Radio Revolution A Q&A with Pandora founder Tim Westergren

Tim Westergren, 42, is an award-winning composer, veteran record producer, and accomplished musician who plays the piano, bassoon, drums and clarinet. He's also the founder of Oakland, California-based Pandora, a personalized online radio service that's used by 15 million people (so far) and is expected to bring in about $25 million in ad revenue this year.

Westergren, 42, recently spoke with Entrepreneur.com about internet radio's potential to revolutionize the industry, the trials of entrepreneurship and the start-up he founded back in January 2000--right before the dot-com crash.

Entrepreneur: Earlier this year, you mentioned in an interview at Digital Music Forum West that internet radio is going to become the standard. Can you explain why you think services like Pandora have the potential to revolutionize the radio industry?

Westergren: There are a couple things that the internet allows you to do in the context of radio that are a pretty radical departure from traditional broadcast radio. The first one is you can customize or personalize a station. Secondly, the listener is able to give feedback and sort of curate the station and what goes on it. And these two things really transformed radio.

Entrepreneur: It seems like Pandora has really taken off in 2008, especially with the development of the iPhone application. But it's taken some time to get to this point--what's been the difference?

Westergren: In the last couple years, the big thing that happened was that broadband penetration has become ubiquitous, and that's a prerequisite for adoption of web radio. I guess the second thing is [that] you're now seeing a whole host of platforms like . mobile phones and network devices that are all becoming distribution points for web radio.

Entrepreneur: How are you planning to expand your listener base?

Westergren: Actually, it kind of happens by itself. We don't advertise at all, so it's more of the same.

Entrepreneur: So what's your ultimate goal for Pandora?

Westergren: There's two parts to the grand vision. We want to be the biggest radio station and revolutionize radio around the world. The second piece is to [provide] the average working musician a massive distribution channel that is truly democratic. We want to create a musician's middle class, to give opportunity to tens of thousands of working musicians who have never had radio play before.

Entrepreneur: And who are some entrepreneurs that you admire?

Westergren: Reed Hastings, the founder of Netflix.

Dr. José Antonio Abreu, founder of El Sistema, an absolutely amazing music program for poor children that has transformed the lives of tens of thousands and continues to grow.

Jeff Bezos: I'm hard-pressed to think of someone who has overcome more naysayers and bested so many competitors ... through sheer discipline, smarts and tenacity.

Mo Ibrahim, [who] defied all expectations and built a massively successful cell phone company in Africa. [He is] now focusing his efforts on economic and political reform across the African continent.

Entrepreneur: Your friend David Hornik once called you the "poster child of startup persistence" in a blog. Can you tell us some of the crazy things you've done to try and keep Pandora alive?

Westergren: Well, we launched right before the dot-com crater, so we lived through the worst years of that time. Probably the most basic thing was a bunch of us went without salary for almost three years and racked up some serious debt. That was one big adventure [laughs].

Entrepreneur: Three years is a pretty long time to go without salary. Where did you find the drive to continue?

Westergren: Well, I think it was a combination of things. I and all the people who did that never stopped believing that [Pandora] was a good idea. There were certainly times when we were questioning whether we would make it over the top, but we never stopped being excited about the idea. And it was like we just needed to hang on long enough.

We also felt a tremendous sense of responsibility and obligation to each other. You do become part of a team. I certainly felt that way about all the employees, and also all the folks who had invested in the company and had given their time to help us along: friends, family, advisors [and] customers.

Entrepreneur: Looking back, is there anything you would have done differently?

Westergren: You know, not really. As crazy as that may sound, all those things have shaped us into who we are now. The reality is, the thing that we built--this Music Genome Project--it took a few years for the infrastructure around it to catch up, to be there so we could really realize its value. Those were tough years for everybody.

Entrepreneur: Is there anything you want people to know about Pandora?

Westergren: One thing I'd like to add is that we play the music of about 60,000 artists now, and there are [almost] 600,000 songs in our collection. About 85 percent of those songs play every day on numerous stations.

So of all the things happening to us, one that I'm most excited about is that I think we're really seeing the beginning of a musician's middle class. I think this is how it's going to get built. And it's happening [now].