How Shazam went from a 4-digit Phone Number to $400m with Chris Barton, Founder

(Intro Narrator at 00:00:00) Today, we're talking to Chris Barton, the founder of Shazam, about how the company went from a four-digit phone call to an app that sold to Apple for $400 million. You're listening to Joel Beasley, Modern CTO.

(Joel Beasley at 00:00:18) So I'm very excited when I found out I was going to get to talk with the creator of Shazam. That was an iconic app. When it came out, there was no other technology like it, at least in my view. And a lot of people just saw it as an application on the iPhone, but there's a much deeper history. When did Shazam start?

(Chris Barton at 00:00:39) Yeah. Okay. Yeah. That's the part that people often don't know. Actually, someone once said to me, not that long ago, and I was like, wow, I never thought about it that way. They said, "Chris, you guys created an app eight years before apps existed," and that's the truth. And so that's one of the unique aspects of Shazam compared to, you know, think of all the other popular apps that came out. Instagram, Snapchat. I mean, just so many amazing apps. But, you know, obviously, there were websites that came as apps like Google and Facebook, and they were websites long before. But Shazam is a mobile-specific application that we invented and created eight years before apps existed. And in fact, when we were raising money to raise money for Shazam, you know, venture capitalists were looking at all these business plans, and all the business plans related to web things, but ours was a mobile thing.

(Chris Barton at 00:01:35) So, yeah, we started Shazam in 2000, and the App Store came out in 2008. When we started Shazam, not only had apps not come out, but Steve Jobs hadn't conceived the idea of the iPhone yet. And not only that, but the iPod and iTunes had not yet launched. So there was no market for digital music. So that's how far back Shazam started. Before people used apps and before people paid 99 cents for a digital song. So, yeah, so the idea was in late 1999. We embarked on this business as, you know, I got some cofounders together. So there were three, and then we finally got a fourth cofounder in 2000. We invented the technology, the core algorithm in mid-2000 and embarked on raising funding, initially angel funding and later venture capital funding, in 2000 and 2001, and built the business. We got our venture capital funding in 2001, just weeks before the World Trade Center and 9/11.

(Chris Barton at 00:02:42) And then we began to build the business so that we could actually launch a commercial service, which we launched in the summer of 2002. And the way Shazam launched was as a phone number. So Shazam was a phone number that you dialed in our first market, the United Kingdom. We started the business in London. And you dialed this phone number. It's actually a four-digit number, kind of—so you can think of it as being like—this is called a short code, like 911 is a short code. So we got a short code number that you could dial. And you dialed this number, initiated a voice phone call into our interactive voice response system, so IVR, which answered the phone, you know, just like when you call your credit card or your airline. And, except our IVR said—had a recording. It said, "Hold your phone to the music." You held your phone up in the air, and we recorded the sound of the phone call, which included, of course, the music in the background.

(Chris Barton at 00:03:35) And then we terminated the phone call. But we had your caller ID. And so a second later, we sent you a text message that said the name of the song. And that's how Shazam launched. And our business model was to charge your mobile phone bill just like—back in those days, people use directory inquiries, 411, to get information. And if you use 411, you paid the phone company 50 cents. So we charged you 50 cents to your mobile phone bill by partnering with mobile phone companies, and that was our business model.

(Joel Beasley at 00:04:07) Was the business sufficient on its—could it stand on its own with that model?

(Chris Barton at 00:04:12) If you mean, did we make enough money to pay the bills, then the answer was definitely a big no. We actually had barely enough users to get a trickle of revenue because you need a lot of people doing this to make money. And it was really hard to get the word out, basically. The marketing just didn't work. And we did all this kind of traditional marketing—radio, television, web-based ads, billboards. We even paid people to walk into bars and tell people about Shazam, but we had a trickle of users. And so, yeah, we not only didn't make enough money, but it stayed like that, not for one year, not for two years, but for six consecutive years. We were burning through cash, you know, running out of money, trying to figure out, you know, how to pay the bills, raising more money in really, really difficult times. Because anyone that was an entrepreneur or a venture capitalist during the years following the dot-com bubble popping will remember that it wasn't just one or two years. It was many, many years of just dark times. So, yeah, so it was pretty challenging to stay alive for all those years. So we barely survived as a company until the App Store launched in 2008. And then that's when we hit this hockey stick of user adoption that just was tremendous.

(Chris Barton at 00:05:35) And then that's when everything changed and top-tier VCs approached us. Kleiner Perkins approached us and became an investor in Shazam, and the whole game of Shazam changed.

(Joel Beasley at 00:05:49) What was your story? So you're bleeding money. It's not working four or five years or three. You're still trying to raise money post-dot-com bust. What story are you using to be like, this is how it's going to be different? Because clearly, it wasn't taking off with people dialing the phone number and making the phone bill revenue. So what story were you using for investors? What was the plan then?

(Chris Barton at 00:06:12) The story that we were using to try to raise more money, basically.

(Joel Beasley at 00:06:14) Were you just saying give us more money, we're great?

(Chris Barton at 00:06:18) Yeah. That's a great question. You know, I think that there's probably two main stories. One is that, you know, we were only in the United Kingdom. So, you know, we had the opportunity to—so while we had a trickle of users, of course, there are mobile phone users around the world, and so our story is we're going to go out and we're going to expand this internationally into many other markets, which required two main things: getting local music into our database for those markets, because there's music that's different, you know, in Japan, Germany, Korea, Brazil. The music's different in all these markets. And then the second piece is then you have to—so remember our model I mentioned was a phone number, a four-digit number. So that required partnering with the mobile phone companies. So we would have to put in place partnerships with each of the mobile phone companies in those markets.

(Chris Barton at 00:07:10) And we actually started to do a white label approach. So instead of it being called Shazam in the markets outside the United Kingdom, we thought we'd rely on the local partners to do the marketing. So when we launched in Germany, it was like the Vodafone music recognition service, and then we launched with Motorola as the Moto ID and so on. So that way we're taking away the financial burden of all the marketing and rely on these partners to launch our services around the world. We were actually one of—believe it or not, we were one of the pioneers of a technology called APIs, which we all know. Everyone knows what APIs are today, but we were one of the first companies to actually really implement APIs. So there was an API into music recognition way back in those days. You know, we're talking about 2003, 2004, kind of time period, where we're rolling the service out in different markets. And so, yeah, there was an MTV-branded Shazam in Japan, and so on. So, again, it's not co-branding with Shazam. It was just white label services. That was one part of our story. And I think the second one is you can kind of compare it to AGI today. Everyone talks about AGI with AI. You know, how soon is it? Is it a year from now, five years from now, ten years from now?

(Joel Beasley at 00:08:25) It's already here, by the way. I tell other people it's here. It's here.

(Chris Barton at 00:08:30) Okay. Yeah, yeah, yeah. Well, so, you know, back then, when you read the newspapers about mobile, all the newspapers said, oh, our next wave that's coming out is 3G networks. And with 3G networks, you'll have all this bandwidth and you'll be able to download music, watch movies, watch videos, do all these high bandwidth things. And there were preliminary—so that was one thing. You saw networks evolving, mobile networks evolving, and then the mobile phone providers were also evolving. So you had early attempts at the—I would call it early attempts at the smartphone, like the iPhone, but, you know, you had Nokia had something called Symbian, and then there were Java apps.

(Joel Beasley at 00:09:08) I remember Symbian. Yeah.

(Chris Barton at 00:09:09) Remember Symbian? Qualcomm had a thing called Brew that they created, and that was on a bunch of their phones that had their technologies on it. Not their phones, but their technologies. That was also an early version of an app. So there were these different app platforms that none of them ever took off in a big way like the iPhone. But all these things were glimmers of hope. You had the 3G networks as a glimmer of hope that music downloads will be a successful model on phones. And then you had these different attempts at the early versions of the App Store, like Symbian, Java, Brew. And so they were all indications that phones were going to get smarter, more advanced, more usable, more graphical user interface oriented, and so on. And those all those things were signs of hope for Shazam because, you know, that would create a better experience for us.

(Chris Barton at 00:10:00) So those were the two main things that we were looking forward to as a means to kind of achieve growth, and growth brings revenue.

(Joel Beasley at 00:10:12) Why The UK?

(Chris Barton at 00:10:12) Yeah. Great question. Well, first of all, it's worth noting. I mean, the quick answer is that from a lifestyle perspective, I thought, how great would it be to start a company but start it in London? You know? At that time, I was—

(Joel Beasley at 00:10:24) You're in your twenties.

(Chris Barton at 00:10:26) Yeah. Well, I have a British father, so I have a British passport—

(Joel Beasley at 00:10:31) Okay.

(Chris Barton at 00:10:31) —as well as an American passport. And I had actually done a master's degree at Cambridge in England, so I kind of loved going to England and living in England. At this point starting Shazam, I was actually doing my MBA at Berkeley, but I did a semester abroad at London Business School, and I even did my summer internship of my MBA was at Microsoft in London. Their internet group was called MSN. That was their portal that competed with Yahoo.

(Joel Beasley at 00:10:59) I know, MSN. The little butterfly? Come on.

(Chris Barton at 00:11:00) Yeah, yeah, yeah. So I worked at MSN for Europe in London in Covent Garden. And so, yeah, I just loved England, and I thought, how cool would it be to start a company but start it in England? That was it. I just thought from a lifestyle perspective, that'd be fun. You know? And, but the other thing that's interesting is at that time, the mobile center of the world was definitely not the US. I mean, remember, Apple did not have iPhone, and Google didn't have Android. So, actually, the US was actually very backwards in mobile compared to the rest of the world. The mobile center of the world were places like Japan where they had the first camera phones, and they had a thing called DoCoMo, the first data service on mobile phones, and then also Sweden and Finland where you had Ericsson and Nokia, and London just because it was an epicenter of Europe. So that's where mobile stuff was happening. And so it also made sense for Shazam to be in a place where, for example, I mentioned we charge people 50 cents per use on Shazam. That was done using what was called premium text messaging, where you send a text message and associated charge to the mobile phone bill. And that technical capability didn't even exist in the US. You could do it in Europe, but you couldn't do it in the US. So we wouldn't have even had a business model had we launched in the US.

(Joel Beasley at 00:12:15) Oh, nice. Well, that all worked out. And so how did you come up with the name?

(Chris Barton at 00:12:21) Yeah. The name came to me really early on when I had the idea for Shazam because at that time, the only thing you could really do with mobile phones—so just remember all those old feature phones. Right? Nokias, Ericssons, those kind of phones, Motorolas. The only thing you could really do with a phone is you could make a phone call. You could send a text message, and I like to joke that you could play Snake if you had a Nokia phone.

(Joel Beasley at 00:12:43) That's all I did. Waiting in line at Chili's, you know, with the dad. He'd let me have his phone.

(Chris Barton at 00:12:49) And play Snake.

(Joel Beasley at 00:12:50) Yeah.

(Chris Barton at 00:12:50) And it's not like he could just download any game. Right? It was just like Snake is all you had, and that was—so, you know, here I am. I have this breakthrough idea of, like, oh, wow. You know? People are going to just hold their phone up in the air, and we're going to just identify the song and send them a text message. And it was going to be the first other thing you could do with these phones. And I thought, wow. If someone's going to hold their phone in the air and literally, like, magic, you know, it's going to figure out the song it's hearing in the air. That's magical.

(Chris Barton at 00:13:20) And so that's why the name Shazam came to me, because Shazam was just like shazam. You know? And, actually, if you look up Shazam in the urban dictionary, it actually means to conjure magic. So you're literally conjuring magic to your phone.

(Joel Beasley at 00:13:32) That is so cool, man. And did you—so you were in your twenties when you started this? Or give me the time range so I understand. I want to ask you more life questions around it.

(Chris Barton at 00:13:42) Yeah. I was in my twenties, and, you know, I was at a point in time where my career was in management consulting. I had done many years of management consulting, and I had gone back to do an MBA. That was the thing you just did in consulting is you get an MBA. And many would go get an MBA and then go back to consulting and kind of step up. You know? You kind of got an instant promotion for having an MBA. So I had gone back to do my MBA at UC Berkeley, and I wasn't even planning to be an entrepreneur, but it was in my first year there that I was suddenly inspired to think, wow, I could start a company. You know? And there was actually a moment of inspiration where I met someone who was an entrepreneur and starting his own company. And then I thought, wow. Yeah. I think that's what I want to do.

(Joel Beasley at 00:14:26) And what was the original need? Were you out somewhere and you wanted to know the name of a—what inspired it? What lit the fuse?

(Chris Barton at 00:14:35) You know, it was—I always like to say that the need was something that I feel like there was no novel breakthrough idea there. Right? I mean, many people knew that you hear songs and you don't know what they are. You know? So it's not like I'm the guy that came up with the idea of, like, oh, wow.

(Chris Barton at 00:14:51) I would love to know the name of that song. And actually, there were several startups around that time that were trying to do it in a much easier, technically easier way to implement it. And that was my original idea as well, where you monitored thousands of radio stations. You solved it essentially only for radio. So you monitored thousands of radio stations, and you provided a service where someone could type in a radio station number and find out in real time what was playing on that radio. And at that time, radio was a huge portion of all listening.

(Chris Barton at 00:15:19) Like, I would say maybe 50% of all music listening was occurring on the radio back then, because, of course, this is before YouTube and TikTok and all these other things, Spotify and so on. So the breakthrough idea of Shazam was not "what's that song." That's something that was just such an obvious problem to so many people, including myself. The breakthrough idea was like, wow, what if we could do it if you're using the sound in the air coming to the microphone of the phone despite the background noises and what a technically difficult challenge it was to invent that type of pattern recognition algorithm.

(Joel Beasley at 00:15:57) So you must have found a really smart nerd to help you out.

(Chris Barton at 00:16:00) Yes, absolutely. That was the key. That was really the key to Shazam. Because we basically, what we invented turned out to be the first artificial intelligence in history that would become a mass consumer product. So, you know, we were creating AI way ahead of anyone who was doing AI. And so I needed, I identified that what I really needed was to get a genius in audio signal processing. So someone with a PhD in electrical engineering that had focused on audio signal processing for music and acoustics. And that was really myself and my cofounders, we worked to find that person.

(Chris Barton at 00:16:36) We found a bunch of people who'd published papers in this area, and they were PhDs and professors out of places like MIT Media Labs, Stanford, where they have a group called the Center for Computer Research in Music and Acoustics, and UC Berkeley. We even talked to the audio signal processing person at Xerox PARC, which is famous for lots of R&D developments. And none of these guys, and or ladies, knew how to do it. They had no idea how to do this because the technical challenge of dealing with all the noise and all the scale of a huge database and a huge number of users was just too difficult.

(Joel Beasley at 00:17:14) Yeah. Xerox PARC. They had a lot of innovation. They didn't capitalize on all of them, but Microsoft and Apple sure did. Family, like, when you were going through this and you had the financial stress of it, like, not working, or did you have a family at that time? Were you pre-family? Where were you at?

(Chris Barton at 00:17:31) Yeah. No, I didn't have a family. Yeah. So, yeah, I was really just, I was living off of, you know, I was an MBA, as an MBA student when I got started, and an MBA student actually has an income of zero.

(Joel Beasley at 00:17:46) I think it's probably negative now.

(Chris Barton at 00:17:47) Negative. Right? Negative, because you're spending money on the MBA. And so it's actually a great time to start a company because, you know, you're already used to not earning money. And then, of course, everyone comes out of the MBA and signs up with a nice big paycheck with some of their new job offers.

(Chris Barton at 00:18:03) So that was the real risk is foregoing those, you know, attractive jobs. But, yeah, we paid ourselves a little bit of money, not a lot because there wasn't much money in the bank, but just to cover the costs of our expenses. And because in the earliest days, we were just bootstrapping. We had no money at all for probably for the first nine months of doing Shazam. And then we did raise an angel round that was sort of two or $300,000 to begin with and eventually grew to a million dollars of angel money. But, yeah, we didn't have a tremendous amount of money to pay ourselves or anyone.

(Joel Beasley at 00:18:40) When you were going around trying to find this acoustic wizard, did was everyone really receptive to the idea? Were there naysayers? How did it go?

(Chris Barton at 00:18:51) You know, again, these were deep experts in that area, audio signal processing PhDs. And I think, you know, they start, "Oh, that's an interesting, an intellectually interesting problem." Right? Because they, you know, that's what their space and their world was to create electronic music and do things like that. But they, you know, they kind of just thought, they looked at, like, kind of the research, because there was some, there were some rudimentary kind of archaic technologies that were doing radio recognition, which you don't have background noise on.

(Chris Barton at 00:19:27) So they looked at those kind of technologies, but thought, "No. I don't see how this is gonna work." So most of them just basically said, "Look. I have no idea how to do this." You know? And it's so fundamentally different than if you look at the entrepreneurial stories of like Facebook where they built a website or Snapchat where they built an app with a disappearing thing, you're really hiring smart engineers and saying, "Let's build this." But it's not like they say, "Oh, we can't do that." Right? They just build it. It's just a matter of building it and hopefully architecting it really nicely.

(Chris Barton at 00:19:55) This is more comparable to, Shazam was more comparable to a biotech company saying, "We're gonna eliminate this disease." It's like, "Well, how are you gonna do it?" You know? And you have to invent a way. So it's not like you just can map out a path. I mean, we had to come up with a breakthrough innovation that didn't exist. So, yeah, frankly, most, pretty much everyone said they don't know, well, everyone said they don't know how to do it. And most of them said there's no point in getting involved because they don't have a, they can't just say, "I'm gonna build it for you." They just didn't know how it would be done. The key, the magical moment was when we got a professor at Stanford, and he just loved the idea.

(Chris Barton at 00:20:30) So he didn't actually invent it, but he joined on board as our adviser. And he was sort of worldwide eminence in this field of music and acoustic signal processing, professor of electrical engineering. He had invented the algorithms that are today behind all electronic keyboards that you hear when you hear music around the world. And he had been the head of audio technologies reporting directly to Steve Jobs at NeXT Computer. He had been hired by the US military to detect submarines under the water using only sound. And he was just so eminent in this field. And so he liked the concept of, like, "Oh, yeah. This would be a fun thing to be involved in." And he helped us pick our fourth cofounder, the genius PhD, or someone who had done his PhD under this professor, Julius Smith. And that was Avery Wang.

(Chris Barton at 00:21:17) Avery Wang joined as the fourth cofounder of Shazam. Avery has four degrees from Stanford in mathematics, electrical engineering, computational neuroscience, you name it, all the relevant areas. And he was the genius that kind of led the charge in inventing our algorithm, working with Julius.

(Joel Beasley at 00:21:33) Okay. So you found this brilliant forward-thinking professor who also had a business sense, who was accomplished in the field of this really tough problem you're trying to solve. They had an underling-type understudy individual that they had been with them and done some engagement with them, so they knew that they were the right person for this fit. They introduced you, and then that's how it happened. Correct. That is pretty cool. That's a good strategy. I think that's a repeatable strategy. If you're trying to solve a difficult problem, it's not always finding the person directly, but it's finding the person who knows a bunch of people who can then filter for you. You know?

(Chris Barton at 00:22:13) Correct. Yeah. And what we did is we actually went out and did our own research on all these people, PhDs from around the world, but it's a small community of people. So we ended up with a list of about 30 names, I think it was, that had done PhDs at MIT Media Lab, Stanford Center for Computer Research, Music and Acoustics, and so on. And so we had this list. And so, actually, once Professor Julius Smith had joined as an adviser, our very first project for him was meeting him in his living room in Palo Alto, California, and saying to him, "Can you please rank the five smartest people on our list?" And, of course, they're all smart. Right? Because they're all PhDs from MIT and Berkeley and Stanford and so on. But, yeah.

(Chris Barton at 00:22:47) So but he knew them all because they all met at conferences and read each other's papers, and many of them had done PhDs thesis under Professor Julius Smith. So, yeah, so he helped us rank those five smartest. I still have the handwritten notes from that session where we rank the five smartest. And Avery was the number one rank on that list.

(Joel Beasley at 00:23:06) Oh, that is so cool. And then once you brought Avery on and the team, the magnificent four were there, was it just 100% we've got this, let's overcome every obstacle, or were there times when it's like, "Look, we've hit this roadblock. We can't do this particular aspect," and you had to rally the troops.

(Chris Barton at 00:23:25) Oh, yeah. I mean, there were definitely a lot of rallying the troops. There were many times we almost gave up. Are you referring to the invention of the algorithm itself?

(Joel Beasley at 00:23:36) The whole business. Yeah. I don't even know what I'm saying sometimes. Yeah. I love it.

(Chris Barton at 00:23:39) Yeah. Well, I mean, the whole story, I now do a bunch of keynote speaking and tell this story, but it's just one obstacle after another. You know? So, you know, just to give you a really short version. It's like, first, we had to invent the algorithm, and for months, we couldn't come up with any method. And, you know, Avery almost wants to give up because it's just, you know, it's just hard to invent things. But, anyway, finally, he came up with a breakthrough. We invented it, filed a patent, and we had this first AI invention in history that became a mass consumer product. And we filed a patent on that. But then we had to raise money, and that was hard.

(Chris Barton at 00:24:11) The .com bubble just popped. You know? So wait to get $7,500,000, which was our Series A round from venture capitalists, was not easy. We pitched over a hundred venture capital firms trying to get this money, and they just kept saying no. Then, even once we had the money, we realized we needed a unique database because that's how you create a searchable database. Right? And there were no digital databases, so we had to go, you know, there was no iTunes, no Spotify, no Apple Music. So we had to go build, we actually built from scratch, from CDs, our own music database, which required hiring 30 eighteen-year-old kids that worked three eight-hour shifts, twenty-four hours a day for nine months, just taking CDs, putting them into computers, typing the name of every song, every album title, every artist, because that information doesn't reside on the CD. So we had to build that database from scratch over nine months. And then, you know, we had to build our own search engine.

(Chris Barton at 00:25:00) So back then, there was no Amazon Web Services or anything. So, you know, we built what's known as a Beowulf cluster. It had been pioneered by Google just a couple years before us. You know, Google started in 1998. We started in 2000, and Google, they built this thing called the Beowulf cluster, just a bunch of PCs wired together and then custom software to turn them into one giant supercomputer. So we decided to do exactly the same thing. And so that was no easy effort to get that built from scratch. So all these things were just, and then, of course, securing that four-digit number from all the mobile phone companies when, by the way, mobile phone companies didn't give four-digit numbers to anyone. So, I mean, I'm telling you, Domino's Pizza, United Airlines, British Airways, 1-800-Flowers, none of those people had a short code. So we are the first private company to get a short code of phone number that they had to be programmatically assigned to us by each of the mobile phone companies for our first market, the United Kingdom.

(Chris Barton at 00:25:56) It was tough.

(Joel Beasley at 00:25:59) It was worth it, though.

(Chris Barton at 00:26:02) It was worth it. It was absolutely worth it.

(Joel Beasley at 00:26:04) The $7,500,000 that you mentioned, you saw all these hills you had to climb, all these, about the database and needing to hire the people, all this stuff. How did you come up with $7,500,000? Why is that the number?

(Chris Barton at 00:26:18) That's so good. I know that, you know, that's one of those things that's like, how do you figure that out? And, you know, I mean, of course, we built up a little spreadsheet, like a budget of, you know, all the technical stuff we would have to do and then how many people we'd have to hire. I think it was about 30 full-time people, not including the other 30 eighteen-year-old kids that were making the music database. Those were temps. But, so, you know, that was just our rough estimate of how much money we needed to kind of build to launch and have a little bit of buffer. And that was $7,500,000. You know? Doing all the things that we just mentioned, you know, hiring engineers to build this cluster.

(Joel Beasley at 00:26:54) Back of the napkin, you listed out this whole road map, and you're like, "Hey. I think $7,500,000 will get us there."

(Chris Barton at 00:27:01) Yeah. That's correct. Yeah.

(Joel Beasley at 00:27:03) Did it get you there?

(Chris Barton at 00:27:05) It did get us to launch. We got all the way to launch, and it had a, we had an additional buffer of about a month or two of burn rate, should we say. But, um, gosh, you know, one big learning is realizing that, you know, launch, it's not like you, I think we kind of hoped that we'd launch, it would be just such a huge success that both revenue would flow in the door and VCs would throw money at us. But because we launched and had just a small number of users, then that really put us in a really tough financial position because we're now at the end of the $7,500,000 when we've just launched, and the money's about to run out. And so, yeah, we had some very significant down rounds with our VCs to stay alive before, you know, and we're trying to find a way to financially survive for so many years until the App Store came out in 2008.

(Joel Beasley at 00:27:57) Alright. So you raise $7,500,000 to do this phone number service using the short codes. Then you launch, and you have a small amount of users. So at this point of time, you start getting those first users coming in, and you've launched, and it's actually technically functional and working and delivering the value you're promising. You're already seven to $8,000,000 and several years into this. Right? How many years into it did you actually launch?

(Chris Barton at 00:28:25) Yeah. That was the summer of 2002 when we launched, and we really embarked on the business in the, January. We'll call it just, you know, yeah, January 2001. Sorry. January 2000. So, yeah, that's two and a half years to launch.

(Joel Beasley at 00:28:41) Two and a half years to have the idea, to find the people, to raise the money, to build these things that don't exist. That's not bad. From startup world, that's impressive.

(Chris Barton at 00:28:53) Yeah. Yeah. To get, you're right. To get from an, I mean, a couple of months, you know, from the idea inception. But yeah. So we'll call it just over two and a half years from idea to a commercial launch and spent in a total of $7,500,000 venture money plus a million of angel money, so $8,500,000 to get us there. Yeah. That's not bad. But then as I said, you know, from the launch to when the App Store came out, that was exactly six years.

Chris Barton at 00:29:18

So, really, we didn't hit a sign of hope for the company because the hope came with the popularity in the App Store. So we then had to survive another six years, and those were the years that we basically had sort of challenging venture rounds. We searched for revenue streams. We did all kinds of creative things to find revenue streams. For example, we built a B2B business where we monitored thousands of radio stations, and that became another side business for us, which we actually ended up selling off.

Chris Barton at 00:29:49

And, you know, we did all kinds of unique things where we helped Samsung fix the metadata of music on their songs on the old phones before smartphones. We created these white label services like Moto ID, which was an app that was preloaded onto Motorola phones that identified songs. So we would just kind of chase all these different little revenue streams to try to keep the company alive.

Joel Beasley at 00:30:17

Wow. So it launches, and then for six years, it's a struggle. So by the time you had any hope or any real positive financial return starting to occur, you were eight years deep into this thing.

Chris Barton at 00:30:32

Yep. That's right. Yep.

Joel Beasley at 00:30:34

Wow. That's great. Tell me about the side business.

Chris Barton at 00:30:38

The side business, the B2B. Are you referring to the B2B business? Yeah. Yeah. So it's funny because that was—remember I mentioned in the inception of the idea—with the inception of the idea, the thing that was a little bit more obvious was, oh, what if we just—and then, frankly, it was my beginning idea was, oh, what if we just made a radio recognition service? Right? The way you could find out what's playing on the radio. And in fact, six companies pursued that idea, by the way. They're all defunct today.

Chris Barton at 00:31:04

But that was the original idea for Shazam, to leverage what was an existing business. There was a company called Broadcast Data Systems that was literally monitoring thousands of radio stations using a simple form of music recognition technology. Now because we had invented a very, very advanced music recognition technology that could work robustly in noise and was highly scalable and so on, it turned out that our technology was actually orders of magnitude better than the existing radio recognition technology for that purpose—for monitoring radio stations—because you didn't need to buy nearly as many computers. It was just super, super processing-intensive, and highly accurate and so on, and it only needed tiny snippets of a song. And so it ended up being a far more economically attractive technology to use for that base case of monitoring thousands of radio stations. So we ended up licensing that off to a company, and then we ended up kind of building a little side business that would monitor radio stations, because it turns out that's a need for royalty collection and distribution.

Chris Barton at 00:32:06

Over a billion dollars a year is collected and distributed to artists when their music is played on radio. And, yeah, so that was our side business. And as I mentioned, we sold it off. We sold it to BMI. BMI and ASCAP are the two big organizations that collect and distribute royalties to artists in the United States. So we sold that to BMI.

Joel Beasley at 00:32:27

Oh, dude. That is awesome. Alright. That's pretty cool. I've had a business kind of do something like that before. I built a—when I was 17, I built a—I was into paintball, you know, the sport. And I built a price monitoring tool because they would always fluctuate the prices everywhere. And then I went to this big event and started handing out stickers, telling everybody about the PB Price, you know, to find the—it would show you one marker piece of equipment and then all the prices. This was revolutionary at the time, right? It's almost twenty years ago. And the people—some people approached me, these older guys. They're probably 30, but they were older to me at the time. And they're like, "We want to buy this technology because we want to do it for MAP pricing"—like minimum or maximum advertised pricing. They were the manufacturers trying to watch the outlets and the retailers. And I said no. I said no because I wanted—I was doing it for the paintballers. I was doing it for us to find the cheapest price, not for you guys to crush the dudes running illegal sales on the weekend, you know?

Chris Barton at 00:33:36

Oh, I love it. I love it. Yeah. You were aligned with your mission.

Joel Beasley at 00:33:38

Yeah. I guess. I was also stupid, 17. I should've changed my mission.

Chris Barton at 00:33:46

But—

Joel Beasley at 00:33:47

No. I can see it now. I can appreciate it as a legitimate business tool. But when you're 17, you're not thinking about that.

Chris Barton at 00:33:54

Yeah. You're thinking about more important things like paintball.

Joel Beasley at 00:33:57

Yeah. Of course. Of course. Alright. That's a story I've never shared. A thousand episodes and I've never shared that story, Chris. This is a special day for us. Alright. Alright.

Chris Barton at 00:34:06

I like it.

Joel Beasley at 00:34:08

We're gonna wrap up on some leadership advice and then we'll let you go. Is that cool with you?

Chris Barton at 00:34:12

That sounds good. Yeah.

Joel Beasley at 00:34:13

Okay. What are your thoughts on eliminating friction and simple wins?

Chris Barton at 00:34:19

Oh, yeah. This is a big part of my keynote speech, about eliminating friction. And definitely I mean, what I really believe is that when you eliminate friction, often that is how you're unleashing the opportunity to build an entirely new user base or engagement or a product. Often that's what so many successful businesses and products achieved—they eliminated friction in some way and made things much easier. And so I'm a big believer in eliminating friction, but I always like to say that it's something that we all know is important, frankly. There's no news there. Everyone understands that we need to make things simple and eliminate friction. And so what I find fascinating is how—what the art is to uncover which friction needs to be eliminated.

Chris Barton at 00:35:09

Because I think what happens is we often see a piece of friction, and we just think, "Ah, it's not that big a deal. You know? They just have to register here." We assume it's not that big a deal, but actually, it really is holding us back from achieving tremendous usability and engagement, adoption, and so on. And then, by the way, this friction matters. It matters not only for consumers, but also for your partners, your suppliers, even your employees. I think you need to eliminate friction in as many places as possible, and sometimes it can be quite hard to eliminate the friction. So if you look at a lot of the great success stories like Dropbox, for example, that I speak about because I spent four years at Dropbox in their early days, you know, that's what they ultimately really did—they eliminated the friction of getting your files into the cloud by solving synchronization and by making it so that if you just drop the file into a folder on your computer, it was also in the cloud. So you didn't have to think about it. You know? You did what you already do, which is put files into folders, and then now they were also in the cloud. And that was what they really innovated on, and no one in the world had innovated, come up with that invention, including Microsoft and Google. And that was why they're the first file cloud service to grow to hundreds of millions of users. So, yeah, eliminating friction is really core, but the art is spotting where to eliminate the friction.

Joel Beasley at 00:36:22

That's—I love Dropbox. When it came out, I was a software engineer, and my friend and I needed—we were googling around. We found this Dropbox tool. It was so basic, Chris. It was the most basic thing in the world. It was probably the first year it came out. But the thing was when I—I could take project files, this is before GitHub, I could take project files from what I was working on at the office and put them into Dropbox, and then I could go home and then load it on my local stuff and work at night. And so for me, that's how I use Dropbox. That's what it was good for.

Chris Barton at 00:36:53

Yeah. Isn't it amazing? And so many people came up with their own use cases. I mean, people have so many different types of careers—real estate agents, musicians, creators, graphic designers—and everyone had their own use cases similar to that, and it really led to massive adoption for Dropbox.

Joel Beasley at 00:37:10

And clear up this timeline for me. Did you work at Dropbox while you were doing Shazam?

Chris Barton at 00:37:15

No. Because remember, Shazam, we started in 2000, and Shazam launched in 2002. And then by the time I worked at Dropbox, I was on the board of Shazam still because Shazam was a long ride. I was on the board of Shazam. I stayed on the board of Shazam all the way through to the exit when Apple bought Shazam in 2018. But, yeah, I joined Dropbox in 2011. And so, yeah, I mean, that was way past starting Shazam. You know? So Dropbox came out much, much later.

Joel Beasley at 00:37:44

So when you moved to the board position, was Shazam just on autopilot? Is that why you felt like you had done everything you needed to do?

Chris Barton at 00:37:50

No. Definitely not on autopilot. It was—it went through so many struggling years that it was definitely not on autopilot. We hired—I think, over those years, we had three different hired-in CEOs. I was the first CEO of the company in the early days, but I was just this young whippersnapper that didn't know how to run companies. And I was more—so, yeah, we hired in gray-haired management. They ran the company, and they just kept having to try different things for all those years. Yeah. So it was a very, very long road with Shazam.

Joel Beasley at 00:38:24

But, ultimately, you sell the company for $400 million to Apple. Is that right?

Chris Barton at 00:38:29

That's correct. Yeah. So, yeah, it was a nice outcome. It's pretty rare for Apple to make big acquisitions like that.

Joel Beasley at 00:38:35

I hope you took most of it as stock because that was—

Chris Barton at 00:38:40

Oh, yeah. I know. I know.

Joel Beasley at 00:38:41

2016, 2018?

Chris Barton at 00:38:44

2018.

Joel Beasley at 00:38:44

Yeah. Yeah. Yeah. I know. I know. That's good, man. Well, success. I mean, it sounds—I know everybody's like, overnight success. It feels like when they meet you, it's like that. But I get it. I've been an entrepreneur for over ten years, and I've had things work. I've had things mostly not work, but sometimes work. But, yeah, they'll survive. And, yeah, thank you so much for coming on and hanging out and sharing with us, man. I really appreciate it.

Chris Barton at 00:39:13

Thanks for having me. It's a pleasure. Yeah.

Joel Beasley at 00:39:16

Thank you so much for listening. And if you found this episode useful, please share it with a friend or colleague who you think would get value from it. And if you have topics that you'd like to hear discussed on the podcast, either add me on LinkedIn or send me an email, [email protected]. Every time I get an email or LinkedIn message, it absolutely makes my day and inspires me to keep going.