When Pandora founder and chief strategy officer Tim Westergren started the Music Genome Project in 2000, the goal was to analyze the musical details of thousands of songs by studying them one at a time. The result was Pandora, free Internet radio that plays music specifically suited to your taste, without commercial interruption. The company continues to grow like a weed, with practically every metric skyrocketing.
EL: Talent seems to play a big role in your business—not just musical talent but employee talent.
Westergren: When you’re a small company, what you lack in scale you have to make up for by being a step ahead of the competition. Innovation is an absolute cornerstone of our company, for a number of reasons. First, it was an innovative idea to start the Music Genome Project. And now we have to be innovative in 360 degrees—in terms of our playlists, how we use technology, how we structure advertising and marketing—because we don’t have a big budget. By virtue of being small, our advantage is that we’re more nimble, and we have a nimble team.
EL: What are some of the obstacles that prevent teams from being effective?
Westergren: I think the biggest hurdle to employees being effective is interpersonal. People need to feel confident, valued and happy in their workplace. Frequently that’s not the case, so people are either afraid of speaking up or don’t care enough to speak up.
EL: How can you remove that obstacle?
Westergren: I think if you can create an organization that empowers and validates people and acknowledges their contributions—and you don’t punish them for mistakes—then you have people who really want to contribute and shine. It’s a lot like managing a band.
EL: How so?
Westergren: I was in bands for a long time, usually as the band’s manager, and there are an uncanny number of parallels between managing a band and a startup company. The most substantial one is the way you have to manage egos and creativity amid a climate of uncertainty and frequent rejections. Then, when you make it big, the same pressures hit: Everyone starts worrying about who’s getting the credit.
EL: Is there a key to managing egos and creativity through a climate of uncertainty?
Westergren: It sounds basic, but you have to be a functional leader and hire people who are like you. If you’re functional, the people below you become functional.
If you’re in a small company and you don’t do it right, you’re screwed. An ill-managed or ill-functioning employee becomes a one-man wrecking crew. You have to learn how to not hire those people, mange them well, or get rid of them quickly.
I think that’s probably where most companies fall down. That’s purely speculation. I’m watching a bunch of companies around me, including the dot-com bust, and I see a lot of very dysfunctional entrepreneurs. As soon as things have gotten tough, they started collapsing.