Shazam: From Dorm Room to $400MM Deal
In today’s issue:
1. Tech News This Week
2. Featured Story: Shazam?
Tech News This Week:
Featured Story:
Shazam - From Dorm Room to $400MM Deal
Alright, grab your favorite snack and settle in, because we’ve got a pretty cool story to dive into today—the wild ride of Shazam!
Back in 1999, a UC Berkeley MBA student named Chris Barton decided he wanted to start a company.
And before even setting on a business idea, he realized it would be wise to have a couple of co-founders on board.
So, he invited his friends Philip Inghelbrecht and Dhiraj Mukherjee to join him on his entrepreneurial journey. Together, they brainstormed and evaluated ideas.
Chris proposed a dilemma he wanted to solve. He would often hear a song, love it, and then struggle to find out its name.
He thought, “What if there was a technology to identify songs with your phone?”
It sounded almost magical at the time. So magical, in fact, that you’d want to exclaim "Shazam!"—a word synonymous with conjuring magic.
The Main Challenge
Back then, a few companies were already working on basic technology for radio song recognition.
People could call in and say, 'I'm listening to ABC radio station; what song is playing right now?'.
Shazam had a much loftier goal: they aimed to recognize any of the 30M+ songs that have ever existed.
Determined to forge ahead, they consulted with a bunch of professors from Stanford, MIT, and Berkeley, all of whom specialized in signal processing.
The consensus was that this technology was simply not feasible due to challenges like background noise, low audio quality from built-in phone microphones, and the sheer scale of the task.
But our team, undeterred by the skepticism, refused to take No for an answer.
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The Technical Solution
Our guys decided to seek someone who could tackle the solution.
This is how Avery Wang, one of the smartest PhDs in the industry, became the fourth co-founder of Shazam.
They split the equity evenly among all four to foster unity within the team.
Next step was building the technology.
The task was so tough that even Avery almost gave up multiple times while combating many of the technical challenges.
However, slowly but steadily, the music recognition algorithm began to take shape.
The Money Hunt and Bumpy Roads
Now, the early days of Shazam were all about cleverness and making the most out of limited resources.
They didn’t have the big bucks like the giant tech companies, so they needed to be smart and savvy.
Somehow, they managed to cobble together a sort-of-working prototype.
And with that, they raised $1 million in seed funding from multiple angel investors.?
Their approach was strategic; they sought out people with expertise in music and mobile phones to gain not only financial support but also expert advice and validation.
Next up was Series A funding, where IDG Ventures and Acacia Capital recognized the potential in Shazam and invested a generous $7.5 million in 2001. Pretty darn cool, right?
Shazam made its debut in the UK in 2002, and it left people utterly astounded. Imagine this: you dial a number, hold your phone up to a song, and bam - you receive a text telling you the song's name and artist. Revolutionary!
However, the timing could have been better.
The dot-com bubble had just burst, money was tight, and here was Shazam, asking people to pay for a phone service to identify song names.
That was a tough sell.
From 2002 to 2008, the company struggled to garner enough users to make ends meet, endured multiple rounds of layoffs, was burning through cash, and nearly went bankrupt.