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Never … say die

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Tim Westergren has been rejected by venture capitalists approximately 350 times. His company, Pandora, has teetered toward failure repeatedly since 1999. Deal after deal has fallen through.

The little online radio company has punched through an incredible number of setbacks: “blows that would make the most determined entrepreneur throw in the towel,” says Inc. magazine.

And yet, Westergren soldiers on with Pandora’s “Music Genome Project,” a proprietary program that uses musicians to break songs into about 400 “genes” for each genre (like pop and jazz) and then uses an algorithm to find similar music.

Listeners at create free radio stations based on their favorite artists or songs. They’re more than customers: They’re rabid fans, and now they’re more than 8 million strong.

Pandora’s problem has always been its business model. Shockingly in debt several times, Westergren has raised more than $30 million, including $12 million in 2006, and burned through most of it as the company tried to find a model that worked.

So how does he manage this wild ride?
  • Mainly, he persists. “I’ve got to give Tim the all-time award for persistence,” says one venture capitalist. “I probably turned him down at least three or four times.”

  • He’s passionate. Westergren plays piano, bassoon, recorder, drums and clarinet. He studied music at Stanford University, where he mastered music theory and computer applications. He toiled for years in acoustic rock bands, trying to build the following he now has.

  • He adapts. “Most entrepreneurs, if you bring up a flaw in the business model, will just adamantly try to claim they’ve got it all figured out,” says the venture capitalist. “Tim said, ‘Well, that’s our best idea right now.’ It was a good reaction.”
Will Pandora survive? The jury’s still out. This year its royalty costs will nearly triple due to new rates far higher than those for AM/FM broadcasters and satellite radio.

“I’ve never, ever given up, even when we were in the most depressive bleak times,” Westergren says.

Why? He points out that in the myth of Pandora, after she’s opened the box and released a host of evils, at the bottom of the box lies hope.

—Adapted from “Pandora’s Long Strange Trip,” Stephanie Clifford, Inc.

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