Andrew: Hey, there, Freedom Fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. And I remember when I first got my iPhone, one of the coolest things to try on the iPhone was this app called Shazam. And with Shazam, if there was music playing on the radio, aha, back then, people actually listened to the radio when it came out, or anywhere, really, like in a store, where it comes up a lot. The grocery store near my house plays the best freaking music. If you want to find out what it is, you just ask Shazam, load up the app. It listens for a little bit and, boom, it tells you what the song is. And back then, I think it would even link you over to buy the song and it was like magic. It showed you the power of the iPhone.
Joining me is one of the co-founders of the company Shazam. And I wanted to have him here to understand how they came up with the idea, how they built it up, and what it was like when it was sold to Apple. And, Philip, I understand that you weren’t there at the time. And I want to also find out about what he’s up to, now. His name is Philip Inghelbrecht. He is, as I said, the co-founder of Shazam. It was one of the most used apps in the world and it was sold to Apple. I’m going to find out about that. I’d also like to find out about his latest company, Tatari. It turned TV advertising into a digital-like experience where you can actually measure, get real-time data, and have the ability to manage your campaign. If you’ve heard me interview entrepreneurs who bought television ads, I’m always amazed, why would they do it? How do they even know if it’s working? And they always have these random things, like, well, what we do is we buy it in a certain market. And then, we connect back the IPs. And I go, “This is a lot of freaking work to buy.” And, anyway, his latest company solves that.
We’re going to find out about those companies thanks to two phenomenal sponsors. The first, if you’re hiring developers, we should find out about the importance of developers at Shazam. You’ve got to talk to them. They are Toptal. And the second is a company I didn’t even want to sign up for but, boy, I’m so glad that I did because it helped me close sales in a way that no other software ever did. It’s called ClickFunnels. I’ll talk about those later. But, first, Philip, do you remember the day that Apple bought Shazam? That you found out about it, even?
Philip: Actually, I don’t. Because it was, if you were to Google this and look it up but it was a very drawn-out process. Obviously, you know, I kind of learned, you know, before it was publicly announced that Apple was going to buy Shazam. But, then, actually the acquisition was initially denied by the European kind of regulatory instances and so that lasted for a while. And then, actually, I don’t remember the exact date that it was finally approved. It just felt so long.
Andrew: Was there a day when you felt like, “I did this. I get to actually like take a breath and realize I did something big, here, that now has a finish?”
Philip: You know, I mean, obviously, an acquisition sounds like, you know, the name is an exit, right? And then, that’s finished. To me, you know, an exit is often kind of associated with the financial outcome. And, sure, there’s some component to that. But I feel like that moment had come way earlier to me.
Andrew: When was that? What’s a moment in time where you felt like, “I didn’t exactly cross the finish line but it’s as close as I’m going to get there?”
Philip: It’s actually, to me, it’s kind of when you see Shazam being used in the wild, as I say. Somebody who you don’t know or never met and they actually spontaneously use Shazam. Or, even, when somebody starts to, you know, suggest that you could use Shazam to recognize the song, those moments, those are definite highlights. As I said, there’s no financial component to it but it’s definitely kind of. . .
Andrew: That’s the time?
Philip: And, actually, there’s a funny story around this. I always kind of promised to myself, if I ever see a person using Shazam in the wild, I’m going to buy him or her a bottle of champagne, just like that. And, this is now, I’d say 2007-2008. I was working at Google at the time and I’m out in L.A. and I go out with a client for drinks to a place, which then turned into a nightclub. So it’s late, late at night and, all of a sudden, there’s this giant guy. He walks up to the speaker and takes his phone, holds it up to the speaker, it starts recognizing his song. I’m like, “Oh my God, there’s my moment.” So I walk up, you know, very kind of like, you know, cautiously and I tap him on the back. I’m like, “Hey, you know, what are you doing?” As an ice breaker and the guy turns around. And, I don’t know exactly how, in what English words he put it but he said something to the extent of, “Bugger off. Get out of the way.” And I was like, “Okay.” It was big giant, it was a big guy. So I was like, “Yeah, that’s too bad, you know. That was a bottle of champagne.” That’s a true story.
Andrew: Wow. Did you get a financial outcome from it? A significant financial outcome from creating this company?
Philip: No. I mean the founders in Shazam and you can look this up, the company had been heavily invested in. And so, obviously, with each investment comes dilution. The investment terms weren’t necessarily very founder-friendly and so very few people, at least, kind of like if you look at the team, necessarily made a lot of money.
Andrew: To give people perspective, this was a company that was founded in 2000, long before the iPhone came out. You worked there until 2004. Then, you mentioned Google, you worked at YouTube, where you were Head of Partnerships for Sports and Entertainment, which must’ve been a fun job. Long before that, you went to work as an investment banker. As a guy who lives in San Francisco, I’m surprised. You went to Berkley to study investment banking? This is the hippie center of the world it feels like.
Philip: I was actually an investment banker before I went to Berkley. And I used Berkley to do a gentle Alt+Ctrl+Delete on my career.
Andrew: Got it. Okay.
Philip: I graduated from college, I just knew, don’t ask me why. I just knew I wanted to be an investment banker. I like mathematics. I like exact sciences. I like the fast-pace. Also, actually, being an investment banker gives you a remarkable sense of responsibility, right? Because you could control $100 million at the age of 22. And, so I really, really liked that component. It also didn’t take me too long to realize that it was kind of like a dead-end career. I looked at the people around me and they were old, right? They were, then, 30-35, and they were still doing the same. They were sitting there with, you know, five screens in front of them, and the speakers. And yelling to brokers and shouting out orders and stuff like that. I was like, “Oh my God, like am I going to do this for the rest of my life? And then, I’m going to be 40. I’m going to be too old for this game and this doesn’t sound like a lot of fun.” So I actually used Berkley as, I guess, the sexy way of calling it, now, is kind of pivot my career.
Andrew: With an intention of going, where?
Philip: Yeah, I didn’t know what I wanted to do. I’m really truthful about that. It’d be fun, actually, maybe, to read my application to see, now, for Berkley, what I really said I was going to do. But what did happen is, I kind of came to San Francisco because of the lifestyle. I really felt that this was a very desirable place to live. As a matter of fact, back in ’93 or ’94, I had traveled through the U.S. I had passed through San Francisco and I was so enamored with the city that I made that promise to myself, to, one day, live, or work, or retire, or go to school, here. And so when I applied to business school, I actually turned down very nice schools like Kellogg, which is probably, you know, on paper, maybe even better than Berkley but I just didn’t want to live in Chicago. But I came to Berkley because of the San Francisco Bay Area. But so back to your question, I also got drawn into the whole dot-com boom, right? I arrived, here, in May of ’98.
Andrew: Just when it was in full swing. This is the period where it was really hot.
Philip: Yeah, I even didn’t know that the Silicon Valley was in the Bay Area, to be honest. So I just came here and, wow, it was amazing. I mean just, truly, almost like reinvented myself. Learned everything about technology that I didn’t know. I would take on consulting projects. Yeah, I would just completely kind of rewrite myself.
A funny story around this is that, actually, the CIA would come. Actually, let me take a step back. So part of that plan was also to do an internship in the U.S., unlike most international students, go back to your home country. And, so I really focused on kind of really reinventing myself, rewriting my resume, and so the CIA would also come to Berkley to interview potential recruits. And, so I got invited for an interview with the CIA and I was like that’s remarkable, right? I mean like I didn’t know that, as a foreigner, you could work for the CIA. So, anyway, I went to the interview. And very early on, I mentioned, I was like, “You know I’m a Belgian national?” And, they’re like, “Oh, one moment.” Steps out. Comes back a minute later and is like, “Well, you know, you must understand, we made a mistake.” I was like, “Okay, I get it. No big deal.” But, really, what I’m trying to say, here, is like the extent to which I had reset myself was so good that I was able to fool the CIA.
Andrew: Wow, even with the accent, though?
Philip: Well, I think in the interview, they probably figured out. Then, again, I mean you could have an accent and be 100% American, as a matter of fact.
Andrew: That is true, especially, here in the Bay Area, which is one of the things that I love about living, here. You grew up in Belgium. Your parents were highly educated and they ran a business. What was the business?
Philip: My parents just had kind of like a medium-sized grocery store, yeah.
Andrew: So they worked in there, I’m imagining, six days a week. Probably closed on Sunday?
Philip: Something like that, yeah.
Andrew: Something like that. You were working in there, I heard, at seven/eight-years-old and you learned the importance of work. And, it was one summer. Or, actually, it wasn’t a summer, it was a winter where you were selling Christmas trees for your dad. Do you remember this?
Philip: Yeah, yeah, yeah.
Andrew: Talk about that. I guess, you said it to a site called waytopassion.com, which is where our researchers found that story.
Philip: Yeah. Yeah, I mean I think like credit to my parents, they actually gave opportunities to work and make money and so that was one of many of them. It’s interesting, when you mentioned earlier, you know, you were open six days a week, closed on Sundays. Well, sometimes, I would actually run the store on Sunday afternoon and get 10% of everything that was sold.
Andrew: 100% of everything that was sold?
Philip: No, 10%, right? Because that made a lot of sense because nobody would come on Sunday, anyway, so it was great for my parents. It wasn’t too busy. They didn’t have to pay me necessarily that much money, right? But I learned kind of the value and the virtues of work and so selling Christmas trees was one of them. That was probably one of the earlier ones where, you know, I helped people pick their Christmas trees and then carry it to the car. And, maybe the story you read, there, which is actually very funny. My dad would pay me a small commission for every tree sold. I forgot how much it was but maybe like 10 cents a tree. But then, of course, people who came to buy the Christmas, they were so kind of like just dumbfounded if not enamored with this little boy, you know, doing business. That, you know, the tips that I got were like an order of magnitude bigger, which was, which, you know, my dad, of course, never knew about.
Andrew: Oh, you didn’t tell him? I would imagine your dad would’ve been proud.
Philip: No, it was better to ask him for a raise.
Andrew: Yeah, you know what, my dad paid me in hourly. I wonder if I would’ve worked harder if he would’ve given me commission, instead. My job was to hand out flyers for his clothing store, help people out at the store. I knew nothing about clothing.
Philip: Yeah, but then you see if you get paid by the flyer, you probably would lose a few flyers as a little boy.
Andrew: Maybe, by the person who comes in because of the flyer, that would’ve been a better way to structure it.
Philip: There you go. There you go. Cost per acquisition, yeah.
Andrew: One of the things that happened when you decided to Alt+Ctrl+Delete your life or your career was you decided, “I’m going to find a company to start.” And you and your co-founder were sitting and trying to come up with different ideas. Do you remember one of the ideas that you didn’t pass? That you didn’t do? The one that you did pass?
Philip: Yeah, one idea, actually I still kind of like regret, at least, not having like written a patent on it and kind of came out of a very personal experience. So I had a meeting. So I was living in Berkley, at the time. I had a meeting in Palo Alto, which, in the Bay Area, distance-wise is maybe only 30 miles. But on a rainy day, that could take you two hours, I kid you not. And so I was, yeah, I was a full hour later for that meeting. And, so this was like ’98-’99. And, what we used back then was MapQuest, right? You would go to Yahoo MapQuest, and then you would print out the directions, right? You won’t have a smartphone to track your progress. And I was like, “Well, while MapQuest is good but it doesn’t really tell us much kind of about the driving conditions.”
At the same time, the FCC had issued kind of some kind of regulation to all the cellphone providers. That cellphones had to be able to be located within 17 meters for 911 purposes. So, essentially, try like triangulate on the cell towers. I was like, “Aha, so in that an approximate location is known so if all cellphone providers can share that data back to you on an anonymous basis, then, you can truly track and calculate the average speed at which a phone is moving along the freeways and the major streets.” And, so MapQuest does not just map directions anymore. It also gives you estimated travel times, right? So it’s a whole mathematical procedure. I went so far to even, then, kind of like think, “Wow, so then, you know, the streets are marked to be green when there’s no traffic, you know, yellow when it’s lots of traffic, and red when it stands still, like a traffic light.” Well, guess what, that’s what Google Maps did in 2005. I thought that, at least, I should’ve written a patent on that.
Andrew: You were going to call it eStalker, I heard.
Philip: No, that was one of Chris’ ideas.
Andrew: Oh, that was a different idea?
Andrew: By the way, I hadn’t thought about MapQuest in years. I went over to it just now and it’s kind of scary that their only innovation, as far as I can see, here, is on how to stick ads in. And, the reason it’s scary is because they really were the leaders. And, it’s a scary reminder for everybody, for me, too, as a guy who’s doing interviews, here. That it’s very easy to fall really far behind and miss out on a huge idea because you’re not innovating. So their only innovation is how to stick more ads into this. Meanwhile, Google has been innovating, innovating, innovating and has just beaten them. And, I’ve got to keep remembering it. We’ve got to keep moving better and better, or else I’m dead.
Philip: Yeah, I think, in general, it’s kind of like two types of companies. Like, if you look at, especially at startups, there’s companies that truly come up with something new. They invent something, right? And then, there’s companies that they don’t invent but they have, maybe, more innovative approach to something. So I’ll give you one example. Like, if I look at Shazam. That was a true invention. Nobody really kind of had even the technology to kind of hold up your phone and deal with all the, you know, the distortions that came with the noise across a database of music and doing so very fast and so that was a true invention. And, so, of course, the challenges it brings about is that you have to, then, create your own market and educate people on the user experience and stuff like that. There’s another set of companies that don’t invent anything but they kind of look at existing markets and just innovate what’s been done there, already. And they don’t do it twice better, they do it usually 10 to 100 times better. And, I think, actually, Google is one of the best examples of that. Google hasn’t, you know, apart from Google, their new company on the side but Google, itself, google.com has never really invented anything, right? They didn’t invent search. They didn’t invent AdWords.
Andrew: Didn’t invent email. That was go-to, you were saying with that, yeah.
Philip: By the way, that’s a great example, they literally made Gmail 100 times Hotmail. Instead of 10 megabytes, you got a gig, right? And I feel like, either way, kind of you know staying up to date and always, you know, move the ball forward, demonstrates as a key ingredient to success whether you’re kind of a true inventor or an innovator. And, so if I look at Tatari, my current company, it’s not that we invented the measurement of TV advertising or the optimization of TV advertising and buying. It’s, really, that we have come up with approaches, which are just an order of magnitude better than what anybody else is doing in the industry, today.
Andrew: It seems like you, from your experience, have discovered that inventing something brand new is not as effective as improving dramatically on something that already exists.
Philip: Well, it’s sometimes harder, right? Sometimes you have to build a new market if you, right, come up with something?
Andrew: Right. What are examples of companies that have come up with brand new markets that have actually done really well? Amazon is a good example of that. What else? It seems like what you’re saying is, “Andrew, there are two different ways to innovate. There’s one where you innovate from scratch. And then, there’s another where you innovate on other people’s ideas.” And it seems like the latter, the innovate on other people’s ideas is what your experience says is the better approach. Tatari is innovating on other people’s ideas. It’s doing better for you. Shazam was coming up with something brand new and defining a market, and that’s harder to do and, probably, less worthwhile. That, we shouldn’t be looking for these new brand new ideas.
Philip: Yeah. I’m not saying that one is better than the other. I really don’t think so.
Philip: No. I wouldn’t say so. It’s just, they’re just two different types of companies, that’s all.
Andrew: Okay. And you just want to know where you are. The idea for Shazam came from where, then?
Philip: That was actually Chris’ idea. Many ideas that we had, some of them, some of them not so good. And it was something that resonated well with me, right? Because who doesn’t have that personal experience of hearing a song and not knowing what it was? And, you know, look at there was a point in time where we had to make a decision where we had to pick one and focus. Focus is super important. Roll with it. And then, that was Shazam, yeah.
Andrew: All right, I’m going to come back in a moment. I’m going to, first, talk about my sponsor. And then, I’m going to come back and understand why you even thought there’d be market? How you thought you were going to make money? This was a period where you had to make money or else. . .I guess maybe there was still leeway to not make money but I still want to know what your business model was when you started. But, first, I’ve got to tell you and everyone else about a company called ClickFunnels. Philip, I did not want to work with ClickFunnels. Speaking about a company that did not innovate. There are other people that didn’t create something from scratch. There are tons of different software that you can use to create a landing page to collect email addresses, to create a follow-up page to sell, to create the whole flow. I knew it. I had it. I bought lots of different software for it so what do I need ClickFunnels for?
And then, this guy, Caleb said, Caleb Hodges said, “Look, you hired me to get you more sales, more leads, let me just use the software that I like.” And, at first, I said, “No, use what we have.” And then, he said, “Andrew, trust me. That’s why you hired me.” I said, “Okay, absolutely. That is why I hired you. Let’s do it.” He created a landing page to explain to people what these chatbots were, which is what we were starting to sell. And it collected more email addresses. And so I said, “Let’s stick with it.”
Then, I think it was Rebecca who said, “After somebody gives us an email address, why don’t we just put a follow-on sales page? ClickFunnels enables that.” Now, Rebecca is not a marketer, she’s a person who is just figuring this stuff out, she goes along. She’s good at using software. She added a sales page. Suddenly, we took one of our funnels, we added a sales page to it, and we’re closing sales. And then, they have these other little features, Philip, that I don’t think you would love because I don’t know that you get into this stuff. People who do, love it. Like, imagine this.
Somebody buys, they put their credit card in. Underneath the credit card information but above the button, I think it’s called an order bump, you could, with one little addition on their form, on their site, you could add an order bump. So, now, I’ve got a checkbox that says, “Hey, for $5 more, you could get this other thing.” People check it. The majority of people who check that checkbox get the extra thing for a few extra bucks for them. Great for me, it adds to the revenue. Now, all that means that we make more money, we get more product for our customers, and we could spend more on advertising, and we could just frankly, the momentum of growth is exciting. So over on my right, I’m going to show it again. This is what, at some point, I said, “Hey, they’ve got this thing called the two-comma club for people who’ve made over a million dollars funnel. A single funnel,” which is a page that creates email addresses, then moves people along and sales to them, are we even in this two-comma club? Let’s just go check. So Rebecca checked. She said, “Yeah, absolutely, Andrew. We’ve been in their two-comma club for a long time.” I said, “Fill out their form, get verified. Let’s get it.” And so we are, look, here, you can see it right here, Philip. This is their two-comma club gold record. We hit it with one funnel. All, for this thing I didn’t even want to sign up for because it seems dead simple because other people do it. They made it even easier. Rebecca, I, Marcela, anyone on the team can go and improve our funnel and get more sales done and that’s one of many funnels that we’ve worked on.
If anyone out there, including you at some point, you’re going to have to have some reason for somebody to come in, maybe get a white paper. Maybe, eventually, sign up for a demo or something, even if you don’t close sells within the funnel, you should know you could close sells within the funnel, or you could just get people to move a little closer to a sell. If you go to clickfunnels.com/mixergy, they will let you try their software for free. Start to get results. And if you love it, you could keep being customer of theirs. If you don’t love it, I would say, yes, you can cancel. But, number two, you should let me know why because I want to understand why it’s not working. These freaking guys created great software and I love it. clickfunnels.com/mixergy, thanks so much for being a sponsor, ClickFunnels.
All right, that company, by the way, is making bank. I interviewed them on stage. I put the people on. Like, I said, “I’m putting you on the spot. Tell me what your revenues are.” You told me before we started, “Andrew, I’m not telling you my revenue. It’s just not the way we do things.” I felt a little bad. Maybe I’m a little gouache. I don’t care. They told it. They said, “All right, Andrew, we’ll tell you whatever you want to know.” Okay. Let’s continue, then, with the story. Where did you think that you were going to make money with Shazam?
Philip: If you were to look at the early business plans that kind of suggested the pay-per-use, right? That say about the recognition of which the company was to retain a certain percentage, let’s say half. And then, of course, right? You multiply, too, with, you know, volume and an international rollout. And, of course, quickly pointed out that Shazam was going to make billions and billions of dollars.
Andrew: Wait, you really imagined that, I, to get a song on the radio onto whatever, to understand what it was, I would pay money for it?
Philip: Yeah. Because back in those days, people would pay, you know, a dollar or $3 to dial a short number to get traffic updates.
Andrew: Oh, you can pay for that? So your number was 2580, which I didn’t realize until now, it’s straight down the center, right? The 2-5-8-0 are the middle numbers on the dial pad, and so people just had to go down the middle. And if they did that, they were charged by their phone company and you collected money from it?
Philip: Yeah, that’s right.
Andrew: Oh, got it. So you don’t really think about it. You’ve got your cellphone in your pocket, easy. That makes sense, okay.
Philip: Yeah, it was almost a disguised like I can’t say a 1-800 number because that’s toll-free. But in the olden days, it used to be like a 1-900 number how you knew was a premium service. But you use a short dial, which, you know, is more accessible, more memorable, and stuff like that.
Andrew: Got it. Got it. Okay. And your co-founder, we won’t go too deep into it. Your co-founder, Chris Barton, was here, on Mixergy. He talked about how you guys figured out the technology behind it. How you hired Avery Wang, and the process you went through to hire him to get the software up and running and working. Let’s talk about the launch. You put this thing together. You had the software. How did you get anybody to even start dialing 2580?
Philip: We had a little bit of a kind of long marketing campaign. If I remember well, it was so most, out of home and mostly radio advertising and, yeah, that was it. Now, you know, what’s really interesting is, back then, you didn’t have social media. You didn’t necessarily have all kind of these network effects that you could use, right? Where, you know, one person shares something with the other and so it was stuff going, you know. When we launched Shazam it wasn’t that it took off like a rocket. Quite the opposite, it felt more like flatlined.
Andrew: You launch it. It flatlines. Did you feel like, “I’m a failure. Why did I even leave? My dad had a solid business. Now, I started this business. What is this silliness?”
Philip: No, no. I’m thinking of like, when you run your own company, you’re going to have so many lows and highs that a little more immunity to those lows.
Andrew: How do you get immunity? I still feel immunity to low. I’ve got to tell you, Philip, if I ask you a bad question, I’m not going to move away from this, thinking, everything is good. I go, “Andrew, what do you do next time to fix it?” I will spend time thinking about it. How do you get to a place in your life where, especially early on, where people don’t like your product. They’re not signing up, they’re not using it, and you feel strong enough to go onto the next move?
Philip: Yeah, you know, I think, in many ways, you know when founders say that my company is my baby? You know what I mean? It actually is a remarkably good analogy. You just mentioned you have kids, yourself.
Andrew: I do.
Philip: I don’t know how old your kids are but let’s say that one of them isn’t so good at math, I’m just making this up. It’s remarkable, Andrew, you know, and what you’re saying, in the business world, you would ditch your kids and you get rid of them, right? But, no, I know what you’re going to do. You’re going to do the exact opposite. You’re going to spend even more time and invest more time until it works. And, so for all intents and purposes, your startup companies are your babies. If it doesn’t go, you’re actually going to do maybe the exact opposite.
Andrew: You know what, that does make sense. I bought my kid a bike that all the parents, here, had all the different requirements for a bike, for the first bike for kids. The only thing that they all agreed on was no training wheels and I’m big on that. So I got a bike with all of the features that they wanted. Philip, it’s so heavy. You know about this, huh? You’ve got kids, also. No training wheels, that’s a San Francisco thing.
Philip: No training wheels.
Andrew: No training wheels, these days.
Philip: Drown and learn to swim.
Andrew: Right. I got a bike that was too heavy. It had no coaster breaks. It had hand breaks, it had this, that. Anyway, it was too heavy for the kid to ride. And, like you said, I just kept working with him. He would freak out about it because it was too heavy to even lift up. And he would fall. And you’re right, okay, so you kept going. Do you remember going back, what you did to make it work? What the next set of ideas were?
Philip: There was never a silver bullet for a company like Shazam. I’d say this, I mean, obviously, the breakthrough came with the iPhone and the App Store, in particular, right? Because that gave us an incredibly powerful. . .
Andrew: That’s three/four years after you left. The iPhone came out 2007. The App Store, 2008, if l remember right, right?
Philip: I think the iPhone was 2006. The App Store, off memory, 2007, right? But that gave an incredible distribution platform so there’s two things I would say to that. So, one, it’s not that we were stupid. We knew that there was going to be a day where cellular phones or feature phones, back then, were going to have some type of operating system and we were going to be able to do part of the Shazam experience on the device and making it so much better, right, so that’s one. Having said that, two, I don’t think any of us reasonably expected that the iPhone was going to be that good, so powerful with color, touchscreen, not to mention the kind of the app marketplace. So like, you know, sure, there’s a little bit of luck around us, what I’m trying to say but it was also negotiated luck, right? Because when we saw that there’s an opportunity to build an app on a phone, right? We kind of, you know, took the bull by the horns because we knew that was also going to be the future. We could also have said like, “Well, that sounds silly,” right? We’re just going to carry on with 2580, right? And that would’ve been a strategic mistake.
Andrew: But you just knew, this thing is coming. We’re building it to the day when that happens, without clear clarity on when, or how. Here’s one of the things that our producer put together for me about the early days of Shazam. You’d have radio DJs say, “I’m going to play you a new song but I’m going to tell you what it is. If you want to find out, go dial 2580 on your phone and you’ll see it.” That sounds like a great promotion.
Philip: That’s an ad. That’s an ad, right? That’s a read-out ad, right?
Andrew: That’s part of the content if I understand right. The DJ was playing music he’d play anyway. They just happened to add this to it.
Andrew: You use Slack, doesn’t it drive you crazy that the whole day, you get these alerts.
Andrew: Does it drive you nuts? I shifted our company away from Slack. I couldn’t deal with the fact that there were constant alerts. I wanted to stay focused.
Philip: I kind of like didn’t notice. You noticed, I didn’t, so.
Andrew: I guess you kind of like it. My wife uses Slack at her job. It is constantly going off. Well, first of all, let’s talk about you, before we talk about why leave, why you left. One of the things that you realized was, “You know what, there’s a B2B component to this.” What was the B2B component of Shazam, business-to-business?
Philip: Yeah, when the company wasn’t doing so well in those early years, I had by then, learned a lot about the music industry. And I knew exactly how the music industry operated. Where some of the pain points sat and so one of those things was, actually, the realization that artists get paid to the extent that their music is actually played on radio and television. And, they get paid based on a small sample of airplay. And then, it kind of gets prorated out and divided up amongst, you know, the large pool of the composers and music writers.
Now, if you work from a sample, that means that the bigger musicians get overpaid and the smaller musicians don’t get paid because they’re simply not a part of that sample. And, so short of it is, I learned that the ability to monitor all radio and television play, not on a sample but on a consensus-basis and doing so accurately and very fast had value. Because it would make for a better distribution of rights and collection later, there, too. So when I realized all of this, I started cutting deals with companies like BMI, Clear Channel, those were, you know, you wanted some numbers? Those were multimillion-dollar contracts and it’s remarkable, right? Because when Shazam, on the one hand, was bleeding cash, and the consumer business, it was raking it on the B2B side.
Andrew: Because they were paying you to understand when their artists were being played on the radio so they could charge more based on that. And the only reason that you knew it was, people were holding their phones up, like that big guy at the event, having their phones listen for the music and that’s how you knew it?
Philip: Yeah. And, it was really more about making sure for them that they did the distribution of the collected money to all that, correctly, so that they wouldn’t get sued by a small artist, that was a real problem. And if they could prove that they did it correctly, that was just an overall net improvement, you know.
Andrew: I was researching you. I like to put everything into Google. And then, limit the search to like old time. Don’t worry, I didn’t find anything that shocking. You’re too old to have had like a whacky Facebook page or something. I see that you had a role of Secretary appointed on June 12, 2009. And then, resigned, August 7, 2002. It feels like you were in the company for a short time. And then, you resigned soon after. I’m trying to understand why, what happened there? Why did you leave Shazam? Maybe that’s a better question, instead of touting all my research. It’s better just to go straight.
Philip: Yeah, company secretary doesn’t really mean anything. Somebody has to be the company secretary.
Andrew: Right, and they put you on the list as that.
Philip: Usually, it’s the CFO, right?
Andrew: But, also, you’re director. And then, you resign again, August 7, 2002. What happened? It feels like something happened in the middle of your tenure, there.
Philip: No, this is all normal. So when you start a company and you have multiple cofounders, typically, all cofounders would be on a board. And then, outside investors come in. They will a board seat, and then one of the founders has to step down so eventually, all founders stepped out of the board. So why did I leave Shazam? So it was I remember about late 2004 and, actually, it comes back to that very earlier point. I wanted to move back to the Bay Area. It was a lifestyle decision. I was okay living in London but this is not what I wanted. I’m very outdoors. I love surfing, high boarding, but at the same time, also, skiing. And, yeah, I just came to the conclusion that life is short and decided to move back to San Francisco. This is not like an overnight decision so, obviously, I discussed this with the, then, CEO and the board, and stuff like that. Also, you know, it’s not like you put in your two weeks notice and off you go. So I made sure that it was a solid transition over six months. And then, yeah, packed my bags and, you know, actually took a big risk just, you know, as a Belgium national without any work permit moved back to SF.
Andrew: And so did you end up with any equity in Shazam, after all that?
Philip: Yeah. Yeah, just traditional founder equity, yeah.
Andrew: And that held on until the sell.
Philip: Mm-hmm, yeah.
Andrew: Okay, good. I was a little concerned, based on how you were talking that maybe you ended up with nothing.
Philip: Yeah, yeah. But I feel like I guess everything is relative. It’s not that any founders made money that they would retire and buy a private jet or anything like that, you know.
Andrew: Did you buy anything with it? No, it just goes into a big account. Not even a surfboard?
Philip: That would be a good move.
Andrew: Yeah, or a car, or something. All right, I am a little bit curious about what you ended up doing at YouTube for a little bit. Could we talk about that? And then, also talk about Tatari?
Philip: Yeah, love to, yeah, yeah.
Andrew: All right, great. I’m curious, also, about the name Tatari. What does that mean? All right, let me take a moment to talk about my second sponsor. Philip, we didn’t get to talk about how you found one person. Why did Avery Wang have such a big impact on you? This kind of ties into my second sponsor, which is Toptal, for hiring developers. What is it about Avery that helped you guys do well?
Philip: Avery invented the algorithms. So he was actually not a hire. He became a fully-fledged co-founder of the company.
Andrew: So one of the things that I’ve been seeing in my interviews and I’m going to keep finding it throughout the interviews is that you find that one person who is phenomenal, it’s not like having five other people is going to compensate for them. It’s not like if you went to UpWork, and found four other people, or 10 other people that they would’ve ended up with the same algorithm, with the same technology that Avery could’ve done on his own, am I right?
Philip: Yeah, true.
Andrew: Right, it’s a whole other world when you deal with best of the best developers, which is why Google is, here. Even though they could be anywhere, they know that there are some phenomenal developers, here, which is why people go to Toptal. Toptal prides themselves on making it so hard to be on the Toptal network that only the best of the best developers make it in. And so when you, Philip, when you finally need a developer or I need a developer, anybody who’s listening to me and needs a developer, all you have to do is go to toptal.com/mixergy. Hit a button. Then, you’ll schedule a call with a matcher. The matcher, Philip, will understand how you work, like use Slack, like what hours do you guys like to work? What technology do you build on? What are you missing?
And then, they will find someone who has done the work that you’re looking to hire for. Who also works in the way that you like them to work. So someone like me couldn’t deal with the Slack environment. Someone like you couldn’t deal with our basecamp environment, which is like low-conversation. I’ve hired people who are really phenomenal but without the conversation, they can’t work with me. Because I’ll go for a week or two without talking to them, right? Every company has its quirks. Every company has its needs. Toptal’s matchers take all that into account. They go out, they find one or two people who are perfect. And, if you like them, talk to them. If you like them, you can hire them. If you don’t, you move on. And if you do hire them using my special link, you will get 80 hours of Toptal developer credit when you pay for your first 80 hours in addition to a no-risk trial period of up to two weeks. All you have to do is go to top, as in top of your head, tal, as in talent. T-O-P-T-A-L.com/mixergy.
So what was it like to go and work for YouTube in the entertainment space and the sports space. I feel like, there, you must have some stories about people who you recruited to have a partnership with YouTube. You’ve got tattoos. You’re definitely cooler than the average tech person I interview. I watch you carefully. You have no accent.
Philip: It was a really exciting time, actually. You know what’s interesting, I always feel that I kind of predicted the importance of online video very well, right? I knew that online video was going to be huge. Obviously, I joined Google Video, which was a big mistake. YouTube would have been the better move. But being there, in those, even still early YouTube days, you know. I think like I came out of Google and moved into YouTube when there were like 35 people. It was just fascinating. The growth was unheard of. Actually, I always said, I have the best job of anybody else at Google. Because it wasn’t that we were kind of tone-deaf to the fact that there was a lot of copyrighted work on the platform. It wasn’t that we were trying to deny that. If anything, we were doing a lot of work in the background to detect those copyrighted works. And, actually, now, make it a positive story when we worked with Disney’s and the News Corp’s of the world to help monetize those copyrighted works, right? Because if you think it through, people who go through the pain of ripping some video content off their TV, transcoding it, and then uploading it back, I mean like those are probably your biggest fans so I don’t want to squash them. If anything, you want to embrace them. And then, maybe help monetize that so it wasn’t that we kind of didn’t realize all of that.
Andrew: So your job was to say to the entertainment companies, to the sports companies, “Look, why squash this person? The content is now on there. Let’s talk about how you can make money from it.” That was your job?
Philip: Yeah. And, obviously, that came from my Shazam background, right? Because I knew one thing or another about content recognition and how the copyrighted works but then, also, the whole business around it. And so it was just fantastic. The people that I met at honestly the highest levels at all these companies, you know, which is great. I actually always say like, you know, Google got sued by Viacom for a billion dollars to deal with that. Nobody has ever actually remarked that or asked themselves the question, why didn’t any of the other big media companies join in that lawsuit. It would have been very easy, right? It’s like, you know what, I’m Disney. I’m going to join Viacom and we’ll make it a $2 billion. None of them did because they knew all too well that we weren’t sitting there like lame ducks. We were actively trying to work with them in a very positive manner.
Andrew: And that was your job to do that?
Philip: That’s right, yeah.
Andrew: Do you have any tips about how to work with, negotiate, partner with somebody who wants to destroy you? Do you have an example of somebody you turned around, who thought coming into this, “You guys are crushing us?”
Philip: Oh, that’s a great question. I don’t have a good example for that. There’s a good saying, right? If you can’t fight them, join them. But I think that’s a good comment. Or, if it wasn’t a comment, maybe more of a question. I think, sometimes you have to come to the realization that maybe something or somebody is too much for you and sometimes it’s hard to swallow your pride and actually, then, I don’t know, go to them. And say, like, “Look, you know, how can I work with you in a more positive manner? And what can I change in myself to make it more palatable for you?” I don’t have a good example but those are difficult moments, especially in the starting company and it’s hard to recognize or admit to those moments.
Andrew: They were incredibly angry at you guys, back then. Especially, since, to be honest, there were a bunch of emails from the original YouTube cofounders talking how they intentionally wanted this. That this is was the thing, right? So the fact that you guys turn around make sense. Now, I understand, too, why the Shazam guy came in handy. Because you had the credibility to say, “We can create software that would tag your stuff.” So let’s continue, then. Well, actually, I have one other question about that. You went from being a founder, which, in San Francisco, is one of the coolest things to be, to being an employee of somebody else’s vision. What was that like?
Philip: You know, it was fun, actually. Don’t forget, I see Google as like a giant startup, at least, back then. I was given a lot of autonomy.
Andrew: You didn’t feel like, “I’m an entrepreneur. I just gave this up to get. . .” No, none of that. I’m watching your face saying no.
Philip: Other than in the beginning, it actually feels a little bit like almost like a relief, right? Because the pressured stress gets removed and everybody needs that time to kind of kick back a little bit. And, that’s also why like I mean like I loved Google. I still love Google. But if you ever wonder why did you only stay there for three and a half years? It’s nothing wrong with the company, or in my job, or in my colleagues. I was just itching to be back in the startup side, that’s it.
Andrew: I have a friend who was an entrepreneur who just became an employee. His health is better. He’s got a personal trainer. He’s messaging me about the different things he’s doing, like burpees. He’s still working really hard but there’s something about not being a founder, it’s a reset, though.
Philip: Yeah. Yeah, I mean the most successful founders are those who can manage their work in a way, and their teams in a way where they only have to work two hours a day, right? That is, if you can do that. . .
Andrew: All right, I’m going to skip over the part that you were president of TrueCar. You worked with Scott Painter, one of the entrepreneurs who’s not super well-known, right? But why don’t we skip all that and ask about Tatari. Where did the idea come from for Tatari?
Philip: It was actually an observation from TrueCar. At TrueCar, we eventually got into TV advertising, right, as a way to keep growing the company. But, also, really, got a very quick taste of how the more traditional agencies could truly mess up TV campaigns and truly waste a lot of money, millions of dollars. You know, I became aware that if you could only inject a little bit of kind of Silicon Valley pedigree and technology into the role of TV advertising and make it a little bit more like digital, like you said in the beginning, then, it can make a day and night difference. And so that was kind of the personal observation and experience.
Andrew: This is TrueCar. So I think for people who don’t know, TrueCar is a place where I can go shop, buy a new or used car, right? That was their thing, bring it online.
Philip: Yup. And so we ended going massively on TV, not always a great story.
Andrew: I do remember seeing a bunch of TrueCar ads. What did you do? I remember talking to the founder of Carbon ID. He said, “Oh, yeah, I’ve been buying Rush Limbaugh ads for years. Here’s how it works.” He’s the guy who told me about the IP and region when it runs, and time when it runs. What did you guys do? What kind of backflips before Tatari did you do, to figure out if your ads were actually working on TV?
Philip: I mean it all comes back to data and analytics. Looking at the right data sets, making sure that your data inputs are correct.
Andrew: And what data were you looking for. Because you guys I don’t think would do a slash anything. It wasn’t like truecar.com/murdershewrote.
Philip: No, that’s right. So the data that’s available, today, versus, you know, as little as five years ago is so different, right? So we would look at the data that comes out of shadowboxes, even data that comes out of smart TVs. And that’s not necessarily privacy invasion, it’s all done on an anonymous basis. But on an aggregate manner, you can get a quick sense to what extent people react to an ad, or they didn’t, right? And then, that way, you can optimize those campaigns, right? If you see if you have two different let’s say commercials, then you can quickly find out, “Oh, well, commercial number one is actually the better one because 50% of people actually react to that one compared to commercial two.” And, so looking at all of that data, correctly analyzing it, then, you can start optimizing your campaigns. And, so these are meaningful optimizations, right? Because even if it’s only, let’s say, a 10% improvement on a $20 million per year TV budget, that’s $2 million, right there.
Andrew: Do you have an example of a bad experience that you had because you couldn’t get data that led you to create Tatari? Or a good one that led you to create Tatari?
Philip: Just funny instances, right?
Andrew: Like, what?
Philip: At one point, there was a creative, which was truly built for female auto buyers. And, that was actually accidentally, by mistake, run on probably one of the most male-focused networks and it outperformed the cost.
Andrew: It did?
Philip: Yeah. And so, why? It’s hard to explain, right? Because you and I might look at this creative and say like, “Well, that’s not for males.” But then, it turns out that, you know, kind of was it more the crowds it shows, right? Or the market actually chose it.
Andrew: And, the only reason you were able to do it is because at TrueCar, you guys got good at getting data on what ads worked?
Philip: Yeah. I mean, look, if there’s anything I’ve learned at TrueCar is that, you know, TV advertising can make a big difference to a company if it’s done correctly and that led me to Tatari. Now, the work that we’ve done at Tatari is infinitely ahead of what was ever done at TrueCar. Today, we will measure campaigns for quite a few companies. The IAB, which is the Internet Advertising Bureau, they listed a published list of the 250 most disruptive, what they call direct to consumer brands. And if you look at that list, of those that do TV, almost half of them will work with us. So companies like [inaudible 00:46:41] These are all companies that, now, kind of have handed over their TV campaigns to us because of kind of the digital approach that we have, today.
Andrew: By the way, your website is so good because of that image, that video that come on, or whatever the animation is. It almost gives me a headache but it’s fantastic for explaining what you do. I don’t even want to reveal it. You know the white text on black background?
Philip: You know, we just relaunched the website like three/four days ago so I’m glad you appreciate it.
Andrew: The whole site is really well-done. Considering what you guys do, you don’t need this kind of like creativity. So, then, what do you guys do to help advertisers track their impressions, and cost per view, and so on?
Philip: Ultimately, we are bringing data and analytics to the world of TV advertising and that kind of takes the role or manifests itself in two pieces. The first one is in the measurement, right? Was one creative better than the other? Was one streaming platform worse or better than the other, right? And, so we’ll do this all day long and we always tell people where they should allocate their dollars. The other thing we’ll do is actually meticulously track television ad inventory, right? What ads can I buy? Where can I buy them? What’s the pricing? Was there a fire sale? If it was sold in an auction model, what were those clearances in the auction? And, if you collect all that data in large amounts, then, you can flip it around, run analytics again and drive what we would call bid optimizations, right? If a network says, “That spot will cost you $50,000.” We may actually have figured out that a more correct value is something more like $40,000 and we might offer that amount of money instead and find success. But in that, you can see an immediate 20% savings, so we’ll do a lot of data and analytics in media buying, as well.
Andrew: I’m very mindful of the time because I know you’ve got kids that you’re going to pick up from school. We’ll close out with that. What does Tatari mean?
Philip: Tatari actually doesn’t mean anything. I had asked a friend at the time, “Hey, do you have a fun Bengali or maybe just a general foreign language for quick or transparent?” And she said, you know, Tatari. I’m like, “That’s cool.” And then, I looked it up and lo and behold, its pronounceable six-letter dot-com domain name is still available for sale. I paid something like $6,000 for it. And nobody really liked it but, one, nobody came up with a better name. Two, when I share the name with somebody, they actually remembered it, unlike Shazam. Five days later, people, today, people still misspell it.
Andrew: Shazam? There’s a way to misspell it?
Philip: Oh, gosh, I’ve seen everything. And, so I’m not going to give you the misspellings because I’m not going to inspire you.
Andrew: Oh, no, don’t get it in my head.
Philip: But Tatari, that’s the ending of that. Later, I found out that actually the person who gave me the name, Tatari, made a mistake. That wasn’t even a correct word.
Andrew: Yeah, I looked that up. It’s not a word. It is a last name. At least, one person I found in, from Instanbul on Crunchbase has the last name, Tatari.
Philip: You are excellent in Google search.
Andrew: I’m searching everything as we talk.
Philip: So, anyway, it stuck. I think it’s a good name. I’m happy we chose that name, yeah.
Andrew: All Right, are you going to go pick up your kids? How old are your kids?
Philip: They are eight and nine. How about yours?
Andrew: Five and three, just started kindergarten. And, one of my things that I’m doing is making sure to get out early and go pick them up before, be one of the early parents to pick them up and spend time with them. I don’t know if you saw it. There was this LinkedIn blog post going around, recently, about a father who lost one of his twin sons and it just really moved me. And he said at the end, “Just spend as much time as you can with your kids. You never know.” And I realized, you know what, they’re probably going to go somewhere at some point, right? You ideally want them to go. I should spend as much time with them as possible. So, yesterday, I left early and I took my kindergartner to coffee. No, he didn’t have coffee.
Philip: That’s a wonderful thing to do. Actually, this weekend, I was in Pennsylvania for three days with my younger daughter for a three-day father/daughter event.
Andrew: Oh, I want to do that. Yeah, those little bonding experiences I think, they go a long way.
Philip: Yeah, this is something you can never take back. And, actually, I think it also makes for, if you spend that time, it makes for a better relationship with your kids.
Andrew: I think so. You know, I’ll say one other thing. That I was talking to this one cab driver who was dropping me off somewhere. And he said he’s really troubled. And I said, “What’s troubling you?” And we started talking. He didn’t get into details but there was something going on with his son. So I said, “What do you do?” He said, “You just have to count on the things that you put in early on coming through right now, when he’s going through his stuff,” so putting in stuff early on. All right, if anyone wants to go check out your site, it’s tatari.com. T-A-T-A-R-I.com. I want to thank the two sponsors who made this interview happen. The first, if you’re hiring developers, go check out toptal.com/mixergy. And, the second, if you’re looking to create a sales funnel, get leads, close sales, really, don’t make the mistake I made of turning away this company. It is phenomenal. Check out clickfunnels.com/mixergy. Thanks, Philip. I’ll let you go. Bye.
Philip: Thanks, Andrew. Have a good rest of the day, bye bye.
Andrew: You, too.