Most often, CEOs are hired to replace a predecessor in times of troubles with the mandate to fix things. Once again, the British-based startup Shazam is an exception. Founded in 2000, the last 13 years have brought both traction and a venerated position in pop culture’s mobile hall of fame as an all-time, top 10 most downloaded iPhone app. The platform (and its 350 million users) has played friend to the millennial music industry, propelling $300 million in digital music sales in the last 12 months, the company reports.
This September, Shazam announced users had deployed their app’s name-that-tune/media discovery function more than 10 billion times to peg down different songs, television shows and advertisements. Each month, ten million more people jump on the platform to listen and engage with all kinds of media; and according to Rich Riley, the best is yet to come. After 14 years at Yahoo, the 40-year-old head honcho at Shazam has embarked on a positive journey and, between meetings with his clients, answered Red Herring’s questions.
Red Herring: What is the situation at the company?
Rich Riley: We are in a phase of accelerated growth. It took us ten years to get to the first billion transactions. Then 10 months for the second billion. [And two months to go from the ninth to the tenth billion.] And we can anticipate that it will go faster in the near future.
RH: How are you expanding the company’s mission?
RR: Shazam’s core value and roots remain in mobile. Consumers decide to engage in music and they expect Shazam to provide a magical experience. Recently we have added dimensions that make it richer by providing historical perspectives, graphs and other elements which make it unique, and a leadership position for our company.
RR: Where we are extending the franchise? TV has become the next frontier and we are making TV “Shazamable.” [As U.S. programming already integrates Shazam,] over time, we anticipate that every show, every program [outside the U.S.] will integrate Shazam and we are currently holding talks with major networks to convert this new step into a reality. We are also working with advertisers to transform their 30 second experience into a deeper engagement. We are continuously adding to our capabilities by so doing.
RH: What drives this explosive growth?
RR: At its core, Shazam is a technology company. Our engineers create new releases of our apps and update them every month, at a faster rate than ever. This allows us to reach customers better with the latest version.
Also we have [a] new set of opportunities: we are in constant conversations to facilitate the mobile strategy of our partners, in programming or in advertising. [We are now working with] a larger variety of applications or verticals, making their ads clickable since we can produce anything on a HTML canvas [and that makes it easier].
And we are spending our time evangelizing our [capabilities, so] the next frontier is expanding all the time.
RH: What is your mandate as a CEO?
RR: Since I joined, I have to [achieve] the optimal balance and make sure we have the right people [to lead] the 200 Shazam employees in the right direction. My second task is to spend time with all our stakeholders, media companies, networks, advertisers, with whom we have partnerships. Those are high level partnerships. We work closely with Apple, Amazon, Audio, Spotify among others. For example, Shazam sells [$300M each year, which translates into 500,000 songs per day on all platforms,] so you can imagine what it means in terms of relationship for all parties involved. But it goes beyond, since we deal with record labels, events, etc.
RH: Any gap between your perception prior to joining and what you eventually learned during the first 100 days?
RR: Sometimes CEOs are disappointed but in this case I did perform my due diligence beforehand and I spent a lot of time with Andrew Fisher who was CEO for over eight years and [is] now Chairman. I spoke to longtime board members like Nenad Marovac and investor Kevin Murphy from Kleiner Perkins to get their perspective. I realized three positive things: that I could develop an invaluable partnership with Andy; that customers loved Shazam’s experience much more even than what I thought; and that the opportunity is larger than we planned.
RH: If everything is rosy, why change the CEO?
RR: The company may have needed someone to grow rapidly from the current stage and someone who had operated in a more complex environment on a larger scale. Also the U.S. is a real focus on our current development.
For me, this represents a fantastic opportunity after 14 years at Yahoo! to work with 200 people, well beyond the five-people startups in a garage, yet to move at a fast pace. It is quite rare to have such a market impact with a strong team in different functions in a company of Shazam’s size.
RH: So what is the roadmap?
RR: We have one of the top ten apps in the world. Shazam is the fundamental way to connect media and content [with people via their smart devices. And it has the potential to be integrated with an innumerable set of verticals such as the retail environment and radio.] It is increasingly relevant to billions of people and we [plan] to execute towards their sharing a magical experience. And the IPO is a fundamental milestone to focus on.
RH: Compared to Google and Facebook, is Shazam too green for an IPO at this stage? Is the business model predictable enough?
RR: Public market investors aspire to growth and momentum. They want to see consumer engagement and progress (more people and more use of Shazam). They want to see technology and category leadership. Since I came on board, we have met with well known bankers and experts and I think the key word is predictability and not really an absolute revenue level. At least that’s what I have understood from these briefings.
Consequently, our job is to put the team, the controls, the accounting and more importantly to continue getting more customers. We put the company in an IPO readiness state first and decide later when it is right. By the way, IPOs are highly dependent upon the overall environment which we do not control so the best we can do is to solidify the prerequisites. Maybe a year or two from now, we will find ourselves in a position to decide on an IPO. Our investors have been patient and backed us up and it has taken a long time.
We are well-financed after Carlos Slim and other firms invested [more than $80 million] in Shazam at a far higher valuation than Series A players such as DN Capital and Nenad Marovac. We have a solid balance sheet so we should focus on our knitting, to develop Shazam around the world.