18 May, 2012

Abra-Shazam! An Instant Millionaire

Melbourne Herald Sun, Friday May 18, 2012

Late today - Friday American time - Facebook will launch into the public market. It will create a feeding frenzy that will make a pirana tank look like high tea at the vicarage.

The issue of 421 million shares is expected to hit $38 each, valuing the company up to $100 billion. Mark Zuckerberg will celebrate his 28th birthday a few days later. He'll retain control of 58 per cent of the voting shares. Two of his boardroom insiders will collect more than a billion and a half apiece. Not bad for a company that started eight years ago.

We're living in a world where - literally - new inventions are appearing every day. The 19th and 20th centuries were gloriously inventive. But now it's not steam engines and aeroplanes that excite our wonder, it's the thousands of little inventions that have taken over every spare corner of our lives.

At the big end are robotics and energy science, but at the small end is the invasion of countless applications for our appliances, televisions and phones - the apps that for a lucky few can spell almost-instant riches.

I was pointed to one a few days ago, called Shazam. Download it free onto your mobile phone, and next time you hear a piece of music you like, press the Shazam icon and it will tell you its name.

Now that sounded far-fetched to me so I tried it. The YouTube demos show it finding music by the likes of Metallica but I wanted to give it something difficult. Going as far as you'll get from Metallica I played Brahms' Second Symphony and pointed the phone at the loudspeaker.

The logo on the phone screen rotated and blinked, then sent a signal to its brain in the cloud. A few seconds later the answer came back. Correct, it even named Herbert von Karajan as conductor. I was seriously impressed.

Now I know a lot of you will think I'm pretty late getting here - after all there are 200 million people Shazaming in 200 countries around the world already (yes it is now a verb. Already). But many of my readers won't know it yet.

Which raises the question - how long can you be a start-up before you are discovered, or you go broke? Shazam, after all, was developed in 2002 and slowly, quietly grew until smartphones took off a few years later. Now it has doubled in membership just in the past year.

Economists love talking about "monetising" - how do you make a quid out of your product, ideally more than you are putting into it. In Shazam's case it was easy. When it finds that elusive song for you, it shows another button on screen. Click through to iTunes to download and buy the track.

Now there is the gold. A few cents commission a time on how many million downloads a day...? They are also expanding the service into TV. You can click a participating commercial and perhaps win a gift or enter a contest. For the advertiser it gives them a measure of real-time responses to their campaign.

We can safely predict that when Shazam raises its initial public offering - soon, they say - it won't go anywhere near as high as Facebook, but it will still make the owners filthy rich. Oh to be that muddy.

Unusually, the company is British - showing that you can create a great app without living in Silicon Valley. It also made them eligible for some British honours.

Just last month it was awarded the Queen’s Award for Enterprise in Innovation. Maybe they can break a record for winning knighthoods.

ray@ebeatty.com

Blog: themarketeer-raybeatty.blogspot.com

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