In the Bits & Pretzels Podcast Shazam's co-founder Chris Barton talks about how he sold his company to Apple and why he would never take venture capital again.
Here’s the way success stories in Silicon Valley usually get written:
An entrepreneur with a great idea looking for a way to start and scale a business reaches out to venture capitalists on Sand Hill Road, the road where all the money sits in the tech world and gets the check – eventually. And that is exactly what Chris Barton, the co-founder of Shazam, did. Shazam, that’s the popular app that lets users identify songs, movies or TV shows by listening to an audio clip:
„If you want millions of dollars for an unproven business, the only people that have that money are venture capitalists.“
Turns out, he made the right decision after all. In late 2018 Apple acquired Shazam for a whooping 400 million dollars, as far as the story goes. The notorious secretive Apple never officially confirmed the amount. But what Barton wonders in the Bits & Pretzels Podcast if there was a different way to start a business? He sees a profound „misalignment“ between founders and investors:
„Venture capitalists are looking for big Grand Slam wins. Whereas for an entrepreneur you are more focussed on building a successful business but it doesn't have to be the world's biggest business.”
While it’s very often in the best interest of investors to push for scale and growth, eyeing an exit, it could be more sustainable for the long term success of an entrepreneur to grow on a slower more sustainable rate. So the co-founder of Shazam shares a surprising solution: For the next startup idea that he is working on right now he decided to not take venture money. (Of course that's much easier said than done for somebody with one or two Apple millions sitting in his bank account and can't be said for an entrepreneur who's just starting a career in tech.)
Today, Shazam is a worldwide phenomena with more over 1 billion downloads. But Barton takes us back to the early days and shares insights into how it all started ten years ago as a crazy idea between friends, when Barton was a student at the University of California. At the time, in 1999, technology like Shazam’s didn’t even exist. The team had to make quite the effort to search and hire the best experts, including a digital processing specialist from the University of Stanford.
After many trials, errors and iterations the team created Shazam and the vision that popped into Chris mind one rainy day in London finally became reality:
"I was doing a semester abroad at London Business School and I was in my flats in Ladbroke Grove near Portobello Market, and then I suddenly thought, gosh, what if you could just identify the song just from the sound coming into your phone?"
About Chris Barton
Chris Barton co-founded Shazam in late 1999. Today the service of the sound company has been downloaded more than 1 billion times around the world. Apple acquired the firm for a speculated $400 million in 2018 as part of its strategy to strengthen its services business. Before he started Shazam Barton worked at Dropbox, leading mobile operator partnerships, and at Google as the head of North American Android partnerships. Chris holds an MBA from UC Berkeley, a Master's degree in Finance from Cambridge University, and a BA from UC Berkeley.
01:48 How Shazam was born
08:07 Searching for the “Einstein” of music
10:41 How to start something that is not invented yet
12:18 Money, money, money, must be funny, in an investors world
14:19 Don' take VC capital
19:32 Push it to the limit! Startup founders under pressure
22:13 I wanna be a billionaire
23:34 Apple came one day and the startup was away
27:56 Rich, unemployed and living in San Francisco
29:03 "I have this new startup that I haven't revealed what it does"
30:52 Emotion and beauty
The Bits & Pretzels Podcast is produced by Regina Körner, Migo Fricke and Hubert Honold with the help of Janek Postpischiel.