CFO Keith Lovell on the tech superstar’s future and IPO
Music recognition app Shazam is not a Silicon Valley product or a Silicon Roundabout company. Yet, the Hammersmith-based tech superstar claims more than 300 million users in 200 countries, with two million new people joining each week.
Touted as one of the main contenders for Britain’s first billion-dollar company, Shazam boasts MTV founder John Sykes and Lastminute.com boss Brent Hoberman as one of its board members. Not just this, celebrity fans of the app include pop sensation Usher and Charlie’s Angels star Drew Barrymore.
For all of you who don’t know, the Shazam app is used to identify songs through users pointing their smartphones at a music source to get the name of the song and artist. ‘Shazammers’ can also tag TV shows to interact with brands advertised and access information about programmes.
Shazam’s story is quite the opposite of your regular tech start up. Founders Chris Barton, Philip Inghelbrecht, Avery Wang and Dhiraj Mukherjee actually came from the Silicon Valley to London in search for investors. After private equity company IDG Ventures pumped in the initial seed capital, Shazam was ready to rock in 2000.
It first launched as an SMS-based service but the onslaught of smartphones made the app, somewhat viral. It took Shazam 10 years to achieve its first billion tags, 10 months for the second billion, and it now registers a billion interactions from users every three months.
Today, Shazam has offices in Menlo Park, New York, Chicago, Los Angeles, San Diego, Seoul and Sydney.
So, can Shazam be Britain’s first billion-dollar tech company, with an IPO on the cards?
We chat with Shazam CFO Keith Lovell to find out:
Q. Why did Shazam come to London?
I think the reason why Shazam is based in London is because of the maturity of the marketplaces here.
Back in 2001, the founders were based out of the West Coast in the US and the mobile market wasn’t at all developed. No investor was ready to pump in money into a mobile venture, which had anything to do with mobiles other than making a call. So, Shazam came to London looking for investors. I think IDG Ventures, one of the early investors, were like the Shazam founders, as they were very passionate about using the music space.
The mobile market has developed since and although we’re UK-based, the US is now our biggest individual market. Also in 2011, Shazam raised $32m fund raise mainly through US,
That’s great! What did you with the $32m (£20m) funding?
We used most of the funding to gear Shazam to increase the music experience and integrate the TV experience. We got more user shazamming with television shows, live events and the ads around them. We are now Shazam-enabling every programme on more than 160 channels in the US, 24 hours a day.
What’s your business model? How do you make money on music?
The way we make money is advertising. Brands pay us for publishing banners on segments on the app like music genre.
There’s also buying inventory space for sponsorships which users see while waiting for information to pop up about any song or show.
The other way we make money is actually by referring people to platforms like iTunes. So when you a user tags a song, we get an affiliate fee from iTunes.
Considering US is your biggest market, how big is the Super Bowl for Shazam?
We’re very pleased with the way the Super Bowl has turned out for us. Last year, it was all about introducing Shazam’s TV offering. This year’s Super Bowl was just another event for us and we used it for a major push for advertisers.
Having said that, I think the bigger event for us last year was the London Olympics. In the US, we partner with NBC for digital content and saw more than a million people tagging the closing ceremony. The Grammys was also a big event for us as it touches both key services that Shazam provides, that’s music and TV.
Are brands warming up to the idea of using Shazam?
I think in the ad world you’d find that influential creative people are always looking for innovative ways to engage the audience. The whole idea of using Shazam-enabled adverts, means that a 30 second advert can turn into a three minute experience with the customer. We’re working with all big brands in the US and UK and see a lot of repeat business coming back to us.
You’ve just opened an office in Australia, what other countries are you looking at?
Australia was a market that almost came to us, we started working with just one agency and now have some 15 campaigns there now.
We’ve been running very successful campaigns in France and Spain and they are our fastest growing regions. There are big Asian markets like China and India that we want to enter in the coming years.
Do you identify with the Tech City crowd?
The Tech Hub is more about start-ups. Our valuation is hundreds of millions of dollars now. I’m not saying we’re too big for them but they’re not a part of our scene. I wouldn’t pigeonhole London of being all about the Tech City. Lots of people forget that we were founded in the early part of 2000s and we’re more of a teenager company than a start-up.
How is it having MTV founder John Sykes and Lastminute founder Brent Hoberman on board?
John Sykes not only has a massive love for music but he also loves the media industry. He’s a perfect fit for us in terms of experience, contacts and the sheer passion he brings to the business.
Brent, being the successful and well respected entrepreneur that he is, helps us with all the wood-for-trees arguments for growing the business. We’re growing very fast in this business and rely on instinct for a lot of our decisions. So having Brent come in gives us a balanced perspective and he points out the loopholes that we may have missed.
What do you think of similar businesses like Soundhound who’re growing quickly?
Soundhound is many times smaller than Shazam. It is very difficult to replicate Shazam’s scale and momentum and the amount of traction it gets. A lot of start-ups like Zee Box are coming up but they are tiny, tiny, tiny compared to Shazam.
Finally, there are a lot of rumours doing rounds that Shazam is set for an IPO this year. What’s your take?
Right now we’re focusing on business and we haven’t announced any plans or taken any steps to launch an IPO. When we decide to do it, we will announce it. Anything out there is pure speculation.