Q&A with Pandora CEO Joe Kennedy '81

Joe Kennedy ’81, the president and CEO of Pandora, the Internet music site, has worked for established companies and start-ups. He joined Oakland-based Pandora in 2004, four months after it was founded, following five years at E-Loan. Previously, he was vice president for sales, service, and marketing for General Motors’ Saturn division. Pandora is a free and subscription-based on-line radio station which selects related songs a listener might also enjoy using an algorithm measuring 400 musical attributes. He spoke to PAW about entrepreneurship and the future of the music industry.

There are a lot of Internet music sites. What sets Pandora apart?

We’re trying to do an amazing job for that part of your music listening when you want someone else to play DJ. We try to mix music that you know and love with music that you might not know or haven’t listened to for a while. Our goal is to be the best at the serendipitous music listening experience.

Much has been written about the music industry’s resistance to Internet music. Has that changed?

Their reaction to Napster and the early digital musical services was: “Shut it down, make it go away, we really like the business of selling plastic discs.” I think it is fair to say that the record industry has approached the digital world with a more of a sense of fear than of opportunity.

Is illegal music sharing still a problem?

Piracy is a problem, but there are times when it has been overstated. The greater disruption caused by digital music has been the unbundling of the album. The music business was a singles business until the 1960s. With the introduction of the LP vinyl album, a new model emerged in which the record companies could sell a $10 or $15 product to consumers who in many cases were only interested in one or two songs. To say that piracy is the reason why the record labels have had to retrench is only part of the story.

Many of the great albums were intended to tell a story. Is that still possible?

Every music lover has a set of albums, like “Born to Run” or “Thriller,” that they really like to enjoy as an album. There is nothing about the digital world that prevents the album concept from being produced. But historically, the vast majority of albums were not great album concepts. I don’t think it’s so much that the album is dead and gone, but there is a much broader array of possibilities today, and the consumer gets to choose.

You have worked for start-ups as well as more established companies. What are some of the cultural differences between them?

Silicon Valley is just a unique place to work. There is a culture of innovation and pursuing new things here. Most importantly, there is a culture that failing is OK. When I lived in Detroit, if someone said that his company had gone belly up and he was out of a job, you would treat that as a very big problem. In the Bay Area, there’s a culture that companies start and die all the time. There is some pain in the transition from one company to the next, but it is viewed as all part of a process.

So many undergraduates pursue careers on Wall Street rather than as entrepreneurs. Does that concern you?

There’s absolutely a role for Wall Street, so I view it as a matter of balance. Princeton develops the next generation of leaders for the country and for the world. Part of leadership is innovating and creating value. A lot of what goes on on Wall Street falls into the category of carving up value. But many of the people who go to Wall Street only stay there for a couple of years and then move on to do other things. Wall Street is a place where you learn analysis and business thinking. It can be good to get that exposure.

How you build a culture within a business?

The opportunity to create a corporate culture is perhaps the greatest thing about being an entrepreneur. You try to create the kind of company you would be proud to work for. In a certain sense it is the lasting legacy of a business’s founders. If you look at companies that have sustained greatness for decades, almost always the culture and values of the founding leadership was crucial to that. Inevitably, the specific products and markets have to evolve, so creating a great company is not simply about producing a great product idea in a great market at one point in time. It’s about how you create an organization that can continue to innovate as the world changes and new opportunities develop.

— Interview has been condensed.