You could say that Tim Westergren is a bit of an expert when it comes to managing feedback. As founder and chief strategy officer of Pandora Media Inc., which runs the streaming music web site Pandora.com, he’s elevated the business philosophy of “listen to your customers” to another level.
“Consumer feedback is a huge influencer on Pandora,” says Westergren, who helped develop the Music Genome Project technology that allows the site’s users to craft their own music radio stations using thumbs up or thumbs down feedback on suggested songs.
Considering that Pandora has never advertised itself any more than a bit of search engine marketing, the value of this influence couldn’t be more apparent. For all intensive purposes, the company has expanded almost entirely through word of mouth to 100 million registered users. Since it made its IPO offering in June, the company has also experienced at least triple-digit growth every quarter since.
“We have a saying at Pandora: ‘It’s the playlist stupid,’” Westergren says. “It’s as simple as that — making it a super easy, intuitive experience and nailing the music choices. That’s really the basis for Pandora’s success so far.”
By staying attuned to the needs and interests of consumers and employees, Westergren has helped scale the business from start-up into a major public company with $138 million in revenue last year. Here’s how.
Know your audience
Pandora’s users have substantially shaped its evolution since the beginning. Perhaps the most obvious example is that fact that the web site was originally launched as a subscription only service.
“Not many people do know that because listeners ensured that it did not last long,” Westergren says. “We pivoted because they said, ‘This ain’t the way.’”
The site went free not long after.
With today’s technology, Westergren says it’s even easier to gain insights about who your customers are and what they want.
“You have a pretty intense feedback loop, which I think is becoming ever more true of all companies right now,” he says. “You have listeners who are much more participatory than they had been in the past.”
The company utilizes a combination of implicit and explicit user feedback to guide its direction. This involves monitoring how people are using the site — which features are gaining popularity and which are waning — as well as looking at feedback in the form of tens of thousands of monthly e-mails from listeners.
“That can influence the small things, little tweaks to the design, and that can affect big things like what large features we might want to add or a new domain we might want to go after,” Westergren says. “So we pay heed.”
An example is the company’s recent web site redesign, which was two years in the making and tested extensively with users before the September release. Some changes included removing the 40-hour listening cap for users, adding new “follow” and “shuffle” options and overhauling the design itself.
“When you do these things you have to get sort of a critical mass of feedback because otherwise you are just guessing at what the right answer is,” Westergren says. “So that’s a prerequisite for any significant change. We had a pretty good notion before this launched how it was going to impact our listening audience.”
If you have a large market opportunity, understanding your customer is even more critical if you want people to choose you over a competitor. Westergren’s strategy for differentiating the company from others with a similar business model — Spotify and Sirius XM Radio to name a few — is fairly simple, and it doesn’t rely on marketing.
“It’s really by creating a product that they love,” he says. “Someone finds it, uses it and it solves a problem for them.
“If they love using it, they will be a long-term loyal listener and they will tell other people about it.”
As your customer base expands, resist the urge to be satisfied with past or current success.
“There’d be ways for us to kind of contract, and be more conservative and focus a lot more on near-term results, but we believe that the opportunity is big enough that it warrants a certain audacity,” Westergren says.
Maintaining consumer loyalty over time requires you to keep finding ways to serve your audience as their needs evolve.
“You need to really actively innovate, actively challenge yourself to maintain the pace and the velocity of innovation and effort that you have had in the previous years,” Westergren says.
That’s why the company’s innovations are driven by both customer feedback as well as the intuition of its leadership.
“It’s kind of a natural life cycle,” he says. “You feel it. You feel it in terms of your own disposition toward your product and you feel it from consumers.”
By investing heavily in its foundation via technology, talent and strategic business investments, the company is working to take advantage of the largest possible opportunity.
For example, several years ago the company’s growth accelerated sharply when it introduced its mobile application for smart phones and seized on consumer demand for mobile listening capabilities. Mobile now accounts for 70 percent of the company’s listening audience.
“I don’t think about the future in terms of obstacles anymore,” Westergren says. “I think it’s more about how do you prioritize the opportunities? That’s our challenge more than anything.”
Solidify your values
While there’s an immense amount of development that’s gone into getting the company to where it is now, Westergren says that all growth initiatives still fall under one primary area of focus: personalization.
Everything from redesigning the web platform to a higher performance HTML5 site to growing mobile offerings to expanding artist selections has worked in harmony with the goal of increasing the level of personalization for users. Westergren says that this is an area that the company has been singularly focused on for more than a decade.
“We’ve essentially been on this path for a long, long time,” he says. “That’s not only about the Music Genome Project and playlist station personalization capabilities. It’s also about streaming and structure. It’s about all of these deployments to multiple platforms on multiple operating systems in multiple environments.
“We’re the first company that’s really doing that at scale, and to me that is the promise of the web.”
As the company continues to hone the concept of personalization in new and exciting ways, Westergren also knows that amid all the change, he needs to make sure the company doesn’t stray from the core values that have helped it grow.
Staying close to your core doesn’t mean that your company’s not changing. Instead, having strong core values acts as a taproot for your business that helps the next generation of leaders and employees to be successful.
“There are lots of things that have to happen when you go from the early stage into a more mature stage,” Westergren says.
“You go through a period where you really need to clarify and codify the core of your company, who you are, why you are doing what you’re doing, your vision and so on – really cement that in such a way that as the company gets big and has more moving parts that you still have a nice, clear anchor vision for everybody to rally around.”
Westergren defines the company’s set of core capabilities as the areas where the company needs to be No. 1, and stay No. 1.
“So the challenge that we give ourselves constantly is ‘Are we meeting that?’” he says. “Are we really the best in the world at that? And if we’re not it’s sort of an all-hands-on deck response.”
This also goes for cultural values. A set of cultural guidelines called ‘Pandora Principles’ govern some of these fundamental areas for employees, ensuring that the company’s culture stays integral as more people come on board.
“It’s kind of like a manifesto,” he says.
“There are things like how do you want to treat each other as employees and what kinds of people do you want to work at your company and how do you want to communicate with each other. Each one of those areas benefits from having core values and principles.”
Develop future leaders
As the company has grown larger, Westergren’s ability to control its direction, even with the help of his management team, continues to get harder. So it has become even more essential to attract and to cultivate a new generation of leaders who can be empowered as new ambassadors of the culture, mission and vision. Doing that requires a successful mission and culture.
“There are two things that people look for in business: a mission that they can really get behind and get excited about, and a place that really values them, treats them well,” Westergren says.
The company’s mission, “enabling people to enjoy music they know and discover music they love,” is one that employees and consumers have naturally embraced.
“This is a product that listeners are deeply passionate about and that trickles down to everyone in the company,” Westergren says. “You know when you say, ‘I work at Pandora,’ somebody goes ‘I love Pandora’ or they are excited to hear that your work there because they love the product.”
However, while driving a unique mission is exciting for employees, that alone isn’t enough to keep people motivated to do more.
“I read somewhere recently that the best employee perk is giving people a place that they love to work,” Westergren says. “That’s kind of it right there.”
As a leader, facilitating a culture that encourages collaboration and avoids hierarchies gives people the freedom to contribute their ideas and run with them.
“So your role as a leader once you have them in the company is to help them do what they do,” Westergren says. “It’s not to control them. It’s not to micromanage them. It really starts with a place of trust.”
Trust covers everything from what level of supervision you give your people to what level of access to information that they have, which at Pandora is very transparent. It also means having faith that the talented people that you hire are going to do a good job. When you build a culture of trust, employees feel like they are part of the solution and want to step into more active roles.
“It’s not, ‘Oh, you solve this. I’m the employee and I’m looking to you to solve this problem,’” Westergren says. “They feel much more sense of ownership, where they want to know how they can help. They understand that things change, and they trust the same way that you trust them that you are doing the best job that you can.”
The team at Pandora has grown to 295 employees since 2005, and the company continues to build its bench of talent. Because people enjoy working there, they also tend to stick around, making it easier for the company to develop leaders internally.
“We have a long tenure in our team, and an unusually long tenure I think for a technology company,” Westergren says. “We’ve been able to grow that part of our company really successfully.”
As you develop the next level of leadership, you gain the latitude needed to keep up with constant change and fast growth.
“You need to stay very closely connected to your company,” Westergren says. “Don’t let layers insulate your leadership from what it’s like to be a line-level employee.
“You give people responsibilities. You empower them. You compensate them properly. You give them a nice environment to be in. If you treat them well, they will reciprocate with effort and innovation and all sorts of contributions.”
How to reach: Pandora Media Inc., www.pandora.com or (510) 451-4100
- Make decisions with a good understanding of your customer
- Solidify your core mission and values
- Develop the next generation of leadership
The Westergren File
Founder and CSO
Pandora Media Inc.
Born: Minneapolis, Minn.
Education: B.A. from Stanford University
Westergren on his management style: There are some unique things I can bring to this as a musician. Managing and operating a band can teach you a lot about how to operate a company believe it or not. So I think there are some really interesting insights that experience brings to this.
Westergren on how Pandora levels the playing field: I think one area that, to me, is particularly exciting is the impact that we are beginning to have on artists. Because of the way we analyze and recommend music, Pandora is a place that is a completely level playing field for musicians. So once your song gets added to the collection, we’re blind to popularity in recommending any given song on a playlist. We have over 900,000 songs in our collection and over 90 percent of those played last month.
What is your favorite station on Pandora?
That’s an unfair question to ask a musician. Actually, I’m pretty scattered in my tastes. I like all sorts for music. I’m a piano player so I’m somewhat partial to piano music, but I also really love a good melody. So I can listen to punk music or classical music or country music if it has a good melody. So I don’t really have a single spot that I sit on very long.
In 2011, Pandora:
- Hit 100 million register users
- Was the most downloaded free music application on Apple’s and Google’s app stores
- Made its stock market debut with a market value of $2.6 billion
- Reached its 10 billionth thumb rating. The song was a thumbs up for “Ridin’ Solo” by Jason Derulo.