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Spinner's got buzz
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July 30, 1998: 6:20 p.m. ET
'Net music company has 100 channels, VC money and a 26-year-old CEO
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SAN FRANCISCO (The Red Herring) - Forget schmoozing -- Hollywood's all about buzz. And when you've got it, you know it. Spinner.com's got it.
The two-year-old company could be the poster child for Silicon Valley's new media startups.
But don't mistake it for the next Broadcast.com (BCST), because this company's less like a radio broadcaster and much more like your own private DJ -- and you don't even need to throw a bar mitzvah.
While David Samuel, Spinner.com's founder and chief executive officer, might look younger than his 26 years would suggest, this Opie clone and future gazillionaire knows exactly how to play Silicon Valley's tune. We sat down for a chat at the Herring on Hollywood conference in Santa Monica, where the buzz around Spinner was turned up high.
Weddings and bar mitzvahs
Red Herring Online: Tell us about Spinner.com, and then we'll get to how rich you're going to be.
David Samuel: (Laughs) Spinner used to be TheDJ.com. In junior high school I started a mobile disk jockey service called Sounds Unlimited, and I built it up through high school and college. I had two guys working for me doing weddings and bar mitzvahs. It was fun.
Herring: So you started out as a DJ?
Samuel: Yep. Then I went to MIT, and then worked at Oracle. So if you mix it all together, you've got Spinner.com.
Herring: So it was like, poof, you had an epiphany, "I want to start an Internet company?"
Samuel: Actually it was. I graduated in June 1994 from MIT. I was supposed to stay there another year and do my masters in electrical engineering, but Oracle's got this great recruiting program so they flew us out to California for a weekend. They've got a beautiful campus and we had a great time, so I just decided to go to Oracle. And I stayed there until February 1996.
But I remember the date distinctly, it was Jan. 11, 1996. I had just started using (RealNetworks') (RNWK) RealAudio and I said, "Hey, we can do digital radio on the Internet," and by February I'd left the company.
Herring: And that was it? You guys just quit?
Samuel: It's a typical Silicon Valley startup story. We quit our jobs -- myself, my fraternity brother Steve Levis, and my brother-in-law, Bryant Lewis -- and we had a three-story house where we started TheDJ.com. The basement was our office, we dropped an ISDN line in there, and it was that way for about a year.
Herring: OK, but how did you live, eat, pay rent, all of that?
Samuel: We started shopping the idea around to some of the Silicon Valley law firms, and we had a small nest egg, some family money. It was really exciting. We launched the service in 1996 and were already being approached by several companies to buy us out.
Herring: Buy what? You guys didn't even have a business.
Samuel: We had five offer letters for an acquisition. I can't tell you from whom, but it was in the seven-figure range, which was amazing for us and really tempting because we had only been in business for six months, and we didn't even have any revenues.
Herring: It's almost ridiculous.
Samuel: And hard to turn down. But we felt we hadn't really stood up yet, so we decided to go with a round of financing. And I'm very glad we made that decision. We got some more money from friends and family, and also some from the CEO of one of the companies that wanted to buy us out. That was our series A round. Then in August 1997, Chris Anderson from Imagine Media invested in us, which was our Series B, and then in April of this year we closed our Series C round which was several million dollars.
Herring: Who did that deal?
Samuel: That was IDG Ventures, Arts Alliance, Allen & Co., Bennett Media, and Phoenix Partners.
Just spinning songs
Herring: You've got to be loving it. You have all this attention, all this financing, and Broadcast.com (BCST) just had the greatest single one-day rise of any IPO in history. What's going through your head right now?
Samuel: We were pretty excited that Friday when we watched what happened with Broadcast.com. But we're different.
Herring: In exactly what way?
Samuel: Broadcast.com takes existing radio stations, among other things, and broadcasts them over the Internet. It's a great idea if you look at it from a local news or sports perspective. But at Spinner we are creating content and a service which is specifically for the Internet, built from the ground up.
Herring: But admit it -- you guys are sounding more and more like a radio station yourselves.
Samuel: We're just spinning songs, but because we have the information right there at a viewer's fingertips, then people can easily go in and get info about an artist and also buy the CD if they want.
Herring: But I can't choose a specific song, it has to just come up randomly through one of the channels, like the blues channel, or top hits channel, or whatever. I can't request a specific song?
Samuel: We have two blues channels actually. But, no, you can't choose a specific song.
Herring: So right now it's just music. Are you going to run ads soon?
Samuel: Well, we've got to make money to stay in business, right?
Herring: We suppose, but isn't it a little like selling out?
Samuel: Look, we built this whole package. The client, the server, the user interface, everything. We could easily have 1,000 channels if we wanted to, that's what makes it attractive, and advertisers like Amazon.com (AMZN) are willing to pay, as well as give us a commission deal. They also made a significant audio buy.
Herring: So now we're going to have to listen to Amazon.com on Spinner.com.
Samuel: As long as we don't do too much advertising I think people will be willing to accept it. And per hour, we'll be doing a lot less than what currently exists now on the radio.
Don't touch that dial
Herring: So where to from here? Obviously an IPO, especially after Broadcast.com's performance.
Samuel: We focused on two things, and if we hit those two goals, our future will be ... uh ... bright.
Herring: OK, shoot.
Samuel: We want to increase our audience to 25 million impressions per month, and grow our revenues.
Herring: Sounds pretty standard. Everyone wants to do that.
Samuel: I think we can do it. We just hired Riley McDonough as our executive vice president of sales; he was formerly the publisher of Inc. magazine, so we've got a pretty good management team in place.
Herring: Now, don't take this the wrong way, but isn't it a little bizarre for you to be dealing with all of these people given how young you are? How has age played into any of this?
Samuel: That's the one nice thing about the Internet; it's fast-moving, and with it comes fast learning. I've always believed you should surround yourself with intelligent and experienced people.
Herring: And what about your other two founders -- are they still around?
Samuel: They both have left the building.
Herring: But they still own part of the company?
Samuel: Yep. Really, the startup environment is extremely stressful and hectic, and maybe it was too much for them. Now, they can stand on the sidelines and enjoy watching us grow.
Herring: And watch an IPO?
Samuel: Yes, after Broadcast.com, it makes looking at the IPO road a little easier. We expect to have mezzanine financing in November of this year, and then a possible IPO in 1999. But we need to build our brand first before an IPO.
Herring: Who are you talking to? Big media companies, @Home to take advantage of bandwidth, other partners?
Samuel: Yes, we have a relationship with @Home, and I think we're going to see more activity from the studios and music labels. But the most important thing is that Spinner, as a broadcaster on top, can tie in all of these other services underneath.
Herring: Does any of this success surprise you?
Samuel: The Internet is shaping up as I kind of envisioned it, so there really hasn't been too many surprises I can think of. Actually, it's really amazing how much fun we have.
Herring: And with an IPO, if it's anything like Broadcast.com's, you'll be rich -- really, really rich?
Samuel: We'll have a party. A very, very big party. 
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