pandora. He is now the Chief Strategy Officer. Did you originally start then the music? You started logging it yourself or did you always hire someone else to do that?
Tim: Well I was the first music analyst, but I didn’t do it alone. I hired a team of about, I guess six or seven people in the very, very beginning when we were kind of building the very first beta version. In the end we had about sixty people doing the analysis.
VJ: What type are these people, are they musicians like you?
Tim: Yeah, they’re all trained musicians. You need a background in music theory to do the work, so they typically come out of music school.
VJ: This is an actual trained musician who knows what they’re talking about?
Tim: Yeah, you’re sort of average working musician probably doesn’t have that kind of training. We’re looking for people who really understand theory and have been ear trained and can really identify these very, very subtle granular details.
VJ: Where do you guys draw the line about a song to rate or a band? Like is it only signed bands or would you rate like my cousin Joey’s band who meets in a garage every two weeks?
Tim: Well the nice thing about this service is it doesn’t discriminate at all—we’re completely blind to popularity. If you’re brother’s band sent us a CD and it was good, it would go into the Genome. It’s really a matter of quality.
VJ: Tim Westergren joining us on the J-O-B, founder at Pandora, one of my favorite websites, gives me all of my good links to specials and (inaudible) music. He’s also the Chief Strategy Officer. Do you guys have to pay the music companies to play their music?
Tim: We do. We pay publishing fees to composers and performance fees to the performers.
VJ: Okay, so what’s the rate?
Tim: Well it’s a fraction of a penny for every song, but it adds up in a hurry. So we paid well over $20 million this year just in performance fees to performers.
VJ: $20 million, so that means you played how many songs?
Tim: Gosh about a billion and a half hours of music last year.
VJ: Billion and a half hours—Wow! So what are the stats about people who if you go to Pandora and you listen to a song you can buy it? How many people are buying music that they hear that you guys rate, because that would be the true sign of success right?
Tim: Yeah. We did a survey a while ago and what we found was that 45% of people who use Pandora are buying more music since they started using it and 1% are buying less. It’s really driving a lot of sales. We’re one of the highest sellers of music through Itunes and Amazon which you can buy directly from Pandora.
VJ: So here’s what I thought when I originally used the site; I said it is great because it gives me music that I love, but I’m like how in the world are these guys going to make money off of this thing, because a, I’m not staring at the screen because I’m off in the other room doing something else. You guys have introduced commercials, right, but how are you guys making money?
Tim: Well the beauty of the site is that you actually—believe it or not—do interact with it quite a bit. The average listener, about six or seven times an hour goes back to Pandora because one of it’s features is it allows people to thumb up and thumb down songs as they listen, it sort of refines and curate the station. So that sort of interaction leads to the creation of ad impressions basically. So our business is about both selling or advertising on the site like that, as well as, like you said a growing amount of audio advertising.
VJ: Tim Westergren is the founder of Pandora—Pandora.com.—Chief Strategy Officer. You can put a song in there and it will give you a thousand others ones that are similar to it because he hires musicians to go and log all that stuff. What was it like to go and get money for this thing?
Tim: Oh we’ve been on a long journey. Pandora—like you said—we founded it ten years ago in January 2000. For about four years we were kind of unfunded. We raised some seed money to get started, but I pitched the company hundreds of time to get more money and we wound up spending a couple of years without salary and really kind of being deep in the valley. It wasn’t until 2004 that someone finally said “wow this is an interesting idea”. That’s when we actually became Pandora in name and in product, we had spent the first four years really building the music genome project.
VJ: So, let me just as a personal question, did you have like a bunch of money in the bank if you went two years without making money?
Tim: I had eleven maxed out credit cards.
VJ: So literally two years, all credit cards.
Tim: Yeah, and borrowing. I was completely in the hole.
VJ: So, I mean you talk to a lot of people that open a business, it really is about the passion. Was it about like you really wanted people to get music or was it more about the business—like you thought eventually this thing is going to click—or both?
Tim: Well my inspiration originally came from my desire to do something for musicians. I had been in bands for a long time and I was aware of all this great talent around that nobody knew about. The web was exploding and it offered all this potential, but it still wasn’t solving the problem of discovery—you know, how do you find that band that nobody knows. That’s really my mission with this company is to surface this great music and create kind of the equivalent of a musician’s middle class.
VJ: More with Tim Westergren in a moment, the founder of Pandora.com, the music genome project. We’ll ask him if he’s rich, I promise.
We are back with the founder of Pandora, Tim Westergren. You know Pandora because it’s the website that you go to, you put in a band that you like and then it musically suggests about five other songs you might like. Pandora. So part of the genius with you is that you realize you’re a musician and maybe not the best business man, because when I went to research you, I realize that Pandora had a CEO named Joe Kennedy, not you. Did you kind of realize that and say I need somebody else?
Tim: Yeah, well I have been one small part of a large group of people. The founder John and I and then there’s a third founder, Will Glazer who was our founding CTO and really helped the company through those first four years. Then we have a whole bunch of people that joined—Tom Conrad runs our product, he’s terrific, our CO Joe, as you mentioned, he joined in 2004 and was really the guy who kind of pointed us in the direction of radio. I relied on a lot of people over the years to help the company to get where it is now.
VJ: When you talk to anyone who started a business too, and you get a little bid of funds, you know you start getting a lot of hands in the cookie jar. Do you find yourself, as one of the founders, always saying “hey guys here was the mission, let’s not be pimps or prostitutes” you know what I mean?
Tim: Yeah that’s one of my roles for sure is to keep the company really focused on it’s mission and make sure that we’re staying true to what we set out to do. In the world of music and rights and all, there’s all sorts of temptations the companies have to kind of fall off that and we’re very disciplined about sticking to it.
VJ: So I guess the money question—we’re going to put you on the hot seat again—is that I just read that you guys had like $20 million in revenue last year, you said you paid out $20 million, so that means you have to have at least that much coming in—you’ve got to be like a multi-millionaire then right?
Tim: We actually did close to $50, last year, but we’re profitable so we had a profitable fourth quarter, but the company is not profitable overall yet. So it’s still a labor of love and we hope we can make it a big business one day.
VJ: Hey Tim are you married? Do you have kids?
Tim: I’m married but no kids.
VJ: Your wife just must be like this angel to put up with your vision for all these years?
Tim: I’m lucky.
VJ: I mean seriously is she the one encouraging you or are you the one like “hold on baby we can do it”?
Tim: No, she’s been great.
Tim: Yeah, absolutely.
VJ: Because that’s just great to have a partner like that. We’re speaking with Tim Westergren who is one of the founders of Pandora, he’s also the Chief Strategy Office. It was founded, as you know, ten years ago. It’s all about the music genome project, you rate a song, you get songs like it and Tim was one of the people who started that. What is Pandora ultimately going to fit when you talk like CD’s, or the MP3 player, or you mentioned radio?
Tim: Well we’re a radio, plain and simple. It’s a different kind of radio, but our goal is to make Pandora as ubiquitous and easy to use as traditional radio has been. So in the car, at home, at the gym, wherever you are in the office and allow you to have these portable stations that are one click away from a personalized listening experience. We really think of ourselves as a new kind of radio.
VJ: Tim Westergren joining us, found of Pandora. Just a couple of more questions. Do you put your radio station online?
Tim: Well every radio station that people use on Pandora someone else can listen to if they can find their way to it. It’s not that you’re sort of a broadcaster or a DJ for other people, but people can tune into your station, so the stations that I have created are on there.
VJ: My thing is if my wife ever got on here, I would just be ashamed that she would have Yanni and all these crazy people on there. Are you always proud to let people listen to your radio stations?
Tim: Yeah. One of the very basic principles around Pandora is that it’s personalized. All that matters to us is what you like. Pandora is not a place that passes judgment on your taste.
VJ: Okay come on (audio skips)
Tim: We think if you like Celine Dion that’s great.
VJ: No, come on.
Tim: If you like Neil Young, that’s great. It’s up to you, it’s whatever floats your boat.
VJ: You’ve got to drawn the line at Yanni. You can’t be endorsing the Yanni listeners of the world.
Tim: You know one thing about my background, is at a musician, I spent a lot of time in recording studios and around working bands and I know what it takes to put together a good record—whether it’s a simple pop record or something much more orchestrated and complicated, so I actually have a lot of respect for every kind of music. It’s all very hard to do.
VJ: Even Yanni?
VJ: Oh Wow! Tim I had so much respect for you, I love Pandora.
Tim: I own music from virtually every artist, you know. A lot of the traditional whipping boys for musical snobs like yourself, I own. I’m happy and proud to be owners of it.
VJ: Okay, here’s the thing, you can’t go five feet in San Francisco or the Bay Area without someone talking about Pandora or having it on their iphone or listening to it in their house. Is it catching on in the rest of the country because I don’t know anybody in Wazula Montana, you know what I mean?
Tim: Yeah, it’s everywhere. We have about 45,000,000 registered listeners in the U.S. and it covers the Country. Wherever there are music lovers, Pandora is sprouting up. So yeah, it’s pretty ubiquitous.
VJ: Tim, I hope we talk in about ten more years and it’s about you selling all of your stock and it’s worth $500 billion dollars.
Tim: [Laughs] I hope we’re still around in ten years.
VJ: Absolutely, because seriously it’s like you—people like us—that have an idea and start a business and put it all on our credit card for ten years, live hand to mouth and go for it and that’s seriously what America’s all about. Hey we wish you all the best of luck Tim.
Tim: Thank you very much, I appreciate it.
VJ: Tim Westergren is the founder of Pandora, Chief Strategy Officer as well. Of course you can find Pandora at Pandora.com.