Shazam helps redefine the consumer engagement market with a little help from Carlos Slim

July 11, 2013

Shazam Logo
New technology firm Shazam is still working out how to convert its potential into profit. Billionaire Carlos Slim is its latest backer

Leaders we deserve have picked early-signals of market leaders before. We have also picked market losers as well. Undeterred however, I offer Shazam for the attention of our subscribers.

The news story this week [July 2013] is that the Mexican billionaire Carlos Slim is putting $40 million into the UK-based firm.

Background to Shazam

Background to Shazam can be found in a LA Times article summarized below [strictly speaking, Andrew Fisher is currently Chairman of Shazam, having handed over the role of CEO to Rich Riley ]

Shazam, the mobile app that instantly recognizes songs and TV commercials, has announced a $40-million round of funding led by Mexican billionaire Carlos Slim. The app, which users turn on when they hear a song that they want to identify, said the funding is being headed up by Slim’s company, America Movil, one of the world’s largest wireless communication firms. Shazam Chief Executive Rich Riley called the investment a milestone.

“It’s a great continuation of the incredible momentum that we have,” he said.

Though Shazam is not profitable, the company said it has generated revenue of $300 million in the past 12 months from song purchases. When users purchase a song from iTunes or other digital stores after tagging it on Shazam, the company gets a cut of the sale.

“We intentionally operate at a slight loss so we can focus on continuing to grow our user base, deepen the experience and accelerate our revenue growth,” Riley said.

Additionally, Shazam said it has worked on more than 300 TV ad campaigns. The London-based company began using its software to tag TV commercials a few years back, and it charges companies it works with six-figure fees to include the Shazam logo on their ads, letting users know that they can expand the commercial through their smartphones. The company last received funding, for $32 million, in September. Since then, Shazam said it has more than tripled its active user base to 70 million.
“Shazam is defining a new category of media engagement which combines the power of mobile with traditional broadcast media and advertising to create compelling value-added experiences for consumers, content providers and brands,” Slim said in statement.

Points of leadership interest in Shazam

Shazam shows the hallmarks of other new-technology companies. Andrew Fisher is a serial innovator and entrepreneur. He is technologically-savvy but not a geek whose interest in technology holds him back from financially shrewd actions. He has attracted Rich Riley as CEO so that Fisher can focus on the new investment required for growth. The last statement above indicates his strategic thinking and the need to re-define what is the emerging market of consumer engagement.

Health warning

All pioneering ventures are vulnerable. This one may succeed, perhaps as an acquisition for its technology, or as a stand-alone global corporation. LWD does not recommend investment opportunities. Its posts are primarily intended as materials of interest to business students and researchers.

Drugs, the silk road, and new money-laundering systems

April 16, 2013

BitcoinThe market in illegal drugs continues to keep a step ahead of efforts to control it. New technology is already being applied to complement or replace older practices of money laundering

In researching the rise of new technology banking, I came across the rapidly-growing Bit Coin system. It struck me as interesting to those engaged in nefarious operations such as drug trafficking. I was not surprised to learn that the idea had already occurred to others.

According to its own website

Bitcoin is a digital currency, a protocol, and a software that enables instant peer to peer transactions, worldwide payments, low or zero processing fees, and much more.
Bitcoin uses peer to peer technology to operate with no central authority; managing transactions and issuing Bitcoins are carried out collectively by the network. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment systems.

How does Bitcoin work?

The International Business Times offers a nice explanation of how bitcoin works

April 16-17th

Paul Krugman in the International Herald tribute writes of The fallacy of bitbugism. Further insights were provided in a BBC review.

McDonald’s tests PayPal’s mobile payments system

August 21, 2012

McDonald’s is partnering PayPal in a trial in France, with plans to roll-out the innovation within two years

According to Reuters, McDonald’s is testing a mobile payments service featuring PayPal at thirty of its restaurants in France. The report has a McDonald’s spokeswoman confirming the France tests, and saying that a PayPal demonstration at a conference was part of a booth that features “technology coming within the next 24 months or so.”

PayPal is racing against start-up organisation Square Inc and other technology companies to become the mobile payments service of choice as consumers increasingly use smart phones to make purchases in shops, restaurants and other retail locations.

Square Inc struck what could be its most important partnership to date last week when it teamed up with Starbucks Corp, the world’s largest coffee chain.

PayPal, [owned by eBay Inc] has signed up more than 15 retailers, including Home Depot and Office Depot, but adding a partner the size of McDonald’s, with over 30,000 restaurants, would be a big win.

The Apotheosis of Apps

Increasingly, Smart phones are looking as one of the most powerful drivers of innovation of the decade. In terms of impact, the iconification of Apps may one day be seen of itself as a major innovation, while smart-phones will be considered a game-changing alpha innovation for the way business is transacted globally

Anger and frustration. In Iran writ large, In Belfast writ small

June 18, 2009

Iran protestors

On the streets of Northern Ireland and those in Iran, violence simmers below the surface. There’s no easy way of linking the two sets of events. Except, perhaps, that each has its mood of deprivation and shared private anger at perceived injustice

‘They need somebody to hate’. That was the first remark I heard from someone brought up in Belfast, on hearing the news of the racist attacks on immigrant families.

A gang of racially motivated youths drove a group of Romanian immigrants from their homes.

Looking at 115 Romanians huddled together on the floor of a Belfast church hall, it was possible to see the worst side of Northern Ireland – and the best – all at once. The speed with which Pastor Malcolm Morgan and his team created a temporary home for 20 families was remarkable. At the same time, the sight of men, women and children looking so helpless and scared was a stain on Northern Ireland’s international reputation. Many of the families came to Belfast believing that the years of prejudice and narrow-mindedness were over. However, it seems that in some parts of the city, racism is the new sectarianism. [Mark Simpson, BBC News]

In Iran

in Iran, a week of remarkable demonstrations continues. The timeline is days since the Presidential elections. The hopes in the democratic process dashed as so cruelly occurred recently in Zimbabwe. Premature claims of victory met with counter-claims backed by violence against the regime.

President Obama refuses to be drawn into the internal conflict. Wisely, in my view. It would have been easy to make some overt gesture of support in the interests of democratic freedom and its abuses.

The BBC reported the complex political situation:

It’s quite clear that there are enormous disputes going on behind the scenes. But the people who run this country are not stupid. There are some quite smart people, even loyalists to Mr Ahmadinejad, and they must realise how much deeper they are digging themselves into this mess every day. But at the moment, quite inexplicably, the Supreme Leader Ayatollah Khamenei seems to be quite in thrall to Mr Ahmadinejad. It’s almost as if he’s taking his orders from him. He usually stays above the fray and interestingly he’s still not been seen in public since the election [Jon Leyne, Reporting from Tehran]

Events continue to escalate.

The audacity of hope?

I wrote at the time of the elections in Zimbabwe that there would be no winners for the foreseeable future. A bleak prognosis backed up in subsequent events.

In Northern Ireland, I am more optimistic that the extended peace process is gradually edging its people away from the bleakest outbreaks of violence and tribal warfare.

And in Iran? The exercise of power is becoming increasingly moderated by the new communications media. One of the dreams of the early web pioneers was of a communications system that would survive the most catastrophic insult. That dream seems to be coming about, as the rest of the linkedin world shares the struggles in Iran in real time.

[Image captured via twitter. Full acknowledgement as soon as possible]