Tim Westergren: How The Band Kept Playing At Pandora

Tim Westergren was a rock musician before he became a startup founder. His music genome project was the core technology used for Pandora.

Tim Westergren founded Pandora in January 2000. The goal was to "capture the essence of music at the most fundamental level" using a matching algorithm and compare them to other songs for a better recommendation experience.

However, at the peak of the dot-com bubble in March 2001, the doors slam shut behind them. 

At the start of 2001, they began to stretch their money out and asked employees to defer their salaries. Tim maxed out his 11 credit cards, and they stopped paying their employees at the end of 2001. About 50 people worked for two years without getting paid to get them across the bridge.

Tim pitched Pandora 348 times before getting their second round of financing. They raised 9 million dollars for the 2nd round. Two million went out the next day to pay the salaries. Today, the company has over 6 million monthly subscribers.

Two things worked in their favour:

• The product was magical. Everyone was excited about the product they've built. Investors were offered password-protected access to the product.
• The company was resilient. When the company went through tough times, the founders were the first to defer. This inspired the staff to continue without salaries. 

In the early days of Pandora, it was all about bringing together people that were inspired by an idea that mattered.

The key moments in the first 5 years of Pandora were when Tim influenced important people to make decisions that helped them.

You have to be creative to influence people. You have to create crumbed trails that will get you to key decision-makers. For example, Tim is a good basketball player. Once he had to influence someone from a legal profession who also played basketball. Tim figured out how to get invited and play on his team.

These are the moments when your startup is dead, and all seems lost.

As a radio company, Pandora operated under a statutory license that let them play all the music without directly licensing the content. But in 2007, the Copyright Royalty Board made a ruling that made the royalty rates so high that it almost put them out of business.

Pandora then emailed their listeners and asked them to contact their members of Congress. Two million people called, wrote, or visited their members of Congress to protest. Congress finally intervened and got the rates to a more normal place.

The most common question among startup founders is how to know when is it time to quit. They really want some validation for their decision.

A better mindset is to say, "This is my life. I'm not doing it because I'm guaranteed a reward at the end. I'm doing it because that's what I do."

It's better to do and fail than regret not trying at all.