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Shazam CEO's 5 tips for making it big

Rich Riley, chief executive officer at Shazam Entertainment Ltd., speaks during the Open Mobile Summit in San Francisco, on Wednesday, Nov. 13, 2013.
David Paul Morris | Bloomberg | Getty Images
Rich Riley, chief executive officer at Shazam Entertainment Ltd., speaks during the Open Mobile Summit in San Francisco, on Wednesday, Nov. 13, 2013.

In the app world, Shazam is a superhero.

The app that started as a music discovery service—and has grown into so many other fields—boasted 86 million active users in December. Last July, Mexican business magnate Carlos Slim invested $40 million in the company. And it's on the road to a likely IPO.

The venture doesn't report financial figures, but CEO Rich Riley says the company has revenues in the "tens of millions" of dollars. It sells between 5 percent and 10 percent of all downloaded music, for which it gets a revenue share. (Last year that worked out to more than 300 million songs sold.)

Shazam was founded in 1999 as a dial-up service but really exploded with the launch of the app store. The company's tool recognizes music and media playing around users and identifies the song or offers more information about the media. Users simply tap the Shazam button on their phone to listen, buy, share and comment on the media. There's no charge, and users can utilize the tool as often as they'd like.

Riley, a former top executive at Yahoo!, was brought in to help the company reach its IPO goal in April 2013. And while this is his first time in the CEO office, he knows a thing or two about business success, having sold the company he co-founded, called Log-Me-On.com, to Yahoo! for $10 million. (That product later became the Yahoo! Toolbar.)

Certainly, the viral nature of Shazam's functionality—which lets users press a button and quickly identify a song or get more information from a television show or commercial—has been a key factor in the company's success. But Riley notes there were other dynamics at play. Here are his top five tips on how to get your business ahead of the pack.

(Read more: How a one-person business can break $1 million in sales)

1. Pick a fight.
Riley was a 13-year vet at Yahoo!, where he last served as executive vice president of the Americas. That meant he spent a lot of time keeping a close eye on Google. While the rest of the world saw the Yahoo/Google search battle as a fight, he says Google never saw it that way.

And ultimately, that taught him a lesson about how to run a company.

"Google said 'we're always going to have the biggest index and a faster search time. Bring it on, but that's the way it is," he said. "And when I came to Shazam, I adopted that philosophy."

Competition certainly makes companies strive harder and perform better, but confidence (though not overconfidence) in your product and a drive to stay far ahead of the pack can boost your chances of success.

(Read more: Trading "gut" for best practice in business expansion)

Inside the Shazam Entertainment Ltd. headquarters in London.
Simon Dawson | Bloomberg | Getty Images
Inside the Shazam Entertainment Ltd. headquarters in London.

2. Don't waste the customer's time.
Time is the most in-demand commodity around today. There are so many goods, services and distractions, a product or service that can quickly solve whatever problem consumers are facing is more likely to succeed.

Sometimes this means bypassing traditional steps that many businesses take. In Shazam's case, that meant resisting the urge to get people to register (which would have given the company a treasure trove of user information).

"People open the app because they hear something they want to know about," said Riley. "We want to get that answer for them as quickly as possible. You push a button, and we do our thing. It's a little analogous to the Google search: You push a button, and you're going to get an answer."

Even today the company struggles with the registration question.

"It's definitely one we kick around," he said. "You can log on through Facebook, and a meaningful percentage of customers do so. But we need to create an incentive for why you would want to register."

(Read more: Business lessons from rapper 50 Cent's playbook)

3. Enlist evangelists.
Every month nearly 10 million people download Shazam, said Riley. But the company's marketing budget is virtually nonexistent.

Some of that success is tied to the app's 4.5-star to 5-star Apple and Google App Store ranking, but Riley credits the bulk of it to the word of mouth from users. Perhaps more importantly, younger users are much more influenced by referrals from friends than they are by any form of advertising.

"People love the Shazam brand, and that love grows as you go younger," he said. "I think that's because we're simple, we're authentic and we do what we're supposed to do."


4. Serve the customer.
No matter what industry you think you're in, you're in the service business. Shazam not only has to keep app owners happy, it has to ensure that its media partners are just as enthusiastic. In the music industry, that's not a problem these days. But the push into television and television advertising has been a bit more challenging.

"We can say we're going to deliver audience to a show," said Riley. "They'll do a call to action, which is great for us. A consumer only Shazams if they want to, so it's a good experience."

When the company began pushing into the television industry—encouraging viewers to Shazam an ad or television program to learn more—there was resistance. Companies feared that instead of driving customers to their own social media efforts, they'd be driving people to Shazam.

The results have proved otherwise, though, said Riley. During the Country Music Awards in 2013, Shazam sold 50,000 songs for artists during the broadcast in just a couple of hours. And Jaguar and other ad companies have seen a notable drive to their extended online media efforts.

"Our pitch is, 'Turn 30 seconds of engagement into several minutes,'" said Riley. "In 2014 you'll see a lot of strategic partnerships from us."


5. Look ahead before others do.
The problem with success is, there's always an up-and-comer who threatens to spot the next big thing before your company does. That's especially true in the app and online world, where changes can be implemented quickly.

One slipup can be fatal. And that's why Shazam recently unveiled an 'always on' feature that constantly monitors the environment around you, listing songs you hear as background music and displaying ad offers on television shows for you to peruse later.

"We think the world is going to an 'always on' state," said Riley. "This was fun for us. We're not exactly sure how people are going to use it, but it's awesome that we have the technical know-how to do it."

—By Chris Morris, Special to CNBC.com

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