Thursday, June 17, 2010

What Do Claims of Pandora's Profitability & The Loch Ness Monster Have in Common? Both Myths Debunked!

I have frequently blogged about online music service Pandora -- I like the service (am one of the small percentage of paid subscribers); and I like its distribution (50 million). But, I hate (okay, too strong of a word) its economics. And, I never understood its long-term business model and path to mega-profitability (despite the fact that pundits like TechCrunch frequently heap praise about the company's economics, which are unknown, of course, because it is privately held). In fact, I have always doubted its mythic story of profitability.

Well, serial entrepreneur Michael Robertson -- who founded, Gizmo, and Lindows -- just wrote a detailed analysis that questions Pandora's claims of profitability, as well as the overall challenges of the company's economics. Robertson, of course, knows a thing or two about those economics. Consider him a guest blogger here -- I urge you to read this detailed analysis -- click here (it is found in today's TechCrunch).

One more thing. Robertson reports that Pandora now has 180 employees worldwide, including a sales force of 80 people. Really??? Almost half the company in sales????!!!!! Is that really necessary? As Scott Lomond and I used to say when we were at my former company SightSpeed, "Yowzer!"

Pandora ultimately may try to take its mythical standing to the public markets in the form of an IPO.