November 2007 -- Pandora: Radio from the Music Genome Project

[Sue Klein Lebeck]

November 2007

Pandora -- Radio from the Music Genome Project
Tim Westergren, Founder


Meet, hear and speak openly with Tim Westergren, founder of Pandora - "a new kind of radio -- stations that play only music you like." Pandora celebrates "insatiable curiosity" by helping you find and discover new music you will love. Pandora is powered by the Music Genome Project -- "a crazy project to capture the complex musical DNA of songs". Pandora is hugely popular at 8 million listeners and counting. Still, like many innovations, Pandora struggles to hit upon just the right business model to sustain its mission.

Tim's inviting style is a great fit for our interactive gatherings: "Ask any questions you have about the company. The more we can talk to each other, the better." So bring your thoughts, questions, ideas -- and also your best wishes for Pandora, for "at the bottom of Pandora's Box was Hope".

See also: October's Inc. magazine to read his "long and strange" story.

[Sue Klein Lebeck]

Notes and Gems:

Pandora -- Radio from the Music Genome Project
Tim Westergren, Founder

These Innovation principles were observed [by me] from our conversation with Tim.
Thank you Tim, for sharing your experience and wisdom:

Culture:
- Culture is key – it is a struggle to hang onto your innovation culture:
At Pandora, new hires go through “Pandora University” as part of their orientation.
This includes a two-hour session with the Founder and the CEO. Take the time to communicate the culture from the start.
- Companies are all about human relationships, egos, and self-confidence. Psychological and interpersonal dynamics are key.
Effective protocols can grease the wheels.
- You must work hard to keep the executives humming together and communicating; it’s like being in a band.
The “Kumbaya stuff”” is desperately important.
- Trust is key:
“in identifiable and material ways, lack of trust will keep you from performing properly”
“the executive team has to have each other’s backs”
Ideation:
- Dive deeply into something, and innovate from there
- Get really familiar with the challenges of your customer
- All good ideas come from the collective.
- Great ideas are often timeless:
“everyone loves music. From age 22 and up, we lose our ability to find it.
You get tired of listening to the same five albums, and you no longer have time to find and buy new music”
- Don’t forget the role of the human, in cooperation with the computer:
“the human ear can do things a computer may never be able to do.”
- Know your vision and goal:
“I just want to fundamentally change the whole frigging [music] business.”
- Differentiate yourself:
- It is a matching game – linking bands with their fans
- ClearChannel, with 100 million web customers, is the key competitor. But, ClearChannel does its own programming.
Pandora, though also “internet radio”, is a user-community, creating user-programmed radio over the internet.
- Pandora is creating community: Customers say ’We’ should do this….”.
- Pandora creates new value for those not served by current models:
“The state of the art is ‘collaborative filtering’. If you are new, you are out in the cold – you can not get into the loop.”
- Be responsive to your customers:
“every time a search request is made without a ‘hit’, it is viewed as a request. After 5 requests, we go out and get the music”
- Know what you do and do not want to create:
“If this could create music, I would throw it away. [That would be a true Pandora’s box]”

Management:
- Find people who are smarter than you, and get them on board
- After a merger: Keep and groom the purchased management team
- Choose leadership well:
“the perfect CEO [Joe] has a low ego and is very smart. It is magic.”
- Manage the milieu you are operating in:
there is much craziness in the music industry; Pandora separates itself from this
- Know your biggest challenge:
As in many cases, the biggest challenge will be sustaining monetization.
- Distinguish between interesting applications, and a sustainable business model
“there are many interesting applications, but the business opportunity of any one of them is really small.”
- Bolster the sustained success of your chosen business model:
“We offer a plethora of services” which will bring the listener and their [ad-consuming eyeballs] back again and again to the website.
Give them an [ad] experience they will enjoy [e.g. an inventive “valence” ad model]
- Transform the risk structure:
Get patronage before investing [in producing a record]. Pre-sell.
- Be prepared for major ups and downs:
“[I] went from having heart palpitations and being bankrupt, to being courted by banks. [ I] lived the entire gamut. [I] kept going….”
- It’s about the people:
When things get tough, people don’t stay for the mission, they stay for the people

[Sue Klein Lebeck]

Musical Innovators --

As you re-enter your workweek schedule after what I hope was a relaxing holiday weekend, remember to give yourself a musical accompaniment to help you through the day. To hear the radio programming of the Innovation Society, log on to www.pandora.com, with the account name [e-mail], and password “innovation”. (I’ve added some of your named favorites, for those who didn’t get a chance to add theirs.)
Let the music begin!

[Sue Klein Lebeck]

Pandora's Near-Death Experience

Those who joined us in November 2007 know Pandora's backstory. Check out Tim Westergren's latest status at http://www.inc.com/magazine/20090301/pandoras-near-death-experience....

Go, Tim, Go!

Cheers,
Sue