Peter Niessen isn't complaining. The 36-year-old director of strategic planning at American Express concedes he has a pretty nice life: a juicy job, a passport with stamps from Cambodia to Ecuador, and a slick Manhattan apartment with a roof deck.
Like many busy professionals, though, Niessen has paid for these blessings in a currency you can't stockpile in a 401(k): time. And as a former rock bassist, one of the most disheartening casualties of his maxed-out life is his ability to discover new music. Carless in New York, he hasn't listened to radio in five years. The lazy afternoons at Tower Records are long gone. "I used to depend on friends," he says, "but I can't look to them as much anymore. It's not that I value music less. I just don't have time to find it."
That dirge of the wage slave is one Tim Westergren has heard before. "People don't lose their love of music," says the founder of Pandora Media, a small Oakland, California, company. "They lose their ability to connect with it."
Westergren, now 39, built Pandora, an online music-matching service, to help the Peter Niessens of the world, the people whose CD-swapping (and beer pong) years are behind them. For $36 a year, after a free 10-hour preview, the company pledges to help them discover sounds they might otherwise miss—and to do it so precisely that its recommendations are better than an actual human being's.
Most matching services depend on other customers' buying patterns. Amazon's or iTunes', to name two, simply note that people who bought CDs by Death Cab for Cutie also picked up the latest New Pornographers' release. But Pandora's Web-based service (there's no download) is driven by a homegrown software package, the Music Genome Project, which maps the DNA of individual songs based on as many as 400 different elements, or "genes." Drop the name of a song or band into the search box and Pandora instantly creates a "radio station" dedicated to that artist, using shared attributes such as acoustic harmony or electronic instrumentation to create a string of songs you might like (see diagram on previous page).
When Niessen set up a station based on the Flaming Lips, for example, Pandora came back with Wilco and Mercury Rev—the usual suspects, given the Lips' sound. But the site's genius is its ability to go deeper as well, dredging up obscurities like the Great Depression and the Lightning Seeds.
Inevitably, Pandora produces some duds. "In between Wilco and the Flaming Lips, Lisa Presley popped up," says Niessen. "I was horrified." But that's actually part of the plan: Users can reject a selection at any time—and the genome rejiggers its algorithm and promises, red-faced, "never to play a song like that again." If you like a song enough to buy it, there's the inevitable link to iTunes and Amazon.
Pandora's a bespoke Internet radio station that learns from its own mistakes.
The result is a bespoke Internet radio station that learns from its own mistakes, one infinitely more diverse than the homogenized playlists promulgated by Clear Channel—and devoid of noxious ads or DJ chatter. Despite what its name might suggest, Pandora is nothing less than a mechanism for filtering and shaping the chaos of an exploding supply of digital music.
"The power of the Internet is that everybody can receive his own unique streaming content," says Joe Kennedy, the company's CEO. "Pandora has all the advantages of traditional radio in terms of speed and ease of use, plus surprise and serendipity."
The Creation Myth
"Serendipity" wasn't a word that got thrown around much in Pandora's early days. In fact, for a long time the company seemed to have been born under a dark star.
Like many ideas at the height of dotcom mania, Pandora was hatched when a flight of fancy met a couple of beers. In the fall of 1999, Westergren, a strapping Stanford poli-sci grad who'd spent 10 years as a keyboardist and songwriter in a rock band, was making a living scoring films—which basically meant pairing music with a director's personal tastes. Then, shortly before moving to Los Angeles to pursue his film career in earnest, he read a newspaper story about musician Aimee Mann; she had legions of loyal fans but not enough to satisfy her label, Geffen Records, which had shelved her.
"I thought, if I could do a kind of Myers-Briggs [personality map] for music and tell people what songs they'd probably like based on musical similarities, the Internet could solve the problem of access," Westergren recalls. "It would be like what eBay did for pink flamingos."
The year being 1999, it didn't take much more than a night in an L.A. bar and a couple of cocktail napkins before Westergren and Jon Kraft, a Stanford classmate who had already launched and sold one business, nailed down a $1.5 million round of angel funding—including a sizable chunk from Guy Kawasaki's Garage.com.
They got the cash at the end of March 2000. Weeks later, the dotcoms marched off the cliff.
By early November 2002, only four full-time staffers remained of the 45 who'd been there at Pandora's peak. Westergren came to work to find an eviction notice posted on the office door. Several former employees were suing for back pay. "I was petrified," he says now. "I was waking up at 4 a.m. in a cold sweat. I had chest constrictions. I started losing my hair."
Even so, "I always thought this was a big idea. Everybody I demo'd it for thought it was cool. That was oxygen for me."
He needed all the oxygen he could get. Westergren would pitch Pandora 348 times before AOL and Best Buy finally built the service into their consumer operations in early 2003, delivering a revenue stream that kept the company afloat. In March 2004, he secured a $7.8 million round from Walden VC; that June, he was finally able to hire Kennedy as CEO.
Inside Pandora's Box
The genome project itself is Westergren's brainchild, but the brain that shaped it was largely Nolan Gasser's. An earnest, friendly guy with a head of curly brown hair, Gasser was employee number six when Pandora launched in 2000. He is Pandora's answer to Craig Venter—and the man most likely to win a Nobel Prize for parsing the gene for Fitty Cent.
Gasser also happens to be that rarest of musical prodigies: a PhD in musicology with an equal passion for renaissance music (he has conducted an early-music ensemble), jazz (he's jammed with John Handy), and pop (he's backed Steve Miller). He deployed that eclecticism to crack the DNA of just about every musical genre, deconstructing the hundreds of traits that give each song its unique signature, from basic building-block genes like the vocal timbre and harmonic language that power rock to mutant chromosomes like rap's vocal stuttering and kick-drum patterning. Pandora currently has some 15,000 artists—several hundred thousand songs, representing a century of music—in its database.
That kind of vivisectioning is arduous work—the decoding process typically takes about 20 minutes per song (longer for dense rap lyrics, five minutes for death metal)—and Westergren knows that as well as anyone. But, he points out, the goal is not to catalog all music, just the good stuff.
"Ironically, I found over the years that the fact that we couldn't go fast was a big advantage," he says. "The problem that needs solving for music is not giving people access to 2.5 million songs." The trick is choosing wisely.
Which brings us to the company's boiler room, a back corner of the cavernous office that looks more like backstage at Lollapalooza. There, five days a week, 32 music-addicted miners pick apart stack after stack of CDs, analyzing each track against a digitized checklist of characteristics. They are all professional musicians—most moonlight in Bay Area bands—and all have studied music theory and been put through an initial 40-hour genome training session (there are training updates as new genomes launch).
"This job's awesome for a musician," says Danny Eisenberg, a spiky-haired blond keyboard player for Grammy-nominated singer Tift Merritt. "You can go on the road and come back, plus you're using your ears in your work." (Still, after a hard day's slog through the collected works of Britney Spears, even the most dedicated gene splitter needs a break: "I listen to a lot of NPR now," admits analyst Jeff Anthony.)
No one is more crucial to the process than Michael Zapruder, Pandora's music buyer, whose hunting grounds run from the Billboard charts to fanatic Web sites such as Pitchforkmedia.com and Insound.com to the catalogs of Forced Exposure in Boston and Other Music in New York. He typically buys between 250 and 350 new CDs a week, or 10,000 a year, generally fewer than 10% of which are on major labels.
"I have to keep the analysts fed," Zapruder says. "If the bins are empty, I walk through the office shamefully."
Dotcom Chorus: Caution
It was only in late August that Pandora moved from a B2B model to a consumer one, expanding beyond AOL's music-recommendation service and Best Buy's music-discovery kiosks to unveil its Web-based consumer interface. Since then, the company has relied on Web buzz to get the word out. And so far it's working: By early October, a growing blog-driven fan base led to a story on the nerd news site Slashdot and deluged the site with traffic. In less than two months, Pandora had been mentioned in more than 1,000 blog postings, most of them of the "holy s—t, this is awesome" variety.
But Ted Schadler, an analyst at Forrester Research, says "the real challenge will be to get the service in front of consumers, not just the cognoscenti who will jump through fire hoops to get cool stuff."
Schadler thinks Pandora has potential—if it can "match sonic snippets in a way that allows them to make stronger recommendations, that's the holy grail"—but worries about its ability to monetize the service. The subscription fee may be a hurdle, he says, especially since you have to pay extra to buy music. And the company will probably have to strike deals with a bunch of destination sites—buying ads on Google, hooking up with a cell-phone provider, or licensing the technology to Yahoo—if it really wants to grow.
Yahoo, of course, has its own matching service and although Kennedy dismisses Yahoo's technology as the "warehouse of choice" approach, he concedes that it could be a formidable competitor.
For his part, Kennedy is beyond coy with his company's numbers (he learned his lesson after boasting about traffic on eLoan, his alma mater, then being forced to try to match it quarter after quarter). But he insists that "everything is exceeding the high end of our expectations for the launch." He anticipates rolling out a free, ad-supported version of the service in the near future, and suggests that Pandora may soon go after another round of funding to fuel expansion plans.
Which may explain why there's still something Conradian about Westergren. "An experience like this transforms you," he says quietly, late one October night, of the entrepreneurial darkness he has traversed. "I don't take anything for granted anymore. It toughened me up and made me appreciate when things are going well."
Despite the pain, he maintains he'd do it all again—faster than you can say diatonic harmony. "The joy I feel when I discover a piece of music I love is magic," he says. "It's my religion."
Linda Tischler (email@example.com) is a Fast Company senior writer. Pandora introduced her to the band Saucy Monky.