As a kid, Joe Kennedy (MBA 1985) got hooked early on the magic of radio, listening in bed at night to a crystal set he had built himself. Radio returned to his life in 2004 when—after an 11-year stint in marketing at Saturn and 5 years at E-Loan as COO—he followed his passion for music and took the helm at Savage Beast Technologies (SBT), a cash-strapped San Francisco start-up. How bad were things at SBT? “The company wasn’t running on fumes,” Kennedy recalls. “The fumes were gone.”

Founded in 2000 by musician Tim Westergren, SBT employed musicologists to codify pieces of music, ranging from classical to unknown indie bands, according to 450 distinct musical characteristics. This digital “Music Genome Project” matches the musical “DNA” of pieces listeners say they like with kindred material in its database. Thus listeners are virtually guaranteed new music they’ll enjoy, unlike recommendations based on more superficial data, such as purchasing patterns.

Music stores were SBT’s customers, but Kennedy’s innovative idea was to reinvent SBT as a personalized Internet radio service (renamed Pandora) to be delivered directly at no cost to listeners via computers and other web-linked devices. Notes Kennedy, “Pandora has all the advantages of traditional radio in its speed and ease of use, as well as offering surprise, serendipity, and customization.” About 80 percent of all music listening is still via radio, and about half of radio listening is done in the car. “Distribution ubiquity and that ease of use—what radio has always been—is what we’re after,” says Kennedy, who has inked deals with major automakers to integrate Pandora into their vehicles.

To date, 125 million users—who listen an average of 18 hours per month—have signed up with Pandora, which now holds more than 900,000 tracks, mostly music but also some comedy routines. Analysts expect 2011 revenues of $275 million, mainly from advertising (subscribers may also opt to pay for ad-free listening).

Even with its years of experience in delivering personalized radio, Kennedy stresses, “We run Pandora with an eye to fueling our employees’ natural bent toward creativity and innovation.”

As for continual improvement, Kennedy is a big believer: he’s been playing piano for 30 years, “mostly attempting to master Gershwin’s Rhapsody in Blue.” Once he’s got that down, Pandora has plenty of other numbers to keep him busy.

—GE

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