When Andrew Fisher joined music discovery service Shazam as CEO in 2005 two of its investors had bailed and it was struggling to find the right business model. The company was so starved for cash that it had to sell its intellectual property.
Fast forward 10 years and Shazam — which bought back its IP — is credited with helping Europe become a category leader in audio over the Internet. Its mobile app has had over 500 million downloads and has more than 100 million monthly active users. Fisher, now the executive chairman, recently closed a $45 million, seventh funding round in a deal that values the company at more than $1 billion.
Under Fisher’s leadership the company has gone from being just a gimmick to a full-fledged service that lets mobile users interact with all sorts of content — such as print, TV, radio and cinema advertisements — all of which have transformed the company’s financial health.
Retail is next. At the Consumer Electronics Show in Las Vegas in January Shazam announced it would integrate Qualcomm’s Gimbal beacon proximity technology to help brick-and-mortar retailers connect with their customers via mobile.
“We really want to be this magical connection to your world that allows you to engage with brands wherever you are,” says Fisher, whose career has spanned the evolution of new media since the days of floppy disks (see the timeline).
A Name That Tune Gimmick In A Pub Music Quiz
“The biggest challenge was to move Shazam beyond a ‘name that tune’ in a pub music quiz,” he says. “We were very much ahead of our time. We had robust technology and patents granted but the really compelling user case did not exist [at launch in 2002].”
But once smartphones came onto the market, there was an explosion of digital content and when unlimited data tariffs became available Shazam “had the possibility of being more than pure discovery and pivoted beyond music,” he says. “If you add television, radio and in-store, that is almost a trillion dollars of addressable market. That is why we have the current valuation. It is an indicator of how big this could be in future.”
Fisher’s Long And Winding Road
Born in Buckinghamshire, England
Graduates from Loughborough University with a BSc Hons Economics
Hired as graduate management trainee at Electrocomponents PLC
Hired as New Media Manager at RS Components
Joins Thomson Directories as General Manager, Business Ventures and participates in management buyout
Sets up TDLi.com to deliver content to Internet and mobile portals
Sells TDLi.com at a valuation of $400 million to InfoSpace and becomes Managing Director Europe
Appointed Shazam CEO
Becomes Shazam’s Executive Chairman
Leads $45 million funding at $1 billion valuation
Shazam’s investors include London’s DN Capital, Silicon Valley’s Kleiner Perkins Caufield & Byers, and Mexican billionaire Carlos Slim. Participants in the latest round include a number of billionaires who wish to remain anonymous, says Fisher.
“Our ambition is ultimately to become a public company — a very strong public company,” he says. “We didn’t need the capital but this round gives us flexibility as there is significant uncertainty in the global economy. There is a lot of interest in mobile-first companies but we think it prudent to strengthen our balance sheet and take as much time as we need as a private company to build our business.”
Shazam’s founders, Chris Barton, Philip Inghelbrecht, Avery Wang and Dhiraj Mukherjee, set out to develop mobile phone technology to answer the question, “what’s that song?” when you’re out in a coffee shop or bar and hear a song you like. They invented the technology in the U.S. but in 2000 no U.S. venture capitalist saw the potential at that time, due to the poor quality of U.S. cellular networks.
So, the founders moved to London. The first few years were tough. London venture firm DN Capital invested in the company after the original investors fled. Nenad Marovac, managing partner at DN Capital, says he was wowed by the technology when founder Barton demoed it in the back of a cab.
“It has definitely been a really rocky road but a very interesting one,” says Marovac.
One Of His First Moves Was To Sell The Company’s IP
Marovac recruited Fisher as CEO and the company’s first U.S. hire, a saleswoman who closed deals with AT&T and Verizon to embed the Shazam app into phones.
Fisher was well-placed to help Shazam grow its music business and branch out into entertainment. “I was part of the very beginning of new media 25 years ago,” he says. He joined Shazam from InfoSpace, a developer of metasearch products, where he was European Managing Director. At InfoSpace Fisher led the company’s European growth, focusing on music and entertainment services for mobile operators and portal solutions for online service providers. Prior to that he founded and was managing director of TDLi.com, which delivered content to Internet and mobile portals. TDLi.com was acquired by InfoSpace with a valuation of $400 million.
As one of his first acts as CEO Fisher made an unusual move. He sold the company’s IP portfolio to BMI, a music rights management company that wanted the technology to monitor U.S. radio stations. Shazam used the proceeds to fund the consumer business.
The deal was structured so that Shazam could lease back the technology and have exclusive use of it for mobile publishing. A few years later Shazam ended up buying back the IP from BMI, says Fisher.
While the early IP sale helped the company’s cash flow, a deal with Apple’s iTunes in 2008 was game changing. The U.S. company featured Shazam as one of the top 10 apps in its store and spent millions in the U.S. on ads teaching people how to use Shazam.
“It launched our brand in North America,” says Fisher. “We moved from people using the service for discovery to using it for convenience. If they heard a song and knew it was by the Foo Fighters it was easy to buy through Shazam. It was one click to discover and one click to purchase. This was the key — to make it easy for people to purchase at the point of inspiration. If they discover a song outside the home — at a bar or at a friend’s — if they can click to purchase at that moment then they will actually complete the transaction.”
10% Of All Digital Music Sales WorldWide
Today, Shazam, which is available on all major mobile phone platforms, handles about 10% of all digital music sales worldwide, Fisher says.
Its technology has been extended not only to create an acoustic fingerprint of a song but of any other media. In 2011 it started applying its technology to making television ads and shows “Shazamble.”
“The mobile device gives an immediate back channel to the advertiser,” says Fisher, allowing, for example, a car maker like Jaguar to offer sign-ups for test drives. The lure for broadcasters to add Shazam to programming is that integrating the app promises to drive engagement and ratings. In return Shazam gets a slice of the $300 billion global TV ad market, says Fisher.
The same principle works for radio and cinema (with the caveat that if you don’t want to get kicked out of theaters you can only Shazam the adverts and trailers before a film starts). Meanwhile, brands have asked Shazam to “complete the loop” by adding QR codes to billboards, he says.
And, “since people already have the Shazam app on their phone, it is easy for retailers to use the public address system to tell shoppers ‘if you Shazam while here you get a discount on a pair of sneakers or jeans,’” says Fisher. The store gets to collect digital data about its customers if they opt in with the retailer and consumers get something in return.
While it is still early days for in-store applications Fisher says he believes it represents a lucrative new market for Shazam.
“It Is Tough Out There.”
“We are adding a million new users a week to Shazam. We know there are over six billion phones in the world. There is so much opportunity in front of us,” says Fisher, who continues to work full-time as executive chair from the company’s headquarters in London. (Rich Riley, a scheduled speaker at 4YFN, took on the role of CEO of Shazam in April 2013.)
Fisher says he was looking for a chief operating officer to help him run the business. He knew and liked Riley, who ran Yahoo Europe for four years. In order to attract someone of his calibre Fisher says he was happy to offer the CEO title. It was a good move, he says, because although the majority of Shazam’s team is still based in Europe it was time to have a chief executive focused on the North American market. Riley is based in New York.
Fisher says he knows that some young companies are disheartened by the difficulties of getting noticed in a world where millions of apps can be purchased. So he wants to tell start-ups attending Mobile World Congress and 4YFN not to give up.
“It is tough out there,” he says. “We had challenges on financing, on product, on market development. It can take a long time to reach success. But with the right level of focus you can overcome challenges and seize the huge opportunity that exists in the mobile space.”