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Tim Westergren and the founder effect

tim westergren

Tim Westergren

Yesterday’s announcement that Pandora switched out its CEO, replacing Brian McAndrews with Tim Westergren, was startling both in unexpectedness and lack of explanation. McAndrews, who was CEO from September, 2013 until yesterday, was evidently a competent executive leader with a resume taking him through The Walt Disney Company and Microsoft, and board seats in various companies including The New York Times.

Tim Westergren is Pandora’s founding visionary, a musician with technology chops who dreamed up the Music Genome Project as a way to deliver uncannily good next-song recommendations to listeners of all types. Westergren’s purpose was always shaped by a mandate to help musicians reach the right listeners.

Growing Up Twice

18_BrianMcAndrews

Brian McAndrews

Is yesterday’s CEO change the latest growing-up moment for Pandora? Or, perhaps more exactly, a post-adult embrace of original purpose? Steve Jobs returned to Apple, but that re-installation of founder energy was comprehensively corrective of what was widely viewed as a disastrous mistake in expelling Jobs in the first place. A more pertinent example of a returning founder might be Larry Page at Google, replacing Eric Schmidt. Schmidt was the grown-up in the room who raised Google to maturity.

In Pandora’s case, Joe Kennedy was the first professional executive to take over the CEO role from Westergren’s founding leadership in 2004, staying with it for nine years. Kennedy marshalled the company through its first consumer-facing years, transitioning it from a technology experiment to the leading Internet radio brand. He also helmed Pandora through its IPO on Wall Street.

Viewing P’s market performance through the lens of changing leadership is interesting. The stock began its eye-popping rise as Kennedy was departing, reaching a pinnacle on February 28, 2014 — roughly matching Pandora’s surging audience growth. It has been an uneven trip downhill since, mainly attributed to Pandora’s flattening audience growth curve, about which investment analysts are obsessed.

pandora stock all time to mar29 2016

A Good Moment for Change

Whatever the internal and board dynamics which drove Pandora’s decision, now is a plausible moment for returning to roots — and always part of the reason for pulling a founder back to the CEO desk (the CEO headphones?). McAndrews recently publicized a willingness, if not exactly a determined intent, to sell the company. Many observers yesterday viewed that pushing McAndrews aside for Westergren signaled a rejection by the board of Pandora’s potential courtship of buyers. Accordingly, the stock gave back much of the upward spike it had gained with McAndrews’ announcement, dropping about 12% yesterday, and more as of this writing today.

The acquisition question remains unanswered, but the moment is good for a leadership change in other ways. Pandora is facing the most crucial year in its history, marked by the first major change in its business plan since 2004. Building the promised on-demand service does more than merely bring Pandora to rough product equivalence with Spotify, its only meaningful independent competitor. At least, it’s more than that in the company’s public imaging and pronouncements.

“We are pursuing a once-in-a-generation opportunity,” Westergren said yesterday. In the company’s view, as expressed by the new board chair Jim Feuille who replaced Westergren in that seat, “Tim carries the vision for how Pandora can transform the music industry.”

Pandora selects its words carefully — we know this well at RAIN News. The key words above are generationtransform, and music industry. Installing Tim Westergren as CEO makes the company about music through and through. Pandora never stopped talking about musicians, and McAndrews developed important new products for musicians, but Westergren brings native, organic music cred like neither McAndrews nor Kennedy did.

Every company uses grand words in important moments. Pandora has actually created something immense — valuable to listeners, disruptive to radio, influential in the entire audio ecosystem. That is credibility too, which, for the moment at least, justifies the grand vision. Now, onward into the future.

 

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Brad Hill

One Comment

  1. Pandora suffers from a nagging, persistent cough from deep in its lungs that hint at grave, potentially deadly concerns that temper the vibrancy and energy the company flashes over time. That cough, brought on by oversized royalties, signals unprofitability the kind that cripples a company. Changing the CEO doesn’t muffle the cough. Maybe it distracts from its attention temporarily. Pandora needs more innovation than they’ve seen in the last decade if they’re to become a sustainable company.

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